SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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F O R M 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 23, 1999
CIT Marine Trust 1999-A
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
000-25495 22-3636314
(Commission File Number) (IRS Employer Identification No.)
c/o Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (302) 636-3305
N/A
(Former name or former address, if changed since last report.)
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Item 2. Acquisition or Disposition of Assets.
On February 23, 1999 The CIT Group Securitization Corporation II (the
"Company") sold $325,000,000 aggregate principal amount of Class A-1 5.45%
Asset-Backed Notes, $179,000,000 aggregate principal amount of Class A-2 5.80%
Asset-Backed Notes, $117,000,000 aggregate principal amount of Class A-3 5.85%
Asset-Backed Notes, $103,134,000 aggregate principal amount of Class A-4 6.25%
Asset-Backed Notes (the "Notes") and $11,028,156 aggregate principal amount of
6.20% Asset-Backed Certificates (the "Certificates"). The Notes and the
Certificates have the benefit of certain financial guaranty insurance policies
issued by MBIA Insurance Corporation and annexed hereto as Exhibits 10.3 and
10.4 and funds deposited in a reserve account established pursuant to a Sale and
Servicing Agreement annexed hereto as Exhibit 4.3 (the "Sale and Servicing
Agreement"). The Notes and Certificates were offered for sale to the public
pursuant to a prospectus supplement dated February 12, 1999 to the prospectus
dated September 29, 1998 (the "Prospectus").
The Certificates represent an ownership interest in the CIT Marine Trust
1999-A (the "Trust") and the Notes represent obligations of the Trust. The Trust
was created, and the Certificates were issued, pursuant to a Trust Agreement
annexed hereto as Exhibit 4.2 (the "Trust Agreement"). The Notes were issued
pursuant to an Indenture annexed hereto as Exhibit 4.1.
The property of the Trust primarily consists of a pool of marine
installment sale contracts and direct loans secured by the new and used boats
financed thereby (the "Contracts") and certain other property described in the
Prospectus, including, without limitation, $27,568,581 which was deposited in
the reserve account from the proceeds of loan made by The CIT Group/Sales
Financing, Inc. pursuant to a Loan Agreement annexed hereto as Exhibit 10.2.
Certain Contracts were acquired by the Company from The CIT Group/Sales
Financing, Inc. pursuant to the terms of a Purchase Agreement annexed hereto as
Exhibit 10.1, and sold by the Company to the Trust pursuant to the Sale and
Servicing Agreement. The remainder of the Contracts were acquired by the Trust
from CIT Marine Trust 1996-A pursuant to the Sale and Servicing Agreement.
Filing of Independent Auditor's Consent
The registrant is filing herewith the consent of PricewaterhouseCoopers to
the use of their name in the Prospectus under the caption "Experts" in the
Prospectus. The Consent is attached hereto as Exhibit 23.1.
Incorporation by reference of Financial Statements of MBIA Insurance Corporation
The consolidated balance sheets of MBIA Insurance Corporation and
subsidiaries as of December 31, 1997 and 1996, and the related consolidated
statements of income, changes in shareholder's equity and cash flows for each of
the three years in the period ended December 31, 1997, prepared
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in accordance with generally accepted accounting principles, and the report with
respect thereto of PricewaterhouseCoopers LLP, included in the Annual Report on
Form 10-K of MBIA Inc. for the year ended December 31, 1997 are hereby
incorporated by reference into this report on Form 8-K as Exhibit 99.1.
Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Sale and Servicing Agreement.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
The following are filed herewith. The exhibit numbers correspond with Item
601(b) of Regulation S-K.
Exhibit No. Description
1.1 Underwriting Agreement among The CIT Group Securitization
Corporation II, The CIT Group/Sales Financing, Inc., The CIT Group,
Inc. and Goldman, Sachs & Co. on behalf of itself and as
representative of the several underwriters dated February 12, 1999.
4.1 Indenture between the CIT Marine Trust 1999-A and Harris Trust and
Savings Bank, as Indenture Trustee, dated as of February 1, 1999.
4.2 Trust Agreement between The CIT Group Securitization Corporation II
and Chase Manhattan Bank Delaware, as Owner Trustee, dated as of
February 1, 1999.
4.3 Sale and Servicing Agreement between The CIT Group Securitization
Corporation II, The CIT Group/Sales Financing, Inc., CIT Marine
Trust 1996-A and the CIT Marine Trust 1999-A, dated as of February
1, 1999.
10.1 Purchase Agreement between The CIT Group/Sales Financing, Inc. and
The CIT Group Securitization Corporation II, dated as of February 1,
1999.
10.2 Loan Agreement among CIT Marine Trust 1999-A, Harris Trust and
Savings Bank, as Indenture Trustee and The CIT Group/Sales
Financing, Inc., as Servicer and Lender.
10.3 Financial Guaranty Insurance Policy No. 28601 issued by MBIA
Insurance Corporation, dated February 23, 1999, relating to the
Notes.
10.4 Financial Guaranty Insurance Policy No. 28602 issued by MBIA
Insurance Corporation, dated February 23, 1999, relating to the
Certificates.
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23.1 Independent Auditors Consent of PricewaterhouseCoopers
99.1 Consolidated Financial Statements of MBIA Insurance Corporation and
the report with respect thereto of PricewaterhouseCoopers (in each
case, incorporated by reference to the Annual Report of Form 10-K of
MBIA Inc. for the year ended December 31, 1997).
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CIT MARINE TRUST 1999-A
By: The CIT Group/Sales Financing, Inc.,
as Servicer
/s/ Frank Garcia
By: --------------------------------------
Name: Frank Garcia
Title: Vice President
Dated: March 2, 1999
EXHIBIT 1.1
Execution Copy
CIT MARINE TRUST 1999-A
$325,000,000 CLASS A-1 5.45 % ASSET-BACKED NOTES
$179,000,000 CLASS A-2 5.80% ASSET-BACKED NOTES
$117,000,000 CLASS A-3 5.85% ASSET-BACKED NOTES
$103,134,000 CLASS A-4 6.25% ASSET-BACKED NOTES
$11,028,156 6.20% ASSET-BACKED CERTIFICATES
THE CIT GROUP SECURITIZATION CORPORATION II
(SELLER)
February 12 1999
UNDERWRITING AGREEMENT
GOLDMAN, SACHS & CO.
as Representative of
the Several Underwriters (the "Representative"),
85 Broad Street
New York, New York 10004
Dear Sirs:
1. Introductory. The CIT Group Securitization Corporation II, a Delaware
corporation (the "Seller") and a wholly-owned limited-purpose finance subsidiary
of The CIT Group, Inc., a Delaware corporation ("CIT"), and CIT (collectively,
the "Registrants") have previously filed a registration statement with the
Securities and Exchange Commission relating to the issuance and sale from time
to time of up to $1,200,000,000 of boat and marine backed notes or certificates.
The Seller proposes to cause CIT Marine Trust 1999-A (the "Trust") to issue and
sell $325,000,000 principal amount of its Class A-1 5.45% Asset-Backed Notes
(the "Class A-1 Notes"), $179,000,000 principal amount of its Class A-2 5.80%
Asset-Backed Notes (the "Class A-2 Notes"), $117,000,000 principal amount of its
Class A-3 5.85% Asset-Backed Notes (the "Class A-3 Notes"), $103,134,000
principal amount of its Class A-4 6.25% Asset-Backed Notes (the "Class A-4
Notes", and, together with the Class A-1 Notes, the Class A-2 Notes and the
Class A-3 Notes, the "Notes"), and $11,028,156 principal amount of its 6.20%
Asset-Backed Certificates (the
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"Certificates," and, together with the Notes, the "Securities"). The Securities
are registered under the registration statement referred to in Section 2(a). The
assets of the Trust include, among other things, a pool of marine installment
sale contracts and direct loans some of which are secured by U.S. Preferred Ship
Mortgages (the "Contracts") secured by new and used boats, boat motors and boat
trailers financed thereby (the "Financed Boats"), and certain monies received
thereunder on or after February 1, 1999 conveyed to the Trust pursuant to the
Sale and Servicing Agreement to be dated as of February 1, 1999 (the "Sale and
Servicing Agreement") among the Trust, the Seller, CIT Marine Trust 1996-A (the
"Selling Trust") and The CIT Group/Sales Financing, Inc., a wholly-owned
subsidiary of CIT, as servicer ("CITSF" or the "Servicer"). Certain Contracts
and certain other assets of the Trust will be sold by CITSF to the Seller
pursuant to a Purchase Agreement to be dated as of February 1, 1999 (the
"Purchase Agreement") between CITSF and the Seller, and certain Contracts and
certain other assets of the Trust will be sold by the Seller and the Selling
Trust to the Trust pursuant to the Sale and Servicing Agreement. Certain of the
Contracts and certain other property sold by CITSF to the Seller will first be
purchased by CITSF from The CIT Group/Consumer Finance, Inc. (NY) ("CITCF-NY")
pursuant to a Purchase Agreement to be dated as of February 1, 1999 (the
"CITCF-NY Sale Agreement") between CITCF-NY and CITSF. The Servicer will service
the Contracts on behalf of the Trust pursuant to the Sale and Servicing
Agreement. The Notes will be issued pursuant to the Indenture to be dated as of
February 1, 1999 (as amended and supplemented from time to time, the
"Indenture"), between the Trust and Harris Trust and Savings Bank, as indenture
trustee (the "Indenture Trustee"). Pursuant to the Sale and Servicing Agreement,
the Servicer will agree to perform certain administrative tasks imposed on the
Trust under the Indenture. The Certificates, each representing a fractional
undivided interest in the Trust, will be issued pursuant to a Trust Agreement to
be dated as of January 1, 1999 (the "Trust Agreement"), between the Seller and
Chase Manhattan Bank Delaware, as owner trustee (the "Owner Trustee"). A note
guaranty insurance policy and a certificate guaranty insurance policy (together
the "Insurance Policies") will be issued by MBIA Insurance Corporation (the
"Insurer") pursuant to the Insurance and Reimbursement Agreement dated as of
February 1, 1999 (the "Insurance Agreement") by and among the Insurer, the
Seller, CITSF, in its individual capacity, as Custodian and as Servicer and CIT.
The Insurer, CIT, CITSF, the Representative and the Seller have entered into an
Indemnification Agreement dated as of February 12, 1999 (the "Indemnification
Agreement"). On the date of issuance of the Securities a reserve fund (the
"Reserve Fund") will be established with the Indenture Trustee as credit
enhancement for the Securities. The Reserve Fund will be funded by one or more
affiliates of the Seller (the "Lender") pursuant to the terms of the Loan
Agreement to be dated as of February 1, 1999 (the "Loan Agreement") among the
Trust, Indenture Trustee, the Servicer and the Lender.
Capitalized terms used herein and not otherwise defined shall have the
meanings given them in the Sale and Servicing Agreement and the Indenture.
The Seller and CITSF hereby agree with the several Underwriters named in
Schedule I hereto (the "Underwriters") as follows:
2. Representations and Warranties of the Seller, CITSF and CIT. Each of
the Seller and CITSF, jointly and severally, and CIT with respect to the
representations and warranties appearing in clauses (a), (b), (c)(i), (d),
(e)(ii), (j)(ii), (t), (y) and (bb) below represents and warrants
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to, and agrees with, the Underwriters, as of the date hereof and as of the date
of the purchase and sale of the Securities pursuant to Section 3 hereof (the
"Closing Date") that:
(a) A registration statement on Form S-3 No. 333-43323, including a
prospectus, relating to the Securities has been filed with the Securities and
Exchange Commission ("Commission") and, as amended, has become effective. Such
registration statement, as amended as of the date of this Agreement, is
hereinafter referred to as the "Registration Statement," and the prospectus
included in such Registration Statement, as supplemented to reflect the terms of
the Securities as first filed with the Commission after the date of this
Agreement pursuant to and in accordance with Rule 424(b) ("Rule 424(b)") under
the Securities Act of 1933 ("Act"), including all material incorporated by
reference therein, is hereinafter referred to as the "Prospectus." A
"preliminary prospectus" means any form of prospectus, including any prospectus
supplement, relating to the Securities used prior to the date of this Agreement
that is subject to completion.
(b) On the effective date of the registration statement relating to the
Securities, such registration statement conformed in all respects to the
requirements of the Act, the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") and the rules and regulations of the Commission promulgated
under the Act and the Trust Indenture Act (the "Rules and Regulations") and did
not include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and, on the date of this Agreement and the Closing Date,
the Registration Statement and the preliminary prospectus conform, and at the
time of the filing of the Prospectus in accordance with Rule 424(b) and the
Closing Date, the Registration Statement and the Prospectus will conform, in all
respects to the requirements of the Act, the Trust Indenture Act and the Rules
and Regulations, and neither of such documents include, or will include, any
untrue statement of a material fact or omits, or will omit, to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, except that the foregoing does not apply to statements
in or omissions from any of such documents based upon (i) written information
furnished to the Seller by any Underwriter through the Representative
specifically for use therein, it being understood that the only such information
consists of the Underwriters' Information (as defined in Section 8(a) or (ii)
the Underwriter Derived Information (as defined in Section 7 below) contained in
the Current Report (as defined in Section 5(m) below) or in any amendment
thereof or supplement thereto, incorporated by reference in such Registration
Statement or such Prospectus (or any amendment thereof or supplement thereto).
The Seller and CITSF acknowledge that any information furnished by any of the
Underwriters specifically for use in the Registration Statement, any preliminary
prospectus or the Prospectus is the Underwriters' Information (as defined in
Section 8(a)).
(c) (i) CIT meets the requirements for use of Form S-3 under the Act and
(ii) the Seller meets the requirements for use of Form S-3 under the Act.
(d) The documents incorporated by reference in the Registration Statement
and Prospectus, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended (the "1934
Act"), and the rules and regulations of the Commission thereunder.
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(e) (i) Each of the Seller, CITSF and The CIT GP Corporation III ("CIT
GP") have been duly organized and are validly existing as corporations in good
standing under the laws of the State of Delaware. CITCF-NY has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of New York. Each of the Seller, CITSF, CITCF-NY and CIT GP
have corporate power and authority to own, lease and operate their respective
properties and conduct their respective businesses as described in the
Prospectus and to enter into and perform their obligations under each of the
Basic Documents (as defined below) to which it is a party; and each of the
Seller, CITSF, CITCF-NY and CIT GP is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the character
of the business transacted by it or properties owned or leased by it requires
such qualification and in which the failure so to qualify would have a material
adverse effect on its respective business, properties, assets, or condition
(financial or other) or on its ability to perform its obligations under any of
the Basic Documents to which it is a party. "Basic Documents" means this
Agreement, the Sale and Servicing Agreement, the Trust Agreement, the Indenture,
the CITCF-NY Sale Agreement, the Purchase Agreement, the Loan Agreement, the
Insurance Agreement, the Indemnification Agreement and the Note Depository
Agreement and (ii) CIT has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware and is in
good standing in each jurisdiction in which the character of the business
transacted by it or properties owned or leased by it requires such qualification
and in which the failure so to qualify would have a material adverse effect on
its respective business, properties, assets, or condition (financial or other).
(f) Neither the Seller nor CIT GP is in violation of its certificate of
incorporation or by-laws or in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to which it
is a party or by which it or its properties may be bound, which default might
result in any material adverse change in the financial condition, earnings,
affairs or business of the Seller or CIT GP, as the case may be, or which might
materially and adversely affect the properties or assets thereof or the ability
to perform its obligations under any of the Basic Documents to which it is a
party.
(g) Neither CITSF nor CITCF-NY is in violation of its certificate of
incorporation or by-laws or in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any material
contract, indenture, mortgage, loan agreement, note, lease or other instrument
to which it is a party or by which it or its respective properties may be bound,
which default might result in any material adverse change in the financial
condition, earnings, affairs or business of either of CITSF or CITCF-NY or which
might materially and adversely affect the properties or assets thereof or their
ability to perform its obligations under any of the Basic Documents to which it
is a party.
(h) The execution and delivery by each of the Seller and CIT GP on the
Closing Date of the Basic Documents to which it is a party and the performance
of its obligations thereunder will be within the corporate power of the Seller
and CIT GP and duly authorized by all necessary corporate action on the part of
the Seller and CIT GP on and as of the Closing Date; and neither the issuance
and sale of the Securities to the Underwriters, nor the execution and delivery
by
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each of the Seller and CIT GP of the Basic Documents to which it is a party, nor
the consummation by the Seller or CIT GP of the transactions therein
contemplated, nor compliance by the Seller or CIT GP with the provisions hereof
or thereof, nor the grant of the security interest in the Collateral to the
Indenture Trustee pursuant to the Indenture, will materially conflict with or
result in a material breach of, or constitute a material default under, any of
the provisions of any law, governmental rule, regulation, judgment, decree or
order binding on the Seller or CIT GP or its properties or the certificate of
incorporation or by-laws of the Seller or CIT GP or any of the provisions of any
indenture, mortgage, contract or other instrument to which the Seller or CIT GP
is a party or by which the Seller or CIT GP is bound or result in the creation
or imposition of any lien, charge or encumbrance upon any of its property
pursuant to the terms of any such indenture, mortgage, contract or other
instrument.
(i) The execution and delivery by each of CITSF and CITCF-NY on and as of
the Closing Date of any of the Basic Documents to which it is a party and the
performance of its obligations thereunder, will be within the corporate power of
each of CITSF and CITCF-NY and duly authorized by all necessary corporate action
on the part of each of CITSF and CITCF-NY on and as of the Closing Date; and
neither the issuance and sale of the Securities to the Underwriters, nor the
execution and delivery by CITSF and CITCF-NY of any of the Basic Documents to
which it is a party, nor the consummation by CITSF and CITSF-NY of the
transactions therein contemplated, nor compliance by CITSF and CITCF-NY with the
provisions hereof or thereof, nor the grant of the security interest in the
Collateral to the Indenture Trustee pursuant to the Indenture, will materially
conflict with or result in a material breach of, or constitute a material
default under, any of the provisions of any law, governmental rule, regulation,
judgment, decree or order binding on CITSF or CITCF-NY or their respective
properties or the certificate of incorporation or by-laws of CITSF or CITCF-NY,
or any of the provisions of any material indenture, mortgage, contract or other
instrument to which CITSF or CITCF-NY is a party or by which CITSF or CITCF-NY
is bound or result in the creation or imposition of any lien, charge or
encumbrance upon any of their respective property pursuant to the terms of any
such material indenture, mortgage, contract or other instrument.
(j) (i) This Agreement has been duly authorized, executed and delivered by
each of the Seller and CITSF, and it constitutes a legal, valid and binding
instrument enforceable against each of the Seller and CITSF in accordance with
its terms, subject (x) to applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws affecting creditors' rights generally, (y) as
to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law) and (z) as to
enforceability with respect to rights of indemnity thereunder, to limitations of
public policy under applicable securities laws and (ii) this Agreement has been
duly authorized, executed and delivered by CIT, and it constitutes a legal,
valid and binding instrument enforceable against CIT in accordance with its
terms, subject (x) to applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws affecting creditors' rights generally, (y) as
to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law) and (z) as to
enforceability with respect to rights of indemnity thereunder, to limitations of
public policy under applicable securities laws and.
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(k) The Sale and Servicing Agreement when executed and delivered on the
Closing Date will be duly authorized, executed and delivered by each of the
Seller, the Selling Trust and CITSF, and will constitute a legal, valid and
binding instrument enforceable against each of the Seller, the Selling Trust and
CITSF in accordance with its terms, subject (i) to applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting
creditors' rights generally and (ii) as to enforceability, to general principles
of equity (regardless of whether enforcement is sought in a proceeding in equity
or at law).
(l) The Trust Agreement when executed and delivered on the Closing Date
will be duly authorized, executed and delivered by each of the Seller and CIT
GP, and will constitute a legal, valid and binding instrument enforceable
against each of the Seller and CIT GP in accordance with its terms, subject (i)
to applicable bankruptcy, reorganization, insolvency, moratorium or other
similar laws affecting creditors' rights generally and (ii) as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
(m) The Loan Agreement when executed and delivered on the Closing Date
will be duly authorized, executed and delivered by the Lender, and will
constitute a legal, valid and binding instrument enforceable against the Lender
in accordance with its terms, subject (i) to applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting
creditors' rights generally and (ii) as to enforceability, to general principles
of equity (regardless of whether enforcement is sought in a proceeding in equity
or at law).
(n) The Certificates, when duly and validly executed by the Owner Trustee
or an agent thereof on behalf of the Trust, authenticated and delivered in
accordance with the Trust Agreement, and delivered to and paid for pursuant
hereto will be validly issued and outstanding and entitled to the benefits of
the Trust Agreement.
(o) The Notes, when duly and validly executed by the Owner Trustee or an
agent thereof on behalf of the Trust, authenticated and delivered in accordance
with the Indenture, and delivered and paid for pursuant hereto will be validly
issued and outstanding and entitled to the benefits of the Indenture.
(p) No filing or registration with, notice to or consent, approval,
authorization or order of any court or governmental authority or agency is
required for the consummation by any of the Seller, CITSF and CIT GP of the
transactions contemplated by any of the Basic Documents to which it is a party,
except such as may be required under the Act, the Rules and Regulations, or
state securities or Blue Sky laws or such other filings, registrations, notices,
consents, approvals, authorizations, orders or permits as have been obtained.
(q) The Seller, CITSF, CITCF-NY, the Selling Trust and CIT GP each possess
all material licenses, certificates, authorities or permits issued by the
appropriate state, federal or foreign regulatory agencies or bodies necessary to
conduct the businesses now operated by them and as described in the Prospectus,
other than such licenses, certificates, authorities or permits the failure of
which to possess would not have a material adverse effect on the interests of
the Certificateholders or the Noteholders under the Basic Documents, and none of
the Seller, CITSF, the Selling Trust, CITCF-NY nor CIT GP have received any
notice of proceedings relating to the
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revocation or modification of any such license, certificate, authority or permit
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would materially and adversely affect the conduct of the
business, operations, financial condition or income of any of the Seller, CITSF,
CITCF-NY, the Selling Trust or CIT GP or their ability to perform their
respective obligations under any of the Basic Documents to which it is a party.
(r) As of the Closing Date, the Contracts and related property will have
been duly and validly assigned to the Owner Trustee in accordance with the Basic
Documents; and when such assignment (in the case of Preferred Mortgages security
upon the filing of assignments with the United States Coast Guard) is effected,
a duly and validly perfected transfer of all such Contracts subject to no prior
lien, mortgage, security interest, pledge, charge or other encumbrance created
by the Seller, CITSF, CITCF-NY, the Selling Trust, CIT GP or any affiliate of
any of the parties will have occurred. As of the Closing Date, the Trust's grant
of a security interest in the Collateral to the Indenture Trustee pursuant to
the Indenture will vest in the Indenture Trustee, for the benefit of the
Noteholders, a first priority perfected security interest therein, subject to no
prior lien, mortgage, security interest, pledge, charge or other encumbrance
created by the Seller, CITSF, CITCF-NY, the Selling Trust, CIT GP or any
affiliate of any of the parties.
(s) As of the Closing Date, each of the Contracts will meet the
eligibility criteria described in the Prospectus.
(t) The financial statements of CIT included or incorporated in the
Registration Statement and Prospectus present fairly the financial position of
CIT and its consolidated subsidiaries as of the dates shown and their results of
operations and cash flows for the periods shown, and such financial statements
have been prepared in conformity with generally accepted accounting principles
in the United States applied on a consistent basis; and any schedules included
in the Registration Statement present fairly the information required to be
stated therein.
(u) The chief executive office of each of the Seller, CITSF, the Selling
Trust and CITCF-NY is listed opposite its name on Schedule II hereto, which
office is the place where it is "located" for the purposes of Section
9-103(3)(d) of the Uniform Commercial Code as in effect in the State of New
York, and the offices of each of the Seller, CITSF and CITCF-NY where it keeps
its respective records concerning the Contracts are also listed in said Schedule
opposite its name and there have been no other such locations during the four
months preceding the Closing Date.
(v) Except as disclosed or incorporated by reference in the Prospectus,
since the date of the latest audited financial statements of CIT included or
incorporated by reference in the Prospectus there has been no material adverse
change, nor any development or event which is reasonably likely to result in a
material adverse change, in the condition (financial or other), business,
properties or results of operations of CITSF and its subsidiaries taken as a
whole.
(w) Neither the Seller, CITSF, CIT GP nor the Trust Fund created by the
Sale and Servicing Agreement will be subject to registration as an "investment
company" under the Investment Company Act of 1940, as amended (the "Investment
Company Act").
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(x) In connection with the offering of the Securities in the State of
Florida, the Seller hereby certifies that they have complied with all provisions
of Section 5.17.075 of the Florida Securities and Investor Protection Act.
(y) As of the Closing Date, each of the respective representations and
warranties of the Seller, CITSF, CITCF-NY, CIT GP and CIT set forth in the Basic
Documents and the Indemnification Agreement will be true and correct, and the
Underwriters may rely on such representations and warranties as if they were set
forth herein in full.
(z) The Seller has filed the preliminary prospectus supplement relating to
the Securities pursuant to and in accordance with Rule 424(b).
(aa) The Insurance Agreement when executed and delivered on the Closing
Date will be duly authorized, executed and delivered by each of the Seller and
CITSF, and will constitute a legal, valid and binding instrument enforceable
against each of the Seller and CITSF in accordance with its terms, subject (i)
to applicable bankruptcy, reorganization, insolvency, moratorium or other
similar laws affecting creditors' rights generally and (ii) as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law) and (iii) as to
enforceability with respect to rights of indemnity thereunder, to limitations of
public policy under applicable securities laws.
(bb) The Indemnification Agreement when executed and delivered on the
Closing Date will be duly authorized, executed and delivered by CIT, and will
constitute a legal, valid and binding instrument enforceable against CIT in
accordance with its terms, subject (i) to applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting creditors' rights
generally, (ii) as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law) and (iii) as to enforceability with respect to rights of indemnity
thereunder, to limitations of public policy under applicable securities laws.
(cc) No Underwriter Derived Information or Computational Materials (as
defined in Section 7 below) contained in the Current Report (as defined in
Section 5(l) below) shall be used or has been provided and therefore is not
applicable.
3. Purchase, Sale and Delivery of Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Seller agrees to cause the Trust to
sell to the Underwriters, and the Underwriters agree, severally and not jointly,
to purchase from the Trust, the principal amount of the Class of Notes set forth
opposite the name of such Underwriter in Schedule I hereto at a purchase price
equal to the Total Price to Seller specified in Schedule III hereto plus accrued
interest, if any, at the applicable Interest Rate from February 23, 1999 to (but
excluding) the Closing Date, and the principal balance of the Certificates set
forth opposite the name of such Underwriter in Schedule I hereto at a purchase
price equal to the Total Price to Seller specified in Schedule IV hereto plus
accrued interest, if any, at the Pass-Through Rate from February 23, 1999 to
(but excluding) the Closing Date.
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The Seller will deliver the Securities (except for one Certificate in the
principal amount of $128,156) to the Representative, for the account of the
Underwriters, against payment of the purchase price by wire transfer of
immediately available funds to the Seller, or to such bank as may be designated
by the Seller, at the office of Schulte Roth & Zabel LLP 900 Third Avenue, New
York, New York 10022 on February 23, 1999, 10:00 a.m., New York City time, or at
such other time not later than seven full business days thereafter as the
Representative and the Seller determine, such time being herein referred to as
the "Closing Date." The Notes to be so delivered will be initially represented
by one or more Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class A-4
Notes registered in the name of Cede & Co., the nominee of The Depository Trust
Company ("DTC"). The interests of beneficial owners of the Notes will be
represented by book entries on the records of DTC and participating members
thereof. The Certificates to be so delivered will be represented by one or more
Certificates issued in fully registered certificated form, registered in the
name(s) requested by the Representative two (2) Business Days prior to the
Closing Date. One Certificate in definitive form in the principal amount of
$128,156 will be retained by the Seller and registered in the name of CIT GP
(the "GP Certificate"). Definitive Notes will be available only under the
limited circumstances set forth in the Indenture and Trust Agreement. The notes
and certificates evidencing the Notes and Certificates will be made available
for checking and packaging at the offices of Schulte Roth & Zabel LLP at least
24 hours prior to the Closing Date.
4. Offering by Underwriters. It is understood that, after the Registration
Statement becomes effective, the Underwriters propose to offer the Securities
for sale to the public (which may include selected dealers), on the terms set
forth in the Prospectus.
5. Covenants of the Seller and CITSF. Each of the Seller and CITSF,
jointly and severally, covenants and agrees with the several Underwriters that:
(a) The Seller will file the Prospectus, properly completed, with the
Commission pursuant to and in accordance with subparagraph (2) (or, if
applicable and if consented to by the Representative which consent shall not be
unreasonably withheld, subparagraph (5)) of Rule 424(b) no later than the second
business day following the earlier of the date of the determination of the
offering price or the date it is first used. The Seller will advise the
Representative promptly of any such filing pursuant to Rule 424(b).
(b) The Seller will advise the Representative promptly of any proposal to
amend or supplement the Registration Statement or the Prospectus, and will not
effect any such amendment or supplementation without the Representative's
consent which consent shall not be unreasonably withheld; and the Seller will
also advise the Representative promptly of any amendment or supplementation of
the Registration Statement or the Prospectus and of the institution by the
Commission of any stop order proceedings in respect of the Registration
Statement and will use its best efforts to prevent the issuance of any such stop
order and to obtain as soon as possible its lifting, if issued.
(c) The Seller will arrange for the qualification of the Securities for
offering and sale under the securities laws of such jurisdictions in the United
States as the Representative may
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reasonably designate and will continue such qualifications in effect so long as
necessary under such laws for the distribution of such Securities, provided that
in connection therewith the Seller shall not be required to qualify as a foreign
corporation to do business nor become subject to service of process generally,
but only to the extent required for such qualification, in any jurisdiction in
which it is not currently so qualified.
(d) If, at any time when a prospectus relating to the Securities is
required to be delivered by law in connection with sales by any Underwriter or
dealer, either (i) any event shall have occurred as a result of which the
Prospectus as then amended or supplemented would include any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, or (ii) for any other reason it shall be necessary to
amend or supplement the Prospectus to comply with the Act, the Seller will
promptly notify the Representative and will promptly prepare and file with the
Commission, at their own expense, an amendment or a supplement to the Prospectus
which will correct such statement or omission or effect such compliance. Neither
the consent of the Representative to, nor the Underwriters' delivery of, any
such amendment or supplement shall constitute a waiver of any of the conditions
set forth in Section 6 hereof.
(e) The Seller will timely prepare and file all periodic reports, on
behalf of the Trust, with the Commission referred to in no-action letters to the
Commission until no longer required to do so as permitted by Section 15(d) of
the 1934 Act.
(f) The Seller will furnish to each of the Underwriters copies of the
Registration Statement, each related preliminary prospectus, the Prospectus and
all amendments and supplements to such documents, in each case as soon as
available and in such quantities as the Representative may from time to time
reasonably request.
(g) So long as any of the Securities are outstanding, the Seller or CITSF,
as the case may be, will furnish to the Representative copies of all written
reports or other written communications (financial or otherwise) furnished or
made available to Noteholders and/or Certificateholders, and deliver to the
Representative during such same period, (i) as soon as they are available,
copies of any reports and financial statements filed by or on behalf of the
Trust by the Seller with the Commission pursuant to the 1934 Act, and (ii) such
additional information concerning the Seller or CITSF (relating to the
Contracts, the servicing thereof or the ability of CITSF to act as Servicer),
the Notes, the Certificates or the Trust as the Representative may reasonably
request from time to time.
(h) Whether or not the transactions contemplated by this Agreement are
consummated CITSF will pay or cause to be paid all costs and expenses incident
to the performance of CITSF's, the Seller's and CIT GP's respective obligations
hereunder, including (i) the preparation, issuance and delivery of the
Securities, (ii) any fees charged by Moody's Investors Service, Inc. ("Moody's")
and Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P" and,
together with Moody's, the "Rating Agencies"), for the rating of the Securities,
(iii) the expenses incurred in printing, reproducing and distributing the
registration statement as filed, the Registration Statement, preliminary
prospectuses and the Prospectus (including any amendments
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and supplements thereto required pursuant to Section 5(d) hereof), (iv) the fees
and disbursements of counsel to the Seller, CITSF, CIT and CIT GP and the
independent public accountants of the Seller, (v) the fees and disbursements of
the Indenture Trustee and its counsel, (vi) the fees and disbursement of the
Owner Trustee and its counsel, (vii) the fees of DTC in connection with the
book-entry registration of the Notes, (viii) the reasonable expenses of the
Representative including the reasonable fees and disbursements of its counsel,
in connection with the initial qualification of the Securities for sale in the
jurisdictions that the Representative may designate pursuant to Section 5(c)
hereof and in connection with the preparation of any blue sky survey and legal
investment survey, (ix) the printing and delivery to the Underwriters, in such
quantities as the Underwriters may reasonably request, of copies of the Basic
Documents and (x) the fees and expenses of the Insurer. Subject to Section 9
hereof, the Underwriters shall be responsible for their own costs and expenses,
including the fees and expenses of their counsel (other than the reasonable
expenses of the Representative including the reasonable fees and disbursements
of its counsel, in connection with the initial qualification of the Securities
for sale in the jurisdictions that the Representative may designate pursuant to
Section 5(c) hereof and in connection with the preparation of any blue sky
survey and legal investment survey).
(i) On or before the Closing Date, the Seller, CITSF and CITCF-NY shall
cause each of their respective books and records (including any computer
records) relating to the Contracts to be marked to show the absolute ownership
by the Owner Trustee in accordance with Section 3.01B(d) of the Sale and
Servicing Agreement, on behalf of the Trust, of the Contracts, and from and
after the Closing Date neither the Seller, CITSF, as Servicer, nor CITCF-NY
shall take any action inconsistent with the ownership by the Owner Trustee on
behalf of the Trust of the Contracts, other than as permitted by the Basic
Documents.
(j) Until the retirement of the Securities, the Seller or CITSF will
deliver to the Representative the certified public accountants' annual
statements of compliance furnished to the Indenture Trustee or the Owner Trustee
pursuant to Section 4.11 of the Sale and Servicing Agreement, as soon as such
statements are furnished to the Indenture Trustee or the Owner Trustee.
(k) To the extent, if any, that either of the ratings provided with
respect to the Securities by either Rating Agency is conditional upon the
furnishing of documents or the taking of any other actions by the Seller, CITSF,
CITCF-NY or CIT GP, the Seller, CITSF, CITCF-NY or CIT GP, as the case may be,
shall furnish such documents and take any such other actions as may be required
to satisfy such conditions. A copy of any such document shall be provided to the
Representative at the time it is delivered to the Rating Agencies.
(l) Provided that the Seller has received the letter from KPMG Peat
Marwick LLP, described in Section 7(a) relating to the Computational Materials,
the Seller will cause such Computational Materials (as defined in Section 7
below) with respect to the Securities which are delivered to the Seller as
provided in Section 7 below to be filed with the Commission on a Current Report
on Form 8-K (the "Current Report") not later than the date on which a final
prospectus supplement relating to the Securities is available for distribution
to investors.
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<PAGE>
6. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Securities will be subject
to the accuracy of the representations and warranties on the part of the Seller,
CIT and CITSF, and contained or incorporated herein, to the accuracy of the
statements of officers of the Seller, CIT and CITSF made pursuant to the
provisions hereof, to the performance by the Seller, CIT and CITSF of its
obligations hereunder and to the following additional conditions precedent:
(a) (i) On the date of this Agreement, the Representative and the Seller
shall have received a letter, dated the date of delivery thereof, of KPMG Peat
Marwick LLP confirming that they are independent public accountants with respect
to the Seller and CITSF within the meaning of the Act and the Rules and
Regulations, substantially in the form of the draft to which the Representative
has previously agreed and otherwise in form and substance satisfactory to the
Representative and counsel for the Underwriters and (ii) on the Closing Date, a
letter, dated the date of delivery thereof, of KPMG Peat Marwick LLP confirming
that they are independent public accountants with respect to the Seller and
CITSF within the meaning of the Act and the Rules and Regulations, consistent
with the letter delivered pursuant to clause (i) above and otherwise in form and
substance satisfactory to the Representative and counsel for the Underwriters.
(b) The Prospectus shall have been filed with the Commission in accordance
with the Rules and Regulations and Section 5(a) hereof. On or prior to the
Closing Date, no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been instituted or, to the knowledge of the Registrants, shall be contemplated
by the Commission.
(c) The Representative shall have received a certificate, dated the
Closing Date, executed by any two of the President, any Vice President, the
principal financial officer or the principal accounting officer of (i) the
Seller representing and warranting that, as of the Closing Date, to the best of
each such officer's knowledge after reasonable investigation, the
representations and warranties of the Seller in this Agreement and the other
Basic Documents to which it is a party are true and correct, that the Seller has
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied hereunder or thereunder at or prior to the Closing Date,
that no stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been instituted or, to
the best of their knowledge, are contemplated by the Commission, (ii) CITSF in
which such officers shall state that, to the best of each such officer's
knowledge after reasonable investigation, the representations and warranties of
CITSF in this Agreement and the other Basic Documents to which it is a party are
true and correct and that CITSF has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied hereunder or thereunder
at or prior to the Closing Date, and (iii) CIT representing and warranting that,
as of the Closing Date, to the best of each such officer's knowledge after
reasonable investigation, the representations and warranties of CIT in this
Agreement and the other Basic Documents are true and correct.
(d) The Representative shall have received a certificate, dated the
Closing Date, executed by any two of the President, any Vice President, the
principal financial officer or the principal accounting officer of CIT GP in
which such officers shall state that, to the best of each
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<PAGE>
such officer's knowledge after reasonable investigation, (i) the representations
and warranties of CIT GP in the Trust Agreement are true and correct and (ii)
that CIT GP has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied under the Trust Agreement at or prior to the
Closing Date. Such certificate shall have attached thereto a true and correct
photocopy of the demand note furnished to CIT GP by CIT.
(e) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting particularly the business or properties of
the (x) Trust, the Seller, CITSF, CITCF-NY, the Selling Trust, CIT GP or CIT or
(y) the Insurer which, in the judgment of a majority in interest of the
Underwriters (including the Representative), materially impairs the investment
quality of the Securities or makes it impractical or inadvisable to proceed with
completion of the sale of and payment for the Securities; (ii) any downgrading
in the rating of (x) any debt securities of CIT or CITSF or any of their direct
or indirect subsidiaries by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act), or any
public announcement that any such organization has under surveillance or review
its rating of any such debt securities (other than an announcement with positive
implications of a possible upgrading, and no implication of a possible
downgrading, of such rating); or (y) the claims-paying ability of the Insurer by
any "nationally recognized statistical rating organization" or if the
claims-paying ability of the Insurer has been put on the "watch list" of any
such rating organization with negative implications; (iii) any suspension or
limitation of trading in securities generally on the New York Stock Exchange or
any setting of minimum prices for trading on such exchange; (iv) any banking
moratorium declared by Federal, New Jersey or New York authorities; or (v) any
outbreak or escalation of major hostilities in which the United States is
involved, any declaration of war by Congress or any other substantial national
or international calamity or emergency if, in the judgment of a majority in
interest of the Underwriters (including the Representative), the effect of any
such outbreak, escalation, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the sale of and payment
for the Securities.
(f) The Representative shall have received a written opinion of in-house
General Counsel of the Seller, CITSF and CITCF-NY, or other counsel satisfactory
to the Representative in its reasonable judgment, dated the Closing Date, in
substantially the form set forth below, with such changes therein as the
Representative and counsel for the Underwriters shall reasonably agree:
(i) The Seller and CITSF have each been duly organized and are
validly existing as corporations in good standing under the laws of the
State of Delaware. CITCF-NY has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
New York.
(ii) The Seller, CITSF and CITCF-NY each have the corporate power
and corporate authority to carry on their respective businesses as
described in the Prospectus and to own and operate their respective
properties in connection therewith.
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<PAGE>
(iii) Each of the Seller, CITSF and CITCF-NY has the corporate power
to own its assets and to transact the business in which it is currently
engaged and to perform their respective obligations under each of the
Basic Documents to which it is a party. The Seller, CITSF and CITCF-NY are
each qualified to do business as a foreign corporation and each is in good
standing in each jurisdiction in which the character of the business
transacted by it or properties owned or leased by it requires such
qualification and in which the failure so to qualify would have a material
adverse effect on the business, properties, assets, or condition
(financial or other) of the Seller, CITSF or CITCF-NY, respectively or on
their ability to perform their respective obligations under the Basic
Documents.
(iv) This Agreement has been duly authorized, executed and delivered
by each of the Seller and CITSF, and is a valid and binding obligation of
each of the Seller and CITSF enforceable against each of the Seller and
CITSF in accordance with its terms, except that (A) such enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally, (B) such enforcement may be limited by general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law), and (C) the enforceability as to rights to indemnity
thereunder may be limited under applicable law.
(v) Each of the Basic Documents to which the Seller, CITSF or
CITCF-NY is a party have been duly authorized, executed and delivered by
each of the Seller, CITSF and CITCF-NY, and each constitutes a valid and
binding obligation of, each of the Seller, CITSF and CITCF-NY, enforceable
against each of the Seller, CITSF and CITCF-NY in accordance with its
terms, except that (A) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (B) such
enforcement may be limited by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law) and (C)
the enforceability as to rights to indemnity thereunder may be limited
under applicable law.
(vi) The execution and delivery by each of the Seller, CITSF and
CITCF-NY of each of the Basic Documents to which it is a party, the
performance of their respective obligations thereunder and the signing of
the Registration Statement by the Seller are within the corporate power of
the Seller, CITSF and CITCF-NY, as applicable, and have been duly
authorized by all necessary corporate action on the part of the Seller,
CITSF and CITCF-NY, as applicable; and neither the issue and sale of the
Securities, nor the consummation of the transactions contemplated by the
Basic Documents nor the fulfillment of the terms thereof, nor the grant of
the security interest in the Collateral to the Indenture Trustee pursuant
to the Indenture will, to the best of such counsel's knowledge, conflict
with or constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or asset of the Seller, CITSF or CITCF-NY pursuant to, any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument, if any, to which the Seller, CITSF or CITCF-NY is a party or
by which either may be bound or to which the property or assets of the
Seller, CITSF or CITCF-NY are subject (which contracts, indentures,
mortgages, loan agreements, notes, leases and other
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such instruments, if any, have been identified by the Seller, CITSF or
CITCF-NY to such counsel), nor will such action result in any violation of
the provisions of the certificate of incorporation or by-laws of the
Seller, CITSF or CITCF-NY or, to the best of such counsel's knowledge, any
law, administrative regulation or administrative or court decree of any
state or federal courts, regulatory bodies, other body, governmental
entity or arbitrator having jurisdiction over the Seller, CITSF or
CITCF-NY.
(vii) The Seller has duly authorized and executed the written order
to the Owner Trustee to execute and deliver the Issuer Order to the
Indenture Trustee to authenticate the Notes.
(viii) The Seller has duly authorized and executed the written order
to the Owner Trustee to authenticate the Certificates.
(ix) To the best of such counsel's knowledge, no filing or
registration with or notice to or consent, approval, authorization or
order of any New Jersey, New York or federal court or governmental
authority or agency is required for the consummation by the Seller, CITSF
or CITCF-NY of the transactions contemplated by this Agreement, except
such as may be required under the Act or the Rules and Regulations, or
state securities or Blue Sky laws or such other filings, registrations,
notices, consents, approvals, authorizations, orders or permits as have
been obtained.
(x) There are no legal or governmental proceedings pending to which
the Seller, CITSF or CITCF-NY is a party or of which any property of the
Seller, CITSF or CITCF-NY is the subject, and no such proceedings are
known by such counsel to be threatened or contemplated by governmental
authorities or threatened by others, (A) that are required to be disclosed
in the Registration Statement and are not disclosed therein or (B)(1)
asserting the invalidity of all or part of any of the Basic Documents, (2)
seeking to prevent the issuance of the Notes or the Certificates, (3) that
could materially and adversely affect the Seller's, CITSF's or CITCF-NY's
obligations under any of the Basic Documents or (4) seeking to affect
adversely the federal or state income tax attributes of the Securities.
(xi) Such counsel is familiar with CITSF's and CITCF-NY's standard
operating procedures relating to CITSF's and CITCF-NY's acquisition of a
perfected first priority security interest in the boats financed by CITSF
and CITCF-NY's pursuant to marine installment sale contracts and direct
loans in the ordinary course of CITSF's and CITCF-NY's business. Other
than with respect to maritime liens and liens that are perfected under the
U.S. Marine Act/Ship Mortgage Act as to which I express no opinion,
assuming that CITSF's standard procedures are followed with respect to the
perfection of security interests in the Financed Boats (and such counsel
has no reason to believe that either CITSF or CITCF-NY has not or will not
continue to follow its standard procedures in connection with the
perfection of security interests in the Financed Boats), CITSF and
CITCF-NY have acquired or will acquire a perfected first priority security
interest in the Financed Boats.
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(xii) The Contracts are chattel paper, as defined in the UCC in the
State of New Jersey.
(xiii) When the CITCF-NY Sale Agreement has been duly executed and
delivered by all parties thereto and the purchase price has been paid to
CITCF-NY by CITSF in the manner specified in the CITCF-NY Sale Agreement,
all of CITCF-NY's right, title and interest in and to the Contracts and
any security interests securing the Contracts will have been conveyed to
CITSF and CITSF will be the holder of a valid, binding and enforceable
security interest in the Contracts against CITCF-NY.
(xiv) When the Purchase Agreement has been duly executed and
delivered by all parties thereto and the purchase price has been paid to
CITSF by the Seller in the manner specified in the Purchase Agreement, all
of CITSF's right, title and interest in and to the Contracts and any
security interests securing the Contracts will have been conveyed to the
Seller and the Seller will be the holder of a valid, binding and
enforceable security interest in the Contracts against CITSF.
(xv) When the Basic Documents have each been duly executed and
delivered by all parties thereto and the purchase price therefor has been
paid to the Seller by the Trust in the manner specified in the Sale and
Servicing Agreement, and the Notes and the Certificates have been duly
executed and duly authenticated and delivered by the Owner Trustee or the
Indenture Trustee, as applicable, to or upon the order of the Seller in
accordance with the Sale and Servicing Agreement, the Indenture and the
Trust Agreement, all of the Seller's right, title and interest in and to
the Contracts and any security interests securing the Contracts will have
been conveyed to the Trust and the Trust will be the holder of a valid and
binding security interest in the Contracts against the Seller.
(xvi) The documents incorporated by reference in the Registration
Statement and Prospectus, at the time they were or hereafter are filed
with the Commission, complied and will comply in all material respects
with the requirements of the 1934 Act and the Rules and Regulations,
except as to the financial statements and other financial and statistical
data included therein, to which such counsel need not express any opinion.
Said counsel may state that they are admitted to practice only in the
States of New York and New Jersey, as applicable, that they are not admitted to
the Bar in any other State, that they do not express an opinion as to the laws
of any jurisdiction other than the laws of the States of New York and New
Jersey, as applicable, the General Corporate Law of the State of Delaware and
the laws of the United States of America.
(g) The Representative shall have received a written opinion of in-house
General Counsel to CIT GP, dated the Closing Date, in substantially the form set
forth below, with such changes therein as counsel for the Underwriters shall
reasonably agree:
(i) CIT GP is duly qualified and licensed and in good standing in
each jurisdiction where its business requires such qualification or
licensing.
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<PAGE>
(ii) The performance by CIT GP of its obligations under the Trust
Agreement will not, to the best of such counsel's knowledge, conflict with
or constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or asset
of CIT GP pursuant to, any material contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which CIT GP is a party or
by which it may be bound or to which the property or assets of CIT GP are
subject (which material contracts, indentures, mortgages, loan agreements,
notes, leases and other such instruments have been identified by CIT GP to
such counsel), nor will such action result in any violation of the
provisions of the certificate of incorporation or by-laws of CIT GP or, to
the best of such counsel's knowledge, any law, administrative regulation
or administrative or court decree of any state or federal courts,
regulatory bodies, other body, governmental entity or arbitrator having
jurisdiction over CIT GP.
(iii) To the best of such counsel's knowledge, no filing or
registration with or notice to or consent, approval, authorization or
order of any Delaware or federal court or governmental authority or agency
is required for the consummation by CIT GP of the transactions
contemplated by the Trust Agreement, except such as may be required under
the Act or the Rules and Regulations, or state securities or Blue Sky laws
or such other filings, registrations, notices, consents, approvals,
authorizations, orders or permits as have been obtained.
(iv) There are no legal or governmental proceedings pending to which
CIT GP is a party or of which any property of CIT GP is the subject, and
no such proceedings are known by such counsel to be threatened or
contemplated by governmental authorities or threatened by others, (A) that
are required to be disclosed in the Registration Statement and are not
disclosed therein or (B)(1) asserting the invalidity of all or part of the
Trust Agreement, (2) that could materially and adversely affect CIT GP's
obligations under the Trust Agreement or (3) seeking to affect adversely
the federal or state income tax attributes of the Securities.
(v) CIT GP has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
the corporate power and corporate authority to perform its obligations
under the Trust Agreement.
(vi) The Trust Agreement has been duly authorized, executed and
delivered by CIT GP.
Said counsel may state that they are admitted to practice only in the
States of New York and New Jersey, as applicable, that they are not admitted to
the Bar in any other State, that they do not express an opinion as to the laws
of any jurisdiction other than the laws of the States of New York and New
Jersey, as applicable, the General Corporate Law of the State of Delaware and
the laws of the United States of America.
(h) The Representative shall have received an opinion of in-house General
Counsel of CIT or other counsel satisfactory to the Representative in its
reasonable judgment, dated
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the Closing Date, in substantially the form set forth below, with such changes
therein as the Representative and counsel for the Underwriters shall reasonably
agree:
(i) CIT has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
(ii) This Agreement has been duly authorized, executed and delivered
by CIT and is a valid and binding obligation of CIT enforceable against
CIT in accordance with its terms, except that (A) such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (B) such enforcement may be limited by general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law) and (C) the enforceability as to rights to indemnity
thereunder may be limited under applicable law.
(iii) The signing of the Registration Statement by CIT is within the
corporate power of CIT and has been duly authorized by all necessary
corporate action on the part of CIT; the consummation of the transactions
contemplated herein and the fulfillment of the terms hereof will not, to
the best of such counsel's knowledge, conflict with or constitute a breach
of, or default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or asset of CIT pursuant to, any
material contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which CIT is a party or by which it may be bound or to
which the property or assets of CIT are subject (which material contracts,
indentures, mortgages, loan agreements, notes, leases and other such
instruments have been identified by CIT to such counsel), nor will such
action result in any violation of the provisions of the certificate of
incorporation or by-laws of CIT or, to the best of such counsel's
knowledge, any law, administrative regulation or administrative or court
decree of any state or federal courts, regulatory bodies, other body,
governmental entity or arbitrator having jurisdiction over CIT.
(iv) The documents with respect to CIT incorporated by reference in
the Registration Statement and Prospectus, at the time they were or
hereafter are filed with the Commission, complied and will comply in all
material respects with the requirements of the 1934 Act and the Rules and
Regulations, except as to the financial statements and other financial and
statistical data included therein, to which such counsel need not express
any opinion.
(v) To the best of such counsel's knowledge, there are no contracts
or documents of CIT which are required to be filed as exhibits to the
Registration Statement pursuant to the Act or the Rules and Regulations
including any documents incorporated by reference pursuant to Item 12 of
Form S-3 which were filed under the 1934 Act which have not been so filed.
Said counsel may state that they are admitted to practice only in the
States of New York and New Jersey, as applicable, that they are not admitted to
the Bar in any other State, that they do not express an opinion as to the laws
of any jurisdiction other than the laws of the States of
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New York and New Jersey, as applicable, the General Corporate Law of the State
of Delaware and the laws of the United States of America.
(i) The Representative shall have received a written opinion of
Lowenstein, Sandler, Kohl, Fisher and Boylan, special local New Jersey counsel
for the Seller and CITSF, dated the Closing Date, in form and substance
satisfactory to the Representative and counsel for the Underwriters, to the
effect that:
(i) (A) If the transfer of the Contracts is deemed to be the grant
of a security interest, and not a true sale, (1) to the extent that the
Uniform Commercial Code as in effect in the State of New Jersey (the "New
Jersey UCC") applies to the perfection of the Seller's security interests
in the Contracts and the proceeds thereof under Section 9-103 of the New
Jersey UCC, when the financing statements executed by CITSF as debtor (the
"First Step Financing Statements") have been duly executed and delivered
and filed or recorded, as appropriate, in the office of the Secretary of
State of New Jersey, such security interests will be perfected and (2) to
the extent that the New Jersey UCC applies to the perfection of the
Trust's security interests in the Contracts and the proceeds thereof under
Section 9-103 of the New Jersey UCC, when the First Step Financing
Statements and the financing statements executed by the Seller as "debtor"
("Second Step Financing Statements") have been duly executed and delivered
and filed or recorded, as appropriate, in the office of the Secretary of
State of New Jersey, such security interests will be perfected and (B)
based solely on such counsel's review of those Financing Statements,
officer certificates and specified New Jersey UCC search reports, the
security interests of the Trust in the Contracts are subject to no equal
or prior security interest under the New Jersey UCC; provided, however
that (1) for purposes of its opinions in this paragraph, such counsel may
assume that: (a) the Seller is the holder of a valid, binding and
enforceable security interest in the Contracts and the Trust is the holder
of a valid, binding and enforceable security interest in the Contracts;
(b) the Contracts constitute "chattel paper," as such term is defined in
Section 9-105 of the New Jersey UCC; (c) the New Jersey UCC governs the
perfection of the security interest in the Contracts, the priority of
those security interests and the classification of the Contracts; (d) the
chief executive office of each of the Company and the Seller is, and
during the past four months has been, in the State of New Jersey; (e)
neither CITSF, the Seller nor the Trust has assigned, nor will assign, any
Contract to a buyer who takes possession of it in the ordinary course of
its business and who acts without knowledge that such Contract is subject
to a security interest; (f) the Contracts exist and each of CITSF and the
Seller, respectively, has rights in the Contracts; (g) (i) no lien
creditor has executed on or attached to the Contracts prior to the
perfection of the security interests of the Seller or the Trust in the
Contracts and the proceeds thereof; and (ii) the Contracts are not subject
to the rights of the holder of a perfected "purchase money security
interest" (as such term is defined in Section 9-107 of the New Jersey
UCC); (h) no Contract, or the proceeds thereof, constitutes proceeds of
any property subject to the security interest of a third party; (i) none
of the proceeds of the Contracts which constitute "securities" under
Article 8 of the New Jersey UCC are transferred to a bona fide purchaser
(other than the Indenture Trustee) under Section 8-302 of the New Jersey
UCC; (j) the Seller, the Indenture Trustee and the Owner Trustee have and
will maintain a list describing the Contracts for inspection during normal
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business hours by interested parties; (k) the underlying facts in the
officer certificates to be received by such counsel are correct; (l) all
financing statements or other notice of liens, other than the financing
statements, in which CITSF, the Seller or the Trust is named as debtor
were properly filed and indexed, that the New Jersey UCC search reports
have revealed all recorded liens against CITSF and the Seller and that no
filings or notices covering CITSF or the Seller were made between the
dates last searched and reported on in the New Jersey UCC search reports
and the time of such financing statements, and (m) from and after the date
hereof CITSF, acting in a capacity as servicer and custodian for the
Trustee, will have taken, and will maintain, exclusive possession of the
Contracts; and (2) such counsel need express no opinion: (a) regarding
perfection as to any government or governmental agency (including without
limitation the United States of America or any State thereof or any agency
or department of the United States of America or any State thereof) of any
security interest in any Contracts with respect to which such government
or agency is obligated; (b) on the perfection of any security interests in
the collateral described in the Contracts; (c) as to the priority of any
perfected security interests under the New Jersey UCC of any liens, claims
or other interests that do not require filing or similar action to attach
or that arise by operation of law against any claim or lien in favor of
the United States or any State or any agency or instrumentality of the
United States or any State (including, without limitation, liens arising
under the federal tax laws or the Employment Retirement Income Security
Act of 1974, as amended) or against the rights of a "lien creditor" (as
defined in the New Jersey UCC); and (d) as to the effect of the laws of
any other state that may govern the perfection or priority of the security
interest in the Contracts by possession or other than by filing a
financing statement under the UCC; (3) such opinions may be subject to the
effect of (i) the limitations on the existence and perfection of security
interests in proceeds resulting from the operation of Section 9-306 of the
New Jersey UCC; (ii) the limitations with respect to documents and
instruments imposed by Section 9-309 of the New Jersey UCC; (iii) bankers'
liens, rights of set-off and other rights of persons in possession of
money, instruments and proceeds constituting certificated or
uncertificated securities; (iv) the priority of any security interests
perfected by possession; (v) the priority of security interests which may
be perfected by any means other than by filing a financing statement under
the New Jersey UCC and (and such counsel may note that CITSF, the Seller
and the Trust have respectively represented that no such security
interests exist) and (vi) Section 552 of the Bankruptcy Code with respect
to any Contracts acquired by the Seller or the Trust subsequent to the
commencement of a case by or against CITSF, the Seller or the Trust under
the Bankruptcy Code; and (4) such counsel's opinion may be further subject
to the effect of general principles of equity, regardless of whether such
principles are considered in a proceeding in equity or at law, as the same
may be applied in a proceeding seeking to enforce any obligation.
(ii) Solely insofar as the present laws of the State of New Jersey
and the Federal law of the United States of America are concerned, in a
properly presented and decided case, a court would conclude that the
transfer of the Contracts and the proceeds thereof by CITCF-NY to CITSF
constitute true sales of such Contracts and, assuming a court reached that
conclusion, in such a case a court would conclude that the Contracts and
the proceeds would not be considered property of the estate of CITCF-NY
pursuant to
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Section 541 of the Bankruptcy Code, and the Contracts and the proceeds
thereof would not be subject to the automatic stay pursuant to Section 362
of the Bankruptcy Code; provided, however, such counsel need express no
opinion (A) with respect to how long the Seller could be denied possession
of the Contracts before the issues discussed in this paragraph are finally
decided on appeal or other review and (B) with respect to the availability
of a preliminary injunction or temporary restraining order pursuant to the
broad equitable powers granted to a bankruptcy court.
(iii) Solely insofar as the present laws of the State of New Jersey
and the Federal law of the United States of America are concerned, in a
properly presented and decided case, a court would conclude that the
transfer of the Contracts and the proceeds thereof by CITSF to the Seller
constitute true sales of such Contracts and, assuming a court reached that
conclusion, in such a case a court would conclude that the Contracts and
the proceeds would not be considered property of the estate of CITSF
pursuant to Section 541 of the Bankruptcy Code, and the Contracts and the
proceeds thereof would not be subject to the automatic stay pursuant to
Section 362 of the Bankruptcy Code; provided, however, such counsel need
express no opinion (A) with respect to how long the Seller could be denied
possession of the Contracts before the issues discussed in this paragraph
are finally decided on appeal or other review and (B) with respect to the
availability of a preliminary injunction or temporary restraining order
pursuant to the broad equitable powers granted to a bankruptcy court.
(iv) Solely insofar as the present laws of the State of New Jersey
and the Federal law of the United States of America are concerned, in a
properly presented and decided case, a court would conclude that the
transfer of the Contracts and the proceeds thereof by the Seller to the
Trust constitute true sales of such Contracts and, assuming a court
reached that conclusion, in such a case a court would conclude that the
Contracts and the proceeds would not be considered property of the estate
of the Seller pursuant to Section 541 of the Bankruptcy Code, and the
Contracts and the proceeds thereof would not be subject to the automatic
stay pursuant to Section 362 of the Bankruptcy Code; provided, however,
such counsel need express no opinion (A) with respect to how long the
Trust could be denied possession of the Contracts before the issues
discussed in this paragraph are finally decided on appeal or other review
and (B) with respect to the availability of a preliminary injunction or
temporary restraining order pursuant to the broad equitable powers granted
to a bankruptcy court.
Such opinion may contain such assumptions, qualifications and limitations
as are customary in opinions of this type and are reasonably acceptable to
counsel to the Underwriters. In rendering such opinion, such counsel may state
that they express no opinion as to the laws of any jurisdiction other than the
Federal law of the United States of America and the laws of the State of New
Jersey.
(j) The Representative shall have received a written opinion of Schulte
Roth & Zabel LLP, special counsel to the Seller, CITSF and CITCF-NY, dated the
Closing Date, in
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substantially the form set forth below, with such changes therein as the
Representative and counsel for the Underwriters shall reasonably agree:
(i) When the Notes have been duly executed, delivered and
authenticated in accordance with the Indenture and delivered and paid for
pursuant to this Agreement, the Notes will be validly issued, outstanding
and entitled to the benefits of the Indenture, except that (A) enforcement
may be subject to bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors'
rights generally and (B) enforcement may be limited by general principles
of equity (regardless of whether enforcement is sought in a proceeding in
equity or at law).
(ii) The Registration Statement became effective under the Act as of
November 4, 1998 and, to the best of such counsel's knowledge, no stop
order suspending the effectiveness of the Registration Statement or any
part thereof or any amendment thereto has been issued under the Act and no
proceeding for that purpose has been instituted or threatened by the
Commission.
(iii) The form of the Indenture has been qualified under the Trust
Indenture Act.
(iv) Neither the Trust Agreement nor the Sale and Servicing
Agreement need to be qualified under the Trust Indenture Act. The Trust is
not, and will not as a result of the offer and sale of the Securities as
contemplated in the Prospectus and in this Agreement become, required to
register as an "investment company" under the Investment Company Act.
(v) The statements in the prospectus supplement relating to the
Securities dated the date hereof, under the caption "The Notes," "The
Certificates" and "The Purchase Agreements and The Trust Documents"
insofar as such statements purport to summarize certain terms of the
Notes, the Certificates and the Basic Documents, present a fair summary of
the terms of such documents.
(vi) To the best of such counsel's knowledge, there are no contracts
or documents of the Seller which are required to be filed as exhibits to
the Registration Statement pursuant to the Act or the Rules or Regulations
which have not been so filed.
(vii) The statements in the Prospectus under the headings "Certain
Federal Income Tax Consequences" and "ERISA Considerations," to the extent
that they constitute matters of law or legal conclusions with respect
thereto are correct in all material respects.
(viii) The registration statement on Form S-3 No. 333-43323 relating
to the Securities as of its effective date, the Registration Statement and
the Prospectus as of the date of this Agreement, and any amendment or
supplement thereto, as of its date, complied as to form in all material
respects with the requirements of the Act and the applicable Rules and
Regulations. Such counsel need express no opinion with respect to the
financial
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statements, the exhibits, annexes and other financial, statistical,
numerical or portfolio data, economic conditions or financial condition of
the portfolio information included in or incorporated by reference into
the registration statement on Form S-3 No. 333-43323 relating to the
Securities, the Registration Statement, the Prospectus or any amendment or
supplement thereto.
(ix) Assuming that each of the Basic Documents to which the Selling
Trust is a party have been duly authorized, executed and delivered by the
Selling Trust, each of the Basic Documents constitutes a valid and binding
obligation of, the Selling Trust, enforceable against the Selling Trust in
accordance with its terms, except that (A) such enforcement may be subject
to bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally
and (B) such enforcement may be limited by general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or
at law).
Such counsel shall state that it has participated in conferences with
officers and representatives of CIT, the Seller, CITSF, Counsel to CITSF and
officers and representatives of the Underwriters, at which conferences certain
of the contents of the Registration Statement and the Prospectus were discussed
and, although such counsel is not passing upon and does not assume any
responsibility whatsoever for, the factual accuracy, completeness or fairness of
the statements contained in the registration statement on Form S-3 No. 333-43323
relating to the Securities, the Registration Statement or Prospectus (except as
stated in Sections 6(j)(v) and 6(j)(vii) above) and has made no independent
check or verification thereof for the purpose of rendering this opinion, on the
basis of the foregoing (relying as to materiality to a large extent upon the
certificates of officers and other representatives of the Seller, CITSF and CIT
GP), no facts have come to their attention that leads such counsel to believe
that the registration statement on Form S-3 No. 333-43323 relating to the
Securities, as of its effective date, the Registration Statement, as of the date
of this Agreement, or any amendment thereto, as of its date when it became
effective, contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus on its date contained
or on the Closing Date contains, any untrue statement of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that such
counsel need express no view with respect to the financial statements, tables,
schedules, exhibits, annexes and other financial, statistical, numerical or
portfolio data, or information on economic conditions or financial condition of
the portfolio included in or incorporated by reference into, the Registration
Statement or Prospectus.
Said counsel may state that they are admitted to practice only in the
State of New York, that they are not admitted to the Bar in any other State and
are not experts in the law of any other State and to the extent that the
foregoing opinions concern the laws of any other State such counsel may rely
upon the opinion of counsel satisfactory to the Underwriters and admitted to
practice in such jurisdiction. Any opinions relied upon by such counsel as
aforesaid shall be addressed to the Underwriters and shall be delivered together
with the opinion of such counsel, which shall state that such counsel believes
that their reliance thereon is justified.
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(k) The Representative shall have received, in form and substance
satisfactory to the Representative and counsel for the Underwriters an opinion
of Schulte Roth & Zabel LLP, special counsel to the Trust, dated the Closing
Date, regarding the creation of a security interest in the Collateral in favor
of the Indenture Trustee on behalf of the Noteholders to the extent that a
security interest in such Collateral can be created under Article 9 of the UCC
as currently in effect in the State of New York. Such opinion may contain such
assumptions, qualifications and limitations as are customary in opinions of this
type and as are reasonably acceptable to counsel to the Underwriters. In
rendering such opinion, such counsel may state that they express no opinion as
to the laws of any jurisdiction other than the Federal law of the United States
of America and the laws of the State of New York.
(l) The Representative shall have received an opinion of Stroock & Stroock
& Lavan LLP, counsel for the Underwriters, dated the Closing Date, with respect
to the validity of the Securities and such other related matters as the
Representative shall require and the Seller shall have furnished or caused to be
furnished to such counsel such documents as they may reasonably request for the
purpose of enabling them to pass upon such matters.
(m) The Representative shall have received opinions of Seward & Kissel and
in-house General Counsel to the Indenture Trustee, dated the Closing Date, in
form and substance satisfactory to the Representative and counsel for the
Underwriters, to the effect that:
(i) The Indenture constitutes a legal, valid and binding agreement
of the Indenture Trustee, enforceable against the Indenture Trustee in
accordance with its terms, except as enforceability thereof may be limited
by bankruptcy, insolvency, liquidation, reorganization, moratorium or
other similar laws affecting the enforcement of rights of creditors
against the Indenture Trustee generally, as such laws would apply in the
event of bankruptcy, insolvency, liquidation, receivership, or
reorganization or any moratorium or similar occurrence affecting the
Indenture Trustee, and the application of general principles of equity
(regardless of whether such enforceability is considered in a proceeding
in equity or law).
(ii) The Notes have been duly authenticated and delivered by the
Indenture Trustee in accordance with the terms of the Indenture.
(iii) The Indenture Trustee is a banking corporation validly
existing under the laws of the state of Illinois and has full power and
authority to enter into, and to take all action required of it, under the
Indenture.
(iv) The Indenture has been duly authorized, executed and delivered
by the Indenture Trustee.
(n) The Representative shall have received an opinion of in-house General
Counsel to the Owner Trustee, dated the Closing Date, in form and substance
satisfactory to the Representative and counsel for the Underwriters, to the
effect that:
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(i) The Owner Trustee is duly incorporated and validly existing as a
national banking association under the laws of the United States of
America and has the power and authority to execute and deliver the Trust
Agreement.
(ii) The execution and delivery of the Trust Agreement by the Owner
Trustee and the performance by the Owner Trustee of its obligations under
the Trust Agreement have been duly authorized by all necessary action of
the Owner Trustee and the Trust Agreement has been duly executed and
delivered by the Owner Trustee.
(iii) The Trust Agreement constitutes valid and binding obligations
of the Owner Trustee enforceable against the Owner Trustee in accordance
with its terms, except as the enforceability thereof may be (a) limited by
bankruptcy, insolvency, reorganization, moratorium, liquidation or other
similar laws affecting the rights of creditors generally, and (b) subject
to general principals of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
(iv) The execution and delivery by the Owner Trustee of the Trust
Agreement and the transactions contemplated thereby do not require any
consent, approval or authorization of, or any registration or filing with,
any applicable governmental authority of the State of Delaware which has
not been obtained or done.
(v) Neither the consummation by the Owner Trustee of the
transactions contemplated in the Trust Agreement, nor the fulfillment of
the terms thereof by the Owner Trustee will conflict with, result in a
breach or violation of, or constitute a default under the charter or the
other organizational documents of the Owner Trustee.
(vi) The Trust has duly executed the Trust Agreement, the Indenture,
the Sale and Servicing Agreement, the Notes and the Certificates.
(vii) The Notes have been executed, authorized and delivered by the
Owner Trustee upon the order of the Seller in accordance with the Trust
Agreement and the Indenture.
(viii) The execution and delivery by the Owner Trustee of the Trust
Agreement and, on behalf of the Trust, of the Indenture and the Sale and
Servicing Agreement do not require any consent, approval or authorization
of, or any registration or filing with, any Federal governmental
authority.
(ix) Neither the consummation by the Owner Trustee of the
transactions contemplated by the Trust Agreement or, on behalf of the
Trust, the transactions contemplated by the Trust Agreement, Indenture and
the Sale and Servicing Agreement nor the fulfillment of the terms thereof
by the Owner Trustee will conflict with or result in a breach or violation
of any federal law.
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(o) The Representative shall have received an opinion of Richards, Layton
& Finger special Delaware counsel for the Trust, dated the Closing Date, in form
and substance satisfactory to the Representative and counsel for the
Underwriters, to the effect that:
(i) The Trust Agreement is the legal, valid and binding agreement of
the Owner Trustee, CIT GP and the Seller, enforceable against the Owner
Trustee, CIT GP and the Seller in accordance with its terms subject to (i)
applicable bankruptcy, insolvency, moratorium, receivership,
reorganization, fraudulent conveyance and similar laws relating to and
affecting the rights and remedies of creditors generally, (ii) principles
of equity (regardless of whether considered and applied in a proceeding in
equity or at law), and (iii) the effect of applicable public policy on the
enforceability of provisions relating to indemnification or contribution.
(ii) The Certificate of Trust has been duly filed with the Secretary
of State of the State of Delaware. The Trust has been duly formed and is
validly existing as a business trust under the Delaware Business Trust
Act.
(iii) The Trust has the power and authority under the Trust
Agreement and the Delaware Business Trust Act to execute, deliver and
perform its obligations under the Trust Agreement, the Indenture, the Sale
and Servicing Agreement, the Notes and the Certificates, and to issue the
Notes and the Certificates.
(iv) The Trust has duly authorized the Trust Agreement, the
Indenture, the Sale and Servicing Agreement, the Notes and the
Certificates.
(v) The Trust has the power under the Trust Agreement and the
Delaware Business Trust Act to pledge the Trust Estate to the Indenture
Trustee as security for the Notes.
(vi) When the Certificates have been executed, authenticated and
delivered by the Owner Trustee upon the order of the Seller in accordance
with the Trust Agreement and when delivered to and paid for pursuant to
this Agreement, the Certificates will be validly issued and outstanding,
and the holder of record of any such Certificates will be entitled to the
benefits accorded by the Trust Agreement subject to (i) applicable
bankruptcy, insolvency, moratorium, receivership, reorganization,
fraudulent conveyance and similar laws relating to and affecting the
rights and remedies of creditors generally, (ii) principles of equity
(regardless of whether considered and applied in a proceeding in equity or
at law), and (iii) the effect of applicable public policy on the
enforceability of provisions relating to indemnification or contribution.
(vii) To the extent that Article 9 of the Uniform Commercial Code as
in effect in the State of Delaware (the "Delaware UCC") is applicable
(without regard to conflicts of laws principles), and assuming that the
security interest created by the Indenture in the Collateral has been duly
created and has attached, upon the filing of a UCC-1 financing statement
with the Secretary of State of the State of Delaware, the Indenture
Trustee will have a perfected security interest in such Collateral and the
proceeds thereof;
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and such security interest will be prior to any other security interest
granted by the Trust that is perfected solely by the filing of financing
statements under the Delaware UCC, excluding purchase money security
interests under ss. 9-312 of the Delaware UCC and temporarily perfected
security interests in proceeds under ss. 9-306 of the Delaware UCC.
(viii) No re-filing or other action is necessary under the Delaware
UCC in the State of Delaware in order to maintain the perfection of the
security interest referenced above except for the filing of continuation
statements at five-year intervals.
(ix) Under ss. 3805(b) of the Delaware Business Trust Act, no
creditor of any Certificateholder shall have any right to obtain
possession of, or otherwise exercise legal or equitable remedies with
respect to, the property of the Trust except in accordance with the terms
of the Trust Agreement subject to (i) applicable bankruptcy, insolvency,
moratorium, receivership, reorganization, fraudulent conveyance and
similar laws relating to and affecting the rights and remedies of
creditors generally, (ii) principles of equity (regardless of whether
considered and applied in a proceeding in equity or at law), and (iii) the
effect of applicable public policy on the enforceability of provisions
relating to indemnification or contribution.
(x) Under ss. 3805(c) of the Delaware Business Trust Act, and
assuming that the Sale and Servicing Agreement conveys good title to the
Contracts to the Trust as a true sale and not as a security arrangement,
the Trust, rather than the Certificateholders, is the owner of the
Contracts subject to (i) applicable bankruptcy, insolvency, moratorium,
receivership, reorganization, fraudulent conveyance and similar laws
relating to and affecting the rights and remedies of creditors generally,
(ii) principles of equity (regardless of whether considered and applied in
a proceeding in equity or at law), and (iii) the effect of applicable
public policy on the enforceability of provisions relating to
indemnification or contribution.
(p) The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the
Class A-4 Notes shall each have been rated at least "Aaa" by Moody's and "AAA"
by S&P and the Certificates shall have been rated at least "Aaa" by Moody's and
"AAA" by S&P.
(q) The Representative shall have received copies of each opinion of
counsel delivered to either Rating Agency, or the Insurer together with a letter
addressed to the Representative, dated the Closing Date, to the effect that each
Underwriter may rely on each such opinion to the same extent as though such
opinion was addressed to each as of its date.
(r) The Representative shall have received evidence satisfactory to it and
counsel for the Underwriters that, on or before the Closing Date, UCC-1
financing statements shall have been submitted to the Trustee for filing in the
appropriate filing offices reflecting (1) the transfer of the interest in the
Contracts and the proceeds thereof (A) from CITCF-NY to CITSF, to the extent
such Contracts have been transferred to CITSF from CITCF-NY, (B) from CITSF to
the Seller, (C) from the Seller to the Owner Trustee, on behalf of the Trust, or
the Trust, as the case may be, (D) from the Selling Trust to the Owner Trustee
on behalf of the Trust, or the Trust, as the
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case may be, and (2) the grant of the security interest by the Trust in the
Contracts and the proceeds thereof to the Indenture Trustee.
(s) On the Closing Date, counsel for the Underwriters shall have been
furnished with such documents and opinions as they reasonably may require for
the purpose of enabling them to pass upon the issuance and sale of the
Securities as herein contemplated and related proceedings or in order to
evidence the accuracy and completeness of any of the representations and
warranties, or the fulfillment of any of the conditions, herein contained; and
all proceedings taken by the Seller in connection with the issuance and sale of
the Securities as herein contemplated shall be in form and substance
satisfactory to the Representative and counsel for the Underwriters.
(t) The Representative shall have received an opinion of Robert S.
Fischer, Esq., dated the Closing Date, in form and substance satisfactory to the
Representative and counsel for the Underwriters regarding the perfection of
security interests in financed boats secured or proposed to be secured by U.S.
Preferred Ship Mortgages under 46 U.S.C. Chapter 313, "Commercial Instruments
and Mortgages".
(u) The Insurance Policies shall have been duly executed and issued at or
prior to the Closing Date and shall conform in all material respects to the
description thereof in the Prospectus.
(v) The Representative shall have received an opinion of Shaw, Pittman,
Potts & Trowbridge, counsel for the Insurer, dated the Closing Date,
satisfactory in form and substance to the Underwriters and counsel for the
Representative, to the effect that:
(i) The Insurer is a corporation validly existing, in good standing
and licensed to transact the business of surety and financial guaranty
insurance under the laws of the State of New York.
(ii) The Insurer has the corporate power to execute and deliver, and
to take all action required of it under the Insurance Policies, the
Insurance Agreement and the Indemnification Agreement.
(iii) Except as have already been obtained, no authorization,
consent, approval, license, formal exemption, or declaration from, nor any
registration or filing with, any court or governmental agency or body of
the United States of America or the State of New York, which if not
obtained would affect or impair the validity or enforceability of the
Insurance Policies, the Insurance Agreement or the Indemnification
Agreement against the Insurer, is required in connection with the
execution and delivery by the Insurer of the Insurance Policies, the
Insurance Agreement, the Indemnification Agreement or in connection with
the Insurer's performance of its obligations thereunder.
(iv) The Insurance Policies, the Insurance Agreement and the
Indemnification Agreement have been duly authorized, executed and
delivered by the Insurer, and the Insurance Policies and, assuming due
authorization, execution and delivery of the Insurance Agreement and the
Indemnification Agreement by the parties thereto (other
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than the Insurer), the Insurance Agreement and the Indemnification
Agreement, constitute the legally valid and binding obligations of the
Insurer, enforceable against the Insurer in accordance with their
respective terms subject, as to enforcement, to (a) bankruptcy,
reorganization, insolvency, moratorium and other similar laws relating to
or affecting the enforcement of creditors' rights generally, including,
without limitation, laws relating to fraudulent transfers or conveyances,
preferential transfers and equitable subordination, presently or from time
to time in effect and general principles of equity (regardless of whether
such enforcement in considered in a proceeding in equity or at law), as
such laws may be applied in any such proceeding with respect to the
Insurer, (b) the qualification that the remedy of specific performance may
be subject to equitable defenses and to the discretion of the court before
which any proceedings with respect thereto may be brought, and (c) the
enforceability of rights to indemnification under the Indemnification
Agreement may be subject to limitations of public policy under applicable
securities laws.
(v) The Insurance Policies are not required to be registered under
the Act, as amended.
Such opinions may be subject to such counsel's customary practices and
limitations relating to the scope of such counsel's participation in the
preparation of the Registration Statement and the Prospectus and its
investigation or verification of information contained therein, such counsel
also shall state that it has no reason to believe that as of the Closing Date
any of the information contained in the Prospectus in (x) the paragraph titled
"Insurance " under the heading "Summary of Terms" or (y) under the captions "The
Insurer" and "Enhancement--Insurance Policies" includes any untrue statement of
a material fact or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (other than financial, numerical and statistical
information contained therein as to which such counsel need express no opinion).
(w) On or prior to the Closing Date there shall not have occurred any
downgrading, nor shall any notice have been given of (A) any intended or
potential downgrading or (B) any review or possible change in rating the
direction of which has not been indicated, in the rating accorded the Insurer's
claims paying ability by any "nationally recognized statistical rating
organization."
(x) The Underwriters shall have received from the Insurer a certificate,
signed by the President, a senior vice president or a vice president of the
Insurer, dated the Closing Date, to the effect that the signer of such
certificate has carefully examined the Insurance Policies and the related
documents and that, to the best of his or her knowledge based on reasonable
investigation:
(i) The information in the Prospectus Supplement as of the date
hereof under the caption "The Insurer" and "Enhancement--Insurance
Policies" (the "Insurer Information") is true and correct in all material
respects and does not contain any untrue statement of a fact that is
material to the Insurer's ability to perform its obligations under the
Insurance Policies. There has been no material adverse change in the
financial condition of the Insurer since December 31, 1998.
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(ii) There are no actions, suits, proceedings or investigations
pending or, to the best of the Insurer's knowledge, threatened against it
at law or in equity or before or by any court, governmental agency, board
or commission or any arbitrator which, if decided adversely, would
materially and adversely affect its condition (financial or otherwise) or
operations of it or would materially and adversely affect its ability to
perform its obligations under the Insurance Policies or the Insurance
Agreement.
(iii) The execution and delivery of the Insurance Agreement, the
Indemnification Agreement and the Insurance Policies and the compliance
with the terms and provisions thereof will not conflict with, result in a
breach of, or constitute a default under any of the terms, provisions or
conditions of, the Restated Charter or By-Laws of the Insurer, or any
agreement, indenture or other instrument to which the Insurer is a party;
(iv) The issuance of the Insurance Policies and the execution,
delivery and performance of the Indemnification Agreement and the
Insurance Agreement have been duly authorized by all necessary corporate
proceedings. No further approvals or filings of any kind, including,
without limitation, any further approvals of or further filing with any
governmental agency or other governmental authority, or any approval of
the Insurer's board of directors or stockholders, are necessary for the
Insurance Policies, the Indemnification Agreement and the Insurance
Agreement to constitute the legal, valid and binding obligations of the
Insurer.
(y) The Representative shall have received an opinion of counsel for the
Selling Trust, dated as of the Closing Date in form and substance satisfactory
to the Representative and counsel for the Underwriters to the effect that:
(i) The Selling Trust has the power to own its assets and to
transact the business in which it is currently engaged and to perform
their respective obligations under each of the Basic Documents to which it
is a party.
(ii) Each of the Basic Documents to which the Selling Trust is a
party have been duly authorized, executed and delivered by the Selling
Trust.
(iii) The execution and delivery by the Selling Trust of each of the
Basic Documents to which it is a party, the performance of its respective
obligations thereunder are within the power of the Selling Trust, and have
been duly authorized by all necessary action on the part of the Selling
Trust; and neither the issue and sale of the Securities, nor the
consummation of the transactions contemplated by the Basic Documents nor
the fulfillment of the terms thereof, nor the grant of the security
interest in the Collateral to the Indenture Trustee pursuant to the
Indenture will, to the best of such counsel's knowledge, conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or asset
of the Selling Trust pursuant to, any contract, indenture, mortgage, loan
agreement, note, lease or other instrument, if any, to which the Selling
Trust is a party or by which either may be bound or to which the property
or assets of the Selling Trust are subject (which contracts, indentures,
mortgages, loan agreements, notes, leases and other such instruments, if
any, have been
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identified by the Selling Trust to such counsel), nor will such action
result in any violation of the provisions of the certificate of formation
of the Selling Trust or, to the best of such counsel's knowledge, any law,
administrative regulation or administrative or court decree of any state
or federal courts, regulatory bodies, other body, governmental entity or
arbitrator having jurisdiction over the Selling Trust.
(iv) There are no legal or governmental proceedings pending to which
the Selling Trust is a party or of which any property of the Selling Trust
is the subject, and no such proceedings are known by such counsel to be
threatened or contemplated by governmental authorities or threatened by
others, (A) that are required to be disclosed in the Registration
Statement and are not disclosed therein or (B)(1) asserting the invalidity
of all or part of any of the Basic Documents, (2) seeking to prevent the
issuance of the Notes or the Certificates, (3) that could materially and
adversely affect the Selling Trust's obligations under any of the Basic
Documents or (4) seeking to affect adversely the federal or state income
tax attributes of the Securities.
(v) When the Basic Documents have each been duly executed and
delivered by all parties thereto, the purchase price therefor has been
paid to the Selling Trust by the Trust in the manner specified in the Sale
and Servicing Agreement and the Notes and the Certificates have been duly
executed and duly authenticated and delivered by the Owner Trustee or the
Indenture Trustee, as applicable, to or upon the order of the Selling
Trust in accordance with the Sale and Servicing Agreement, the Indenture
and the Trust Agreement, all of the Selling Trust's right, title and
interest in and to the Contracts and any security interests securing the
Contracts will have been conveyed to the Trust and the Trust will be the
holder of a valid and binding security interest in the Contracts against
the Selling Trust.
(z) The Underwriter shall have received from the Selling Trust a
certificate signed by CITSF dated the Closing Date to the effect that all
Contracts sold by the Selling Trust to the Trust are being transferred free and
clear of all liens and encumbrances.
(aa) The Representative shall have received copies of any certificates or
other closing documents delivered to either Rating Agency or the Insurer.
(bb) The Representative shall have received an opinion of in-house,
counsel to the Lender, dated the Closing Date, in form and substance
satisfactory to the Representative and counsel for the Underwriters, to the
effect that:
(i) The Lender has full power and authority to enter into, and to
take all action required of it, under the Loan Agreement.
(ii) The Loan Agreement has been duly authorized, executed and
delivered by the Lender.
(iii) The Loan Agreement constitutes a legal, valid and binding
agreement of the Lender, enforceable against the Lender in accordance with
its terms, except as enforceability thereof may be limited by bankruptcy,
insolvency, liquidation,
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reorganization, moratorium or other similar laws affecting the enforcement
of rights of creditors against the Lender generally, as such laws would
apply in the event of bankruptcy, insolvency, liquidation, receivership,
or reorganization or any moratorium or similar occurrence affecting the
Lender, and the application of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or
law).
7. Computational Materials.
(a) Not later than 10:30 a.m. New York time, on the business day before
the date on which the Current Report relating to the Securities is required to
be filed by the Seller with the Commission pursuant to Section 5(m) hereof, each
Underwriter shall deliver to the Seller five complete copies of all materials,
if any, provided by such Underwriter to prospective investors in such Securities
which constitute "Computational Materials" within the meaning of the no-action
letter dated May 20, 1994 issued by the Division of Corporation Finance of the
Commission to Kidder, Peabody Acceptance Corporation I, Kidder, Peabody & Co.
Incorporated, and Kidder Structured Asset Corporation, the no-action letter
dated May 27, 1994 issued by the Division of Corporation Finance of the
Commission to the Public Securities Association and the no-action letter of
February 17, 1995 issued by the Commission to the Public Securities Association
(collectively, the "Kidder/PSA Letters") and the filing of which is a condition
of the relief granted in such letters (such materials being the "Computational
Materials"). Each delivery of Computational Materials to the Seller pursuant to
this paragraph (a) shall be effected by delivering four copies of such materials
to counsel for the Seller on behalf of the Seller and one copy of such materials
to the Seller. The Computational Materials so delivered shall be accompanied by
a letter from KPMG Peat Marwick LLP, addressed to the Seller and the
Representative, in form and substance reasonably satisfactory to the Seller and
the Representative, to the effect that KPMG Peat Marwick LLP have performed
certain agreed upon procedures with respect to such Computational Materials as a
result of which they have determined that such Computational Materials are
mathematically correct.
(b) Each Underwriter that so delivers Computational Materials represents
and warrants to and agrees with the Seller, as of date hereof and as of the
Closing Date, that:
(i) on the date any such Computational Materials with respect to the
Securities were last furnished to each prospective investor by such
Underwriter and on the date of delivery thereof to the Seller pursuant to
Section 7(a), any Underwriter Derived Information (defined below) included
therein did not and will not include any untrue statement of a material
fact, or, when read in conjunction with the Prospectus and a prospectus
supplement relating to the Securities, did not and will not omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading; and
(ii) the Computational Materials contain customary legends and are
in substantially the same form as previously furnished to the Seller.
Notwithstanding the foregoing, no Underwriter makes any representation or
warranty as to any information other than the Underwriter Derived Information
provided by such Underwriter. "Underwriter Derived Information" means such
portion, if any, of the information
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delivered to the Seller pursuant to Section 5(m) for filing with the Commission
on Form 8-K as: (i) is not contained in the Prospectus without taking into
account information incorporated therein by reference and (ii) does not
constitute Seller Provided Information. "Seller Provided Information" means any
computer tape furnished to the Underwriters by the Seller concerning the assets
comprising the Trust upon which the mathematical calculations reflected in the
Underwriter Derived Information of any Underwriter are based.
(c) Each Underwriter severally covenants with the Seller that if any
Underwriter Derived Information required to be provided to the Seller pursuant
to this Section 7 is determined to contain any information that is inaccurate or
misleading, such Underwriter (whether or not such Underwriter Derived
Information was provided to the Seller or filed by the Seller with the
Commission) shall promptly prepare and deliver to the Seller and each
prospective investor which received such Underwriter Derived Information
corrected Underwriter Derived Information. All information provided to the
Seller pursuant to this Section 7(c) shall be provided within the time periods
set forth in Section 7(a).
(d) Each Underwriter shall comply with all applicable laws and regulations
in connection with the use of Computational Materials including the Kidder/PSA
Letters.
(e) Each Underwriter shall provide the Company with representative forms
of all Computational Materials prior to their first use, to the extent such
forms have not previously been approved by the Company for use by such
Underwriter.
(f) If an Underwriter does not provide any Computational Materials to the
Company pursuant to Section 7(e), such Underwriter shall be deemed to have
represented, as of the Closing Date, that it did not provide any prospective
investors with any information in written or electronic form in connection with
the offering of the Certificates that is required to be filed with the
Commission in accordance with the Kidder/PSA Letters.
(g) In the event of any delay in the delivery by any Underwriter to the
Company of all Computational Materials required to be delivered in accordance
with Section 7(a), the Company shall have the right to delay the release of the
Prospectus to investors or to any Underwriter, to delay the Closing Date and to
take other appropriate actions in each case as necessary in order to allow the
Company to comply with its agreement set forth in Section 5(m) to file the
Computational Materials by the time specified therein.
8. Indemnification and Contribution.
(a) CITSF will indemnify and hold each Underwriter harmless against any
losses, claims, damages or liabilities, joint or several, to which such
Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any related preliminary prospectus or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for
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any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that (i)
CITSF will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement in or omission or alleged omission from any of such
documents (x) in reliance upon and in conformity with written information
furnished to the Seller or CITSF by any Underwriter through the Representative
specifically for use therein; it being understood and agreed that the only such
information furnished by any Underwriter consists of the following information
contained in the prospectus supplement relating to the Securities dated the date
hereof: the information contained under the caption "Plan of Distribution" (the
"Underwriters' Information") or (y) with respect to Underwriter Derived
Information included in any Current Report or any amendment or supplement
thereof, except to the extent that any untrue statement or alleged untrue
statement therein results (or is alleged to have resulted) from an error (a
"Seller Error") in the Seller Provided Information other than a Seller Error
which is corrected by information subsequently furnished by the Seller in
writing or by electronic transmission to such Underwriter prior to the time such
Computational Materials are furnished to the Seller pursuant to Section 7(a),
(ii) such indemnity with regard to any related preliminary prospectus shall not
inure to the benefit of each Underwriter (or any person controlling each
Underwriter) from whom the person asserting any such loss, claim, damage or
liability purchased the Securities which are the subject thereof if such person
did not receive a copy of the Prospectus (or, in the event it is amended or
supplemented, such Prospectus as amended or supplemented) at or prior to the
confirmation of the sale of such Securities to such person if such Prospectus
(or, in the event it is amended or supplemented, such Prospectus as amended or
supplemented) was timely forwarded to each Underwriter as required by this
Agreement and the untrue statement or omission of a material fact contained in
such related preliminary prospectus was corrected in the Prospectus (or, in the
event it is amended or supplemented, such Prospectus as amended or supplemented)
and (iii) CITSF shall not, in connection with any one such action or separate
but substantially similar or related transactions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys for all
such Underwriters, which firm shall be designated in accordance with Section
8(c) hereof.
(b) Each Underwriter, severally and not jointly, will indemnify and hold
harmless the Seller and CITSF against any losses, claims, damages or liabilities
to which the Seller or CITSF may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, the
Prospectus or any amendment or supplement thereto, or any related preliminary
prospectus or preliminary prospectus supplement, or arise out of or are based
upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Seller or CITSF by such Underwriter through the Representative specifically for
use therein, and will reimburse any legal or other expenses reasonably incurred
by the Seller or CITSF in connection with investigating or defending any such
action or claim as such expenses are incurred, it being understood and agreed
that (i) the
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only such information furnished by any Underwriter consists of (x) the
Underwriters' Information and (y) in any Underwriter Derived Information (or
amendments or supplements thereof) furnished to the Seller by such Underwriter
pursuant to Section 7 (except that no such indemnity shall be available for any
losses, claims, damages or liabilities (or actions in respect thereof) resulting
from a Seller Error other than a Seller Error which is corrected by information
subsequently furnished by the Seller in writing or by electronic transmission to
such Underwriter prior to the time such Computational Materials are furnished to
the Seller pursuant to Section 7(a), and (ii) the Underwriters shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys for each of the Seller and CITSF, which
firm shall be designated in accordance with Section 8(c) hereof.
(c) Promptly after receipt by an indemnified party under this Section of
written notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under such subsection. In case any such action is brought against any
indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof and after acceptance by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action.
Any indemnified party shall have the right to employ separate counsel in
any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless: (i) the employment thereof has been specifically authorized by the
indemnifying party in writing; or (ii) such indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party, in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party,
it being understood, however that the indemnifying party shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
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allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (in addition to one local counsel per
jurisdiction) at any time for all such indemnified parties, which firm shall be
designated in writing by the related Underwriter, if the indemnified parties
under this Section 8 consist of one or more Underwriters or any of its or their
controlling persons, or the Seller, if the indemnified parties under this
Section 8 consist of the Seller or any of the Seller's directors, officers or
controlling persons.
(d) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above, (i) in such proportion
as is appropriate to reflect not only the relative benefits received by the
Seller and CITSF on the one hand and the Underwriters on the other from the
offering of the Securities or (ii) if the allocation provided in clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Seller and CITSF on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities as well as any other
relevant equitable considerations. The relative benefits received by the Seller
and CITSF on the one hand and the Underwriters on the other shall be deemed to
be in the same proportion as the total net proceeds from the offering of the
Securities (before deducting expenses) received by the Seller and CITSF bear to
the total underwriting discounts and commissions received by the Underwriters.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Seller, CITSF or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to above in this
subsection (d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any action or claim which is the subject of this subsection (d). Notwithstanding
the provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Securities underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of CITSF under this Section shall be in addition to
any liability which the Seller or CITSF may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section shall be in addition to any liability which the
respective Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each director of the Seller or CITSF, to each officer of the
Seller or CITSF who has signed the
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Registration Statement and to each person, if any, who controls the Seller or
CITSF within the meaning of the Act.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Seller, CITSF and CIT or their respective officers and of the Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation or statement as to the results thereof,
made by or on behalf of any Underwriter, the Seller, CITSF, CIT or any of their
respective representatives, officers or directors or any controlling person, and
will survive delivery of and payment for the Securities. If this Agreement is
terminated pursuant to Section 10 or if for any reason the purchase of the
Securities by the Underwriters is not consummated, the Seller, CITSF and
CITCF-NY shall remain responsible for the expenses to be paid or reimbursed by
it pursuant to Section 5 hereof and the respective obligations of the Seller,
CITSF and the Underwriters pursuant to Section 8 hereof shall remain in effect.
If the purchase of the Securities by the Underwriters is not consummated for any
reason other than solely because of the termination of this Agreement pursuant
to Section 10 or the occurrence of any event specified in clauses (iii), (iv) or
(v) of Section 6(e) hereof, the Seller and CITSF will reimburse the Underwriters
for all out-of-pocket expenses (including fees and disbursements of counsel)
reasonably incurred by them in connection with the offering of the Securities.
10. Failure to Purchase the Securities. If any Underwriter or Underwriters
default in their obligations to purchase the principal amount of the Class or
Classes of Notes and/or the Certificates opposite such Underwriter's name on
Schedule I hereto and the aggregate principal amount of the Securities that such
defaulting Underwriter or Underwriters agreed but failed to purchase does not
exceed 10% of the total principal amount of the Securities, the Representative
may make arrangements satisfactory to the Seller and CITSF for the purchase of
such Notes or Certificates by other persons, including any of the Underwriters,
but if no such arrangements are made by the Closing Date, the non-defaulting
Underwriters shall be obligated severally, in proportion to their respective
commitments hereunder, to purchase the Class or Classes of Notes and/or the
Certificates that such defaulting Underwriters agreed but failed to purchase. If
any Underwriter or Underwriters so default and the aggregate principal amount of
the Notes and/or the Certificates with respect to such default or defaults
exceeds 10% of the total principal amount of the Securities and arrangements
satisfactory to the Representative, the Seller and CITSF for the purchase of
such Notes and/or Certificates by other persons are not made within 36 hours
after such default, this Agreement will terminate without liability on the part
of any non-defaulting Underwriter, the Seller or CITSF, except as provided in
Section 9. As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section. Nothing herein will relieve a
defaulting Underwriter or Underwriters from liability for its default.
11. Notices. All communications hereunder will be in writing and, if sent
to the Representative or the Underwriters, will be mailed, delivered or sent by
facsimile transmission and confirmed to the Representative at 85 Broad Street,
New York, NY 10004, Attention: Tom Lasersohn, with a copy to the Registration
Department (facsimile number (212) 902-4024); if sent to the Seller, will be
mailed, delivered or sent by facsimile transmission and confirmed to it at The
CIT Group Securitization Corporation II, 650 CIT Drive, Livingston, New Jersey
07039, Attention:
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James J. Egan, Jr., President (facsimile number (201) 740-5410); if sent to CIT,
will be mailed, delivered or sent by facsimile transmission and confirmed to it
by The CIT Group, Inc., 1211 Avenue of the Americas, New York, New York 10036,
Attention: Joseph M. Leone, Executive Vice President and Chief Financial Officer
(facsimile number (212) 536-1971); and if sent to CITSF, will be mailed,
delivered or sent by facsimile transmission and confirmed to it at The CIT
Group/Sales Financing, Inc., 650 CIT Drive, Livingston, New Jersey 07039,
Attention: James J. Egan, Jr., President (facsimile number (201) 740-5410).
12. No Bankruptcy Petition. Each Underwriter agrees that, prior to the
date which is one year and one day after the payment in full of all securities
issued by the Seller or by a trust for which the Seller was the depositor or by
the Trust, which securities were rated by any nationally recognized statistical
rating organization, it will not institute against, or join any other person in
instituting against, the Seller, the Trust or CIT GP any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
proceedings under any Federal or state bankruptcy or similar law.
13. Successors. This Agreement will inure to the benefit of and be binding
upon the Underwriters, the Seller, CIT and CITSF and their respective successors
and the officers and directors and controlling persons referred to in Section 7,
and no other person will have any right or obligations hereunder.
14. Representation of Underwriters. The Representative will act for the
several Underwriters in connection with the transactions described in this
Agreement, and any action taken by Representative under this Agreement will be
binding upon all the Underwriters.
15. Counterparts. This Agreement may be executed in any number of
counterparts each of which shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement.
16. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to principles
of conflicts of laws.
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If the foregoing is in accordance with the Representative's understanding
of our agreement, kindly sign and return to us a counterpart hereof, whereupon
it will become a binding agreement among CIT, the Seller, CITSF and the several
Underwriters in accordance with its terms.
Very truly yours,
THE CIT GROUP, INC.
By: /s/ Frank Garcia
---------------------------------
Name: Frank Garcia
Title: Vice President
GROUP SECURITIZATION
CORPORATION II
By: /s/ Frank Garcia
---------------------------------
Name: Frank Garcia
Title: Vice President
THE CIT GROUP/SALES FINANCING, INC.
By: /s/ Frank Garcia
---------------------------------
Name: Frank Garcia
Title: Vice President
The foregoing Underwriting
Agreement is hereby confirmed and
accepted as of the date first above written:
GOLDMAN, SACHS & CO.
By: /s/ Goldman Sachs & Co.
-------------------------------------
Name:
Title:
Acting on behalf of itself
and as the Representative
of the several Underwriters.
-39-
<PAGE>
SCHEDULE I
Principal Amount of
Underwriter Class A-1 Notes
----------- ---------------
Goldman, Sachs & Co. $ 65,000,000
Bear, Stearns & Co. Inc. $ 65,000,000
Chase Securities Inc. $ 65,000,000
First Unions Capital Markets $ 65,000,000
Salomon Smith Barney $ 65,000,000
Total $325,000,000
Principal Amount of
Underwriter Class A-2 Notes
----------- ---------------
Goldman, Sachs & Co. $ 35,800,000
Bear, Stearns & Co. Inc. $ 35,800,000
Chase Securities Inc. $ 35,800,000
First Unions Capital Markets $ 35,800,000
Salomon Smith Barney $ 35,800,000
Total $179,000,000
Principal Amount of
Underwriter Class A-3 Notes
----------- ---------------
Goldman, Sachs & Co. $ 23,400,000
Bear, Stearns & Co. Inc. $ 23,400,000
Chase Securities Inc. $ 23,400,000
First Unions Capital Markets $ 23,400,000
Salomon Smith Barney $ 23,400,000
Total $117,000,000
I-1
<PAGE>
Principal Amount of
Underwriter Class A-4 Notes
----------- ---------------
Goldman, Sachs & Co. $ 20,626,800
Bear, Stearns & Co. Inc. $ 20,626,800
Chase Securities Inc. $ 20,626,800
First Unions Capital Markets $ 20,626,800
Salomon Smith Barney $ 20,626,800
Total $103,134,000
Principal Amount
Underwriter of Certificates
----------- ---------------
Goldman, Sachs & Co. $ 2,180,000
Bear, Stearns & Co. Inc. $ 2,180,000
Chase Securities Inc. $ 2,180,000
First Unions Capital Markets $ 2,180,000
Salomon Smith Barney $ 2,180,000
Total $10,900,000
I-2
<PAGE>
SCHEDULE II
Locations of Chief Executive Offices and Principal Places of Business
The CIT Group Securitization Corporation II 650 CIT Drive
Livingston, NJ 07039-0491
The CIT Group/Sales Financing, Inc. 650 CIT Drive
Livingston, NJ 07039-0491
The CIT Group/Consumer Finance, Inc. (NY) 650 CIT Drive
Livingston, NJ 07039-0491
The CIT Marine Trust
1996-A
II-1
<PAGE>
SCHEDULE III
<TABLE>
<CAPTION>
Original
Principal Class A
Security Amount $ Price % Price $ Rate %
-------- -------- ------- ------- ------
<S> <C> <C> <C> <C>
Class A-1 Notes $325,000,000 99.986952% $324,957,594.00 5.45%
Class A-2 Notes $179,000,000 99.892041% $178,806,753.39 5.80%
Class A-3 Notes $117,000,000 99.801085% $116,767,269.45 5.85%
Class A-4 Notes $103,134,000 99.769382% $102,896,154.43 6.25%
</TABLE>
Total Price to Public: $723,427,771.27
Total Price to Seller: $721,308,668.27
Underwriting Discounts
and Commissions: $ 2,119,103.00
III-1
<PAGE>
SCHEDULE IV
Original Pass-
Principal Class A Through
Security Amount $ Price % Price $ Rate %
-------- -------- ------- ------- ------
Certificates $10,900,000 99.943641% $10,893,856.87 6.20%
Total Price to Public: $10,893,856.87
Total Price to Seller: $10,844,806.87
Underwriting Discounts $ 49,050.00
and Commissions:
IV-1
EXHIBIT 4.1
CIT MARINE TRUST 1999 - A
Class A-1 5.45% Asset-Backed Notes
Class A-2 5.80% Asset-Backed Notes
Class A-3 5.85% Asset-Backed Notes
Class A-4 6.25% Asset-Backed Notes
INDENTURE
Dated as of February 1, 1999
Harris Trust and Savings Bank,
Indenture Trustee
<PAGE>
CROSS-REFERENCE TABLE
TIA Section Indenture Section
310(a)(1) 6.11
310(a)(2) 6.11
310(a)(3) 6.10
310(a)(4) 6.14
310(b) 6.11
310(c) Not Applicable
311(a) 6.12
311(b) 6.12
311(c) Not Applicable
312(a) 7.1, 7.2
312(b) 7.2
312(c) 7.2
313(a) 7.4(a), 7.4(b)
313(b)(1) 7.4(a)
313(b)(2) 7.4(a)
313(c) 7.4(a)
313(d) 7.4(a)
314(a) 3.9, 7.3(a)
314(b) 3.6
314(c)(1) 2.2, 2.9, 4.1, 11.1
314(c)(2) 11.1(a)
314(c)(3) 11.1(a)
314(d) 2.9, 11.1(b)
314(e) 11.1(a)
314(f) 11.1(a)
315(a) 6.1(b)
315(b) 6.5
315(c) 6.1(a)
315(d) 6.2, 6.1(c)
315(e) 5.13
316 (a) last sentence 1.1
316(a)(1)(A) 5.11
316(a)(1)(B) 5.12
316(a)(2) Omitted
316(b), (c) 5.7
317(a)(1) 5.3(b)
317(a)(2) 5.3(d)
317(b) 3.3
318(a) 11.7
Note: This cross-reference table shall not for any purpose be deemed to be part
of this Indenture.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE.........................2
SECTION 1.1 Definitions......................................................2
SECTION 1.2 Incorporation by Reference of Trust Indenture Act................2
ARTICLE II THE NOTES.........................................................3
SECTION 2.1 Form ............................................................3
SECTION 2.2 Execution, Authentication and Delivery...........................3
SECTION 2.3 Temporary Notes..................................................4
SECTION 2.4 Registration; Registration of Transfer and Exchange
of Notes.......................................................4
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes.......................6
SECTION 2.6 Persons Deemed Noteholders.......................................7
SECTION 2.7 Payment of Principal and Interest................................7
SECTION 2.8 Cancellation of Notes............................................8
SECTION 2.9 Release of Collateral............................................9
SECTION 2.10 Book-Entry Notes.................................................9
SECTION 2.11 Notices to Depository...........................................10
SECTION 2.12 Definitive Notes................................................10
SECTION 2.13 Seller as Noteholder............................................10
SECTION 2.14 Tax Treatment...................................................10
ARTICLE III COVENANTS.......................................................11
SECTION 3.1 Payment of Principal and Interest...............................11
SECTION 3.2 Maintenance of Agency Office....................................11
SECTION 3.3 Money for Payments To Be Held in Trust..........................11
SECTION 3.4 Existence.......................................................13
SECTION 3.5 Protection of Trust Estate; Acknowledgment of Pledge............13
SECTION 3.6 Opinions as to Trust Estate.....................................13
SECTION 3.7 Performance of Obligations; Servicing of Contracts..............14
SECTION 3.8 Negative Covenants..............................................15
SECTION 3.9 Annual Statement as to Compliance...............................16
SECTION 3.10 Consolidation, Merger, etc. of Issuer; Disposition
of Trust Assets...............................................16
SECTION 3.11 Successor or Transferee.........................................18
SECTION 3.12 No Other Business...............................................18
SECTION 3.13 No Borrowing....................................................18
SECTION 3.14 Guarantees, Loans, Advances and Other Liabilities...............18
SECTION 3.15 Servicer's Obligations..........................................19
SECTION 3.16 Capital Expenditures............................................19
SECTION 3.17 Removal of Servicer.............................................19
-i-
<PAGE>
SECTION 3.18 Restricted Payments.............................................19
SECTION 3.19 Notice of Events of Default.....................................20
SECTION 3.20 Further Instruments and Acts....................................20
SECTION 3.21 Representations and Warranties by the Issuer to
the Indenture Trustee.........................................20
ARTICLE IV SATISFACTION AND DISCHARGE.......................................20
SECTION 4.1 Satisfaction and Discharge of Indenture.........................21
SECTION 4.2 Application of Trust Money......................................22
SECTION 4.3 Repayment of Monies Held by Paying Agent........................22
SECTION 4.4 Duration of Position of Indenture Trustee.......................22
ARTICLE V DEFAULT AND REMEDIES..............................................23
SECTION 5.1 Events of Default...............................................23
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment..............24
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee..........................................25
SECTION 5.4 Remedies; Priorities............................................27
SECTION 5.5 Optional Preservation of the Contracts..........................29
SECTION 5.6 Limitation of Suits.............................................30
SECTION 5.7 Unconditional Rights of Noteholders To Receive Principal
and Interest..................................................31
SECTION 5.8 Restoration of Rights and Remedies..............................31
SECTION 5.9 Rights and Remedies Cumulative..................................31
SECTION 5.10 Delay or Omission Not a Waiver..................................31
SECTION 5.11 Control by Noteholders..........................................31
SECTION 5.12 Waiver of Past Defaults.........................................32
SECTION 5.13 Undertaking for Costs...........................................33
SECTION 5.14 Waiver of Stay or Extension Laws................................33
SECTION 5.15 Action on Notes.................................................33
SECTION 5.16 Performance and Enforcement of Certain Obligations..............33
ARTICLE VI THE INDENTURE TRUSTEE...........................................35
SECTION 6.1 Duties of Indenture Trustee.....................................35
SECTION 6.2 Rights of Indenture Trustee.....................................36
SECTION 6.3 Indenture Trustee May Own Notes.................................37
SECTION 6.4 Indenture Trustee's Disclaimer..................................37
SECTION 6.5 Notice of Defaults..............................................37
SECTION 6.6 Reports by Indenture Trustee to Holders.........................38
SECTION 6.7 Compensation; Indemnity.........................................38
SECTION 6.8 Replacement of Indenture Trustee................................38
SECTION 6.9 Merger or Consolidation of Indenture Trustee....................40
-ii-
<PAGE>
SECTION 6.10 Appointment of Co-Indenture Trustee or Separate
Indenture Trustee.............................................40
SECTION 6.11 Eligibility; Disqualification...................................41
SECTION 6.12 Preferential Collection of Claims Against Issuer................41
SECTION 6.13 Representations and Warranties of Indenture Trustee.............42
SECTION 6.14 Indenture Trustee May Enforce Claims Without
Possession of Notes...........................................42
SECTION 6.15 Suit for Enforcement............................................43
ARTICLE VII NOTEHOLDERS' LIST AND REPORTS...................................43
SECTION 7.1 Issuer To Furnish Indenture Trustee Names and
Addresses of Noteholders......................................43
SECTION 7.2 Preservation of Information, Communications to Noteholders......43
SECTION 7.3 Reports by Issuer...............................................43
SECTION 7.4 Reports by Trustee..............................................44
ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND RELEASES............................45
SECTION 8.1 Collection of Money.............................................45
SECTION 8.2 Designated Accounts; Payments...................................45
SECTION 8.3 General Provisions Regarding Accounts...........................46
SECTION 8.4 Release of Trust Estate.........................................47
SECTION 8.5 Opinion of Counsel..............................................47
ARTICLE IX SUPPLEMENTAL INDENTURES.........................................48
SECTION 9.1 Supplemental Indentures Without Consent of Noteholders..........48
SECTION 9.2 Supplemental Indentures With Consent of Noteholders.............49
SECTION 9.3 Execution of Supplemental Indentures............................50
SECTION 9.4 Effect of Supplemental Indenture................................50
SECTION 9.5 Conformity with Trust Indenture Act.............................50
SECTION 9.6 Reference in Notes to Supplemental Indentures...................50
ARTICLE X REDEMPTION OF NOTES.............................................51
SECTION 10.1 Redemption......................................................51
SECTION 10.2 Form of Redemption Notice.......................................51
SECTION 10.3 Notes Payable on Redemption Date................................52
ARTICLE XI MISCELLANEOUS...................................................52
SECTION 11.1 Compliance Certificates and Opinions, etc.......................52
SECTION 11.2 Form of Documents Delivered to Indenture Trustee................54
SECTION 11.3 Acts of Noteholders.............................................55
SECTION 11.4 Notices, etc., to Indenture Trustee, Issuer
and Rating Agencies...........................................55
-iii-
<PAGE>
SECTION 11.5 Notices to Noteholders; Waiver..................................56
SECTION 11.6 Alternate Payment and Notice Provisions.........................57
SECTION 11.7 Conflict with Trust Indenture Act...............................57
SECTION 11.8 Effect of Headings and Table of Contents........................57
SECTION 11.9 Successors and Assigns..........................................57
SECTION 11.10 Separability....................................................57
SECTION 11.11 Benefits of Indenture...........................................58
SECTION 11.12 Legal Holidays..................................................58
SECTION 11.13 Governing Law...................................................58
SECTION 11.14 Counterparts....................................................58
SECTION 11.15 Recording of Indenture..........................................58
SECTION 11.16 No Recourse.....................................................58
SECTION 11.17 No Petition.....................................................59
SECTION 11.18 Inspection......................................................59
SECTION 11.19 Indemnification by and Reimbursement of the Servicer............60
SECTION 11.20 Limitation of Liability.........................................60
EXHIBIT A-1 - Form of Class A-1 Asset-Backed Notes
EXHIBIT A-2 - Form of Class A-2 Asset-Backed Notes
EXHIBIT A-3 - Form of Class A-3 Asset-Backed Notes
EXHIBIT A-4 - Form of Class A-4 Asset-Backed Notes
-iv-
<PAGE>
INDENTURE, dated as of February 1, 1999 between CIT MARINE TRUST 1999-A, a
Delaware business trust (the "Issuer"), and HARRIS TRUST AND SAVINGS BANK, an
Illinois banking corporation, as trustee and not in its individual capacity (the
"Indenture Trustee").
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the Holders of the Notes:
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the Closing Date, as
trustee for the benefit of the Noteholders, the Insurer and (only to the extent
expressly provided herein) the Certificateholders, all of the Issuer's right,
title and interest in and to (i) the Contracts and all the rights, benefits and
obligations arising from and in connection with each Contract; (ii) all monies
received on or with respect to the Contracts on or after the Cut-off Date
(exclusive of (a) payments with respect to Post Cut-off Date Insurance Add-Ons
and (b) interest due and payable prior to the Cut-off Date); (iii) such amounts
as from time to time may be credited to one or more accounts (other than the
Excluded Assets), including the Collection Account, Note Distribution Account
and Reserve Account, established and maintained by the Servicer pursuant to the
Sale and Servicing Agreement (including all investments in such accounts and all
income from the funds therein (other than Investment Earnings on funds on
deposit in the Reserve Account related to the Loan) and all proceeds thereof);
(iv) an assignment of the security interests in the Financed Boats granted by
the Obligors and any accessions thereto pursuant to the Contracts and any other
interest of the Issuer in the Financed Boats (including any right to receive
future Net Liquidation Proceeds) that secures the Contracts and that shall have
been repossessed by the Servicer by or on behalf of the Trust; (v) the right to
proceeds from Insurance Policies covering individual Financed Boats or the
Obligors and the Contracts; (vi) the rights of the Issuer under the Sale and
Servicing Agreement (but excluding all rights of the Issuer to the Excluded
Assets); (vii) the proceeds from any Servicer's Errors and Omissions Protection
Policy, any fidelity bond and any blanket physical damage policy, to the extent
such proceeds relate to any Financed Boat; (viii) all rights of recourse against
any cosigner or under any personal guarantee with respect to the Contracts
(other than any right as against a Dealer under a Dealer Agreement or other such
agreement); (ix) all documents contained in the Contract Files relating to the
Contracts; (x) all rights to proceeds, if any, of the Note Insurance Policy; and
(xi) all present and future claims, demands, causes and choses in action in
respect of any or all of the foregoing and all payments on or under and all
proceeds of every kind and nature whatsoever in respect of any or all of the
foregoing, including all proceeds of the conversion, voluntary or involuntary,
into cash or other liquid property, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts,
insurance proceeds, condemnation awards, rights to payment of any and every kind
and other forms of obligations and receivables, instruments and other property
which at any time constitute all or part of or are included in the proceeds of
any and all proceeds of the foregoing (collectively, the "Collateral").
<PAGE>
The foregoing Grant is made in trust to secure the payment of principal of
and interest on, and any other amounts owing in respect of, the Notes and to
secure compliance with the provisions of this Indenture, all as provided in this
Indenture.
The Indenture Trustee, as trustee on behalf of the Noteholders and the
Insurer, acknowledges such Grant, accepts the trusts under this Indenture in
accordance with the provisions of this Indenture.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions. Certain capitalized terms used in this Indenture
and not otherwise defined herein shall have the respective meanings assigned
them in the Sale and Servicing Agreement (as hereafter supplemented and amended,
the "Sale and Servicing Agreement") dated as of February 1, 1999 among the
Issuer, CIT Marine Trust 1996-A, The CIT Group Securitization Corporation II
(the "Company" or the "Seller") and The CIT Group/Sales Financing, Inc., as
Servicer ("CITSF"). All references in this Indenture to Articles, Sections,
subsections and exhibits are to the same contained in or attached to this
Indenture unless otherwise specified. All terms defined in this Indenture shall
have the defined meanings when used in any certificate, notice, Note or other
document made or delivered pursuant hereto unless otherwise defined therein.
SECTION 1.2 Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the TIA, such provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture securityholder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" means the Indenture Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by a Commission rule have
the respective meanings assigned to them by such definitions.
-2-
<PAGE>
ARTICLE II
THE NOTES
SECTION 2.1 Form.
(a) The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the
Class A-4 Notes, in each case, together with the Indenture Trustee's certificate
of authentication, shall be substantially in the form set forth in Exhibit A-1,
Exhibit A-2, Exhibit A-3 and Exhibit A-4, respectively, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may,
consistently herewith, be determined by the officers executing such Notes, as
evidenced by their execution of the Notes. Any portion of the text of any Note
may be set forth on the reverse thereof, with an appropriate reference thereto
on the face of the Note.
(b) The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders), all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
(c) The terms of the Notes as provided in Exhibit A-1, Exhibit A-2,
Exhibit A-3 and Exhibit A-4 are part of the terms of this Indenture.
SECTION 2.2 Execution, Authentication and Delivery.
(a) Each Note shall be dated the date of its authentication, and shall be
issuable as a registered Note in the minimum denomination of $1,000 and in
integral multiples thereof (except for one Note of each class which may be
issued in a denomination other than an integral multiple of $1,000).
(b) The Notes shall be executed on behalf of the Issuer by any of its
Authorized Officers. The signature of any such Authorized Officer on the Notes
may be manual or facsimile.
(c) Notes bearing the manual or facsimile signature of individuals who
were Authorized Officers of the Issuer at the time such signatures were affixed
shall bind the Issuer, notwithstanding that such individuals or any of them have
ceased to hold such office prior to the authentication and delivery of such
Notes or did not hold such office at the date of such Notes.
(d) The Indenture Trustee, in exchange for the Grant of the Contracts and
the other components of the Trust, and simultaneously with the constructive
delivery to the Indenture Trustee of the Contract Files with respect to the
Contracts and the other components and assets of the Trust, shall cause to be
authenticated and delivered to or upon the order of the Issuer, the Notes for
original issue in the following aggregate principal amounts:
-3-
<PAGE>
Class A-1 Notes $325,000,000,
Class A-2 Notes $179,000,000,
Class A-3 Notes $117,000,000,
Class A-4 Notes $103,134,000.
The aggregate principal amount of Notes outstanding at any time may not
exceed the foregoing amounts except as provided in Section 2.5.
(e) No Notes shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form set forth in Exhibit
A-1, Exhibit A-2, Exhibit A-3 and Exhibit A-4, as applicable, executed by the
Indenture Trustee by the manual signature of one of its Authorized Officers, and
such certificate upon any Note shall be conclusive evidence, and the only
evidence, that such Note has been duly authenticated and delivered hereunder.
SECTION 2.3 Temporary Notes.
(a) Pending the preparation of Definitive Notes, if any, the Issuer may
execute, and upon receipt of an Issuer Order the Indenture Trustee shall
authenticate and deliver, such Temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, of the tenor of the Definitive
Notes in lieu of which they are issued and with such variations as are
consistent with the terms of this Indenture as the officers executing such Notes
may determine, as evidenced by their execution of such Notes.
(b) If Temporary Notes are issued, the Issuer shall cause Definitive Notes
to be prepared without unreasonable delay. After the preparation of Definitive
Notes, the Temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the Temporary Notes at the Agency Office of the Issuer to be
maintained as provided in Section 3.2, without charge to the Noteholder. Upon
surrender for cancellation of any one or more Temporary Notes, the Issuer shall
execute and the Indenture Trustee shall authenticate and deliver in exchange
therefor a like principal amount of Definitive Notes of authorized
denominations. Until so delivered in exchange, the Temporary Notes shall in all
respects be entitled to the same benefits under this Indenture as Definitive
Notes.
SECTION 2.4 Registration; Registration of Transfer and Exchange of Notes.
(a) The Issuer shall cause to be kept the Note Register, in which, subject
to such reasonable regulations as the Issuer may prescribe, the Issuer shall
provide for the registration of the Notes and the registration of transfers and
exchanges of the Notes. The Indenture Trustee shall initially be the Note
Registrar for the purpose of registering the Notes and transfers of the Notes as
herein provided. Upon any resignation of any Note Registrar, the Issuer shall
promptly appoint a successor Note Registrar or, if it elects not to make such an
appointment, assume the duties of the Note Registrar.
-4-
<PAGE>
(b) If a Person other than the Indenture Trustee is appointed by the
Issuer as Note Registrar, the Issuer will give the Indenture Trustee and the
Insurer prompt written notice of the appointment of such Note Registrar and of
the location, and any change in the location, of the Note Register. The
Indenture Trustee and the Insurer shall have the right to inspect the Note
Register at all reasonable times and to obtain copies thereof. The Indenture
Trustee and the Insurer shall have the right to rely upon a certificate executed
on behalf of the Note Registrar by an Executive Officer thereof as to the names
and addresses of the Noteholders and the principal amounts and number of such
Notes.
(c) Upon surrender for registration of transfer of any Note at the
Corporate Trust Office of the Indenture Trustee or the Agency Office of the
Issuer (and following the delivery, in the former case, of such Notes to the
Issuer by the Indenture Trustee), the Issuer shall execute, the Indenture
Trustee shall authenticate and the Noteholder shall obtain from the Indenture
Trustee, in the name of the designated transferee or transferees, one or more
new Notes of the same class in any authorized denominations, of a like aggregate
principal amount.
(d) At the option of the Noteholder, Notes may be exchanged for other
Notes of the same class in any authorized denominations, of a like aggregate
principal amount, upon surrender of the Notes to be exchanged at the Corporate
Trust Office of the Indenture Trustee or the Agency Office of the Issuer (and
following the delivery, in the former case, of such Notes to the Issuer by the
Indenture Trustee), the Issuer shall execute, and the Indenture Trustee shall
authenticate and the Noteholder shall obtain from the Indenture Trustee, the
Notes which the Noteholder making the exchange is entitled to receive.
(e) All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
(f) Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Indenture Trustee, (i) duly executed by the
Holder thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar which requirements include membership or
participation in Securities Transfer Agents Medallion Program ("Stamp") or such
other "signature guarantee program" as may be determined by the Note Registrar
in addition to, or in substitution for, Stamp, all in accordance with the
Exchange Act, and (ii) accompanied by such other documents as the Indenture
Trustee may require.
(g) No service charge shall be made to a Holder or the Insurer for any
registration of transfer or exchange of Notes, but the Issuer or Indenture
Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Notes, other than exchanges pursuant to Section 2.3 or
9.6 not involving any transfer.
-5-
<PAGE>
(h) The preceding provisions of this Section 2.4 notwithstanding, the
Issuer shall not be required to transfer or make exchanges, and the Note
Registrar need not register transfers or exchanges, of Notes that: (i) have been
selected for redemption pursuant to Article X, if applicable; or (ii) are due
for repayment within 15 days of submission to the Corporate Trust Office or the
Agency Office.
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes.
(a) If (i) any mutilated Note is surrendered to the Indenture Trustee, or
the Indenture Trustee receives evidence to its satisfaction of the destruction,
loss or theft of any Note, and (ii) there is delivered to the Indenture Trustee
and the Insurer such security or indemnity as may be required by them to hold
the Issuer, the Indenture Trustee and the Insurer harmless, then, in the absence
of notice to the Issuer, the Note Registrar or the Indenture Trustee that such
Note has been acquired by a bona fide purchaser, the Issuer shall execute and
upon the Issuer's request the Indenture Trustee shall authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Note, a replacement Note of a like class and aggregate principal amount;
provided, however, that if any such destroyed, lost or stolen Note, but not a
mutilated Note, shall have become or within seven days shall be due and payable,
or shall have been called for redemption, instead of issuing a replacement Note,
the Issuer may make payment to the Holder of such destroyed, lost or stolen Note
when so due or payable or upon the Redemption Date, if applicable, without
surrender thereof.
(b) If, after the delivery of a replacement Note or payment in respect of
a destroyed, lost or stolen Note pursuant to subsection (a), a bona fide
purchaser of the original Note in lieu of which such replacement Note was issued
presents for payment such original Note, the Issuer, the Indenture Trustee and
the Insurer shall be entitled to recover such replacement Note (or such payment)
from (i) any Person to whom it was delivered, (ii) the Person taking such
replacement Note from the Person to whom such replacement Note was delivered; or
(iii) any assignee of such Person, except a bona fide purchaser, and the Issuer
and the Indenture Trustee shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or expense
incurred by the Issuer, the Insurer or the Indenture Trustee in connection
therewith.
(c) In connection with the issuance of any replacement Note under this
Section 2.5, the Issuer may require the payment by the Holder of such Note of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other reasonable expenses (including all fees and
expenses of the Indenture Trustee) connected therewith.
(d) Any duplicate Note issued pursuant to this Section 2.5 in replacement
for any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be found at any time or be enforced by any
Person, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
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(e) The provisions of this Section 2.5 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.6 Persons Deemed Noteholders. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee, the
Insurer and any agent of the Issuer, the Indenture Trustee or the Insurer may
treat the Person in whose name any Note is registered (as of the day of
determination) as the Noteholder for the purpose of receiving payments of
principal of and interest on such Note and for all other purposes whatsoever,
whether or not such Note be overdue, and none of the Issuer, the Indenture
Trustee, the Insurer or any agent of the Issuer, the Indenture Trustee or the
Insurer shall be affected by notice to the contrary.
SECTION 2.7 Payment of Principal and Interest.
(a) Interest on the Notes shall accrue in the manner set forth in the form
of the Notes set forth in Exhibit A-1, Exhibit A-2, Exhibit A-3 and Exhibit A-4,
as applicable, at the respective Interest Rate for each class of the Notes, and
such interest shall be payable on each Distribution Date as specified in the
form of the Notes set forth in Exhibit A-1, Exhibit A-2, Exhibit A-3 and Exhibit
A-4, as applicable. Any interest payable on any Note shall be punctually paid or
duly provided for by a deposit by or at the direction of the Issuer into the
Collection Account on the Deposit Date, shall be withdrawn from the Collection
Account and deposited into the Note Distribution Account by the Indenture
Trustee on the applicable Distribution Date and shall be paid to the Person in
whose name such Note (or one or more Predecessor Notes) is registered on the
applicable Record Date, by check mailed first-class, postage prepaid to such
Person's address as it appears on the Note Register on such Record Date;
provided, however, that, unless and until Definitive Notes have been issued
pursuant to Section 2.12, with respect to Notes registered on the applicable
Record Date in the name of the Depository (initially, Cede & Co.), payment shall
be made by wire transfer in immediately available funds to the account
designated by the Depository.
(b) Prior to the occurrence of an Event of Default and a declaration in
accordance with Section 5.2 that the Notes have become immediately due and
payable, the outstanding principal of each class of the Notes shall be payable
in full on the Note Final Scheduled Distribution Date for such class and, to the
extent of funds available therefor, in installments on the Distribution Dates
(if any) preceding the applicable Note Final Scheduled Distribution Date, in
accordance with Section 8.2(c). Any principal payable on any Note shall be
punctually paid or duly provided for by a deposit by or at the direction of the
Issuer into the Note Distribution Account on the applicable Distribution Date
and shall be paid to the Person in whose name such Note (or one or more
Predecessor Notes) is registered on the applicable Record Date, by check mailed
first-class, postage prepaid to such Person's address as it appears on the Note
Register on such Record Date; provided, however, that, unless and until
Definitive Notes have been issued pursuant to Section 2.12, with respect to
Notes registered on the Record Date in the name of the Depository (initially,
Cede & Co.), payment shall be made by wire transfer in immediately available
funds to the account designated by the Depository, except for: (i) the final
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installment of principal on any Note; and (ii) the Redemption Price (as
hereinafter defined) for any Notes, if so called, which, in each case, shall be
payable as provided herein. The funds represented by any such checks in respect
of interest or principal returned undelivered shall be held in accordance with
Section 3.3.
(c) The entire unpaid principal amount of each class of the Notes shall be
due and payable, if not previously paid, if:
(i) an Event of Default shall have occurred and be continuing while
the Indenture Trustee is the Controlling Party; and
(ii) the Indenture Trustee or the Noteholders representing not less
than 66 2/3% of the aggregate outstanding principal amount of the Notes
have declared the Notes to be immediately due and payable in the manner
provided in Section 5.2.
(d) If the Issuer defaults in a payment of interest on any of the Notes,
the Issuer shall pay such defaulted interest at the applicable Interest Rate in
any lawful manner. The Issuer may pay such defaulted interest to the Persons who
are Noteholders on a subsequent special record date, which date shall be at
least five Business Days prior to the payment date. The Issuer shall fix or
cause to be fixed any such special record date and payment date, and, at least
15 days before any such special record date, the Issuer shall mail to each
Noteholder and the Indenture Trustee a notice that states the special record
date, the payment date and the amount of defaulted interest to be paid.
(e) With respect to any Distribution Date on which the final installment
of principal and interest on a class of the Notes is to be paid, the Indenture
Trustee shall notify each Noteholder of record for such class as of the Record
Date for such Distribution Date of the fact that the final installment of
principal of and interest on such Note is to be paid on such Distribution Date.
Such notice shall be sent (i) on such Record Date by facsimile, if Book-Entry
Notes are outstanding; or (ii) not later than three Business Days after such
Record Date in accordance with Section 11.5(a) if Definitive Notes are
outstanding, and shall specify that such final installment shall be payable only
upon presentation and surrender of such Note and shall specify the place where
such Note may be presented and surrendered for payment of such installment.
Notices in connection with redemptions of Notes shall be mailed to Noteholders
as provided in Section 10.2.
SECTION 2.8 Cancellation of Notes. All Notes surrendered for payment,
redemption, exchange or registration of transfer shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall be promptly canceled by the Indenture Trustee. The Issuer may at any
time deliver to the Indenture Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly canceled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for
any Notes canceled as provided in this Section 2.8, except as expressly
permitted by this Indenture. All canceled Notes may be held or disposed of by
the Indenture Trustee in accordance with its standard retention or disposal
policy as in effect at the time unless the Issuer shall direct by an
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Issuer Order that they be destroyed or returned to it; provided, however, that
such Issuer Order is timely and the Notes have not been previously disposed of
by the Indenture Trustee.
SECTION 2.9 Release of Collateral. Subject to Section 11.1, the Indenture
Trustee shall release property from the lien of this Indenture only upon receipt
of an Issuer Request accompanied by an Officer's Certificate, an Opinion of
Counsel and Independent Certificates in accordance with TIA ss314 (c) and
314(d)(1) or an Opinion of Counsel in lieu of such Independent Certificates to
the effect that the TIA does not require any such Independent Certificates.
SECTION 2.10 Book-Entry Notes. The Notes, upon original issuance, shall be
issued in the form of a typewritten Note or Notes representing the Book-Entry
Notes, to be delivered to The Depository Trust Company, the initial Depository
by or on behalf of the Issuer. Such Note or Notes shall be registered on the
Note Register in the name of the Depository, and no Note Owner shall receive a
Definitive Note representing such Note Owner's interest in such Note, except as
provided in Section 2.12. Unless and until the Definitive Notes have been issued
to Note Owners pursuant to Section 2.12:
(a) the provisions of this Section 2.10 shall be in full force and effect;
(b) the Note Registrar and the Indenture Trustee shall be entitled to deal
with the Depository for all purposes of this Indenture (including the payment of
principal of and interest on the Notes and the giving of instructions or
directions hereunder) as the sole holder of the Notes and shall have no
obligation to the Note Owners;
(c) to the extent that the provisions of this Section 2.10 conflict with
any other provisions of this Indenture, the provisions of this Section 2.10
shall control;
(d) the rights of the Note Owners shall be exercised only through the
Depository and shall be limited to those established by law and agreements
between such Note Owners and the Depository and/or the Depository Participants.
Unless and until Definitive Notes are issued pursuant to Section 2.12, the
initial Depository shall make book-entry transfers between the Depository
Participants and receive and transmit payments of principal of and interest on
the Notes to such Depository Participants, pursuant to the Depository Agreement;
and
(e) whenever this Indenture requires or permits actions to be taken based
upon instructions or directions of Holders of Notes evidencing a specified
percentage of the aggregate outstanding principal amount of the Notes, the
Depository shall be deemed to represent such percentage only to the extent that
it has (i) received written instructions to such effect from Note Owners and/or
Depository Participants owning or representing, respectively, such required
percentage of the beneficial interest in the Notes; and (ii) has delivered such
written instructions to the Indenture Trustee.
SECTION 2.11 Notices to Depository. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Note Owners pursuant to Section
2.12, the Indenture Trustee
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shall give all such notices and communications specified herein to be given to
Noteholders to the Depository and shall have no obligation to the Note Owners.
SECTION 2.12 Definitive Notes. If (i) the Servicer advises the Indenture
Trustee in writing that the Depository is no longer willing or able to properly
discharge its responsibilities with respect to the Notes and the Issuer is
unable to locate a qualified successor, (ii) the Servicer, at its option,
advises the Indenture Trustee in writing that it elects to terminate the
book-entry system through the Depository or (iii) after the occurrence of an
Event of Default or an Event of Termination, Note Owners representing beneficial
interests aggregating at least a majority of the aggregate outstanding principal
amount of the Notes advise the Depository in writing that the continuation of a
book-entry system through the Depository is no longer in the best interests of
the Note Owners, then the Depository shall notify all Note Owners and the
Indenture Trustee of the occurrence of any such event and the Depository shall,
after being informed by the Indenture Trustee, notify the Note Owners of the
availability of Definitive Notes to Note Owners requesting the same. Upon
surrender to the Indenture Trustee of the typewritten Note or Notes representing
the Book-Entry Notes by the Depository, accompanied by registration
instructions, the Issuer shall execute and the Indenture Trustee shall
authenticate the Definitive Notes in accordance with the instructions of the
Depository. None of the Issuer, the Insurer, the Servicer, the Note Registrar or
the Indenture Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Notes, the Indenture Trustee
shall recognize the Holders of the Definitive Notes as Noteholders.
SECTION 2.13 Seller as Noteholder. The Seller in its individual or any
other capacity may become the owner or pledgee of the Notes and may otherwise
deal with the Issuer or its affiliates with the same rights it would have if it
were not the Seller.
SECTION 2.14 Tax Treatment. The Issuer and the Indenture Trustee, by
entering into this Indenture, and the Noteholders, by acquiring any Note or
interest therein, (i) express their intention that the Notes qualify under
applicable tax law as indebtedness secured by the Contracts, and (ii) unless
otherwise required by appropriate taxing authorities, agree to treat the Notes
as indebtedness secured by the Contracts for the purpose of federal income
taxes, state and local income and franchise taxes, and any other taxes imposed
upon, measured by or based upon gross or net income.
ARTICLE III
COVENANTS
SECTION 3.1 Payment of Principal and Interest. The Issuer shall duly and
punctually pay the principal of and interest on the Notes in accordance with the
terms of the Notes and this Indenture. On each Distribution Date and on the
Redemption Date (if applicable), the Issuer shall cause amounts on deposit in
the Note Distribution Account to be distributed to the Noteholders in accordance
with Sections 2.7 and 8.2, less amounts properly withheld under the Code by any
Person from a payment to any Noteholder of interest and/or principal. Any
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amounts so withheld shall be considered as having been paid by the Issuer to
such Noteholder for all purposes of this Indenture.
SECTION 3.2 Maintenance of Agency Office. In the event that Definitive
Notes are issued pursuant to Section 2.12, and as long as any such Definitive
Notes remain outstanding, the Issuer shall establish and maintain in the Borough
of Manhattan, the City of New York, an office (the "Agency Office"), being an
office or agency where Notes may be surrendered to the Issuer for registration
of transfer or exchange, and where notices and demands to or upon the Issuer in
respect of the Notes and this Indenture may be served. The Issuer hereby
initially appoints the Indenture Trustee to serve as its agent in the event that
Definitive Notes are issued. The Issuer shall give prompt written notice to the
Indenture Trustee and the Insurer of the location, and of any change in the
location, of any such office or agency. If at any time the Issuer shall fail to
maintain any such office or agency or shall fail to furnish, in accordance with
the provisions of this Section 3.2, the Indenture Trustee with the address
thereof, such surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Indenture Trustee, and the Issuer hereby appoints
the Indenture Trustee as its agent to receive all such surrenders, notices and
demands.
SECTION 3.3 Money for Payments To Be Held in Trust.
(a) As provided in Sections 8.2(a) and (b), all payments of amounts due
and payable with respect to any Notes that are to be made from amounts withdrawn
from the Note Distribution Account pursuant to Section 8.2(c) shall be made on
behalf of the Issuer by the Indenture Trustee or by another Paying Agent, and no
amounts so withdrawn from the Note Distribution Account for payments of Notes
shall be paid over to the Issuer except as provided in this Section 3.3.
(b) On or before the Distribution Date or the Redemption Date (if
applicable), the Issuer shall deposit or cause to be deposited in the Note
Distribution Account an aggregate sum sufficient to pay the amounts then
becoming due with respect to the Notes, such sum to be held in trust for the
benefit of the Persons entitled thereto and (unless the Paying Agent is the
Indenture Trustee) shall promptly notify the Indenture Trustee and the Insurer
of its action or failure so to act.
(c) The Issuer shall cause each Paying Agent other than the Indenture
Trustee to execute and deliver to the Indenture Trustee and the Insurer an
instrument in which such Paying Agent shall agree with the Indenture Trustee
(and if the Indenture Trustee acts as Paying Agent, it hereby so agrees),
subject to the provisions of this Section 3.3, that such Paying Agent shall:
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and pay such sums to such Persons as herein
provided;
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(ii) give the Indenture Trustee and the Insurer written notice of
any default by the Issuer (or any other obligor upon the Notes) of which
it has actual knowledge in the making of any payment required to be made
with respect to the Notes;
(iii) at any time during the continuance of any such default, upon
the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of Notes if
at any time it ceases to meet the standards required to be met by a Paying
Agent in effect at the time of determination; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith.
(d) The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
(e) Subject to applicable laws with respect to escheat of funds, any money
held by the Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for one year
after such amount has become due and payable shall be discharged from such trust
and be paid either (i) to the Issuer upon Issuer Request and with the consent of
the Insurer (if the Insurer is at any such time the Controlling Party) or (ii)
if such money or any portion thereof was paid by the Insurer to the Indenture
Trustee for the payment of principal of or interest on such Note to the extent
of such unreimbursed amounts, to the Insurer in lieu of the Issuer; and the
Holder of such Note shall thereafter, as an unsecured general creditor, look
only to the Issuer for payment thereof (but only to the extent of the amounts so
paid to the Issuer), and all liability of the Indenture Trustee or such Paying
Agent with respect to such trust money shall thereupon cease; provided, however,
that the Indenture Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Issuer cause to be published once,
in a newspaper published in the English language, customarily published on each
Business Day and of general circulation in the City of New York, notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining shall be repaid to the Issuer or the
Insurer, as applicable. The Indenture Trustee may also adopt and employ, at the
expense of the Issuer, any other reasonable means of notification of such
repayment (including, but not limited to, mailing notice of such repayment to
Holders whose Notes have been called but have not been
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surrendered for redemption or whose right to or interest in monies due and
payable but not claimed is determinable from the records of the Indenture
Trustee or of any Paying Agent, at the last address of record for each such
Holder).
SECTION 3.4 Existence. Subject to Section 3.10, the Issuer shall keep in
full effect its existence, rights and franchises as a business trust under the
laws of the State of Delaware and shall obtain and preserve its qualification to
do business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Indenture, the
Notes, the Collateral and each other instrument or agreement included in the
Trust Estate.
SECTION 3.5 Protection of Trust Estate; Acknowledgment of Pledge. The
Issuer shall from time to time execute and deliver all such supplements and
amendments hereto and all such financing statements, continuation statements,
instruments of further assurance and other instruments, and shall take such
other action necessary or advisable to: (i) maintain or preserve the lien and
security interest (and the priority thereof) of this Indenture or carry out more
effectively the purposes hereof, (ii) perfect, publish notice of or protect the
validity of any Grant made or to be made by this Indenture, (iii) enforce any
rights under this Indenture against the Collateral, or (iv) preserve and defend
title to the Trust Estate and the rights of the Indenture Trustee, the Insurer
and the Noteholders in such Trust Estate against the claims of all persons and
parties, and the Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required by the Indenture Trustee pursuant to this Section 3.5.
SECTION 3.6 Opinions as to Trust Estate.
(a) On the Closing Date, the Issuer shall furnish to the Indenture Trustee
and the Insurer an Opinion of Counsel either stating that, in the opinion of
such counsel, such action has been taken with respect to the recording and
filing of this Indenture, any indentures supplemental hereto and any other
requisite documents, and with respect to the execution and filing of any
financing statements and continuation statements as are necessary to perfect and
make effective the lien and security interest of this Indenture and reciting the
details of such action, or stating that, in the opinion of such counsel, no such
action is necessary to make such lien and security interest effective.
(b) On or before April 15 in each calendar year, beginning April 15, 2000,
the Issuer shall furnish to the Indenture Trustee and the Insurer an Opinion of
Counsel either stating that, in the opinion of such counsel, such action has
been taken with respect to the recording, filing, re-recording and refiling of
this Indenture, any indentures supplemental hereto and any other requisite
documents and with respect to the execution and filing of any financing
statements and continuation statements as is necessary to maintain the lien and
security interest created by this Indenture and reciting the details of such
action or stating that in the opinion of such counsel no such action is
necessary to maintain the lien and security interest created by this Indenture.
Such Opinion of Counsel shall also describe the recording, filing, re-recording
and refiling of this Indenture, any indentures supplemental hereto and any other
requisite documents
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and the execution and filing of any financing statements and continuation
statements that will, in the opinion of such counsel, be required to maintain
the lien and security interest of this Indenture until April 15 in the following
calendar year.
SECTION 3.7 Performance of Obligations; Servicing of Contracts.
(a) The Issuer shall not take any action and shall use its reasonable
efforts not to permit any action to be taken by others that would release any
Person from any of such Person's material covenants or obligations under any
instrument or agreement included in the Trust Estate or that would result in the
amendment, hypothecation, subordination, termination or discharge of, or impair
the validity or effectiveness of, any such instrument or agreement, except as
otherwise expressly provided in this Indenture, the Sale and Servicing Agreement
or such other instrument or agreement.
(b) The Issuer may contract with other Persons to assist it in performing
its duties under this Indenture, and any performance of such duties by a Person
identified to the Indenture Trustee and the Insurer in the Basic Documents or an
Officer's Certificate of the Issuer shall be deemed to be action taken by the
Issuer. Initially, the Issuer has contracted with the Servicer to assist the
Issuer in performing its duties under this Indenture.
(c) The Issuer shall punctually perform and observe all of its obligations
and agreements contained in this Indenture, the Basic Documents and in the
instruments and agreements included in the Trust Estate, including but not
limited to filing or causing to be filed all UCC financing statements and
continuation statements required to be filed by the terms of this Indenture, the
Sale and Servicing Agreement and the Purchase Agreement in accordance with and
within the time periods provided for herein and therein.
(d) If the Issuer shall have knowledge of the occurrence of an Event of
Termination under the Sale and Servicing Agreement, the Issuer shall promptly
notify the Indenture Trustee, the Insurer and the Rating Agencies thereof, and
shall specify in such notice the response or action, if any, the Issuer has
taken or is taking with respect to such default. If an Event of Termination
shall arise from the failure of the Servicer to perform any of its duties or
obligations under the Sale and Servicing Agreement with respect to the
Contracts, the Indenture Trustee shall take all reasonable steps available to it
pursuant to the Sale and Servicing Agreement to remedy such failure or to effect
a Service Transfer pursuant to the Sale and Servicing Agreement.
(e) Without derogating from the absolute nature of the assignment granted
to the Indenture Trustee under this Indenture or the rights of the Indenture
Trustee hereunder, the Issuer agrees that it shall not, without the prior
written consent of the Indenture Trustee, the Insurer (so long as the Insurer is
the Controlling Party) or the Holders of at least a majority in aggregate
outstanding principal amount of the Notes together with the consent of the
Insurer (so long as the Insurer is the Controlling Party), as applicable in
accordance with the terms thereof, amend, modify, waive, supplement, terminate
or surrender, or agree to any amendment, modification, supplement, termination,
waiver or surrender of, the terms of any of the Basic Documents, or waive timely
performance or observance by the Servicer or the Seller under the
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Sale and Servicing Agreement or the Purchase Agreement. If any such amendment,
modification, supplement or waiver shall be so consented to by the Indenture
Trustee, the Insurer or such Holders, as applicable, the Issuer agrees, promptly
following a request by the Indenture Trustee to do so, to execute and deliver,
in its own name and at its own expense, such agreements, instruments, consents
and other documents as the Indenture Trustee may deem necessary or appropriate
in the circumstances.
SECTION 3.8 Negative Covenants. So long as any Notes are outstanding, the
Issuer shall not:
(a) sell, transfer, exchange or otherwise dispose of any of the properties
or assets of the Issuer, except the Issuer may (i) collect, liquidate, sell or
otherwise dispose of Contracts (including Repurchased Contracts and Liquidated
Contracts) and Financed Boats, (ii) make cash payments out of the Designated
Accounts and (iii) take other actions, in each case as contemplated by the Basic
Documents;
(b) claim any credit on, or make any deduction from the principal or
interest payable in respect of the Notes (other than amounts properly withheld
from such payments under the Code or applicable state law) or assert any claim
against any present or former Noteholder by reason of the payment of the taxes
levied or assessed upon any part of the Trust Estate;
(c) voluntarily commence any insolvency, readjustment of debt, marshaling
of assets and liabilities or other proceeding, or apply for an order by a court
or agency or supervisory authority for the winding-up or liquidation of its
affairs or any other event specified in Section 5.1(e) or (f); or
(d) either (i) permit the validity or effectiveness of this Indenture to
be impaired, or permit the Lien of this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be released from
any covenants or obligations with respect to the Notes under this Indenture
except as may be expressly permitted hereby, (ii) permit any Lien or other
encumbrance (other than the Lien of this Indenture) to be created on or extend
to or otherwise arise upon or burden the Trust Estate or any part thereof or any
interest therein or the proceeds thereof (other than tax liens, mechanics' liens
and other liens that arise by operation of law, in each case on a Financed Boat
and arising solely as a result of an action or omission of the related Obligor)
or (iii) permit the Lien of this Indenture not to constitute a valid first
priority security interest in the Trust Estate (other than with respect to any
such tax, mechanics' or other Lien).
SECTION 3.9 Annual Statement as to Compliance. The Issuer shall deliver to
the Indenture Trustee and the Insurer, on or before April 15 of each year,
beginning April 15, 2000, and otherwise in compliance with Section 314(a)(4) of
the TIA, an Officer's Certificate signed by an Authorized Officer of the
Servicer, dated as of April 15 of such year, stating that a review of the
activities of the Issuer during the immediately preceding fiscal year and of
performance under this Indenture has been made and, to the best of such
Authorized Officer's knowledge, based on such review, the Issuer has fulfilled
all of its obligations under this Indenture throughout such year, or, if there
has been a default in the fulfillment of any such
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obligation, specifying each such default known to such Authorized Officer and
the nature and status thereof. A copy of such certificate may be obtained by any
Noteholder by a request in writing to the Issuer addressed to the Corporate
Trust Office of the Indenture Trustee.
SECTION 3.10 Consolidation, Merger, etc. of Issuer; Disposition of Trust
Assets.
(a) The Issuer shall not consolidate or merge with or into any other
Person, unless:
(i) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger shall be a Person organized and existing
under the laws of the United States of America or any State or the
District of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Indenture Trustee and
the Insurer, in form satisfactory to the Indenture Trustee and the
Insurer, the due and timely payment of the principal of and interest on
all Notes and the performance or observance of every agreement and
covenant of this Indenture on the part of the Issuer to be performed or
observed, all as provided herein;
(ii) immediately after giving effect to such merger or
consolidation, no Default or Event of Default shall have occurred and be
continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction and such Person;
(iv) any action as is necessary to maintain the Lien created by this
Indenture shall have been taken; and
(v) the Issuer shall have delivered to the Indenture Trustee and the
Insurer an Officers' Certificate and an Opinion of Counsel addressed to
the Issuer, each stating:
(A) that such consolidation or merger and such supplemental
indenture comply with this Section 3.10;
(B) that such consolidation or merger and such supplemental
indenture shall have no material adverse tax consequence to the
Trust or any Noteholder or Certificateholder; and
(C) that all conditions precedent herein provided for in this
Section 3.10 have been complied with, which shall include any filing
required by the Exchange Act.
(b) Except as otherwise expressly permitted by this Indenture or the other
Basic Documents, the Issuer shall not sell, convey, exchange, transfer or
otherwise dispose
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of any of its properties or assets (other than the Excluded Assets), including
those included in the Trust Estate, to any Person unless:
(i) the Person that acquires such properties or assets of the Issuer
(A) shall be a United States citizen or a Person organized and existing
under the laws of the United States of America or any State or the
District of Columbia and (B) by an indenture supplemental hereto, executed
and delivered to the Indenture Trustee and the Insurer, in form
satisfactory to the Indenture Trustee and the Insurer: (1) expressly
assumes the due and punctual payment of the principal of and interest on
all Notes and the performance or observance of every agreement and
covenant of this Indenture on the part of the Issuer to be performed or
observed, all as provided herein; (2) expressly agrees that all right,
title and interest so sold, conveyed, exchanged, transferred or otherwise
disposed of shall be subject and subordinate to the rights of Noteholders
and the Insurer; (3) unless otherwise provided in such supplemental
indenture, expressly agrees to indemnify, defend and hold harmless the
Issuer against and from any loss, liability or expense arising under or
related to this Indenture and the Notes; and (4) expressly agrees that
such Person (or if a group of Persons, then one specified Person) shall
make all filings with the Commission (and any other appropriate Person)
required by the Exchange Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction and such Person;
(iv) any action as is necessary to maintain the Lien created by this
Indenture shall have been taken: and
(v) the Issuer shall have delivered to the Indenture Trustee and the
Insurer an Officers' Certificate and an Opinion of Counsel addressed to
the Issuer, each stating that:
(A) such sale, conveyance, exchange, transfer or disposition
and such supplemental indenture comply with this Section 3.10;
(B) such sale, conveyance, exchange, transfer or disposition
and such supplemental indenture has no material adverse tax
consequence to the Trust or to any Noteholders or
Certificateholders; and
(C) that all conditions precedent herein provided for in this
Section 3.10 have been complied with, which shall include any filing
required by the Exchange Act.
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SECTION 3.11 Successor or Transferee.
(a) Upon any consolidation or merger of the Issuer in accordance with
Section 3.10(a), the Person formed by or surviving such consolidation or merger
(if other than the Issuer) shall succeed to, and be substituted for, and may
exercise every right and power of, the Issuer under this Indenture with the same
effect as if such Person had been named as the Issuer herein.
(b) Upon a sale, conveyance, exchange, transfer or disposition of all the
assets and properties of the Issuer pursuant to Section 3.10(b), the Trust shall
be released from every covenant and agreement of this Indenture to be observed
or performed on the part of the Issuer with respect to the Notes immediately
upon the delivery of written notice to the Indenture Trustee and the Insurer
from the Person acquiring such assets and properties stating that the Trust is
to be so released.
SECTION 3.12 No Other Business. The Issuer shall not engage in any
business or activity other than acquiring, holding and managing the Contracts,
the other assets of the Trust Estate, and the Excluded Assets and the proceeds
therefrom in the manner contemplated by the Basic Documents, issuing the Notes
and the Certificates, making payments on the Notes and the Certificates and
engaging in such other activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto, as set forth in Section 2.3
of the Trust Agreement.
SECTION 3.13 No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness for money borrowed other than indebtedness for money borrowed in
respect of the Notes or in accordance with the Basic Documents.
SECTION 3.14 Guarantees, Loans, Advances and Other Liabilities. Except as
contemplated by this Indenture or the other Basic Documents, the Issuer shall
not make any loan or advance or credit to, or guarantee (directly or indirectly
or by an instrument having the effect of assuring another's payment or
performance on any obligation or capability of so doing or otherwise), endorse
or otherwise become contingently liable, directly or indirectly, in connection
with the obligations, stocks or dividends of, or own, purchase, repurchase or
acquire (or agree contingently to do so) any stock, obligations, assets or
securities of, or any other interest in, or make any capital contribution to,
any other Person.
SECTION 3.15 Servicer's Obligations. The Issuer shall use its best efforts
to cause the Servicer to comply with its obligations under the Sale and
Servicing Agreement.
SECTION 3.16 Capital Expenditures. The Issuer shall not make any
expenditure (whether by long-term or operating lease or otherwise) for capital
assets (either real, personal or intangible property) other than the purchase of
the Contracts and other property and rights from the Seller pursuant to the
Basic Documents.
SECTION 3.17 Removal of Servicer. So long as any Notes are outstanding,
the Issuer shall not remove the Servicer without cause unless the Rating Agency
Condition shall
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have been satisfied in connection with such removal and the Insurer shall have
given its prior written consent with a copy of such consent to the Indenture
Trustee.
SECTION 3.18 Restricted Payments. Except for payments of principal of or
interest on or redemption of the Notes and except as expressly provided in the
Basic Documents, so long as any Notes are outstanding, the Issuer shall not,
directly or indirectly:
(a) pay any dividend or make any distribution (by reduction of capital or
otherwise), whether in cash, property, securities or a combination thereof, to
the Owner Trustee or any owner of a beneficial interest in the Issuer or
otherwise, in each case with respect to any ownership or equity interest or
similar security in or of the Issuer or to the Servicer;
(b) redeem, purchase, retire or otherwise acquire for value any such
ownership or equity interest or similar security; or
(c) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Issuer may make, or cause to be made, distributions
to the Servicer, the Owner Trustee, the Lender, the holder of the AO Interest
(and any successor in interest thereto) and the Certificateholders as permitted
by, and to the extent funds are available for such purpose under, the Sale and
Servicing Agreement, the Loan Agreement or the Trust Agreement. The Issuer shall
not, directly or indirectly, make payments to or distributions from the
Collection Account except in accordance with the Basic Documents.
SECTION 3.19 Notice of Events of Default. The Issuer agrees to give the
Indenture Trustee, the Insurer and the Rating Agencies prompt written notice of
each Event of Default hereunder, each Event of Termination and each default on
the part of the Seller or the Servicer of their obligations under the Basic
Documents.
SECTION 3.20 Further Instruments and Acts. Upon request of the Indenture
Trustee or the Insurer (if the Insurer is at such time the Controlling Party),
the Issuer shall execute and deliver such further instruments and do such
further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 3.21 Representations and Warranties by the Issuer to the Indenture
Trustee. The Issuer hereby represents and warrants to the Indenture Trustee and
the Insurer as follows:
(a) No Contract has been sold, transferred, assigned or pledged by the
Trust to any Person other than the Indenture Trustee; immediately prior to the
conveyance of the Contracts pursuant to this Indenture, the Trust had good and
marketable title thereto, free of any Lien; and, upon execution and delivery of
this Indenture by the Trust, the Indenture Trustee shall have all of the right,
title and interest of the Trust in, to and under the Contracts, the unpaid
indebtedness evidenced thereby and the collateral security therefor, free of any
Lien; and
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(b) All filings (including, without limitation, UCC filings) necessary in
any jurisdiction to give the Indenture Trustee a first perfected security
interest in the Contracts, other than with respect to any Financed Boats located
in states in which notation of a security interest on the title document is
required or permitted to perfect such security interest, shall have been made
and all Assignments of Preferred Mortgages shall be filed within the period
provided under the Sale and Servicing Agreement.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1 Satisfaction and Discharge of Indenture. This Indenture shall
cease to be of further effect with respect to the Notes except as to: (i) rights
of registration of transfer and exchange; (ii) substitution of mutilated,
destroyed, lost or stolen Notes; (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon; (iv) Sections 3.3, 3.4, 3.5, 3.8,
3.10, 3.12, 3.13, 3.19 and 3.21; (v) the rights, obligations and immunities of
the Indenture Trustee hereunder (including the rights of the Indenture Trustee
under Section 6.7 and the obligations of the Indenture Trustee under Sections
4.2 and 4.4); and (vi) the rights of Noteholders as beneficiaries hereof with
respect to the property so deposited with the Indenture Trustee payable to all
or any of them, and the Indenture Trustee, on demand of and at the expense of
the Issuer, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture with respect to the Notes, if:
(a) either:
(i) all Notes theretofore authenticated and delivered (other than
(A) Notes that have been destroyed, lost or stolen and that have been
replaced or paid as provided in Section 2.5 and (B) Notes for whose
payment money has theretofore been deposited in trust or segregated and
held in trust by the Issuer and thereafter repaid to the Issuer or
discharged from such trust, as provided in Section 3.3) have been
delivered to the Indenture Trustee for cancellation and the Note Insurance
Policy has expired and been returned to the Insurer for cancellation; or
(ii) all Notes not theretofore delivered to the Indenture Trustee
for cancellation:
(A) have become due and payable,
(B) will be due and payable on their respective Note Final
Scheduled Distribution Dates within one year, or
(C) are to be called for redemption within one year under
arrangements satisfactory to the Indenture Trustee for the giving of
notice of redemption by the Indenture Trustee in the name, and at
the expense, of the Issuer,
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and the Issuer, in the case of (A), (B) or (C) of subsection 4.1(a)(ii) above,
has irrevocably deposited or caused to be irrevocably deposited with the
Indenture Trustee cash or direct obligations of or obligations guaranteed by the
United States of America (which will mature prior to the date such amounts are
payable), in trust for such purpose, in an amount sufficient to pay and
discharge the entire unpaid principal of and accrued interest on (a) such Notes
not theretofore delivered to the Indenture Trustee for cancellation when due on
their respective Note Final Scheduled Distribution Dates for such Notes or the
Redemption Date for such Notes (if such Notes have been called for redemption
pursuant to Section 10), as the case may be, and (b) all amounts due to the
Insurer pursuant to Section 5.05(b) of the Sale and Servicing Agreement and as
subrogee to the rights of the Holders of the Notes pursuant to Section 5.12 of
the Sale and Servicing Agreement;
(b) the Issuer has paid or caused to be paid all other sums payable
hereunder by the Issuer; and
(c) the Issuer has delivered to the Indenture Trustee and the Insurer an
Officer's Certificate, an Opinion of Counsel and (if required by the TIA or the
Indenture Trustee) an Independent Certificate from a firm of certified public
accountants, each meeting the applicable requirements of Section 11.1(a) and
each stating that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied with.
SECTION 4.2 Application of Trust Money. All monies deposited with the
Indenture Trustee pursuant to Section 4.1 shall be held in trust and applied by
it, in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent, as the Indenture Trustee
may determine, to the Insurer and the Holders of the particular Notes for the
payment or redemption of which such monies have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal and
interest; but such monies need not be segregated from other funds except to the
extent required herein or in the Sale and Servicing Agreement or required by
law.
SECTION 4.3 Repayment of Monies Held by Paying Agent. In connection with
the satisfaction and discharge of this Indenture with respect to the Notes, all
monies then held by any Paying Agent other than the Indenture Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Indenture Trustee to be held and applied according to
Section 3.3 and thereupon such Paying Agent shall be released from all further
liability with respect to such monies.
SECTION 4.4 Duration of Position of Indenture Trustee. Notwithstanding the
earlier payment in full of all principal and interest due to the Noteholders
under the terms of the Notes and the cancellation of the Notes pursuant to
Section 4.1, the Indenture Trustee shall continue to act in the capacity as
Indenture Trustee hereunder and, for the benefit of the Certificateholders,
shall comply with its obligations under the Basic Documents, as appropriate,
until such time as all payments in respect of Certificate Balance and interest
due to the Certificateholders have been paid in full.
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ARTICLE V
DEFAULT AND REMEDIES
SECTION 5.1 Events of Default. For the purposes of this Indenture, "Event
of Default" wherever used herein, means any one of the following events:
(a) any failure to pay any interest on any Note as and when the same
becomes due and payable which failure continues unremedied for a period of five
(5) days;
(b) except as set forth in Section 5.1(c), failure to pay any installment
of the principal of any Note as and when the same becomes due and payable, and
such failure continues unremedied for a period of thirty (30) days after there
shall have been given, by registered or certified mail, written notice thereof
to the Servicer by the Indenture Trustee or to the Servicer and the Indenture
Trustee by the Holders of not less than 25% of the aggregate outstanding
principal amount of the Notes; or
(c) failure to pay in full the outstanding principal balance of each class
of the Notes on or prior to the Note Final Scheduled Distribution Date for such
class; or
(d) default in the observance or performance in any material respect of
any covenant or agreement of the Issuer made in this Indenture (other than a
covenant or agreement for payment of principal or interest) which failure
materially and adversely affects the rights of the Noteholders, and such default
shall continue or not be cured for a period of 30 days after there shall have
been given, by registered or certified mail, to the Issuer, the Seller (or the
Servicer, as applicable) and the Insurer by the Indenture Trustee or to the
Issuer and the Seller (or the Servicer, as applicable) and the Indenture Trustee
by the Controlling Party or, if the Insurer is not the Controlling Party, the
Holders of at least 25% of the aggregate outstanding principal amount of the
Notes, a written notice specifying such default and requiring it to be remedied
and stating that such notice is a "Notice of Default" hereunder; or
(e) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial part of
the Trust Estate in an involuntary case under any applicable federal or state
bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Issuer or for any substantial part of the Trust Estate,
or ordering the winding-up or liquidation of the Issuer's affairs, and such
decree or order shall remain unstayed and in effect for a period of 90
consecutive days; or
(f) the commencement by the Issuer of a voluntary case under any
applicable federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or the consent by the Issuer to the entry of an order for
relief in an involuntary case under any such law, or the consent by the Issuer
to the appointment or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Issuer or for any
substantial part of the Trust Estate, or the making by the Issuer of any general
assignment for the benefit of
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creditors, or the failure by the Issuer generally to pay its debts as such debts
become due, or the taking of action by the Issuer in furtherance of any of the
foregoing; or
(g) if the Insurer is the Controlling Party, an Insurance Agreement
Trigger Event.
The Issuer shall deliver to the Indenture Trustee and the Insurer, within
five Business Days after learning of the occurrence thereof, written notice in
the form of an Officer's Certificate of any event which with the giving of
notice and the lapse of time would become an Event of Default under Section
5.1(c), its status and what action the Issuer is taking or proposes to take with
respect thereto. The Indenture Trustee shall, upon becoming aware of an Event of
Default, promptly notify the Rating Agencies of such Event of Default.
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment.
(a) If an Event of Default should occur and be continuing and the Insurer
is not the Controlling Party, then and in every such case, unless the principal
amount of the Notes shall have already become due and payable, either the
Indenture Trustee or the Holders of Notes representing not less than 66 2/3% of
the aggregate outstanding principal amount of the Notes may declare all the
Notes to be immediately due and payable, by a notice in writing to the Issuer
(and to the Indenture Trustee if given by the Noteholders) setting forth the
Event or Events of Default, and upon any such declaration the unpaid principal
amount of such Notes, together with accrued and unpaid interest thereon through
the date of acceleration, shall become immediately due and payable. If on the
date that any Event of Default occurs and is continuing the Insurer is the
Controlling Party, the Insurer, in its sole discretion and upon delivery of a
written notice to the Indenture Trustee specifying such Event of Default, may
determine whether or not to accelerate payment on the Notes. In the event of any
acceleration of the Notes by operation of this Section 5.2, the Indenture
Trustee shall continue to be entitled to make claims under the Note Insurance
Policy pursuant to Section 5.09 of the Sale and Servicing Agreement. The
Indenture Trustee shall, upon the declaration that all Notes are to be
immediately due and payable, promptly notify the Rating Agencies.
(b) If an Event of Default occurs at any time when the Insurer is the
Controlling Party, the Insurer shall have the right, but not the obligation, to
make one or more accelerated payments on the Notes and to prepay the Notes, in
whole or in part, on any date or dates following the occurrence of such Event of
Default if the Insurer, in its sole discretion, shall so elect. This right of
the Insurer to make accelerated payments on the Notes is in addition to its
obligation to make payments on the Notes pursuant to the Note Insurance Policy.
(c) At any time after such declaration of acceleration of maturity has
been made and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee as hereinafter provided in this Article V,
provided, either the Insurer (so long as the Insurer is the Controlling Party)
or the Holders of Notes representing not less than 66 2/3% of the aggregate
outstanding principal amount of the Notes (if the Insurer is not the Controlling
Party), by written notice to the Issuer, the Indenture Trustee and, if the
Noteholders issue such
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notice, the Insurer may waive all Defaults set forth in the notice delivered
pursuant to Section 5.2(a), and rescind and annul such declaration and its
consequences if:
(i) the Issuer has paid or deposited with the Indenture Trustee a
sum sufficient to pay
(A) all payments of principal of and interest on all Notes and
all other amounts that would then be due hereunder or upon such
Notes if the Event of Default giving rise to such acceleration had
not occurred; and
(B) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses, disbursements
and advances of the Indenture Trustee and its agents and counsel;
and
(ii) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such acceleration,
have been cured or waived as provided herein;
provided, that no such rescission and annulment shall extend to or affect any
subsequent default or impair any right consequent thereto; and provided,
further, that if the Indenture Trustee shall have proceeded to enforce any right
under this Indenture and such proceedings shall have been discontinued or
abandoned because of such rescission and annulment or for any other reason, or
shall have been determined adversely to the Indenture Trustee, then and in every
such case, the Indenture Trustee, the Issuer, the Insurer and the Noteholders,
as the case may be, shall be restored respectively to their former positions and
rights hereunder, and all rights, remedies and powers of the Indenture Trustee,
the Issuer, the Insurer and the Noteholders, as the case may be, shall continue
as though no such proceedings had been taken.
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.
(a) The Issuer covenants that if an Event of Default occurs and is
continuing under Section 5.1(a), 5.1(b) or 5.1(c) of this Indenture, then the
Issuer shall, upon demand of the Indenture Trustee made at the written direction
of the Insurer, if the Insurer is the Controlling Party, pay to the Indenture
Trustee, for the ratable benefit of the Noteholders in accordance with their
respective outstanding principal amounts, the whole amount then due and payable
on such Notes for principal and interest, with interest upon the overdue
principal, at the rate borne by the respective class of the Notes, and in
addition thereto such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee and its agents and counsel.
(b) If the Issuer shall fail forthwith to pay such amounts upon such
demand, the Indenture Trustee, in its own name and as trustee of an express
trust, shall, at the written direction of the Insurer, if the Insurer is the
Controlling Party, institute a proceeding for the collection of the sums so due
and unpaid, and may prosecute such Proceeding to judgment or final decree, and
may enforce the same against the Issuer or other obligor upon such Notes and
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collect in the manner provided by law out of the property of the Issuer or other
obligor upon such Notes, wherever situated, the monies adjudged or decreed to be
payable. At any time when (i) the Insurer is the Controlling Party or (ii)(A)
the Insurer is a holder of Notes pursuant to Section 5.12 of the Sale and
Servicing Agreement and (B) all amounts due to all other holders of the Notes
pursuant to the Notes and this Indenture have been paid in full, the Insurer
may, in its own name, institute any Proceeding or take any other action
permitted under this Section 5.3 to collect amounts due hereunder from the
Issuer or any other obligor on the Notes.
(c) If an Event of Default occurs and is continuing, the Indenture Trustee
may, as more particularly provided in Section 5.4, in its discretion, with the
prior written consent of the Controlling Party, or shall, at the direction of
the Controlling Party, proceed to protect and enforce its rights and the rights
of the Noteholders, by such appropriate Proceedings as the Indenture Trustee
shall deem most effective to protect and enforce any such rights, whether for
the specific enforcement of any covenant or agreement in this Indenture or in
aid of the exercise of any power granted herein, or to enforce any other proper
remedy or legal or equitable right vested in the Indenture Trustee by this
Indenture or by law.
(d) If there shall be pending, relative to the Issuer or any other obligor
upon the Notes or any Person having or claiming an ownership interest in the
Trust Estate, proceedings under Title 11 of the United States Code or any other
applicable federal or state bankruptcy, insolvency or other similar law, or if a
receiver, assignee or trustee in bankruptcy or reorganization, liquidator,
sequestrator or similar official shall have been appointed for or taken
possession of the Issuer or its property or such other obligor or Person, or in
case of any other comparable judicial Proceedings relative to the Issuer or
other obligor upon the Notes, or to the creditors or property of the Issuer or
such other obligor, the Indenture Trustee, irrespective of whether the principal
of any Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand pursuant to the provisions of this Section 5.3, shall be
entitled and empowered (but only at the direction of the Insurer if the Insurer
is the Controlling Party), by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes and to
file such other papers or documents as may be necessary or advisable in
order to have the claims of the Indenture Trustee (including any claim for
reasonable compensation to the Indenture Trustee and each predecessor
Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all advances
made, by the Indenture Trustee and each predecessor Trustee, except as a
result of negligence or bad faith) and of the Noteholders allowed in such
Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of Notes in any election of a trustee, a standby
trustee or Person performing similar functions in any such Proceedings;
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(iii) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Noteholders and of the Indenture Trustee on
their behalf; and
(iv) to file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Indenture
Trustee or the Holders of Notes allowed in any judicial proceedings
relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee, and, if the Indenture Trustee shall consent
to the making of payments directly to such Noteholders, to pay to the Indenture
Trustee such amounts as shall be sufficient to cover reasonable compensation to
the Indenture Trustee, each predecessor Trustee and their respective agents,
attorneys and counsel, and all other expenses and liabilities incurred, and all
disbursements and advances made, by the Indenture Trustee and each predecessor
trustee, and their respective agents, attorneys and counsel, and any other
amounts due to the Indenture Trustee and each predecessor trustee under Section
6.7 hereof, except as a result of negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial or other
Proceedings relative thereto, and any such Proceedings instituted by the
Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Trustee and their respective agents and attorneys, shall be for the ratable
benefit of the Noteholders and the Insurer.
(g) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Noteholders, and it shall not be necessary to make any
Noteholder a party to any such Proceedings.
SECTION 5.4 Remedies; Priorities.
(a) If an Event of Default has occurred and is continuing and either (i)
the Insurer is not the Controlling Party, then the Indenture Trustee may do one
or more of the following (subject to Section 5.5) or (ii) the Insurer is the
Controlling Party and the Insurer so
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directs the Indenture Trustee in writing, then the Indenture Trustee shall do
one or more of the following (subject to Section 5.5):
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the Notes
or under this Indenture with respect thereto, whether by declaration of
acceleration or otherwise, enforce any judgment obtained, and collect from
the Issuer and any other obligor upon such Notes monies adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust Estate;
(iii) exercise any remedies of a secured party under the UCC and
take any other appropriate action to protect and enforce the rights and
remedies of the Indenture Trustee, the Insurer and the Noteholders; and
(iv) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
provided, however, that (X) if the Insurer is not the Controlling Party, the
Indenture Trustee may not sell or otherwise liquidate the Trust Estate following
an Event of Default, unless (A) the Holders of all of the aggregate outstanding
principal amount of the Notes consent thereto, (B) the proceeds of such sale or
liquidation distributable to the Noteholders are sufficient to pay in full the
principal of and the accrued interest on the Notes at the date of such sale or
liquidation or (C) the Indenture Trustee determines that the Trust Estate will
not continue to provide sufficient funds for the payment of principal of and
interest on the Notes as and when they would have become due if the Notes had
not been declared due and payable, and the Indenture Trustee obtains the consent
of Holders of not less than 66 2/3% of the aggregate outstanding principal
amount of the Notes or (Y) if the Insurer is the Controlling Party, the Insurer
may not direct the Indenture Trustee, and the Indenture Trustee shall not comply
with any such direction, to sell or otherwise liquidate the Collateral following
an Event of Default unless the proceeds of such sale or liquidation
distributable to the Securityholders are sufficient to pay in full the principal
of and the accrued interest on the Securities, unless such Event of Default
resulted in a claim being made on the Policies or arose from an event of
bankruptcy, insolvency, receivership or liquidation of the Trust. Prior to a
sale or liquidation of the Trust Estate following an Event of Default, the
Indenture Trustee shall notify the Rating Agencies of such sale or liquidation.
In determining the sufficiency or insufficiency of proceeds or funds with
respect to clauses (B) and (C), the Indenture Trustee may, but need not, obtain
and conclusively rely upon an opinion of an Independent investment banking or
accounting firm of national reputation as to the feasibility of such proposed
action and as to the sufficiency of the Trust Estate for such purpose.
(b) If the Indenture Trustee collects any money or property pursuant to
this Article V, it shall pay out the money or property in the following order:
FIRST: to the Indenture Trustee for any amounts due under Section 6.7;
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SECOND: to the Servicer for the Servicer Payment, to the extent not
previously retained;
THIRD: to the Insurer for any accrued and unpaid Insurance Premiums, to
the extent not previously paid and to the extent accrued prior to an Insurer
Default, if any;
FOURTH: to the Noteholders for amounts due and unpaid on the Notes for
interest, ratably among all Noteholders, without preference or priority of any
kind, according to the amounts due and payable on all the Notes for interest;
FIFTH: to the holders of the Notes for amounts due and unpaid on the Notes
for principal, ratably, without preference or priority of any kind, according to
the amounts due and payable on the Notes for principal, until the principal
amount of the Notes is reduced to zero;
SIXTH: to the Certificate Distribution Account for payment to
Certificateholders for amounts due and unpaid on the Certificates for interest,
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Certificates for interest;
SEVENTH: to the Certificate Distribution Account for payment to
Certificateholders for amounts due and unpaid on the Certificates for the
Certificate Balance ratably, without preference or priority of any kind,
according to the amounts due and payable on the Certificates for the Certificate
Balance;
EIGHTH: to the Insurer to pay the Reimbursement Obligations (to the extent
not previously paid) plus interest accrued thereon prior to any Insurer Default;
NINTH: to the Lender to pay the Lender Fees;
TENTH: if CITSF or one of its affiliates is the Servicer, to the Servicer
for the Servicing Fee (including any unpaid Servicing Fees for past Distribution
Dates), to the extent not previously paid to the Servicer;
ELEVENTH: to the Lender for payment of outstanding principal on the Loan;
TWELFTH: to the Reserve Account the amount by which the Specified Reserve
Amount for the next Distribution Date exceeds the amount on deposit in the
Reserve Account; and
THIRTEENTH: to the Issuer for distribution to the holder of the AO
Interest.
The Indenture Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section 5.4. At least 15 days before
such record date, the Indenture Trustee shall mail to each Noteholder, the
Insurer and the Indenture Trustee a notice that states the record date, the
payment date and the amount to be paid.
SECTION 5.5 Optional Preservation of the Contracts. If the Notes have been
declared to be due and payable under Section 5.2 following an Event of Default
and such
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declaration and its consequences have not been rescinded and annulled, the
Indenture Trustee may, but need not, elect to take and maintain possession of
the Trust Estate. It is the desire of the parties hereto and the Noteholders
that there be at all times sufficient funds for the payment of principal of and
interest on the Notes, and the Indenture Trustee shall take such desire into
account when determining whether or not to take and maintain possession of the
Trust Estate. In determining whether to take and maintain possession of the
Trust Estate, the Indenture Trustee may, but need not, obtain and conclusively
rely upon an opinion of an Independent investment banking or accounting firm of
national reputation as to the feasibility of such proposed action and as to the
sufficiency of the Trust Estate for such purpose.
SECTION 5.6 Limitation of Suits. No Holder of any Note shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(i) such Holder has previously given written notice to the Indenture
Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the aggregate outstanding
principal amount of the Notes have made written request to the Indenture Trustee
to institute such Proceeding in respect of such Event of Default in its own name
as Indenture Trustee hereunder;
(iii) such Holder or Holders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be incurred
in complying with such request;
(iv) the Indenture Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such Proceedings;
(v) no direction inconsistent with such written request has been given to
the Indenture Trustee during such 60-day period by the Holders of a majority of
the aggregate outstanding principal amount of the Notes; and
(vi) the Insurer has given its prior written consent if it is the
Controlling Party;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders of Notes or to enforce any right under this Indenture, except
in the manner herein provided and for the equal, ratable and common benefit of
all holders of Notes. For the protection and enforcement of the provisions of
this Section 5.6, each and every Noteholder shall be entitled to such relief as
can be given either at law or in equity.
If the Indenture Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of Notes, each
representing less than a majority of the aggregate outstanding principal amount
of the Notes, the Indenture Trustee in its sole
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discretion may determine what action, if any, shall be taken, notwithstanding
any other provisions of this Indenture.
SECTION 5.7 Unconditional Rights of Noteholders To Receive Principal and
Interest. Notwithstanding any other provisions in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest on such Note on or after the respective
due dates thereof expressed in such Note or in this Indenture (or, in the case
of redemption, if applicable, on or after the Redemption Date) and to institute
suit for the enforcement of any such payment, and such right shall not be
impaired without the consent of such Holder.
SECTION 5.8 Restoration of Rights and Remedies. If the Indenture Trustee,
the Insurer or any Noteholder has instituted any Proceeding to enforce any right
or remedy under this Indenture and such Proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Indenture
Trustee, the Insurer or to such Noteholder, then and in every such case the
Issuer, the Indenture Trustee, the Insurer and the Noteholders shall, subject to
any determination in such Proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Indenture Trustee, the Insurer and the Noteholders shall continue as though no
such Proceeding had been instituted.
SECTION 5.9 Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.10 Delay or Omission Not a Waiver. No delay or omission of the
Indenture Trustee, the Insurer or any Holder of any Note to exercise any right
or remedy accruing upon any Default or Event of Default shall impair any such
right or remedy or constitute a waiver of any such Default or Event of Default
or an acquiescence therein. Every right and remedy given by this Article V or by
law to the Indenture Trustee, the Insurer or to the Noteholders may be exercised
from time to time, and as often as may be deemed expedient, by the Indenture
Trustee, the Insurer or by the Noteholders, as the case may be.
SECTION 5.11 Control by Noteholders. If the Insurer is not the Controlling
Party, the Holders of a majority of the aggregate outstanding principal amount
of the Notes shall, subject to provision being made for indemnification against
costs, expenses and liabilities in a form satisfactory to the Indenture Trustee,
have the right to direct the time, method and place of conducting any Proceeding
for any remedy available to the Indenture Trustee with respect to the Notes or
exercising any trust or power conferred on the Indenture Trustee; provided,
however, that:
(i) subject to Section 6.1, the Indenture Trustee shall have the right to
decline to follow any such direction if the Indenture Trustee, being advised by
counsel, determines that
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the action so directed may not lawfully be taken, or if the Indenture Trustee in
good faith shall, by a Responsible Officer, determine that the proceedings so
directed would be illegal or subject it to personal liability or be unduly
prejudicial to the rights of Noteholders not parties to such direction;
(ii) subject to the express terms of Section 5.4, any direction to the
Indenture Trustee to sell or liquidate the Trust Estate shall be by the Holders
of Notes representing not less than 100% of the aggregate outstanding principal
amount of the Notes;
(iii) if the conditions set forth in Section 5.5 have been satisfied and
the Indenture Trustee elects to retain the Trust Estate pursuant to Section 5.5,
then any direction to the Indenture Trustee by Holders of Notes representing
less than 100% of the aggregate outstanding principal amount of the Notes to
sell or liquidate the Trust Estate shall be of no force and effect; and
(iv) the Indenture Trustee may take any other action deemed proper by the
Indenture Trustee that is not inconsistent with such direction;
provided, however, that, subject to Section 6.1, the Indenture Trustee need not
take any action that it determines might cause it to incur any liability or
might materially adversely affect the rights of any Noteholders not consenting
to such action.
SECTION 5.12 Waiver of Past Defaults.
(a) Prior to the declaration of the acceleration of the maturity of the
Notes as provided in Section 5.2, the Insurer or, at any time the Insurer is not
the Controlling Party, the Holders of not less than a majority of the aggregate
outstanding principal amount of the Notes may waive any past Default or Event of
Default and its consequences except a Default (i) in the payment of principal of
or interest on any of the Notes or (ii) in respect of a covenant or provision
hereof which cannot be modified or amended without the consent of the Holder of
each Note. In the case of any such waiver, the Issuer, the Indenture Trustee,
the Insurer and the Noteholders shall be restored to their former positions and
rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereto.
(b) Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
SECTION 5.13 Undertaking for Costs. All parties to this Indenture agree,
and each Holder of any Note by such Holder's acceptance thereof shall be deemed
to have agreed, that any court may in its discretion require, in any Proceeding
for the enforcement of any right or remedy under this Indenture, or in any
Proceeding against the Indenture Trustee for any action taken, suffered or
omitted by it as Trustee, the filing by any party litigant in such Proceeding
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of an undertaking to pay the costs of such Proceeding, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such Proceeding, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.13 shall not apply to:
(a) any Proceeding instituted by the Indenture Trustee or the Insurer;
(b) any Proceeding instituted by any Noteholder, or group of Noteholders,
in each case holding in the aggregate more than 10% of the aggregate outstanding
principal amount of the Notes; or
(c) any Proceeding instituted by any Noteholder for the enforcement of the
payment of principal of or interest on any Note on or after the respective due
dates expressed in such Note and in this Indenture (or, in the case of
redemption, on or after the Redemption Date).
SECTION 5.14 Waiver of Stay or Extension Laws. The Issuer covenants (to
the extent that it may lawfully do so) that it shall not at any time insist
upon, or plead or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture. The Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law and covenants that it
shall not hinder, delay or impede the execution of any power herein granted to
the Indenture Trustee or the Insurer but shall suffer and permit the execution
of every such power as though no such law had been enacted.
SECTION 5.15 Action on Notes. The Indenture Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or remedies
of the Indenture Trustee, the Insurer or the Noteholders shall be impaired by
the recovery of any judgment by the Indenture Trustee or the Insurer against the
Issuer or by the levy of any execution under such judgment upon any portion of
the Trust Estate or upon any of the assets of the Issuer.
SECTION 5.16 Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Indenture Trustee or the Insurer
to do so and at the Servicer's expense, the Issuer agrees to take all such
lawful action as the Indenture Trustee or the Insurer may reasonably request to
compel or secure the performance and observance by the Seller and the Servicer
of their respective obligations to the Issuer under or in connection with the
Basic Documents (other than the Excluded Assets) in accordance with the terms
thereof, and to exercise any and all rights, remedies, powers and privileges
lawfully available to the Issuer under or in connection with the Sale and
Servicing Agreement to the extent and in the manner reasonably directed by the
Indenture Trustee or the Insurer, including the transmission of notices of
default on the part of the Seller or the Servicer thereunder and the institution
of legal or administrative actions or proceedings to compel or secure
performance by CITSF, the Seller or the Servicer of each of their obligations
under the Basic Documents (other than with respect to the Excluded Assets).
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(b) If an Event of Default has occurred and is continuing at any time the
Insurer is not the Controlling Party, the Indenture Trustee may, and, at the
direction (which direction shall be in writing or by telephone (confirmed in
writing promptly thereafter)) of the Holders of not less than 66 2/3% of the
aggregate outstanding principal amount of the Notes shall, subject to Article
VI, exercise all rights, remedies, powers, privileges and claims of the Issuer
against the Seller or the Servicer under or in connection with the Basic
Documents (other than with respect to the Excluded Assets), including the right
or power to take any action to compel or secure performance or observance by the
Seller or the Servicer of each of their obligations to the Issuer thereunder and
to give any consent, request, notice, direction, approval, extension or waiver
thereunder, and any right of the Issuer to take such action shall be suspended.
(c) Promptly following a request from the Indenture Trustee or the Insurer
to do so and at the Servicer's expense, the Issuer agrees to take all such
lawful action as the Indenture Trustee or the Insurer may reasonably request to
compel or secure the performance and observance by CITSF of each of its
obligations to the Seller under or in connection with the Sale and Servicing
Agreement and the Purchase Agreement in accordance with the terms thereof, and
to exercise any and all rights, remedies, powers and privileges lawfully
available to the Issuer under or in connection with the Sale and Servicing
Agreement and the Purchase Agreement to the extent and in the manner reasonably
directed by the Indenture Trustee or the Insurer, including the transmission of
notices of default on the part of the Seller thereunder and the institution of
legal or administrative actions or proceedings to compel or secure performance
by CITSF of each of its obligations under the Sale and Servicing Agreement and
the Purchase Agreement.
(d) If an Event of Default has occurred and is continuing at any time the
Insurer is not the Controlling Party, the Indenture Trustee may, and, at the
direction (which direction shall be in writing or by telephone (confirmed in
writing promptly thereafter)) of the Holders of not less than 66 2/3% of the
aggregate outstanding principal amount of the Notes shall, exercise all rights,
remedies, powers, privileges and claims of the Seller against CITSF or the
Servicer under or in connection with the Sale and Servicing Agreement and the
Purchase Agreement, including the right or power to take any action to compel or
secure performance or observance by CITSF or the Servicer of each of its
obligations to the Seller thereunder and to give any consent, request, notice,
direction, approval, extension or waiver under the Sale and Servicing Agreement
and the Purchase Agreement, and any right of the Seller to take such action
shall be suspended.
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ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.1 Duties of Indenture Trustee.
(a) If an Event of Default has occurred and is continuing, the Indenture
Trustee shall exercise the rights and powers vested in it by this Indenture and
use the same degree of care and skill in their exercise as a prudent person
would exercise or use under the circumstances in the conduct of such person's
own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; provided, however, that the Indenture
Trustee shall examine the certificates and opinions to determine whether
or not they conform to the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this Section 6.1(c) does not limit the effect of Section 6.1(b);
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Indenture Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction properly delivered to it pursuant to Section 5.11.
(d) The Indenture Trustee shall not be liable for interest on any money
received by it except as the Indenture Trustee may agree in writing with the
Issuer.
(e) Money held in trust by the Indenture Trustee need not be segregated
from other funds except to the extent required by law or the terms of this
Indenture, the Sale and Servicing Agreement or the Trust Agreement.
(f) No provision of this Indenture shall require the Indenture Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable
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grounds to believe that repayments of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
(g) Every provision of this Indenture relating to the Indenture Trustee
shall be subject to the provisions of this Section 6.1 and to the provisions of
the TIA.
(h) The Indenture Trustee shall take the actions required to be taken by
it set forth in Article XI of the Sale and Servicing Agreement in connection
with a sale of the Contracts.
(i) In the event that the Indenture Trustee is also acting as
Authenticating Agent and/or Note Registrar hereunder, the rights and protections
afforded to the Indenture Trustee pursuant to this Article VI shall also be
afforded to such Authenticating Agent and/or Note Registrar.
SECTION 6.2 Rights of Indenture Trustee.
(a) The Indenture Trustee may conclusively rely on any document believed
by it to be genuine and to have been signed or presented by the proper person.
The Indenture Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel. The Indenture Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on the Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee, and the Indenture Trustee shall
not be responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed with
due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it takes or
omits to take in good faith which it reasonably believes to be authorized or
within its rights or powers; provided, however, that the Indenture Trustee's
conduct does not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Notes shall be full and complete authorization and protection from liability
in respect to any action taken, omitted or suffered by it hereunder in good
faith and in accordance with the advice or opinion of such counsel.
(f) Prior to the occurrence of an Event of Default and after the curing of
all Events of Default that may have occurred, the Indenture Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument,
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opinion, report, notice, request, consent, order, approval, bond, or other paper
or document, unless requested in writing to do so by Holders of the Notes
evidencing not less than 25% of the principal amount of the Notes; provided,
however, that if the payment within a reasonable time to the Indenture Trustee
of the costs, expenses, or liabilities likely to be incurred by it in the making
of such investigation shall be, in the opinion of the Indenture Trustee, not
reasonably assured to the Indenture Trustee by the security afforded to it by
the terms of this Indenture, the Indenture Trustee may require reasonable
indemnity against such cost, expense, or liability or payment of such expenses
as a condition precedent to so proceeding. The reasonable expense of every such
examination shall be paid by the Issuer or by the Seller at the direction of the
Issuer or, if paid by the Indenture Trustee, shall be reimbursed by the Issuer
or by the Seller at the direction of the Issuer upon demand. Nothing in this
clause (f) shall affect the obligation of the Issuer or the Seller to observe
any applicable law prohibiting disclosure of information regarding the Obligors.
SECTION 6.3 Indenture Trustee May Own Notes. The Indenture Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Issuer, the Servicer or any of their respective
Affiliates with the same rights it would have if it were not Indenture Trustee;
provided, however, that the Indenture Trustee shall comply with Sections 6.10
and 6.11. Any Paying Agent, Note Registrar, co-registrar or co-paying agent may
do the same with like rights.
SECTION 6.4 Indenture Trustee's Disclaimer. The Indenture Trustee shall
not be responsible for and makes no representation as to the validity or
adequacy of this Indenture or the Notes, it shall not be accountable for the
Issuer's use of the proceeds from the Notes, and it shall not be responsible for
any statement of the Issuer in the Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the Indenture
Trustee's certificate of authentication.
SECTION 6.5 Notice of Defaults. If a Default occurs and is continuing and
if it is actually known to a Responsible Officer of the Indenture Trustee, the
Indenture Trustee shall mail to each Noteholder notice of the Default within 90
days after it occurs and to the Insurer notice of the Default promptly after it
occurs. Except in the case of a Default in payment of principal of or interest
on any Note, the Indenture Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of Noteholders.
SECTION 6.6 Reports by Indenture Trustee to Holders. The Indenture Trustee
shall deliver to each Noteholder the information and documents set forth in
Article VII, and, in addition, all such information with respect to the Notes as
may be required to enable such holder to prepare its federal and state income
tax returns.
SECTION 6.7 Compensation; Indemnity.
(a) The Issuer shall cause the Servicer, pursuant to the Sale and
Servicing Agreement, to pay to the Indenture Trustee from time to time
reasonable compensation for its services. The Indenture Trustee's compensation
shall not be limited by any law on compensation
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of a trustee of an express trust. The Issuer shall cause the Servicer pursuant
to the Sale and Servicing Agreement to reimburse the Indenture Trustee for all
reasonable out-of-pocket expenses incurred or made by it, including costs of
collection, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Indenture Trustee's agents, counsel, accountants and experts.
The Issuer shall cause the Servicer pursuant to the Sale and Servicing Agreement
to indemnify the Indenture Trustee in accordance with Section 8.02 of the Sale
and Servicing Agreement.
(b) The Issuer's obligations to the Indenture Trustee pursuant to this
Section 6.7 shall survive the discharge of this Indenture or the earlier
resignation or removal of the Indenture Trustee. When the Indenture Trustee
incurs expenses after the occurrence of a Default specified in Section 5.1(d) or
(e) with respect to the Issuer, the expenses are intended to constitute expenses
of administration under Title 11 of the United States Code or any other
applicable federal or state bankruptcy, insolvency or similar law.
SECTION 6.8 Replacement of Indenture Trustee.
(a) The Indenture Trustee may resign at any time by so notifying the
Issuer and the Insurer. The Insurer, if the Insurer is the Controlling Party,
or, if the Insurer is not the Controlling Party, Holders of a majority in
aggregate outstanding principal amount of the Notes may remove the Indenture
Trustee by so notifying the Indenture Trustee and may, with the consent of the
Insurer, appoint a successor Indenture Trustee. Such resignation or removal
shall become effective in accordance with Section 6.8(c). The Issuer shall
remove the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) the Indenture Trustee is adjudged a bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the
Indenture Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes incapable of acting.
(b) If the Indenture Trustee resigns or is removed or if a vacancy exists
in the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Insurer,
if the Insurer is the Controlling Party, or, if the Insurer is not the
Controlling Party, Holders of a majority in aggregate outstanding principal
amount of the Notes may appoint a successor Indenture Trustee, but until a
successor Indenture Trustee shall have been so appointed by the Insurer, if the
Insurer is the Controlling Party, or, if the Insurer is not the Controlling
Party, Holders of the Notes, the Issuer shall appoint a successor Indenture
Trustee reasonably acceptable to the Insurer, and until the Issuer has appointed
such successor the resignation of the Indenture Trustee shall not become
effective. After any such appointment other than by the Insurer or Holders of
the Notes, the person making such appointment shall forthwith cause notice
thereof to be mailed to the Insurer and to the Holders of the Notes at their
addresses as the same then appear in the register of the Issuer; but any
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successor Trustee so appointed shall, immediately and without further act, be
superseded by a successor Trustee appointed by the Insurer or Holders of the
Notes in the manner above prescribed, if such appointment be made prior to the
expiration of one year from the date of the mailing of such notice by the
Issuer, or by such receivers, trustees, custodians, or assignees. A retiring
Indenture Trustee shall not be liable for any acts or omissions of a successor
Indenture Trustee occurring after the retirement of such retired Indenture
Trustee, which retirement was effected pursuant to the terms and subject to the
conditions of this Indenture.
(c) A successor Indenture Trustee shall deliver a written acceptance of
its appointment to the retiring Indenture Trustee, the Insurer and to the
Issuer. Thereupon the resignation or removal of the retiring Indenture Trustee
shall become effective, and the successor Indenture Trustee shall have all the
rights, powers and duties of the Indenture Trustee under this Indenture. The
successor Indenture Trustee shall mail a notice of its succession to
Noteholders. The retiring Indenture Trustee shall promptly transfer all property
held by it as Indenture Trustee to the successor Indenture Trustee.
(d) If a successor Indenture Trustee does not take office within 60 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Trustee, the Insurer (if the Insurer is the Controlling Party), the Issuer or
the Holders of a majority of the aggregate outstanding principal amount of the
Notes may petition any court of competent jurisdiction for the appointment of a
successor Indenture Trustee acceptable to the Insurer.
(e) If the Indenture Trustee fails to comply with Section 6.11, any
Noteholder with the prior written consent of the Insurer (if the Insurer is the
Controlling Party) may petition any court of competent jurisdiction for the
removal of the Indenture Trustee and the appointment of a successor Indenture
Trustee acceptable to the Insurer.
(f) Notwithstanding the replacement of the Indenture Trustee pursuant to
this Section 6.8, the Issuer's obligations under Section 6.7 and the Servicer's
corresponding obligations under the Sale and Servicing Agreement shall continue
for the benefit of the retiring Indenture Trustee.
SECTION 6.9 Merger or Consolidation of Indenture Trustee.
(a) Any corporation into which the Indenture Trustee may be merged or with
which it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Indenture Trustee shall be a party, or any
corporation succeeding to the corporate trust business of the Indenture Trustee,
shall be the successor of the Indenture Trustee under this Indenture; provided,
however, that such corporation shall be eligible under the provisions of Section
6.11, without the execution or filing of any instrument or any further act on
the part of any of the parties to this Indenture, anything in this Indenture to
the contrary notwithstanding.
(b) If at the time such successor or successors by merger or consolidation
to the Indenture Trustee shall succeed to the trusts created by this Indenture,
any of the Notes shall have been authenticated but not delivered, any such
successor to the Indenture Trustee may adopt the certificate of authentication
of any predecessor trustee, and deliver such Notes so
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authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee. In all such cases such certificate of
authentication shall have the same full force as is provided anywhere in the
Notes or herein with respect to the certificate of authentication of the
Indenture Trustee.
SECTION 6.10 Appointment of Co-Indenture Trustee or Separate Indenture
Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Trust or any Financed Boat may at the time be located, the
Indenture Trustee, with the consent of the Insurer (if the Insurer is the
Controlling Party), shall have the power and may execute and deliver all
instruments to appoint one or more Persons to act as a co-trustee or
co-trustees, or separate trustee or separate trustees, of all or any part of the
Trust, and to vest in such Person or Persons, in such capacity and for the
benefit of the Noteholders and the Insurer, such title to the Trust, or any part
hereof, and, subject to the other provisions of this Section 6.10, such powers,
duties, obligations, rights and trusts as the Indenture Trustee or the Insurer
may consider necessary or desirable. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor trustee under
Section 6.11 and no notice to Noteholders of the appointment of any co-trustee
or separate trustee shall be required under Section 6.8.
(b) Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Indenture Trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee and such separate trustee
or co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Indenture
Trustee joining in such act), except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be performed
the Indenture Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in any
such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the
Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the resignation
of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall
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refer to this Indenture and the conditions of this Article VI. Each separate
trustee and co-trustee, upon its acceptance of the trusts conferred, shall be
vested with the estates or property specified in its instrument of appointment,
either jointly with the Indenture Trustee or separately, as may be provided
therein, subject to all the provisions of this Indenture, specifically including
every provision of this Indenture relating to the conduct of, affecting the
liability of, or affording protection to, the Indenture Trustee. Every such
instrument shall be filed with the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee, its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect of
this Indenture on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 6.11 Eligibility; Disqualification. The Indenture Trustee shall at
all times satisfy the requirements of TIA ss310(a). The Indenture Trustee shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition and it shall have a long term
unsecured debt rating of "Baa3" or better by Moody's and "BBB-" or better by
Standard & Poor's. The Indenture Trustee shall comply with TIA ss310(b);
provided, however, that there shall be excluded from the operation of TIA
ss310(b)(1) any indenture or indentures under which other securities of the
Issuer are outstanding if the requirements for such exclusion set forth in TIA
ss310(b)(1) are met.
SECTION 6.12 Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA ss311(a), excluding any creditor
relationship listed in TIA ss311(b). A trustee who has resigned or been removed
shall be subject to TIA ss311(a) to the extent indicated.
SECTION 6.13 Representations and Warranties of Indenture Trustee. The
Indenture Trustee represents and warrants as of the Closing Date that:
(a) the Indenture Trustee is an Illinois banking corporation duly
organized, validly existing and in good standing under the laws of the State of
Illinois;
(b) the Indenture Trustee has full power, authority and legal right to
execute, deliver and perform this Indenture, and has taken all necessary action
to authorize the execution, delivery and performance by it of this Indenture;
(c) the execution, delivery and performance by the Indenture Trustee of
this Indenture (i) shall not violate any provision of any applicable law or
regulation governing the banking and trust powers of the Indenture Trustee or
any order, writ, judgment or decree of any court, arbitrator, or governmental
authority applicable to the Indenture Trustee or any of its assets, (ii) shall
not violate any provision of the corporate charter or by-laws of the Indenture
Trustee, or (iii) shall not violate any provision of, or constitute, with or
without notice or lapse of
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time, a default under, or result in the creation or imposition of any Lien on
any properties included in the Trust pursuant to the provisions of any mortgage,
indenture, contract, agreement or other undertaking to which it is a party,
which violation, default or Lien could reasonably be expected to have a
materially adverse effect on the Indenture Trustee's performance or ability to
perform its duties under this Indenture or on the transactions contemplated in
this Indenture;
(d) the execution, delivery and performance by the Indenture Trustee of
this Indenture shall not require the authorization, consent or approval of, the
giving of notice to, the filing or registration with, or the taking of any other
action in respect of, any governmental authority or agency regulating the
banking and corporate trust activities of the Indenture Trustee; and
(e) this Indenture has been duly executed and delivered by the Indenture
Trustee and constitutes the legal, valid and binding agreement of the Indenture
Trustee, enforceable in accordance with its terms, except as enforcement of such
terms may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and by the availability of equitable
remedies.
SECTION 6.14 Indenture Trustee May Enforce Claims Without Possession of
Notes. All rights of action and claims under this Indenture or the Notes may be
prosecuted and enforced by the Indenture Trustee without the possession of any
of the Notes or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Indenture Trustee shall be brought in its
own name as Indenture Trustee. Any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee, its agents and counsel, be for the ratable
benefit of the Noteholders in respect of which such judgment has been obtained.
SECTION 6.15 Suit for Enforcement. If an Event of Default shall occur and
be continuing, the Indenture Trustee, in its discretion may, subject to the
provisions of Section 6.1, proceed to protect and enforce its rights and the
rights of the Noteholders under this Indenture by Proceeding whether for the
specific performance of any covenant or agreement contained in this Indenture or
in aid of the execution of any power granted in this Indenture or for the
enforcement of any other legal, equitable or other remedy as the Indenture
Trustee, being advised by counsel, shall deem most effectual to protect and
enforce any of the rights of the Indenture Trustee or the Noteholders.
ARTICLE VII
NOTEHOLDERS' LIST AND REPORTS
SECTION 7.1 Issuer To Furnish Indenture Trustee Names and Addresses of
Noteholders. The Issuer shall furnish or cause to be furnished by the Servicer
to the Indenture Trustee (a) not more than five days before each Distribution
Date, a list, in such form as the Indenture Trustee may reasonably require, of
the names and addresses of the Holders of Notes as of the close of business on
the Record Date, and (b) at such other times as the Indenture Trustee
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may request in writing, within 14 days after receipt by the Issuer of any such
request, a list of similar form and content as of a date not more than 10 days
prior to the time such list is furnished; provided, however, that so long as the
Indenture Trustee is the Note Registrar, no such list shall be required to be
furnished.
SECTION 7.2 Preservation of Information, Communications to Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list furnished to the Indenture Trustee as provided
in Section 7.1 and the names and addresses of Holders of Notes received by the
Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may
destroy any list furnished to it as provided in such Section 7.1 upon receipt of
a new list so furnished.
(b) Noteholders may communicate pursuant to TIA ss312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have
the protection of TIA ss312(c).
SECTION 7.3 Reports by Issuer.
(a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after the Issuer
is required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) which the Issuer may be required
to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with rules and regulations prescribed from time to time by the
Commission such additional information, documents and reports with respect
to compliance by the Issuer with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
(iii) supply to the Indenture Trustee (and the Indenture Trustee
shall transmit by mail to all Noteholders described in TIA ss313(c)) such
summaries of any information, documents and reports required to be filed
by the Issuer pursuant to clauses (i) and (ii) of this Section 7.3(a) as
may be required by rules and regulations prescribed from time to time by
the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer
shall end on December 31 of such year.
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SECTION 7.4 Reports by Trustee.
(a) If required by TIA ss313(a), within 60 days after each June 1,
beginning with June 1, 1999, the Indenture Trustee shall mail to each Noteholder
as required by TIA ss313(c) a brief report dated as of such date that complies
with TIA ss313(a). The Indenture Trustee also shall comply with TIA ss313(b). A
copy of any report delivered pursuant to this Section 7.4(a) shall, at the time
of its mailing to Noteholders, be filed by the Indenture Trustee with the
Commission and each stock exchange, if any, on which the Notes are listed. The
Issuer shall notify the Indenture Trustee if and when the Notes are listed on
any stock exchange.
(b) On each Distribution Date, the Indenture Trustee shall include with
each payment to each Noteholder a copy of the statement for the related Due
Period applicable to such Distribution Date as required pursuant to the Sale and
Servicing Agreement.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1 Collection of Money. Except as otherwise expressly provided
herein, the Indenture Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Indenture Trustee pursuant to this Indenture. The Indenture
Trustee shall apply all such money received by it as provided in this Indenture.
Except as otherwise expressly provided in this Indenture, if any default occurs
in the making of any payment or performance under any agreement or instrument
that is part of the Trust Estate, the Indenture Trustee may take such action as
may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate Proceedings. Any such action shall be
without prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article V.
SECTION 8.2 Designated Accounts; Payments.
(a) On or prior to the Closing Date, the Issuer shall cause the Servicer
to establish and maintain, in the name of the Indenture Trustee or Owner
Trustee, as appropriate, for the benefit of the Insurer and the Noteholders or
the Certificateholders as appropriate, the accounts as provided in Section 5.01
of the Sale and Servicing Agreement.
(b) On or before each Distribution Date, the Servicer will deposit all
amounts of monies relating to the preceding Due Period into the Collection
Account as provided in Section 5.02 of the Sale and Servicing Agreement. On each
Distribution Date, the Indenture Trustee shall (i) transfer or cause the
transfer of amounts on deposit in the Collection Account to the Note
Distribution Account and the Certificate Distribution Account pursuant to
Section 5.05 of the Sale and Servicing Agreement, (ii) transfer or cause the
transfer of amounts on deposit in the Reserve Account to the Note Distribution
Account and the Certificate Distribution Account pursuant to Section 5.06 of the
Sale and Servicing Agreement and (iii) transfer and distribute, or
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cause to be transferred and distributed, amounts on deposit in the Reserve
Account to the Lender pursuant to Section 5.06 of the Sale and Servicing
Agreement.
(c) On each Distribution Date and Redemption Date, the Indenture Trustee
shall distribute all amounts on deposit in the Note Distribution Account to
Noteholders in respect of the Notes to the extent of amounts due and unpaid on
the Notes for principal and interest. Unless an Event of Default shall have
occurred (in which case Section 5.4 shall be applicable), to the extent that the
funds available for distribution in the Note Distribution Account are not
sufficient to pay all amounts of accrued and unpaid principal and interest on
the Notes, such amounts will be distributed first in respect of interest to the
Noteholders for amounts due and unpaid on the Notes for interest ratably among
all Noteholders without preference or priority of any kind and then in respect
of principal in the following order of priority:
(i) to the Class A-1 Notes until the principal balance of the Class
A-1 Notes is reduced to zero;
(ii) to the Class A-2 Notes until the principal balance of the Class
A-2 Notes is reduced to zero;
(iii) to the Class A-3 Notes until the principal balance of the
Class A-3 Notes is reduced to zero; and
(iv) to the Class A-4 Notes until the principal balance of the Class
A-4 Notes is reduced to zero.
SECTION 8.3 General Provisions Regarding Accounts.
(a) So long as no Default or Event of Default shall have occurred and be
continuing, all or a portion of the funds in the Designated Accounts shall be
invested in Eligible Investments and, in the case of the Collection Account and
the Note Distribution Account, reinvested by the Indenture Trustee upon
instructions in writing from the Servicer, and in the case of the Certificate
Distribution Account, reinvested by the Owner Trustee (or its designated agent)
subject to the provisions of Section 5.01(c) of the Sale and Servicing
Agreement. The Issuer shall not direct the Indenture Trustee to make any
investment of any funds or to sell any investment held in any of the Collection
Account, the Reserve Account and the Note Distribution Account unless the
security interest granted and perfected in such account (to the extent provided
in the Basic Documents) shall continue to be perfected in such investment or the
proceeds of such sale, in either case without any further action by any Person,
and, in connection with any direction to the Indenture Trustee to make any such
investment or sale, if requested by the Indenture Trustee, the Issuer shall
deliver to the Indenture Trustee an Opinion of Counsel, acceptable to the
Indenture Trustee, to such effect.
(b) Subject to Section 6.1(c), the Indenture Trustee shall not in any way
be held liable by reason of any insufficiency in any of the Designated Accounts
resulting from any loss on any Eligible Investment included therein except for
losses attributable to the Indenture
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Trustee's failure to make payments on such Eligible Investments issued by the
Indenture Trustee, in its commercial capacity as principal obligor and not as
trustee, in accordance with their terms.
(c) If (i) the Servicer shall have failed to give investment directions
for any funds on deposit in the Designated Accounts to the Indenture Trustee by
11:00 a.m., New York City time (or such other time as may be agreed by the
Servicer and the Indenture Trustee), on any Business Day; or (ii) a Default or
Event of Default shall have occurred and be continuing with respect to the Notes
but the Notes shall not have been declared due and payable pursuant to Section
5.2, or, if such Notes shall have been declared due and payable following an
Event of Default, amounts collected or receivable from the Trust Estate are
being applied in accordance with Section 5.5 as if there had not been such a
declaration; then the Indenture Trustee shall, to the fullest extent
practicable, invest and reinvest funds in such Designated Accounts in one or
more Eligible Investments selected by the Indenture Trustee; provided that the
Indenture Trustee will not be liable for the performance of such investments so
long as it invests the funds in such Designated Accounts in Eligible
Investments.
SECTION 8.4 Release of Trust Estate.
(a) Subject to the payment of its fees and expenses pursuant to Section
6.7, the Indenture Trustee may, and when required by the provisions of this
Indenture shall, execute instruments to release property from the Lien of this
Indenture, or convey the Indenture Trustee's interest in the same, in a manner
and under circumstances that are consistent with the provisions of this
Indenture. No party relying upon an instrument executed by the Indenture Trustee
as provided in this Article VIII shall be bound to ascertain the Indenture
Trustee's authority, inquire into the satisfaction of any conditions precedent
or see to the application of any monies.
(b) The Indenture Trustee shall, at such time as there are no Notes
outstanding and all sums due to the Indenture Trustee pursuant to Section 6.7
have been paid and all amounts due to the Insurer under the Basic Documents have
been paid, release any remaining portion of the Trust Estate that secured the
Notes from the Lien of this Indenture and release to the Issuer or any other
Person entitled thereto any funds then on deposit in the Designated Accounts (to
the extent such funds were subject to the Lien of this Indenture). The Indenture
Trustee shall release property from the Lien of this Indenture pursuant to this
Section 8.4(b) only upon receipt by the Indenture Trustee and the Insurer of an
Issuer Request accompanied by an Officer's Certificate, an Opinion of Counsel
and (if required by the TIA) Independent Certificates in accordance with TIA
ss314(c) and 314(d)(1) meeting the applicable requirements of Section 11.1 or an
Opinion of Counsel in lieu of such Independent Certificates to the effect that
the TIA does not require any such Independent Certificates.
SECTION 8.5 Opinion of Counsel. The Indenture Trustee and the Insurer
shall receive at least seven days' notice when requested by the Issuer to take
any action pursuant to Section 8.4(a), accompanied by copies of any instruments
involved, and the Indenture Trustee and the Insurer shall also require as a
condition to such action, an Opinion of Counsel, in form and substance
satisfactory to the Indenture Trustee and the Insurer, stating the legal effect
of any such action, outlining the steps required to complete the same, and
concluding that all conditions
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precedent to the taking of such action have been complied with and such action
shall not materially and adversely impair the security for the Notes or the
rights of the Noteholders in contravention of the provisions of this Indenture;
provided, however, that such Opinion of Counsel shall not be required to express
an opinion as to the fair value of the Trust Estate. Counsel rendering any such
opinion may rely, without independent investigation, on the accuracy and
validity of any certificate or other instrument delivered to the Indenture
Trustee in connection with any such action.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 Supplemental Indentures Without Consent of Noteholders.
Without the consent of the Holders of any Notes but with the prior consent of
the Insurer (so long as the Insurer is the Controlling Party) and prior written
notice to the Rating Agencies and, in the case of clause (viii), satisfaction of
the Rating Agency Condition, the Issuer and the Indenture Trustee, when
authorized by an Issuer Order, at any time and from time to time, may enter into
one or more indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act as in force at the date of the execution
thereof), in form satisfactory to the Indenture Trustee, for any of the
following purposes:
(i) to correct or amplify the description of the Collateral or add
additional collateral;
(ii) to provide for the assumption of the Note and the Indenture
obligations by a permitted successor to the Trust;
(iii) to add additional covenants for the benefit of the related
Noteholders and the Insurer, or for the Trust to surrender any rights or power
conferred upon it;
(iv) to convey, transfer, assign mortgage or pledge any property to or
with the Indenture Trustee;
(v) to cure any ambiguity or correct or supplement any provision in the
Indenture or any supplemental indenture which may be inconsistent with any other
provision of the Indenture or in any supplemental indenture;
(vi) to provide for the acceptance of the appointment of a successor
Indenture Trustee or to add or change any of the provisions of the Indenture as
shall be necessary and permitted to facilitate the administration by more than
one trustee;
(vii) to modify, eliminate or add to the provisions of the Indenture in
order to comply with the Trust Indenture Act of 1939, as amended; or
(viii) to add any provisions to, change in any manner or eliminate any of
the provisions of, the Indenture or modify in any manner the rights of
Noteholders under such
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Indenture; provided that any action specified in this clause (viii) shall not,
as evidenced by an Opinion of Counsel, adversely affect in any material respect
the interests of any Noteholder unless Noteholder consent is otherwise obtained
as described herein.
SECTION 9.2 Supplemental Indentures With Consent of Noteholders.
(a) The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, also may, with prior notice to the Rating Agencies and with the consent
of the Insurer (so long as the Insurer is the Controlling Party) and Holders of
not less than a majority of the aggregate outstanding principal amount of the
Notes, by Act (as defined in Section 11.3 hereof) of such Holders delivered to
the Issuer and the Indenture Trustee, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, changing in any
manner, or eliminating any of the provisions of, this Indenture or of modifying
in any manner the rights of the Noteholders under this Indenture; provided,
however, that no such supplemental indenture shall, without the consent of the
Holder of each outstanding Note affected thereby:
(i) change the due date of any installment of principal of or
interest on any Note or reduce the principal amount thereof, the interest
rate specified thereon or the redemption price with respect thereto or
change any place of payment where or the coin or currency in which any
Note or any interest thereon is payable;
(ii) impair the right to institute suit for the enforcement of
certain provisions of the Indenture regarding payment;
(iii) reduce the percentage of the aggregate principal amount of the
outstanding Notes the consent of the holders of which is required for any
such supplemental indenture or the consent of the holders of which is
required for any waiver of compliance with certain provisions of the
Indenture or of certain defaults thereunder and their consequences as
provided for in the Indenture;
(iv) modify or alter the provisions of the Indenture regarding the
voting of Notes held by the Trust, any other obligor on the Notes, the
Seller or an Affiliate of any of them;
(v) reduce the percentage of the aggregate outstanding amount of the
Notes the consent of the holders of which is required to direct the
Indenture Trustee to sell or liquidate the Contracts if the proceeds of
such sale would be insufficient to pay the principal amount and accrued
but unpaid interest on the outstanding Notes;
(vi) decrease the percentage of the aggregate principal amount of
the Notes required to amend the sections of the Indenture which specify
the applicable percentage of aggregate principal amount of the Notes
necessary to amend the Indenture or certain other related agreements; or
(vii) permit the creation of any Lien ranking prior to or on a
parity with the Lien of the Indenture with respect to any of the
collateral for the Notes or, except as
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otherwise permitted or contemplated in the Indenture, terminate the Lien
of the Indenture on any such collateral or deprive the Holder of any Note
of the security afforded by the Lien of the Indenture.
(b) The Indenture Trustee may in its sole and absolute discretion
determine whether or not any Notes would be affected (such that the consent of
each would be required) by any supplemental indenture proposed pursuant to this
Section 9.2 and any such determination shall be conclusive and binding upon the
Holders of all Notes, whether authenticated and delivered thereunder before or
after the date upon which such supplemental indenture becomes effective. The
Indenture Trustee shall not be liable for any such determination made in good
faith.
(c) It shall be sufficient if an Act of Noteholders approves the
substance, but not the form, of any proposed supplemental indenture.
(d) Promptly after the execution by the Issuer and the Indenture Trustee
of any supplemental indenture pursuant to this Section 9.2, the Indenture
Trustee shall mail to the Noteholders to which such amendment or supplemental
indenture relates and the Insurer a notice setting forth in general terms the
substance of such supplemental indenture. Any failure of the Indenture Trustee
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.
SECTION 9.3 Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, the Indenture Trustee shall be entitled to receive, and
subject to Sections 6.1 and 6.2, shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Indenture Trustee may, but shall
not be obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
SECTION 9.4 Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith with respect
to the Notes affected thereby, and the respective rights, limitations of rights,
obligations, duties, liabilities and immunities under this Indenture of the
Indenture Trustee, the Issuer and the Noteholders shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 9.5 Conformity with Trust Indenture Act. Every amendment of this
Indenture and every supplemental indenture executed pursuant to this Article IX
shall conform to the requirements of the TIA as then in effect so long as this
Indenture shall then be qualified under the TIA.
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SECTION 9.6 Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee and the Insurer as to
any matter provided for in such supplemental indenture. If the Issuer or the
Indenture Trustee shall so determine, new Notes so modified as to conform, in
the opinion of the Indenture Trustee and the Issuer, to any such supplemental
indenture may be prepared and executed by the Issuer and authenticated and
delivered by the Indenture Trustee in exchange for outstanding Notes of the same
class.
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.1 Redemption. The Notes are subject to redemption upon (i) the
exercise by CITSF of its option to purchase the Contracts pursuant to Section
11.01 of the Sale and Servicing Agreement or (ii) the mandatory sale of the
Contracts pursuant to Section 11.02 of the Sale and Servicing Agreement. Such
redemption shall occur on any Distribution Date. The purchase price for the
Notes shall be equal to the applicable redemption price as set forth in such
Sections (the "Redemption Price"), provided the Issuer has available funds
sufficient to pay such amount. The Issuer shall furnish the Insurer and the
Rating Agencies notice of such redemption. If the Notes are to be redeemed
pursuant to this Section 10.1, the Issuer shall furnish notice thereof to the
Indenture Trustee and the Insurer not later than 25 days prior to the Redemption
Date and the Issuer shall deposit into the Note Distribution Account, on or
before the Redemption Date, the aggregate Redemption Price of the Notes to be
redeemed, whereupon all such Notes shall be due and payable on the Redemption
Date.
SECTION 10.2 Form of Redemption Notice.
(a) Notice of redemption of any of the Notes under Section 10.1 shall be
given by the Indenture Trustee by first class mail, postage prepaid, mailed not
less than five days prior to the applicable Redemption Date to the Insurer and
each affected Noteholder of record at such Noteholder's address appearing in the
Note Register.
(b) All notices of redemption shall state:
(i) the Redemption Date;
(ii) the applicable Redemption Price; and
(iii) the place where Notes are to be surrendered for payment of the
Redemption Price (which shall be the Agency Office of the Indenture
Trustee to be maintained as provided in Section 3.2).
(c) Notice of redemption of any of the Notes shall be given by the
Indenture Trustee in the name and at the expense of the Issuer. Failure to give
notice of redemption, or any
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defect therein, to any Holder of any Note shall not impair or affect the
validity of the redemption of any other Note.
SECTION 10.3 Notes Payable on Redemption Date. The Notes subject to
redemption shall, following notice of redemption as required by Section 10.2 (in
the case of redemption pursuant to Section 10.1), on the Redemption Date cease
to be outstanding for purposes of this Indenture and shall thereafter represent
only the right to receive the applicable Redemption Price and (unless the Issuer
shall default in the payment of such Redemption Price) no interest shall accrue
on such Redemption Price for any period after the date to which accrued interest
is calculated for purposes of calculating such Redemption Price.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the Indenture Trustee
to take any action under any provision of this Indenture, the Issuer shall
furnish to the Indenture Trustee and the Insurer: (i) an Officer's Certificate
stating that all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with, (ii) (if required by
the TIA) an Opinion of Counsel stating that in the opinion of such counsel all
such conditions precedent, if any, have been complied with and (iii) (if
required by the TIA) an Independent Certificate from a firm of certified public
accountants meeting the applicable requirements of this Section 11.1, except
that, in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture,
no additional certificate or opinion need be furnished. Every certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Indenture shall include:
(i) a statement that each signatory of such certificate or opinion
has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the judgment of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
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(b) (i) Prior to the deposit with the Indenture Trustee of any Collateral
or other property or securities that is to be made the basis for the release of
any property or securities subject to the Lien of this Indenture, the Issuer
shall, in addition to any obligation imposed in Section 11.1(a) or elsewhere in
this Indenture, furnish to the Indenture Trustee and the Insurer an Officer's
Certificate certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such deposit) to the Issuer
of the Collateral or other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the Indenture
Trustee and the Insurer an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause (b)(i)
above, the Issuer shall also deliver to the Indenture Trustee and the
Insurer an Independent Certificate as to the same matters, if the fair
value to the Issuer of the securities to be so deposited and of all other
such securities made the basis of any such withdrawal or release since the
commencement of the then current fiscal year of the Issuer, as set forth
in the certificates delivered pursuant to clause (i) above and this clause
(b)(ii), is 10% or more of the aggregate outstanding principal amount of
the Notes, but such a certificate need not be furnished with respect to
any securities so deposited, if the fair value thereof to the Issuer as
set forth in the related Officer's Certificate is less than $25,000 or
less than one percent of the aggregate outstanding principal amount of the
Notes.
(iii) Other than with respect to the release of any Repurchased
Contracts or Liquidated Contracts, whenever any property or securities are
to be released from the lien of this Indenture, the Issuer shall also
furnish to the Indenture Trustee and the Insurer an Officer's Certificate
certifying or stating the opinion of each Person signing such certificate
as to the fair value (within 90 days of such release) of the property or
securities proposed to be released and stating that in the opinion of such
person the proposed release will not impair the security under this
Indenture in contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Indenture
Trustee and the Insurer an Officer's Certificate certifying or stating the
opinion of any signatory thereof as to the matters described in clause
(b)(iii) above, the Issuer shall also furnish to the Indenture Trustee and
the Insurer an Independent Certificate as to the same matters if the fair
value of the property or securities and of all other property, other than
Repurchased Contracts or Liquidated Contracts, or securities released from
the lien of this Indenture since the commencement of the then current
calendar year, as set forth in the certificates required by clause
(b)(iii) above and this clause (b)(iv), equals 10% or more of the
aggregate outstanding principal amount of the Notes, but such certificate
need not be furnished in the case of any release of property or securities
if the fair value thereof as set forth in the related Officer's
Certificate is less than $25,000 or less than one percent of the then
aggregate outstanding principal amount of the Notes.
(v) Notwithstanding Section 2.9 or any other provision of this
Section 11.1, the Issuer may (A) collect, liquidate, sell or otherwise
dispose of Contracts,
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Financed Boats and the Excluded Assets as and to the extent expressly
permitted or required by the Basic Documents, (B) make cash payments out
of the Designated Accounts and the other Excluded Assets as and to the
extent expressly permitted or required by the Basic Documents and (C) take
any other action not inconsistent with the TIA.
SECTION 11.2 Form of Documents Delivered to Indenture Trustee.
(a) In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
(b) Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Servicer, the Seller or the Issuer, stating that the information with
respect to such factual matters is in the possession of the Servicer, the Seller
or the Issuer, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
(c) Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
(d) Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
SECTION 11.3 Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Noteholders
or a class of Noteholders may be embodied in and evidenced by one or more
instruments of substantially
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similar tenor signed by such Noteholders in person or by agents duly appointed
in writing; and except as herein otherwise expressly provided such action shall
become effective when such instrument or instruments are delivered to the
Indenture Trustee, and, where it is hereby expressly required, to the Issuer.
Such instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Noteholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 6.1) conclusive in favor of
the Indenture Trustee and the Issuer, if made in the manner provided in this
Section 11.3.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Notes shall bind the Holder of every Note
issued upon the registration thereof or in exchange therefor or in lieu thereof,
in respect of anything done, omitted or suffered to be done by the Indenture
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
SECTION 11.4 Notices, etc., to Indenture Trustee, Issuer and Rating
Agencies.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or Act of Noteholders or other documents provided or permitted by this Indenture
to be made upon, given or furnished to or filed with:
(i) the Indenture Trustee by any Noteholder, the Insurer or by the
Issuer shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Indenture Trustee at its
Corporate Trust Office and, unless otherwise specified in this Indenture,
may be sent by electronic facsimile transmission (with hard copy to follow
via first class mail), mailed by certified mail, return receipt requested,
or delivered by hand;
(ii) the Issuer by the Indenture Trustee, the Insurer or by any
Noteholder shall be sufficient for every purpose hereunder if in writing
and either sent by electronic facsimile transmission (with hard copy to
follow via first class mail) or mailed, by certified mail, return receipt
requested to the Issuer and the Owner Trustee, care of the Owner Trustee
at its Corporate Trust Office or at any other address previously furnished
in writing to the Indenture Trustee by the Issuer;
(iii) the Insurer shall be sufficient for any purpose hereunder if
in writing and mailed by registered mail or personally delivered or
telexed or facsimiled to the Insurer at: MBIA Insurance Corporation, 113
King Street, Armonk, New York 10504, Attention: Insured Portfolio
Management, Structured Finance; Facsimile No.: (914) 765-3163, Telephone
No.: (914) 273-4949.
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The Issuer shall promptly transmit any notice received by it from the
Noteholders to the Indenture Trustee and the Insurer and the Indenture Trustee
shall likewise promptly transmit any notice received by it from the Noteholders
to the Issuer and the Insurer, with a copy to the Owner Trustee at its Corporate
Trust Office.
(b) Notices required to be given to the Rating Agencies by the Issuer, the
Indenture Trustee or the Owner Trustee shall be in writing, personally
delivered, sent by electronic facsimile transmission (with hard copy to follow
via first class mail) or mailed by certified mail, return receipt requested to:
(i) in the case of Moody's Investors Service, at the following address: Moody's
Investors Service, ABS Monitoring Department, 99 Church Street, New York, New
York 10007; and (ii) in the case of Standard & Poor's, at the following address:
Standard & Poor's, 26 Broadway (15th Floor), New York, New York 10004, Attn.:
Asset-Backed Surveillance Department or as to each of the foregoing, at such
other address as shall be designated by written notice to the other parties.
SECTION 11.5 Notices to Noteholders; Waiver.
(a) Where this Indenture provides for notice to Noteholders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if it is in writing and mailed, first-class, postage prepaid to each
Noteholder affected by such event, at such Person's address as it appears on the
Note Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. If notice to Noteholders is
given by mail, neither the failure to mail such notice nor any defect in any
notice so mailed to any particular Noteholder shall affect the sufficiency of
such notice with respect to other Noteholders, and any notice that is mailed in
the manner herein provided shall conclusively be presumed to have been duly
given regardless of whether such notice is in fact actually received.
(b) Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
(c) In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
(d) Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute an Event of
Default.
SECTION 11.6 Alternate Payment and Notice Provisions. Notwithstanding any
provision of this Indenture or any of the Notes to the contrary, the Issuer may
enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the
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Indenture Trustee or any Paying Agent to such Holder, that is different from the
methods provided for in this Indenture for such payments or notices. The Issuer
shall furnish to the Indenture Trustee a copy of each such agreement and the
Indenture Trustee shall cause payments to be made and notices to be given in
accordance with such agreements.
SECTION 11.7 Conflict with Trust Indenture Act.
(a) If any provision hereof limits, qualifies or conflicts with another
provision hereof that is required to be included in this Indenture by any of the
provisions of the TIA, such required provision shall control.
(b) The provisions of TIA ss310 through 317 that impose duties on any
Person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 11.8 Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 11.9 Successors and Assigns.
(a) All covenants and agreements in this Indenture and the Notes by the
Issuer shall bind its successors and assigns, whether so expressed or not.
(b) All covenants and agreements of the Indenture Trustee in this
Indenture shall bind its successors and assigns, whether so expressed or not.
SECTION 11.10 Separability. In case any provision in this Indenture or in
the Notes shall be invalid, illegal or unenforceable, the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 11.11 Benefits of Indenture. The Insurer and its successors and
assigns shall be third-party beneficiaries to the provisions of this Indenture.
Nothing in this Indenture or in the Notes, express or implied, shall give to any
Person, other than the parties hereto, the Insurer and their successors
hereunder, and the Noteholders, and any other party secured hereunder, and any
other Person with an ownership interest in any part of the Trust Estate, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
SECTION 11.12 Legal Holidays. If the date on which any payment is due
shall not be a Business Day, then (notwithstanding any other provision of the
Notes or this Indenture) payment need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made on
the date on which nominally due, and no interest shall accrue for the period
from and after any such nominal date.
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SECTION 11.13 Governing Law. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.14 Counterparts. This Indenture may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
SECTION 11.15 Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Indenture Trustee or any other counsel reasonably
acceptable to the Indenture Trustee and the Insurer) to the effect that such
recording is necessary either for the protection of the Noteholders or any other
Person secured hereunder or for the enforcement of any right or remedy granted
to the Indenture Trustee under this Indenture.
SECTION 11.16 No Recourse. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith, against:
(i) the Indenture Trustee or the Owner Trustee in its individual capacity;
(ii) any owner of a beneficial interest in the Issuer; or
(iii) any partner, owner, beneficiary, agent, officer, director, employee
or agent of any holder of a beneficial interest in the Issuer or of the Owner
Trustee or the Indenture Trustee or of any successor or assign of the Indenture
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed (it being understood that the Indenture Trustee
and the Owner Trustee have no such obligations in their individual capacity) and
except that any such partner, owner or beneficiary shall be fully liable, to the
extent provided by applicable law, for any unpaid consideration for stock,
unpaid capital contribution or failure to pay any installment or call owing to
such entity. For all purposes of this Indenture, in the performance of any
duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of the
Trust Agreement.
SECTION 11.17 No Petition. The Indenture Trustee, by entering into this
Indenture, and each Noteholder, by accepting a Note issued hereunder, hereby
covenant and agree that they shall not, prior to the date which is one year and
one day after the termination of this Indenture with respect to the Trust
pursuant to Section 4.1, acquiesce, petition or otherwise invoke or cause the
Seller or the Trust to invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the Seller or the
Trust under any federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Seller or the Trust or any
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substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Seller or the Trust.
SECTION 11.18 Inspection. The Issuer agrees that, on reasonable prior
notice, it shall permit any representative of the Indenture Trustee or the
Insurer (if the Insurer is the Controlling Party), during the Issuer's normal
business hours, to examine all the books of account, records, reports, and other
papers of the Issuer, to make copies and extracts therefrom, to cause such books
to be audited by Independent certified public accountants, and to discuss the
Issuer's affairs, finances and accounts with the Issuer's officers, employees
and Independent certified public accountants, all at such reasonable times and
as often as may be reasonably requested. The Indenture Trustee shall and shall
cause its representatives to hold in confidence all such information except to
the extent disclosure may be required by law (and all reasonable applications
for confidential treatment are unavailing) and except to the extent that the
Indenture Trustee may reasonably determine that such disclosure is consistent
with its obligations hereunder. Notwithstanding anything herein to the contrary,
the foregoing shall not be construed to prohibit (i) disclosure of any and all
information that is or becomes publicly known, or information obtained by the
Indenture Trustee from sources other than the Servicer or the Seller or any of
their affiliates, (ii) disclosure of any and all information (A) if required to
do so by any applicable statute, law, rule or regulation, (B) to any government
agency or regulatory body having authority to regulate or oversee any respects
of the Indenture Trustee's business, (C) pursuant to any subpoena, civil
investigative demand or similar demand or request of any court, regulatory
authority, arbitrator or arbitration to which the Indenture Trustee is a party,
(D) to any independent or internal auditor, agent, employee or attorney of the
Indenture Trustee reasonably having a need to know the same, provided that the
Indenture Trustee advises such recipient of the confidential nature of the
information being disclosed and such recipient agrees to keep the same
confidential in accordance with the terms hereof, or (iii) any other disclosure
authorized by the Servicer or the Seller; provided, however, the Indenture
Trustee shall give the Servicer prior notice of any such disclosure.
SECTION 11.19 Indemnification by and Reimbursement of the Servicer. The
Indenture Trustee further acknowledges and accepts the Servicer's obligation to
indemnify, defend and hold the Indenture Trustee harmless as set forth in the
Sale and Servicing Agreement and the conditions thereto and limitations thereon
in the Sale and Servicing Agreement.
SECTION 11.20 Limitation of Liability. It is expressly understood and
agreed by the parties hereto that (a) this Agreement is executed and delivered
by Chase Manhattan Bank Delaware, not individually or personally but solely as
Owner Trustee to the Trust, in the exercise of the powers and authority
conferred and vested in it under the Trust Agreement, (b) each of the
representations, undertakings and agreements herein made on the part of the
Owner Trustee or the Trust is made and intended not as personal representations,
undertakings and agreements by Chase Manhattan Bank Delaware but is made and
intended for the purpose of binding only the Trust and (c) under no
circumstances shall Chase Manhattan Bank Delaware be personally liable for the
payment of any indebtedness or expenses of the Trust or be liable for the breach
or failure of any obligation, representation, warranty or covenant made or
undertaken by the Trust under this Indenture.
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IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this
Indenture to be duly executed by their respective officers, thereunto duly
authorized, all as of the day and year first above written.
CIT MARINE TRUST 1999-A
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but solely as
Owner Trustee under the Trust Agreement
By: /s/ Denis Kelly
--------------------------------------------
Name: Denis Kelly
Title: Trust Officer
HARRIS TRUST AND SAVINGS BANK,
not in its individual capacity but solely as
Indenture Trustee
By: /s/ Robert D. Foltz
--------------------------------------------
Name: Robert D. Foltz
Title: Vice President
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EXHIBIT A-1
FORM OF ASSET-BACKED NOTES
REGISTERED $325,000,000
No. __
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 125590 AA 7
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange or payment, and any Note issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
CIT MARINE TRUST 1999-A
CLASS A-1 5.45% ASSET-BACKED NOTES
CIT MARINE TRUST 1999-A, a business trust organized and existing under the laws
of the State of Delaware (herein referred to as the "Issuer"), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of THREE HUNDRED TWENTY FIVE MILLION DOLLARS ($325,000,000)
payable in accordance with the Indenture, prior to the occurrence of an Event of
Default and a declaration that the Notes are due and payable, on each
Distribution Date to the extent of amounts available therefor in an amount equal
to the Note Primary Principal Distribution Amount and the Note Additional
Principal Distribution Amount, if any; provided, however, that the outstanding
principal balance of this Note shall be due and payable on the earlier of the
August 2006 Distribution Date (the "Class A-1 Note Final Scheduled Distribution
Date") and the Redemption Date with respect to a redemption of Notes, if any,
pursuant to Section 10.1 of the Indenture. On each Distribution Date until the
principal of this Note is paid or made available for payment, interest on the
outstanding principal amount of this Note shall be due and payable, calculated
at the rate per annum shown above during the
A-1-1
<PAGE>
related Interest Accrual Period on the outstanding principal amount of this
Class A-1 Note on such Distribution Date before giving effect to any
distributions of principal with respect hereto on such Distribution Date.
Interest will be calculated on the basis of a 360-day year consisting of twelve
30-day months. Such principal of and interest on this Note shall be paid in the
manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America which, at the time of payment, is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the Indenture referred to on the reverse
hereof or be valid or obligatory for any purpose.
A-1-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: February 23, 1999 CIT MARINE TRUST 1999-A
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but solely
as Owner Trustee under the Trust Agreement
By:________________________________
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
HARRIS TRUST AND SAVINGS BANK,
not in its individual capacity
but solely as Indenture Trustee
By:________________________________
Name:
Title:
A-1-3
<PAGE>
REVERSE OF NOTE
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as Class A-1 5.45% Asset-Backed Notes (herein called the "Class A-1
Notes") issued under an Indenture, dated as of February 1, 1999 (such Indenture,
as supplemented or amended, is herein called the "Indenture"), between the
Issuer and Harris Trust and Savings Bank, an Illinois banking corporation, as
trustee (the "Indenture Trustee", which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Noteholders.
Also issued under the Indenture are the Class A-2 5.80% Asset-Backed Notes (the
"Class A-2 Notes"), the Class A-3 5.85% Asset-Backed Notes (the "Class A-3
Notes") and the Class A-4 6.25% Asset-Backed Notes (the "Class A-4 Notes" and,
together with the Class A-1 Notes, Class A-2 Notes and Class A-3 Notes, the
"Notes"). The Class A-1 Notes are subject to all terms of the Indenture. All
terms used and not otherwise defined in this Note that are defined in the
Indenture, as supplemented or amended, shall have the meanings assigned to them
in or pursuant to the Indenture.
The Class A-1 Notes and all other Notes issued pursuant to the Indenture
are and will be equally and ratably secured by the Collateral pledged as
security therefor as provided in the Indenture.
Subject to the immediately following paragraph, principal on the Class A-1
Notes shall be payable in full on the earlier of the Distribution Date which is
the Class A-1 Note Final Scheduled Distribution Date set forth above and the
Redemption Date, if any, pursuant to Section 10.1 of the Indenture. In addition,
principal on the Class A-1 Notes will be payable in installments on earlier
Distribution Dates to the extent of amounts available therefor, in the amounts
and in the priorities set forth in Section 8.2(c) of the Indenture.
"Distribution Date," with respect to the Notes means the fifteenth day of each
month or, if any such date is not a Business Day, the next succeeding Business
Day, commencing March 15, 1999.
Notwithstanding the provisions of the preceding paragraph, the entire
unpaid principal amount of this Note shall be due and payable on the date on
which an Event of Default shall have occurred and be continuing and the Insurer
is not the Controlling Party and the Indenture Trustee or the Noteholders
representing not less than 66-2/3% of the aggregate outstanding principal amount
of the Notes have declared the Notes to be immediately due and payable in the
manner provided in Section 5.2 of the Indenture. In such event, the Holders of
all Notes shall be entitled to receive repayment of principal ratably in
proportion to their respective unpaid principal balances in the order of
priority provided in Section 5.4 of the Indenture. If on the date of any Event
of Default the Insurer is the Controlling Party, the Insurer, in its sole
discretion, may determine whether or not to accelerate payment of the Notes.
All principal payments on the Class A-1 Notes shall be made pro rata to
the Holders of the Class A-1 Notes.
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<PAGE>
Payments of interest on this Note at the rate of 5.45% per annum shall be
due and payable on each Distribution Date. Interest on this Note for any
Distribution Date due but not paid on such Distribution Date will be due on the
next Distribution Date in addition to an amount equal to interest on such amount
at the rate per annum shown on the face of this Note (to the extent lawful).
Payments of interest on this Note, together with the installment of principal,
if any, if not in full payment of this Note, shall be made by check mailed to
the Person whose name appears as the Registered Holder of this Note (or one or
more Predecessor Notes) on the Note Register as of the close of business on each
Record Date, except that with respect to Notes registered on the Record Date in
the name of the nominee of the Depository (initially, such nominee to be Cede &
Co.), payments will be made by wire transfer in immediately available funds to
the account designated by such nominee. Such checks shall be mailed to the
Person entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. The Record Date, with respect to any
Distribution Date, means the Business Day immediately preceding such
Distribution Date, or if Definitive Notes are issued, the last Business Day of
the month immediately preceding the month in which such Distribution Date
occurs. Any reduction in the principal amount of this Note (or any one or more
Predecessor Notes) effected by any payments made on any Distribution Date shall
be binding upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount of
this Note on a Distribution Date, then the Indenture Trustee, in the name of and
on behalf of the Issuer, shall notify the Person who is the Registered Holder
hereof as of the Record Date preceding such Distribution Date by notice sent in
accordance with Section 2.7(e) of the Indenture, and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Indenture Trustee's principal Corporate Trust Office or at the office of the
Indenture Trustee's agent appointed for such purposes located in the City of New
York.
Pursuant to the Note Insurance Policy, the Insurer is required, to the
extent of any insufficiency in the Available Amount and the Available Reserve
Amount, to make available to the Indenture Trustee such amounts as are necessary
to distribute to the Class A-1 Noteholders on each Distribution Date the full
and timely payment of interest on the Class A-1 Notes, on each Distribution Date
the amount of any Collateralization Shortfall with respect to the Class A-1
Notes and on the Class A-1 Note Final Scheduled Distribution Date the full and
ultimate payment of principal on the Class A-1 Notes.
Upon receipt of amounts under the Note Insurance Policy on behalf of the
Class A-1 Notes, the Indenture Trustee shall distribute, in accordance with the
Sale and Servicing Agreement, to the Class A-1 Notes any portion thereof to
which the Noteholders of the Class A-1 Notes may be entitled.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
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<PAGE>
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, with such signature guaranteed by a commercial bank
or trust company located, or having a correspondent located, in the City of New
York or the city in which the Corporate Trust Office is located, or a member
firm of a national securities exchange, and such other documents as the
Indenture Trustee may require, and thereupon one or more new Notes of the same
class of authorized denominations and in the same aggregate principal amount
will be issued to the designated transferee or transferees. No service charge
will be charged for any registration of transfer or exchange of this Note, but
the transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of
a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee or the Owner Trustee in their
individual capacities, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee or the Owner Trustee in their individual capacities, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in their individual capacities, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of
a Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture such Noteholder will not, prior to the
date which is one year and one day after the termination of the Indenture with
respect to the Issuer, acquiesce, petition or otherwise invoke or cause the
Seller or the Issuer to invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the Seller or the
Issuer under any federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Seller or the Issuer or any substantial part of
its property, or ordering the winding up or liquidation of the affairs of the
Seller or the Issuer.
Each Noteholder, by acceptance of a Note or, in the case of a Note Owner,
a beneficial interest in a Note, unless otherwise required by appropriate taxing
authorities, agrees to treat the Notes as indebtedness secured by the Contracts
for the purpose of federal income taxes, state and local income and franchise
taxes and any other taxes imposed upon, measured by or based upon gross or net
income.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note shall
A-1-6
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be overdue, and neither the Issuer, the Indenture Trustee nor any such agent
shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Noteholders under the Indenture at any time by the
Issuer with the prior written consent of the Indenture Trustee, the Insurer and
the Holders of Notes representing a majority of the aggregate outstanding
principal amount of all the Notes. The Indenture also contains provisions
permitting the Indenture Trustee, the Insurer and the Holders of Notes
representing specified percentages of the aggregate outstanding principal amount
of the Notes, on behalf of the Holders of all the Notes, to waive compliance by
the Issuer with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Note (or any one of more Predecessor Notes) shall be conclusive
and binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent or waiver is made upon this
Note. The Indenture also permits the Indenture Trustee to amend or waive certain
terms and conditions set forth in the Indenture without the consent of the
Noteholders.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Indenture Trustee, the
Insurer and the Holders of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the laws
of the State of New York, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer to pay the
principal of and interest on this Note at the times, place and rate, and in the
coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, neither the Seller, the Servicer, the Holder of
the AO Interest, the Indenture Trustee nor the Owner Trustee in their respective
individual capacities, any owner of a beneficial interest in the Issuer, nor any
of their respective partners, beneficiaries, agents, officers, directors,
employees or successors or assigns, shall be personally liable for, nor shall
recourse be had to any of them for, the payment of principal of or interest on,
or performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in this Note or the Indenture, it being expressly
understood that said covenants, obligations and
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<PAGE>
indemnifications have been made by the Owner Trustee solely as the Owner Trustee
in the assets of the Issuer.
The Holder of this Note by the acceptance hereof agrees that, except as
expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, the Holder shall have no claim against any of the foregoing
for any deficiency, loss or claim therefrom; provided, however, that nothing
contained herein shall be taken to prevent recourse to, and enforcement against,
the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
A-1-8
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
________________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
________________________________________________________________________________
the within Note, and all rights thereunder, hereby irrevocably constituting and
appointing
______________________________________________________________________ Attorney
to transfer said Note on the books of the Note Registrar, with full power of
substitution in the premises.
Dated:______________ _____________________*
Signature Guaranteed: _____________________
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Note in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar, which requirements include membership or participation in
the Securities Transfer Agent's Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the Note Registrar in
addition to, or in substitution for, STAMP, all in accordance with the Exchange
Act.
A-1-9
<PAGE>
STATEMENT OF INSURANCE
The MBIA Insurance Corporation (the "Insurer") has issued a Financial
Guaranty Insurance Policy (the "Note Insurance Policy") containing the following
provisions, such policy being on file at Harris Trust and Savings Bank, as
indenture trustee (the "Indenture Trustee"), Chicago, Illinois.
The Insurer, in consideration of the payment of the premium and subject to
the terms of the Note Insurance Policy, thereby unconditionally and irrevocably
guarantees to pay to the Indenture Trustee in respect of (i) each Distribution
Date (other than the Final Scheduled Distribution Date with respect to a class
of Notes), an amount equal to the amount by which the Note Interest Distribution
Amount exceeds that portion of the Available amount allocated to pay such
amounts as provided in the Sale and Servicing Agreement (as defined below) after
giving effect to amounts available therefor from the Reserve Account, (ii) each
Distribution Date (other than the Final Scheduled Distribution Date with respect
to any class of Notes), an amount equal to the Collateralization Shortfall after
giving effect to amounts available therefor from the Reserve Account and (iii)
each Distribution Date which is a Final Scheduled Distribution Date with respect
to a class of Notes, an amount equal to the amount by which the outstanding
principal amount of such class of Notes exceeds that portion of the Available
Amount allocated to pay such amounts as provided in the Sale and Servicing
Agreement after giving effect to amounts available therefor from the Reserve
Account (such amounts, collectively, as of any Distribution Date, the "Note
Policy Claim Amount"). The Insurer also agrees to pay an amount equal to any
Avoided Payment (as defined below). Each payment pursuant to the Note Insurance
Policy with respect to any class of Notes will be received by the Indenture
Trustee, on behalf of the Noteholders, for distribution by the Indenture Trustee
to each Noteholder of each Noteholder's proportionate share of the Note Policy
Claim Amount. The Insurer's obligations under the Note Insurance Policy shall be
discharged to the extent funds equal to the applicable Note Policy Claim Amount
are received by the Indenture Trustee, whether or not such funds are properly
applied by the Indenture Trustee. The Note Insurance Policy does not guarantee
payments of principal on the Notes other than as a result of a Collateralization
Shortfall or with respect to the outstanding principal amount of each class of
Notes on the Final Scheduled Distribution Date for such class of Notes, and will
not guarantee payment of any amounts that become due on an accelerated basis as
a result of (a) a default by the Trust, (b) the occurrence of an Event of
Default under (and as defined in) the Indenture, or (c) any other cause. The
Insurer may elect, in its sole discretion, to pay in whole or in part such
principal due upon acceleration. The Insurer may elect, in its sole discretion,
to pay all or a portion of any shortfalls in the amount of such Available Amount
to make distributions of principal on the Notes, other than distributions of
principal with respect to a Collateralization Shortfall or a class of Notes on
the Final Scheduled Distribution Date thereof, which is guaranteed by the
Insurer.
Notwithstanding the foregoing paragraph, the Note Insurance Policy does
not cover shortfalls, if any, attributable to the liability of the Trust or the
Indenture Trustee for withholding taxes, if any (including interest and
penalties in respect of any such liability).
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Payment of amounts under the Note Insurance Policy shall be made in
immediately available funds on the later of (a) 3 p.m., New York City time, on
the related Distribution Date and (b) 3 p.m., New York City time, on the third
Business Day following presentation to State Street Bank and Trust Company,
N.A., as Fiscal Agent for the Insurer or any successor fiscal agent appointed by
the Insurer (the "Fiscal Agent") of a notice for payment (a "Notice for
Payment"), appropriately completed and executed by the Indenture Trustee. A
Notice for Payment under the Note Insurance Policy may be presented to the
Fiscal Agent on any Business Day following the Determination Date in respect of
which the Notice for Payment is being presented, but in any event, not later
than the third Business Day prior to the applicable Distribution Date, in
accordance with the Note Insurance Policy. Any Notice for Payment received by
the Fiscal Agent after 3 p.m., New York City time, on a Business Day, or on any
day that is not a Business Day, will be deemed to be received by the Fiscal
Agent on the next succeeding Business Day.
Subject to the foregoing, if the payment of any amount guaranteed by the
Note Insurance Policy and previously distributed to a Noteholder in respect of
the Notes that is recoverable and sought to be recovered as a voidable
preference in an Insolvency Proceeding in accordance with a nonappealable order
of a court having competent jurisdiction is voided ("Avoided Payment"), the
Insurer will make such Avoided Payment on behalf of the Noteholder upon receipt
by the Fiscal Agent from the Indenture Trustee on behalf of such Noteholder of
(i) a certified copy of a final, nonappealable order of a court having competent
jurisdiction to the effect that the Noteholder is required to return any such
payment or portion thereof prior to the Termination Date of the Note Insurance
Policy because such payment was voided under applicable law (the "Order")
together with a certificate of such Noteholder that such Order is final and not
subject to appeal, (ii) an assignment properly completed and executed by such
Noteholder irrevocably assigning to the Insurer all rights and claims of such
Noteholder relating to or arising under such Avoided Payment, (iii) a Notice for
Payment appropriately completed and executed by the Indenture Trustee and (iv)
appropriate instruments to effect the appointment of the Insurer as agent for
such Noteholder in any legal proceeding relating to such Avoided Payment.
The Insurer shall make payments due in respect of Avoided Payments no
later than 3 p.m., New York City time, on the Business Day which is no earlier
than (a) the third Business Day following receipt by the Fiscal Agent of the
documents required under clauses (i) through (iv) of the preceding paragraph and
(b) the date that such documents are received by the Fiscal Agent, if at least
two Business Days prior to such receipt, the Fiscal Agent shall have received
written notice from the Indenture Trustee that such documents were to be
delivered on such date and such date was specified in such notice. Any such
documents received by the Fiscal Agent after 3 p.m., New York City time, on any
Business Day or on any day that is not a Business Day shall be deemed to have
been received by the Fiscal Agent prior to 3 p.m. on the next succeeding
Business Day. All payments made by the Insurer under the Note Insurance Policy
on account of any Avoided Payment shall be made to the receiver or the trustee
in bankruptcy named in the Order on behalf of the Noteholder and not to the
Indenture Trustee or any Noteholder directly unless such Noteholder has returned
such Avoided Payment to such receiver or trustee in bankruptcy, in which case
such payment will be disbursed to the Indenture
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<PAGE>
Trustee on behalf of such Noteholder upon proof of such payment reasonably
satisfactory to the Insurer.
The Fiscal Agent is the agent of the Insurer only and the Fiscal Agent
shall in no event be liable to Noteholders for any acts of the Fiscal Agent or
any failure of the Insurer to deposit or cause to be deposited, sufficient funds
to make payments due under the Note Insurance Policy.
The obligations of the Insurer under the Note Insurance Policy are
irrevocable, primary, absolute and unconditional (except as expressly provided
therein) and neither the failure of the Trust, the Indenture Trustee, CIT, the
Seller, the Servicer or any other person to perform any covenant or obligation
in favor of the Insurer (or otherwise), nor the failure or omission to make a
demand permitted under the Note Insurance Policy nor the commencement of any
bankruptcy, debtor or other insolvency proceeding by or against the Trust, the
Indenture Trustee, CIT, the Seller, the Servicer or any other person shall in
any way affect or limit the Insurer's obligations under the Note Insurance
Policy.
The Note Insurance Policy and the obligations of the Insurer thereunder
shall terminate on the date (the "Termination Date") that is the earliest to
occur of (a) ninety-one days following the earlier of (i) the latest Final
Scheduled Distribution Date and (ii) the date on which all amounts required to
be paid to the Noteholders have been paid in full, provided, that, if any
Insolvency Proceeding is existing by or against the Trust, the Seller, the
Servicer or CIT during such ninety-one day period, then the Note Insurance
Policy and the Insurer's obligations under the Note Insurance Policy shall
terminate on the date of the conclusion or dismissal of such Insolvency
Proceeding without continuing jurisdiction by the court in such Insolvency
Proceeding, provided, further that, and notwithstanding anything to the contrary
in the Note Insurance Policy, the Note Insurance Policy shall not terminate
prior to the date on which the Insurer has made all payments required to be made
under the terms of the Note Insurance Policy in respect of Avoided Payments; and
(b) the Business Day following the date that the Insurer receives written notice
from the Servicer terminating the Note Insurance Policy as a result of a
downgrade of the Insurer's claims paying ability rating by any Rating Agency
which results in a downgrading of the Notes; provided, however, that no
termination shall be effective until (x) all amounts owed to the Insurer under
the Insurance Agreement on the date such written notice is received by the
Insurer are paid in full in cash and (y) the original Note Insurance Policy is
received by the Insurer.
As used herein, the following terms shall have the following meanings:
"Business Day" means any day other than a Saturday, Sunday or any day on
which banking institutions, insurance companies or trust companies in the states
of New York, Illinois, Delaware or Oklahoma are authorized or required by law or
executive order to be closed.
"Noteholder" means each holder of a Note who, on the applicable
Distribution Date, is entitled under the terms of the related Note to receive
payments under the Note Insurance Policy.
3
<PAGE>
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
dated as of February 1, 1999 among the Company, the Servicer, CIT Marine Trust
1996-A and the Issuer without regard to any amendment or supplement thereto.
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings set forth in the Sale and Servicing Agreement as of the
date of execution of the Note Insurance Policy, without giving effect to any
subsequent amendment or modification to the Sale and Servicing Agreement unless
such amendment or modification has been approved in writing by the Insurer.
Any notice under the Note Insurance Policy or service of process on the
Fiscal Agent of the Insurer may be made at the address listed below for the
Fiscal Agent of the Insurer or such other address as the Insurer shall specify
in writing to the Trustee.
The notice address of the Fiscal Agent is 61 Broadway, 15th Floor, New
York, New York 10006, Attention: Municipal Registrar and Paying Agency, or such
other address as the Fiscal Agent shall specify to the Indenture Trustee in
writing.
The Note Insurance Policy is being issued under and pursuant to, and shall
be construed under, the laws of the State of New York, without giving regard to
the conflict of laws principles thereof.
The insurance provided by the Note Insurance Policy is not covered by the
property/casualty insurance security fund specified in Article 76 of the New
York Insurance Law.
MBIA INSURANCE CORPORATION
4
<PAGE>
EXHIBIT A-2
FORM OF ASSET-BACKED NOTES
REGISTERED $179,000,000
No. __
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 125590 AB 5
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange or payment, and any Note issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
CIT MARINE TRUST 1999-A
CLASS A-2 5.80% ASSET-BACKED NOTES
CIT MARINE TRUST 1999-A, a business trust organized and existing under the laws
of the State of Delaware (herein referred to as the "Issuer"), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of ONE HUNDRED SEVENTY NINE MILLION DOLLARS ($179,000,000) payable
in accordance with the Indenture, prior to the occurrence of an Event of Default
and a declaration that the Notes are due and payable, on each Distribution Date
to the extent of amounts available therefor in an amount equal to the Note
Primary Principal Distribution Amount and the Note Additional Principal
Distribution Amount, if any; provided, however, that the outstanding principal
balance of this Note shall be due and payable on the earlier of the March 2010
Distribution Date (the "Class A-2 Note Final Scheduled Distribution Date") and
the Redemption Date with respect to a redemption of Notes, if any, pursuant to
Section 10.1 of the Indenture. On each Distribution Date until the principal of
this Note is paid or made available for payment, interest on the outstanding
principal amount of this Note shall be due and payable, calculated at the rate
per annum shown above during the related
A-2-1
<PAGE>
Interest Accrual Period on the outstanding principal amount of this Class A-2
Note on such Distribution Date before giving effect to any distributions of
principal with respect hereto on such Distribution Date. Interest will be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
Such principal of and interest on this Note shall be paid in the manner
specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America which, at the time of payment, is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the Indenture referred to on the reverse
hereof or be valid or obligatory for any purpose.
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<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: February 23, 1999 CIT MARINE TRUST 1999-A
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but solely
as Owner Trustee under the Trust Agreement
By:________________________________
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
HARRIS TRUST AND SAVINGS BANK,
not in its individual capacity
but solely as Indenture Trustee
By:________________________________
Name:
Title:
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<PAGE>
REVERSE OF NOTE
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as Class A-2 5.80% Asset-Backed Notes (herein called the "Class A-2
Notes") issued under an Indenture, dated as of February 1, 1999 (such Indenture,
as supplemented or amended, is herein called the "Indenture"), between the
Issuer and Harris Trust and Savings Bank, an Illinois banking corporation, as
trustee (the "Indenture Trustee", which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Noteholders.
Also issued under the Indenture are the Class A-1 5.45% Asset-Backed Notes (the
"Class A-1 Notes"), the Class A-3 5.85% Asset-Backed Notes (the "Class A-3
Notes") and the Class A-4 6.25% Asset-Backed Notes (the "Class A-4 Notes" and,
together with the Class A-1 Notes, Class A-2 Notes and Class A-3 Notes, the
"Notes"). The Class A-2 Notes are subject to all terms of the Indenture. All
terms used and not otherwise defined in this Note that are defined in the
Indenture, as supplemented or amended, shall have the meanings assigned to them
in or pursuant to the Indenture.
The Class A-2 Notes and all other Notes issued pursuant to the Indenture
are and will be equally and ratably secured by the Collateral pledged as
security therefor as provided in the Indenture.
Subject to the immediately following paragraph, principal on the Class A-2
Notes shall be payable in full on the earlier of the Distribution Date which is
the Class A-2 Note Final Scheduled Distribution Date set forth above and the
Redemption Date, if any, pursuant to Section 10.1 of the Indenture. In addition,
principal on the Class A-2 Notes will be payable in installments on earlier
Distribution Dates to the extent of amounts available therefor, in the amounts
and in the priorities set forth in Section 8.2(c) of the Indenture.
"Distribution Date," with respect to the Notes means the fifteenth day of each
month or, if any such date is not a Business Day, the next succeeding Business
Day, commencing March 15, 1999.
Notwithstanding the provisions of the preceding paragraph, the entire
unpaid principal amount of this Note shall be due and payable on the date on
which an Event of Default shall have occurred and be continuing and the Insurer
is not the Controlling Party and the Indenture Trustee or the Noteholders
representing not less than 66-2/3% of the aggregate outstanding principal amount
of the Notes have declared the Notes to be immediately due and payable in the
manner provided in Section 5.2 of the Indenture. In such event, the Holders of
all Notes shall be entitled to receive repayment of principal ratably in
proportion to their respective unpaid principal balances in the order of
priority provided in Section 5.4 of the Indenture. If on the date of any Event
of Default the Insurer is the Controlling Party, the Insurer, in its sole
discretion, may determine whether or not to accelerate payment of the Notes.
All principal payments on the Class A-2 Notes shall be made pro rata to
the Holders of the Class A-2 Notes.
A-2-4
<PAGE>
Payments of interest on this Note at the rate of 5.80% per annum shall be
due and payable on each Distribution Date. Interest on this Note for any
Distribution Date due but not paid on such Distribution Date will be due on the
next Distribution Date in addition to an amount equal to interest on such amount
at the rate per annum shown on the face of this Note (to the extent lawful).
Payments of interest on this Note, together with the installment of principal,
if any, if not in full payment of this Note, shall be made by check mailed to
the Person whose name appears as the Registered Holder of this Note (or one or
more Predecessor Notes) on the Note Register as of the close of business on each
Record Date, except that with respect to Notes registered on the Record Date in
the name of the nominee of the Depository (initially, such nominee to be Cede &
Co.), payments will be made by wire transfer in immediately available funds to
the account designated by such nominee. Such checks shall be mailed to the
Person entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. The Record Date, with respect to any
Distribution Date, means the Business Day immediately preceding such
Distribution Date, or if Definitive Notes are issued, the last Business Day of
the month immediately preceding the month in which such Distribution Date
occurs. Any reduction in the principal amount of this Note (or any one or more
Predecessor Notes) effected by any payments made on any Distribution Date shall
be binding upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount of
this Note on a Distribution Date, then the Indenture Trustee, in the name of and
on behalf of the Issuer, shall notify the Person who is the Registered Holder
hereof as of the Record Date preceding such Distribution Date by notice sent in
accordance with Section 2.7(e) of the Indenture, and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Indenture Trustee's principal Corporate Trust Office or at the office of the
Indenture Trustee's agent appointed for such purposes located in the City of New
York.
Pursuant to the Note Insurance Policy, the Insurer is required, to the
extent of any insufficiency in the Available Amount and the Available Reserve
Amount, to make available to the Indenture Trustee such amounts as are necessary
to distribute to the Class A-2 Noteholders on each Distribution Date the full
and timely payment of interest on the Class A-2 Notes, on each Distribution Date
the amount of any Collateralization Shortfall with respect to the Class A-2
Notes and on the Class A-2 Note Final Scheduled Distribution Date the full and
ultimate payment of principal on the Class A-2 Notes.
Upon receipt of amounts under the Note Insurance Policy on behalf of the
Class A-2 Notes, the Indenture Trustee shall distribute, in accordance with the
Sale and Servicing Agreement, to the Class A-2 Notes any portion thereof to
which the Noteholders of the Class A-2 Notes may be entitled.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
A-2-5
<PAGE>
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, with such signature guaranteed by a commercial bank
or trust company located, or having a correspondent located, in the City of New
York or the city in which the Corporate Trust Office is located, or a member
firm of a national securities exchange, and such other documents as the
Indenture Trustee may require, and thereupon one or more new Notes of the same
class of authorized denominations and in the same aggregate principal amount
will be issued to the designated transferee or transferees. No service charge
will be charged for any registration of transfer or exchange of this Note, but
the transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of
a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee or the Owner Trustee in their
individual capacities, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee or the Owner Trustee in their individual capacities, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in their individual capacities, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of
a Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture such Noteholder will not, prior to the
date which is one year and one day after the termination of the Indenture with
respect to the Issuer, acquiesce, petition or otherwise invoke or cause the
Seller or the Issuer to invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the Seller or the
Issuer under any federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Seller or the Issuer or any substantial part of
its property, or ordering the winding up or liquidation of the affairs of the
Seller or the Issuer.
Each Noteholder, by acceptance of a Note or, in the case of a Note Owner,
a beneficial interest in a Note, unless otherwise required by appropriate taxing
authorities, agrees to treat the Notes as indebtedness secured by the Contracts
for the purpose of federal income taxes, state and local income and franchise
taxes and any other taxes imposed upon, measured by or based upon gross or net
income.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note shall
A-2-6
<PAGE>
be overdue, and neither the Issuer, the Indenture Trustee nor any such agent
shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Noteholders under the Indenture at any time by the
Issuer with the prior written consent of the Indenture Trustee, the Insurer and
the Holders of Notes representing a majority of the aggregate outstanding
principal amount of all the Notes. The Indenture also contains provisions
permitting the Indenture Trustee, the Insurer and the Holders of Notes
representing specified percentages of the aggregate outstanding principal amount
of the Notes, on behalf of the Holders of all the Notes, to waive compliance by
the Issuer with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Note (or any one of more Predecessor Notes) shall be conclusive
and binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent or waiver is made upon this
Note. The Indenture also permits the Indenture Trustee to amend or waive certain
terms and conditions set forth in the Indenture without the consent of the
Noteholders.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Indenture Trustee, the
Insurer and the Holders of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the laws
of the State of New York, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer to pay the
principal of and interest on this Note at the times, place and rate, and in the
coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, neither the Seller, the Servicer, the Holder of
the AO Interest, the Indenture Trustee nor the Owner Trustee in their respective
individual capacities, any owner of a beneficial interest in the Issuer, nor any
of their respective partners, beneficiaries, agents, officers, directors,
employees or successors or assigns, shall be personally liable for, nor shall
recourse be had to any of them for, the payment of principal of or interest on,
or performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in this Note or the Indenture, it being expressly
understood that said covenants, obligations and
A-2-7
<PAGE>
indemnifications have been made by the Owner Trustee solely as the Owner Trustee
in the assets of the Issuer.
The Holder of this Note by the acceptance hereof agrees that, except as
expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, the Holder shall have no claim against any of the foregoing
for any deficiency, loss or claim therefrom; provided, however, that nothing
contained herein shall be taken to prevent recourse to, and enforcement against,
the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
A-2-8
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
________________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
________________________________________________________________________________
the within Note, and all rights thereunder, hereby irrevocably constituting and
appointing
______________________________________________________________________ Attorney
to transfer said Note on the books of the Note Registrar, with full power of
substitution in the premises.
Dated:______________ _____________________*
Signature Guaranteed: _____________________
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Note in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar, which requirements include membership or participation in
the Securities Transfer Agent's Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the Note Registrar in
addition to, or in substitution for, STAMP, all in accordance with the Exchange
Act.
A-2-9
<PAGE>
STATEMENT OF INSURANCE
The MBIA Insurance Corporation (the "Insurer") has issued a Financial
Guaranty Insurance Policy (the "Note Insurance Policy") containing the following
provisions, such policy being on file at Harris Trust and Savings Bank, as
indenture trustee (the "Indenture Trustee"), Chicago, Illinois.
The Insurer, in consideration of the payment of the premium and subject to
the terms of the Note Insurance Policy, thereby unconditionally and irrevocably
guarantees to pay to the Indenture Trustee in respect of (i) each Distribution
Date (other than the Final Scheduled Distribution Date with respect to a class
of Notes), an amount equal to the amount by which the Note Interest Distribution
Amount exceeds that portion of the Available amount allocated to pay such
amounts as provided in the Sale and Servicing Agreement (as defined below) after
giving effect to amounts available therefor from the Reserve Account, (ii) each
Distribution Date (other than the Final Scheduled Distribution Date with respect
to any class of Notes), an amount equal to the Collateralization Shortfall after
giving effect to amounts available therefor from the Reserve Account and (iii)
each Distribution Date which is a Final Scheduled Distribution Date with respect
to a class of Notes, an amount equal to the amount by which the outstanding
principal amount of such class of Notes exceeds that portion of the Available
Amount allocated to pay such amounts as provided in the Sale and Servicing
Agreement after giving effect to amounts available therefor from the Reserve
Account (such amounts, collectively, as of any Distribution Date, the "Note
Policy Claim Amount"). The Insurer also agrees to pay an amount equal to any
Avoided Payment (as defined below). Each payment pursuant to the Note Insurance
Policy with respect to any class of Notes will be received by the Indenture
Trustee, on behalf of the Noteholders, for distribution by the Indenture Trustee
to each Noteholder of each Noteholder's proportionate share of the Note Policy
Claim Amount. The Insurer's obligations under the Note Insurance Policy shall be
discharged to the extent funds equal to the applicable Note Policy Claim Amount
are received by the Indenture Trustee, whether or not such funds are properly
applied by the Indenture Trustee. The Note Insurance Policy does not guarantee
payments of principal on the Notes other than as a result of a Collateralization
Shortfall or with respect to the outstanding principal amount of each class of
Notes on the Final Scheduled Distribution Date for such class of Notes, and will
not guarantee payment of any amounts that become due on an accelerated basis as
a result of (a) a default by the Trust, (b) the occurrence of an Event of
Default under (and as defined in) the Indenture, or (c) any other cause. The
Insurer may elect, in its sole discretion, to pay in whole or in part such
principal due upon acceleration. The Insurer may elect, in its sole discretion,
to pay all or a portion of any shortfalls in the amount of such Available Amount
to make distributions of principal on the Notes, other than distributions of
principal with respect to a Collateralization Shortfall or a class of Notes on
the Final Scheduled Distribution Date thereof, which is guaranteed by the
Insurer.
Notwithstanding the foregoing paragraph, the Note Insurance Policy does
not cover shortfalls, if any, attributable to the liability of the Trust or the
Indenture Trustee for withholding taxes, if any (including interest and
penalties in respect of any such liability).
1
<PAGE>
Payment of amounts under the Note Insurance Policy shall be made in
immediately available funds on the later of (a) 3 p.m., New York City time, on
the related Distribution Date and (b) 3 p.m., New York City time, on the third
Business Day following presentation to State Street Bank and Trust Company,
N.A., as Fiscal Agent for the Insurer or any successor fiscal agent appointed by
the Insurer (the "Fiscal Agent") of a notice for payment (a "Notice for
Payment"), appropriately completed and executed by the Indenture Trustee. A
Notice for Payment under the Note Insurance Policy may be presented to the
Fiscal Agent on any Business Day following the Determination Date in respect of
which the Notice for Payment is being presented, but in any event, not later
than the third Business Day prior to the applicable Distribution Date, in
accordance with the Note Insurance Policy. Any Notice for Payment received by
the Fiscal Agent after 3 p.m., New York City time, on a Business Day, or on any
day that is not a Business Day, will be deemed to be received by the Fiscal
Agent on the next succeeding Business Day.
Subject to the foregoing, if the payment of any amount guaranteed by the
Note Insurance Policy and previously distributed to a Noteholder in respect of
the Notes that is recoverable and sought to be recovered as a voidable
preference in an Insolvency Proceeding in accordance with a nonappealable order
of a court having competent jurisdiction is voided ("Avoided Payment"), the
Insurer will make such Avoided Payment on behalf of the Noteholder upon receipt
by the Fiscal Agent from the Indenture Trustee on behalf of such Noteholder of
(i) a certified copy of a final, nonappealable order of a court having competent
jurisdiction to the effect that the Noteholder is required to return any such
payment or portion thereof prior to the Termination Date of the Note Insurance
Policy because such payment was voided under applicable law (the "Order")
together with a certificate of such Noteholder that such Order is final and not
subject to appeal, (ii) an assignment properly completed and executed by such
Noteholder irrevocably assigning to the Insurer all rights and claims of such
Noteholder relating to or arising under such Avoided Payment, (iii) a Notice for
Payment appropriately completed and executed by the Indenture Trustee and (iv)
appropriate instruments to effect the appointment of the Insurer as agent for
such Noteholder in any legal proceeding relating to such Avoided Payment.
The Insurer shall make payments due in respect of Avoided Payments no
later than 3 p.m., New York City time, on the Business Day which is no earlier
than (a) the third Business Day following receipt by the Fiscal Agent of the
documents required under clauses (i) through (iv) of the preceding paragraph and
(b) the date that such documents are received by the Fiscal Agent, if at least
two Business Days prior to such receipt, the Fiscal Agent shall have received
written notice from the Indenture Trustee that such documents were to be
delivered on such date and such date was specified in such notice. Any such
documents received by the Fiscal Agent after 3 p.m., New York City time, on any
Business Day or on any day that is not a Business Day shall be deemed to have
been received by the Fiscal Agent prior to 3 p.m. on the next succeeding
Business Day. All payments made by the Insurer under the Note Insurance Policy
on account of any Avoided Payment shall be made to the receiver or the trustee
in bankruptcy named in the Order on behalf of the Noteholder and not to the
Indenture Trustee or any Noteholder directly unless such Noteholder has returned
such Avoided Payment to such receiver or trustee in bankruptcy, in which case
such payment will be disbursed to the Indenture
2
<PAGE>
Trustee on behalf of such Noteholder upon proof of such payment reasonably
satisfactory to the Insurer.
The Fiscal Agent is the agent of the Insurer only and the Fiscal Agent
shall in no event be liable to Noteholders for any acts of the Fiscal Agent or
any failure of the Insurer to deposit or cause to be deposited, sufficient funds
to make payments due under the Note Insurance Policy.
The obligations of the Insurer under the Note Insurance Policy are
irrevocable, primary, absolute and unconditional (except as expressly provided
therein) and neither the failure of the Trust, the Indenture Trustee, CIT, the
Seller, the Servicer or any other person to perform any covenant or obligation
in favor of the Insurer (or otherwise), nor the failure or omission to make a
demand permitted under the Note Insurance Policy nor the commencement of any
bankruptcy, debtor or other insolvency proceeding by or against the Trust, the
Indenture Trustee, CIT, the Seller, the Servicer or any other person shall in
any way affect or limit the Insurer's obligations under the Note Insurance
Policy.
The Note Insurance Policy and the obligations of the Insurer thereunder
shall terminate on the date (the "Termination Date") that is the earliest to
occur of (a) ninety-one days following the earlier of (i) the latest Final
Scheduled Distribution Date and (ii) the date on which all amounts required to
be paid to the Noteholders have been paid in full, provided, that, if any
Insolvency Proceeding is existing by or against the Trust, the Seller, the
Servicer or CIT during such ninety-one day period, then the Note Insurance
Policy and the Insurer's obligations under the Note Insurance Policy shall
terminate on the date of the conclusion or dismissal of such Insolvency
Proceeding without continuing jurisdiction by the court in such Insolvency
Proceeding, provided, further that, and notwithstanding anything to the contrary
in the Note Insurance Policy, the Note Insurance Policy shall not terminate
prior to the date on which the Insurer has made all payments required to be made
under the terms of the Note Insurance Policy in respect of Avoided Payments; and
(b) the Business Day following the date that the Insurer receives written notice
from the Servicer terminating the Note Insurance Policy as a result of a
downgrade of the Insurer's claims paying ability rating by any Rating Agency
which results in a downgrading of the Notes; provided, however, that no
termination shall be effective until (x) all amounts owed to the Insurer under
the Insurance Agreement on the date such written notice is received by the
Insurer are paid in full in cash and (y) the original Note Insurance Policy is
received by the Insurer.
As used herein, the following terms shall have the following meanings:
"Business Day" means any day other than a Saturday, Sunday or any day on
which banking institutions, insurance companies or trust companies in the states
of New York, Illinois, Delaware or Oklahoma are authorized or required by law or
executive order to be closed.
"Noteholder" means each holder of a Note who, on the applicable
Distribution Date, is entitled under the terms of the related Note to receive
payments under the Note Insurance Policy.
3
<PAGE>
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
dated as of February 1, 1999 among the Company, the Servicer, CIT Marine Trust
1996-A and the Issuer without regard to any amendment or supplement thereto.
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings set forth in the Sale and Servicing Agreement as of the
date of execution of the Note Insurance Policy, without giving effect to any
subsequent amendment or modification to the Sale and Servicing Agreement unless
such amendment or modification has been approved in writing by the Insurer.
Any notice under the Note Insurance Policy or service of process on the
Fiscal Agent of the Insurer may be made at the address listed below for the
Fiscal Agent of the Insurer or such other address as the Insurer shall specify
in writing to the Trustee.
The notice address of the Fiscal Agent is 61 Broadway, 15th Floor, New
York, New York 10006, Attention: Municipal Registrar and Paying Agency, or such
other address as the Fiscal Agent shall specify to the Indenture Trustee in
writing.
The Note Insurance Policy is being issued under and pursuant to, and shall
be construed under, the laws of the State of New York, without giving regard to
the conflict of laws principles thereof.
The insurance provided by the Note Insurance Policy is not covered by the
property/casualty insurance security fund specified in Article 76 of the New
York Insurance Law.
MBIA INSURANCE CORPORATION
4
<PAGE>
EXHIBIT A-3
FORM OF ASSET-BACKED NOTES
REGISTERED $117,000,000
No. __
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 125590 AC 3
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange or payment, and any Note issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
CIT MARINE TRUST 1999-A
CLASS A-3 5.85% ASSET-BACKED NOTES
CIT MARINE TRUST 1999-A, a business trust organized and existing under the laws
of the State of Delaware (herein referred to as the "Issuer"), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of ONE HUNDRED SEVENTEEN MILLION DOLLARS ($117,000,000) payable in
accordance with the Indenture, prior to the occurrence of an Event of Default
and a declaration that the Notes are due and payable, on each Distribution Date
to the extent of amounts available therefor in an amount equal to the Note
Primary Principal Distribution Amount and the Note Additional Principal
Distribution Amount, if any; provided, however, that the outstanding principal
balance of this Note shall be due and payable on the earlier of the May 2013
Distribution Date (the "Class A-3 Note Final Scheduled Distribution Date") and
the Redemption Date with respect to a redemption of Notes, if any, pursuant to
Section 10.1 of the Indenture. On each Distribution Date until the principal of
this Note is paid or made available for payment, interest on the outstanding
principal amount of this Note shall be due and payable, calculated at the rate
per annum shown above during the related
A-3-1
<PAGE>
Interest Accrual Period on the outstanding principal amount of this Class A-3
Note on such Distribution Date before giving effect to any distributions of
principal with respect hereto on such Distribution Date. Interest will be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
Such principal of and interest on this Note shall be paid in the manner
specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America which, at the time of payment, is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the Indenture referred to on the reverse
hereof or be valid or obligatory for any purpose.
A-3-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: February 23, 1999 CIT MARINE TRUST 1999-A
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but solely
as Owner Trustee under the Trust Agreement
By:________________________________
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
HARRIS TRUST AND SAVINGS BANK,
not in its individual capacity
but solely as Indenture Trustee
By:________________________________
Name:
Title:
A-3-3
<PAGE>
REVERSE OF NOTE
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as Class A-3 5.85% Asset-Backed Notes (herein called the "Class A-3
Notes") issued under an Indenture, dated as of February 1, 1999 (such Indenture,
as supplemented or amended, is herein called the "Indenture"), between the
Issuer and Harris Trust and Savings Bank, an Illinois banking corporation, as
trustee (the "Indenture Trustee", which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Noteholders.
Also issued under the Indenture are the Class A-1 5.45% Asset-Backed Notes (the
"Class A-1 Notes"), the Class A-2 5.80% Asset-Backed Notes (the "Class A-2
Notes") and the Class A-4 6.25% Asset-Backed Notes (the "Class A-4 Notes" and,
together with the Class A-1 Notes, Class A-2 Notes and Class A-3 Notes, the
"Notes"). The Class A-3 Notes are subject to all terms of the Indenture. All
terms used and not otherwise defined in this Note that are defined in the
Indenture, as supplemented or amended, shall have the meanings assigned to them
in or pursuant to the Indenture.
The Class A-3 Notes and all other Notes issued pursuant to the Indenture
are and will be equally and ratably secured by the Collateral pledged as
security therefor as provided in the Indenture.
Subject to the immediately following paragraph, principal on the Class A-3
Notes shall be payable in full on the earlier of the Distribution Date which is
the Class A-3 Note Final Scheduled Distribution Date set forth above and the
Redemption Date, if any, pursuant to Section 10.1 of the Indenture. In addition,
principal on the Class A-3 Notes will be payable in installments on earlier
Distribution Dates to the extent of amounts available therefor, in the amounts
and in the priorities set forth in Section 8.2(c) of the Indenture.
"Distribution Date," with respect to the Notes means the fifteenth day of each
month or, if any such date is not a Business Day, the next succeeding Business
Day, commencing March 15, 1999.
Notwithstanding the provisions of the preceding paragraph, the entire
unpaid principal amount of this Note shall be due and payable on the date on
which an Event of Default shall have occurred and be continuing and the Insurer
is not the Controlling Party and the Indenture Trustee or the Noteholders
representing not less than 66-2/3% of the aggregate outstanding principal amount
of the Notes have declared the Notes to be immediately due and payable in the
manner provided in Section 5.2 of the Indenture. In such event, the Holders of
all Notes shall be entitled to receive repayment of principal ratably in
proportion to their respective unpaid principal balances in the order of
priority provided in Section 5.4 of the Indenture. If on the date of any Event
of Default the Insurer is the Controlling Party, the Insurer, in its sole
discretion, may determine whether or not to accelerate payment of the Notes.
All principal payments on the Class A-3 Notes shall be made pro rata to
the Holders of the Class A-3 Notes.
A-3-4
<PAGE>
Payments of interest on this Note at the rate of 5.85% per annum shall be
due and payable on each Distribution Date. Interest on this Note for any
Distribution Date due but not paid on such Distribution Date will be due on the
next Distribution Date in addition to an amount equal to interest on such amount
at the rate per annum shown on the face of this Note (to the extent lawful).
Payments of interest on this Note, together with the installment of principal,
if any, if not in full payment of this Note, shall be made by check mailed to
the Person whose name appears as the Registered Holder of this Note (or one or
more Predecessor Notes) on the Note Register as of the close of business on each
Record Date, except that with respect to Notes registered on the Record Date in
the name of the nominee of the Depository (initially, such nominee to be Cede &
Co.), payments will be made by wire transfer in immediately available funds to
the account designated by such nominee. Such checks shall be mailed to the
Person entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. The Record Date, with respect to any
Distribution Date, means the Business Day immediately preceding such
Distribution Date, or if Definitive Notes are issued, the last Business Day of
the month immediately preceding the month in which such Distribution Date
occurs. Any reduction in the principal amount of this Note (or any one or more
Predecessor Notes) effected by any payments made on any Distribution Date shall
be binding upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount of
this Note on a Distribution Date, then the Indenture Trustee, in the name of and
on behalf of the Issuer, shall notify the Person who is the Registered Holder
hereof as of the Record Date preceding such Distribution Date by notice sent in
accordance with Section 2.7(e) of the Indenture, and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Indenture Trustee's principal Corporate Trust Office or at the office of the
Indenture Trustee's agent appointed for such purposes located in the City of New
York.
Pursuant to the Note Insurance Policy, the Insurer is required, to the
extent of any insufficiency in the Available Amount and the Available Reserve
Amount, to make available to the Indenture Trustee such amounts as are necessary
to distribute to the Class A-3 Noteholders on each Distribution Date the full
and timely payment of interest on the Class A-3 Notes, on each Distribution Date
the amount of any Collateralization Shortfall with respect to the Class A-3
Notes and on the Class A-3 Note Final Scheduled Distribution Date the full and
ultimate payment of principal on the Class A-3 Notes.
Upon receipt of amounts under the Note Insurance Policy on behalf of the
Class A-3 Notes, the Indenture Trustee shall distribute, in accordance with the
Sale and Servicing Agreement, to the Class A-3 Notes any portion thereof to
which the Noteholders of the Class A-3 Notes may be entitled.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
A-3-5
<PAGE>
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, with such signature guaranteed by a commercial bank
or trust company located, or having a correspondent located, in the City of New
York or the city in which the Corporate Trust Office is located, or a member
firm of a national securities exchange, and such other documents as the
Indenture Trustee may require, and thereupon one or more new Notes of the same
class of authorized denominations and in the same aggregate principal amount
will be issued to the designated transferee or transferees. No service charge
will be charged for any registration of transfer or exchange of this Note, but
the transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of
a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee or the Owner Trustee in their
individual capacities, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee or the Owner Trustee in their individual capacities, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in their individual capacities, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of
a Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture such Noteholder will not, prior to the
date which is one year and one day after the termination of the Indenture with
respect to the Issuer, acquiesce, petition or otherwise invoke or cause the
Seller or the Issuer to invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the Seller or the
Issuer under any federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Seller or the Issuer or any substantial part of
its property, or ordering the winding up or liquidation of the affairs of the
Seller or the Issuer.
Each Noteholder, by acceptance of a Note or, in the case of a Note Owner,
a beneficial interest in a Note, unless otherwise required by appropriate taxing
authorities, agrees to treat the Notes as indebtedness secured by the Contracts
for the purpose of federal income taxes, state and local income and franchise
taxes and any other taxes imposed upon, measured by or based upon gross or net
income.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note shall
A-3-6
<PAGE>
be overdue, and neither the Issuer, the Indenture Trustee nor any such agent
shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Noteholders under the Indenture at any time by the
Issuer with the prior written consent of the Indenture Trustee, the Insurer and
the Holders of Notes representing a majority of the aggregate outstanding
principal amount of all the Notes. The Indenture also contains provisions
permitting the Indenture Trustee, the Insurer and the Holders of Notes
representing specified percentages of the aggregate outstanding principal amount
of the Notes, on behalf of the Holders of all the Notes, to waive compliance by
the Issuer with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Note (or any one of more Predecessor Notes) shall be conclusive
and binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent or waiver is made upon this
Note. The Indenture also permits the Indenture Trustee to amend or waive certain
terms and conditions set forth in the Indenture without the consent of the
Noteholders.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Indenture Trustee, the
Insurer and the Holders of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the laws
of the State of New York, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer to pay the
principal of and interest on this Note at the times, place and rate, and in the
coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, neither the Seller, the Servicer, the Holder of
the AO Interest, the Indenture Trustee nor the Owner Trustee in their respective
individual capacities, any owner of a beneficial interest in the Issuer, nor any
of their respective partners, beneficiaries, agents, officers, directors,
employees or successors or assigns, shall be personally liable for, nor shall
recourse be had to any of them for, the payment of principal of or interest on,
or performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in this Note or the Indenture, it being expressly
understood that said covenants, obligations and
A-3-7
<PAGE>
indemnifications have been made by the Owner Trustee solely as the Owner Trustee
in the assets of the Issuer.
The Holder of this Note by the acceptance hereof agrees that, except as
expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, the Holder shall have no claim against any of the foregoing
for any deficiency, loss or claim therefrom; provided, however, that nothing
contained herein shall be taken to prevent recourse to, and enforcement against,
the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
A-3-8
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
________________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
________________________________________________________________________________
the within Note, and all rights thereunder, hereby irrevocably constituting and
appointing
______________________________________________________________________ Attorney
to transfer said Note on the books of the Note Registrar, with full power of
substitution in the premises.
Dated:______________ _____________________*
Signature Guaranteed: _____________________
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Note in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar, which requirements include membership or participation in
the Securities Transfer Agent's Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the Note Registrar in
addition to, or in substitution for, STAMP, all in accordance with the Exchange
Act.
A-3-9
<PAGE>
STATEMENT OF INSURANCE
The MBIA Insurance Corporation (the "Insurer") has issued a Financial
Guaranty Insurance Policy (the "Note Insurance Policy") containing the following
provisions, such policy being on file at Harris Trust and Savings Bank, as
indenture trustee (the "Indenture Trustee"), Chicago, Illinois.
The Insurer, in consideration of the payment of the premium and subject to
the terms of the Note Insurance Policy, thereby unconditionally and irrevocably
guarantees to pay to the Indenture Trustee in respect of (i) each Distribution
Date (other than the Final Scheduled Distribution Date with respect to a class
of Notes), an amount equal to the amount by which the Note Interest Distribution
Amount exceeds that portion of the Available amount allocated to pay such
amounts as provided in the Sale and Servicing Agreement (as defined below) after
giving effect to amounts available therefor from the Reserve Account, (ii) each
Distribution Date (other than the Final Scheduled Distribution Date with respect
to any class of Notes), an amount equal to the Collateralization Shortfall after
giving effect to amounts available therefor from the Reserve Account and (iii)
each Distribution Date which is a Final Scheduled Distribution Date with respect
to a class of Notes, an amount equal to the amount by which the outstanding
principal amount of such class of Notes exceeds that portion of the Available
Amount allocated to pay such amounts as provided in the Sale and Servicing
Agreement after giving effect to amounts available therefor from the Reserve
Account (such amounts, collectively, as of any Distribution Date, the "Note
Policy Claim Amount"). The Insurer also agrees to pay an amount equal to any
Avoided Payment (as defined below). Each payment pursuant to the Note Insurance
Policy with respect to any class of Notes will be received by the Indenture
Trustee, on behalf of the Noteholders, for distribution by the Indenture Trustee
to each Noteholder of each Noteholder's proportionate share of the Note Policy
Claim Amount. The Insurer's obligations under the Note Insurance Policy shall be
discharged to the extent funds equal to the applicable Note Policy Claim Amount
are received by the Indenture Trustee, whether or not such funds are properly
applied by the Indenture Trustee. The Note Insurance Policy does not guarantee
payments of principal on the Notes other than as a result of a Collateralization
Shortfall or with respect to the outstanding principal amount of each class of
Notes on the Final Scheduled Distribution Date for such class of Notes, and will
not guarantee payment of any amounts that become due on an accelerated basis as
a result of (a) a default by the Trust, (b) the occurrence of an Event of
Default under (and as defined in) the Indenture, or (c) any other cause. The
Insurer may elect, in its sole discretion, to pay in whole or in part such
principal due upon acceleration. The Insurer may elect, in its sole discretion,
to pay all or a portion of any shortfalls in the amount of such Available Amount
to make distributions of principal on the Notes, other than distributions of
principal with respect to a Collateralization Shortfall or a class of Notes on
the Final Scheduled Distribution Date thereof, which is guaranteed by the
Insurer.
Notwithstanding the foregoing paragraph, the Note Insurance Policy does
not cover shortfalls, if any, attributable to the liability of the Trust or the
Indenture Trustee for withholding taxes, if any (including interest and
penalties in respect of any such liability).
1
<PAGE>
Payment of amounts under the Note Insurance Policy shall be made in
immediately available funds on the later of (a) 3 p.m., New York City time, on
the related Distribution Date and (b) 3 p.m., New York City time, on the third
Business Day following presentation to State Street Bank and Trust Company,
N.A., as Fiscal Agent for the Insurer or any successor fiscal agent appointed by
the Insurer (the "Fiscal Agent") of a notice for payment (a "Notice for
Payment"), appropriately completed and executed by the Indenture Trustee. A
Notice for Payment under the Note Insurance Policy may be presented to the
Fiscal Agent on any Business Day following the Determination Date in respect of
which the Notice for Payment is being presented, but in any event, not later
than the third Business Day prior to the applicable Distribution Date, in
accordance with the Note Insurance Policy. Any Notice for Payment received by
the Fiscal Agent after 3 p.m., New York City time, on a Business Day, or on any
day that is not a Business Day, will be deemed to be received by the Fiscal
Agent on the next succeeding Business Day.
Subject to the foregoing, if the payment of any amount guaranteed by the
Note Insurance Policy and previously distributed to a Noteholder in respect of
the Notes that is recoverable and sought to be recovered as a voidable
preference in an Insolvency Proceeding in accordance with a nonappealable order
of a court having competent jurisdiction is voided ("Avoided Payment"), the
Insurer will make such Avoided Payment on behalf of the Noteholder upon receipt
by the Fiscal Agent from the Indenture Trustee on behalf of such Noteholder of
(i) a certified copy of a final, nonappealable order of a court having competent
jurisdiction to the effect that the Noteholder is required to return any such
payment or portion thereof prior to the Termination Date of the Note Insurance
Policy because such payment was voided under applicable law (the "Order")
together with a certificate of such Noteholder that such Order is final and not
subject to appeal, (ii) an assignment properly completed and executed by such
Noteholder irrevocably assigning to the Insurer all rights and claims of such
Noteholder relating to or arising under such Avoided Payment, (iii) a Notice for
Payment appropriately completed and executed by the Indenture Trustee and (iv)
appropriate instruments to effect the appointment of the Insurer as agent for
such Noteholder in any legal proceeding relating to such Avoided Payment.
The Insurer shall make payments due in respect of Avoided Payments no
later than 3 p.m., New York City time, on the Business Day which is no earlier
than (a) the third Business Day following receipt by the Fiscal Agent of the
documents required under clauses (i) through (iv) of the preceding paragraph and
(b) the date that such documents are received by the Fiscal Agent, if at least
two Business Days prior to such receipt, the Fiscal Agent shall have received
written notice from the Indenture Trustee that such documents were to be
delivered on such date and such date was specified in such notice. Any such
documents received by the Fiscal Agent after 3 p.m., New York City time, on any
Business Day or on any day that is not a Business Day shall be deemed to have
been received by the Fiscal Agent prior to 3 p.m. on the next succeeding
Business Day. All payments made by the Insurer under the Note Insurance Policy
on account of any Avoided Payment shall be made to the receiver or the trustee
in bankruptcy named in the Order on behalf of the Noteholder and not to the
Indenture Trustee or any Noteholder directly unless such Noteholder has returned
such Avoided Payment to such receiver or trustee in bankruptcy, in which case
such payment will be disbursed to the Indenture
2
<PAGE>
Trustee on behalf of such Noteholder upon proof of such payment reasonably
satisfactory to the Insurer.
The Fiscal Agent is the agent of the Insurer only and the Fiscal Agent
shall in no event be liable to Noteholders for any acts of the Fiscal Agent or
any failure of the Insurer to deposit or cause to be deposited, sufficient funds
to make payments due under the Note Insurance Policy.
The obligations of the Insurer under the Note Insurance Policy are
irrevocable, primary, absolute and unconditional (except as expressly provided
therein) and neither the failure of the Trust, the Indenture Trustee, CIT, the
Seller, the Servicer or any other person to perform any covenant or obligation
in favor of the Insurer (or otherwise), nor the failure or omission to make a
demand permitted under the Note Insurance Policy nor the commencement of any
bankruptcy, debtor or other insolvency proceeding by or against the Trust, the
Indenture Trustee, CIT, the Seller, the Servicer or any other person shall in
any way affect or limit the Insurer's obligations under the Note Insurance
Policy.
The Note Insurance Policy and the obligations of the Insurer thereunder
shall terminate on the date (the "Termination Date") that is the earliest to
occur of (a) ninety-one days following the earlier of (i) the latest Final
Scheduled Distribution Date and (ii) the date on which all amounts required to
be paid to the Noteholders have been paid in full, provided, that, if any
Insolvency Proceeding is existing by or against the Trust, the Seller, the
Servicer or CIT during such ninety-one day period, then the Note Insurance
Policy and the Insurer's obligations under the Note Insurance Policy shall
terminate on the date of the conclusion or dismissal of such Insolvency
Proceeding without continuing jurisdiction by the court in such Insolvency
Proceeding, provided, further that, and notwithstanding anything to the contrary
in the Note Insurance Policy, the Note Insurance Policy shall not terminate
prior to the date on which the Insurer has made all payments required to be made
under the terms of the Note Insurance Policy in respect of Avoided Payments; and
(b) the Business Day following the date that the Insurer receives written notice
from the Servicer terminating the Note Insurance Policy as a result of a
downgrade of the Insurer's claims paying ability rating by any Rating Agency
which results in a downgrading of the Notes; provided, however, that no
termination shall be effective until (x) all amounts owed to the Insurer under
the Insurance Agreement on the date such written notice is received by the
Insurer are paid in full in cash and (y) the original Note Insurance Policy is
received by the Insurer.
As used herein, the following terms shall have the following meanings:
"Business Day" means any day other than a Saturday, Sunday or any day on
which banking institutions, insurance companies or trust companies in the states
of New York, Illinois, Delaware or Oklahoma are authorized or required by law or
executive order to be closed.
"Noteholder" means each holder of a Note who, on the applicable
Distribution Date, is entitled under the terms of the related Note to receive
payments under the Note Insurance Policy.
3
<PAGE>
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
dated as of February 1, 1999 among the Company, the Servicer, CIT Marine Trust
1996-A and the Issuer without regard to any amendment or supplement thereto.
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings set forth in the Sale and Servicing Agreement as of the
date of execution of the Note Insurance Policy, without giving effect to any
subsequent amendment or modification to the Sale and Servicing Agreement unless
such amendment or modification has been approved in writing by the Insurer.
Any notice under the Note Insurance Policy or service of process on the
Fiscal Agent of the Insurer may be made at the address listed below for the
Fiscal Agent of the Insurer or such other address as the Insurer shall specify
in writing to the Trustee.
The notice address of the Fiscal Agent is 61 Broadway, 15th Floor, New
York, New York 10006, Attention: Municipal Registrar and Paying Agency, or such
other address as the Fiscal Agent shall specify to the Indenture Trustee in
writing.
The Note Insurance Policy is being issued under and pursuant to, and shall
be construed under, the laws of the State of New York, without giving regard to
the conflict of laws principles thereof.
The insurance provided by the Note Insurance Policy is not covered by the
property/casualty insurance security fund specified in Article 76 of the New
York Insurance Law.
MBIA INSURANCE CORPORATION
4
<PAGE>
EXHIBIT A-4
FORM OF ASSET-BACKED NOTES
REGISTERED $103,134,000
No. __
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 125590 AD 1
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange or payment, and any Note issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
CIT MARINE TRUST 1999-A
CLASS A-4 6.25% ASSET-BACKED NOTES
CIT MARINE TRUST 1999-A, a business trust organized and existing under the laws
of the State of Delaware (herein referred to as the "Issuer"), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of ONE HUNDRED THREE MILLION, ONE HUNDRED THIRTY FOUR THOUSAND
DOLLARS ($103,134,000) payable in accordance with the Indenture, prior to the
occurrence of an Event of Default and a declaration that the Notes are due and
payable, on each Distribution Date to the extent of amounts available therefor
in an amount equal to the Note Primary Principal Distribution Amount and the
Note Additional Principal Distribution Amount, if any; provided, however, that
the outstanding principal balance of this Note shall be due and payable on the
earlier of the November 2019 Distribution Date (the "Class A-4 Note Final
Scheduled Distribution Date") and the Redemption Date with respect to a
redemption of Notes, if any, pursuant to Section 10.1 of the Indenture. On each
Distribution Date until the principal of this Note is paid or made available for
payment, interest on the outstanding principal amount of this Note shall be due
and payable, calculated at
A-4-1
<PAGE>
the rate per annum shown above during the related Interest Accrual Period on the
outstanding principal amount of this Class A-4 Note on such Distribution Date
before giving effect to any distributions of principal with respect hereto on
such Distribution Date. Interest will be calculated on the basis of a 360-day
year consisting of twelve 30-day months. Such principal of and interest on this
Note shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America which, at the time of payment, is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the Indenture referred to on the reverse
hereof or be valid or obligatory for any purpose.
A-4-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: February 23, 1999 CIT MARINE TRUST 1999-A
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but solely
as Owner Trustee under the Trust Agreement
By:________________________________
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
HARRIS TRUST AND SAVINGS BANK,
not in its individual capacity
but solely as Indenture Trustee
By:________________________________
Name:
Title:
A-4-3
<PAGE>
REVERSE OF NOTE
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as Class A-4 6.25% Asset-Backed Notes (herein called the "Class A-4
Notes") issued under an Indenture, dated as of February 1, 1999 (such Indenture,
as supplemented or amended, is herein called the "Indenture"), between the
Issuer and Harris Trust and Savings Bank, an Illinois banking corporation, as
trustee (the "Indenture Trustee", which term includes any successor trustee
under the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture Trustee and the Noteholders.
Also issued under the Indenture are the Class A-1 5.45% Asset-Backed Notes (the
"Class A-1 Notes"), the Class A-2 5.80% Asset-Backed Notes (the "Class A-2
Notes") and the Class A-3 5.85% Asset-Backed Notes (the "Class A-3 Notes" and,
together with the Class A-1 Notes, Class A-2 Notes and Class A-4 Notes, the
"Notes"). The Class A-4 Notes are subject to all terms of the Indenture. All
terms used and not otherwise defined in this Note that are defined in the
Indenture, as supplemented or amended, shall have the meanings assigned to them
in or pursuant to the Indenture.
The Class A-4 Notes and all other Notes issued pursuant to the Indenture
are and will be equally and ratably secured by the Collateral pledged as
security therefor as provided in the Indenture.
Subject to the immediately following paragraph, principal on the Class A-4
Notes shall be payable in full on the earlier of the Distribution Date which is
the Class A-4 Note Final Scheduled Distribution Date set forth above and the
Redemption Date, if any, pursuant to Section 10.1 of the Indenture. In addition,
principal on the Class A-4 Notes will be payable in installments on earlier
Distribution Dates to the extent of amounts available therefor, in the amounts
and in the priorities set forth in Section 8.2(c) of the Indenture.
"Distribution Date," with respect to the Notes means the fifteenth day of each
month or, if any such date is not a Business Day, the next succeeding Business
Day, commencing March 15, 1999.
Notwithstanding the provisions of the preceding paragraph, the entire
unpaid principal amount of this Note shall be due and payable on the date on
which an Event of Default shall have occurred and be continuing and the Insurer
is not the Controlling Party and the Indenture Trustee or the Noteholders
representing not less than 66-2/3% of the aggregate outstanding principal amount
of the Notes have declared the Notes to be immediately due and payable in the
manner provided in Section 5.2 of the Indenture. In such event, the Holders of
all Notes shall be entitled to receive repayment of principal ratably in
proportion to their respective unpaid principal balances in the order of
priority provided in Section 5.4 of the Indenture. If on the date of any Event
of Default the Insurer is the Controlling Party, the Insurer, in its sole
discretion, may determine whether or not to accelerate payment of the Notes.
All principal payments on the Class A-4 Notes shall be made pro rata to
the Holders of the Class A-4 Notes.
A-4-4
<PAGE>
Payments of interest on this Note at the rate of 6.25% per annum shall be
due and payable on each Distribution Date. Interest on this Note for any
Distribution Date due but not paid on such Distribution Date will be due on the
next Distribution Date in addition to an amount equal to interest on such amount
at the rate per annum shown on the face of this Note (to the extent lawful).
Payments of interest on this Note, together with the installment of principal,
if any, if not in full payment of this Note, shall be made by check mailed to
the Person whose name appears as the Registered Holder of this Note (or one or
more Predecessor Notes) on the Note Register as of the close of business on each
Record Date, except that with respect to Notes registered on the Record Date in
the name of the nominee of the Depository (initially, such nominee to be Cede &
Co.), payments will be made by wire transfer in immediately available funds to
the account designated by such nominee. Such checks shall be mailed to the
Person entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. The Record Date, with respect to any
Distribution Date, means the Business Day immediately preceding such
Distribution Date, or if Definitive Notes are issued, the last Business Day of
the month immediately preceding the month in which such Distribution Date
occurs. Any reduction in the principal amount of this Note (or any one or more
Predecessor Notes) effected by any payments made on any Distribution Date shall
be binding upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount of
this Note on a Distribution Date, then the Indenture Trustee, in the name of and
on behalf of the Issuer, shall notify the Person who is the Registered Holder
hereof as of the Record Date preceding such Distribution Date by notice sent in
accordance with Section 2.7(e) of the Indenture, and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Indenture Trustee's principal Corporate Trust Office or at the office of the
Indenture Trustee's agent appointed for such purposes located in the City of New
York.
Pursuant to the Note Insurance Policy, the Insurer is required, to the
extent of any insufficiency in the Available Amount and the Available Reserve
Amount, to make available to the Indenture Trustee such amounts as are necessary
to distribute to the Class A-4 Noteholders on each Distribution Date the full
and timely payment of interest on the Class A-4 Notes, on each Distribution Date
the amount of any Collateralization Shortfall with respect to the Class A-4
Notes and on the Class A-4 Note Final Scheduled Distribution Date the full and
ultimate payment of principal on the Class A-4 Notes.
Upon receipt of amounts under the Note Insurance Policy on behalf of the
Class A-4 Notes, the Indenture Trustee shall distribute, in accordance with the
Sale and Servicing Agreement, to the Class A-4 Notes any portion thereof to
which the Noteholders of the Class A-4 Notes may be entitled.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
A-4-5
<PAGE>
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, with such signature guaranteed by a commercial bank
or trust company located, or having a correspondent located, in the City of New
York or the city in which the Corporate Trust Office is located, or a member
firm of a national securities exchange, and such other documents as the
Indenture Trustee may require, and thereupon one or more new Notes of the same
class of authorized denominations and in the same aggregate principal amount
will be issued to the designated transferee or transferees. No service charge
will be charged for any registration of transfer or exchange of this Note, but
the transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of
a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee or the Owner Trustee in their
individual capacities, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee or the Owner Trustee in their individual capacities, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in their individual capacities, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of
a Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture such Noteholder will not, prior to the
date which is one year and one day after the termination of the Indenture with
respect to the Issuer, acquiesce, petition or otherwise invoke or cause the
Seller or the Issuer to invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the Seller or the
Issuer under any federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Seller or the Issuer or any substantial part of
its property, or ordering the winding up or liquidation of the affairs of the
Seller or the Issuer.
Each Noteholder, by acceptance of a Note or, in the case of a Note Owner,
a beneficial interest in a Note, unless otherwise required by appropriate taxing
authorities, agrees to treat the Notes as indebtedness secured by the Contracts
for the purpose of federal income taxes, state and local income and franchise
taxes and any other taxes imposed upon, measured by or based upon gross or net
income.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note shall
A-4-6
<PAGE>
be overdue, and neither the Issuer, the Indenture Trustee nor any such agent
shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Noteholders under the Indenture at any time by the
Issuer with the prior written consent of the Indenture Trustee, the Insurer and
the Holders of Notes representing a majority of the aggregate outstanding
principal amount of all the Notes. The Indenture also contains provisions
permitting the Indenture Trustee, the Insurer and the Holders of Notes
representing specified percentages of the aggregate outstanding principal amount
of the Notes, on behalf of the Holders of all the Notes, to waive compliance by
the Issuer with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Note (or any one of more Predecessor Notes) shall be conclusive
and binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent or waiver is made upon this
Note. The Indenture also permits the Indenture Trustee to amend or waive certain
terms and conditions set forth in the Indenture without the consent of the
Noteholders.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Indenture Trustee, the
Insurer and the Holders of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the laws
of the State of New York, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer to pay the
principal of and interest on this Note at the times, place and rate, and in the
coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, neither the Seller, the Servicer, the Holder of
the AO Interest, the Indenture Trustee nor the Owner Trustee in their respective
individual capacities, any owner of a beneficial interest in the Issuer, nor any
of their respective partners, beneficiaries, agents, officers, directors,
employees or successors or assigns, shall be personally liable for, nor shall
recourse be had to any of them for, the payment of principal of or interest on,
or performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in this Note or the Indenture, it being expressly
understood that said covenants, obligations and
A-4-7
<PAGE>
indemnifications have been made by the Owner Trustee solely as the Owner Trustee
in the assets of the Issuer.
The Holder of this Note by the acceptance hereof agrees that, except as
expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, the Holder shall have no claim against any of the foregoing
for any deficiency, loss or claim therefrom; provided, however, that nothing
contained herein shall be taken to prevent recourse to, and enforcement against,
the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
A-4-8
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
________________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
________________________________________________________________________________
the within Note, and all rights thereunder, hereby irrevocably constituting and
appointing
______________________________________________________________________ Attorney
to transfer said Note on the books of the Note Registrar, with full power of
substitution in the premises.
Dated:______________ _____________________*
Signature Guaranteed: _____________________
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Note in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar, which requirements include membership or participation in
the Securities Transfer Agent's Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the Note Registrar in
addition to, or in substitution for, STAMP, all in accordance with the Exchange
Act.
A-4-9
<PAGE>
STATEMENT OF INSURANCE
The MBIA Insurance Corporation (the "Insurer") has issued a Financial
Guaranty Insurance Policy (the "Note Insurance Policy") containing the following
provisions, such policy being on file at Harris Trust and Savings Bank, as
indenture trustee (the "Indenture Trustee"), Chicago, Illinois.
The Insurer, in consideration of the payment of the premium and subject to
the terms of the Note Insurance Policy, thereby unconditionally and irrevocably
guarantees to pay to the Indenture Trustee in respect of (i) each Distribution
Date (other than the Final Scheduled Distribution Date with respect to a class
of Notes), an amount equal to the amount by which the Note Interest Distribution
Amount exceeds that portion of the Available amount allocated to pay such
amounts as provided in the Sale and Servicing Agreement (as defined below) after
giving effect to amounts available therefor from the Reserve Account, (ii) each
Distribution Date (other than the Final Scheduled Distribution Date with respect
to any class of Notes), an amount equal to the Collateralization Shortfall after
giving effect to amounts available therefor from the Reserve Account and (iii)
each Distribution Date which is a Final Scheduled Distribution Date with respect
to a class of Notes, an amount equal to the amount by which the outstanding
principal amount of such class of Notes exceeds that portion of the Available
Amount allocated to pay such amounts as provided in the Sale and Servicing
Agreement after giving effect to amounts available therefor from the Reserve
Account (such amounts, collectively, as of any Distribution Date, the "Note
Policy Claim Amount"). The Insurer also agrees to pay an amount equal to any
Avoided Payment (as defined below). Each payment pursuant to the Note Insurance
Policy with respect to any class of Notes will be received by the Indenture
Trustee, on behalf of the Noteholders, for distribution by the Indenture Trustee
to each Noteholder of each Noteholder's proportionate share of the Note Policy
Claim Amount. The Insurer's obligations under the Note Insurance Policy shall be
discharged to the extent funds equal to the applicable Note Policy Claim Amount
are received by the Indenture Trustee, whether or not such funds are properly
applied by the Indenture Trustee. The Note Insurance Policy does not guarantee
payments of principal on the Notes other than as a result of a Collateralization
Shortfall or with respect to the outstanding principal amount of each class of
Notes on the Final Scheduled Distribution Date for such class of Notes, and will
not guarantee payment of any amounts that become due on an accelerated basis as
a result of (a) a default by the Trust, (b) the occurrence of an Event of
Default under (and as defined in) the Indenture, or (c) any other cause. The
Insurer may elect, in its sole discretion, to pay in whole or in part such
principal due upon acceleration. The Insurer may elect, in its sole discretion,
to pay all or a portion of any shortfalls in the amount of such Available Amount
to make distributions of principal on the Notes, other than distributions of
principal with respect to a Collateralization Shortfall or a class of Notes on
the Final Scheduled Distribution Date thereof, which is guaranteed by the
Insurer.
Notwithstanding the foregoing paragraph, the Note Insurance Policy does
not cover shortfalls, if any, attributable to the liability of the Trust or the
Indenture Trustee for withholding taxes, if any (including interest and
penalties in respect of any such liability).
1
<PAGE>
Payment of amounts under the Note Insurance Policy shall be made in
immediately available funds on the later of (a) 3 p.m., New York City time, on
the related Distribution Date and (b) 3 p.m., New York City time, on the third
Business Day following presentation to State Street Bank and Trust Company,
N.A., as Fiscal Agent for the Insurer or any successor fiscal agent appointed by
the Insurer (the "Fiscal Agent") of a notice for payment (a "Notice for
Payment"), appropriately completed and executed by the Indenture Trustee. A
Notice for Payment under the Note Insurance Policy may be presented to the
Fiscal Agent on any Business Day following the Determination Date in respect of
which the Notice for Payment is being presented, but in any event, not later
than the third Business Day prior to the applicable Distribution Date, in
accordance with the Note Insurance Policy. Any Notice for Payment received by
the Fiscal Agent after 3 p.m., New York City time, on a Business Day, or on any
day that is not a Business Day, will be deemed to be received by the Fiscal
Agent on the next succeeding Business Day.
Subject to the foregoing, if the payment of any amount guaranteed by the
Note Insurance Policy and previously distributed to a Noteholder in respect of
the Notes that is recoverable and sought to be recovered as a voidable
preference in an Insolvency Proceeding in accordance with a nonappealable order
of a court having competent jurisdiction is voided ("Avoided Payment"), the
Insurer will make such Avoided Payment on behalf of the Noteholder upon receipt
by the Fiscal Agent from the Indenture Trustee on behalf of such Noteholder of
(i) a certified copy of a final, nonappealable order of a court having competent
jurisdiction to the effect that the Noteholder is required to return any such
payment or portion thereof prior to the Termination Date of the Note Insurance
Policy because such payment was voided under applicable law (the "Order")
together with a certificate of such Noteholder that such Order is final and not
subject to appeal, (ii) an assignment properly completed and executed by such
Noteholder irrevocably assigning to the Insurer all rights and claims of such
Noteholder relating to or arising under such Avoided Payment, (iii) a Notice for
Payment appropriately completed and executed by the Indenture Trustee and (iv)
appropriate instruments to effect the appointment of the Insurer as agent for
such Noteholder in any legal proceeding relating to such Avoided Payment.
The Insurer shall make payments due in respect of Avoided Payments no
later than 3 p.m., New York City time, on the Business Day which is no earlier
than (a) the third Business Day following receipt by the Fiscal Agent of the
documents required under clauses (i) through (iv) of the preceding paragraph and
(b) the date that such documents are received by the Fiscal Agent, if at least
two Business Days prior to such receipt, the Fiscal Agent shall have received
written notice from the Indenture Trustee that such documents were to be
delivered on such date and such date was specified in such notice. Any such
documents received by the Fiscal Agent after 3 p.m., New York City time, on any
Business Day or on any day that is not a Business Day shall be deemed to have
been received by the Fiscal Agent prior to 3 p.m. on the next succeeding
Business Day. All payments made by the Insurer under the Note Insurance Policy
on account of any Avoided Payment shall be made to the receiver or the trustee
in bankruptcy named in the Order on behalf of the Noteholder and not to the
Indenture Trustee or any Noteholder directly unless such Noteholder has returned
such Avoided Payment to such receiver or trustee in bankruptcy, in which case
such payment will be disbursed to the Indenture
2
<PAGE>
Trustee on behalf of such Noteholder upon proof of such payment reasonably
satisfactory to the Insurer.
The Fiscal Agent is the agent of the Insurer only and the Fiscal Agent
shall in no event be liable to Noteholders for any acts of the Fiscal Agent or
any failure of the Insurer to deposit or cause to be deposited, sufficient funds
to make payments due under the Note Insurance Policy.
The obligations of the Insurer under the Note Insurance Policy are
irrevocable, primary, absolute and unconditional (except as expressly provided
therein) and neither the failure of the Trust, the Indenture Trustee, CIT, the
Seller, the Servicer or any other person to perform any covenant or obligation
in favor of the Insurer (or otherwise), nor the failure or omission to make a
demand permitted under the Note Insurance Policy nor the commencement of any
bankruptcy, debtor or other insolvency proceeding by or against the Trust, the
Indenture Trustee, CIT, the Seller, the Servicer or any other person shall in
any way affect or limit the Insurer's obligations under the Note Insurance
Policy.
The Note Insurance Policy and the obligations of the Insurer thereunder
shall terminate on the date (the "Termination Date") that is the earliest to
occur of (a) ninety-one days following the earlier of (i) the latest Final
Scheduled Distribution Date and (ii) the date on which all amounts required to
be paid to the Noteholders have been paid in full, provided, that, if any
Insolvency Proceeding is existing by or against the Trust, the Seller, the
Servicer or CIT during such ninety-one day period, then the Note Insurance
Policy and the Insurer's obligations under the Note Insurance Policy shall
terminate on the date of the conclusion or dismissal of such Insolvency
Proceeding without continuing jurisdiction by the court in such Insolvency
Proceeding, provided, further that, and notwithstanding anything to the contrary
in the Note Insurance Policy, the Note Insurance Policy shall not terminate
prior to the date on which the Insurer has made all payments required to be made
under the terms of the Note Insurance Policy in respect of Avoided Payments; and
(b) the Business Day following the date that the Insurer receives written notice
from the Servicer terminating the Note Insurance Policy as a result of a
downgrade of the Insurer's claims paying ability rating by any Rating Agency
which results in a downgrading of the Notes; provided, however, that no
termination shall be effective until (x) all amounts owed to the Insurer under
the Insurance Agreement on the date such written notice is received by the
Insurer are paid in full in cash and (y) the original Note Insurance Policy is
received by the Insurer.
As used herein, the following terms shall have the following meanings:
"Business Day" means any day other than a Saturday, Sunday or any day on
which banking institutions, insurance companies or trust companies in the states
of New York, Illinois, Delaware or Oklahoma are authorized or required by law or
executive order to be closed.
"Noteholder" means each holder of a Note who, on the applicable
Distribution Date, is entitled under the terms of the related Note to receive
payments under the Note Insurance Policy.
3
<PAGE>
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
dated as of February 1, 1999 among the Company, the Servicer, CIT Marine Trust
1996-A and the Issuer without regard to any amendment or supplement thereto.
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings set forth in the Sale and Servicing Agreement as of the
date of execution of the Note Insurance Policy, without giving effect to any
subsequent amendment or modification to the Sale and Servicing Agreement unless
such amendment or modification has been approved in writing by the Insurer.
Any notice under the Note Insurance Policy or service of process on the
Fiscal Agent of the Insurer may be made at the address listed below for the
Fiscal Agent of the Insurer or such other address as the Insurer shall specify
in writing to the Trustee.
The notice address of the Fiscal Agent is 61 Broadway, 15th Floor, New
York, New York 10006, Attention: Municipal Registrar and Paying Agency, or such
other address as the Fiscal Agent shall specify to the Indenture Trustee in
writing.
The Note Insurance Policy is being issued under and pursuant to, and shall
be construed under, the laws of the State of New York, without giving regard to
the conflict of laws principles thereof.
The insurance provided by the Note Insurance Policy is not covered by the
property/casualty insurance security fund specified in Article 76 of the New
York Insurance Law.
MBIA INSURANCE CORPORATION
EXHIBIT 4.2
AMENDED AND RESTATED TRUST AGREEMENT
BETWEEN
THE CIT GROUP SECURITIZATION CORPORATION II,
SELLER
AND
CHASE MANHATTAN BANK DELAWARE,
OWNER TRUSTEE
DATED AS OF February 1, 1999
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE.........................1
SECTION 1.1 Definitions...................................................1
ARTICLE II ORGANIZATION......................................................1
SECTION 2.1 Name .........................................................1
SECTION 2.2 Office .......................................................1
SECTION 2.3 Purposes and Powers...........................................2
SECTION 2.4 Appointment of Owner Trustee..................................2
SECTION 2.5 Initial Capital Contribution of Owner Trust Estate............2
SECTION 2.6 Declaration of Trust..........................................3
SECTION 2.7 Transfer of Interest to The CIT GP Corporation III............3
SECTION 2.8 Title to Trust Property.......................................3
SECTION 2.9 Situs of Trust................................................4
SECTION 2.10 Representations and Warranties of the Seller..................4
SECTION 2.11 Representations and Warranties of the Holder of the AO
Interest..................................................5
SECTION 2.12 Tax Treatment................................................5
ARTICLE III THE CERTIFICATES.................................................7
SECTION 3.1 Initial Certificate Ownership.................................7
SECTION 3.2 Form of the Certificates......................................7
SECTION 3.3 Execution, Authentication and Delivery........................7
SECTION 3.4 Registration; Registration of Transfer
and Exchange of Certificates................................8
SECTION 3.5 Mutilated; Destroyed; Lost or Stolen Certificates.............9
SECTION 3.6 Persons Deemed Certificateholders............................10
SECTION 3.7 Access to List of Certificateholders' Names and Addresses....10
SECTION 3.8 Maintenance of Corporate Trust Office........................10
SECTION 3.9 Appointment of Paying Agent..................................10
SECTION 3.10 Seller as Certificateholder..................................11
ARTICLE IV ACTIONS BY OWNER TRUSTEE.........................................11
SECTION 4.1 Prior Notice to Certificateholders with
Respect to Certain Matters................................11
SECTION 4.2 Action by Certificateholders with Respect to Certain Matters.12
SECTION 4.3 Action by Certificateholders with Respect to Bankruptcy......12
SECTION 4.4 Restrictions on Certificateholders' Power....................12
SECTION 4.5 Majority Control.............................................13
ARTICLE V APPLICATION OF TRUST FUNDS; CERTAIN DUTIES........................13
SECTION 5.1 Establishment of Accounts....................................13
SECTION 5.2 Application of Trust Funds...................................13
SECTION 5.3 Method of Payment............................................14
<PAGE>
SECTION 5.4 Accounting and Reports to the Certificateholders,
The Internal Revenue Service and Others..................15
SECTION 5.5 Signature on Returns; Tax Matters Partner....................15
ARTICLE VI THE OWNER TRUSTEE................................................15
SECTION 6.1 Duties of Owner Trustee......................................15
SECTION 6.2 Rights of Owner Trustee......................................16
SECTION 6.3 Acceptance of Trusts and Duties..............................17
SECTION 6.4 Action Upon Instruction by Certificateholders................18
SECTION 6.5 Furnishing of Documents......................................19
SECTION 6.6 Representations and Warranties of Owner Trustee..............19
SECTION 6.7 Reliance; Advice of Counsel..................................20
SECTION 6.8 Owner Trustee May Own Certificates and Notes.................20
SECTION 6.9 Compensation and Indemnity...................................21
SECTION 6.10 Replacement of Owner Trustee.................................21
SECTION 6.11 Merger or Consolidation of Owner Trustee.....................22
SECTION 6.12 Appointment of Co-Trustee or Separate Trustee................22
SECTION 6.13 Eligibility Requirements for Owner Trustee...................24
ARTICLE VII TERMINATION OF TRUST AGREEMENT..................................24
SECTION 7.1 Termination of Trust Agreement...............................24
ARTICLE VIII AMENDMENTS.....................................................26
SECTION 8.1 Amendments Without Consent of
Certificateholders or Noteholders.........................26
SECTION 8.2 Amendments With Consent of Certificateholders
and Noteholders...........................................26
SECTION 8.3 Form of Amendments...........................................27
ARTICLE IX MISCELLANEOUS....................................................27
SECTION 9.1 No Legal Title to Owner Trust Estate.........................27
SECTION 9.2 Limitations on Rights of Others..............................28
SECTION 9.3 Notices .....................................................28
SECTION 9.4 Severability.................................................28
SECTION 9.5 Counterparts.................................................29
SECTION 9.6 Successors and Assigns.......................................29
SECTION 9.7 No Petition Covenant.........................................29
SECTION 9.8 No Recourse..................................................29
SECTION 9.9 Headings.....................................................29
SECTION 9.10 Governing Law................................................29
SECTION 9.11 Certificate Transfer Restrictions............................29
SECTION 9.12 Indemnification by the Servicer..............................30
SECTION 9.13 Third Party Beneficiary......................................30
SECTION 9.14 No Duty to Monitor...........................................30
-ii-
<PAGE>
Exhibit A
CIT Marine Trust 1999-A 6.20% Asset Backed Certificate
Exhibit B
Certificate of Trust
Exhibit C
Form of Marine Trust 1999-A Certificate Transferee Letter
-iii-
<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT, dated as of February 1, 1999,
between THE CIT GROUP SECURITIZATION CORPORATION II, a Delaware corporation (as
amended, modified or supplemented from time to time as permitted hereby, this
"Agreement"), as Seller, and CHASE MANHATTAN BANK DELAWARE, a Delaware banking
corporation with its principal place of business in the State of Delaware, as
Owner Trustee.
WHEREAS, the Seller and the Owner Trustee entered into a Trust Agreement,
dated as of February 1, 1999 (the "Original Trust Agreement");
WHEREAS, pursuant to the Original Trust Agreement, the Trust was created
under the Business Trust Statute; and
WHEREAS, the Seller and the Owner Trustee desire to amend and restate the
Original Trust Agreement as permitted therein and to continue the Trust as a
business trust under the Business Trust Statute and that this Agreement
constitute the governing instrument of such business trust;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, and of other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Seller and the Owner Trustee
hereby amend and restate in its entirety the Original Trust Agreement as
follows:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions. Certain capitalized terms used in this Agreement
shall have the respective meanings assigned to them in the Sale and Servicing
Agreement of even date herewith, among the Seller, the Servicer and the Trust
(the "Sale and Servicing Agreement"). All references herein to "the Agreement"
or "this Agreement" are to the Trust Agreement, and all references herein to
Articles, Sections and subsections are to Articles, Sections and subsections of
this Agreement unless otherwise specified.
ARTICLE II
ORGANIZATION
SECTION 2.1 Name. The Trust created hereby shall be known as "CIT Marine
Trust 1999-A" in which name the Owner Trustee may conduct the business of the
Trust, make and execute contracts and other instruments on behalf of the Trust
and sue and be sued on behalf of the Trust.
SECTION 2.2 Office. The office of the Trust shall be in care of the Owner
Trustee at the Corporate Trust Office or at such other address as the Owner
Trustee may designate by written notice to the Certificateholders, the Insurer
and the Seller.
<PAGE>
SECTION 2.3 Purposes and Powers. The purpose of the Trust is to engage in
the following activities:
(a) to issue the Notes pursuant to the Indenture and the Certificates
pursuant to this Agreement, and to sell, transfer or exchange the Notes and the
Certificates;
(b) with the proceeds of the sale of the Notes and the Certificates to pay
the organizational, start-up and transactional expenses of the Trust and to pay
the balance of the proceeds to the Seller and the Selling Trust pursuant to the
Sale and Servicing Agreement;
(c) to acquire, manage and hold the Contracts;
(d) to assign, grant, transfer, pledge, mortgage and convey the Trust
Estate pursuant to the terms of the Indenture and to hold, manage and distribute
to the Certificateholders pursuant to the terms of this Agreement and the Sale
and Servicing Agreement any portion of the Trust Estate released from the lien
of, and remitted to the Trust pursuant to, the Indenture;
(e) to enter into and perform its obligations and exercise its rights
under the Basic Documents to which it is to be a party;
(f) to engage in those activities, including entering into agreements,
that are necessary, suitable or convenient to accomplish the foregoing or are
incidental thereto or connected therewith;
(g) to hold and administer the Certificate Distribution Account and apply
the proceeds thereof as provided in the Sale and Servicing Agreement; and
(h) subject to compliance with the Basic Documents, to engage in such
other activities as may be required in connection with conservation of the Owner
Trust Estate and the making of distributions to the Certificateholders and the
Noteholders.
The Trust is hereby authorized to engage in the foregoing activities and shall
not engage in any activity other than in connection with the foregoing or other
than as required or authorized by the terms of this Agreement or the Basic
Documents.
SECTION 2.4 Appointment of Owner Trustee. The Seller hereby appoints the
Owner Trustee as trustee of the Trust effective as of the date hereof, to have
all the rights, powers and duties set forth herein.
SECTION 2.5 Initial Capital Contribution of Owner Trust Estate. Pursuant
to the Original Trust Agreement, the Seller sold, assigned, transferred,
conveyed and set over to the Owner Trustee, as of February 1, 1999, the sum of
One Dollar ($1). The Owner Trustee hereby acknowledges receipt in trust from the
Seller, as of the date hereof, of the foregoing contribution,
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which shall constitute the initial Owner Trust Estate and shall be deposited in
the Certificate Distribution Account.
SECTION 2.6 Declaration of Trust. The Owner Trustee hereby declares that
it shall hold the Owner Trust Estate in trust upon and subject to the conditions
set forth herein for the use and benefit of the Certificateholders, subject to
the obligations of the Trust under the Basic Documents. It is the intention of
the parties hereto that the Trust constitute a business trust under the Business
Trust Statute and that this Agreement constitute the governing instrument of
such business trust. It is the intention of the parties hereto that, solely for
purposes of federal income taxes, state and local income and franchise taxes and
any other taxes imposed upon, measured by, or based upon gross or net income,
the Trust shall be treated as a partnership. The parties agree that, unless
otherwise required by appropriate tax authorities, the Servicer, on behalf of
the Trust, shall cause to be filed annual or other necessary returns, reports
and other forms consistent with the characterization of the Trust as a
partnership for such tax purposes. Effective as of the date hereof, the Owner
Trustee shall have all rights, powers and duties set forth herein and in the
Business Trust Statute with respect to accomplishing the purposes of the Trust.
SECTION 2.7 Transfer of Interest to The CIT GP Corporation III
(a) On the Closing Date, the Seller shall and does hereby transfer and
assign its entire interest in the Trust (including the AO Interest but excluding
the Certificates sold on the Closing Date to the underwriters) to CIT through
the issuance of a dividend and The CIT GP Corporation III acknowledges receipt
of such interest in the Trust (including the AO Interest) from CIT as a capital
contribution. The holder of the AO Interest shall pay organizational expenses of
the Trust as they may arise or shall, upon the request of the Owner Trustee,
promptly reimburse the Owner Trustee for any such expenses paid by the Owner
Trustee. The obligations of the holder of the AO Interest under this subsection
2.7(a) shall be evidenced by the Certificates issued to the holder of the AO
Interest, which for purposes of the Business Trust Statute shall be deemed to be
a separate class of Certificates from all other Certificates issued by the
Trust.
(b) No Certificateholder, other than to the extent set forth in subsection
2.7(a) with respect to the holder of the AO Interest, shall have any personal
liability for any liability or obligation of the Trust.
(c) No Certificateholder, including the holder of the AO Interest, shall
have the right to exercise any control of the Trust other than to the extent of
its percentage ownership of the Certificates as provided herein.
SECTION 2.8 Title to Trust Property. Legal title to all the Owner Trust
Estate shall be vested at all times in the Trust as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Owner Trust Estate to be vested in a trustee or trustees, in which case
title shall be deemed to be vested in the Owner Trustee, a co-trustee and/or a
separate trustee, as the case may be, for the benefit of the Trust.
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SECTION 2.9 Situs of Trust. The Trust shall be located and administered in
the State of Delaware. All bank accounts maintained by the Owner Trustee, on
behalf of the Trust, shall be located in the State of Delaware or the State of
New York. Payments shall be received by the Trust only in Delaware or New York,
and payments will be made by the Trust only from Delaware or New York. The only
office of the Trust shall be the Corporate Trust Office in Delaware.
SECTION 2.10 Representations and Warranties of the Seller.
The Seller hereby represents and warrants to the Owner Trustee, as of the
Closing Date, that:
(a) The Seller has been organized and is validly existing as a corporation
in good standing under the laws of the State of Delaware, with power and
authority to own its properties and conduct its business as such properties are
presently owned and such business is presently conducted and had at all relevant
times, and now has, power, authority and legal right to acquire and own the
Contracts sold by it pursuant to the Sale and Servicing Agreement.
(b) The Seller is duly qualified to do business as a foreign corporation
in good standing and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of property or the conduct of its
business requires such qualifications.
(c) The Seller has the power and authority to execute and deliver this
Agreement and to carry out its terms, the Seller has full power and authority to
sell and assign the property to be sold and assigned to and deposited with, as
part of, the Trust and the Seller has duly authorized such sale and assignment
to the Trust by all necessary action; and the execution, delivery and
performance of this Agreement have been duly authorized by the Seller by all
necessary corporate action.
(d) The consummation of the transactions contemplated by this Agreement
and the fulfillment of the terms of this Agreement do not conflict with, result
in any breach of any of the terms and provisions of or constitute (with or
without notice or lapse of time) a default under its certificate of
incorporation or by-laws of the Seller, or any indenture, agreement or other
instrument to which the Seller is a party or by which it is bound, or result in
the creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, agreement or other instrument (other than
pursuant to or as contemplated by the Basic Documents), or violate any law or,
to the best of its knowledge, any order, rule or regulation applicable to the
Seller of any court or of any federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over the Seller
or any of its properties.
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SECTION 2.11 Representations and Warranties of the Holder of the AO
Interest.
The CIT GP Corporation III, as intended holder of the AO Interest hereby
represents and warrants to the Owner Trustee, as of the Closing Date, that:
(a) It has been duly organized and is validly existing as a corporation in
good standing under the laws of the State of Delaware, with power and authority
to own its properties and conduct its business as such properties are presently
owned and such business is presently conducted.
(b) It is duly qualified to do business as a foreign corporation in good
standing and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of property or the conduct of its
business requires such qualifications.
(c) It has the power and authority to execute and deliver this Agreement
and to carry out its terms and the execution, delivery and performance of this
Agreement have been duly authorized by all necessary corporate action.
(d) The consummation of the transactions contemplated by this Agreement
and the fulfillment of the terms of this Agreement do not conflict with, result
in any breach of any of the terms and provisions of or constitute (with or
without notice or lapse of time) a default under its certificate of
incorporation or by-laws, or any indenture, agreement or other instrument to
which it is a party or by which it is bound, or result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of any
such indenture, agreement or other instrument (other than pursuant to or as
contemplated by the Basic Documents), or violate any law or, to the best of its
knowledge, any order, rule or regulation applicable to the Seller of any court
or of any federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over it or any of its
properties.
SECTION 2.12 Tax Treatment
(a) The Servicer, on behalf of the Trust, shall maintain capital accounts
("Capital Accounts") for each Certificateholder and allocations of income, gain,
loss or deduction as provided herein shall be credited or debited, as the case
may be, to such Capital Accounts. Contributions to, and distributions from, the
Trust shall be credited or debited, as the case may be, to such Capital
Accounts.
(b) Net income of the Trust for any month as determined for Federal income
tax purposes (and each item of income, gain, loss, credit and deduction entering
into the computation thereof) shall be allocated as determined by the Servicer
as follows:
(i) to the extent of available net income, among the
Certificateholders as of the first Record Date following the end of such
month, in proportion to their ownership of principal amount of
Certificates on such date, an amount of net income up to the sum of (x)
the amount of any interest that accrues on the Certificates for such
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month based on the Pass-Through Rate, (y) an amount equivalent to any
overdue interest on the Certificates that accrued during a prior month (to
the extent that no allocation of taxable income has been previously made
for such amount under clause (x)), and (z) any Trust income attributable
to discount on the Contracts that corresponds to any excess of the
principal amount of the Certificates over initial issue price; and
(ii) to the holder of the AO Interest, to the extent of any
remaining net income.
If the net income of the Trust for any month is insufficient for the
allocations described in clause (b) (i) above, subsequent net income shall first
be allocated to make up such shortfall before being allocated as provided in
clause (b) (ii). Net losses of the Trust, if any, for any month as determined
for Federal income tax purposes (and each item of income, gain, loss, credit and
deduction entering into the computation thereof) shall be allocated to the
holder of the AO Interest to the extent the holder of the AO Interest is
reasonably expected, as determined by the Servicer, to bear the economic burden
of such net losses, then net losses shall be allocated among the
Certificateholders as of the first Record Date following the end of such month
in proportion to their ownership of principal amount of Certificates on such
Record Date until the principal balance of the Certificates is reduced to zero.
The holder of the AO Interest is authorized to modify the allocations in this
paragraph if necessary or appropriate, in its sole discretion, for the
allocations to fairly reflect the economic income, gain or loss to the holder of
the AO Interest, the Certificateholders, or as otherwise required by the Code.
(c) Notwithstanding anything in this Section 2.12 to the contrary, (i)
items of net loss and deduction attributable to nonrecourse debt of the Trust
and to "partner nonrecourse debt" (as defined in the Section 704(b) Regulations)
shall be allocated as provided in the Section 704(b) Regulations; (ii) if in any
period, there is a net decrease in the amount of "minimum gain" (as defined in
the Section 704(b) Regulations) of the Trust, or in the amount of "minimum gain"
attributable to "partner nonrecourse debt", then the Certificateholders shall be
allocated items of income or gain for such period and subsequent periods to the
extent and in the manner provided in Treasury Regulations Sections 1.704-2(f)
and 1.704-(2)(i)(4) as a "minimum gain chargeback" (as defined in the Section
704(b) Regulations); (iii) allocations of income of the Trust shall be made in a
manner necessary to satisfy a "qualified income offset" provision as described
in Treasury Regulation Section 1.704-1(b)(2)(ii)(d); and (iv) in no event shall
net losses or deductions be allocated to a Certificateholder to the extent that
such allocation would result in such Certificateholder having a negative balance
in its Capital Account which exceeds the sum of its share of "minimum gain" of
the Trust and "minimum gain" attributable to "partner nonrecourse debt" and the
amount such Certificateholder is obligated (or deemed obligated) to contribute
to the Trust upon liquidation of the Trust.
(d) For purposes of Treasury Regulations Section 1.752-3(a)(3), "excess
nonrecourse liabilities" shall be allocated among the Certificateholders in
accordance with the manner in which it is reasonably expected that the
deductions attributable to those nonrecourse liabilities will be allocated.
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ARTICLE III
THE CERTIFICATES
SECTION 3.1 Initial Certificate Ownership. Upon the formation of the Trust
by the contribution by the Seller pursuant to Section 2.5 and until the issuance
of the Certificates, the Seller shall be the sole beneficiary of the Trust.
SECTION 3.2 Form of the Certificates.
(a) Subject to Section 2.7(a), there shall be one class of Certificates
which shall be the 6.20% Asset-Backed Certificates of the Trust. The
Certificates shall be substantially in the form set forth in Exhibit A and shall
be issued in minimum denominations of $20,000 and in integral multiples of
$1,000 in excess thereof; provided, however, that (a) Certificates shall be
issued to the holder of the AO Interest pursuant to Section 2.7 in such
denominations as to represent at least 1% of the initial Certificate Balance and
(b) one Certificate may be issued in a denomination other than an integral
multiple of $1,000. The Certificates shall be executed on behalf of the Trust by
manual or facsimile signature of a Responsible Officer of the Owner Trustee.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures shall have been affixed, authorized to sign on
behalf of the Trust, shall be valid and binding obligations of the Trust,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the authentication and delivery of such Certificates or did
not hold such offices at the date of authentication and delivery of such
Certificates.
(b) The Certificates shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders) all as determined by the officers executing such Certificates,
as evidenced by their execution of such Certificates.
(c) The terms of the Certificates set forth in Exhibit A shall form part
of this Agreement.
SECTION 3.3 Execution, Authentication and Delivery. Concurrently with the
sale of the Contracts to the Trust pursuant to the Sale and Servicing Agreement,
the Owner Trustee shall cause the Certificates in an aggregate principal amount
equal to the initial Certificate Balance to be executed on behalf of the Trust,
authenticated and delivered to or upon the written order of the Seller, signed
by its chairman of the board, its president or any vice president, without
further corporate action by the Seller, in authorized denominations. No
Certificate shall entitle its holder to any benefit under this Agreement, or
shall be valid for any purpose, unless there shall appear on such Certificate a
certificate of authentication substantially in the form set forth in Exhibit A,
executed by the Owner Trustee, or by the Owner Trustee's authenticating agent,
by manual signature. The authenticating agent shall initially be Chase Manhattan
Bank. Such authentication shall constitute conclusive evidence that such
Certificate shall have been duly
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authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication.
SECTION 3.4 Registration; Registration of Transfer and Exchange of
Certificates.
(a) The Certificate Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 3.8, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Owner
Trustee shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as provided herein; provided, however, that no
Certificate may be subdivided upon transfer or exchange such that the
denomination of any resulting Certificate is less than $20,000. Chase Manhattan
Bank shall be the initial Certificate Registrar. Upon any resignation of a
Certificate Registrar, the Owner Trustee shall promptly appoint a successor or,
if it elects not to make such an appointment, assume the duties of Certificate
Registrar.
(b) Upon surrender for registration or transfer of any Certificate at the
office or agency maintained pursuant to Section 3.8, the Owner Trustee shall
execute on behalf of the Trust, authenticate and deliver (or shall cause its
authenticating agent to authenticate and deliver), in the name of the designated
transferee or transferees, one or more new Certificates in authorized
denominations of a like aggregate amount dated the date of authentication by the
Owner Trustee or any authenticating agent.
(c) At the option of a Holder of Certificates, Certificates may be
exchanged for other Certificates of authorized denominations of a like aggregate
principal amount upon surrender of the Certificates to be exchanged at the
Corporate Trust Office maintained pursuant to Section 3.8. Whenever any
Certificates are so surrendered for exchange, the Owner Trustee shall execute on
behalf of the Trust, authenticate and deliver (or shall cause its authenticating
agent to authenticate and deliver) one or more Certificates dated the date of
authentication by the Owner Trustee or any authenticating agent. Such
Certificates shall be delivered to the Holder making the exchange.
(d) Every Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Owner Trustee and the Certificate Registrar duly
executed by the Holder or his attorney duly authorized in writing with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Certificate Registrar, which requirements include membership
or participation in the Securities Transfer Agent's Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Certificate Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Exchange Act. Each Certificate surrendered for registration
of transfer or exchange shall be canceled and subsequently destroyed by the
Owner Trustee or Certificate Registrar in accordance with its customary
practice.
(e) No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Owner Trustee or the Certificate Registrar may
require
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payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
SECTION 3.5 Mutilated; Destroyed; Lost or Stolen Certificates.
(a) If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate, and (ii) there is delivered
to the Certificate Registrar, the Owner Trustee and the Trust such security or
indemnity as may be required by them to hold each of them harmless, then, in the
absence of notice to the Certificate Registrar or the Owner Trustee that such
Certificate has been acquired by a protected purchaser, the Owner Trustee shall
execute on behalf of the Trust and the Owner Trustee shall authenticate and
deliver (or shall cause its authenticating agent to authenticate and deliver),
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a replacement Certificate of a like aggregate principal amount;
provided, however, that if any such destroyed, lost or stolen Certificate, but
not a mutilated Certificate, shall have become or within seven days shall be due
and payable, then instead of issuing a replacement Certificate the Owner Trustee
may pay such destroyed, lost or stolen Certificate when so due or payable.
(b) If, after the delivery of a replacement Certificate or payment in
respect of a destroyed, lost or stolen Certificate pursuant to subsection
3.5(a), a protected purchaser of the original Certificate in lieu of which such
replacement Certificate was issued presents for payment such original
Certificate, the Owner Trustee shall be entitled to recover such replacement
Certificate (or such payment) from the Person to whom it was delivered or any
Person taking such replacement Certificate from such Person to whom such
replacement Certificate was delivered or any assignee of such Person, except a
protected purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or expense
incurred by the Owner Trustee in connection therewith.
(c) In connection with the issuance of any replacement Certificate under
this Section 3.5, the Owner Trustee may require the payment by the Holder of
such Certificate of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other reasonable expenses
(including the fees and expenses of the Owner Trustee and the Certificate
Registrar) connected therewith.
(d) Any duplicate Certificate issued pursuant to this Section 3.5 in
replacement of any mutilated, destroyed, lost or stolen Certificate shall
constitute an original additional contractual obligation of the Trust, whether
or not the mutilated, destroyed, lost or stolen Certificate shall be found at
any time or be enforced by anyone, and shall be entitled to all the benefits of
this Agreement equally and proportionately with any and all other Certificates
duly issued hereunder.
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(e) The provisions of this Section 3.5 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Certificates.
SECTION 3.6 Persons Deemed Certificateholders. Prior to due presentation
of a Certificate for registration of transfer, the Owner Trustee or the
Certificate Registrar may treat the Person in whose name any Certificate shall
be registered in the Certificate Register as the Certificateholder of such
Certificate for the purpose of receiving distributions pursuant to Article V and
for all other purposes whatsoever, and neither the Owner Trustee nor the
Certificate Registrar shall be affected by any notice to the contrary.
SECTION 3.7 Access to List of Certificateholders' Names and Addresses. The
Owner Trustee shall furnish or cause to be furnished to the Servicer, the
Seller, the Insurer and the holder of the AO Interest, within 15 days after
receipt by the Owner Trustee of a request therefor from the Servicer, the
Insurer, the Seller or the holder of the AO Interest in writing, a list, in such
form as the Servicer, the Seller or the holder of the AO Interest may reasonably
require, of the names and addresses of the Certificateholders as of the most
recent Record Date. If three or more Holders of Certificates or one or more
Holder of Certificates evidencing not less than 25% of the Certificate Balance
apply in writing to the Owner Trustee, and such application states that the
applicants desire to communicate with other Certificateholders with respect to
their rights under this Agreement or under the Certificates and such application
is accompanied by a copy of the communication that such applicants propose to
transmit, then the Owner Trustee shall, within five Business Days after the
receipt of such application, afford such applicants access during normal
business hours to the current list of Certificateholders. Each Holder, by
receiving and holding a Certificate, shall be deemed to have agreed not to hold
the Seller, the holder of the AO Interest or the Owner Trustee accountable by
reason of the disclosure of its name and address, regardless of the source from
which such information was derived.
SECTION 3.8 Maintenance of Corporate Trust Office. The Owner Trustee shall
maintain in the Borough of Manhattan, the City of New York, an office or offices
or agency or agencies where Certificates may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Owner Trustee
in respect of the Certificates and the Basic Documents may be served. The Owner
Trustee initially designates the offices of Chase Manhattan Bank, 450 West 33rd
Street, New York, New York 10001, as its principal office for such purposes. The
Owner Trustee shall give prompt written notice to the Seller and to the
Certificateholders of any change in the location of the Certificate Register or
any such office or agency.
SECTION 3.9 Appointment of Paying Agent. The Paying Agent shall make
distributions to Certificateholders from the Certificate Distribution Account
pursuant to Section 5.2 and amounts, if any, to be paid to the holder of the AO
Interest, in each case pursuant to the Sale and Servicing Agreement. Any Paying
Agent shall have the revocable power to withdraw funds from the Certificate
Distribution Account for the purpose of making the distributions referred to
above. The Owner Trustee may revoke such power and remove the Paying Agent if
the Owner Trustee determines in its sole discretion that the Paying Agent shall
have failed to
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perform its obligations under this Agreement in any material respect. The Paying
Agent shall initially be Chase Manhattan Bank, and any co-paying agent chosen by
the Owner Trustee, and acceptable to the Servicer. The Paying Agent shall be
permitted to resign as Paying Agent upon 30 days' written notice to the Owner
Trustee. If Chase Manhattan Bank shall no longer be the Paying Agent, the Owner
Trustee shall appoint a successor to act as Paying Agent (which shall be an
Eligible Institution). The Owner Trustee shall cause such successor Paying Agent
or any additional Paying Agent appointed by the Owner Trustee to execute and
deliver to the Owner Trustee an instrument in which such successor Paying Agent
or additional Paying Agent shall agree with the Owner Trustee that as Paying
Agent, such successor Paying Agent or additional Paying Agent shall hold all
sums, if any, held by it for payment to the Certificateholders in trust for the
benefit of the Certificateholders entitled thereto until such sums shall be paid
to such Certificateholders. The Paying Agent shall return all unclaimed funds to
the Owner Trustee and upon removal of a Paying Agent such Paying Agent shall
also return all funds in its possession to the Owner Trustee. The provisions of
Sections 6.3, 6.6, 6.7 and 6.9 shall apply to the Owner Trustee also in its role
as Paying Agent (if the Owner Trustee shall also act as Paying Agent), for so
long as the Owner Trustee shall act as Paying Agent and, to the extent
applicable, to any other paying agent appointed hereunder. Any reference in this
Agreement to the Paying Agent shall include any co-paying agent unless the
context requires otherwise.
SECTION 3.10 Seller as Certificateholder. The Seller in its individual or
any other capacity may become the owner or pledgee of Certificates and may
otherwise deal with the Owner Trustee or its Affiliates as if it were not the
Seller.
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1 Prior Notice to Certificateholders with Respect to Certain
Matters. The Owner Trustee shall not take action with respect to the following
matters, unless (i) the Owner Trustee shall have notified the Certificateholders
and the Insurer in writing of the proposed action at least 30 days before the
taking of such action, and (ii) neither the Insurer (so long as the Insurer is
the Controlling Party) nor the Certificateholders (if the Insurer is not the
Controlling Party) shall have notified the Owner Trustee in writing prior to the
30th day after such notice is given that such Certificateholders (if the Insurer
is not the Controlling Party) or the Insurer (so long as the Insurer is the
Controlling Party) have withheld consent or provided alternative direction (any
direction by the Certificateholders shall require the prior consent of the
Insurer unless the Insurer has been discharged from all obligations under the
Certificate Insurance Policy and paid in full):
(a) the initiation of any material claim or lawsuit by the Trust (except
claims or lawsuits brought in connection with the collection of payments due on
the Contracts) and the compromise of any material action, claim or lawsuit
brought by or against the Trust (except with respect to the aforementioned
claims or lawsuits for collection of payments due on the Contracts);
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(b) the election by the Trust to file an amendment to the Certificate of
Trust (unless such amendment is required to be filed under the Business Trust
Statute);
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder or the Insurer is required;
(d) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder or the Insurer is not required
and such amendment materially adversely affects the interest of the
Certificateholders;
(e) the amendment, change or modification of the Sale and Servicing
Agreement, except to cure any ambiguity or defect or to amend or supplement any
provision in a manner that would not materially adversely affect the interests
of the Certificateholders or the Insurer or in circumstances in which the Sale
and Servicing Agreement expressly provides that the consent of the
Certificateholders or the Insurer is not required; or
(f) the appointment pursuant to the Indenture of a successor Note
Registrar, Paying Agent or Indenture Trustee or pursuant to this Agreement of a
successor Certificate Registrar, or the consent to the assignment by the Note
Registrar, Paying Agent or Indenture Trustee or Certificate Registrar of its
obligations under the Indenture or this Agreement, as applicable.
SECTION 4.2 Action by Certificateholders with Respect to Certain Matters.
The Owner Trustee shall not have the power, except upon the written direction of
the Certificateholders evidencing not less than a majority of the Certificate
Balance (or with the consent or at the direction of the Insurer (so long as the
Insurer is the Controlling Party)), to (a) remove the Servicer under the Sale
and Servicing Agreement pursuant to Section 9.01 thereof, (b) appoint a
successor Servicer pursuant to Section 9.02 of the Sale and Servicing Agreement,
or (c) except as expressly provided in the Basic Documents, sell the Contracts
or any interest therein after the termination of the Indenture.
SECTION 4.3 Action by Certificateholders with Respect to Bankruptcy. The
Owner Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy relating to the Trust without the unanimous prior approval of all
Holders of Certificates (including the holder of the AO Interest) and the
Insurer (so long as no Insurer Default shall have occurred and be continuing)
and the delivery to the Owner Trustee by each such Certificateholder of a
certificate certifying that such Certificateholder reasonably believes that the
Trust is insolvent.
SECTION 4.4 Restrictions on Certificateholders' Power. The
Certificateholders shall not direct the Owner Trustee to take or refrain from
taking any action if such action or inaction would be contrary to any obligation
of the Trust or the Owner Trustee under this Agreement or any of the Basic
Documents or would be contrary to Section 2.3, nor shall the Owner Trustee be
obligated to follow any such direction, if given.
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SECTION 4.5 Majority Control. Except as expressly provided herein, any
action that may be taken or consent that may be given or withheld by the
Certificateholders under this Agreement may be taken, given or withheld by the
Holders of Certificates evidencing not less than a majority of the Certificate
Balance. Except as expressly provided herein, any written notice of the
Certificateholders delivered pursuant to this Agreement shall be effective if
signed by Holders of Certificates evidencing not less than a majority of the
Certificate Balance at the time of the delivery of such notice.
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1 Establishment of Accounts.
(a) On or prior to the Closing Date, the Trust shall cause the Servicer to
establish and maintain, in the name of the Indenture Trustee or the Owner
Trustee, as appropriate, for the benefit of the Insurer, the Noteholders and the
Certificateholders, the accounts as provided in Section 5.01 of the Sale and
Servicing Agreement.
(b) The Trust shall possess all right, title and interest in and to all
funds on deposit from time to time in the Certificate Distribution Account and
in all proceeds thereof. Except as otherwise provided herein or in the Sale and
Servicing Agreement, the Certificate Distribution Account shall be under the
sole dominion and control of the Owner Trustee for the benefit of the
Certificateholders. If, at any time, the Certificate Distribution Account ceases
to be held as an Eligible Account, the Owner Trustee (or the Servicer on behalf
of the Owner Trustee, if the Certificate Distribution Account is not then held
by the Owner Trustee or an Affiliate thereof) shall within 10 Business Days (or
such longer period, not to exceed 30 calendar days, as to which each Rating
Agency may consent) establish a new Certificate Distribution Account as an
Eligible Account and shall transfer any cash and/or any investments to such new
Certificate Distribution Account.
SECTION 5.2 Application of Trust Funds.
(a) On each Distribution Date, the Owner Trustee, or the Paying Agent
appointed pursuant to Section 3.9 hereof, shall distribute to the
Certificateholders, on a pro rata basis, amounts deposited in the Certificate
Distribution Account pursuant to the Sale and Servicing Agreement on or prior to
such Distribution Date first in respect of interest and then in respect of
principal.
(b) On each Distribution Date, the Owner Trustee shall send to each
Certificateholder the statement provided to the Owner Trustee by the Servicer
pursuant to Section 5.08 of the Sale and Servicing Agreement on such
Distribution Date setting forth, among other things, the amount of the
distribution allocable to principal and to interest, the Certificate Balance
after giving effect to such distribution and the Servicer Payment
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with respect to such Distribution Date; provided, however, that the Servicer has
provided such statement to the Owner Trustee.
(c) If any withholding tax is imposed on the Trust's payment (or
allocations of income) to a Certificateholder, such tax shall reduce the amount
otherwise distributable to the Certificateholder in accordance with this Section
5.2. The Owner Trustee, or the Paying Agent appointed pursuant to Section 3.9
hereof, is hereby authorized and directed to retain from amounts otherwise
distributable to the Certificateholders sufficient funds for the payment of any
tax that is legally owed by the Trust (but such authorization shall not prevent
the Owner Trustee from contesting any such tax in appropriate proceedings and
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings). The amount of any withholding tax imposed with respect to a
Certificateholder shall be treated as cash distributed to such Certificateholder
at the time it is withheld by the Trust and remitted to the appropriate taxing
authority. At the direction of the Servicer pursuant to Section 5.4(e), if there
is a possibility that withholding tax is payable with respect to a distribution
(such as a distribution to a non-U.S. Certificateholder), the Owner Trustee, or
the Paying Agent appointed pursuant to Section 3.9 hereof, may in its sole
discretion withhold such amounts in accordance with this subsection 5.2(c). If a
Certificateholder wishes to apply for a refund of any such withholding tax, the
Owner Trustee, or the Paying Agent appointed pursuant to Section 3.9 hereof,
shall reasonably cooperate with such Certificateholder in making such claim so
long as such Certificateholder agrees to reimburse the Owner Trustee, or the
Paying Agent appointed pursuant to Section 3.9 hereof, for any out-of-pocket
expenses incurred.
(d) If the Indenture Trustee holds escheated funds for payment to the
Trust pursuant to Section 3.3(e) of the Indenture, the Owner Trustee shall, upon
notice from the Indenture Trustee that such funds exist, submit on behalf of the
Trust an Issuer Order to the Indenture Trustee pursuant to Section 3.3(e) of the
Indenture instructing the Indenture Trustee to pay such funds to or at the order
of the Seller.
SECTION 5.3 Method of Payment. Subject to subsection 7.1(c), distributions
required to be made to Certificateholders on any Distribution Date shall be made
to each Certificateholder of record on the immediately preceding Record Date
either by wire transfer, in immediately available funds, to the account of such
Holder at a bank or other entity having appropriate facilities therefor, if (i)
such Certificateholder shall have provided to the Certificate Registrar
appropriate written instructions at least five Business Days prior to such
Record Date and such Holder's Certificates in the aggregate evidence a
denomination of not less than $1,000,000 or (ii) such Certificateholder is the
holder of the AO Interest, or an Affiliate thereof, or, if not, by check mailed
to such Certificateholder at the address of such holder appearing in the
Certificate Register. Notwithstanding the foregoing, the final distribution in
respect of the Certificates (whether on the Certificate Final Distribution Date
or otherwise) will be payable only upon presentation and surrender of such
Certificate at the office or agency maintained for that purpose by the Owner
Trustee pursuant to Section 3.8.
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SECTION 5.4 Accounting and Reports to the Certificateholders, The Internal
Revenue Service and Others. The Servicer, on behalf of the Trust, shall (a)
maintain (or cause to be maintained) the books of the Trust on a calendar year
basis on the accrual method of accounting, (b) deliver to each
Certificateholder, as may be required by the Code and applicable Treasury
Regulations or otherwise, such information as may be required to enable each
Certificateholder to prepare its federal and state income tax returns, (c) cause
to be filed such tax returns relating to the Trust and cause to be made such
elections as may from time to time be required or appropriate under any
applicable state or federal statute or rule or regulation thereunder so as to
maintain the Trust's characterization as a partnership for federal income tax
purposes, (d) cause such tax returns to be signed in the manner required by law
and (e) cause to be collected any withholding tax as described in and in
accordance with subsection 5.2(c) with respect to income or distributions to
Certificateholders.
SECTION 5.5 Signature on Returns; Tax Matters Partner. The Owner Trustee
shall sign on behalf of the Trust any and all tax returns of the Trust prepared
by or on behalf of the Servicer and in execution form, unless applicable law
requires a Certificateholder to sign such documents, in which case such
documents shall be signed by the holder of the AO Interest. To the extent one
may be required, the holder of the AO Interest shall be the "tax matters
partner" of the Trust pursuant to the Code. The Owner Trustee shall not be
liable for the contents or the preparation of any tax returns of the Trust, nor
shall the Owner Trustee be responsible for the filing of any tax return or
similar document with any tax authority.
ARTICLE VI
THE OWNER TRUSTEE
SECTION 6.1 Duties of Owner Trustee.
(a) The Owner Trustee undertakes to perform such duties, and only such
duties, as are specifically set forth in this Agreement and the other Basic
Documents to which the Trust is a party, including the administration of the
Trust in the interest of the Certificateholders, subject to the Basic Documents
and in accordance with the provisions of this Agreement and the Basic Documents
to which the Trust is a party. No implied covenants or obligations shall be read
into this Agreement on the part of the Owner Trustee.
The Owner Trustee is authorized from time to time to take such action as
the Servicer directs in writing with respect to the Basic Documents and shall,
upon the written direction of the Servicer, execute and deliver any amendments
to this Agreement or any of the Basic Documents.
(b) Notwithstanding the foregoing, the Owner Trustee shall be deemed to
have discharged its duties and responsibilities hereunder and under the Basic
Documents to the extent the Servicer has agreed in the Sale and Servicing
Agreement to perform any act or to discharge any duty of the Owner Trustee
hereunder or under any Basic
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Document, and the Owner Trustee shall not be liable for the default or failure
of the Servicer to carry out its obligations under the Sale and Servicing
Agreement.
(c) In the absence of bad faith on its part, the Owner Trustee may
conclusively rely upon certificates or opinions furnished to the Owner Trustee
and conforming to the requirements of this Agreement in determining the truth of
the statements and the correctness of the opinions contained therein; provided,
however, that the Owner Trustee shall have examined such certificates or
opinions so as to determine compliance of the same with the requirements of this
Agreement.
(d) The Owner Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this subsection 6.1(d) shall not limit the effect of subsection
6.1(a) or (b);
(ii) the Owner Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it is proved that the
Owner Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Owner Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 4.1, 4.2 or 6.4.
(e) Subject to Sections 5.1 and 5.2, monies received by the Owner Trustee
hereunder need not be segregated in any manner except to the extent required by
law or the Sale and Servicing Agreement and may be deposited under such general
conditions as may be prescribed by law, and the Owner Trustee shall not be
liable for any interest thereon.
(f) The Owner Trustee shall not take any action that (i) is inconsistent
with the purposes of the Trust set forth in Section 2.3 or (ii) would, to the
actual knowledge of a Responsible Officer of the Owner Trustee, result in the
Trust's becoming taxable as a corporation for federal income tax purposes. The
Certificateholders shall not direct the Owner Trustee to take action that would
violate the provisions of this Section 6.1 and any such direction shall be null
and void.
SECTION 6.2 Rights of Owner Trustee. The Owner Trustee is authorized and
directed to execute and deliver the Basic Documents and each certificate or
other document attached as an exhibit to or contemplated by the Basic Documents
to which the Trust is to be a party, in such form as the Seller shall approve as
evidenced conclusively by the Owner Trustee's execution thereof. In addition to
the foregoing, the Owner Trustee is authorized, but shall not be obligated, to
take all actions required of the Trust pursuant to the Basic Documents. The
Owner Trustee is further authorized from time to time to take such action as the
Servicer recommends with respect to the Basic Documents.
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SECTION 6.3 Acceptance of Trusts and Duties. Except as otherwise provided
in this Article VI, in accepting the trusts hereby created, Chase Manhattan Bank
Delaware acts solely as Owner Trustee hereunder and not in its individual
capacity and all Persons having any claim against the Owner Trustee by reason of
the transactions contemplated by this Agreement or any Basic Document shall look
only to the Owner Trust Estate for payment or satisfaction thereof. The Owner
Trustee accepts the trusts hereby created and agrees to perform its duties
hereunder with respect to such trusts but only upon the terms of this Agreement.
The Owner Trustee also agrees to disburse all monies actually received by it
constituting part of the Owner Trust Estate upon the terms of the Basic
Documents and this Agreement. The Owner Trustee shall not be liable or
accountable hereunder or under any Basic Document under any circumstances,
except (i) for its own negligent action, its own negligent failure to act or its
own willful misconduct or (ii) in the case of the inaccuracy of any
representation or warranty contained in Section 6.6 and expressly made by the
Owner Trustee. In particular, but not by way of limitation (and subject to the
exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall at no time have any responsibility or
liability for or with respect to the legality, validity and enforceability of
any Contract, or the perfection and priority of any security interest created by
any Contract in any Financed Boat or the maintenance of any such perfection and
priority, or for or with respect to the sufficiency of the Owner Trust Estate or
its ability to generate the payments to be distributed to Certificateholders
under this Agreement or the Noteholders under the Indenture, including, without
limitation: the existence, condition and ownership of any Financed Boat; the
existence and enforceability of any insurance thereon; the existence and
contents of any Contract on any computer or other record thereof; the validity
of the assignment of any Contract to the Trust or of any intervening assignment;
the completeness of any Contract; the performance or enforcement of any
Contract; the compliance by the Seller or the Servicer with any warranty or
representation made under any Basic Document or in any related document or the
accuracy of any such warranty or representation or any action of the Servicer,
the Trustee or the Servicer or any subservicer taken in the name of the Owner
Trustee.
(b) the Owner Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in accordance with the instructions of the Servicer
or any Certificateholder;
(c) no provision of this Agreement or any Basic Document shall require the
Owner Trustee to expend or risk funds or otherwise incur any financial liability
in the performance of any of its rights or powers hereunder or under any Basic
Document, if the Owner Trustee shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents, including
the principal of and interest on the Notes or the Certificate Balance of and
interest on the Certificates;
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(e) the Owner Trustee shall not be responsible for or in respect of and
makes no representation as to the validity or sufficiency of any provision of
this Agreement or for the due execution hereof by the Seller or for the form,
character, genuineness, sufficiency, value or validity of any of the Owner Trust
Estate or for or in respect of the validity or sufficiency of the Basic
Documents, the Notes, the Certificates (other than the certificate of
authentication on the Certificates) or of any Contracts or any related
documents, and the Owner Trustee shall in no event assume or incur any
liability, duty or obligation to any Noteholder or to any Certificateholder,
other than as expressly provided for herein and in the Basic Documents;
(f) the Owner Trustee shall not be liable for the default or misconduct of
the Indenture Trustee, the Seller or the Servicer under any of the Basic
Documents or otherwise and the Owner Trustee shall have no obligation or
liability to perform the obligations of the Trust under this Agreement or the
Basic Documents that are required to be performed by the Servicer under the Sale
and Servicing Agreement or the Indenture Trustee under the Indenture; and
(g) the Owner Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation under this Agreement or otherwise or in relation to this
Agreement or any Basic Document, at the request, order or direction of the
Servicer or any of the Certificateholders, unless such Servicer or
Certificateholders have offered to the Owner Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities that may be
incurred by the Owner Trustee therein or thereby. The right of the Owner Trustee
to perform any discretionary act enumerated in this Agreement or in any Basic
Document shall not be construed as a duty, and the Owner Trustee shall not be
answerable for other than its negligence or willful misconduct in the
performance of any such act.
SECTION 6.4 Action Upon Instruction by Certificateholders.
(a) Subject to Section 4.4, the Certificateholders may by written
instruction direct the Owner Trustee in the management of the Trust. Such
direction may be exercised at any time by written instruction of the
Certificateholders pursuant to Section 4.5 with the consent of the Insurer (if
the Insurer is the Controlling Party).
(b) Notwithstanding the foregoing, the Owner Trustee shall not be required
to take any action hereunder or under any Basic Document if the Owner Trustee
shall have reasonably determined, or shall have been advised by counsel, that
such action is likely to result in liability on the part of the Owner Trustee or
is contrary to the terms hereof or of any Basic Document or is otherwise
contrary to law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or any
Basic Document, or is unsure as to the application, intent, interpretation or
meaning of any provision of this Agreement or the Basic Documents, the Owner
Trustee shall promptly
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give notice (in such form as shall be appropriate under the circumstances) to
the Certificateholders and the Insurer requesting instruction as to the course
of action to be adopted, and, to the extent the Owner Trustee acts in good faith
in accordance with any such instruction received, the Owner Trustee shall not be
liable on account of such action to any Person. If the Owner Trustee shall not
have received appropriate instructions within ten days of such notice (or within
such shorter period of time as reasonably may be specified in such notice or may
be necessary under the circumstances) it may, but shall be under no duty to,
take or refrain from taking such action which is consistent, in its view, with
this Agreement or the Basic Documents, and as it shall deem to be in the best
interests of the Certificateholders, and the Owner Trustee shall have no
liability to any Person for any such action or inaction.
SECTION 6.5 Furnishing of Documents. The Owner Trustee shall furnish (a)
to the Certificateholders, promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Owner Trustee
under the Basic Documents and (b) to the Noteholders, promptly upon receipt of a
written request therefor, copies of the Purchase Agreement, the Sale and
Servicing Agreement and this Agreement.
SECTION 6.6 Representations and Warranties of Owner Trustee. The Owner
Trustee hereby represents and warrants to the Seller, for the benefit of the
Certificateholders and the Insurer, that:
(a) It is a Delaware banking corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware with its principal
place of business in the State of Delaware.
(b) It has full power, authority and legal right to execute, deliver and
perform this Agreement, and has taken all necessary action to authorize the
execution, delivery and performance by it of this Agreement.
(c) The execution, delivery and performance by it of this Agreement (i)
shall not violate any provision of any law or regulation governing the banking
and trust powers of the Owner Trustee or any order, writ, judgment or decree of
any court, arbitrator or governmental authority applicable to the Owner Trustee
or any of its assets, (ii) shall not violate any provision of the corporate
charter or by-laws of the Owner Trustee, or (iii) shall not violate any
provision of, or constitute, with or without notice or lapse of time, a default
under, or result in the creation or imposition of any lien on any properties
included in the Trust pursuant to the provisions of any mortgage, indenture,
contract, agreement or other undertaking to which it is a party, which
violation, default or lien could reasonably be expected to have a materially
adverse effect on the Owner Trustee's performance or ability to perform its
duties as Owner Trustee under this Agreement or on the transactions contemplated
in this Agreement.
(d) The execution, delivery and performance by the Owner Trustee of this
Agreement shall not require the authorization, consent or approval of, the
giving of notice
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to, the filing or registration with, or the taking of any other action in
respect of, any governmental authority or agency regulating the banking and
corporate trust activities of banks or trust companies in the jurisdiction in
which the Trust was formed.
(e) This Agreement has been duly executed and delivered by the Owner
Trustee and constitutes the legal, valid and binding agreement of the Owner
Trustee, enforceable in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, or other similar laws
affecting the enforcement of creditors' rights in general and by general
principles of equity, regardless of whether such enforceability is considered in
a proceeding in equity or at law.
SECTION 6.7 Reliance; Advice of Counsel.
(a) The Owner Trustee shall incur no liability to anyone in acting upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties and
need not investigate any fact or matter in any such document. The Owner Trustee
may accept a certified copy of a resolution of the board of directors or other
governing body of any corporate party as conclusive evidence that such
resolution has been duly adopted by such body and that the same is in full force
and effect. As to any fact or matter the method of the determination of which is
not specifically prescribed herein, the Owner Trustee may for all purposes
hereof rely on a certificate, signed by the president or any vice president or
by the treasurer or other authorized officers of the relevant party, as to such
fact or matter, and such certificate shall constitute full protection to the
Owner Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in the
performance of its duties and obligations under this Agreement or the Basic
Documents, the Owner Trustee: (i) may act directly or through its agents,
attorneys, custodians or nominees pursuant to agreements entered into with any
of them, and the Owner Trustee shall not be liable for the conduct or misconduct
of such agents, attorneys, custodians or nominees if such agents, attorneys,
custodians or nominees shall have been selected by the Owner Trustee with
reasonable care; and (ii) may consult with counsel, accountants and other
skilled professionals to be selected with reasonable care and employed by it.
The Owner Trustee shall not be liable for anything done, suffered or omitted in
good faith by it in accordance with the opinion or advice of any such counsel,
accountants or other such Persons; provided that such opinion or advice is, at
the time and under the circumstances, not clearly contrary to this Agreement or
any other Basic Document.
SECTION 6.8 Owner Trustee May Own Certificates and Notes. The Owner
Trustee in its individual or any other capacity may become the owner or pledgee
of Certificates or Notes and may deal with the Seller, the Indenture Trustee and
the Servicer in transactions in the same manner as it would have if it were not
the Owner Trustee.
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SECTION 6.9 Compensation and Indemnity. The Owner Trustee shall receive as
compensation for its services hereunder such fees as have been separately agreed
upon before the date hereof between the Seller, or any person representing the
Seller, and the Owner Trustee, and the Owner Trustee shall be entitled to be
reimbursed by the Servicer for its other reasonable expenses hereunder,
including the reasonable compensation, expenses and disbursements of such
agents, custodians, nominees, representatives, experts and counsel as the Owner
Trustee may employ in connection with the exercise and performance of its rights
and its duties hereunder. If the Seller shall fail to compensate the Owner
Trustee, the Servicer shall pay to the Owner Trustee such compensation. The
Servicer shall indemnify the Owner Trustee and its successors, assigns, agents
and servants in accordance with the provisions of Section 8.02 of the Sale and
Servicing Agreement. The indemnities contained in this Section 6.9 shall survive
the resignation, removal or termination of the Owner Trustee or the termination
of this Agreement. Any amounts paid to the Owner Trustee pursuant to this
Article VI shall be deemed not to be a part of the Owner Trust Estate
immediately after such payment.
SECTION 6.10 Replacement of Owner Trustee.
(a) The Owner Trustee may resign at any time and be discharged from the
trusts hereby created by giving 30 days' prior written notice thereof to the
Servicer and the Insurer, provided that such resignation shall not become
effective until a successor Owner Trustee has been appointed. The Servicer (with
the consent of the Insurer (so long as the Insurer is the Controlling Party))
may appoint a successor Owner Trustee by delivering a written instrument
pursuant to Section 6.10(b). If no successor Owner Trustee shall have been
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Owner Trustee may petition any court of
competent jurisdiction for the appointment of a successor Owner Trustee. The
Servicer shall remove the Owner Trustee if:
(i) the Owner Trustee shall cease to be eligible in accordance with
the provisions of Section 6.13 and shall fail to resign after written
request therefor by the Servicer;
(ii) the Owner Trustee shall be adjudged bankrupt or insolvent;
(iii) a receiver or other public officer shall be appointed or take
charge or control of the Owner Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation; or
(iv) the Owner Trustee shall otherwise be incapable of acting.
(b) If the Owner Trustee resigns or is removed or if a vacancy exists in
the office of Owner Trustee for any reason the Servicer shall (with the consent
of the Insurer (so long as the Insurer is the Controlling Party)) promptly
appoint a successor Owner Trustee by written instrument, in duplicate (one copy
of which instrument shall be delivered to the outgoing Owner Trustee so removed
and one copy to the successor Owner Trustee) and shall pay all fees owed to the
outgoing Owner Trustee.
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(c) Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section 6.10
shall not become effective until a written acceptance of appointment is
delivered by the successor Owner Trustee to the outgoing Owner Trustee and the
Servicer and all fees and expenses due to the outgoing Owner Trustee are paid.
Any successor Owner Trustee appointed pursuant to this Section 6.10 shall be
eligible to act in such capacity in accordance with Section 6.13 and, following
compliance with the preceding sentence, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor under this Agreement,
with like effect as if originally named as Owner Trustee. The Servicer shall
provide notice of such resignation or removal of the Owner Trustee and the
Insurer to each of the Rating Agencies.
(d) The predecessor Owner Trustee shall upon payment of its fees and
expenses deliver to the successor Owner Trustee all documents and statements and
monies held by it under this Agreement. The Servicer and the predecessor Owner
Trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for fully and certainly vesting and confirming in the
successor Owner Trustee all such rights, powers, duties and obligations.
(e) Upon acceptance of appointment by a successor Owner Trustee pursuant
to this Section 6.10, the Servicer shall mail notice of the successor of such
Owner Trustee to all Certificateholders, the Indenture Trustee, the Noteholders,
the Insurer and the Rating Agencies .
SECTION 6.11 Merger or Consolidation of Owner Trustee. Any entity into
which the Owner Trustee may be merged or converted or with which it may be
consolidated, or any entity resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any entity
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, provided
such entity shall be eligible pursuant to Section 6.13, and without the
execution or filing of any instrument or any further act on the part of any of
the parties hereto; provided, however, that the Owner Trustee shall mail notice
of such merger, conversion or consolidation to the Insurer and the Rating
Agencies.
SECTION 6.12 Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Owner Trust Estate or any Financed Boat may at the time be
located, the Servicer and the Owner Trustee acting jointly shall have the power
and shall execute and deliver all instruments to appoint one or more Persons
approved by the Owner Trustee and reasonably acceptable to the Insurer (so long
as the Insurer is the Controlling Party) to act as co-trustee, jointly with the
Owner Trustee, or as separate trustee or trustees, of all or any part of the
Owner Trust Estate, and to vest in such Person, in such capacity, such title to
the Trust, or any part thereof, and, subject to the other provisions of this
Section 6.12,
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such powers, duties, obligations, rights and trusts as the Servicer and the
Owner Trustee may consider necessary or desirable. If the Servicer shall not
have joined in such appointment within 15 days after the receipt by it of a
request so to do, the Owner Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee under this Agreement shall be
required to meet the terms of eligibility as a successor trustee pursuant to
Section 6.13 and no notice of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 6.10.
(b) Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Owner Trustee shall be conferred upon and exercised or performed
jointly by the Owner Trustee and such separate trustee or co-trustee (it
being understood that such separate trustee or co-trustee is not
authorized to act separately without the Owner Trustee joining in such
act), except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed, the Owner Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of
title to the Trust or any portion thereof in any such jurisdiction) shall
be exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Owner Trustee;
(ii) no trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement;
and
(iii) the Servicer and the Owner Trustee acting jointly may at any
time accept the resignation of or remove any separate trustee or
co-trustee.
(c) Any notice, request or other writing given to the Owner Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Owner
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Owner Trustee. Each such instrument shall be filed with the Owner
Trustee and a copy thereof given to the Servicer.
(d) Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall
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vest in and be exercised by the Owner Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.
SECTION 6.13 Eligibility Requirements for Owner Trustee. The Owner Trustee
shall at all times: (a) be authorized to exercise corporate trust powers; (b)
have a combined capital and surplus of at least $50,000,000 and be subject to
supervision or examination by federal or state authorities; and (c) have (or
have a parent which has) a senior unsecured long-term debt rating of at least
"BBB" by Standard & Poor's and have a senior unsecured long-term debt rating of
at least "Baa3" by Moody's. If such corporation shall publish reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purpose of this
Section 6.13, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Owner Trustee shall cease
to be eligible in accordance with the provisions of this Section 6.13, the Owner
Trustee shall resign immediately in the manner and with the effect specified in
Section 6.10. At all times, the Owner Trustee or Co-trustee appointed pursuant
hereto shall be a person that satisfies the provisions of Section 3807(a) of the
Business Trust Statute (the "Delaware Trustee").
ARTICLE VII
TERMINATION OF TRUST AGREEMENT
SECTION 7.1 Termination of Trust Agreement.
(a) This Agreement has been entered into in part to induce the Indenture
Trustee, the Insurer and the Certificateholders from time to time to participate
in the transactions contemplated hereby, and each of the Owner Trustee, the
holder of the AO Interest and the Seller agree that the Indenture Trustee (so
long as the Indenture shall not have been terminated in accordance with its
terms), the Insurer and the Certificateholders from time to time are third party
beneficiaries hereof, and shall be entitled to enforce the terms of this
Agreement to the same extent as if they were signatories hereto, subject,
however, to Article IV hereof and to the applicable provisions of the Indenture.
So long as the Indenture shall not have been terminated in accordance with its
terms, this Agreement and the Trust created hereby are irrevocable by the Owner
Trustee and the Seller, unless the Indenture Trustee, the Insurer and the
Certificateholders consent in writing to such termination. This Agreement (other
than Section 6.9) and the Trust shall terminate and be of no further force or
effect on the final distribution by the Owner Trustee of all monies or other
property or proceeds of the Owner Trust Estate in accordance with the terms of
the Indenture, the Sale and Servicing Agreement (including the exercise by CITSF
of its option to purchase the Contracts pursuant to Section 11.01 of the Sale
and Servicing Agreement or resulting from the mandatory sale of all Contracts
pursuant to Section 11.02 of the Sale and Servicing Agreement) and Article V.
The bankruptcy, liquidation, dissolution, death or incapacity of any
Certificateholder, including the holder of the AO Interest, shall not (x)
operate to terminate this Agreement or the Trust, nor (y) entitle such
Certificateholder's legal representatives or heirs to claim
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<PAGE>
an accounting or to take any action or proceeding in any court for a partition
or winding up of all or any part of the Trust or the Owner Trust Estate nor (z)
otherwise affect the rights, obligations and liabilities of the parties hereto.
The bankruptcy, liquidation or dissolution of the Owner Trustee (or any other
beneficiary herewith) will not terminate this Agreement or the Trust, nor
entitle such person's legal representatives or heirs, as appropriate, to claim
an accounting or to take any action or proceeding in any court for a partition
or winding up of the Trust or Owner Trust Estate, nor otherwise affect the
rights, obligations and liabilities of the parties hereto. No creditor of any
Certificateholder shall obtain legal title to or exercise legal or equitable
remedies with respect to the Owner Trust Estate as a result of such
Certificateholder's holding of the Certificate. No transfer, by operation of law
or otherwise, of any right, title and interest of any Certificateholder in and
to its undivided beneficial interest in the Owner Trust Estate shall operate to
terminate this Agreement or the Trust created hereby.
(b) Except as provided in Section 7.1(a), neither the Seller nor the
holder of the AO Interest nor any Certificateholder shall be entitled to revoke
or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the Distribution
Date upon which the Certificateholders shall surrender their Certificates to the
Paying Agent for payment of the final distribution and cancellation, shall be
given by the Owner Trustee by letter to Certificateholders mailed within five
Business Days of receipt of notice of such termination from CITSF given pursuant
to Section 11.01 of the Sale and Servicing Agreement, or within five Business
Days of the Owner Trustee receiving notice of such termination from the
Indenture Trustee pursuant to Section 11.02 of the Sale and Servicing Agreement,
stating: (i) the Distribution Date upon or with respect to which final payment
of the Certificates shall be made upon presentation and surrender of the
Certificates at the office of the Paying Agent therein designated; (ii) the
amount of any such final payment; and (iii) that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made only
upon presentation and surrender of the Certificates at the office of the Paying
Agent therein specified. The Owner Trustee shall give such notice to the
Certificate Registrar (if other than the Owner Trustee) and the Paying Agent at
the time such notice is given to Certificateholders. Upon presentation and
surrender of the Certificates, the Paying Agent shall cause to be distributed to
Certificateholders amounts distributable on such Distribution Date pursuant to
Section 5.2.
(d) If all of the Certificateholders shall not surrender their
Certificates for cancellation within six months after the date specified in the
above mentioned written notice, the Owner Trustee shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice all the Certificates shall not have been
surrendered for cancellation, the Owner Trustee may take appropriate steps, or
may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
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<PAGE>
thereof shall be paid out of the funds and other assets that shall remain
subject to this Agreement. Subject to applicable laws with respect to escheat of
funds, any funds remaining in the Trust after exhaustion of such remedies in the
preceding sentence shall be deemed property of the holder of the AO Interest and
distributed by the Owner Trustee to the holder of the AO Interest.
(e) Upon the winding up of the Trust and its termination and the written
direction of the Seller, the Owner Trustee shall cause the Certificate of Trust
to be canceled by filing a certificate of cancellation with the Secretary of
State of the State of Delaware in accordance with the provisions of Section 3810
of the Business Trust Statute.
ARTICLE VIII
AMENDMENTS
SECTION 8.1 Amendments Without Consent of Certificateholders or
Noteholders. This Agreement may be amended by the Seller and the Owner Trustee
with the consent of the Insurer (so long as the Insurer is the Controlling
Party) and without the consent of any of the Noteholders or the
Certificateholders (but with prior written notice to each of the Rating Agencies
and the Indenture Trustee and in the case of clauses (iii) and (vi),
satisfaction of the Rating Agency Condition), to (i) correct manifest error or
cure any ambiguity, (ii) correct or supplement any provision in this Agreement
that may be inconsistent with any other provision in this Agreement, (iii) add
or amend any provision as requested by Moody's or Standard & Poor's to maintain
or improve the rating of the Notes or Certificates, (iv) add to the covenants,
restrictions or obligations of the Seller, the holder of the AO Interest, the
Owner Trustee or the Indenture Trustee, (v) evidence and provide for the
acceptance of the appointment of a successor trustee with respect to the Owner
Trust Estate and add to or change any provisions as shall be necessary to
facilitate the administration of the trusts hereunder by more than one trustee
pursuant to Article VI and (vi) add, change or eliminate any other provision of
this Agreement provided that an amendment pursuant to this clause (vi), as
evidenced by an Opinion of Counsel, does not adversely affect in any material
respect the interests of the Noteholders or the Certificateholders.
SECTION 8.2 Amendments With Consent of Certificateholders and Noteholders.
This Agreement may be amended from time to time by the Seller and the Owner
Trustee with the consent of the Insurer (so long as the Insurer is the
Controlling Party), Noteholders whose Notes evidence not less than a majority of
the aggregate outstanding principal amount of the Notes as of the close of the
preceding Distribution Date and the consent of Certificateholders whose
Certificates evidence not less than a majority of the Certificate Balance as of
the close of the preceding Distribution Date (which consent, whether given
pursuant to this Section 8.2 or pursuant to any other provision of this
Agreement, shall be conclusive and binding on such Person and on all future
Holders of such Notes or Certificates and of any Notes or Certificates issued
upon the transfer thereof or in exchange thereof or in lieu thereof whether or
not notation of such consent is made upon the Notes or Certificates) for the
purpose of adding any provisions
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<PAGE>
to or changing in any manner or eliminating any of the provisions of this
Agreement, or of modifying in any manner the rights of the Noteholders or the
Certificateholders; provided, however, that no such amendment shall increase or
reduce in any manner the amount of, or accelerate or delay the timing of,
distributions that shall be required to be made on any Note or Certificate, the
Pass Through Rate or any Interest Rate; provided that unless an Insurer Default
has occurred and is continuing, such action shall not materially adversely
affect the interest of the Insurer. The Seller shall furnish notice to each of
the Rating Agencies and the Indenture Trustee prior to obtaining consent to any
proposed amendment under this Section 8.2.
SECTION 8.3 Form of Amendments.
(a) Promptly after the execution of any amendment, supplement or consent
pursuant to Section 8.1 or 8.2, the Seller shall furnish written notification of
the substance of such amendment or consent to each Certificateholder, the
Insurer and the Indenture Trustee.
(b) It shall not be necessary for the consent of Certificateholders, the
Noteholders or the Indenture Trustee pursuant to Section 8.2 to approve the
particular form of any proposed amendment or consent, but it shall be sufficient
if such consent shall approve the substance thereof. The manner of obtaining
such consents (and any other consents of Certificateholders provided for in this
Agreement or in any other Basic Document) and of evidencing the authorization of
the execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe.
(c) Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State of the State of Delaware.
(d) Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Owner Trustee may, but shall not
be obligated to, enter into any such amendment which affects the Owner Trustee's
own rights, duties or immunities under this Agreement or otherwise.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 No Legal Title to Owner Trust Estate. The Certificateholders
shall not have legal title to any part of the Owner Trust Estate. The
Certificateholders shall be entitled to receive distributions with respect to
their undivided ownership interest therein only in accordance with Articles V
and VII. No transfer, by operation of law or otherwise, of any right, title, and
interest of the Certificateholders to and in their ownership interest in the
Owner Trust Estate shall
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<PAGE>
operate to terminate this Agreement or the trusts hereunder or entitle any
transferee to an accounting or to the transfer to it of legal title to any part
of the Owner Trust Estate.
SECTION 9.2 Limitations on Rights of Others. Except as expressly provided
herein, the provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Seller, the Certificateholders, the Servicer, the Insurer and, to
the extent expressly provided herein, the Indenture Trustee and the Noteholders,
and nothing in this Agreement, whether express or implied, shall be construed to
give to any other Person any legal or equitable right, remedy or claim in the
Owner Trust Estate or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.
SECTION 9.3 Notices.
(a) All demands, notices and communications upon or to the Seller, the
Servicer, the Indenture Trustee, the Owner Trustee or the Rating Agencies under
this Agreement shall be in writing personally delivered, sent by electronic
facsimile (with hard copy to follow via first class mail), provided, however,
receipt of such is acknowledged by return facsimile or otherwise in writing, or
mailed by certified mail-return receipt requested, and shall be deemed to have
been duly given upon receipt (a) in the case of the Seller, at the following
address: 650 CIT Drive, Livingston, New Jersey 07039, (b) in the case of the
Servicer, at the following address: 650 CIT Drive, Livingston, New Jersey 07039,
(c) in the case of the Indenture Trustee, at its Corporate Trust Office, (d) in
the case of the Trust or the Owner Trustee, to the Owner Trustee at its
Corporate Trust Office, (e) in the case of Moody's Investors Service, Inc., to
Moody's Investors Service, Inc., ABS Monitoring Department, 99 Church Street,
New York, New York 10007 and (f) in the case of Standard & Poor's Ratings
Service, to Standard & Poor's Ratings Service, 26 Broadway (15th Floor), New
York, New York 10004, Attention: Asset Backed Surveillance Department, (g) in
the case of the Insurer, to MBIA Insurance Corporation, 113 King Street, Armonk,
New York 10504, Attention Insured Portfolio Management, Structured Finance, or
at such other address as shall be designated by such Person in a written notice
to the other parties to this Agreement.
(b) Any notice required or permitted to be given to a Certificateholder
shall be given by first-class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register. Any notice so mailed within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not the Certificateholder receives such notice.
SECTION 9.4 Severability. If any one or more of the covenants, agreements,
provisions or terms of this Agreement shall be for any reason whatsoever held
invalid, then such covenants, agreements, provisions or terms shall be deemed
severable from the remaining covenants, agreements, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the other
provisions of this Agreement or of the Certificates or the rights of the holders
thereof.
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<PAGE>
SECTION 9.5 Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument.
SECTION 9.6 Successors and Assigns. All covenants and agreements contained
herein shall be binding upon, and inure to the benefit of, the Seller, the Owner
Trustee, the Insurer and each Certificateholder and their respective successors
and permitted assigns, all as herein provided. Any request, notice, direction,
consent, waiver or other instrument or action by a Certificateholder shall bind
the successors and assigns of such Certificateholder.
SECTION 9.7 No Petition Covenant. Notwithstanding any prior termination of
this Agreement, the Trust (or the Owner Trustee on behalf of the Trust), the
Owner Trustee, each Certificateholder, the Indenture Trustee and each Noteholder
or Note Owner shall not, prior to the date which is one year and one day after
the termination of this Agreement with respect to the Seller or the Trust,
acquiesce, petition or otherwise invoke or cause the Seller or the Trust to
invoke the process of any court or governmental authority for the purpose of
commencing or sustaining a case against the Seller or the Trust under any
federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Seller, the Trust or any substantial part of their property, or ordering
the winding-up or liquidation of the affairs of the Seller or the Trust.
SECTION 9.8 No Recourse. Each Certificateholder by accepting a Certificate
acknowledges that such Certificateholder's Certificates represent beneficial
interests in the Trust only and do not represent interests in or obligations of
the Seller, the holder of the AO Interest, the Servicer, the Owner Trustee, the
Indenture Trustee or any Affiliate thereof and no recourse may be had against
such parties or their assets, except as may be expressly set forth or
contemplated in this Agreement, the Certificates or the Basic Documents.
SECTION 9.9 Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
SECTION 9.10 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 9.11 Certificate Transfer Restrictions. The Certificates may not
be acquired by or for the account of (i) a non-United States person as defined
in ss. 7701(a) of the Code, (ii) an employee benefit plan (as defined in Section
3(3) of ERISA) that is subject to the provisions of Title I of ERISA, (iii) a
plan described in Section 4975(e)(1) of the Code or (iv) any entity whose
underlying assets include plan assets by reason of a plan's investment in the
entity (each, a "Benefit Plan"). No transfer of a Certificate may be made unless
the Certificate Registrar shall have received from the prospective transferee of
such Certificate a representation letter
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substantially in the form of Exhibit C, that such transferee is not subject to
the foregoing limitation.
SECTION 9.12 Indemnification by the Servicer. The Owner Trustee further
acknowledges and accepts the conditions and limitations with respect to the
Servicer's obligation to indemnify, defend and hold the Owner Trustee harmless
as set forth in Section 8.02 of the Sale and Servicing Agreement.
SECTION 9.13 Third Party Beneficiary. The Insurer and the Indenture
Trustee are express third party beneficiaries of this Agreement entitled to
enforce any rights reserved to it and to rely on any representations and
warranties hereunder to the same extent as if it were a party to this Agreement.
Nothing in this Section 9.13 shall be construed as creating any fiduciary
obligations on the part of the Owner Trustee to the Insurer or any other Person
except the Certificateholders.
SECTION 9.14 No Duty to Monitor. The Owner Trustee shall have no duty, and
shall not be obligated, to monitor or supervise the Servicer or any other Person
to the extent that the Servicer or such other Person has agreed to perform the
duties of the Owner Trustee hereunder or under any Basic Document.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed by their respective officers hereunto duly authorized, as of
the day and year first above written
CHASE MANHATTAN BANK DELAWARE
as Owner Trustee
By: /s/ Denis Kelly
------------------------------------
Name: Denis Kelly
Title: Trust Officer
THE CIT GROUP SECURITIZATION
CORPORATION II
By: /s/ Frank Garcia
------------------------------------
Name: Frank Garcia
Title: Vice President
Accepted and Agreed
with respect to the
provisions relating
to the intended holder
of the AO Interest:
THE CIT GP CORPORATION III
By: /s/ Frank J. Madeira
-----------------------------------
Name: Frank J. Madeira
Title: Vice President
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EXHIBIT A
FORM OF TRUST CERTIFICATE
NUMBER ______ ORIGINAL CERTIFICATE BALANCE $_________________
CUSIP NO. 125590 AE 9 FRACTIONAL UNDIVIDED INTEREST: ___%
SEE REVERSE FOR CERTAIN DEFINITIONS
NO INTEREST IN THIS CERTIFICATE MAY BE ACQUIRED BY OR FOR THE ACCOUNT OF
(i) A NON-UNITED STATES PERSON, AS DEFINED IN SECTION 7701(A) OF THE CODE, (ii)
AN "EMPLOYEE BENEFIT PLAN" (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, ("ERISA")) THAT IS SUBJECT
TO THE PROVISIONS OF TITLE I OF ERISA, (iii) A PLAN DESCRIBED IN SECTION
4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (INCLUDING, WITHOUT
LIMITATION, INDIVIDUAL RETIREMENT ACCOUNTS AND KEOGH PLANS), OR (iv) ANY ENTITY
WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF A PLAN'S INVESTMENT IN
THE ENTITY.
A-1
<PAGE>
CIT MARINE TRUST 1999-A
6.20% ASSET-BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined below, the
property of which includes a pool of marine installment sale contracts and
direct loans secured by new and used boats and sold to the Trust by The CIT
Group Securitization Corporation II (This Certificate does not represent an
interest in or obligation of The CIT Group Securitization Corporation II, The
CIT Group/Sales Financing, Inc. or The CIT Group, Inc. or any of their
respective affiliates.)
THIS CERTIFIES THAT ____________________ is the registered owner of a
nonassessable, fully-paid, fractional undivided interest in CIT Marine Trust
1999-A (the "Trust") formed by The CIT Group Securitization Corporation II, a
Delaware corporation (the "Seller"), represented by the Original Certificate
Balance specified above.
The Trust was created pursuant to a Trust Agreement, dated as of
February 1, 1999 (as amended and supplemented from time to time, the "Trust
Agreement"), between the Seller and Chase Manhattan Bank Delaware, as owner
trustee (the "Owner Trustee"), a summary of certain of the pertinent provisions
of which is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the Trust
Agreement.
This Certificate is one of the duly authorized Certificates designated
as 6.20% Asset-Backed Certificates (the "Certificates"). This Certificate is
issued under and is subject to the terms, provisions and conditions of the Trust
Agreement, to which Trust Agreement the holder of this Certificate by virtue of
the acceptance hereof assents and by which such holder is bound. The property of
the Trust includes a pool of marine installment sale contracts and direct loans
(the "Contracts") secured by the new and used boats financed thereby (the
"Financed Boats"), certain monies received under the Contracts on and after
February 1, 1999 (the "Cut-off Date"), security interests in the Financed Boats,
the Collection Account, the Note Distribution Account, the Certificate
Distribution Account and the Reserve Account, in each case together with the
proceeds thereof, the proceeds from claims under certain insurance policies in
respect of individual Financed Boats or the related Obligors and certain rights
under the Sale and Servicing Agreement. The rights of the holders of the
Certificates are subordinated to the rights of the holders of the Notes, as set
forth in the Sale and Servicing Agreement.
Under the Trust Agreement, there shall be distributed on the 15th day
of each month or, if such 15th day is not a Business Day, the next Business Day,
commencing on March 15, 1999 (each, a "Distribution Date"), to the person in
whose name this Certificate is registered on the related Record Date (as defined
below), such Certificateholder's fractional undivided interest as set forth
above in the amount of interest and principal to be distributed to
Certificateholders on such Distribution Date. Interest in respect of a
Distribution Date will accrue at the Pass-Through Rate shown above during the
related Interest Accrual Period. On each Distribution Date accrued interest at
the Pass-Through Rate on the outstanding Certificate Balance of this Certificate
shall be distributed, to the extent of the Available Amount remaining after
payment of the Servicer Payment, accrued and unpaid fees of the Insurer and
interest due on the Notes on such
A-2
<PAGE>
Distribution Date. To the extent the remaining Available Amount on a
Distribution Date is insufficient to pay Certificateholders the entire amount of
interest due on such Distribution Date, such shortfall will be funded, first,
from the Reserve Account, subject to the Available Reserve Amount remaining
after any withdrawal from the Reserve Account to make payments of interest and
principal due on the Notes on such Distribution Date, as more specifically set
forth in the Sale and Servicing Agreement and, second, by the Insurer pursuant
to the Certificate Insurance Policy. Interest on this Certificate for any
Distribution Date due but not paid on such Distribution Date will be due on the
next Distribution Date in addition to an amount equal to interest on such amount
at the Pass-Through Rate (to the extent lawful). Interest on this Certificate
will be calculated on the basis of a 360-day year consisting of twelve 30-day
months. The "Record Date," with respect to any Distribution Date, means the last
Business Day of the month immediately preceding the month in which such
Distribution Date occurs.
On each Distribution Date principal of this Certificate will be
payable, subject to the remaining Available Amount and the remaining Available
Reserve Amount, in an amount equal to the Certificate Primary Principal
Distribution Amount with respect to such Distribution Date and, on and after the
payment in full of the Notes, the Certificate Additional Principal Distribution
Amount. The Certificate Primary Principal Distribution Amount will be funded on
each Distribution Date to the extent of the Available Amount remaining after
payment of the Servicer Payment, accrued and unpaid fees of the Insurer,
interest due on the Notes on such Distribution Date, interest due on the
Certificates on such Distribution Date and the Note Primary Principal
Distribution Amount. The Certificate Additional Principal Distribution Amount
will be funded on each Distribution Date to the extent of the Available Amount
remaining after payment of the Certificate Primary Principal Distribution Amount
(and all other amounts payable prior to the payment of such Certificate Primary
Distribution Amount in accordance with the foregoing sentence) and after payment
of the Reimbursement Obligations to the Insurer, interest on the Loan, the
Servicing Fee if CITSF or one of its affiliates is the Servicer, the Additional
Required Reserve Amount and the Note Additional Principal Distribution Amount.
Payments of the Certificate Additional Principal Distribution Amount will only
be made after the Notes have been paid in full.
In the event that on a Distribution Date (after giving effect to the
distribution of the Note Primary Principal Distribution Amount and the Note
Additional Principal Distribution Amount to the Noteholders and the Certificate
Principal Distribution Amount and the Certificate Additional Principal
Distribution Amount to the Certificateholders) a Collateralization Shortfall
exists, such Collateralization Shortfall will be paid to the Notes so long as
any Note is outstanding and then to the Certificates on or after the
Distribution Date that the Notes are paid in full, first, from amounts, if any,
available in the Reserve Account (after payment of the Note Interest
Distribution Amount and the Certificate Interest Distribution Amount) and,
second, from amounts paid by the Insurer pursuant to the Certificate Insurance
Policy.
In the event that on the Certificate Final Scheduled Distribution Date
the Available Amount, including the Available Reserve Amount, remaining for
payment of the principal of this Certificate is insufficient to pay the
Certificate Balance, such shortfall will be paid by the Insurer pursuant to the
Certificate Insurance Policy.
A-3
<PAGE>
The distributions in respect of principal and interest on this
Certificate are payable in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts. All payments made by the Trust with respect to this Certificate shall be
applied, to the extent of the remaining Available Amount and the remaining
Available Reserve Amount, first to interest due and payable on this Certificate
as provided above and then to the unpaid distributions in respect of principal
on this Certificate.
The holder of this Certificate acknowledges and agrees that its rights
to receive distributions in respect of this Certificate are subordinated to the
rights of the Noteholders as and to the extent described in the Sale and
Servicing Agreement and the Indenture.
It is the intent of the Seller, the Servicer and the Certificateholders
that, for purposes of federal income, state and local income and franchise taxes
and any other taxes imposed upon, measured by or based upon gross or net income,
the Trust shall be treated as a partnership. Except as otherwise required by
appropriate taxing authorities, the Seller and the other Certificateholders by
acceptance of a Certificate, agree to treat, and to take no action inconsistent
with the treatment of, the Certificates for such tax purposes as interests in
such partnership.
Each Certificateholder, by its acceptance of a Certificate, covenants
and agrees that such Certificateholder shall not, prior to the date which is one
year and one day after the termination of the Trust Agreement, acquiesce,
petition or otherwise invoke or cause the Seller or the Issuer to invoke the
process of any court or governmental authority for the purpose of commencing or
sustaining a case against the Seller or the Issuer under any federal or state
bankruptcy, insolvency, reorganization or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Seller or the Issuer or any substantial part of its property, or ordering
the winding up or liquidation of the affairs of the Seller or the Issuer.
Distributions on this Certificate shall be made as provided in the
Trust Agreement by the Owner Trustee by wire transfer or check mailed to the
Certificateholder of record in the Certificate Register without the presentation
or surrender of this certificate or the making of any notation hereon. Except as
otherwise provided in the Trust Agreement and notwithstanding the above, the
final distribution on this Certificate shall be made after due notice by the
Owner Trustee of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office maintained for such purpose by
the Owner Trustee.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee by manual signature, this
Certificate shall not entitle the holder hereof to any benefit under the Trust
Agreement or the Sale and Servicing Agreement or be valid for any purpose.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF
A-4
<PAGE>
LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not
in its individual capacity, has caused this Certificate to be duly executed.
CIT MARINE TRUST 1999-A
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity,
but solely as Owner Trustee
By: ______________________________
Name:
Title:
Dated:
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to
in the within-mentioned Trust Agreement.
By: CHASE MANHATTAN BANK By: CHASE MANHATTAN BANK,
DELAWARE, not in its individual capacity
but solely as authenticating agent
not in its individual capacity
but solely as Owner Trustee
By __________________________ By __________________________
Name: Name:
Title: Title:
A-5
<PAGE>
REVERSE OF CERTIFICATE
The Certificates do not represent an obligation of, or an interest in, the
Seller, the Servicer, The CIT Group, Inc., the holder of the AO Interest, the
Indenture Trustee, the Owner Trustee or any affiliates of any of them and no
recourse may be had against such parties or their assets, except as may be
expressly set forth or contemplated herein or in the Trust Agreement or the
Basic Documents. In addition, this Certificate is not guaranteed by any
governmental agency or instrumentality and is limited in right of payment to
certain collections and recoveries with respect to the Contracts (and certain
other amounts), all as more specifically set forth herein and in the Trust
Agreement and the Sale and Servicing Agreement. A copy of each of the Sale and
Servicing Agreement and the Trust Agreement may be examined during normal
business hours at the principal office of the Seller, and at such other places,
if any, designated by the Seller, by any Certificateholder upon written request.
The Trust Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification in any manner of the rights of the
Certificateholders under the Trust Agreement at any time by the Seller and the
Owner Trustee with the consent of the Insurer (so long as the Insurer is the
Controlling Party), Noteholders whose Notes evidence not less than a majority of
the aggregate outstanding principal amount of the Notes as of the close of the
preceding Distribution Date and the consent of Certificateholders whose
Certificates evidence not less than a majority of the Certificate Balance as of
the close of the preceding Distribution Date. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such holder and on all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Trust Agreement also permits
the amendment thereof, in certain circumstances, without the consent of the
Holders of any of the Certificates or the Notes.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained by
the Owner Trustee for such purposes, accompanied by a written instrument of
transfer in form satisfactory to the Owner Trustee and the Certificate Registrar
duly executed by the Holder hereof or such Holder's attorney duly authorized in
writing and thereupon one or more new Certificates of authorized denominations
evidencing the same aggregate interest in the Trust will be issued to the
designated transferee. The initial Certificate Registrar appointed under the
Trust Agreement is Chase Manhattan Bank Delaware.
Neither this Certificate nor any beneficial interest herein may be
directly or indirectly assigned, sold, pledged, hypothecated or otherwise
transferred except upon satisfaction of the conditions set forth in Section 9.11
of the Trust Agreement pursuant to which this Certificate was issued. Any
attempted transfer in violation of such restrictions shall be null and void and
shall vest no rights in any purported transferee, and shall subject the Holder
hereof to liability for any tax imposed (and related expenses, if any) with
respect to such attempted transfer.
A-6
<PAGE>
The Certificates are issuable only as registered Certificates without
coupons in denominations of $20,000 or integral multiples of $1,000 in excess
thereof; provided, however, that one Certificate may be issued in a denomination
other than an integral multiple of $1,000 such that the holder of the AO
Interest may own at least 1% of the Certificate Balance (as described in the
Trust Agreement). As provided in the Trust Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
denomination, as requested by the Holder surrendering the same; provided,
however, that no Certificate may be subdivided such that the denomination of any
resulting Certificate is less than $20,000. No service charge shall be made for
any such registration of transfer or exchange, but the Owner Trustee or the
Certificate Registrar may require payment of a sum sufficient to cover any tax
or governmental charge payable in connection therewith.
The Owner Trustee, the Certificate Registrar and any agent of the Owner
Trustee or the Certificate Registrar may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Owner Trustee, the Certificate Registrar or any such agent shall be affected by
any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement and
the Trust created thereby shall terminate upon the payment to Certificateholders
of all amounts required to be paid to them pursuant to the Trust Agreement and
the Sale and Servicing Agreement and the disposition of all property held as
part of the Trust. CITSF may at its option purchase the Contracts at a price
specified in the Sale and Servicing Agreement, and such purchase of the
Contracts shall effect early retirement of the Certificates; provided, however,
that such right of purchase is exercisable on any Distribution Date as of which
the Pool Balance as of the last day of the related Due Period is 10% or less of
the Initial Pool Balance. In addition, following the first Distribution Date as
of which the Pool Balance as of the last day of the related Due Period is 5% or
less of the Initial Pool Balance an auction sale of the remaining Contracts may
be conducted (in each case, as described in the Sale and Servicing Agreement)
and such auction may effect early retirement of the Certificates.
A-7
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
________________________________________________________________________________
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
________________________________________________________________________________
to transfer said Certificate on the books of the Certificate Registrar, with
full power of substitution in the premises.
Dated: ______________________*
Signature Guaranteed:
___________________
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Certificate Registrar, which requirements include membership or
participation in the Securities Transfer Agent's Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Certificate
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Exchange Act.
A-8
<PAGE>
STATEMENT OF INSURANCE
MBIA Insurance Corporation (the "Insurer") has issued a Financial Guaranty
Insurance Policy (the "Certificate Insurance Policy") containing the following
provisions, such policy being on file at CIT Marine Trust 1999-A, care of Chase
Manhattan Bank Delaware, as owner trustee (the "Owner Trustee"), Wilmington,
Delaware.
The Insurer, in consideration of the payment of the premium and subject to
the terms of the Certificate Insurance Policy, thereby unconditionally and
irrevocably guarantees to pay to the Trust in respect of (i) each Distribution
Date (other than the Certificate Final Scheduled Distribution Date), an amount
equal to the amount by which the Certificate Interest Distribution Amount
exceeds that portion of the Available Amount allocated to pay such amounts as
provided in the Sale and Servicing Agreement (as defined below) after giving
effect to amounts available therefor from the Reserve Account, (ii) each
Distribution Date on and after the payment in full of the Notes (other than the
Certificate Final Scheduled Distribution Date), an amount equal to the
Collateralization Shortfall after giving effect to amounts available therefor
from the Reserve Account and (iii) on the Certificate Final Scheduled
Distribution Date, an amount equal to the excess of the Certificate Balance over
that portion of the Available Amount allocated to pay such amounts as provided
in the Sale and Servicing Agreement after giving effect to amounts available
therefor from the Reserve Account (such amounts, collectively, as of any
Distribution Date, the "Certificate Policy Claim Amount"). The Insurer also
agrees to pay an amount equal to any Avoided Payment (as defined below). Each
payment pursuant to the Certificate Insurance Policy will be received by the
Trust, on behalf of the Certificateholders, for distribution by the Owner
Trustee to each Certificateholder of each Certificateholder's proportionate
share of the Certificate Policy Claim Amount. The Insurer's obligations under
the Certificate Insurance Policy shall be discharged to the extent funds equal
to the applicable Certificate Policy Claim Amount are received by the Trust,
whether or not such funds are properly applied by the Trust. The Certificate
Insurance Policy does not guarantee payments of principal on the Certificates
other than as a result of a Collateralization Shortfall or with respect to the
Certificate Balance on the Certificate Final Scheduled Distribution Date, and
will not guarantee payment of any amounts that become due on an accelerated
basis as a result of (a) a default by the Trust, (b) the occurrence of an Event
of Default under (and as defined in) the Indenture, or (c) any other cause. The
Insurer may elect, in its sole discretion, to pay all or a portion of any
shortfalls in the amount of such Available Amount to make distributions of
principal on the Certificates, other than distributions of principal with
respect to a Collateralization Shortfall or on the Certificate Final Scheduled
Distribution Date, which is guaranteed by the Insurer.
Notwithstanding the foregoing paragraph, the Certificate Insurance Policy
does not cover shortfalls, if any, attributable to the liability of the Trust
for withholding taxes, if any (including interest and penalties in respect of
any such liability).
Payment of amounts under the Certificate Insurance Policy shall be made in
immediately available funds on the later of (a) 3 p.m., New York City time, on
the related
A-9
<PAGE>
Distribution Date and (b) 3 p.m., New York City time, on the third Business Day
following presentation to State Street Bank and Trust Company, N.A., as Fiscal
Agent for the Insurer or any successor fiscal agent appointed by the Insurer
(the "Fiscal Agent") of a notice for payment (a "Notice for Payment"),
appropriately completed and executed by the Trust. A Notice for Payment under
the Certificate Insurance Policy may be presented to the Fiscal Agent on any
Business Day following the Determination Date in respect of which the Notice for
Payment is being presented, but in any event, not later than the third Business
Day prior to the applicable Distribution Date, in accordance with the
Certificate Insurance Policy. Any Notice for Payment received by the Fiscal
Agent after 3 p.m., New York City time, on a Business Day, or on any day that is
not a Business Day, will be deemed to be received by the Fiscal Agent on the
next succeeding Business Day.
Subject to the foregoing, if the payment of any amount guaranteed by the
Certificate Insurance Policy and previously distributed to a Certificateholder
in respect of the Certificates that is recoverable and sought to be recovered as
a voidable preference in an Insolvency Proceeding in accordance with a
nonappealable order of a court having competent jurisdiction is voided ("Avoided
Payment"), the Insurer will make such Avoided Payment on behalf of the
Certificateholder upon receipt by the Fiscal Agent from the Trust on behalf of
such Certificateholder of (i) a certified copy of a final, nonappealable order
of a court having competent jurisdiction to the effect that the
Certificateholder is required to return any such payment or portion thereof
prior to the Termination Date of the Certificate Insurance Policy because such
payment was voided under applicable law (the "Order") together with a
certificate of such Certificateholder that such Order is final and not subject
to appeal, (ii) an assignment properly completed and executed by such
Certificateholder irrevocably assigning to the Insurer all rights and claims of
such Certificateholder relating to or arising under such Avoided Payment, (iii)
a Notice for Payment appropriately completed and executed by the Trust and (iv)
appropriate instruments to effect the appointment of the Insurer as agent for
such Certificateholder in any legal proceeding relating to such Avoided Payment.
The Insurer shall make payments due in respect of Avoided Payments no
later than 3 p.m., New York City time, on the Business Day which is no earlier
than (a) the third Business Day following receipt by the Fiscal Agent of the
documents required under clauses (i) through (iv) of the preceding paragraph and
(b) the date that such documents are received by the Fiscal Agent, if at least
three Business Days prior to such receipt, the Fiscal Agent shall have received
written notice from the Trust that such documents were to be delivered on such
date and such date was specified in such notice. Any such documents received by
the Fiscal Agent after 3 p.m., New York City time, on any Business Day or on any
day that is not a Business Day shall be deemed to have been received by the
Fiscal Agent prior to 3 p.m. on the next succeeding Business Day. All payments
made by the Insurer under the Certificate Insurance Policy on account of any
Avoided Payment shall be made to the receiver or the trustee in bankruptcy named
in the Order on behalf of the Certificateholder and not to the Trust or any
Certificateholder directly unless such Certificateholder has returned such
Avoided Payment to such receiver or trustee in bankruptcy, in which case such
payment will be disbursed to the Trust on behalf of such Certificateholder upon
proof of such payment reasonably satisfactory to the Insurer.
A-10
<PAGE>
The Fiscal Agent is the agent of the Insurer only and the Fiscal Agent
shall in no event be liable to Certificateholders for any acts of the Fiscal
Agent or any failure of the Insurer to deposit or cause to be deposited,
sufficient funds to make payments due under the Certificate Insurance Policy.
The obligations of the Insurer under the Certificate Insurance Policy are
irrevocable, primary, absolute and unconditional (except as expressly provided
therein) and neither the failure of the Trust, the Owner Trustee, CIT, the
Seller, the Servicer or any other person to perform any covenant or obligation
in favor of the Insurer (or otherwise), nor the failure or omission to make a
demand permitted under the Certificate Insurance Policy nor the commencement of
any bankruptcy, debtor or other insolvency proceeding by or against the Trust,
the Owner Trustee, CIT, the Seller, the Servicer or any other person shall in
any way affect or limit the Insurer's obligations under the Certificate
Insurance Policy.
The Certificate Insurance Policy and the obligations of the Insurer
thereunder shall terminate on the date (the "Termination Date") that is the
earliest to occur of (a) ninety-one days following the earlier of (i) the latest
Final Scheduled Distribution Date and (ii) the date on which all amounts
required to be paid to the Certificateholders have been paid in full, provided,
that, if any Insolvency Proceeding is existing by or against the Trust, the
Seller, the Servicer or CIT during such ninety-one day period, then the
Certificate Insurance Policy and the Insurer's obligations under the Certificate
Insurance Policy shall terminate on the date of the conclusion or dismissal of
such Insolvency Proceeding without continuing jurisdiction by the court in such
Insolvency Proceeding, provided, further that, and notwithstanding anything to
the contrary in the Certificate Insurance Policy, the Certificate Insurance
Policy shall not terminate prior to the date on which the Insurer has made all
payments required to be made under the terms of the Certificate Insurance Policy
in respect of Avoided Payments; and (b) the Business Day following the date that
the Insurer receives written notice from the Servicer terminating the
Certificate Insurance Policy as a result of a downgrade of the Insurer's claims
paying ability rating by any Rating Agency which results in a downgrading of the
Certificates; provided, however, that no termination shall be effective until
(x) all amounts owed to the Insurer under the Insurance Agreement on the date
such written notice is received by the Insurer are paid in full in cash and (y)
the original Certificate Insurance Policy is received by the Insurer.
As used herein, the following terms shall have the following meanings:
"Business Day" means any day other than a Saturday, Sunday or any day on
which banking institutions, insurance companies or trust companies in the states
of New York, Illinois, Delaware or Oklahoma are authorized or required by law or
executive order to be closed.
"Certificateholder" means each holder of a Certificate who, on the
applicable Distribution Date, is entitled under the terms of the related
Certificate to receive payments under the Certificate Insurance Policy.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
dated as of February 1, 1999 among the Company, the Servicer, CIT Marine Trust
1996-A and the Issuer without regard to any amendment or supplement thereto.
A-11
<PAGE>
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings set forth in the Sale and Servicing Agreement as of the
date of execution of the Certificate Insurance Policy, without giving effect to
any subsequent amendment or modification to the Sale and Servicing Agreement
unless such amendment or modification has been approved in writing by the
Insurer.
Any notice under the Certificate Insurance Policy or service of process on
the Fiscal Agent of the Insurer may be made at the address listed below for the
Fiscal Agent of the Insurer or such other address as the Insurer shall specify
in writing to the Trustee.
The notice address of the Fiscal Agent is 61 Broadway, 15th Floor, New
York, New York 10006, Attention: Municipal Registrar and Paying Agency, or such
other address as the Fiscal Agent shall specify to the Owner Trustee in writing.
The Certificate Insurance Policy is being issued under and pursuant to,
and shall be construed under, the laws of the State of New York, without giving
regard to the conflict of laws principles thereof.
The insurance provided by the Certificate Insurance Policy is not covered
by the property/casualty insurance security fund specified in Article 76 of the
New York Insurance Law.
MBIA INSURANCE CORPORATION
A-12
<PAGE>
EXHIBIT B
CERTIFICATE OF TRUST
OF
CIT MARINE TRUST 1999-A
THIS Certificate of Trust of CIT MARINE TRUST 1999-A (the "Trust") is
being duly executed and filed on behalf of the Trust by the undersigned, as
trustee, to form a business trust under the Delaware Business Trust Act (12 Del.
C. ss. 3801 et seq.) (the "Act").
1. Name. The name of the business trust formed by this Certificate of
Trust is CIT MARINE TRUST 1999-A.
2. Delaware Trustee. The name and business address of the trustee of the
Trust in the State of Delaware is Chase Manhattan Bank Delaware, 1201 Market
Street, Wilmington, Delaware 19801, Attention: Corporate Trustee Administration.
3. Effective Date. This Certificate of Trust shall be effective upon
filing.
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate of
Trust in accordance with Section 3811(a)(1) of the Act.
CHASE MANHATTAN BANK
DELAWARE, not in its
individual capacity, but
solely as Owner Trustee under
a Trust Agreement dated as of
February 1, 1999
By: /s/ Denis Kelly
--------------------------
Name: Denis Kelly
Title: Trust Officer
B-1
<PAGE>
EXHIBIT C
CIT MARINE TRUST 1999-A
CERTIFICATE TRANSFEREE LETTER
February __, 1999
CIT Marine Trust 1999-A
c/o Chase Manhattan Bank Delaware,
as Owner Trustee
1201 Market Street
Wilmington, Delware 19801
Attention: Corporate Trust Administration
Chase Manhattan Bank,
as Certificate Registrar
450 West 33rd Street
New York, New York 10001
Attention: Corporate Trust Administration
Ladies and Gentlemen:
In connection with our proposed purchase of the _________ 6.20%
Asset-Backed Certificates (the "Certificates") of CIT Marine Trust 1999-A (the
"Issuer"), a trust formed by The CIT Group Securitization Corporation II (the
"Seller"), we confirm that:
1. We are not, and each account (if any) for which we are purchasing the
Certificates is not, (A) an employee benefit plan (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) that
is subject to Title I of ERISA, (B) a plan described in Section 4975(e)(1) of
the Internal Revenue Code of 1986, as amended (the "Code"), that is subject to
Section 4975 of the Code, (C) a governmental plan, as defined in Section 3(32)
of ERISA, subject to any federal, state or local law which is, to a material
extent, similar to the provisions of Section 406 of ERISA or Section 4975 of the
Code, (D) an entity whose underlying assets include plan assets by reason of a
plan's investment in the entity (within the meaning of Department of Labor
Regulation 29 C.F.R. ss. 2510.3-101 or otherwise under ERISA) or (E) a person
investing "plan assets" of any such plan (including without limitation, for
purposes of this clause (E), an insurance company general account, but excluding
any entity registered under the Investment Company Act of 1940, as amended).
2. We are, and each account (if any) for which we are purchasing the
Certificates is, a person who is (A) a citizen or resident of the United States,
(B) a corporation or partnership organized in or under the laws of the United
States or any political subdivision thereof, (C) an estate the income of which
is includible in gross income for United States tax
C-1
<PAGE>
purposes, regardless of its source, or (D) a trust if a U.S. court is able to
exercise primary supervision over the administration of such trust and one or
more Persons meeting the conditions of clause (A), (B) or (C) of this paragraph
2 has the authority to control all substantial decisions of the trust.
3. We understand that any purported resale, transfer, assignment,
participation, pledge or other disposal of (any such act, a "Transfer") of any
Certificate (or any interest therein) to any person who does not meet the
conditions of paragraphs 1 and 2 above shall be null and void (each, a "Void
Transfer"), and the purported transferee in a Void Transfer shall not be
recognized by the Issuer or any other person as a Certificateholder for any
purpose.
4. We agree that if we determine to Transfer any of the Certificates we
will cause our proposed transferee to provide to the Issuer and the Certificate
Registrar a letter substantially in the form of this letter.
You are entitled to rely upon this letter and are irrevocably authorized
to produce this letter or a copy hereof to any interested party in any
administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.
Very truly yours,
By:___________________________
Name:
Title:
Securities To Be Purchased:
$__________ principal balance of Certificates
Annex A attached hereto lists the name of the account and principal balance of
Certificates purchased for each account (if any) for which we are purchasing
Certificates.
C-2
EXHIBIT 4.3
THE CIT GROUP SECURITIZATION CORPORATION II,
as Seller
THE CIT GROUP/SALES FINANCING, INC.,
as Servicer
CIT MARINE TRUST 1996-A
as Selling Trust
CIT MARINE TRUST 1999-A
as Issuer
SALE AND SERVICING AGREEMENT
Dated as of February 1, 1999
7 $735,162,156
CIT Marine Trust 1999-A
Class A-1 5.45% Asset-Backed Notes
Class A-2 5.80% Asset-Backed Notes
Class A-3 5.85% Asset-Backed Notes
Class A-4 6.25% Asset-Backed Notes
6.20% Asset-Backed Certificates
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS .......................................................1
SECTION 1.01 General .....................................................1
SECTION 1.02 Specific Terms...............................................1
ARTICLE II CONVEYANCE OF CONTRACTS; ACCEPTANCE BY TRUST.....................26
SECTION 2.01 Conveyance of the Contracts.................................26
SECTION 2.02 Acceptance by Owner Trustee on Behalf of the Trust..........27
ARTICLE III REPRESENTATIONS AND WARRANTIES; THE CONTRACTS...................28
SECTION 3.01A Representations and Warranties Regarding Each Contract......28
SECTION 3.01B Representations and Warranties Regarding the
Contracts in the Aggregate..............................32
SECTION 3.01C Representations and Warranties Regarding the Contract Files.33
SECTION 3.02 Repurchase of Contracts for Breach of Representations
and Warranties, Etc.....................................34
SECTION 3.03 Custody of Contract Files...................................34
SECTION 3.04 Duties of Servicer as Custodian.............................35
SECTION 3.05 Instructions; Authority to Act..............................36
SECTION 3.06 Effective Period and Termination............................36
ARTICLE IV ADMINISTRATION AND SERVICING OF CONTRACTS........................37
SECTION 4.01 Duties of Servicer..........................................37
SECTION 4.02 Collection of Contract Payments.............................39
SECTION 4.03 Realization Upon Contracts..................................40
SECTION 4.04 Physical Damage Insurance...................................41
SECTION 4.05 Maintenance of Security Interests
in Financed Boats; Retitling...........................43
SECTION 4.06 Covenants of Servicer.......................................44
SECTION 4.07 Purchase of Contracts Upon Breach...........................45
SECTION 4.08 Servicing Fee...............................................45
SECTION 4.09 Monthly Report..............................................45
SECTION 4.10 Annual Statement as to Compliance...........................46
SECTION 4.11 Annual Report of Accountants................................46
SECTION 4.12 Duties of Owner Trustee.....................................46
SECTION 4.13 Reports to Securityholders and the Rating Agencies..........47
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<PAGE>
Page
----
SECTION 4.14 Maintenance of Fidelity Bond and Errors and Omission Policy.47
SECTION 4.15 Satisfaction of Contract....................................48
SECTION 4.16 Costs and Expenses..........................................48
ARTICLE V ACCOUNTS; DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS.........48
SECTION 5.01 Collection Account and Reserve Account......................48
SECTION 5.02 Collections; Applications...................................51
SECTION 5.03 Monthly Advances............................................53
SECTION 5.04 Additional Deposits.........................................53
SECTION 5.05 Distributions...............................................53
SECTION 5.06 Reserve Account.............................................56
SECTION 5.07 Net Deposits................................................59
SECTION 5.08 Statements to Securityholders...............................59
SECTION 5.09 Claims on the Policies......................................61
SECTION 5.10 Notices to the Insurer......................................62
SECTION 5.11 Rights in Respect of Insolvency Proceedings.................62
SECTION 5.12 Effect of Payments by the Insurer; Subrogation..............63
ARTICLE VI [RESERVED] 64
ARTICLE VII THE COMPANY.....................................................65
SECTION 7.01 Representations of Company..................................65
SECTION 7.02 Merger or Consolidation of Company..........................66
SECTION 7.03 Limitation on Liability of the Company and Others...........66
SECTION 7.04 The Company May Own Securities..............................66
SECTION 7.05 Indebtedness of and Sale of Assets by the Company...........67
ARTICLE VIII THE SERVICER...................................................67
SECTION 8.01 Representations of CITSF....................................67
SECTION 8.02 Liability of Servicer, Indemnities..........................68
SECTION 8.03 Merger or Consolidation of Servicer.........................70
SECTION 8.04 Limitation on Liability of Servicer and Others..............70
SECTION 8.05 Servicer Not to Resign......................................71
SECTION 8.06 Assignment of Servicing.....................................71
ARTICLE IX EVENTS OF TERMINATION..............................................71
SECTION 9.01 Events of Termination.......................................71
SECTION 9.02 Indenture Trustee to Act; Appointment of Successor..........73
SECTION 9.03 Notification to Securityholders.............................74
SECTION 9.04 Rights to Direct Trustees and Waiver
of Events of Termination...............................75
-ii-
<PAGE>
SECTION 9.05 Effect of Transfer..........................................75
ARTICLE X [RESERVED] .........................................................76
ARTICLE XI OPTIONAL PURCHASE AND AUCTION SALE.................................76
SECTION 11.01 Optional Purchase of All Contracts.........................76
SECTION 11.02 Mandatory Sale of All Contracts............................77
SECTION 11.03 Contract Repurchase Procedures.............................79
ARTICLE XII MISCELLANEOUS PROVISIONS..........................................79
SECTION 12.01 Amendment..................................................79
SECTION 12.02 Protection of Title to Trust...............................81
SECTION 12.03 Limitation on Rights of Securityholders....................83
SECTION 12.04 Governing Law..............................................84
SECTION 12.05 Notices 84
SECTION 12.06 Severability of Provisions.................................85
SECTION 12.07 Submission to Jurisdiction; Venue..........................85
SECTION 12.08 Counterparts...............................................86
SECTION 12.09 Merger and Integration.....................................86
SECTION 12.10 Headings...................................................86
SECTION 12.11 Third Party Beneficiary....................................86
SECTION 12.12 Removal of Insurer.........................................86
EXHIBITS
Exhibit A List of Contracts
Schedule 1 List of Company Contracts
Schedule 2 List of Selling Trust Contracts
Exhibit B Form of Issuer's Acknowledgment and Certification
Exhibit C Form of Servicer's Certificate
Exhibit D Form of Monthly Report
Exhibit E Termination - Auction Procedures
Exhibit F Note Insurance Policy
Exhibit G Certificate Insurance Policy
-iii-
<PAGE>
This Sale and Servicing Agreement, dated as of February 1, 1999, is made
among The CIT Group Securitization Corporation II, as seller (together with its
permitted successors and assigns, the "Company" or the "Seller"), CIT Marine
Trust 1996-A (the "Selling Trust"), a Delaware business trust, The CIT
Group/Sales Financing, Inc., a corporation organized and existing under the laws
of the State of Delaware, as servicer (in its individual capacity, "CITSF," or,
together with its permitted successors and assigns, the "Servicer"), and CIT
Marine Trust 1999-A (the "Issuer" and the "Trust"), for which Chase Manhattan
Bank Delaware, a Delaware banking corporation, acts not in its individual
capacity but solely as Owner Trustee (together with permitted successors and
assigns, the "Owner Trustee").
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, the parties hereto agree as provided herein:
ARTICLE I
DEFINITIONS
SECTION 1.01 General. For the purpose of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires, the terms
defined in this Article include the plural as well as the singular, the words
"herein," "hereof" and "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular Article, Section or other
subdivision, and Section references refer to Sections of this Agreement.
SECTION 1.02 Specific Terms.
"Actual Knowledge" means, with respect to the Owner Trustee or the
Indenture Trustee, any officer within the Corporate Trust Administration office
of such Trustee responsible for administering the Trust or the Indenture, as the
case may be, who has actual knowledge of an action taken or an action not taken
with regard to this Agreement or any other Basic Document. Actions taken or
actions not taken of which such Trustee should have had knowledge, and
constructive knowledge, do not meet the definition of Actual Knowledge
hereunder.
"Additional Certificate Percentage" means, for any Distribution Date, (a)
on and prior to the repayment in full of the Notes, 0%; and (b) after the
repayment in full of the Notes, 100%.
"Additional Enhancement Sub-Account" means the deposit account established
and maintained pursuant to Section 5.01(a)(iv) hereof and which is a part of the
Reserve Account.
"Additional Note Percentage" means, for any Distribution Date, (a) on and
prior to the repayment in full of the Notes, 100%; and (b) after the repayment
in full of the Notes, 0%.
"Additional Principal Distribution Amount" means, for any Distribution
Date, the excess, if any, of (a) the Targeted Overcollateralization Amount for
such Distribution Date over (b) the Current Overcollateralization Amount for
such Distribution Date.
<PAGE>
"Additional Required Reserve Amount" means, for any Distribution Date, an
amount equal to the sum of (i) 25% of the Stated Principal Balance of the
Contracts that are past due more than 180 days (as of the last day of the
related Due Period), (ii) 50% of the Stated Principal Balance of the Contracts
that are secured by Financed Boats that remain in repossession inventory as of
the last day of the related Due Period and (iii) if the Net Yield is less than
1.00% and for each subsequent Distribution Date until the Net Yield has been
equal to or greater than 1.00% for three consecutive Distribution Dates, the
greater of (a) 4.45% of the Pool Balance as of the first day of the related Due
Period and (b) 1.75% of the Cut-off Date Principal Balance.
"Advisor" has the meaning set forth in Section 11.02 hereof.
"Affiliate" of any specified Person means any other Person controlling or
controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
"Agency Office" means the office of the Trust maintained pursuant to
Section 3.2 of the Indenture.
"AO Interest" means the Certificates which shall be held by The CIT GP
Corporation III, as described in Section 2.7 of the Trust Agreement.
"Article 8" means Article 8 (1994 Version) (and corresponding amendments
to Article 9) of the Relevant UCC.
"Assignment" includes, without limitation, an assignment of a Preferred
Mortgage in compliance with the requirements of the Ship Mortgage Statutes.
"Auction" has the meaning set forth in Section 11.02.
"Auction Date" has the meaning set forth in Section 11.02.
"Auction Procedures" has the meaning set forth in Section 11.02.
"Auction Property" has the meaning set forth in Section 11.02.
"Authorized Officer" means with respect to the Trust, any officer of the
Owner Trustee who is authorized to act for the Owner Trustee in matters relating
to the Trust and who is identified on the list of Authorized Officers delivered
by the Owner Trustee to the Indenture Trustee on the Closing Date (as such list
may be modified or supplemented from time to time thereafter).
"Available Amount" means, for any Distribution Date, an amount equal to
the excess of (A) the sum of (i) all amounts on deposit in the Collection
Account attributable to collections or deposits made in respect of the Contracts
(including any Late Fees) in the related Due Period (but
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excluding any payments made under the Policies), (ii) Insurer Optional Deposits
in the related Due Period, (iii) the Purchase Price for any Repurchased
Contracts and any Monthly Advances made by the Servicer, if such Purchase Price
or Monthly Advance is paid on the Deposit Date immediately preceding such
Distribution Date and (iv) all amounts deposited in the Collection Account
pursuant to Section 5.06(h), over (B) the sum of the following amounts (to the
extent that the Servicer has not already withheld such amounts from collections
on the Contracts): (i) any repossession profits on Liquidated Contracts, any
Liquidation Expenses incurred and taxes and insurance advanced by the Servicer
in respect of Financed Boats that are reimbursable to the Servicer hereunder,
(ii) any amounts incorrectly deposited in the Collection Account, (iii) net
investment earnings on the funds in the Collection Account due to the Servicer
hereunder and (iv) any other amounts permitted to be withdrawn from the
Collection Account by the Servicer (or to be retained by the Servicer from
collections on the Contracts) hereunder.
"Available Reserve Amount" means, as of any Distribution Date, the lesser
of (i) the Specified Reserve Amount for such Distribution Date and (ii) the
amount on deposit in the Reserve Account (excluding the Additional Enhancement
Sub-Account), exclusive of Investment Earnings on the Loan Sub-Account, and
before giving effect to any deposit to be made to the Reserve Account on such
Distribution Date.
"Basic Documents" means the Certificate of Trust, the Trust Agreement, the
Sale and Servicing Agreement, the Indenture, the Policies, the Insurance
Agreement, the Indemnification Agreement, the Premium Side Letter Agreement, the
Loan Agreement and the Purchase Agreement.
"Benefit Plan" means a benefit plan as described in Section 9.11 of the
Trust Agreement.
"Boat" means new or used boats, boat motors and boat trailers.
"Book-Entry Notes" means a beneficial interest in the Notes, ownership and
transfers of which shall be made through book entries by a Depository as
described in Section 2.10 of the Indenture.
"Business Day" means any day other than a Saturday, Sunday or any day on
which the Insurer or banking institutions or trust companies in the States of
New York, Delaware, Illinois or Oklahoma are authorized or required by law,
regulation or executive order to be closed.
"Business Trust Statute" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code ss. 3801 et seq., as the same may be amended from time to
time.
"Buyer" has the meaning set forth in Section 11.03 hereof.
"Certificate" means any one of the 6.20% Asset Backed Certificates
executed by the Owner Trustee and authenticated by the Owner Trustee in
substantially the form set forth in Exhibit A to the Trust Agreement.
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"Certificate Additional Principal Distribution Amount" means, for any
Distribution Date, the Additional Certificate Percentage of the Additional
Principal Distribution Amount.
"Certificate Balance" initially means, as of the Closing Date, $11,028,156
and, on any Distribution Date thereafter, the initial Certificate Balance
reduced by all distributions in respect of principal actually made to the
Certificateholders.
"Certificate Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.1 of the Trust Agreement.
"Certificate Final Scheduled Distribution Date" means the November 2019
Distribution Date.
"Certificate Primary Principal Distribution Amount" means, for any
Distribution Date, the Primary Certificate Percentage of the Primary Principal
Distribution Amount.
"Certificated Securities" means a "certificated security" within the
meaning of the Relevant UCC.
"Certificateholder" means the holder of record of a Certificate (including
the holder of the AO Interest) pursuant to the terms of the Trust Agreement.
"Certificate Insurance Policy" means the financial guaranty insurance
policy issued by the Insurer with respect to the Certificates, including any
endorsements thereto, in the form of Exhibit G hereto.
"Certificate Interest Carryover Shortfall" means, for any Distribution
Date, the excess of the Certificate Interest Distribution Amount for the
preceding Distribution Date over the amount in respect of interest at the
Pass-Through Rate that was actually deposited into the Certificate Distribution
Account on such preceding Distribution Date, plus interest on such excess, to
the extent permitted by law, at the Pass-Through Rate from and including such
preceding Distribution Date to but excluding the current Distribution Date.
"Certificate Interest Distribution Amount" means, for any Distribution
Date, the sum of the Certificate Monthly Interest Amount for such Distribution
Date and the Certificate Interest Carryover Shortfall for such Distribution
Date.
"Certificate Monthly Interest Amount" means, for any Distribution Date,
one month's interest (or, in the case of the first Distribution Date, interest
accrued from and including the Closing Date to but excluding such Distribution
Date) at the Pass-Through Rate on the Certificate Balance on such Distribution
Date (or, in the case of the first Distribution Date, the Original Certificate
Balance), before giving effect to all distributions of principal to the
Certificateholders on such Distribution Date.
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"Certificate of Trust" means the certificate of trust of the Issuer
substantially in the form of Exhibit B to the Trust Agreement to be filed for
the Trust pursuant to Section 3810(a) of the Business Trust Statute.
"Certificate Pool Factor" means an eight-digit decimal which the Servicer
will compute each month indicating the remaining Certificate Balance as of the
Distribution Date, as a fraction of the initial Certificate Balance. The
Certificate Pool Factor will be 1.00000000 as of the Cut-off Date, and
thereafter will decline to reflect reductions in the outstanding principal
balance of the Certificates. A Certificateholder's portion of the aggregate
outstanding Certificate Balance is the product of (i) the original denomination
of the Certificateholder's Certificate and (ii) the Certificate Pool Factor.
"Certificate Register" means the register of Certificates specified in
Section 3.4 of the Trust Agreement.
"Certificate Registrar" means the registrar at any time of the Certificate
Register, appointed pursuant to Section 3.4 of the Trust Agreement.
"CIT" means The CIT Group, Inc.
"CITCF-NY" means The CIT Group/Consumer Finance, Inc. (NY).
"CITSF" means The CIT Group/Sales Financing, Inc., and its successors in
interest as permitted under the related agreement.
"Class A-1 Interest Rate" means 5.45% per annum.
"Class A-2 Interest Rate" means 5.80% per annum.
"Class A-3 Interest Rate" means 5.85% per annum.
"Class A-4 Interest Rate" means 6.25% per annum.
"Class A-1 Note" means any one of the Class A-1 5.45% Asset-Backed Notes
in the aggregate principal amount of $325,000,000 issued pursuant to the
Indenture and substantially in the form of Exhibit A-1 to the Indenture.
"Class A-2 Note" means any one of the Class A-2 5.80% Asset-Backed Notes
in the aggregate principal amount of $179,000,000 issued pursuant to the
Indenture and substantially in the form of Exhibit A-2 to the Indenture.
"Class A-3 Note" means any one of the Class A-3 5.85% Asset-Backed Notes
in the aggregate principal amount of $117,000,000 issued pursuant to the
Indenture and substantially in the form of Exhibit A-3 to the Indenture.
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"Class A-4 Note" means any one of the Class A-4 6.25% Asset-Backed
Notes in the aggregate principal amount of $103,134,000 issued pursuant to the
Indenture and substantially in the form of Exhibit A-4 to the Indenture.
"Class A-1 Note Final Scheduled Distribution Date" means the September
2006 Distribution Date.
"Class A-2 Note Final Scheduled Distribution Date" means the April 2010
Distribution Date.
"Class A-3 Note Final Scheduled Distribution Date" means the May 2013
Distribution Date.
"Class A-4 Note Final Scheduled Distribution Date" means the November 2019
Distribution Date.
"Closing Date" means February 23, 1999.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the Treasury Regulations promulgated thereunder.
"Collateral" means the collateral specified in the Granting Clause of the
Indenture.
"Collateralization Shortfall" means, on any Distribution Date, the excess,
if any, of the outstanding principal amount of the Notes and the Certificate
Balance (after giving effect to all distributions pursuant to Section 5.05(b) on
such Distribution Date) over the Pool Balance as of the last day of the related
Due Period.
"Collection Account" means the account designated as such established and
maintained pursuant to Section 5.01(a) hereof.
"Commission" means the Securities and Exchange Commission.
"Company" means The CIT Group Securitization Corporation II, and its
successors in interest as permitted under the related agreement.
"Company Contract" means a Contract described in the List of Company
Contracts.
"Computer Tape" means the computer tape generated by the Servicer which
provides information relating to the Contracts, and includes the master file and
the history file.
"Contract" means one or more of the marine installment sale contracts and
direct loans described in the List of Contracts.
"Contract File" means, as to each Contract (i) an original copy of the
Contract; (ii) either (a) the original title document for the related Financed
Boat or a duplicate certified by the appropriate governmental authority which
issued the original thereof or the application for such
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title document, or (b) if the laws of the jurisdiction in which the related
Financed Boat is located do not provide for the issuance to the lender of title
documents for Boats, other evidence of ownership of the related Financed Boat
which is customarily relied upon in such jurisdiction as evidence of title to a
Boat; (iii) evidence of one or more of the following types of perfection of the
security interest in the related Financed Boat granted by such Contract, as
appropriate: (a) notation of such security interest on the title document, (b) a
financing statement meeting the requirements of the UCC, with evidence of
recording indicated thereon, (c) a Preferred Mortgage, or (d) such other
evidence of perfection of a security interest in a Boat as is customarily relied
upon in the jurisdiction in which the related Financed Boat is located; (iv) an
assignment of the Contract evidencing the chain of title of the Contract from
the Dealer which is the originator thereof to CITSF or CITCF-NY; (v) any
extension, modification or waiver agreement(s); and (vi) the Assignment from the
Dealer which is the originator thereof to CITSF or CITCF-NY.
"Contract Rate" means, with respect to any particular Contract, the rate
of interest specified in that Contract.
"Control" means
(a) with respect to a Security Entitlement if the Indenture Trustee
(i) is identified on the records of the Securities Intermediary for
such Security Entitlement as the person having such a Security Entitlement
against the Securities Intermediary, or
(ii) has obtained the agreement, in writing, of the Securities
Intermediary for such Security Entitlement that it will comply with orders
of the Indenture Trustee regarding the transfer or redemption of the
Security Entitlement without further consent of any other person, and
(b) with respect to a United States Security Entitlement if:
(i) (A) the Indenture Trustee is a participant in the book entry
system maintained by the Federal Reserve Bank that is acting as fiscal
agent for the issuer of such United Sates Security Entitlement; and
(B) such Federal Reserve Bank has indicated by book entry that such
United States Security Entitlement has been credited to the Indenture
Trustee's securities account in such book entry system; or
(ii) (A) the Indenture Trustee
(1) is identified in the records of a Securities Intermediary
for such United States Security Entitlement as the Person having
such Security Entitlement against the Securities Intermediary; or
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(2) has obtained the agreement, in writing, of the Securities
Intermediary for such Security Entitlement that it will comply with
orders of the Indenture Trustee regarding the transfer or redemption
of the Security Entitlement without further consent of any other
person; and
(B) the Securities Intermediary for such United States Security
Entitlement is a participant in the book entry system maintained by the
Federal Reserve Bank that is acting as fiscal agent for the issuer of such
United States Security Entitlement; and
(C) such Federal Reserve Bank has indicated by book entry that such
United States Security Entitlement has been credited to such Securities
Intermediary's securities account in such book entry system.
"Controlling Party" means (i) as long as the Policies are in effect and no
Insurer Default has occurred and is continuing, the Insurer, (ii) if (a) an
Insurer Default has occurred and is continuing or either Policy is otherwise no
longer in effect and (b) the Notes have not been paid in full, the Indenture
Trustee for the benefit of the Noteholders and (iii) if (a) an Insurer Default
has occurred and is continuing or either Policy is otherwise no longer in effect
and (b) the Notes have been paid in full, the Owner Trustee for the benefit of
the Certificateholders.
"Corporate Trust Office" means with respect to the Indenture Trustee or
the Owner Trustee, the principal office at which at any particular time the
corporate trust business of the Indenture Trustee or the Owner Trustee,
respectively, shall be administered, which offices at the Closing Date are
located, in the case of the Indenture Trustee, at 311 West Monroe Street,
Chicago, Illinois 60606, Attn.: Indenture Trust Administration, and in the case
of the Owner Trustee, at 1201 Market Street, Wilmington, Delaware 19801,
Attention: Corporate Trust Administration.
"Crossover Date" means the Distribution Date on which the Notes have been
paid in full.
"Current Overcollateralization Amount" means, for any Distribution Date,
the excess, if any, of (a) the Pool Balance as of the last day of the related
Due Period over (b) the outstanding principal amount of the Notes and
Certificates on such Distribution Date minus the portion of the Primary
Principal Distribution Amount to be distributed to Securityholders on such
Distribution Date.
"Cut-off Date" means February 1, 1999.
"Cut-off Date Principal Balance" means the aggregate unpaid principal
balance of all of the Contracts as of the Cut-off Date.
"Dealer" means the Boat dealer or other entity who sold a Financed Boat or
third party originator who originated and assigned the Contract relating to such
Financed Boat to CITSF or CITCF-NY under a Dealer Agreement.
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"Dealer Agreement" means the agreement, if any, under which Contracts were
originated by a Dealer and sold to CITSF or CITCF-NY, and all documents and
instruments relating thereto.
"Default" means any occurrence that is, or with notice or the lapse of
time or both would become an Event of Default.
"Deficiency Amount" means, on any Distribution Date, the excess, if any,
of (a) the sum of the Note Interest Distribution Amount, the Certificate
Interest Distribution Amount, the Collateralization Shortfall, if any, the
principal balance of each class of Notes on the applicable Note Final Scheduled
Distribution Date and the Certificate Balance on the Certificate Final Scheduled
Distribution Date over (b) the sum of the Available Amount and the Available
Reserve Amount minus the amounts used in the payment of clauses (i) and (ii) of
Section 5.05(b).
"Deficiency Claim Date" means, with respect to each Distribution Date, the
third Business Day preceding such Distribution Date.
"Definitive Notes" means the Notes specified in Section 2.12 of the
Indenture.
"Delivery" when used with respect to Reserve Account Property means:
(a) with respect to any Physical Property (that is not either a United
States Security Entitlement or a Security Entitlement), physical delivery
thereof to the Indenture Trustee or its nominee or custodian endorsed to, or
registered in the name of, the Indenture Trustee or its nominee or custodian or
endorsed in blank by an effective endorsement; and
(b) with respect to any Uncertificated Security (A) the issuer registers
the Indenture Trustee as the registered owner thereof or (B) the Indenture
Trustee otherwise satisfies the requirements of Section 8-106(c) of Article 8.
"Deposit Date" means, with respect to any Distribution Date, the Business
Day immediately preceding such related Distribution Date.
"Depository" means the initial Depository, The Depository Trust Company,
the nominee of which is CEDE & CO., and any permitted successor depository. The
Depository shall at all times be a "clearing corporation" defined in Section
8-102(3) of the Uniform Commercial Code of the State of New York.
"Depository Agreement" means an agreement among the Trust, the Servicer,
the Indenture Trustee and the Depository, relating to the Notes, as the same may
be amended and supplemented from time to time.
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"Depository Participant" means a broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Designated Accounts" means the Collection Account, the Note Distribution
Account, the Certificate Distribution Account and the Reserve Account.
"Determination Date" means the third Business Day prior to each
Distribution Date.
"Distribution Date" means the date on which payments of interest and
principal on the Securities will be made. Such Distribution Dates will be on the
fifteenth day of each month or, if any such day is not a Business Day, on the
next succeeding Business Day, commencing March 15, 1999.
"Draw Amount" has the meaning set forth in Section 5.06(b) hereof.
"Due Date" means, with respect to each payment under each Contract, the
day set forth in such Contract as the date on which such payment under such
Contract is scheduled to be made.
"Due Period" means, with respect to any Distribution Date, the period
during which principal, interest and other amounts will be collected on the
Contracts for application towards the payment of principal and interest to the
Securityholders, the payment of fees on such Distribution Date and other
purposes specified herein. The "Due Period" will be the calendar month
immediately preceding the Distribution Date. The first Due Period will commence
on and include the Cut-off Date and will end on and include February 28, 1999.
"Electronic Ledger" means the electronic master record of Contracts of the
Servicer.
"Eligible Account" means any account which is (i) an account maintained
with an Eligible Institution; (ii) an account or accounts the deposits in which
are fully insured by either the Bank Insurance Fund or the Savings Association
Insurance Fund of the FDIC; (iii) a "segregated trust account" maintained with
the corporate trust department of a federal or state chartered depository
institution or trust company with trust powers and acting in its fiduciary
capacity for the benefit of a Trustee, which depository institution or trust
company has capital and surplus (or, if such depository institution or trust
company is a subsidiary of a bank holding company system, the capital and
surplus of the bank holding company) of not less than $50,000,000 and the
securities of such depository institution (or, if such depository institution is
a subsidiary of a bank holding company system and such depository institution's
securities are not rated, the securities of the bank holding company) have a
credit rating from each Rating Agency in one of its generic credit rating
categories which signifies investment grade; or (iv) an account that will not
cause any Rating Agency to downgrade or withdraw its then-current rating
assigned to the Securities, as confirmed in writing by each Rating Agency.
"Eligible Institution" means any depository institution organized under
the laws of the United States or any state, the deposits of which are insured to
the full extent permitted by law by the Bank Insurance Fund (currently
administered by the Federal Deposit Insurance Corporation)
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whose short-term deposits have been rated in one of the two highest rating
categories or such other rating category as will not adversely affect the
ratings assigned to the Certificates and/or the Notes.
"Eligible Investments" means, at any time, any one or more of the
obligations and securities described in Section 5.01(b) hereof.
"Eligible Servicer" means CITSF, the Trustees or any other Person
qualified to act as Servicer of the Contracts under applicable federal and state
laws and regulations, which Person either (i) services not less than
$100,000,000 in outstanding principal amount of marine installment sale
contracts or direct loan agreements or (ii) has been approved by the Insurer so
long as the Insurer is the Controlling Party.
"ERISA" means The Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" means an event as described in Section 5.1 of the
Indenture.
"Event of Termination" means an event specified in Section 9.01 hereof.
"Excess Collections" means, for any Distribution Date, the Available
Amount remaining after payment of clauses (i) through (x) of Section 5.05(b) on
such Distribution Date.
"Excess Sub-Account" means the deposit account established and maintained
pursuant to Section 5.01(a)(iv) hereof and which is a part of the Reserve
Account.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Assets" means any amounts on deposit in the Certificate
Distribution Account and any Investment Earnings thereon.
"Farm Credit Entitlement" means a "Security Entitlement" as defined in 12
C.F.R. ss. 615.5450.
"FHL Bank Entitlement" means a "Security Entitlement" as defined in 12
C.F.R. ss. 912.1.
"Final Draw Amount" has the meaning set forth in Section 5.06(c)(ii)
hereof.
"Final Note Draw Amount" has the meaning set forth in Section 5.06(c)(i)
hereof.
"Fiscal Agent" has the meaning specified in each Policy.
"Financed Boat" with respect to a Contract means the new or used Boat,
together with all accessions thereto, securing an Obligor's indebtedness under
such Contract.
"Force-Placed Insurance" means insurance described in Section 4.04(a)
hereof.
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"Force-Placed Insurance Premium" means any premium for theft and physical
damage insurance purchased by CITSF or CITCF-NY or a successor Servicer on
behalf of an Obligor who has failed to obtain required insurance coverage(s).
"Funding Corporation Entitlement" means a "Security Entitlement" as
defined in 12 C.F.R. ss. 1511.1.
"Grant" means to mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, and grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to the Indenture. A Grant of the Collateral or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of, the Collateral and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the Granting party or otherwise and generally to do
and receive anything that the Granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"Holder" means the Person in whose name a Note or Certificate is
registered on the Note Register or the Certificate Register, as applicable.
"HUD Entitlement" means a "Security Entitlement" as defined in 24 C.F.R.
ss. 81.2.
"Indemnification Agreement" means the Indemnification Agreement, dated as
of the Closing Date, among the Insurer, CIT, the Seller, CITSF and the
Underwriters.
"Indenture" means the indenture, dated as of the date hereof, between the
Issuer and the Indenture Trustee, as amended and supplemented from time to time.
"Indenture Trustee" means Harris Trust and Savings Bank, not in its
individual capacity but solely as trustee under the Indenture, or any successor
trustee under the Indenture.
"Independent" when used with respect to any specified Person, means that
the Person (i) is in fact independent of the Issuer, any other obligor upon the
Notes, the Seller and any Affiliates of any of the foregoing Persons, (ii) does
not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Seller or any Affiliate of
any of the foregoing Persons and (iii) is not connected with the Issuer, any
such other obligor, the Seller or any Affiliate of any of the foregoing Persons
as an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1 of the
Indenture, made by an Independent appraiser or other expert appointed by an
Issuer Order and approved by the Indenture Trustee in the exercise of reasonable
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care, and such opinion or certificate shall state that the signer has read the
definition of "Independent" in the Indenture and that the signer is Independent
within the meaning thereof.
"Indirect Participant" means a broker, dealer, bank or other financial
institution for whom a Depository Participant may, from time to time, effect
book-entry transfers through a Depository.
"Initial Pool Balance" means the Pool Balance as of the Cut-off Date.
"Insolvency Proceeding" has the meaning set forth in Section 5.11(a)
hereof.
"Initial Reserve Amount" means $27,568,581.
"Insurance Advances" has the meaning set forth in Section 4.04(d) hereof.
"Insurance Agreement" means the Insurance and Reimbursement Agreement,
dated as of the Closing Date, among the Insurer, CIT, the Seller and the
Servicer.
"Insurance Agreement Trigger Event" shall have the meaning set forth in
the Insurance Agreement.
"Insurance Documents" means the Insurance Agreement, the Policies, the
Indemnification Agreement and the Premium Side Letter Agreement.
"Insurance Policy" means, with respect to each Contract, the policy of
physical damage and all other insurance covering the Financed Boats or the
Obligors, as provided in Section 4.04(a) hereof, and which, as provided therein,
may be a blanket policy maintained by the Servicer in accordance with the terms
and conditions of such Section 4.04(b) hereof.
"Insurance Premium" shall have the meaning set forth in the Insurance
Agreement.
"Insurance Proceeds" means proceeds paid by any insurer pursuant to any
Insurance Policy.
"Insured Payment" means the sum of (i) as of any Distribution Date, any
Deficiency Amount and (ii) any Preference Amount.
"Insurer" means MBIA Insurance Corporation and its successors.
"Insurer Default" means any one of the following events shall have
occurred and be continuing:
(a) the Insurer shall have failed to make a required payment when due
under either Policy in accordance with its terms;
(b) the Insurer shall have (i) filed a petition or commenced any case or
proceeding under any provision or chapter of the United States Bankruptcy Code,
the
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New York State Insurance Law or any other similar federal or state law relating
to insolvency, bankruptcy, rehabilitation, liquidation, or reorganization, (ii)
made a general assignment for the benefit of its creditors or (iii) had an order
for relief entered against it under the United States Bankruptcy Code, the New
York State Insurance Law or any other similar federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation, or reorganization that is
final and nonappealable; or
(c) a court of competent jurisdiction, the New York Department of
Insurance or any other competent regulatory authority shall have entered a final
and nonappealable order, judgment or decree (i) appointing a custodian, trustee,
agent or receiver for the Insurer or for all or any material portion of its
property or (ii) authorizing the taking of possession by a custodian, trustee,
agent or receiver of the Insurer or the taking of possession of all or any
material portion of its property.
"Insurer Optional Deposit" means, with respect to any Distribution Date,
an amount delivered by or on behalf of the Insurer, at its sole option, to the
Indenture Trustee or the Owner Trustee, as the case may be, for deposit into the
Collection Account, Note Distribution Account or the Certificate Distribution
Account, as applicable, for any of the following purposes: (i) to provide funds
in respect of the payment of fees or expenses of any provider of services to the
Trust with respect to such Distribution Date; (ii) to provide funds in respect
of the payment of principal or interest on the Securities to the extent the
amounts to be distributed to the Securityholders exceed the Available Amount or
to fund a Collateralization Shortfall; or (iii) to include such amount as part
of the Note Primary Principal Distribution Amount, the Note Additional Principal
Distribution Amount, the Certificate Primary Principal Distribution Amount, the
Certificate Additional Principal Distribution Amount, the Note Interest
Distribution Amount or the Certificate Interest Distribution Amount, as the case
may be, for such Distribution Date to the extent that without such amount a draw
would be required to be made on the Note Insurance Policy or the Certificate
Insurance Policy, as the case may be.
"Interest Accrual Period" means, with respect to a Distribution Date, the
period from and including the preceding Distribution Date (or the Closing Date
in the case of the first Distribution Date), to but excluding such Distribution
Date.
"Interest Rates" means collectively the Class A-1 Interest Rate, the Class
A-2 Interest Rate, the Class A-3 Interest Rate and the Class A-4 Interest Rate.
"Investment Earnings" means investment earnings (including, without
limitation, interest and dividends) on amounts on deposit in a Designated
Account, net of losses and investment expenses, if any.
"Issuer" means the Trust until a successor replaces it and, thereafter,
means the successor and, for purposes of any provision contained in the
Indenture and required by the TIA, each other obligor on the Notes.
"Issuer Order" and "Issuer Request" mean a written order or request signed
in the name of the Issuer by any one of its Authorized Officers and delivered to
the Indenture Trustee.
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"Late Fees" means any late fees, prepayment charges, extension fees or
other administrative fees or similar charges allowed by applicable law with
respect to the Contracts.
"Lender" means the financial institution which is a party to the Loan
Agreement and which, pursuant to the Loan Agreement, will make a loan to the
Trust on the Closing Date (the proceeds of which will be deposited in the
Reserve Account on the Closing Date) and its successors and assigns under the
Loan Agreement.
"Lender Fees" means the amount equal to the sum of (x) the product of (A)
one-twelfth of 1.00% and (B) the average unpaid principal amount of the Loan
during the Interest Accrual Period and (y) if the average unpaid principal
amount of the Loan during such Interest Accrual Period is greater than the
average amount on deposit in the Loan Sub-Account during such Interest Accrual
Period, the product of (A) the difference between the average unpaid principal
amount of the Loan during such Interest Accrual Period and the average amount on
deposit in the Loan Sub-Account (including the principal amount of all Eligible
Investments held, but excluding Investment Earnings thereon) during such
Interest Accrual Period and (B) one-twelfth of LIBOR + 2.00%.
"LIBOR" has the meaning set forth in the Loan Agreement.
"Lien" means any security interest, charge, pledge, equity or encumbrance
of any kind other than tax liens, mechanics' liens and any liens that attach by
operation of law.
"Liquidated Contract" means any defaulted Contract as to which the
Servicer (a) has recovered all amounts that it expects to recover by sale or
disposition of the related Financed Boat or (b) deems any further collections,
other than recovery of deficiency judgments, to be unlikely in accordance with
its customary practices and procedures, but in any event a Contract shall be
deemed to become a Liquidated Contract no later than the date on which the
Servicer has received proceeds from the sale or disposition of such Financed
Boat, and such Contract shall have a Stated Principal Balance of zero.
"Liquidation Distribution Date" has the meaning set forth in Section 11.02
hereof.
"Liquidation Expenses" means all reasonable fees of third parties and
other reasonable expenses incurred by the Servicer in the course of converting
any defaulted Contract or Financed Boat into cash proceeds (including, without
limitation, expenses relating to recovery, repossession and sale of such
Financed Boat).
"List of Company Contracts" means the list attached hereto as Schedule 1
to Exhibit A identifying certain Contracts constituting part of the corpus of
the Trust.
"List of Selling Trust Contracts" means the list attached hereto as
Schedule 2 to Exhibit A identifying certain Contracts constituting part of the
corpus of the Trust.
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"List of Contracts" means the list attached hereto as Exhibit A
(consisting of the List of Company Contracts and the List of Selling Trust
Contracts) identifying each Contract constituting part of the corpus of the
Trust.
"Loan" means the loan made to the Trust pursuant to the Loan Agreement.
"Loan Agreement" means the Loan Agreement dated as of the date hereof
among the Lender, the Trust, the Servicer and the Indenture Trustee.
"Loan Sub-Account" means the deposit account established and maintained
pursuant to Section 5.01(a)(iv) hereof and which is a part of the Reserve
Account.
"Military Reservist Relief Act" means the California Military Reservist
Relief Act of 1991.
"Minimum Reserve Amount" means $7,351,622; provided that such minimum
amount may never be greater than the outstanding principal amount of the
Securities.
"Monthly Advance" means, with respect to any Distribution Date, any
payment made by the Servicer pursuant to Section 5.03 hereof.
"Monthly Report" has the meaning set forth in Section 4.09 hereof. The
form of Monthly Report is attached as Exhibit D hereto.
"Moody's" means Moody's Investors Service and its successors in interest.
"Net Liquidation Losses" means the amount, if any, by which (a) the
principal balance of all Contracts which became Liquidated Contracts since the
Cut-off Date exceeds (b) the Net Liquidation Proceeds received since the Cut-off
Date in respect of all Liquidated Contracts.
"Net Liquidation Proceeds" means the monies collected (from whatever
source, including, without limitation, from settlement proceeds) during a Due
Period on a Liquidated Contract (except such amounts as are allocable to Post
Cut-off Date Insurance Add-Ons in accordance with Section 4.04 hereof), net of
the sum of (a) Liquidation Expenses, plus (b) any payments required by law to be
remitted to any creditor of, or to the Obligor.
"Net Yield" means on any day, the percentage equivalent of (a) four
multiplied by (b) a fraction, the numerator of which is equal to Excess
Collections during the three immediately preceding Due Periods and the
denominator of which is equal to the average of the Pool Balances as of the last
day of each of such three immediately preceding Due Periods.
"Nonrecoverable Advance" means any advance made or proposed to be made
pursuant to Section 5.03 hereof in respect of a Contract, which the Servicer
believes, in its good faith judgment, is not, or if made would not be,
ultimately recoverable from subsequent collections in respect of interest on
such Contract made by or on behalf of the Obligor thereunder, or from Net
Liquidation Proceeds or Insurance Proceeds in respect of such Contract. In
determining whether an advance is or will be nonrecoverable, the Servicer need
not take into account that it might
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receive any amounts in a deficiency judgment. The determination by the Servicer
that any advance is, or if made would constitute, a Nonrecoverable Advance,
shall be evidenced by an officer's certificate of the Servicer delivered to the
Trustees and stating the reasons for such determination.
"Note Additional Principal Distribution Amount" means, for any
Distribution Date, the Additional Note Percentage of the Additional Principal
Distribution Amount.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.01(a)(ii) hereof.
"Note Final Scheduled Distribution Date" means the Class A-1 Note Final
Scheduled Distribution Date, the Class A-2 Note Final Scheduled Distribution
Date, the Class A-3 Note Final Scheduled Distribution Date or the Class A-4 Note
Final Scheduled Distribution Date, as applicable.
"Note Insurance Policy" means the financial guaranty insurance policy
issued by the Insurer with respect to the Notes, including any endorsements
thereto, in the form of Exhibit F hereto.
"Note Interest Carryover Shortfall" means, for any Distribution Date for
each class of Notes (other than the first Distribution Date), the excess of (i)
the Note Interest Distribution Amount for the preceding Distribution Date for
such class of Notes, over (ii) the amount in respect of interest that was
actually deposited into the Note Distribution Account in respect of such class
of Notes on such preceding Distribution Date, plus interest on the amount of
interest due but not paid to the Noteholders of such class on the preceding
Distribution Date, to the extent permitted by law, at the applicable Interest
Rate borne by such class of Notes.
"Note Interest Distribution Amount" means, for any Distribution Date for
any class of Notes, the sum of (x) the Note Monthly Interest Amount for such
Distribution Date for such class of Notes and (y) the Note Interest Carryover
Shortfall for such Distribution Date for such class of Notes.
"Note Monthly Interest Amount" means, for any Distribution Date for any
class of Notes, interest accrued during the related Interest Accrual Period at
the applicable Interest Rate on the outstanding principal balance of such class
of Notes on such Distribution Date (or, in the case of the first Distribution
Date, on the Closing Date) before giving effect to all distributions of
principal to the Noteholders on such Distribution Date, calculated on the basis
of a 360-day year consisting of twelve 30-day months.
"Note Owners" with respect to a Book-Entry Note, means the Person who is
the owner of beneficial interests in such Book-Entry Note, as reflected on the
books of the Depository, or on the books of a Person maintaining an account with
such Depository (directly as a Depository Participant or as an Indirect
Participant, in each case in accordance with the rules of such Depository).
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"Note Pool Factor" means, with respect to a class of Notes, an eight-digit
decimal which the Servicer will compute each month indicating the remaining
outstanding principal balance of each class of the Notes as of the Distribution
Date, as a fraction of the initial outstanding principal balance of such class
of the Notes. The Note Pool Factor will be 1.00000000 as of the Cut-off Date,
and thereafter will decline to reflect reductions in the outstanding principal
balance of the applicable class of the Notes. A Noteholder's portion of the
aggregate outstanding principal balance of the related class of Notes is the
product of (i) the original denomination of the Noteholder's Note and (ii) the
applicable Note Pool Factor.
"Note Primary Principal Distribution Amount" means, for any Distribution
Date, the Primary Note Percentage of the Primary Principal Distribution Amount.
"Note Register" means the register of the Notes as specified in Section
2.4 of the Indenture.
"Note Registrar" means the registrar at any time of the Note Register,
appointed pursuant to Section 2.4 of the Indenture.
"Noteholder" means the holder of record of a Note pursuant to the
Indenture.
"Notes" means the Class A-1, Class A-2, Class A-3, and Class A-4 Notes.
"Notice" means the telephonic or telegraphic notice, promptly each
confirmed in writing by telecopy substantially in the form of Exhibit A attached
to each of the Policies, the original of which is subsequently delivered by
registered or certified mail, from the Indenture Trustee or the Owner Trustee
specifying the Insured Payment that shall be due and owing on the applicable
Distribution Date.
"Obligor" means each Person who is indebted under a Contract.
"Officer's Certificate" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1 of the Indenture,
and delivered to the Indenture Trustee. Unless otherwise specified, any
reference in the Indenture to an officer's certificate shall be to an Officer's
Certificate of any Authorized Officer of the Issuer.
"Opinion of Counsel" means a written opinion of counsel who may, except as
otherwise expressly provided herein, in the Trust Agreement or in the Indenture,
be counsel (internal or external) for the Seller or Servicer. In addition, for
the purposes of the Indenture: (i) the opinion shall be addressed to the
Indenture Trustee as Indenture Trustee and (ii) the opinion shall comply with
any applicable requirements of Section 11.1 of the Indenture and shall be in
form and substance satisfactory to the Indenture Trustee and the Insurer.
"Original Certificate Balance" means $11,028,156.
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"Owner Trust Estate" means all right, title and interest of the Trust in
and to the property and rights assigned to the Trust pursuant to Article II
hereof, all funds deposited from time to time in the Designated Accounts (except
the Note Distribution Account) and all other property of the Trust from time to
time, including any rights of the Owner Trustee and the Trust pursuant to the
Basic Documents.
"Owner Trustee" means Chase Manhattan Bank Delaware, a Delaware banking
corporation, or any successor trustee under the Trust Agreement.
"Pass-Through Rate" means 6.20% per annum.
"Paying Agent" with respect to the Indenture means the Indenture Trustee
or any other Person that meets the eligibility standards for the Indenture
Trustee specified in Section 6.11 of the Indenture and is authorized by the
Issuer to make the payments to and distributions from the Collection Account,
Reserve Account and the Note Distribution Account, including payment of
principal and interest on the Notes on behalf of the Issuer. "Paying Agent" with
respect to the Trust Agreement means any paying agent or co-paying agent
appointed pursuant to Section 3.9 of the Trust Agreement that meets the
eligibility requirements of Section 6.13 of the Trust Agreement.
"Payment Shortfall" means, with respect to any Contract and any
Distribution Date, the excess of (x) the product of (i) one-twelfth of the
Contract Rate of such Contract and (ii) the outstanding principal amount of such
Contract as of the last day of the second preceding Due Period (or, in the case
of the first Due Period ending after the Contract was acquired by the Trust, as
of the Cut-off Date) over (y) the amount of interest, if any, collected on such
Contract during the related Due Period.
"Person" means any legal person, including any individual, corporation,
partnership, joint venture, association, joint stock company, trust (including
any beneficiary thereof), unincorporated organization or government or any
agency or political subdivision thereof.
"Physical Property" means banker's acceptances, commercial paper,
negotiable certificates of deposits and other obligations that constitute
"instruments" within the meaning of Section 9-105(1)(i) of the Relevant UCC and
are susceptible to physical delivery and Certificated Securities.
"Policy" means each of the Note Insurance Policy and the Certificate
Insurance Policy issued by the Insurer with respect to the Securities, including
any endorsements thereto, in the form of Exhibits F and G hereto.
"Pool Balance" means the aggregate outstanding principal balance of the
Contracts; provided that a Liquidated Contract and a Repurchased Contract shall
cease to be included in the Pool Balance as of the last day of the Due Period in
which such Contract became a Liquidated Contract or a Repurchased Contract, as
the case may be.
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"Post Cut-off Date Insurance Add-Ons" means Force-Placed Insurance
Premiums added to the Contracts on or after the Cut-off Date, which amounts are
to be repaid to an account separate from the Collection Account over the
remaining life of such Contract.
"Predecessor Notes" with respect to any particular Note means every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for purposes of this definition, any Note
authenticated and delivered under Section 2.5 of the Indenture in lieu of a
mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen Note.
"Preference Amount" means any amount previously distributed to a
Securityholder that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the United States Bankruptcy
Code, as amended from time to time, in accordance with a final nonappealable
order of a court of competent jurisdiction in respect of an Insolvency
Proceeding.
"Preference Claim" has the meaning set forth in Section 5.11(b).
"Preferred Mortgage" means a "preferred mortgage" as defined in Section
31322 of the Ship Mortgage Statutes.
"Premium Side Letter Agreement" means the Premium Side Letter Agreement,
dated the Closing Date, among the Insurer, CITSF and CIT.
"Primary Certificate Percentage" means, for any Distribution Date, (i)
prior to the Stepdown Date, 1.0%; and (ii) on and after the Stepdown Date, 1.5%;
provided, however, that after the Notes have been paid in full, the Primary
Certificate Percentage shall be 100%.
"Primary Note Percentage" means, for any Distribution Date, (i) prior to
the Stepdown Date, 99.0%; and (ii) on and after the Stepdown Date, 98.5%;
provided, however, that after the Notes have been paid in full, the Primary Note
Percentage shall be 0%.
"Primary Principal Distribution Amount" means, on each Distribution Date,
the sum of the following amounts with respect to the related Due Period, in each
case calculated in accordance with the method specified in each Contract: (i)
all payments of principal (including all Principal Prepayments applied during
the related Due Period) made on each Contract during the related Due Period,
(ii) the Stated Principal Balance of each Contract which, as of the related
Deposit Date, was purchased by CITSF or the Servicer hereunder, and (iii) the
Principal Carryover Shortfall; provided, however, that payments of principal
(including Principal Prepayments) with respect to a Repurchased Contract
received after the last day of the Due Period in which the Contract became a
Repurchased Contract shall not be included in the Primary Principal Distribution
Amount.
"Principal Carryover Shortfall" means, for any Distribution Date, the
excess of (i) the Primary Principal Distribution Amount for the preceding
Distribution Date over (ii) the amount
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in respect of principal that was actually distributed to the holders of the
Securities on such Distribution Date.
"Principal Prepayment" means a payment or other recovery of principal on a
Contract (including Insurance Proceeds and Net Liquidation Proceeds applied to
principal on a Contract) which is received in advance of its Due Date and
applied upon receipt (or, in the case of a partial Principal Prepayment, upon
the next scheduled payment date on such Contract) to reduce the outstanding
principal amount of such Contract prior to the date or dates on which such
principal amount is scheduled to be paid.
"Principal Prepayment in Full" means any Principal Prepayment of the
entire principal balance of a Contract.
"Proceeding" means any suit in equity, action at law or other judicial or
administrative proceeding.
"Purchase Agreement" means the Purchase Agreement dated as of the date
hereof between the Seller and CITSF, as amended and supplemented from time to
time.
"Purchase Price" means, with respect to a Contract to be purchased
hereunder, an amount equal to the remaining principal amount outstanding on such
Contract on the date of purchase, plus 30 days' interest thereon at the Contract
Rate, plus the reimbursement then due to the Servicer for outstanding Monthly
Advances on such Contract.
"Rating Agencies" as of any date means the nationally recognized
statistical rating organizations requested by the Seller to provide ratings of
the Notes and the Certificates which are rating the Notes and Certificates on
such date.
"Rating Agency Condition" with respect to any action means, the condition
that each Rating Agency shall have notified the Seller, the Servicer, the Issuer
and the Insurer (if the Insurer is the Controlling Party) in writing that such
action shall not result in a downgrade or withdrawal of the then current rating
of the Notes or Certificates without regard to the Policies.
"Record Date" with respect to any Distribution Date means (i) with respect
to the Notes, the Business Day immediately preceding the related Distribution
Date or, in the event Definitive Notes have been issued, the last Business Day
of the month immediately preceding the month in which such Distribution Date
occurs and (ii) with respect to the Certificates, the last Business Day of the
month immediately preceding the month in which such Distribution Date occurs.
"Redemption Date" means the Distribution Date specified by the Servicer or
the Issuer pursuant to Section 10.1 of the Indenture.
"Reimbursement Obligations" means the sum of (i) any unreimbursed payments
made by the Insurer under the Policies and any Insurer Optional Deposits (to the
extent not reimbursed from other amounts available to the Insurer), (ii) any
unpaid Insurance Premiums, and (iii) all other amounts due to the Insurer under
the Insurance Agreement and the Indemnification
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Agreement, together in each case with interest on such amounts as set forth in
the Insurance Agreement to the extent not previously paid.
"Related Company Contract Assets" has the meaning set forth in Section
2.01 hereof.
"Related Selling Trust Contract Assets" has the meaning set forth in
Section 2.01 hereof.
"Relevant UCC" means the Uniform Commercial Code as in effect in the
applicable jurisdiction.
"Relief Act Reduction" shall mean the reduction of the rate of interest
payable on any Contract to a rate below the Contract Rate pursuant to the
Soldiers' and Sailors' Civil Relief Act or the Military Reservist Relief Act.
"Repurchased Contract" means a Contract which (i) CITSF purchased pursuant
to Section 3.02 or (ii) the Servicer purchased pursuant to Section 4.02 or 4.07
hereof. The purchase of a Repurchased Contract shall be deemed effective as of
the last day of the Due Period preceding the Deposit Date on which the Purchase
Price therefor was paid, and it shall cease to be included in the Pool Balance
as of such last day of the Due Period.
"Reserve Account" means the deposit accounts established and maintained
pursuant to Section 5.01(a)(iv) hereof, including the Additional Enhancement
Sub-Account, the Excess Sub-Account and the Loan Sub-Account.
"Reserve Account Property" means all amounts and investments held from
time to time in the Reserve Account (whether in the form of deposit accounts,
Physical Property, Security Entitlements, Uncertificated Securities or
otherwise).
"Reserve Account Surplus" means, as of any Distribution Date, the
amount, if any, by which the amount on deposit in the Reserve Account (excluding
the Additional Enhancement Sub-Account), after taking into account any deposits
to the Reserve Account pursuant to Section 5.06(a) on such Distribution Date and
any withdrawals from the Reserve Account pursuant to Section 5.06(b) or (c) on
such Distribution Date, exceeds the Specified Reserve Amount for the next
Distribution Date.
"Responsible Officer" with respect to the Indenture Trustee or the Owner
Trustee means, any officer within the Corporate Trust Office of such trustee,
and, with respect to the Servicer, the President, any Vice President, Assistant
Vice President, Secretary, Assistant Secretary or any other officer or assistant
officer of such Person customarily performing functions similar to those
performed by any of the above designated officers and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge and familiarity with the particular subject.
"Sale and Servicing Agreement" means this Agreement, as amended and
supplemented from time to time.
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"Sallie Mae Entitlement" means a "Security Entitlement" as defined in 31
C.F.R. ss. 354.1.
"Securities" means the Notes and the Certificates.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Securities Intermediary" means a "securities intermediary" within the
meaning of Section 8-102(a)(14) of Article 8.
"Security Certificate" means a "securities certificate" within the meaning
of Section 8-102(a)(16) of Article 8.
"Security Entitlement" means a "securities entitlement" within the meaning
of Section 8-102(a)(17) of Article 8.
"Securityholders" means the Person in whose name a Note or Certificate is
registered on the Note Register or the Certificate Register, as applicable.
"Seller" means the Person executing this Agreement as the Seller, or any
successor in interest to the Seller pursuant to the terms hereof.
"Selling Trust" means CIT Marine Trust 1996-A.
"Selling Trust Contract" means a Contract described in the List of Selling
Trust Contracts.
"Service Transfer" has the meaning set forth in Section 9.01 hereof.
"Servicer" means the Person executing this Agreement as the Servicer, or
any successor Servicer pursuant to a Service Transfer hereunder.
"Servicer Letter of Credit" has the meaning set forth in Section 5.02(b)
hereof.
"Servicer Payment" means, with respect to a Distribution Date, the sum of
the reimbursement then due to the Servicer for outstanding Monthly Advances, the
Servicing Fee for such Distribution Date and the aggregate unpaid Servicing Fees
for past Distribution Dates; provided, however, that if CITSF or one of its
affiliates is the Servicer, the Servicing Fee (including any unpaid Servicing
Fees for past Distribution Dates) shall not be included in the Servicer Payment
but instead shall be payable to the Servicer on each Distribution Date only from
the Available Amount, if any, remaining after the Insurance Premium, the
principal and interest payable on the Securities on such Distribution Date,
Reimbursement Obligations payable to the Insurer and interest on the Loan have
been paid.
"Servicer's Certificate" means a certificate, substantially in the form of
Exhibit C hereto, completed by and executed on behalf of the Servicer by a
Servicing Officer in accordance with Section 4.09 hereof.
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"Servicer's Errors and Omissions Protection Policy" means the errors and
omissions policy maintained by the Servicer or any similar replacement policy,
if any, pursuant to Section 4.14 hereof.
"Servicing Fee" means, as to any Distribution Date, the sum of (i)
one-twelfth of the product of the Servicing Fee Rate and the Pool Balance as of
the first day of the related Due Period (or, in the case of the first
Distribution Date, as of the Cut-off Date) and (ii) any Investment Earnings on
amounts on deposit in the Collection Account, the Note Distribution Account and
the Certificate Distribution Account.
"Servicing Fee Rate" means 0.50%; provided, however, if CITSF or an
affiliate is not the Servicer, the Servicing Fee Rate shall be a rate determined
at the time of the appointment of a Servicer but not to exceed 1.00%.
"Servicing Officer" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of Contracts whose name
appears on a list of servicing officers appearing in an Officer's Certificate
furnished to the Trust by the Servicer, as the same may be amended from time to
time.
"Ship Mortgage Statutes" means Chapter 313 of Title 46 of the United
States Code, as amended from time to time.
"Simple Interest Contract" means a Contract as to which interest is
calculated each day on the basis of the actual principal balance outstanding on
such day.
"Soldiers' and Sailors' Civil Relief Act" means the Soldiers' and Sailors'
Civil Relief Act of 1940, as amended.
"Specified Reserve Amount" means, for any Distribution Date, the excess
of: (i) 5.55% of the Pool Balance as of the first day of the related Due Period,
but in no event less than $16,541,149 over (ii) the excess of the Pool Balance
as of the first day of the related Due Period over the outstanding principal
amount of the Securities on such Distribution Date (before giving effect to any
distributions to Securityholders on such Distribution Date); provided, however,
that if an Insurance Agreement Trigger Event has occurred and is continuing, the
Specified Reserve Amount will equal the outstanding principal balance of the
Securities plus accrued interest thereon; provided further, however, that in no
event shall the Specified Reserve Amount be less than the Minimum Reserve
Amount.
"Standard & Poor's" means Standard & Poor's, a division of The McGraw-Hill
Companies, Inc., and its successors in interest.
"Stated Principal Balance" means, with respect to any Contract for any Due
Period, its unpaid principal balance at the end of the related Due Period, but
without giving effect to any adjustments due to bankruptcy or similar
proceedings.
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"Stepdown Date" means the first Distribution Date after the Distribution
Date on which the Certificate Balance (after giving effect to all distributions
on such Distribution Date) is equal to or less than the Current
Overcollateralization Amount.
"Targeted Overcollateralization Amount" means, for any Distribution Date,
$9,189,527.
"Temporary Notes" means the Notes specified in Section 2.3 of the
Indenture.
"TIA" or "Trust Indenture Act" means The Trust Indenture Act of 1939 as in
force on the date hereof, unless otherwise specifically provided.
"Treasury Entitlement" means a "Security Entitlement" as defined in 31
C.F.R. ss. 357.2.
"Treasury Regulations" means any proposed, temporary or final regulation
promulgated under the Code.
"Trust" means CIT Marine Trust 1999-A, a Delaware business trust created
by the Trust Agreement.
"Trust Agreement" means the Amended and Restated Trust Agreement dated the
date hereof between the Seller and the Owner Trustee, as amended and
supplemented from time to time.
"Trust Estate" means all money, instruments, rights and other property
that are subject or intended to be subject to the lien and security interest of
the Indenture for the benefit of the Noteholders (including, without limitation,
all property and interest Granted to the Indenture Trustee), including any
proceeds thereof, but excluding the Excluded Assets.
"Trustees" means both the Indenture Trustee and the Owner Trustee.
"UCC" means the Uniform Commercial Code as in effect in the relevant
jurisdiction.
"Uncertificated Security" means an "uncertificated security" within the
meaning of the Relevant UCC.
"Underwriters" means Goldman, Sachs & Co., Bear, Stearns & Co. Inc., Chase
Securities Inc., First Union Capital Markets Corp. and Salomon Smith Barney.
"United States Securities Entitlement" means a Treasury Entitlement, a
HUD Entitlement, a FHL Bank Entitlement, a Funding Corporation Entitlement, a
Farm Credit Entitlement or a Sallie Mae Entitlement.
"U.S. Documentable Boat" means a vessel that meets the federal five-ton
standard and qualifies for documentation under federal law.
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ARTICLE II
CONVEYANCE OF CONTRACTS; ACCEPTANCE BY TRUST
SECTION 2.01 Conveyance of the Contracts. In consideration of the purchase
price for the Company Contracts and the retention of the AO Interest, on the
Closing Date, the Company shall, and by execution of this Agreement hereby does,
sell, transfer, assign absolutely, set over and otherwise convey to the Trust,
and the Trust shall, and by execution of this Agreement hereby does, purchase,
(i) all the right, title and interest of the Company in and to the Company
Contracts and all the rights, benefits, and obligations arising from and in
connection with each Company Contract, (ii) an assignment of the security
interests in the Financed Boats granted by the Obligors and any accessions
thereto pursuant to the Company Contracts, (iii) all monies received by the
Company on or with respect to the Company Contracts on or after the Cut-off Date
(exclusive of (i) payments with respect to Post Cut-off Date Insurance Add-Ons
and (ii) interest due and payable prior to the Cut-off Date), (iv) the interest
of the Company in the Financed Boats (including any right to receive future Net
Liquidation Proceeds) that secures the Company Contracts and that shall have
been repossessed by the Servicer by or on behalf of the Trust, (v) all rights of
the Company to proceeds from Insurance Policies covering individual Financed
Boats or the Obligors and the Company Contracts, (vi) the proceeds from any
Servicer's Errors and Omissions Protection Policy, any fidelity bond and any
blanket physical damage policy, to the extent such proceeds relate to any
Financed Boat, (vii) all rights of recourse against any cosigner or under any
personal guarantee with respect to the Company Contracts (other than any right
as against a Dealer under a Dealer Agreement or other such agreement), (viii)
all amounts credited to the Collection Account, (ix) all proceeds in any way
derived from any of the foregoing items, and (x) all documents contained in the
Contract Files relating to the Company Contracts (the items in clauses (ii)
through (x) are referred to herein as the "Related Company Contract Assets").
The parties intend and agree that the conveyance of the Company's right, title
and interest in and to the Contracts (and all rights, entitlements and amounts
listed above) pursuant to this Agreement shall constitute an absolute sale. The
"purchase price" for the Company Contracts shall be an amount equal to
$435,081,432.60. Such purchase price shall be payable in immediately available
funds on the Closing Date.
In consideration of the purchase price for the Selling Trust Contracts, on
the Closing Date, the Selling Trust shall, and by execution of this Agreement
hereby does, sell, transfer, assign absolutely, set over and otherwise convey to
the Trust, and the Trust shall, and by execution of this Agreement hereby does,
purchase, (i) all the right, title and interest of the Selling Trust in and to
the Selling Trust Contracts and all the rights, benefits, and obligations
arising from and in connection with each Selling Trust Contract, (ii) an
assignment of the security interests in the Financed Boats granted by the
Obligors and any accessions thereto pursuant to the Selling Trust Contracts,
(iii) all monies received by the Selling Trust on or with respect to the Selling
Trust Contracts on or after the Cut-off Date (exclusive of (i) payments with
respect to Post Cut-off Date Insurance Add-Ons and (ii) interest due and payable
prior to the Cut-off Date), (iv) the interest of the Selling Trust in the
Financed Boats (including any right to receive future Net Liquidation Proceeds)
that secures the Selling Trust Contracts and that shall have been repossessed by
the Servicer by or on behalf of the Trust, (v) all rights of the Selling
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Trust to proceeds from Insurance Policies covering individual Financed Boats or
the Obligors and the Selling Trust Contracts, (vi) the proceeds from any
Servicer's Errors and Omissions Protection Policy, any fidelity bond and any
blanket physical damage policy, to the extent such proceeds relate to any
Financed Boat, (vii) all rights of recourse against any cosigner or under any
personal guarantee with respect to the Selling Trust Contracts (other than any
right as against a Dealer under a Dealer Agreement or other such agreement),
(viii) all amounts credited to the Collection Account, (ix) all proceeds in any
way derived from any of the foregoing items, and (x) all documents contained in
the Contract Files relating to the Selling Trust Contracts (the items in clauses
(ii) through (x) are referred to herein as the "Related Selling Trust Contract
Assets"). The parties intend and agree that the conveyance of the Selling
Trust's right, title and interest in and to the Contracts (and all rights,
entitlements and amounts listed above) pursuant to this Agreement shall
constitute an absolute sale. The "purchase price" for the Selling Trust
Contracts shall be an amount equal to $297,072,042.40. Such purchase price shall
be payable in immediately available funds on the Closing Date.
Each of the Company and the Selling Trust hereby declares and covenants
that it shall at no time have any legal, equitable or beneficial interest in, or
any right, including, without limitation, any reversionary or offset right, to
the Collection Account and the Reserve Account, and that, in the event it
receives any of the same, it shall hold same in trust for the benefit of the
Trust on behalf of the Securityholders and shall immediately endorse over to the
Trust any such amount it receives. Neither the Seller nor the Servicer shall
have the right to remove any Contracts from the Trust after the Closing Date.
In addition, on or prior to the Closing Date, the Company shall cause the
Insurer to deliver the Note Insurance Policy to the Indenture Trustee for the
benefit of the Holders of the Notes and the Certificate Insurance Policy to the
Owner Trustee for the benefit of the holders of the Certificates.
SECTION 2.02 Acceptance by the Trust. On the Closing Date, the Trust shall
deliver a certificate to the Company and the Selling Trust substantially in the
form of Exhibit B hereto acknowledging conveyance of the Contracts and Contract
Files relating thereto to the Trust and declaring that the Trust, through the
Servicer, as custodian, pursuant to Section 3.03 hereof, will hold all Contracts
that have been delivered in trust, upon the trusts herein set forth, for the use
and benefit of the Insurer and all Certificateholders and Noteholders, as their
respective interests may appear, subject to the terms and provisions of this
Agreement and the Basic Documents.
ARTICLE III
REPRESENTATIONS AND WARRANTIES; THE CONTRACTS
SECTION 3.01A Representations and Warranties Regarding Each Contract. The
Company Contracts have been sold by CITSF to the Company pursuant to the
Purchase Agreement. In connection with such sales, CITSF made the
representations and warranties in Sections 3.01A, 3.01B, 3.01C and 8.01 of this
Agreement to the Company (such representations and warranties being incorporated
in the Purchase Agreement) and assumed the obligations in
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Section 3.02 of this Agreement. As a condition of the purchase by the Company,
the Company has required that CITSF make such representations and warranties
directly to the Trust and the Securityholders so that the Trust may recover
directly against CITSF on such representations and warranties rather than
indirectly through claims by the Company against CITSF. In addition, the Selling
Trust Contracts have been sold by CITSF to the Selling Trust. Consequently,
CITSF represents and warrants to the Trust, the Insurer and the Securityholders
as to each Contract as of the Closing Date (except as otherwise expressly
stated):
(a) List of Contracts. The information set forth in the List of Contracts
is true and correct as of its date.
(b) Payments. With respect to a Contract, as of the Cut-off Date, the
payment (if any) of principal and interest for its Due Date next preceding the
Cut-off Date was made by or on behalf of the Obligor (without any advance from
CITSF or any Person acting on behalf of CITSF) or was not delinquent for more
than 59 days.
(c) No Waivers. The terms of the Contract have not been waived, altered,
amended or modified in any respect, except by instruments or documents
identified in the Contract File with respect thereto, and no waiver, alteration,
amendment or modification has caused such Contract to fail to meet any of the
other representations and warranties made by CITSF with respect thereto.
(d) Binding Obligation. The Contract is the legal, valid and binding
obligation of the Obligor thereunder and is enforceable in accordance with its
terms, except as such enforceability may be limited by laws affecting the
enforcement of creditors' rights generally and equitable remedies.
(e) No Defenses. As of the Cut-off Date, CITSF had no knowledge of any
facts which would give rise to any right of rescission, set-off, counterclaim or
defense, including the defense of usury, or the same being asserted or
threatened with respect to any Contract.
(f) Insurance. The Obligor on the Contract is required to maintain
physical damage insurance covering the related Financed Boat in accordance with
CITSF's normal requirements or, if the related Financed Boat is not so covered
by an Obligor's insurance, it is covered by a blanket insurance policy
maintained by CITSF or the Servicer. As of the Cut-off Date, neither CITSF nor
the Servicer has obtained Force-Placed Insurance with respect to any Contract.
(g) Lawful Assignment. The Contract was not originated in and is not
subject to the laws of any jurisdiction whose laws would prohibit the transfer
of the Contract to the Company under the Purchase Agreement, the transfer of the
Contract to the Trust under this Agreement, or pursuant to transfers of
Securities, or the ownership of the Contracts by the Trust.
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(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 Contract have been complied with in all
material respects and such compliance is not affected by the Trust's ownership
of the Contracts, and CITSF shall for at least the period of this Agreement,
maintain in its possession, available for the Trust's inspection, and shall
deliver to the Trust upon demand, evidence of compliance with all such
requirements.
(i) Contract in Force. The Contract has not been satisfied or subordinated
in whole or in part or rescinded, and the Financed Boat securing the Contract
has not been released from the security interest of the Contract in whole or in
part.
(j) Valid Security Interest. The Contract and the filing of one or more
financing statements and/or the making of a notation of security interest on a
title document relating to the Financed Boat covered thereby create a valid and
enforceable perfected first priority security interest in favor of CITSF,
CITCF-NY or the Dealer which originated such Contract in the Financed Boat
covered thereby as security for payment of the amounts due under such Contract,
which security interest (if in favor of CITCF-NY or the Dealer) has been validly
and effectively assigned to CITSF. CITSF has assigned all of its right, title
and interest in such Contract, including the security interest in the Financed
Boat covered thereby, to the Company or the Selling Trust, and the Company or
the Selling Trust, as the case may be, has assigned all of its right, title and
interest in such Contract and such Financed Boat to the Trust, which,
accordingly, has a valid and enforceable first priority perfected security
interest in the Financed Boat covered thereby except to the extent that the
making of a notation of security interest on a title document relating to the
Financed Boat covered thereby is required to perfect such security interest.
With respect to each Financed Boat that is a U.S. Documentable Boat, a filed and
fully effective Preferred Mortgage has been placed in favor of CITSF, CITCF-NY
or the Dealer as security for the Contract with respect to such U.S.
Documentable Boat.
(k) Notation of Security Interest. CITSF or CITCF-NY has taken all
necessary action with respect to the Contract to perfect the security interest
in the Financed Boat covered thereby in favor of CITSF or CITCF-NY. With respect
to each Contract, if the related Financed Boat 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 Financed Boat is being applied
for such title document will be issued within 180 days and will show, CITSF or
CITCF-NY as the holder of a first priority security interest in such Financed
Boat; if the related Financed Boat is located in a state in which the filing of
a financing statement under the UCC is required to perfect a security interest
in a Boat, such filings or recordings have been duly made and show CITSF or
CITCF-NY as secured party. An Assignment will be filed within 180 days of the
Closing Date with respect to the Preferred Mortgages pursuant to a bulk
assignment.
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(l) Capacity of Parties. All parties to the Contract had legal capacity to
execute the Contract.
(m) Good Title. CITSF or CITCF-NY purchased the Contract for fair value
and took possession thereof, without knowledge that the Contract was subject to
a security interest in favor of a third party. None of CITSF, CITCF-NY, the
Company or the Selling Trust has sold, assigned or pledged the Contract to any
person other than from CITCF-NY to CITSF, from CITSF to the Company or from the
Company or the Selling Trust to the Trust. Prior to the transfer of the Contract
by CITCF-NY to CITSF, CITSF to the Company and by the Company or the Selling
Trust, as the case may be, to the Trust, each of CITCF-NY, CITSF, the Company
and the Selling Trust, as the case may be, had good and marketable title thereto
free and clear of any lien, encumbrance, equity, loan, pledge, charge, claim or
security interest and was the sole owner thereof with full right to transfer the
Contract to the Company, the Selling Trust and the Trust, as the case may be.
The Company paid fair value to CITSF for the Contracts. Immediately upon the
transfer of the Contract, the Trust, for the benefit of the Securityholders,
shall acquire good and marketable title to the Contract free and clear of any
encumbrance, equity, loan, pledge, charge, claim or security interest, and the
transfer thereof shall have been perfected under applicable law.
(n) No Defaults. As of the Cut-off Date, CITSF had no knowledge of any
default, breach, violation or event permitting acceleration of the Contract and
no event which, with notice and the expiration of any applicable grace or cure
period, would constitute such a default, breach, violation or event permitting
acceleration of the Contract (except payment delinquencies permitted by
subsection (b) above). Neither CITCF-NY nor CITSF has waived any such default,
breach, violation or event permitting acceleration except payment delinquencies
permitted by subsection (b) above.
(o) No Liens. As of the Cut-off Date for each Contract, CITSF had no
knowledge of any liens or claims which have been filed for necessaries, work,
labor or materials affecting the Financed Boat securing the Contract which are
or may be liens prior or equal to, the security interest granted under the
Contract.
(p) Equal Installments. The Contract is a Simple Interest Contract and
provides for level monthly payments which provide interest at the stated
Contract Rate and, if paid in accordance with its schedule, fully amortize the
loan over its original term.
(q) Enforceability. The 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, except as enforceability of such provisions may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally and by the availability of equitable remedies.
(r) Obligor Not a Governmental Entity. The Obligor on the Contract is not
the United States of America or any state or any agency, department,
instrumentality or political subdivision thereof.
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(s) Obligor Not Subject to Bankruptcy Proceedings. The Obligor on the
Contract was not in a bankruptcy proceeding as of the Cut-off Date.
(t) No Repossession. As of the Cut-off Date for each Contract, the
Financed Boat which secured the Contract had not been repossessed without
reinstatement.
(u) Obligor Not a Relief Act Obligor. If (i) the Obligor on the Contract
is in the military (including an Obligor who is a member of the National Guard
or is in the reserves) and (ii) the Contract is subject to the Soldiers' and
Sailors' Civil Relief Act or the Military Reservist Relief Act, such Obligor has
not made a claim to CITSF that
(A) the amount of interest on the related Contract should be limited to 6%
pursuant to the Soldiers' and Sailors' Civil Relief Act during the period
of such Obligor's active duty status, or
(B) payments on such Contract should be delayed pursuant to the Military
Reservist Relief Act,
in either case, unless a court has ordered otherwise upon application of CITSF.
(v) Only One Original. There is only one original executed copy of the
Contract, which, immediately prior to the execution of this Agreement, was in
the possession of CITSF.
(w) Contract Is Chattel Paper. The Contract is "chattel paper" as defined
in the New Jersey UCC.
(x) Selection Criteria. As of the Cut-off Date for each Contract, the
Contract satisfies the eligibility criteria discussed in the Prospectus
Supplement for the Securities under the heading "The Contract Pool--General."
(y) Valid Transfer. All of the right, title and interest of CITSF, the
Company or the Selling Trust, as the case may be, and, if applicable, CITCF-NY
in the Contract has been validly sold, transferred and assigned to the Trust and
all filings necessary to evidence such sale, transfer and conveyance have been
made in all appropriate jurisdictions.
(z) Trust License. The Trust is in compliance with any and all license,
permit and other requirements of any Federal or state law applicable to its
ownership of the Contract and its exercise of rights under the Contract and the
Basic Documents.
(aa) Origination. The Contract was originated in the United States of
America.
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SECTION 3.01B Representations and Warranties Regarding the Contracts in
the Aggregate. CITSF represents and warrants to the Trust and the
Securityholders, that:
(a) Amounts. The aggregate principal amounts payable by Obligors under the
Contracts as of the Cut-off Date equal the Cut-off Date Principal Balance.
(b) Characteristics. The Contracts have the following characteristics as
of the Cut-off Date:
(i) each Contract has a fixed Contract Rate, which is equal to or
greater than 7.50%;
(ii) the remaining maturity of each Contract is at least 12 months,
but not more than 240 months;
(iii) the original maturity of each Contract was at least 18 months,
but not more than 245 months;
(iv) the weighted average remaining term to stated maturity of the
Contracts was 168 months;
(v) the weighted average Contract Rate of the Contracts was 9.50%;
(vi) the final scheduled payment dates on the Contracts range from
dates in January 2000 to May 2019;
(vii) the average remaining principal balance of the Contracts per
contract was $31,914;
(viii) the outstanding principal balances of the Contracts ranged
from $1,073 to $785,708;
(ix) each of the Contracts was first entered onto the Servicer's or
CITCF-NY's servicing system between September 1994 and January 1999;
(x) not more than 5% of the Contracts by Cut-off Date Principal
Balance had mailing addresses in any one state, as determined by
information provided by Obligors (except Obligors with mailing addresses
in California, Texas, Florida and Missouri, which represent approximately
16.06%, 12.10%, 7.31% and 5.20%, respectively, of the Cut-off Date
Principal Balance) and less than 10% of the Obligors had mailing addresses
in Oklahoma;
(xi) at least 67.16% of the Contracts, based on Cut-off Date
Principal Balance, were secured by new Financed Boats at origination; and
(xii) the weighted average original term to stated maturity of the
Contracts was 184 months.
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(c) Computer Tape. As of the Closing Date, the Computer Tape made
available by the Servicer was complete and accurate as of its date and included
a description of the same Contracts that are described in the List of Contracts.
(d) Marking Records. By the Closing Date, CITSF shall have caused the
portions of the Electronic Ledger relating to the Contracts constituting part of
the Trust to be clearly and unambiguously marked to indicate that such Contracts
constitute part of the Trust and are owned by the Trust in accordance with the
terms of the trust created hereunder.
(e) No Adverse Selection. No adverse selection procedures have been
employed in selecting the Contracts from the marine installment sale contracts
and direct loans owned by CITSF which were originated by CITSF or purchased by
CITSF from CITCF-NY or Dealers or owned by the Selling Trust, except that CITSF
and the Selling Trust did not select any such Contract which would cause a
breach of any representation or warranty of CITSF contained in this Agreement
that would materially adversely affect the Trust's interest in such Contract.
SECTION 3.01C Representations and Warranties Regarding the Contract Files.
CITSF represents and warrants to the Trust and the Securityholders that:
(a) Possession. Immediately prior to the Closing Date, CITSF will have
possession of each original Contract and the related Contract File, and there
are and there will be no custodial agreements in effect materially and adversely
affecting the right of CITSF to make, or to cause to be made, any delivery
required in connection with the conveyance of the Contracts to the Company or
from the Company to the Trust.
(b) Bulk Transfer Laws. The transfer, assignment and conveyance of the
Contracts and the Contract Files from CITSF to the Company and from the Company
to the Trust and from the Selling Trust to the Company are not subject to the
bulk transfer or any similar statutory provisions in effect in any applicable
jurisdiction.
SECTION 3.02 Repurchase of Contracts for Breach of Representations and
Warranties, Etc.
(a) Subject to Section 3.02(b), CITSF shall repurchase a Contract, at its
Purchase Price, (i) not later than sixty days after CITSF receives written
notice from either of the Trustees or the Servicer, or not later than sixty days
after CITSF otherwise becomes aware, of a breach of any representation or
warranty of CITSF set forth in Section 3.01A or 3.01B of this Agreement that
materially and adversely affects the Trust's interest in such Contract or with
respect to which the interests of the Insurer are materially and adversely
affected and which breach has not been cured or (ii) not later than sixty days
after CITSF receives written notice from either of the Trustees of a failure to
make a notation of a security interest on a title document required to perfect
the security interest of the Trust in a Financed Boat subject to a Contract that
materially and adversely affects the Trust's interest in such Contract or with
respect to which the
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interests of the Insurer are materially and adversely affected and which failure
has not been cured. The Owner Trustee agrees to cooperate with and to assist the
Servicer in effecting any such cure whenever requested to do so by the Servicer.
CITSF shall effect such repurchase by paying to the Servicer for deposit in the
Collection Account on the Deposit Date immediately following the determination
that such Purchase Price is owed the aggregate of the Purchase Price of all
Contracts that are required to be repurchased pursuant to the preceding
sentence. With respect to any Contract incorrectly described on the List of
Contracts, only with respect to remaining unpaid principal balance, which CITSF
would otherwise be required to repurchase pursuant to this Section 3.02, CITSF
may, in lieu of repurchasing such Contract, deposit in the Collection Account
cash in an amount sufficient to cure such deficiency or discrepancy, not later
than one Business Day after the first Determination Date which is more than
sixty days after CITSF becomes aware or receives written notice from the
Trustees or the Servicer of such incorrect description. CITSF shall send written
notice of any such cash deposit to the Rating Agencies as promptly as possible
following such deposit. Notwithstanding any other provision of the Agreement,
the obligation of CITSF under this Section 3.02 shall not terminate upon a
Service Transfer pursuant to Article VII.
(b) The repurchase obligation of CITSF set forth in this Section 3.02
shall constitute the sole remedy available to the Trust and the Securityholders
for a breach of any representation and warranty hereunder with respect to the
Contracts (but not with respect to any other breach by CITSF of its obligations
hereunder, as set forth herein).
SECTION 3.03 Custody of Contract Files. To assure uniform quality in
servicing the Contracts and to reduce administrative costs, the Trust, upon the
execution and delivery of this Agreement, revocably appoints the Servicer, and
the Servicer accepts such appointment, to act as the agent of the Trust and as
custodian of the Contract File with respect to each Contract, each of which is
hereby constructively delivered to the Trust. In the event that CIT's senior
unsecured long-term debt is rated lower than "BBB" by Standard & Poor's or lower
than "Baa2" by Moody's, the Servicer shall promptly deliver all Contract Files
in its possession to the Indenture Trustee or, if the outstanding principal
balance of the Notes has been paid in full, the Owner Trustee.
SECTION 3.04 Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer, in its capacity as custodian, shall hold
the Contract Files on behalf of the Trust for the use and benefit of the Trust
and the Insurer, and maintain such accurate and complete accounts, records and
computer systems pertaining to the Contracts as shall enable the Owner Trustee
and the Indenture Trustee to comply with their obligations pursuant to this
Agreement and the other Basic Documents.
As custodian, the Servicer shall have and perform the following powers and
duties:
(i) hold the Contract Files on behalf of the Trust and the Insurer,
maintain accurate records pertaining to each Contract to enable it to
comply
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with the terms and conditions of this Agreement, maintain a current
inventory thereof, conduct annual physical inspections of Contract Files
held by it under this Agreement and certify to the Trust and the Insurer
annually that it continues to maintain possession of such Contract Files;
(ii) implement policies and procedures in writing and signed by a
Servicing Officer, with respect to persons authorized to have access to
the Contract Files on the Servicer's premises and the receipting for
Contract Files taken from their storage area by an employee of the
Servicer for purposes of servicing or any other purposes; and
(iii) attend to all details in connection with maintaining custody
of the Contract Files on behalf of the Trust and the Insurer.
In performing its duties under this Section 3.04, the Servicer agrees to
act with reasonable care, consistent with the same degree of skill and care that
it exercises with respect to similar contracts serviced by it for its own
account. The Servicer shall promptly report to the Trust in writing any material
failure by it to hold the Contract Files as herein provided and shall promptly
take appropriate action to remedy any such failure. In acting as custodian of
the Contract Files, the Servicer agrees further not to assert any beneficial
ownership interests in the Contracts or the Contract Files. The Servicer agrees
to indemnify the Trust, the Certificateholders, the Noteholders, the Owner
Trustee, the Insurer and the Indenture Trustee (and its respective officers,
directors, employees and agents) for any and all liabilities, obligations,
losses, damages, payments, costs, or expense of any kind whatsoever which may be
imposed on, incurred by or asserted against the Trust, the Certificateholders,
the Noteholders, the Owner Trustee, the Insurer and the Indenture Trustee as the
result of any act or omission by the Servicer relating to the maintenance and
custody of the Contract Files; provided, however, that the Servicer will not be
liable for any portion of any such amount resulting from the negligence or
willful misconduct of the Trust, the Certificateholders, the Noteholders, the
Owner Trustee, the Insurer or the Indenture Trustee. Such indemnity shall
survive the termination of this Agreement or the earlier discharge of the
Indenture Trustee under the Indenture.
(b) Maintenance of and Access to Records. The Servicer, in its capacity as
custodian, agrees to maintain the Contract Files at its office in the State of
Oklahoma, or at such of its offices as shall from time to time be identified to
the Trust by written notice. The Servicer, in its capacity as custodian, may
temporarily move individual Contract Files or any portion thereof without notice
as necessary to conduct collection and other servicing activities in accordance
with its customary practices and procedures, but shall promptly return such
Contract File as soon as practicable after it is no longer needed for such
purpose.
The Servicer, in its capacity as custodian, shall make available to the
Trust and the Insurer, or its duly authorized representatives, attorneys or
auditors, the Contract Files
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and the related accounts, records and computer systems maintained by the
Servicer at such times during normal business hours as the Trust or the Insurer
shall reasonably instruct which do not unreasonably interfere with the
Servicer's normal operations or customer or employee relations.
(c) Release of Documents. Upon written instruction from the Trust, the
Servicer, in its capacity as custodian, shall release or cause to be released
any document in the Contract Files to the Trust, the Trust's agent or the
Trust's designee, as the case may be, at such place or places as the Trust may
designate, as soon as practicable. The Servicer, in its capacity as custodian,
shall not be responsible for any loss occasioned by the failure of the Trust,
its agent or its designee to return any document or any delay in doing so.
SECTION 3.05 Instructions; Authority to Act. The Servicer shall be deemed
to have received proper instructions from either of the Trustees with respect to
the Contract Files upon its receipt of written instructions signed by a
Responsible Officer of such Trustee. A certified copy of a by-law or of a
resolution of the Board of Directors of the Owner Trustee or the Indenture
Trustee, as applicable, shall constitute conclusive evidence of the authority of
any such Responsible Officer to act and shall be considered in full force and
effect until receipt by the Servicer of written notice to the contrary given by
the Trust.
SECTION 3.06 Effective Period and Termination. The Servicer's appointment
as custodian shall become effective as of the Closing Date and shall continue in
full force and effect until terminated pursuant to this Section 3.06 or until
this Agreement shall be terminated. The Servicer may perform its duties as
custodian through one or more agents, which agents may maintain physical
possession of Contract Files as agent for the Servicer acting as custodian.
Notwithstanding the appointment of any such agents, the Servicer shall remain
responsible and liable for any failure in the performance of any duties and
obligations hereunder that may be assigned to such agents. If the Servicer shall
resign as Servicer under Section 8.05 hereof or if all of the rights and
obligations of the Servicer shall have been terminated under Section 9.01
hereof, the appointment of the Servicer as custodian may be terminated by the
Insurer or, if the Insurer is no longer the Controlling Party, the Indenture
Trustee or by the Holders of Notes evidencing not less than a majority of the
aggregate outstanding principal balance of the Notes as of the close of the
preceding Distribution Date (or, if the Notes have been paid in full and the
Indenture has been discharged in accordance with its terms, by the Owner Trustee
or by the Holders of Certificates evidencing not less than a majority of the
Certificate Balance as of the close of the preceding Distribution Date), in the
same manner as rights and obligations of the Servicer may be terminated under
Section 9.01 hereof. The Trust may terminate the Servicer's appointment as
custodian at any time with cause upon written notification to the Servicer. As
soon as practicable after any termination of such appointment, the Servicer
shall deliver the Contract Files to the Trust or the Trust's agent at such place
or places as the Trust may reasonably designate. The Servicer shall cooperate
with the Trust in making the transfer and shall bear all of the Servicer's costs
and expenses with respect to such transfer, but the Trust shall bear the actual
costs and expenses of packing and transporting the Contract Files to the
location designated by the Trust. Notwithstanding the termination of the
Servicer as custodian, the Trust
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agrees that upon any such termination, the Trust shall provide, or cause its
agent to provide, access to the Contract Files to the Servicer for the purpose
of carrying out its duties and responsibilities with respect to the servicing of
the Contracts hereunder.
ARTICLE IV
ADMINISTRATION AND SERVICING OF CONTRACTS
SECTION 4.01 Duties of Servicer.
(a) The Servicer, as agent for the Trust, shall manage, administer,
service and make collections on the Contracts and perform or cause to be
performed all contractual and customary undertakings of the holder of the
Contracts to the Obligor. The Trust, at the request of a Servicing Officer,
shall furnish the Servicer with any reasonable documents or take any action
reasonably requested, necessary or appropriate to enable the Servicer to carry
out its servicing and administrative duties hereunder.
(b) In managing, administering, servicing and making collections on the
Contracts pursuant to this Agreement, the Servicer will exercise the same degree
of skill and care that the Servicer exercises with respect to similar contracts
serviced by the Servicer for its own account.
(c) The Servicer, with the consent of the Insurer (so long as the Insurer
is the Controlling Party), may enter into subservicing agreements with one or
more subservicers (which shall be Eligible Servicers) for the servicing and
administration of any or all of the Contracts. The Servicer shall provide notice
to the Rating Agencies of the appointment of any such subservicer. References in
this Agreement to actions taken, to be taken, permitted to be taken, or
restrictions on actions permitted to be taken, by the Servicer in servicing the
Contracts shall include actions taken, to be taken, permitted to be taken, or
restrictions on actions permitted to be taken, by a subservicer on behalf of the
Servicer. Each subservicing agreement will be upon such terms and conditions as
are not inconsistent with this Agreement and the standard of care set forth
herein and as the Servicer and the subservicer have agreed. All compensation
payable to a subservicer under a subservicing agreement shall be payable by the
Servicer from its servicing compensation or otherwise from its own funds, and
none of the Trust, the Insurer, the Owner Trustee, the Indenture Trustee, the
Certificateholders or the Noteholders will have any liability to the subservicer
with respect thereto.
Notwithstanding any subservicing agreement or any of the provisions of
this Agreement relating to agreements or any arrangements between the Servicer
or a subservicer or any reference to actions taken through such Persons or
otherwise, the Servicer shall remain obligated and liable to the Trust, the
Insurer, the Owner Trustee, the Indenture Trustee, the Certificateholders and
the Noteholders for the servicing and administering of the Contracts and the
other Trust property in accordance with the
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provisions of this Agreement without diminution of such obligation or liability
by virtue of such subservicing agreements.
Any subservicing agreement that may be entered into and any other
transactions or servicing arrangements relating to the Contracts and the other
Trust property involving a subservicer in its capacity as such shall be deemed
to be between the subservicer and the Servicer alone, and the Insurer, Owner
Trustee, the Indenture Trustee, the Certificateholders and the Noteholders shall
not be deemed parties thereto and shall have no claims, rights, obligations,
duties or liabilities with respect to the subservicer except as set forth in the
next succeeding paragraph.
In the event the Servicer shall for any reason no longer be acting as
such, the successor Servicer may, in its discretion, thereupon assume all of the
rights and obligations of the outgoing Servicer under a subservicing agreement.
In such event, the successor Servicer shall be deemed to have assumed all of the
Servicer's interest therein and to have replaced the outgoing Servicer as a
party to each such subservicing agreement to the same extent as if such
subservicing agreement had been assigned to the successor Servicer, except that
the outgoing Servicer shall not thereby be relieved of any liability or
obligations on the part of the outgoing Servicer to the subservicer under such
subservicing agreement. The outgoing Servicer shall, upon request of the Trust,
but at the expense of the outgoing Servicer, deliver to the successor Servicer
all documents and records relating to each such subservicing agreement and the
Contracts and other Trust property then being serviced thereunder and an
accounting of amounts collected and held by it and otherwise use its best
efforts to effect the orderly and efficient transfer of any subservicing
agreement to the successor Servicer. In the event that the successor Servicer
elects not to assume a subservicing agreement, the outgoing Servicer, at its
expense, shall cause the subservicer to deliver to the successor Servicer all
documents and records relating to the Contracts and the other Trust property
being serviced thereunder and all amounts held (or thereafter received) by such
subservicer (together with an accounting of such amounts) and shall otherwise
use its best efforts to effect the orderly and efficient transfer of servicing
of the Contracts and the other Trust property being serviced by such subservicer
to the successor Servicer.
(d) The Servicer's duties shall include collection and posting of all
payments, responding to inquiries of Obligors or by federal, state or local
governmental authorities with respect to the Contracts, investigating
delinquencies, reporting federal income tax information to Obligors, monitoring
the collateral in cases of Obligor default and handling the foreclosure or other
liquidation of Financed Boats in appropriate instances (subject to reimbursement
of its expenses incurred in connection with such foreclosure, liquidation or
other realization on the Contracts), administering and enforcing Insurance
Policies in accordance with its customary practices, accounting for collections,
furnishing monthly and annual statements to the Trust and the Insurer with
respect to distributions, and making Monthly Advances pursuant to Section 5.03
hereof.
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The Servicer shall be authorized and empowered by the Trust to execute and
deliver, on behalf of itself, the Trust, the Insurer, the Owner Trustee, the
Indenture Trustee, the Certificateholders, the Noteholders, or any of them, any
and all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable instruments, with respect to the
Contracts or with respect to the Financed Boats.
Upon written request of the Servicer and receipt by the Trust of an
Officer's Certificate setting forth the facts underlying such request, the Trust
shall furnish the Servicer with any limited powers of attorney and other
documents reasonably necessary or appropriate to enable the Servicer to carry
out its servicing and administrative duties hereunder and neither the Trust nor
the Indenture Trustee shall be held liable for such actions of the Servicer
thereunder.
SECTION 4.02 Collection of Contract Payments. The Servicer shall make
reasonable efforts, consistent with the customary servicing practices and
procedures employed by the Servicer with respect to Contracts owned or serviced
by it, to collect all payments called for under the terms and provisions of the
Contracts as and when the same shall become due, and in connection therewith
shall follow such normal collection practices and procedures as it follows with
respect to comparable new or used marine installment sale contracts and direct
loan agreements that it services for itself and others. The Servicer shall not
reduce or defer scheduled payments, extend any Contract or otherwise modify the
terms of any Contract; provided, however, that, consistent with its customary
practices and servicing procedures, the Servicer may, in its discretion, arrange
with an Obligor to, defer, reschedule, extend or modify the payment schedule of
any delinquent Contract for credit related reasons that would be acceptable to
the Servicer with respect to a comparable Contract secured by a new or used Boat
that it services for itself or others, so long as (a) the maturity of such
Contract would not be extended beyond the 180th day prior to the Certificate
Final Scheduled Distribution Date and (b) the deferral, rescheduling, extension
or other modification of the terms of the Contract would not constitute a
cancellation of such Contract and the creation of a new installment sale
contract or direct loan. If, as a result of deferring, rescheduling or extending
of payments or any other modification, such deferring, rescheduling, extension
or modification breaches any of the terms of the preceding sentence, then the
Servicer shall be obligated to purchase such Contract pursuant to Section 4.07
hereof on the Deposit Date immediately following the date on which it became
aware or received written notice from the Trust of such failure. The Servicer
may, in accordance with its customary servicing practices and procedures, in its
good faith judgment, waive any Late Fees that may be due or payable under any
Contract. Notwithstanding the foregoing, in connection with the settlement by
the Servicer of a defaulted Contract, the Servicer may forgive a portion of such
Contract, if in its discretion it believes that the acceptance of the settlement
proceeds from the related Obligor would result in the Trust's receiving a
greater amount of collections than the Net Liquidation Proceeds that would
result from repossessing and liquidating the related Financed Boat.
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SECTION 4.03 Realization Upon Contracts.
(a) The Servicer will, consistent with customary servicing practices and
procedures and the terms of this Agreement, act with respect to the Contracts in
such manner as it reasonably believes will maximize the receipt of principal and
interest on the Contracts and Net Liquidation Proceeds in respect of defaulted
Contracts.
In the event that title to any Financed Boat is acquired in foreclosure or
by conveyance in lieu of foreclosure, the deed or certificate of sale shall be
issued to the Trust, or, at its election, to its nominee on behalf of the Trust.
(b) The Servicer shall be entitled to recover all Liquidation Expenses
relating to a defaulted Contract, from the liquidation proceeds with respect to
such Contract or related Financed Boat. The Net Liquidation Proceeds realized in
connection with any such action with respect to a Contract shall be deposited by
the Servicer in the Collection Account in the manner specified in Section 5.02
hereof and shall be applied to reduce (or to satisfy, as the case may be) the
Purchase Price of the Contract, if such Contract is to be purchased by (i) CITSF
pursuant to Section 3.02 hereof, (ii) the Servicer pursuant to Section 4.07
hereof, or (iii) CITSF pursuant to Section 11.01 hereof. The foregoing shall be
subject to the provision that, in any case in which the Financed Boat shall have
suffered damage, the Servicer shall not expend funds in connection with the
repair or the repossession of such Financed Boat unless it shall determine in
its sole discretion that such repair and/or repossession will increase the Net
Liquidation Proceeds of the related Contract.
(c) The Servicer may sue to enforce or collect upon Contracts, including
foreclosure of any security interest in a Financed Boat, in its own name, if
possible, or as agent for the Trust. If the Servicer elects to commence a legal
proceeding to enforce a Contract or any Insurance Policy in respect thereof, the
act of commencement shall be deemed to be an automatic assignment of the
Contract to the Servicer for purposes of collection only. If, however, in any
enforcement suit or legal proceeding it is held that the Servicer may not
enforce a Contract on the ground that it is not a real party in interest or a
holder entitled to enforce the Contract, the Trust shall, at the Servicer's
expense, take such steps as the Servicer deems necessary to enforce the
Contract, including bringing suit in its name or the names of the
Securityholders.
(d) Prior to a Service Transfer, the Servicer may grant to the Obligor on
any Contract any rebate, refund or adjustment out of the Collection Account that
the Servicer in good faith believes is required because of a Principal
Prepayment or a Principal Prepayment in Full. The Servicer will not permit any
rescission or cancellation of any Contract, except to the extent required by
law.
(e) The Servicer may enforce any due-on-sale clause in a Contract if such
enforcement is called for under its then current servicing policies for
obligations similar to the Contracts, provided that such enforcement is
permitted by applicable law and will not adversely affect any applicable
Insurance Policy.
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(f) If CITSF, as Servicer, believes that an Obligor is likely to refinance
its Contract, CITSF may in its discretion attempt to retain such Obligor as its
customer by soliciting the Obligor to refinance the Contract with CITSF.
SECTION 4.04 Physical Damage Insurance.
(a) The Servicer, in accordance with its customary servicing practices and
procedures, shall use its best efforts to require that each Obligor shall have
obtained and shall maintain physical damage insurance covering the Financed
Boat, provided that such insurance shall be in an amount no greater than the
outstanding principal balance of the related Contract or, if such insurance also
covers the interest of the related Obligor in the Financed Boat, no greater than
the greater of the outstanding principal balance of the related Contract or the
value of the Financed Boat, or such lesser amount permitted by applicable law.
The Servicer may, but shall not be obligated to, verify if such insurance is
being maintained by the Obligors or enforce rights or pursue any remedies under
the Contracts or applicable law to require the Obligors to maintain physical
damage insurance, in accordance with the Servicer's customary servicing
practices and procedures with respect to comparable new or used boats financed
by installment sale contracts or direct loan agreements that it services for
itself or others. If an Obligor fails to maintain such insurance, the Servicer
may, but shall not be obligated to, obtain insurance and advance such premiums
for such insurance on behalf of such Obligor. If the Servicer obtains such
insurance and advances such premiums for such insurance, such insurance policy
shall name the Servicer as an additional insured and loss payee, and shall be
issued by an insurer having a rating of "A" or better by A.M. Best (such
insurance being referred to herein as "Force-Placed Insurance"). Such
Force-Placed Insurance and any commissions or finance charges collected by the
Servicer in connection therewith shall be, to the extent permitted by law, in an
amount in accordance with customary servicing practices and procedures, but in
no event shall such Force-Placed Insurance be in an amount greater than the
outstanding principal balance of the related Contract or, if such insurance also
covers the interest of the related Obligor in the Financed Boat, no greater than
the greater of the outstanding principal balance of the related Contract or the
value of the Financed Boat, or such lesser amount permitted by applicable law.
The Servicer shall disclose to the related Obligor all information with respect
to such Force-Placed Insurance, commissions and finance charges as required by
applicable law. The Servicer does not, under its customary servicing practices
and procedures, obtain Force-Placed Insurance when the principal balance of the
related marine installment sale contract or installment loan falls below the
level or levels periodically established in accordance with such customary
servicing practices and procedures. In accordance with such customary servicing
practices and procedures, the Servicer may periodically readjust such levels,
suspend Force-Placed Insurance or arrange other methods of protection of the
Financed Boats that it deems necessary or advisable, provided that the Servicer
determines that such actions do not materially and adversely affect the
interests of the Certificateholders or the Noteholders. Any portion of the
principal balance of a Contract attributable to Insurance Advances or Post
Cut-off Date Insurance Add-Ons will not be owned by the Trust, and amounts
allocable thereto will not be available for distribution in respect of the
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Securities. Unless otherwise designated by the Obligor, the Servicer shall not
allocate payments by the Obligor to Insurance Advances or Post Cut-off Date
Insurance Add-Ons in respect of such Contracts if any amount of principal or
interest is due but unpaid on such Contracts. The Servicer shall not deposit
payments allocable to Insurance Advances or Post Cut-off Date Insurance Add-Ons
in the Collection Account and shall instead promptly pay such amounts to an
account of the Servicer maintained for that purpose. In the event that an
Obligor under a Contract with respect to which the Servicer has made Insurance
Advances or advanced funds to obtain Force-Placed Insurance makes scheduled
payments under the Contract, but fails to make scheduled payments of such
Insurance Advances or Post Cut-off Date Insurance Add-Ons as due, and the
Servicer has determined that eventual payment of such amount is unlikely, the
Servicer may, but shall not be required to, take any action available to it,
including determining that the related Contract is in default, taking remedial
action and determining that the Contract is a Liquidated Contract; provided,
however, that any Net Liquidation Proceeds with respect to such Contract shall
be applied first to the accrued and unpaid interest at the Contract Rate, then
to the principal amount outstanding, and the remainder, if any, to repayment of
any such Insurance Advances or Post Cut-off Date Insurance Add-Ons.
(b) The Servicer, or any affiliate of the Servicer, may, to the extent
permitted by law (i) enter into agreements with one or more insurers or other
Persons pursuant to which the Servicer or such affiliate will earn commissions
and fees in connection with any insurance policy purchased by an Obligor
including, without limitation, any physical damage insurance policy (whether or
not such physical damage insurance policy is force-placed pursuant to the
provisions of any Contract), or any other insurance policy whatsoever, and (ii)
in connection with the foregoing, to solicit, or permit and assist any insurer
or any agent thereof to solicit (including, without limitation, providing such
insurer or agent a list of Obligors including name, address or other
information) any Obligor.
(c) The Servicer may make advances ("Insurance Advances") to an Obligor to
finance insurance premiums related to the Financed Boat. Any such Insurance
Advances may be secured by the related Financed Boat.
SECTION 4.05 Maintenance of Security Interests in Financed Boats;
Retitling.
(a) Within 180 days after the Closing, the Servicer shall file with the
U.S. Coast Guard, assignments of all Preferred Mortgages. The Servicer shall not
be required to amend certificates of title covering Financed Boats to reflect
transfers by the currently named secured party. The Servicer likewise shall not
be required to cause UCC-3 assignments of Financing Statements filed against
Financed Boats to be assigned of record to the Trust.
(b) The Servicer, in accordance with its customary servicing practices and
procedures, shall, at its own expense, take such steps as are necessary to
maintain perfection of the security interest created by each Contract in the
related Financed Boat
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in favor of CITSF or CITCF-NY; provided, however, that the Servicer shall not be
obligated to amend any certificate of title to note the Trust's interest as the
assignee of the secured party on the certificate of title to such Financed Boat
even if such notation is required to perfect the Trust's security interest in
such Financed Boat. The Servicer hereby agrees to take, to the extent permitted
by law, such steps as are necessary to re-perfect such security interest in the
name of CITSF or CITCF-NY in the event of the relocation of a Financed Boat to a
jurisdiction other than the jurisdiction in which steps had been taken to
perfect the security interest in favor of CITSF or CITCF-NY.
(c) In the event that the assignment of the Contract to the Trust is
insufficient, without a notation on the related Financed Boat's certificate of
title or the assignment of the UCC-1 financing statement or the Preferred
Mortgage, to grant to the Trust a perfected security interest in the related
Financed Boat, CITSF or CITCF-NY hereby agrees to serve as the Trust's agent for
the purpose of perfecting the security interest in such Financed Boat and that
CITSF's or CITCF-NY's listing as the secured party on the certificate of title,
UCC-1 financing statement or Preferred Mortgage, is in the capacity as agent of
the Trust.
(d) If, at any time, a Service Transfer has occurred and CITSF is no
longer the Servicer, and the successor Servicer is unable to foreclose upon a
Financed Boat because the title document or the Preferred Mortgage for such
Financed Boat does not show such successor Servicer or the Trust as the
lienholder, CITSF shall take all necessary steps to apply for a replacement
title document showing the successor Servicer or the Trust as the secured party
or shall, at its expense, file an Assignment with respect to such Preferred
Mortgage, as the case may be.
(e) In order to facilitate the successor Servicer's actions, as described
in subsection 4.05(b) hereof, CITSF will provide the successor Servicer with any
necessary power of attorney permitting it to retitle the Financed Boat. The
Company hereby appoints the Trust (acting through the Owner Trustee or the
Servicer) its attorney-in-fact to endorse, as appropriate, the certificate of
title relating to any Financed Boat in order to cause a change in the name of
the secured party of the Financed Boat to the Trust at such time as such
certificate of title is endorsed and delivered to the applicable state
department of motor vehicles with appropriate fees. The Company will provide the
Trust with any necessary power of attorney for such purpose.
(f) In the event that the successor Servicer seeks to foreclose on a
Financed Boat and if the successor Servicer is unable to retitle or otherwise
perfect a security interest in the Financed Boat then CITSF, at its expense,
will take all actions necessary to act with the successor Servicer, to the
extent permitted by law, to enable the successor Servicer to foreclose upon the
Financed Boat, including, as appropriate, the filing of any UCC-1 or UCC-2
financing statements necessary to perfect the security interest in any Financed
Boat.
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SECTION 4.06 Covenants of Servicer. The Servicer shall not:
(i) Security Interest to Remain in Force. Release a Financed Boat
securing a Contract from the security interest granted by the Contract
except as contemplated herein or as required by the terms of such Contract
or applicable law;
(ii) No Impairment. Impair the rights of the Trust in the Contracts
or take any action inconsistent with the Trust's ownership of the
Contracts, except as expressly provided herein;
(iii) Amendments. Increase the number of payments under a Contract,
nor increase the principal amount of such Contract which is used to
finance the purchase price of the related Financed Boats, nor extend or
forgive payments on a Contract or extend or modify the payment schedule or
other terms of a Contract, except as provided in Section 4.02 hereof;
(iv) Compliance with Insurance Policies. Fail to comply with the
provisions of any Insurance Policy, if the failure to comply would impair
the protection or benefit to be afforded by such Insurance Policies; and
(v) Trust License. Fail to obtain and maintain any license, permit
or other approval required by any Federal or state law in order for the
Trust to own any Contract or to exercise the rights under any Contract or
the Basic Documents.
SECTION 4.07 Purchase of Contracts Upon Breach. The Servicer or the
Trustees, as the case may be, shall inform the other parties and the Insurer
promptly, in writing, upon the discovery of any breach by the Servicer of its
covenants under Section 4.02 hereof, Section 4.04 hereof, Section 4.05 hereof or
Section 4.06 hereof, which materially and adversely affects the Trust's interest
in any Contract or with respect to which the interests of the Insurer are
materially and adversely affected. The Trustees shall not be deemed to have
discovered such a breach until such time as a Responsible Officer of each of the
Trustees receives written notice of such breach. Except as otherwise specified
in Section 4.02 hereof, unless the breach shall have been cured, the Servicer
shall purchase such Contract, at its Purchase Price, not later than the first
Deposit Date which is not more than 60 days after the Servicer receives written
notice from the Trustees, or not later than 60 days after the Servicer otherwise
becomes aware of, a breach of any of its obligations under Sections 4.02, 4.04
or 4.05 hereof or any covenant of the Servicer in Section 4.06 hereof which
materially and adversely affects the Trust's interest in such Contract. The
Servicer shall effect such purchase by depositing on such Deposit Date, in
accordance with Section 5.04 hereof, the Purchase Price of such Contract (less
any Net Liquidation Proceeds deposited, or to be deposited, by the Servicer in
the Collection Account with respect to such Contract pursuant to Section 5.02
hereof) in the Collection Account. The effective date of such purchase shall be
the last day of the Due Period preceding such Deposit Date. The sole remedy of
the Trust, the Insurer, the Owner Trustee, the Indenture Trustee, the
Certificateholders or the Noteholders against the Servicer with respect to a
breach pursuant to Sections 4.02, 4.04, 4.05 or 4.06 hereof shall be to require
the Servicer to purchase Contracts pursuant to this Section 4.07.
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SECTION 4.08 Servicing Fee. The Servicing Fee for a Distribution Date
shall be equal to the sum of (i) one-twelfth of the product of the Servicing Fee
Rate and the Pool Balance as of the first day of the related Due Period (or, in
the case of the first Distribution Date, as of the Cut-off Date) and (ii) any
Investment Earnings on amounts on deposit in the Collection Account, the
Certificate Distribution Account and the Note Distribution Account.
SECTION 4.09 Monthly Report. On or before each Determination Date, the
Servicer shall furnish a report (the "Monthly Report"), which shall be in
substantially the form of Exhibit D hereto (with such additional information as
the Servicer shall elect to include therein), to the Insurer, Owner Trustee, the
Indenture Trustee, any Paying Agent (under the Indenture and the Trust
Agreement) and (if CITSF is not the Servicer) CITSF. The determination by the
Servicer of the amount of the distributions to be made pursuant to Section 5.05
hereof shall, in the absence of obvious error, be presumptively deemed to be
correct for all purposes hereunder, and the Trustees shall be fully protected in
relying upon the same without any independent check or verification. The
Servicer shall also specify in the Monthly Report each Contract which CITSF or
the Servicer is required to repurchase as of the last day of the related Due
Period and each Contract which the Servicer shall have determined to be a
Liquidated Contract during such Due Period. The Trustees shall not be required
to recompute, verify or recalculate information contained in the Servicer's
Certificate.
Each Monthly Report shall be accompanied by a certificate of a Servicing
Officer substantially in the form of Exhibit C hereto, certifying the accuracy
of the Monthly Report and that no Event of Termination or event that with notice
or lapse of time or both would become an Event of Termination has occurred, or
if such event has occurred and is continuing, specifying the event and its
status.
In addition, the Servicer shall, on request of the Trustees or the
Insurer, furnish the Trustees or the Insurer, as the case may be, such
reasonably pertinent underlying data on the Contracts as can be generated by the
Servicer's existing data processing system without undue modification or
expense.
SECTION 4.10 Annual Statement as to Compliance.
(a) The Servicer shall deliver to the Trustees and the Insurer within 90
days after the end of each calendar year commencing March 31, 2000, a
certificate signed by a Responsible Officer of the Servicer, stating that (i) a
review of the activities of the Servicer during the preceding calendar year of
its performance under this Agreement has been made under such officer's
supervision and (ii) to the best of such officer's knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement
throughout such preceding calendar year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof.
(b) The Servicer shall deliver to the Trustees and the Insurer, promptly
after having obtained knowledge thereof, a certificate of a Responsible Officer
of the Servicer
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specifying any event which with the giving of notice or lapse of time, or both,
would become an Event of Termination under subsection (a) or (b) of Section 9.01
hereof.
SECTION 4.11 Annual Report of Accountants. On or before March 31 of each
year, commencing March 31, 2000, the Servicer, at its expense, shall cause a
firm of independent public accountants which is a member of the American
Institute of Certified Public Accountants to furnish a statement which opines
on, at a minimum, the Servicer's compliance with the minimum servicing standards
set forth in the Uniform Single Attestation Program for Mortgage Bankers (in
accordance with the 1995 revisions thereto). Such examination and report of
independent public accountants will be prepared in accordance with the
requirements set forth in the Uniform Single Attestation Program for Mortgage
Bankers (in accordance with the 1995 revisions thereto). Copies of the annual
statement of accountants shall also be provided to each Rating Agency, the
Insurer and to the Trustees.
SECTION 4.12 Duties of Owner Trustee. The Servicer shall monitor the
performance of the Issuer and the Owner Trustee and shall advise the Owner
Trustee in writing when action is necessary to comply with the Issuer's or the
Owner Trustee's duties under the Indenture and the Trust Agreement. If the
Seller shall fail to compensate the Owner Trustee pursuant Section 6.9 of the
Trust Agreement, the Servicer shall pay to the Owner Trustee such compensation.
The Servicer shall reimburse the Owner Trustee as provided in Section 6.9 of the
Trust Agreement for its reasonable expenses thereunder. The Servicer agrees to
take the actions required to be taken by it under Section 6.10 of the Trust
Agreement.
The Servicer shall prepare for execution by the Issuer or the Owner
Trustee, or shall cause to be prepared by other appropriate persons, all
documents, reports, filings, instruments, certificates and opinions as shall be
required to be prepared, filed or delivered by the Issuer or the Owner Trustee
pursuant to the Indenture or the Trust Agreement.
In furtherance of the foregoing, the Servicer's duties shall include,
without limitation, compliance with the requirements of Sections 2.6, 2.12, 5.4,
6.9 and 6.10 of the Trust Agreement and Sections 2.2, 2.4, 2.7(d), 2.9, 3.3,
3.4, 3.5, 3.6, 3.7(b), 3.7(d), 3.9, 3.10, 3.19, 3.20, 4.1, 6.8, 7.1, 7.3, 8.2,
8.3, 8.4, 8.5, 9.1, 9.2, 9.6, 11.1(a), 11.1(b), 11.4, 11.6 and 11.15 of the
Indenture.
In accordance with directions from the Trust, the Servicer shall
administer, perform or supervise the performance of such other activities in
connection with the Basic Documents as are not covered by any of the foregoing
and as are expressly reasonably requested by the Trust and are reasonably within
the capability of the Servicer. The Servicer shall furnish to the Owner Trustee
from time to time such additional information regarding the Trust or the Basic
Documents as the Owner Trustee shall reasonably request.
SECTION 4.13 Reports to Securityholders and the Rating Agencies.
(a) Concurrently with each distribution charged to the Certificate
Distribution Account and the Note Distribution Account, the Owner Trustee and
the Indenture Trustee, respectively, so long as each has received the Monthly
Report from the Servicer, shall forward or cause to be forwarded by mail to each
Securityholder, such Monthly
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Report. The Servicer shall furnish to each Securityholder of record during any
calendar year information for tax reporting purposes not later than the latest
date permitted by law.
(b) The Servicer shall forward to each Rating Agency each letter of the
independent certified public accountants' described in Section 4.11 hereof, each
Servicer's Certificate described in Section 4.09 hereof, each annual statement
as to compliance described in Section 4.10 hereof and each statement to
Securityholders described in Section 5.08 hereof.
SECTION 4.14 Maintenance of Fidelity Bond and Errors and Omission
Policy. The Servicer shall during the term of its service as Servicer maintain
in force (a) a policy or policies of errors and omissions insurance coverage,
and (b) a fidelity bond in respect of its officers, employees and agents. Such
policy or policies and such fidelity bond shall have such deductibles and be in
such form and amount as is generally customary among Persons which service a
portfolio of marine installment sale contracts having an aggregate principal
amount of $100,000,000 or more and which are generally regarded as servicers
acceptable to institutional investors.
SECTION 4.15 Satisfaction of Contract. Upon payment in full on any
Contract, the Servicer is authorized to execute an instrument in satisfaction of
such Contract and to do such other acts and execute such other documents as the
Servicer deems necessary to discharge the Obligor thereunder and eliminate the
security interest in the Financed Boat related thereto. The Servicer shall
determine when a Contract has been paid in full. To the extent that insufficient
payments are received on a Contract credited by the Servicer as prepaid or paid
in full and satisfied, the shortfall shall be paid by the Servicer out of its
own funds.
SECTION 4.16 Costs and Expenses. Except as provided in Section 4.03
hereof, all costs and expenses incurred by the Servicer in carrying out its
duties hereunder, including all fees and expenses incurred in connection with
the enforcement of Contracts (including enforcement of defaulted Contracts and
repossessions of Financed Boats securing such Contracts), shall be paid by the
Servicer and the Servicer shall not be entitled to reimbursement hereunder.
ARTICLE V
ACCOUNTS; DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS
SECTION 5.01 Collection Account and Reserve Account.
(a) (i) On or before the Closing Date, there shall be established and
maintained in the name of the Indenture Trustee, for the benefit of the Insurer,
Noteholders and Certificateholders, an Eligible Account (which initially shall
be maintained with the Indenture Trustee) known as the "CIT Marine Trust 1999-A
Collection Account" (the "Collection Account"), bearing an additional
designation clearly indicating that the funds deposited therein are held for the
benefit of the Noteholders and Certificateholders and owned by the Trust.
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(ii) On or before the Closing Date, there shall be established and
maintained in the name of the Indenture Trustee, for the benefit of the
Noteholders, an Eligible Account (which initially shall be maintained with
the Indenture Trustee) known as the "CIT Marine Trust 1999-A Note
Distribution Account" (the "Note Distribution Account"), bearing an
additional designation clearly indicating that the funds deposited therein
are held for the benefit of the Noteholders and owned by the Trust.
(iii) On or before the Closing Date, pursuant to the Trust
Agreement, there shall be established and maintained in the name of the
Owner Trustee, for the benefit of the Certificateholders, an Eligible
Account (which initially shall be maintained with the Paying Agent of the
Owner Trustee) known as the "CIT Marine Trust 1999-A Certificate
Distribution Account" (the "Certificate Distribution Account"), bearing an
additional designation clearly indicating that the funds deposited therein
are held for the benefit of the Certificateholders and owned by the Trust.
(iv) On or before the Closing Date, there shall be established and
maintained in the name of the Indenture Trustee three Eligible Accounts
(which initially shall be maintained with the Indenture Trustee)
(collectively, the "Reserve Account"), known as the "CIT Marine Trust
1999-A Additional Enhancement Sub-Account" (the "Additional Enhancement
Sub-Account"), the "CIT Marine Trust 1999-A Loan Sub-Account" (the "Loan
Sub-Account") and the "CIT Marine Trust 1999-A Excess Sub-Account" (the
"Excess Sub-Account"), each bearing a designation clearly indicating that
the funds deposited therein are held for the benefit of the Lender, the
Insurer, the Noteholders and the Certificateholders and owned by the
Trust.
(b) The amounts on deposit in the accounts described in Sections 5.01(a)
above shall, in the name of the Trust be invested solely in Eligible Investments
(which, in the case of the Reserve Account, may include obligations of CIT so
long as such obligations qualify as Eligible Investments), that mature not later
than one Business Day prior to the next succeeding Distribution Date, in
accordance with instructions provided to the Trustees by the Servicer in writing
(or, in the case of the Loan Sub-Account, in accordance with instructions
provided to the Servicer by the Lender in writing). All Investment Earnings from
the investment of funds in the accounts described in Section 5.01(a) hereof
shall be deposited in the accounts in which such Investment Earnings were
earned. All Investment Earnings realized from any such investment of funds in
the Collection Account, Certificate Distribution Account and Note Distribution
Account (to the extent investment of such funds is permitted hereunder) shall be
for the benefit of the Servicer and may be withdrawn by the Servicer on each
Distribution Date pursuant to Section 5.02(c)(ii) hereof. All Investment
Earnings realized from any such investment of funds in the Loan Sub-Account
shall be distributed as provided in Section 5.06. An amount equal to any net
loss on investments in any Designated Account (other than the Loan Sub-Account)
shall be deposited in the Collection Account by the Servicer out of its own
funds, without right to reimbursement, immediately as realized. "Eligible
Investments" are any of the following:
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(i) direct obligations of, and obligations fully guaranteed by, the
United States of America, the Federal Home Loan Mortgage Corporation (if
then rated Aaa by Moody's), the Federal National Mortgage Association, or
any agency or instrumentality of the United States of America the
obligations of which are backed by the full faith and credit of the United
States of America and which are noncallable;
(ii) demand and time deposits in, certificates of deposit of,
banker's acceptances issued by, or federal funds sold by any depository
institution or trust company (including the Trustees or any Affiliate of
the Trustees, acting in their commercial capacity) incorporated under the
laws of the United States of America or any state thereof or the District
of Columbia (or any domestic branch or agency of a foreign bank) and
subject to supervision and examination by federal and/or state
authorities, so long as, at the time of such investment or contractual
commitment providing for such investment, the commercial paper or other
short-term debt obligations of such depository institution or trust
company have been rated at least P-1 or higher from Moody's and A-1 from
Standard & Poor's; or any other demand or time deposit or certificate of
deposit which is fully insured by the Federal Deposit Insurance
Corporation and which is rated at least P-1 by Moody's;
(iii) repurchase obligations with respect to any security described
in either clause (i) or (ii) above and entered into with any institution
whose commercial paper is at least rated P-1 from Moody's and at least A-1
by Standard & Poor's;
(iv) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America or
any State thereof which have a credit rating of at least A2 or P-1 from
Moody's and at least AAA from Standard & Poor's at the time of such
investment (or, with respect to the investment of any amounts on deposit
in the Certificate Distribution Account, such Standard & Poor's rating
shall be at least A);
(v) commercial paper (which may be issued by CIT) having a rating of
at least P-1 from Moody's and at least A-1 from Standard & Poor's at the
time of such investment;
(vi) money market funds which are rated Aaa by Moody's and at least
AAAm or AAAm-G by Standard & Poor's, including funds which meet such
rating requirements for which the Trustees or an affiliate of the Trustees
serves as an investment advisor, administrator, shareholder servicing
agent and/or custodian or subcustodian, notwithstanding that (i) such
Trustee or an affiliate of such Trustee charges and collects fees and
expenses from such funds for services rendered, (ii) such Trustee charges
and collects fees and expenses for services rendered pursuant to this
instrument, and (iii) services performed for such funds
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and pursuant to this instrument may converge at any time. (The Seller and
the Servicer specifically authorize such Trustee or an affiliate of such
Trustee to charge and collect all fees and expenses from such funds for
services rendered to such funds, in addition to any fees and expenses such
Trustee may charge and collect for services rendered pursuant to this
instrument.); and
(vii) any other investments approved by the Rating Agencies.
The Trustees may trade with themselves, each other, or with an Affiliate
on an arm's length basis in the purchase or sale of such Eligible Investments.
The Trustees shall not be liable for the selection of or for any investment
losses made at the written direction of the Servicer on any Eligible
Investments.
SECTION 5.02 Collections; Applications.
(a) Deposits to Collection Account. Subject to subsections 5.02(b) and (c)
hereof, the Servicer shall deposit in the Collection Account, no later than two
Business Days after the Closing Date, any amounts representing payments received
on the Contracts on or after the Cut-off Date through and including the Closing
Date. Subject to subsections 5.02(b) and (c) hereof, the Servicer shall deposit
in the Collection Account as promptly as practicable (not later than the second
Business Day) following the receipt thereof by the Servicer, all amounts
received in respect of the Contracts, including all loan payments from Obligors,
Net Liquidation Proceeds and Insurance Proceeds.
(b) Monthly Deposits to Collection Account. Notwithstanding anything in
this Agreement to the contrary, for so long as, and only so long as,
(i) the Servicer or the direct or indirect parent of the Servicer
shall have and maintain a short-term debt rating of at least A-1 by
Standard & Poor's and either a short-term debt rating of P-1 or a
long-term debt rating of at least A2 by Moody's, or
(ii) the Servicer obtains a letter of credit, surety bond or
insurance policy (the "Servicer Letter of Credit") reasonably acceptable
to the Insurer (if it is the Controlling Party) under which demands for
payment may be made to secure timely remittance of monthly collections to
the Collection Account and the Trustees are provided with a letter from
each Rating Agency to the effect that the utilization of such alternative
remittance schedule and any amendment required to be made to this
Agreement in connection therewith will not result in a qualification,
reduction or withdrawal of its then-current rating of the Notes or
Certificates,
the Servicer may make the deposits to the Collection Account specified in
subsection 5.02(a) hereof on a monthly basis, but not later than the Deposit
Date following the last day of the Due Period within which such payments were
processed by the Servicer, in an amount equal to the net amount of such deposits
and payments which would have been
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made to the Collection Account during such Due Period but for the provisions of
this subsection 5.02(b). In the event that the Servicer is permitted to make
remittances of collections to the Collection Account pursuant to Section
5.02(b)(ii) hereof, this Agreement may be modified, to the extent necessary,
without the consent of any Securityholder. The Servicer shall notify the
Trustees if the Servicer no longer complies with the requirements set forth in
clause (i) or (ii) above.
(c) Amounts Not Required to Be Deposited. The Servicer shall not be
required to deposit in the Collection Account amounts relating to the Contracts
attributable to the following:
(i) amounts received with respect to each Contract (or property
acquired in respect thereof) which has been purchased by CITSF or the
Servicer pursuant to this Agreement,
(ii) Investment Earnings on funds deposited in the Collection
Account, the Certificate Distribution Account, the Note Distribution
Account and the Reserve Account,
(iii) amounts received in respect of Post Cut-off Date Insurance
Add-Ons,
(iv) any repossession profits on Liquidated Contracts,
(v) amounts received as liquidation proceeds, to the extent the
Servicer is entitled to reimbursement of Liquidation Expenses relating
thereto pursuant to Section 4.03 hereof,
(vi) amounts to be reimbursed to the Servicer in respect of
Nonrecoverable Advances and
(vii) interest due and payable prior to the Cut-off Date.
(d) Permitted Withdrawals from the Collection Account. The Indenture
Trustee shall, at the written direction of the Servicer, from time to time as
provided herein, make withdrawals from the Collection Account of amounts
deposited in said account pursuant to this Agreement that are attributable to
the Contracts for the following purposes:
(i) to make payments and distributions in the amounts and in the
manner provided for in Section 5.05 hereof;
(ii) to pay to CITSF or the Servicer with respect to each Contract
or property acquired in respect thereof that has been purchased pursuant
to Section 3.02, 4.02, 4.07 or 11.01 hereof, all amounts received thereon
and not required to be distributed to Noteholders and Certificateholders;
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(iii) to pay to the Buyer with respect to each Contract or property
acquired in respect thereof that has been purchased pursuant to Section
11.02 hereof, all amounts received thereon and not required to be
distributed to Noteholders and Certificateholders;
(iv) to withdraw any amount deposited in the Collection Account that
was not required to be deposited therein; and
(v) to reimburse the Servicer out of liquidation proceeds for
Liquidation Expenses incurred by it, to the extent such expenses have not
otherwise been reimbursed.
Since, in connection with withdrawals pursuant to clauses (ii), (iii) and
(v) of this subsection 5.02(d), CITSF's entitlement thereto is limited to
collections or other recoveries on the related Contract, the Servicer
shall keep and maintain separate accounting, on a Contract by Contract
basis, for the purpose of justifying any withdrawal from the Collection
Account pursuant to such clauses. The Servicer shall keep and maintain an
accounting for the purpose of justifying any withdrawal from the
Collection Account pursuant to clause (iv) of this subsection 5.02(d).
SECTION 5.03 Monthly Advances. With respect to each Contract as to which
there has been a Payment Shortfall during the related Due Period (other than a
Payment Shortfall arising from either (i) a Principal Prepayment in Full of a
Contract or (ii) a Contract which has been subject to a Relief Act Reduction
during such Due Period), the Servicer shall make a Monthly Advance in the amount
of such Payment Shortfall, but only to the extent the Servicer, in its good
faith judgment, expects to recover such Monthly Advance from subsequent interest
collections on such Contract made by or on behalf of the Obligors thereunder, or
from Net Liquidation Proceeds or Insurance Proceeds with respect to the related
Contract. The Servicer shall not be obligated to make any advance to the Trust
in respect of the principal component of scheduled payments on any Contract
which is not paid during the Due Period in which it is due.
The Servicer shall deposit any such Monthly Advance into the Collection
Account in next-day funds or immediately available funds no later than 12:00
noon, New York time, on the related Deposit Date. The Servicer shall be
reimbursed for any such Monthly Advance from subsequent collections in respect
of interest on such Contract made by or on behalf of the Obligor, or from Net
Liquidation Proceeds or Insurance Proceeds with respect to such Contract. If an
unreimbursed Monthly Advance shall become a Nonrecoverable Advance, the Servicer
shall be reimbursed from collections on all the Contracts in the Trust in the
order of priority set forth in Section 5.05 hereof.
SECTION 5.04 Additional Deposits. CITSF, the Servicer or the Buyer, as the
case may be, shall deposit into the Collection Account the aggregate Purchase
Price pursuant to Sections 3.02, 4.02, 4.07, 11.01 and 11.02 hereof, as
applicable. All remittances shall be made to the Collection Account, in next-day
funds or immediately available funds, no later than 12:00 noon, New York time,
on the related Deposit Date.
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SECTION 5.05 Distributions.
(a) On or before the Determination Date preceding a Distribution Date, the
Servicer shall make a determination and inform the Indenture Trustee and the
Owner Trustee in writing (and the Paying Agent, if any, appointed pursuant to
the Trust Agreement or the Indenture) of the following amounts with respect to
the preceding Due Period: (i) the aggregate amount of collections on the
Contracts; (ii) the aggregate amount of Monthly Advances to be remitted by the
Servicer; (iii) the aggregate Purchase Price of Contracts to be purchased by
CITSF or the Servicer; (iv) the aggregate amount of funds to be withdrawn from
the Additional Enhancement Sub-Account and deposited into the Collection
Account; (v) the aggregate amount to be distributed as principal and interest on
the Notes on the related Distribution Date; (vi) the aggregate amount to be
distributed as principal and interest on the Certificates on the related
Distribution Date; (vii) the Servicer Payment; (viii) the amounts required to be
withdrawn from the Reserve Account for such Distribution Date in accordance with
Sections 5.05(b) and 5.06 hereof; (ix) any amounts to be deposited into the
Additional Enhancement Sub-Account pursuant to Section 5.05(b)(x), the Excess
Sub-Account pursuant to Section 5.05(b)(xiii) and the Reserve Account pursuant
to Section 5.06 hereof; (x) the aggregate amount of unreimbursed Monthly
Advances to be reimbursed to the Servicer; (xi) the Insurance Premiums to be
paid to the Insurer; (xii) the amount of any Lender Fees; and (xiii) the amount
of any Reimbursement Obligations.
(b) On or before 11:00 a.m. (New York City time) on each Distribution Date
the Indenture Trustee, based on the written instruction provided by the Servicer
in subsection (a) above, shall withdraw the Available Amount from the Collection
Account and the Indenture Trustee or the Paying Agent on behalf of the Indenture
Trustee shall make the following payments (to the extent sufficient funds are
available therefor) in the following order and priority:
(i) the Servicer Payment (to the extent not previously retained by
the Servicer) shall be paid to the Servicer;
(ii) the Insurance Premium (to the extent accrued prior to an
Insurer Default and not previously paid) shall be paid to the Insurer;
(iii) the Note Interest Distribution Amount will be deposited into
the Note Distribution Account, for payment to the Noteholders for amounts
due and unpaid on the Notes for interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on each
class of the Notes for interest on such Distribution Date;
(iv) the Certificate Interest Distribution Amount will be deposited
into the Certificate Distribution Account, for payment to the
Certificateholders for interest on such Distribution Date;
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(v) on and prior to the Crossover Date, the Note Primary Principal
Distribution Amount will be deposited into the Note Distribution Account,
for payment of principal to the Noteholders in the following order of
priority:
(a) to the Class A-1 Notes until the principal balance of the
Class A-1 Notes is reduced to zero;
(b) to the Class A-2 Notes until the principal balance of the
Class A-2 Notes is reduced to zero;
(c) to the Class A-3 Notes until the principal balance of the
Class A-3 Notes is reduced to zero; and
(d) to the Class A-4 Notes until the principal balance of the
Class A-4 Notes is reduced to zero;
provided, however, that if an Event of Default has occurred and the
Insurer is not the Controlling Party and the Notes have been accelerated,
the Note Primary Principal Distribution Amount will be deposited into the
Note Distribution Account, for payment of principal on each class of Notes
pro rata on the basis of their respective unpaid principal amounts;
(vi) on and prior to the Distribution Date on which the Certificates
have been paid in full, the Certificate Primary Principal Distribution
Amount will be deposited into the Certificate Distribution Account, for
payment of principal to the Certificateholders;
(vii) the Reimbursement Obligations will be paid to the Insurer (to
the extent not previously paid);
(viii) the Lender Fees will be paid to the Lender;
(ix) if CITSF or one of its affiliates is the Servicer, the
Servicing Fee (including any unpaid Servicing Fees for prior Due Periods)
shall (to the extent not previously paid to the Servicer) be paid to the
Servicer;
(x) deposit in the Additional Enhancement Sub-Account the amount
necessary, if any, to increase the balance in the Additional Enhancement
Sub-Account to equal the Additional Required Reserve Amount for such
Distribution Date;
(xi) on and prior to the Distribution Date on which the Notes have
been paid in full, the Note Additional Principal Distribution Amount will
be deposited into the Note Distribution Account for payment of principal
to the Noteholders in the following order of priority:
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(a) to the Class A-1 Notes until the principal balance of the
Class A-1 Notes is reduced to zero;
(b) to the Class A-2 Notes until the principal balance of the
Class A-2 Notes is reduced to zero;
(c) to the Class A-3 Notes until the principal balance of the
Class A-3 Notes is reduced to zero; and
(d) to the Class A-4 Notes until the principal balance of the
Class A-4 Notes is reduced to zero;
(xii) on and prior to the Distribution Date on which the
Certificates have been paid in full, the Certificate Additional Principal
Distribution Amount will be deposited into the Certificate Distribution
Account for payment of principal to the Certificateholders; and
(xiii) the balance, if any, remaining after the payments on clauses
(i) through (xii) above shall be deposited in the Excess Sub-Account.
(c) On each Distribution Date, the Indenture Trustee and the Owner Trustee
shall distribute all amounts in the Note Distribution Account and the
Certificate Distribution Account, respectively, to the Noteholders and the
Certificateholders, respectively, as provided in the Indenture and Trust
Agreement, respectively.
SECTION 5.06 Reserve Account.
(a) The Indenture Trustee shall, on the Closing Date, deposit or cause to
be deposited in the Loan Sub-Account by wire transfer of immediately available
funds the Initial Reserve Amount from the proceeds of the loan to be made on the
Closing Date by the Lender under the Loan Agreement. On each Distribution Date,
the Indenture Trustee shall deposit or cause to be deposited into the Reserve
Account by wire transfer of immediately available funds any amount it receives
pursuant to (a) Section 5.05(b)(x) into the Additional Enhancement Sub-Account
and (b) Section 5.05(b)(xiii) into the Excess Sub-Account. The Indenture Trustee
shall have the sole right to make withdrawals from the Reserve Account. Amounts
withdrawn from the Reserve Account and paid to the Securityholders, the Lender,
or the holder of the AO Interest, as provided herein and in the Loan Agreement,
shall not be required to be reimbursed to the Reserve Account by the Trustees,
the Securityholders, the Lender, any Paying Agent or any transferee thereof. Any
amounts withdrawn from the Reserve Account to be distributed to Securityholders
shall be withdrawn first from the Additional Enhancement Sub-Account, then from
the Excess Sub-Account and, finally, from the Loan Sub-Account.
(b) (i) In the event that the sum of the Certificate Interest Distribution
Amount, the Note Interest Distribution Amount, the Note Primary Principal
Distribution Amount and the Certificate Primary Principal Distribution Amount to
be distributed to
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the Securityholders for any Distribution Date exceeds the amount deposited in
the Certificate Distribution Account and Note Distribution Account pursuant to
clauses (iii) through (vi) of Section 5.05(b) hereof on such Distribution Date,
the Servicer shall instruct the Indenture Trustee in writing to withdraw or
cause to be withdrawn from the Reserve Account, in the order of priority set
forth in the last sentence of subparagraph (a) of this Section 5.06, on or
before the related Deposit Date the lesser of the amount of such excess and the
sum of the Available Reserve Amount and the amount on deposit in the Additional
Enhancement Sub-Account (the "Draw Amount"). The Indenture Trustee shall deposit
such amount, or cause such amount to be deposited first, into the Note
Distribution Account and second, to the extent of any remaining Draw Amount, to
the Certificate Distribution Account no later than 12:00 noon, New York City
time, on such Deposit Date.
(ii) In the event that on a Distribution Date (after giving effect to the
distribution of the Note Primary Principal Distribution Amount and the Note
Additional Principal Distribution Amount to the Noteholders and the Certificate
Primary Principal Distribution Amount and the Certificate Additional Principal
Distribution Amount to the Certificateholders) a Collateralization Shortfall
exists, the Servicer shall instruct the Indenture Trustee in writing to withdraw
or cause to be withdrawn from the Reserve Account, in the order of priority set
forth in clause (a) of this Section 5.06, on or before the related Deposit Date
the lesser of the Collateralization Shortfall and the sum of the Available
Reserve Amount and the amount on deposit in the Additional Enhancement
Sub-Account. The Indenture Trustee shall deposit such amount, or cause such
amount to be deposited into the Note Distribution Account (or if the Notes have
been paid in full, the Certificate Distribution Account), no later than 12:00
noon, New York City time, on such Deposit Date.
(c) (i) On or before the Deposit Date immediately preceding the Note Final
Scheduled Distribution Date with respect to each class of Notes, the Servicer
shall instruct the Indenture Trustee in writing to withdraw or cause to be
withdrawn from the Reserve Account, in the order of priority set forth in last
sentence of subparagraph (a) of this Section 5.06, an amount (the "Final Note
Draw Amount") equal to the lesser of (A) the aggregate outstanding principal
balance of such class of Notes and the Note Interest Distribution Amount on the
applicable Note Final Scheduled Distribution Date, after giving effect to
distributions to Noteholders on the applicable Note Final Scheduled Distribution
Date pursuant to Sections 5.05(b)(iii), (v) and (xi) hereof and (B) the sum of
the Available Reserve Amount and the amount on deposit in the Additional
Enhancement Sub-Account, after giving effect to any withdrawal from the Reserve
Account pursuant to clause (b) of this Section 5.06. The Indenture Trustee shall
deposit such amount, or cause such amount to be deposited, into the Note
Distribution Account no later than 12:00 noon, New York City time, on such
Deposit Date.
(ii) On or before the Deposit Date immediately preceding the Certificate
Final Scheduled Distribution Date, the Servicer shall instruct the Indenture
Trustee in writing to withdraw or cause to be withdrawn from the Reserve Account
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an amount (the "Final Draw Amount") equal to the lesser of (A) the Certificate
Balance and the Certificate Interest Distribution Amount on the Certificate
Final Scheduled Distribution Date, after giving effect to distributions to
Certificateholders on the Certificate Final Scheduled Distribution Date pursuant
to Sections 5.05(b)(iv), (vi) and (xii) hereof and (B) the sum of the Available
Reserve Amount and the amount on deposit in the Additional Enhancement
Sub-Account, after giving effect to any withdrawal from the Reserve Account
pursuant to clause (b) of this Section 5.06. The Indenture Trustee shall deposit
such amount, or cause such amount to be deposited, into the Certificate
Distribution Account no later than 12:00 noon, New York City time, on such
Deposit Date.
(d) Investment Earnings on deposit in the Loan Sub-Account and the Reserve
Account Surplus shall be distributed by the Indenture Trustee to the Lender and
the Holder of the AO Interest to the extent required by, and in accordance with,
Section 3 of the Loan Agreement.
(e) On each Distribution Date on and after the Loan is no longer
outstanding, Investment Earnings on deposit in the Loan Sub-Account Account
(after giving effect to all distributions to the Lender on such Distribution
Date) and the Reserve Account Surplus shall be distributed by the Indenture
Trustee to the Holder of the AO Interest. If The CIT Group, Inc. is rated at
least "BBB" by Standard & Poor's and at least "Baa2" by Moody's on the
Certificate Final Scheduled Distribution Date the Indenture Trustee shall pay on
such Certificate Distribution Date, and if The CIT Group, Inc. is not so rated
the Indenture Trustee shall pay after the expiration of the applicable
preference period, to the Holder of the AO Interest any amounts remaining on
deposit in the Reserve Account after paying the Final Draw Amount to the
Certificateholders as contemplated by subparagraph (c) above, and paying the
outstanding principal and interest payable to the Lender pursuant to Section 3
of the Loan Agreement.
(f) If at any time the Reserve Account ceases to be maintained as an
Eligible Account as required by Section 5.01(a) hereof, the Indenture Trustee
shall within 10 Business Days (or such longer period not to exceed 30 calendar
days, as to which each Rating Agency may consent) establish a new Reserve
Account meeting the conditions specified in Section 5.01(a) hereof and shall
transfer any and all cash and investments in the Reserve Account to such new
Reserve Account.
(g) With respect to the Reserve Account Property:
(i) any Reserve Account Property that constitutes Physical Property
(and that is not either a United States Security Entitlement or a Security
Entitlement) shall be delivered to the Indenture Trustee in accordance
with paragraph (a) of the definition of "Delivery" and shall be held by
the Indenture Trustee, pending maturity or disposition;
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(ii) the Indenture Trustee shall maintain Control over any Reserve
Account Property that is a United States Security Entitlement or a
Security Entitlement, pending maturity or disposition; and
(iii) any Reserve Account Property that is an Uncertificated
Security (and that is not a United States Security Entitlement) shall be
delivered to the Indenture Trustee in accordance with paragraph (b) of the
definition of "Delivery" and shall be maintained by the Indenture Trustee,
pending maturity or disposition.
The Indenture Trustee shall, at the expense of the Seller, take such
action as is required to maintain the Indenture Trustee's security interest in
any Reserve Account Property; provided, however, that the Indenture Trustee may
conclusively rely upon the written instructions of the Seller as to the method
by which the security interest of the Indenture Trustee may be perfected. The
Seller shall provide such instructions with respect to the method of perfection
of such security interest.
(h) On or before the Deposit Date immediately preceding each Distribution
Date, the Servicer shall instruct the Indenture Trustee in writing to withdraw
or cause to be withdrawn from the Additional Enhancement Sub-Account, an amount
equal to the excess, if any of the amount on deposit in the Additional
Enhancement Sub-Account over the Additional Required Reserve Amount for such
Distribution Date. The Indenture Trustee shall deposit such amount, or cause
such amount to be deposited, into the Collection Account no later than 12:00
noon, New York City time, on such Deposit Date.
SECTION 5.07 Net Deposits. As an administrative convenience, the Servicer
shall be permitted to make deposits of collections, Monthly Advances and the
aggregate Purchase Price of Contracts for, or with respect to, a Due Period net
of distributions to be made to the Servicer with respect to such Due Period
(including, without limitation, the Servicing Fee, reimbursement of
Nonrecoverable Advances and amounts to be deducted in the definition of
"Available Amount"). The Servicer, however, shall account to the Trustees and
the Securityholders as if all such deposits and distributions were made on an
aggregate basis for each type of payment or deposit.
SECTION 5.08 Statements to Securityholders. On each Distribution Date, the
Servicer shall prepare and provide to the Trustees and the Insurer, to be
delivered by the Trustees on such Distribution Date to each Securityholder, the
Monthly Report which shall be in substantially the form of Exhibit D hereto,
setting forth for the related Due Period the following information (with such
additional information as the Servicer shall elect to include therein):
(i) the amount of collections on the Contracts during the
immediately preceding Due Period;
(ii) the Available Amount;
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(iii) the amount of the distribution allocable to principal of each
class of the Notes and to the Certificate Balance of the Certificates,
including any overdue principal;
(iv) the amount of the distribution allocable to interest on or with
respect to each class of Securities, including any overdue interest;
(v) the Pool Balance, the Note Pool Factors and the Certificate Pool
Factor as of the end of the related Due Period;
(vi) the Servicer Payment for such Distribution Date;
(vii) the amount of Monthly Advances, if any, during the immediately
preceding Due Period;
(viii) the amount, if any, withdrawn from the Reserve Account and
distributed to the Noteholders and the Certificateholders with respect to
such Distribution Date;
(ix) the Available Reserve Amount, after giving effect to any
deposit to or withdrawal from the Reserve Account with respect to such
Distribution Date, and such amount expressed as a percentage of the Pool
Balance;
(x) the aggregate principal balance of all Contracts which were
delinquent 30, 60, 90, 120 and 180 days or more as of the last day of the
related Due Period;
(xi) the aggregate principal balance of all Contracts secured by
Financed Boats that have been repossessed during the related Due Period
and the aggregate principal balance of all Contracts secured by Financed
Boats that remain in repossession inventory as of the last day of the
related Due Period.
(xii) the amount of investment earnings, net of losses and
investment expenses, on amounts on deposit in the Collection Account;
(xiii) the aggregate principal balance of all Contracts which became
Liquidated Contracts during the related Due Period;
(xiv) the number and aggregate principal amount of Contracts which
were prepaid, in part or in whole, during the related Due Period;
(xv) the aggregate outstanding principal balance of each class of
the Notes as of such Distribution Date after giving effect to any
distributions on such Distribution Date;
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(xvi) the Certificate Balance as of such Distribution Date after
giving effect to any distributions thereon and reductions thereto on such
Distribution Date;
(xvii) the amount, if any, by which the amount due to be distributed
to each class of Noteholders and Certificateholders exceeds the actual
amount distributed on the related Distribution Date to each class of the
Noteholders and Certificateholders, respectively;
(xviii) the Draw Amount, if any, and the Final Draw Amount (if
applicable) with respect to such Distribution Date;
(xix) the Specified Reserve Amount;
(xx) the Additional Required Reserve Amount;
(xxi) the amount of Lender Fees;
(xxii) amount of the surplus to be distributed to the Lender and to
the holder of the AO Interest after all payments have been made in respect
of the Securities and the Servicer Payment has been paid; and
(xxiii) the amount, if any, of funds received with respect to draws
on the Policies or Insurer Optional Deposits.
Within a reasonable period of time after the end of each calendar year,
but not later than the latest date permitted by law (where applicable law
specifies such date), the Servicer shall furnish or cause to be furnished to
each Person who at any time during such calendar year was a Securityholder, and
received any payment thereon, a statement containing the relevant amounts
described above for such calendar year. Such obligation shall be deemed to have
been satisfied to the extent that substantially comparable information shall be
provided to the Securityholders pursuant to any requirements of the Code as from
time to time in force.
SECTION 5.09 Claims on the Policies.
(a) If an Insured Payment is necessary for any Due Period, then the
Indenture Trustee or the Owner Trustee shall give notice to the Insurer and the
Fiscal Agent (as defined in the Policies), if any, by telephone or telecopy of
the amount of the required Insured Payment. Such notice shall be confirmed in
writing by the Indenture Trustee or the Owner Trustee in the form set forth as
Exhibit A to each of the Note Insurance Policy and the Certificate Insurance
Policy, to the Insurer and the Fiscal Agent, if any, so that such notice is
received by the Insurer and the Fiscal Agent no later than 3:00 p.m., New York
City time, on the Deficiency Claim Date. Following receipt by the Insurer of
such notice in such form, the Insurer or the Fiscal Agent shall pay the
Indenture Trustee or the Trust any amount payable under the Policies, on the
later to occur of (i) 3:00 p.m. New York City time, on the third Business Day
following such receipt and
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(ii) 3:00 p.m., New York City time, on the Distribution Date to which such
deficiency relates, as provided in the Policies.
(b) The Indenture Trustee or the Owner Trustee shall deposit the Insured
Payments made under the Policies in the Note Distribution Account or the
Certificate Distribution Account, as the case may be, and distribute such
amounts only to pay to the Noteholders or Certificateholders, as the case may
be, in accordance with the terms of the Policies, and such amounts may not be
applied in any other manner. Amounts paid under the Policies shall remain
uninvested and shall be disbursed by the Indenture Trustee or the Owner Trustee
to Noteholders or Certificateholders in accordance with Section 5.05(b), the
Policies and the Indenture. However, the amount of any payment of principal of
or interest on the Notes or Certificates, to be paid from amounts in the Note
Distribution Account or the Certificate Distribution Account, as the case may
be, in respect of payments on the Policies shall be noted in the records to be
maintained as provided in paragraph (c) below, and in the statement to be
furnished to the Noteholders and Certificateholders pursuant to Section 5.08.
(c) The Indenture Trustee or the Owner Trustee, as the case may be, shall
keep a complete and accurate record of the amount of interest and principal paid
in respect of any Notes or Certificates from moneys received under the Policies.
The Insurer shall have the right to inspect such records at reasonable times
during normal business hours upon three Business Day's prior written notice to
the Indenture Trustee or the Owner Trustee at the expense of the Insurer.
(d) In fulfilling its obligations under this Section 5.09, the Owner
Trustee may act through the Paying Agent appointed pursuant to Section 3.9 of
the Trust Agreement.
SECTION 5.10 Notices to the Insurer. All notices, statements, reports,
notes, or opinions required by this Agreement to be sent to any other party
hereto or to the Securityholders at any time shall also be sent to the Insurer
unless the Policies are no longer in effect (and the Insurer has been paid in
full).
SECTION 5.11 Rights in Respect of Insolvency Proceedings.
(a) In the event that the Indenture Trustee or the Owner Trustee has
received a certified copy of a final, nonappealable order of the appropriate
court that any distribution of the Note Distribution Amount or the Certificate
Distribution Amount has been voided in whole or in part as a preference payment
in connection with any proceeding by or against CIT, the Selling Trust, the
Seller, the Servicer or the Trust commenced under the United States Bankruptcy
Code or any other applicable United States federal or state bankruptcy,
insolvency, receivership, rehabilitation, or similar law (an "Insolvency
Proceeding") the Indenture Trustee or the Owner Trustee, as the case may be,
shall comply with the terms of the Policies relating to Preference Amounts. The
Servicer shall provide notice to the Rating Agencies of the commencement of any
such Insolvency Proceeding.
(b) The Indenture Trustee shall promptly notify the Insurer of either of
the following as to which a Responsible Officer has Actual Knowledge: (i) the
commencement of any Insolvency Proceeding or (ii) the making of any claim in
connection with any Insolvency
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Proceeding seeking the avoidance as a preferential transfer (a "Preference
Claim") of any payment of principal of or interest on the Notes. Each
Noteholder, by its purchase of a Note, and the Indenture Trustee hereby agree
that, so long as an Insurer Default shall not have occurred and be continuing,
the Insurer may at any time during the continuation of an Insolvency Proceeding
direct all matters relating to such Insolvency Proceeding, including (i) all
matters relating to any Preference Claim, (ii) the direction of any appeal of
any order relating to any Preference Claim and (iii) the posting of any surety,
supersedeas or performance bond pending any such appeal. In addition, and
without limitation of the foregoing, as set forth in Section 5.12, the Insurer
shall be subrogated to, and each Noteholder and the Indenture Trustee hereby
delegate and assign, to the fullest extent permitted by law, the rights of the
Indenture Trustee and such Noteholder in the conduct of any Insolvency
Proceeding, including all rights of any party to an adversary proceeding action
with respect to any court order issued in connection with any such Insolvency
Proceeding.
(c) Upon the occurrence of any of the events described in (a) or (b)
above, the Indenture Trustee shall furnish to the Insurer its records evidencing
the distributions of principal of and interest on the Notes that have been made
and subsequently recovered from Noteholders and the dates on which such payments
were made.
(d) The Owner Trustee shall promptly notify the Insurer of either of the
following as to which a Responsible Officer has Actual Knowledge: (i) the
commencement of any Insolvency Proceeding or (ii) the making of any Preference
Claim of any payment of principal of or interest on the Certificates. Each
Certificateholder, by its purchase of a Certificate, and the Trust hereby agree
that, so long as the Insurer is the Controlling Party, the Insurer may at any
time during the continuation of an Insolvency Proceeding direct all matters
relating to such Insolvency Proceeding, including (i) all matters relating to
any Preference Claim, (ii) the direction of any appeal of any order relating to
any Preference Claim and (iii) the posting of any surety, supersedeas or
performance bond pending any such appeal. In addition, and without limitation of
the foregoing, as set forth in Section 5.12, the Insurer shall be subrogated to,
and each Certificateholder and the Trust hereby delegate and assign, to the
fullest extent permitted by law, the rights of the Trust and such
Certificateholder in the conduct of any Insolvency Proceeding, including all
rights of any party to an adversary proceeding action with respect to any court
order issued in connection with any such Insolvency Proceeding.
(e) Upon the occurrence of any of the events described in (a) or (d)
above, the Owner Trustee shall furnish to the Insurer, at the Insurer's expense,
copies of its records evidencing the distributions of principal of and interest
on the Certificates that have been made and subsequently recovered from
Certificateholders and the dates on which such payments were made.
(f) In fulfilling its obligations under this Section 5.11, the Owner
Trustee may act through the Paying Agent appointed pursuant to Section 3.9 of
the Trust Agreement.
SECTION 5.12 Effect of Payments by the Insurer; Subrogation.
(a) Anything herein to the contrary notwithstanding, any distribution of
principal of or interest on the Notes that is made with moneys received pursuant
to the terms of the Note
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Insurance Policy shall not be considered payment of the Notes by the Trust and
shall not discharge the Trust assets in respect of such distribution. Without
the need for any further action on the part of the Insurer, the Indenture
Trustee or the Note Registrar, (i) to the extent the Insurer makes payments,
directly or indirectly, on account of principal of or interest on the Notes to
the Noteholders thereof, the Insurer will be fully subrogated to the rights of
such Noteholders to receive such principal and interest from distributions of
the assets of the Trust and will be deemed to the extent of the payments so made
to be a Noteholder and (ii) the Insurer shall be paid principal and interest in
its capacity as a Noteholder until all such payments by the Insurer have been
fully reimbursed, but only from the sources and in the manner provided herein
for the distribution of such principal and interest and in each case only after
the Noteholders have received all payments of principal and interest due to them
under this Agreement on the related Distribution Date.
(b) Anything herein to the contrary notwithstanding, any distribution of
principal of or interest on the Certificates that is made with moneys received
pursuant to the terms of the Certificate Insurance Policy shall not be
considered payment of the Certificates by the Trust and shall not discharge the
Trust assets in respect of such distribution. The Owner Trustee acknowledges
that, without the need for any further action on the part of the Insurer, the
Owner Trustee or the Certificate Registrar, (i) to the extent the Insurer makes
payments, directly or indirectly, on account of principal of or interest on the
Certificates to the Certificateholders thereof, the Insurer will be fully
subrogated to the rights of such Certificateholders to receive such principal
and interest from distributions of the assets of the Trust and will be deemed to
the extent of the payments so made to be a Certificateholder and (ii) the
Insurer shall be paid principal and interest in its capacity as a
Certificateholder until all such payments by the Insurer have been fully
reimbursed, but only from the sources and in the manner provided herein for the
distribution of such principal and interest and in each case only after the
Certificateholders have received all payments of principal and interest due to
them under this Agreement on the related Distribution Date.
(c) Without limiting the rights or interests of the Noteholders or the
Certificateholders as otherwise set forth herein, so long as no Insurer Default
exists or is not continuing, the Indenture Trustee or the Trust, as the case may
be, shall cooperate in all respects with any reasonable request by the Insurer
for action to preserve or enforce the Insurer's rights or interests under this
Agreement, including, upon the occurrence of an Event of Termination, a request
to take any one or more of the following actions:
(i) institute proceedings for the collection of all amounts then
payable on the Notes or the Certificates under this Agreement, enforce any
judgment obtained and collect moneys adjudged due; and
(ii) exercise any remedies of a secured party under the UCC and take
any other appropriate action to protect and enforce the rights and
remedies of the Insurer hereunder.
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ARTICLE VI
[RESERVED]
ARTICLE VII
THE COMPANY
SECTION 7.01 Representations of Company. The Company hereby makes the
following representations as to itself on which the Owner Trustee and the
Indenture Trustee on behalf of the Trust shall rely in accepting the Contracts
in trust and authenticating the Certificates and the Notes, respectively. The
representations are made as of the execution and delivery of this Agreement, and
shall survive the sale of the Contracts to the Trust.
(i) Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the corporate power to own its assets
and to transact the business in which it is currently engaged. The Company is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which the character of the business transacted by it or
properties owned or leased by it requires such qualification and in which the
failure so to qualify would have a material adverse effect on the business,
properties, assets, or condition (financial or other) of the Company or on the
Certificates or the transactions contemplated by this Agreement.
(ii) Authorization; Binding Obligations. The Company has the power and
authority to make, execute, deliver and perform this Agreement and all of the
transactions contemplated under this Agreement, and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement. When executed and delivered, this Agreement will constitute the
legal, valid and binding obligation of the Company enforceable in accordance
with its terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally and by the availability of equitable remedies.
(iii) No Consent Required. The Company is not required to obtain the
consent of any other party or any consent, license, approval or authorization
from, or registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement the failure of which so to obtain would have a
material adverse effect on the business, properties, assets or condition
(financial or otherwise) of the Company or on the Certificates or the
transactions contemplated by this Agreement.
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(iv) No Violations. The execution, delivery and performance of this
Agreement by the Company will not violate any provision of any existing law or
regulation or any order or decree of any court or the Articles of Incorporation
or Bylaws of the Company, or constitute a material breach of any mortgage,
indenture, contract or other agreement to which the Company is a party or by
which the Company may be bound.
(v) Litigation. No litigation or administrative proceeding of or before
any court, tribunal or governmental body is currently pending, or to the
knowledge of the Company threatened, against the Company or any of its
properties or with respect to this Agreement or the Certificates which, if
adversely determined, would in the opinion of the Company have a material
adverse effect on the transactions contemplated by this Agreement.
SECTION 7.02 Merger or Consolidation of Company. Any Person into which the
Company may be merged or consolidated, or any corporation resulting from any
merger or consolidation to which the Company shall be a party, or any Person
succeeding to the business of the Company, shall be the successor of the Company
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding. The Company shall promptly notify each Rating Agency of any
such merger to which it is a party and such merger shall satisfy the Rating
Agency Condition.
SECTION 7.03 Limitation on Liability of the Company and Others.
(a) Neither the Company nor any of the directors, officers, employees or
agents of the Company shall be under any liability to the Owner Trustee, the
Indenture Trustee, the Certificateholders or the Noteholders for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment; notwithstanding anything herein to
the contrary, no party to this Agreement shall have any recourse against the
Company for any actions taken, or failed to be taken, by the Company.
(b) The Company and any director, officer, employee or agent of the
Company may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
(c) The Company shall not be under any obligation to appear in, prosecute
or defend any legal action which arises under this Agreement.
SECTION 7.04 The Company May Own Securities. The Company and any Person
controlling, controlled by, or under common control with the Company may in its
individual or any other capacity become the owner or pledgee of Notes or
Certificates with the same rights as it would have if it were not the Company or
an Affiliate thereof, except as otherwise provided in the definition of
"Noteholder" or "Certificateholder," respectively. Notes and Certificates so
owned by or pledged to the Company or such controlling or commonly controlled
Person shall
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have an equal and proportionate benefit under the provisions of this Agreement,
without preference, priority or distinction as among all of the Notes and
Certificates.
SECTION 7.05 Indebtedness of and Sale of Assets by the Company.
(a) The Company will not incur any material indebtedness (other than
indebtedness which is contemporaneously repaid upon the issuance of securities
by the Company or by selling any assets in connection therewith to the extent
permitted by its Certificate of Incorporation) nor will it sell all or
substantially all of its assets, if either such action would result in the
downgrading by Moody's of any outstanding securities of the Company or any trust
or other entity of which the Company is the settlor or depositor, which
securities are then rated by Moody's; provided, however, nothing contained in
this Agreement shall prohibit the Company from issuing any securities or acting
as the settlor or depositor of any trust or other entity (or selling any assets
in connection therewith) to the extent permitted by its Certificate of
Incorporation.
(b) Prior to the issuance of any securities by the Company, the Company
shall give at least five days' prior written notice to Moody's with a copy of
the Prospectus or Preliminary Prospectus Supplement and, on the issuance date, a
copy of the agreements pertaining to such securities of the type in the
definition of Basic Documents.
ARTICLE VIII
THE SERVICER
SECTION 8.01 Representations of CITSF. CITSF hereby makes the following
representations on which the Owner Trustee and the Indenture Trustee on behalf
of the Trust shall rely in accepting the Contracts in trust and authenticating
the Certificates and the Notes, respectively. The representations are made as of
the execution and delivery of this Agreement, and shall survive the sale of the
Contracts to the Trust.
(i) Organization and Good Standing. CITSF is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization and has the corporate power to own its assets and to transact the
business in which it is currently engaged. CITSF is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the character of the business transacted by it or properties owned or
leased by it requires such qualification and in which the failure so to qualify
would have a material adverse effect on the business, properties, assets, or
condition (financial or other) of CITSF or on the Certificates or the
transactions contemplated by the Agreement.
(ii) Authorization; Binding Obligations. CITSF has the power and authority
to make, execute, deliver and perform this Agreement and all of the transactions
contemplated under this Agreement, and has taken all necessary
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corporate action to authorize the execution, delivery and performance of this
Agreement. When executed and delivered, this Agreement will constitute the
legal, valid and binding obligation of CITSF enforceable in accordance with its
terms, except as enforcement of such terms may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and by the availability of equitable remedies.
(iii) No Consent Required. CITSF is not required to obtain the consent of
any other party or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or agency
in connection with the execution, delivery, performance, validity or
enforceability of this Agreement the failure of which so to obtain would have a
material adverse effect on the business, properties, assets or condition
(financial or otherwise) of CITSF or on the Certificates or the transactions
contemplated by this Agreement.
(iv) No Violations. The execution, delivery and performance of this
Agreement by CITSF will not violate any provision of any existing law or
regulation or any order or decree of any court or the Articles of Incorporation
or Bylaws of CITSF, or constitute a material breach of any mortgage, indenture,
contract or other agreement to which CITSF is a party or by which CITSF may be
bound.
(v) Litigation. No litigation or administrative proceeding of or before
any court, tribunal or governmental body is currently pending, or to the
knowledge of CITSF threatened, against CITSF or any of its properties or with
respect to this Agreement or the Certificates which, if adversely determined,
would in the opinion of CITSF have a material adverse effect on the transactions
contemplated by this Agreement.
SECTION 8.02 Liability of Servicer, Indemnities. The Servicer shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under the Basic Documents and shall have no other
obligations or liabilities hereunder.
(i) The Servicer shall defend, indemnify, and hold harmless the Owner
Trustee, the Indenture Trustee, the Trust, the Certificateholders and the
Noteholders from and against any and all costs, expenses, losses, damages,
claims, and liabilities, arising from any failure by the Servicer to comply with
the provisions of this Agreement relating to Forced Placed Insurance (including
any violation by the Servicer of any applicable law in connection with the force
placement of insurance or the receipt of any commissions related thereto) which
materially and adversely affects the Trust's interest in any Contract; provided,
however, that nothing herein shall be construed to imply that the Servicer is
obligated to force place insurance.
(ii) Subject to Section 8.04(a) hereof, the Servicer will defend and
indemnify the Insurer, the Owner Trustee, the Indenture Trustee, the Trust, the
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Certificateholders and the Noteholders against any and all costs, expenses,
losses, damages, claims and liabilities arising out of or resulting from (x) the
negligent use or operation by the Servicer of a Financed Boat or (y) any
negligent action taken, or negligently failed to be taken, by the Servicer with
respect to any Financed Boat, to the extent such loss is not reimbursed pursuant
to any Insurance Policy, the Servicer's Errors and Omission Policy or any
fidelity bond.
(iii) The Servicer agrees to pay, and shall indemnify, defend, and hold
harmless the Owner Trustee (and its officers, directors, employees and agents),
the Indenture Trustee (and its officers, directors, employees and agents), the
Trust, the Certificateholders and the Noteholders from and against, any taxes
that may at any time be asserted with respect to the transfer of the Contracts
to the Trust, including, without limitation, any sales, gross receipts, personal
or real property, privilege or license taxes (but not including any federal,
state or other taxes arising out of the creation of the Trust and the issuance
of the Notes and Certificates or distributions with respect thereto) and costs,
expenses and reasonable counsel fees in defending against the same.
(iv) The Servicer shall indemnify, defend, and hold harmless the Insurer,
the Owner Trustee, the Indenture Trustee, the Trust, the Certificateholders and
the Noteholders from and against any and all costs, expenses, losses, claims,
damages, and liabilities to the extent that such cost, expense, loss, claim,
damage, or liability arose out of, or was imposed upon such Persons, through the
willful misfeasance, negligence, or bad faith of the Servicer in the performance
of its duties under this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement, or, with respect to the Owner
Trustee, arising from a violation of the securities laws in connection with the
offer and sale of the Certificates or the Notes.
(v) The Servicer shall indemnify, defend, and hold harmless from and
against, and pay to the Trustees (and their respective officers, directors,
employees and agents) all costs, expenses (including reasonable legal fees and
expenses), losses, claims, damages, and liabilities arising out of or incurred
in connection with the acceptance or performance of the trusts and duties herein
contained in accordance with the terms and conditions herein and in the other
Basic Documents, as the case may be, except to the extent that such cost,
expense, loss, claim, damage or liability: (a) shall be due to the willful
misfeasance, negligence or bad faith of such Trustee; (b) relates to any tax
other than the taxes with respect to which the Company shall be required to
indemnify such Trustee pursuant to this Agreement; (c) shall arise from such
Trustee's breach of any of its representations or warranties set forth in the
Trust Agreement or the Indenture, as applicable; or (d) shall arise out of or be
incurred in connection with the acceptance or performance by such Trustee of the
duties of successor Servicer hereunder.
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Indemnification under this Section 8.02 shall include reasonable fees and
expenses of counsel in any litigation appointed by the Servicer and reasonably
satisfactory to the indemnitee, provided that the Servicer shall only be
required to pay the fees and expenses of one counsel in any single litigation
(or related proceedings) for all indemnitees; provided, however, if in the
written opinion of counsel reasonably satisfactory to the Servicer, the
interests of an indemnitee and the Servicer conflict such that the Servicer and
such indemnitee may not both be represented by such counsel, upon ten days prior
written notice to the Servicer, such indemnitee may hire one other counsel and
the indemnification under this Section 8.02 shall also include the reasonable
fees and expenses of such other counsel. If the Servicer shall have made any
indemnity payments pursuant to this Section 8.02 and the recipient thereafter
collects any of such amounts from others, the recipient shall promptly repay
such amounts to the Servicer without interest. The indemnities under this
Section 8.02 shall survive the resignation or removal of an indemnitee, the
resignation or termination of the Servicer for any costs, claims or expenses
arising prior to the date of such resignation or termination, or the termination
of the Trust Agreement and this Agreement.
SECTION 8.03 Merger or Consolidation of Servicer. Any person into which
the Servicer may be merged or consolidated, or any corporation or other entity
resulting from any merger, conversion or consolidation to which the Servicer
shall be a party, or any Person succeeding to the business of the Servicer
(which Person assumes the obligations of the Servicer), shall be the successor
of the Servicer hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding; provided, however, that the successor or surviving
Person to the Servicer shall satisfy the criteria set forth in the definition of
an Eligible Servicer. The Servicer shall promptly notify each Rating Agency of
any such merger to which it is a party.
SECTION 8.04 Limitation on Liability of Servicer and Others.
(a) Neither the Servicer, nor any of the shareholders, Affiliates,
directors, officers, employees or agents of the Servicer shall be under any
liability to the Trust or the Securityholders for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Servicer, the Company or any such Person against any
liability which otherwise would be imposed by reason of willful misfeasance, bad
faith or negligence in the performance of duties or by reason or reckless
disregard of obligations and duties hereunder.
(b) The Servicer and any director, officer, employee or agent of the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
(c) Except as arises from its duties as Servicer hereunder, the Servicer
shall not be under any obligation to appear in, prosecute or defend any legal
action which arises under this Agreement and which in its opinion may involve it
in any expenses or liability; provided, however, that the Servicer and the
Company may in its discretion
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undertake any such action which it may deem necessary or desirable in respect of
this Agreement and the rights and duties of the parties hereto. In such event,
the legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs and liabilities of the Trust payable from the
Collection Account and the Servicer and the Company shall be entitled to be
reimbursed therefor out of the Collection Account.
SECTION 8.05 Servicer Not to Resign. The Servicer shall not resign from
its obligations and duties under this Agreement except upon determination that
the performance of its duties shall no longer be permissible under applicable
law, compliance with which could not be realized without material adverse impact
on the Servicer's financial condition. Notice of any such determination
permitting the resignation of the Servicer shall be communicated to the
Trustees, the Insurer and the Rating Agencies at the earliest practicable time
(and, if such communication is not in writing, shall be confirmed in writing at
the earliest practicable time) and any such determination permitting the
resignation of the Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustees and the Insurer. No such resignation shall
become effective until the Indenture Trustee or a successor Servicer shall have
assumed the responsibilities and obligations of the Servicer in accordance with
Section 9.02 hereof.
SECTION 8.06 Assignment of Servicing. The Servicer may sell, transfer,
assign or convey its rights as Servicer to any Eligible Servicer, upon written
notice to the Trustees, the Insurer and the Rating Agencies, without the consent
of the Securityholders or the Trustees, provided that the Rating Agency
Condition is satisfied and the Insurer consents.
ARTICLE IX
EVENTS OF TERMINATION
SECTION 9.01 Events of Termination. "Event of Termination" means the
occurrence of any of the following:
(a) Any failure by the Servicer to make any deposit into an account
required to be made hereunder which failure continues unremedied for a period of
three Business Days after the Servicer has become aware that such deposit was
required;
(b) Any failure by the Servicer duly to observe or perform in any material
respect any covenant or agreement in this Agreement (other than pursuant to
Section 9.01(a)) hereof, which materially and adversely affects the rights of
the Securityholders and which continues unremedied for 60 days after the date on
which written notice of such failure, requiring the same to be remedied, shall
have been given to the Servicer by the Indenture Trustee, the Owner Trustee, the
Insurer or the Company or to the Servicer, the Company and the Trustees by
Holders of Notes or Certificates evidencing not less than 25% of the aggregate
outstanding principal amount of the Notes, or the outstanding Certificate
Balance, respectively, with the written consent of the Insurer, such consent not
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to be unreasonably withheld; provided, however, that if any such failure to
observe or perform a term, covenant or agreement relates solely to one or more
Contracts that have become Repurchased Contracts in accordance with Sections
3.02 and 4.07, then such failure to observe or perform shall not give rise to an
Event of Termination hereunder;
(c) Any assignment or delegation by the Servicer of its duties or rights
hereunder except as specifically permitted hereunder, or any attempt to make
such an assignment or delegation;
(d) A court or other governmental authority having jurisdiction in the
premises in respect of the Servicer shall have entered a decree or order for
relief in respect of the Servicer in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of the Servicer, as the case may be, or for any
substantial liquidation of its affairs, and such order remains undischarged and
unstayed for at least 60 days;
(e) The Servicer shall have commenced a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or shall have consented to the entry of an order for relief in an
involuntary case under any such law, or shall have consented to the appointment
of or taking possession by a receiver, liquidator, assignee, trustee, custodian
or sequestrator (or other similar official) of the Servicer or for any
substantial part of its property, or shall have made any general assignment for
the benefit of its creditors, or shall have failed to, or admitted in writing
its inability to, pay its debts as they become due, or shall have taken any
corporate action in furtherance of the foregoing; or
(f) Any disqualification of the Servicer as an Eligible Servicer.
If an Event of Termination has occurred and is continuing, the Insurer or,
if the Insurer is no longer the Controlling Party, the Indenture Trustee (or, if
no Notes are outstanding, the Owner Trustee) may, and at the written direction
of Holders of Notes evidencing not less than a majority of the aggregate
outstanding principal amount of the Notes (or, if no Notes are outstanding, by
the Holders of Certificates evidencing not less than a majority of the
Certificate Balance), with the written consent of the Insurer (so long as the
Insurer is the Controlling Party), such consent not to be unreasonably withheld,
shall, unless prohibited by applicable law, terminate all (but not less than
all) of the rights and obligations of the Servicer with respect to the Trust
hereunder and in and to the Contracts, and the proceeds thereof (such
termination being herein called a "Service Transfer"), whereupon (subject to
applicable law) all authority and power of the Servicer under this Agreement,
whether with respect to the Contracts, the Contract Files or otherwise, shall
pass to and be vested in the Indenture Trustee pursuant to and under this
Section 9.01 (however, if no Notes are outstanding, such authority shall pass to
and be vested in the Owner Trustee pursuant to and under this Section 9.01);
and, without limitation, such Trustee is authorized and empowered to execute and
deliver on behalf of the Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments (including, without limitation,
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documents required to make such Trustee or a successor Servicer the sole
lienholder or legal title holder of record of each Financed Boat), and to do any
and all acts or things necessary or appropriate to effect the purposes of such
notice of termination. Each of CITSF and the Servicer agrees to cooperate with
such Trustee in effecting the termination of the responsibilities and rights of
the Servicer hereunder, including, without limitation, the transfer to such
Trustee for administration by it of all cash amounts which shall at the time be
held by the Servicer for deposit, or have been deposited by the Servicer, in the
Collection Account, or for its own account in connection with its services
hereafter or thereafter received with respect to the Contracts and the execution
of any documents required to make such Trustee or a successor Servicer the sole
lienholder or legal title holder of record in respect of each Financed Boat
including the retitling of Financed Boats located in the states in which
notation of a security interest on the title document is required to perfect a
security interest in favor of the Trust in the Financed Boat covered by a
Contract. The Servicer shall be entitled to receive any other amounts which are
payable to the Servicer under this Agreement (including amounts payable to it
with respect to the period ending on the date of the Service Transfer), at the
time of the termination of its activities as Servicer, to the extent that funds
in the Collection Account are available for the payment thereof without reducing
the amount of distributions that would be made to Holders of the Notes and
Certificates (or, if funds are not sufficient therefor at the time of such
termination, on the first Distribution Date on which funds are sufficient
therefor). The Servicer shall transfer to the successor Servicer (i) the
Servicer's records relating to the Contracts in such electronic form as the
successor Servicer may reasonably request and (ii) the Contracts and any of the
Contract Files in the Servicer's possession. The Servicer shall be responsible
for the costs of such transfer.
SECTION 9.02 Indenture Trustee to Act; Appointment of Successor. On and
after the time the Servicer receives a notice of termination pursuant to Section
9.01 hereof or a notice of determination pursuant to Section 8.05 hereof, the
Indenture Trustee (or, if no Notes are outstanding, the Owner Trustee) or any
successor Servicer shall be the successor in all respects to the Servicer in its
capacity as Servicer under this Agreement and the transactions set forth or
provided for herein and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof, and the Servicer shall be relieved of such responsibilities, duties and
liabilities arising after such Service Transfer; provided, however, that (i) the
Indenture Trustee (or, if no Notes are outstanding, the Owner Trustee) or any
successor Servicer will not assume any obligations of CITSF pursuant to Section
3.02 hereof or be obligated to deposit any net loss on an investment directed by
a predecessor Servicer pursuant to Section 5.01(b) hereof, and (ii) the
Indenture Trustee (or, if no Notes are outstanding, the Owner Trustee) or any
successor Servicer shall not be liable for any acts or omissions of the Servicer
occurring prior to such Service Transfer or for any breach by CITSF of any of
its obligations contained herein or in any related document or agreement. The
Indenture Trustee and any successor Servicer shall have no responsibility for
failure of CITSF and any predecessor Servicer to deliver to the Indenture
Trustee or such successor Servicer any property or funds belonging to the Trust,
including but not limited to the funds, records, Contracts and Contract Files.
As compensation therefor, the Indenture Trustee shall, except as provided in
this Section 9.02, be entitled to such compensation as the Servicer would have
been entitled to hereunder if no such notice of termination had been given.
Notwithstanding the above, the Indenture Trustee (or, if no Notes are
outstanding, the Owner Trustee) or any successor Servicer
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may, if it shall be unwilling so to act, or shall, if it is legally unable so to
act, appoint, or petition a court of competent jurisdiction to appoint, an
Eligible Servicer as the successor to the Servicer hereunder in the assumption
of all or any part of the responsibilities, duties or liabilities of the
Servicer hereunder. Notwithstanding the foregoing sentence, so long as the
Insurer is the Controlling Party, the Insurer shall have the right to designate
any successor Servicer. Notwithstanding anything herein nor in the Indenture to
the contrary, in no event shall the Indenture Trustee or the successor Servicer
be liable for any Servicing Fee or for any differential in the amount of the
Servicing Fee paid hereunder and the amount necessary to induce any successor
Servicer to act as successor Servicer under this Agreement and the transactions
set forth or provided for therein. Pending appointment of a successor to the
Servicer hereunder, unless the Indenture Trustee is prohibited by law from so
acting, the Indenture Trustee shall act in such capacity as hereinabove
provided. In connection with such appointment and assumption, the Indenture
Trustee (or, if no Notes are outstanding, the Owner Trustee) may make such
arrangements for the compensation of such successor out of payments on Contracts
as it and such successor shall agree; provided, however, that no such
compensation shall, without the written consent of not less than 66-2/3% of the
principal amount of the Notes and Certificate Balance of the Certificates, be in
excess of the Servicing Fee calculated based on a Servicing Fee Rate of 1.00%.
The Indenture Trustee and such successor shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession.
SECTION 9.03 Notification to Securityholders.
(a) Promptly following the occurrence of any Event of Termination, the
Servicer shall give written notice thereof to the Trustees, the Lender (so long
as the Loan under the Loan Agreement is still outstanding), the Insurer and the
Securityholders at their respective addresses appearing on the Certificate
Register and the Note Register and to each Rating Agency.
(b) Within 10 days following any termination or appointment of a successor
to the Servicer pursuant to this Article IX, the Trustees shall give written
notice thereof to the Lender (so long as the Loan under the Loan Agreement is
still outstanding), the Insurer and to the Certificateholders and Noteholders at
their respective addresses appearing on the Certificate Register and the Note
Register.
(c) The Indenture Trustee shall give written notice to each Rating Agency
and the Insurer at least 30 days prior to the date upon which any Eligible
Servicer (other than the Indenture Trustee) is to assume the responsibilities of
Servicer pursuant to Section 9.02 hereof, naming such successor Servicer.
SECTION 9.04 Rights to Direct Trustees and Waiver of Events of
Termination. The Insurer or, if the Insurer is no longer the Controlling Party,
the Holders of Notes or Certificates evidencing not less than 25% of the
aggregate outstanding principal amount of the Notes or 25% of the Certificate
Balance, respectively, shall have the right to direct the time, method, and
place of conducting any proceeding for any remedy available to the Indenture
Trustee or the Owner Trustee, respectively, or exercising any trust or power
conferred on the Trustees; provided,
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however, that the Trustees shall have the right to decline to follow any such
direction which such Trustee (being advised by counsel) determines that the
action so directed may not lawfully be taken, or if such Trustee in good faith
shall, by a Responsible Officer or Officers of such Trustee, determine that the
proceedings so directed would be illegal or involve it in personal liability or
be unduly prejudicial to the rights of Noteholders or Certificateholders not
parties to such direction; provided further that nothing in this Agreement shall
impair the right of the Trustees to take any action deemed proper by such
Trustee and which is not inconsistent with such direction by the Noteholders or
Certificateholders.
The Insurer or, if the Insurer is no longer the Controlling Party, the
Holders of Notes evidencing not less than a majority of the aggregate
outstanding principal amount of the Notes (or, if all of the Notes have been
paid in full and the Indenture has been discharged in accordance with its terms,
Certificates evidencing not less than a majority of the Certificate Balance) may
waive any past Event of Termination hereunder and its consequences (except a
continuing failure to make any required deposits to or payments from the
Collection Account and the other accounts contemplated herein in accordance with
this Agreement, which default cannot be waived without the consent of all
Securityholders) and, upon any such waiver, such Event of Termination shall
cease to exist and shall be deemed to have been cured for every purpose of this
Agreement; but no such waiver shall extend to any subsequent or other Event of
Termination or impair any right consequent thereon.
SECTION 9.05 Effect of Transfer.
(a) After the Service Transfer, the Indenture Trustee or successor
Servicer may notify the Obligors to make payments directly to the successor
Servicer that are due under the Contracts after the effective date of the
Service Transfer.
(b) After the Service Transfer, the replaced Servicer shall have no
further obligations with respect to the management, administration, servicing or
collection of the Contracts and the successor Servicer shall have all of such
obligations, except that the replaced Servicer shall remain liable for any
liability of the replaced Servicer hereunder that was already accrued at the
time of the Service Transfer and except that the replaced Servicer will transmit
or cause to be transmitted directly to the successor Servicer for its own
account, promptly on receipt and in the same form in which received, any amounts
(properly endorsed where required for the successor Servicer to collect them)
received as payments upon or otherwise in connection with the Contracts.
(c) A Service Transfer shall not affect the rights and duties of the
parties hereunder (including but not limited to the indemnities and other
agreements of the Servicer and CITSF) other than those relating to the
management, administration, servicing or collection of the Contracts; provided,
however, that a replaced Servicer's indemnities hereunder shall not be
applicable to actions or omissions by the successor Servicer.
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ARTICLE X
[RESERVED]
ARTICLE XI
OPTIONAL PURCHASE AND AUCTION SALE
SECTION 11.01 Optional Purchase of All Contracts. On any Distribution Date
on which the Pool Balance as of the last day of the related Due Period is 10% or
less of the Initial Pool Balance, CITSF (with the consent of the Insurer, if a
claim has previously been made under the Policies or if such purchase would
result in any amount owing and remaining unpaid under this Agreement or the
Insurance Agreement to the Insurer) shall have the option to purchase the
Contracts (including the defaulted Contracts), any Financed Boats in the Trust
relating to defaulted Contracts and all rights relating to the Contracts under
all Insurance Policies. To exercise such option, CITSF shall notify the Trustees
and the Depository, if any, in writing, no later than the Determination Date
succeeding such Due Period; provided, however, that CITSF shall not effect any
such purchase if the long-term unsecured obligations of its parent are rated
less than Baa3 by Moody's or less than BBB by Standard & Poor's, unless the
Trustees shall have received an Opinion of Counsel acceptable to them that
payment of the purchase price to the Securityholders will not constitute a
voidable preference or a fraudulent transfer under the United States Bankruptcy
Code. CITSF shall effect such purchase by depositing, in accordance with Section
5.04 hereof, the aggregate Purchase Price of the Contracts (less any other
amounts deposited, or to be deposited, by the Servicer in the Collection Account
with respect to the Contract pursuant to Section 5.02 hereof) plus the appraised
value of any other property held by the Trust and purchased by CITSF (less
liquidation expenses) in the Collection Account on the Deposit Date immediately
succeeding such Due Period and shall pay to the Insurer all amounts due to the
Insurer; provided, however, in no event shall the amount so deposited, when
added to the amounts on deposit in the Collection Account on such date and
available for distribution to Securityholders on the next Distribution Date, be
less than the amount required to pay all accrued and unpaid interest on the
Notes, the remaining principal balance of the Notes, accrued and unpaid interest
on the Certificates and the Certificate Balance, after giving effect to payment
of the Servicer Payment. The effective date of such purchase shall be the last
day of such Due Period.
SECTION 11.02 Mandatory Sale of All Contracts. In accordance with the
procedures and schedule set forth in Exhibit E hereto (the "Auction
Procedures"), the Indenture Trustee (or, if the Notes have been paid in full and
the Indenture shall have been discharged in accordance with its terms, the Owner
Trustee) shall, at the expense of the Servicer, conduct an auction (the
"Auction") of the Contracts remaining in the Trust (such Contracts hereinafter
referred to as the "Auction Property") in order to effect a termination of the
Trust pursuant to Section 7.1 of the Trust Agreement on the second Distribution
Date succeeding the related Due Period on which the Pool Balance is 5% or less
of the Initial Pool Balance. Within five Business Days after the last day of the
Due Period in which the Pool Balance is 5% or less of the Initial Pool Balance,
the
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Servicer shall notify the Trustees in writing to initiate the Auction
Procedures. The Auction shall be conducted no later than five Business Days
prior to the second Distribution Date succeeding such Due Period (such date, the
"Auction Date"). CITSF and the Company may, but shall not be required to, bid at
the Auction. Such Trustee shall, at the expense of the Servicer, appoint a
financial advisor, as advisor to such Trustee (in such capacity, the "Advisor"),
to assist such Trustee with the Auction. Such Trustee, at the expense of the
Servicer, may hire an agent to conduct the Auction. Such Trustee shall sell and
transfer the Auction Property to the highest bidder therefor at the Auction
provided that:
(i) the Auction has been conducted in accordance with the Auction
Procedures;
(ii) such Trustee has received good faith bids for the Auction
Property from two prospective purchasers that are considered by such
Trustee, in its sole discretion, to be competitive participants in the
market for marine installment sale contracts;
(iii) the Advisor shall have advised such Trustee in writing that at
least two of such bidders (including the winning bidder) are participants
in the market for marine installment sale contracts and direct loan
agreements willing and able to purchase the Auction Property;
(iv) the highest bid in respect of the Auction Property is not less
than the aggregate fair market value of the Auction Property (as
determined by the Advisor in its sole discretion);
(v) [Intentionally omitted]
(vi) the highest bid would result in proceeds from the sale of the
Auction Property which will be at least equal to the sum of (A) the
greater of (1) the aggregate Purchase Price for the Contracts (including
defaulted Contracts), plus the appraised value of any other property held
by the Trust (less liquidation expenses), or (2) an amount that, when
added to amounts on deposit in the Collection Account and available for
distribution to Securityholders on the second Distribution Date following
the consummation of such sale (the "Liquidation Distribution Date"), would
result in proceeds sufficient to distribute to Securityholders the amounts
of interest due to the Securityholders for such Distribution Date and any
unpaid interest payable to the Securityholders with respect to one or more
prior Distribution Dates and the outstanding principal amount of the Notes
and the Certificate Balance, and (B) the Servicer Payment and, unless the
Servicer agrees to exclude it from the minimum bid requirement, if CITSF
or any affiliate is the Servicer, the Servicing Fee (including any unpaid
Servicing Fees) and all amounts, if any, due to the Insurer, as determined
by the Advisor, whose determination shall be binding absent manifest
error.
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Provided that all of the conditions set forth in clauses (i) through (vi)
have been met, such Trustee shall sell and transfer the Auction Property,
without representation, warranty or recourse, to such highest bidder in
accordance with and upon completion of the Auction Procedures. Such Trustee
shall deposit the purchase price for the Auction Property in the Collection
Account at least one Business Day prior to such second succeeding Distribution
Date. In addition, the Auction must stipulate that the Servicer be retained to
service the Contracts on terms substantially similar to those in the Agreement.
In the event that any of such conditions are not met or such highest bidder
fails or refuses to comply with any of the Auction Procedures, such Trustee
shall decline to consummate such sale and transfer. In the event such sale and
transfer is not consummated in accordance with the foregoing, however, such
Trustee may from time to time in the future, but shall not be under any further
obligation to, solicit bids for sale of the assets of the Trust upon the same
terms and conditions as set forth above.
If any of the foregoing conditions is not met, such Trustee shall decline
to consummate such sale and shall not be under any obligation to solicit any
further bids or otherwise negotiate any further sale of Contracts remaining in
the Trust. In such event, however, such Trustee may from time to time solicit
bids in the future for the purchase of such Contracts pursuant to this Section
11.02.
If applicable, the Indenture Trustee shall provide notice to the Owner
Trustee of the termination of the Trust pursuant to this Section 11.02 as soon
as practicable upon the consummation of the mandatory sale of the Contracts
pursuant to this Section 11.02.
In no event shall such Trustee have any liability for any act or omission
of any Auction agent or Advisor appointed by such Trustee in good faith, or for
any act or omission of such Trustee in accordance with the advice of such
Auction agent or Advisor, including, without limitation, any failure to obtain
the best price for the Contracts or any failure by such Auction agent or Advisor
to comply with the Auction Procedures.
SECTION 11.03 Contract Repurchase Procedures. Promptly after any
repurchase of a Contract by CITSF referred to in Section 3.02 hereof, or any
purchase of a Contract by CITSF referred to in Section 11.01 hereof, or any
purchase of a Contract by the Servicer pursuant to Section 4.02 or 4.07 hereof,
or any purchase of a Contract by a Person pursuant to Section 11.02 hereof, the
Owner Trustee shall execute such documents as are presented to it by CITSF, the
Servicer or such Person, as applicable (the "Buyer"), and are reasonably
necessary to convey the Repurchased Contract to the Buyer, and transfer all
right, title and interest in the Contract and the Related Company Contract
Assets or the Related Selling Trust Contract Assets, as the case may be
(including any payments in respect of the Contract or the related Financed Boat
received after the last day of the Due Period immediately preceding the Deposit
Date on which such Buyer paid the Purchase Price for such Contract), to such
Buyer.
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ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.01 Amendment. This Agreement may be amended in writing by the
Company, the Servicer and the Owner Trustee and the Indenture Trustee without
prior notice to or the consent of any of the Securityholders, and in the case of
clauses (v) and (vi), upon satisfaction of the Rating Agency Condition, and with
the prior written consent of the Insurer (so long as the Insurer is the
Controlling Party) (i) to correct manifest error or cure any ambiguity; (ii) to
correct or supplement any provisions herein or therein which may be inconsistent
with any other provisions herein or therein, as the case may be; (iii) to add or
amend any provisions as requested by Moody's or Standard & Poor's in order to
maintain or improve any rating of the Notes or Certificates (it being understood
that, after the Closing Date, neither the Owner Trustee, the Indenture Trustee,
the Company nor CITSF is obligated to maintain or improve such rating); (iv) to
add to the covenants, restrictions or obligations of the Company, the Servicer,
the Owner Trustee or the Indenture Trustee or to provide for the delivery of or
substitution of a Servicer Letter of Credit; (v) to evidence and provide for the
acceptance of the appointment of a successor trustee with respect to the Owner
Trust Estate and add to or change any provisions as shall be necessary to
facilitate the administration of the trusts under the Trust Agreement by more
than one trustee pursuant to Article VI of the Trust Agreement; (vi) to add,
change or amend any provision to maintain the trust as an entity not subject to
federal income tax; or (vii) to add, change or eliminate any other provisions,
provided that an amendment pursuant to this clause (vii), shall not, as
evidenced by an Opinion of Counsel for the Servicer or the Company, adversely
affect in any material respect the interests of the Trust, any Noteholder or any
Certificateholder.
This Agreement may also be amended in writing from time to time by the
Company, the Servicer and the Owner Trustee and the Indenture Trustee, with the
consent of Holders of Certificates evidencing not less than a majority of the
Certificate Balance and the consent of Holders of Notes evidencing not less than
a majority of the aggregate outstanding principal amount of the Notes and with
the prior written consent of the Insurer (so long as the Insurer is the
Controlling Party), for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement, or of
modifying in any manner the rights of the Certificateholders or Noteholders,
respectively; provided, however, that no such amendment shall (i) increase or
reduce in any manner the amount of, or accelerate or delay the timing of,
distributions that shall be required to be made on any Certificate or Note,
respectively, the Contract Rate, the Pass-Through Rate or the Interest Rates or
(ii) reduce the aforesaid percentage requirement to consent to any such
amendment, without the consent of the Holders of all Certificates and Notes then
outstanding.
Promptly after the execution of any amendment or consent pursuant to this
Section, the Owner Trustee shall furnish written notification of the substance
of such amendment to each Certificateholder and each Noteholder (but only if
such amendment is pursuant to the second paragraph of this Section 12.01) and
(so long as the Loan under the Loan Agreement is still
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outstanding) the Lender and, in all cases, to each Rating Agency and the
Insurer, which notification will be prepared by the Servicer and delivered to
such Trustee.
It shall not be necessary for the consent of the Certificateholders or the
Noteholders pursuant to this Section 12.01 to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by Certificateholders or
the Noteholders, as the case may be, shall be subject to such reasonable
requirements as such Trustee may prescribe.
Such Trustee may, but shall not be obligated to, enter into any such
amendment which affects such Trustee's own rights, duties or immunities under
this Agreement or otherwise. However, no such amendment shall be permitted
without the consent of the Trustee whose rights, duties or immunities are being
modified.
In connection with any amendment pursuant to this Section 12.01, each of
the Trustees and the Insurer (so long as the Insurer is the Controlling Party)
shall be entitled to receive an Opinion of Counsel to the Servicer to the effect
that such amendment is authorized or permitted by this Agreement.
Upon the execution of any amendment or consent pursuant to this Section
12.01, this Agreement shall be modified in accordance therewith, and such
amendment or consent shall form a part of this Agreement for all purposes, and
every Holder of Securities theretofore or thereafter issued hereunder shall be
bound thereby.
SECTION 12.02 Protection of Title to Trust.
(a) On or prior to the Closing Date, the Servicer shall file the following
fully executed UCC-1 financing statements:
(i) UCC-1 financing statement executed by CITCF-NY as debtor, naming
CITSF as secured party and filed in New Jersey and Oklahoma City to
perfect the sale from CITCF-NY to CITSF;
(ii) UCC-1 financing statement executed by CITSF as debtor, naming
the Company as secured party and filed in New Jersey and Oklahoma City to
perfect the sale from CITSF to the Company;
(iii) UCC-1 financing statement executed by the Company as debtor,
naming the Owner Trustee as secured party and filed in New Jersey and
Oklahoma City to perfect the sale from the Company to the Owner Trustee;
(iv) UCC-1 financing statement executed by the Owner Trustee as
debtor, naming the Indenture Trustee as secured party and filed in New
Jersey, Oklahoma City, and Delaware to perfect the security interest
granted in the Collateral by the Indenture; and
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(v) UCC-1 financing statement executed by the Selling Trust as
debtor, naming the Owner Trustee as secured party and filed in New Jersey,
Oklahoma City and Delaware to perfect the sale from the Selling Trust to
the Owner Trustee.
The Servicer shall cause to be filed all necessary continuation statements
of the UCC-1 financing statements referred to in the previous sentence on which
it is the debtor.
From time to time the Servicer shall, subject to the following sentence,
take and cause to be taken such actions and execute such documents as are
necessary to perfect and protect the Noteholders' and Certificateholders'
interests in the Contracts and their proceeds against all other persons,
including, without limitation, the filing of financing statements, amendments
thereto and continuation statements, the execution of transfer instruments and
the making of notations on or taking possession of all records or documents of
title.
The Servicer will maintain the Trust's perfected first priority security
interest in each Financed Boat so long as the related Contract is the property
of the Trust; provided, however, that because of the expense and administrative
inconvenience involved, the Servicer will not be required to amend any
certificate of title to name CITSF, the Company or the Trust as the lienholder,
and neither the Servicer nor the Company will be required to deliver any
certificate of title to the Trust or note thereon the Trust's interest other
than as required pursuant to Section 9.01.
The Servicer agrees to pay all reasonable costs and disbursements in
connection with the perfection and the maintenance of perfection, as against all
third parties, of the Noteholders' and Certificateholders' right, title and
interest in and to the Contracts (including, without limitation, the security
interest in the Financed Boats granted thereby).
(b) During the term of this Agreement, neither the Company nor CITSF shall
change its name, identity or structure or relocate its chief executive office
without first giving notice thereof to the Trustees and the Servicer. In
addition, following any such change in the name, identity, structure or location
of the chief executive office of the Company or CITSF, the Company or CITSF, as
appropriate, shall give written notice thereof to each Rating Agency.
If any change in the Company's, the Servicer's or CITSF's name, identity
or structure or the relocation of its chief executive office would make any
financing or continuation statement or notice of lien filed under this Agreement
seriously misleading within the meaning of applicable provisions of the UCC or
any title statute or would cause any such financing or continuation statement or
notice of lien to become unperfected (whether immediately or with lapse of
time), the Servicer no later than five days after the effective date of such
change, shall (subject to the proviso in the penultimate paragraph of Section
12.02(a) hereof) file, or cause to be filed, such amendments or financing
statements as may be required to preserve, perfect and protect
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the Noteholders' and Certificateholders' interests in the Contracts and proceeds
thereof and in the Financed Boats.
(c) During the term of this Agreement, the Company and CITSF will maintain
their respective chief executive offices in one of the states of the United
States.
(d) The Servicer shall maintain accounts and records as to each Contract
accurately and in sufficient detail to permit (i) the reader thereof to know at
any time the status of such Contract, including payments and recoveries made and
payments owing (and the nature of each) and (ii) reconciliation between payments
or recoveries on (or with respect to) each Contract and the amounts from time to
time deposited in the Collection Account in respect of such Contract.
(e) Each of the Company and the Servicer shall maintain its computer
systems (if any) so that, from and after the time of sale under this Agreement
of the Contracts to the Trust, the master computer records of the Company and
the Servicer (including archives) that shall refer to a Contract indicate
clearly that such Contract is owned by the Trust. Indication of the Trust's
ownership of a Contract shall be deleted from or modified on the Company's and
the Servicer's computer systems when, and only when, the Contract shall have
been paid in full, repurchased or assigned pursuant hereto.
(f) At all times during the term hereof, the Servicer shall afford the
Trust and its authorized agents reasonable access during normal business hours
to the Servicer's records relating to the Contracts and will cause its personnel
to assist in any examination of such records by the Trust or its authorized
agents. The examination referred to in this Section 12.02(f) shall be conducted
in a manner which does not unreasonably interfere with the Servicer's normal
operations or customer or employee relations. Without otherwise limiting the
scope of the examination the Trust may make, the Trust or its authorized agents
may, using generally accepted audit procedures, verify the status of each
Contract and review the Electronic Ledger and records relating thereto for
conformity to Monthly Reports prepared pursuant to Article V hereof and
compliance with the standards represented to exist as to each Contract in this
Agreement. Nothing in this Section 12.02(f) or Section 3.04(b) hereof shall
affect the obligation of the Servicer to observe any applicable law prohibiting
disclosure of information regarding the Obligors, and the failure of the
Servicer to provide access to information as a result of such obligation shall
not constitute a breach of this Section 12.02(f) or Section 3.04(b) hereof.
(g) Upon request, the Servicer shall furnish to the Trust, within five
Business Days, a list of all Contracts by contract number and name of Obligor as
of the end of the most recent Due Period held as part of the Trust, together
with a reconciliation of such list to the List of Contracts and to each of the
Servicer Certificates indicating removal of Contracts from the Trust.
At all times during the term hereof, the Servicer shall keep available a
copy of the List of Contracts at its principal executive office for inspection
by Securityholders.
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(h) The Servicer shall, to the extent required by applicable law, cause
the Notes and Certificates to be registered with the Securities and Exchange
Commission pursuant to Section 12(b) or Section 12(g) of the Securities Exchange
Act of 1934 within the time periods specified in such sections.
SECTION 12.03 Limitation on Rights of Securityholders. The death or
incapacity of any Securityholder shall not operate to terminate this Agreement
or the Trust, nor entitle the Securityholder's legal representatives or heirs to
claim an accounting or to take any action or commence any proceeding in any
court for a partition or winding up of the Trust, nor otherwise affect the
rights, obligations, and liabilities of the parties to this Agreement or any of
them.
No Securityholder shall have any right to vote (except as provided in
Section 9.04 hereof and this Section 12.03) or in any manner otherwise control
the operation and management of the Trust, or the obligations of the parties to
this Agreement, nor shall anything set forth in this Agreement or contained in
the terms of the Securities, be construed so as to constitute the Holders as
partners or members of an association; nor shall any Securityholder be under any
liability to any third person by reason of any action taken pursuant to any
provision of this Agreement.
No Securityholder shall have any right by virtue or by availing itself of
any provisions of this Agreement to institute any suit, action, or proceeding in
equity or at law upon or under or with respect to this Agreement, except as
provided in Section 9.04 and this Section 12.03; no one or more Holders of
Securities shall have any right in any manner whatsoever by virtue or by
availing itself or themselves of any provisions of this Agreement to affect,
disturb, or prejudice the rights of the Holders of any other of the Securities,
or to obtain or seek to obtain priority over or preference to any other such
Holder, or to enforce any right under this Agreement, except in the manner
provided in this Agreement and for the equal, ratable and common benefit of all
Securityholders. For the protection and enforcement of the provisions of this
Section 12.03, each Securityholder and the Trust shall be entitled to such
relief as can be given either at law or in equity.
SECTION 12.04 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York,
without regard to its conflict-of-laws provisions.
SECTION 12.05 Notices. All communications and notices pursuant hereto to
the Company, the Servicer, Moody's and Standard & Poor's shall be in writing and
delivered or mailed to it at the appropriate following address:
If to the Company:
The CIT Group Securitization Corporation II
650 CIT Drive
Livingston, New Jersey 07039
Attention: President
-82-
<PAGE>
If to the Selling Trust:
CIT Marine Trust 1996-A
c/o Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, Delaware 19801
Attention: Corporate Trust Administration
If to the Servicer or to the Lender:
The CIT Group/Sales Financing, Inc.
650 CIT Drive
Livingston, New Jersey 07039
Attention: President
If to Standard & Poor's:
Standard & Poor's
26 Broadway
New York, New York 10004
Attention: ABS Group/Market Surveillance
If to Moody's:
Moody's Investors Service
99 Church Street
New York, New York 10007
Attention: ABS Monitoring Department
If to Insurer:
MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Attention: Insured Portfolio Management, Structured Finance
or at such other address as the party may designate by notice to the other
parties hereto, which notice shall be effective when received.
All communications and notices pursuant hereto to a Certificateholder
or a Noteholder shall be in writing and delivered or mailed at the address shown
in the Certificate Register or Note Register, respectively.
All communications and notices required hereunder to be given to the
Owner Trustee shall be in writing and shall be sent to Chase Manhattan Bank
Delaware, 1201 Market Street, Wilmington, Delaware 19801, Attention: Corporate
Trust Administration, and to the Indenture
-83-
<PAGE>
Trustee shall be sent to Harris Trust and Savings Bank, 311 West Monroe Street,
Chicago Illinois 60606 Attention: Indenture Trust Administration.
SECTION 12.06 Severability of Provisions. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the
Certificates and Notes or the rights of the Holders thereof.
SECTION 12.07 Submission to Jurisdiction; Venue. The parties hereto with
respect to any action or claim brought against or by the Trust submit to
jurisdiction in the state or federal courts in New York, New York, and agree to
New York, New York as the venue for any such claim or action.
SECTION 12.08 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.
SECTION 12.09 Merger and Integration. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived, or supplemented except as provided herein.
SECTION 12.10 Headings. The headings herein are for purposes of reference
only and shall not otherwise affect the meaning or interpretation of any
provision hereof.
SECTION 12.11 Third Party Beneficiary. The Insurer is an express third
party beneficiary of this Agreement entitled to enforce any rights reserved to
it and to rely on any representations or warranties hereunder to the same extent
as if it were a party to this Agreement.
SECTION 12.12 Removal of Insurer. In the event that the Insurer's claims
paying ability ratings have been reduced by any of the Rating Agencies or if the
Insurer fails to make a payment under the Policies in accordance with their
terms, the Servicer may, but is not obligated to, upon payment of all amounts
required to be paid to the Insurer pursuant to the Insurance Agreement through
the date of any change either (i) replace both Policies with financial guaranty
insurance policies issued by another insurer provided that, in the event that
the Insurer's claims paying ability ratings have been reduced, the ratings on
the claims paying ability of such replacement insurer are higher than those of
the insurer sought to be replaced (after giving effect to such reduction) or
(ii) terminate both Policies and provide another form of credit enhancement;
provided that, in the case of clause (ii), the Rating Agencies issue
confirmation that, to the extent the ratings of the Securities have been reduced
in connection with this reduction in the Insurer's claims paying ability
ratings, the ratings of the Securities will be increased from their then-current
levels (after giving effect to such reduction) as a result of such action.
-84-
<PAGE>
[Signature page to follow.]
-85-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of February
1, 1999
THE CIT GROUP/SALES FINANCING, INC.
By: /s/ Frank J. Madeira
-----------------------------------------
Name: Frank J. Madeira
Title: Vice President
THE CIT GROUP SECURITIZATION
CORPORATION II
By: /s/ Frank Garcia
-----------------------------------------
Name: Frank Garcia
Title: Vice President
CIT MARINE TRUST 1999-A
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but solely as
Owner Trustee on behalf of the Trust
By: /s/ Denis Kelly
-----------------------------------------
Name: Denis Kelly
Title: Trust Officer
CIT MARINE TRUST 1996-A
By: CHASE MANHATTAN BANK
DELAWARE,
not in its individual capacity but solely as
Owner Trustee on behalf of the Selling Trust
By: /s/ Denis Kelly
-----------------------------------------
Name: Denis Kelly
Title: Trust Officer
Acknowledged and Accepted:
HARRIS TRUST AND SAVINGS BANK
not in its individual capacity
but solely as Indenture Trustee,
By: /s/ Robert D. Foltz
----------------------------------
Name: Robert D. Foltz
Title: Vice President
-86-
<PAGE>
EXHIBIT A
List of Contracts
A-1
<PAGE>
EXHIBIT B
FORM OF ISSUERS ACKNOWLEDGMENT AND CERTIFICATION
CIT Marine Trust 1999-A (the "Issuer"), a Delaware business trust, created
pursuant to the Trust Agreement, dated as of February 1, 1999, between The CIT
Group Securitization Corporation II (the "Company") and Chase Manhattan Bank
(Delaware), a Delaware banking corporation, acting as Owner Trustee (the "Owner
Trustee"), acknowledges pursuant to the Sale and Servicing Agreement dated as of
February 1, 1999 among the Company, The CIT Marine Trust 1996-A (the "Selling
Trust"), The CIT Group/Sales Financing, Inc. and the CIT Marine Trust 1999-A
(the "Agreement"), that the Issuer has received, and holds in trust thereunder
the following through the Servicer as custodian: (i) all the right, title and
interest of the Company and the Selling Trust, as the case may be, in and to the
Contracts and all the rights, benefits and obligations arising from and in
connection with each Contract, (ii) an assignment of the security interests in
the Financed Boats granted by the Obligors and any accessions thereto pursuant
to the Contracts, (iii) all monies received by the Company or the Selling Trust
on or with respect to the Contracts on or after the Cut-off Date (exclusive of
(i) payments with respect to Post Cut-off Date Insurance Add-Ons and (ii)
interest due and payable prior to the Cut-off Date), (iv) the interest of the
Company or the Selling Trust in the Financed Boats (including any right to
receive future Net Liquidation Proceeds) that secures the Contracts and that
shall have been repossessed by the Servicer by or on behalf of the Trust, (v)
all rights of the Company or the Selling Trust to proceeds of Insurance Policies
covering individual Financed Boats or the Obligors and the Contracts, (vi) the
proceeds from any Servicer's Errors and Omissions Protection Policy, any
fidelity bond and any blanket physical damage policy, to the extent such
proceeds relate to any Financed Boat, (vii) all rights of recourse against any
cosigner or under any personal guarantee with respect to the Contracts (other
than any right as against a Dealer under a Dealer Agreement or other such
agreement), (viii) all amounts credited to the Collection Account, (ix) all
proceeds in any way derived from any of the foregoing items, and (x) all
documents contained in the Contract Files relating to the Contracts. The Trust
shall issue to, or upon the written order of, the Company Certificates
representing ownership of a beneficial interest in 100% of the Trust and Notes
representing obligations of the Trust. Capitalized terms used herein have the
meanings given them in the Agreement.
B-1
<PAGE>
IN WITNESS WHEREOF, the Trust has caused this acknowledgment to be
executed by its duly authorized officer as of this ____ day of February, 1999.
CIT MARINE TRUST 1999-A
By: CHASE MANHATTAN BANK DELAWARE not
in its individual capacity but
solely as Owner Trustee
By:___________________________________
Name:
Title:
B-2
<PAGE>
EXHIBIT C
THE CIT GROUP/SALES FINANCING, INC.
CERTIFICATE OF SERVICING OFFICER
The undersigned certifies that he is the [title] of The CIT Group/Sales
Financing, Inc., a corporation organized under the laws of Delaware ("CITSF"),
and that as such he is duly authorized to execute and deliver this certificate
on behalf of CITSF pursuant to Section 4.09 of the Sale and Servicing Agreement,
dated as of February 1, 1999 (the "Agreement"), among CITSF, The CIT Group
Securitization Corporation II, The CIT Marine Trust 1996-A and CIT Marine Trust
1999-A (all capitalized terms used herein without definition having the
respective meanings specified in the Agreement), and further certifies that:
1. The Monthly Report for the period from __________ to __________
attached to this certificate is complete and accurate in accordance with the
requirements of Sections 4.09 and 5.08 of the Agreement; and
2. As of the date hereof, no Event of Termination or event that with
notice or lapse of time or both would become an Event of Termination has
occurred. [If an Event of Termination has occurred, such Event of Termination
shall be specified and its current status reported.]
IN WITNESS WHEREOF, I have affixed hereunto my signature this ____ day of
_________, ____.
THE CIT GROUP/SALES FINANCING, INC.,
By: ___________________________________
Name:
Title:
C-1
<PAGE>
EXHIBIT D
<TABLE>
<CAPTION>
Due Period 1/0/00
Determination Date 1/0/00
Distribution Date 1/0/00
<S> <C> <C>
I. All Payments on the Contracts 0.00
II. All Liquidation Proceeds on the Contracts with respect to 0.00
Principal
III. Repurchased Contracts 0.00
IV. Investment Earnings on Collection Account 0.00
V. Servicer Monthly Advances 0.00
VI. Reimbursement of prior Monthly Advances 0.00
VII. Insurer Deposits 0.00
VIII. Release of the Additional Enhancement Requirement Sub-Account 0.00
IX. Incorrect Deposits 0.00
Total available amount in Collection Account 0.00
Draws from the Reserve Account $0.00
Draws on the Note Insurance Policy $0.00
Draws on the Certificate Insurance Policy $0.00
Total Distribution $0.00
<CAPTION>
DISTRIBUTION AMOUNTS Cost per $1000
- -------------------- --------------
<C> <C> <C> <C>
1. (a) Class A-1 Note Interest Distribution 0.00
(b) Class A-1 Note Primary Principal Distribution 0.00
(c) Class A-1 Additional Principal Distribution 0.00
Amount 0.00000000 0.00
Aggregate Class A-1 Note Distribution
2. (a) Class A-2 Note Interest Distribution 0.00
(b) Class A-2 Note Primary Principal Distribution 0.00
(c) Class A-2 Additional Principal Distribution 0.00
Amount 0.00000000 0.00
Aggregate Class A-2 Note Distribution
3. (a) Class A-3 Note Interest Distribution 0.00
(b) Class A-3 Note Primary Principal Distribution 0.00
(c) Class A-3 Additional Principal Distribution 0.00
Amount 0.00000000 0.00
Aggregate Class A-3 Note Distribution
4. (a)Class A-4 Note Interest Distribution 0.00
(b) Class A-4 Note Primary Principal Distribution 0.00
(c) Class A-4 Additional Principal Distribution 0.00
Amount 0.00000000 0.00
Aggregate Class A-4 Note Distribution
5. (a) Certificate Interest Distribution 0.00
(b) Certificate Primary Principal Distribution 0.00
(c) Certificate Additional Principal Amount 0.00
Aggregate Certificate Distribution 0.00000000 0.00
6. Insurance Fee, including accrued and unpaid amounts 0.00
7. Reimbursement of Insurance Policy Draws
(a) Note Insurance Policy 0.00
(b) Certificate Insurance Policy 0.00
8. Lender Fees 0.00
9. Servicing Fee 0.00
10. Deposits to the Additional Enhancement Sub-Account 0.00
11. Deposits to the Reserve Account 0.00
</TABLE>
D-1
<PAGE>
<TABLE>
<CAPTION>
Total Distribution $0.00
=====
INTEREST
- ------------------------------------------------------
<S> <C> <C> <C> <C>
1. Current Interest Requirement
(a) Class A-1 Notes @ 0.000% 0.00
(b) Class A-2 Notes @ 0.000% 0.00
(c) Class A-3 Notes @ 0.000% 0.00
(d) Class A-4 Notes @ 0.000% 0.00
Aggregate Interest on Class A Notes 0.00
(e) Certificate @ 0.000% 0.00
2. Remaining Interest Shortfall
(a) Class A-1 Notes 0.00
(b) Class A-2 Notes 0.00
(c) Class A-3 Notes 0.00
(d) Class A-4 Notes 0.00
(e) Certificate 0.00
Cost per $1000
3. Total Distribution of Interest ---------------
(a) Class A-1 Notes 0.00000000 0.00
(b) Class A-2 Notes 0.00000000 0.00
(c) Class A-3 Notes 0.00000000 0.00
(d) Class A-4 Notes 0.00000000 0.00
Total Aggregate Interest on Class A Notes 0.00
(e) Certificate 0.00000000 0.00
<CAPTION>
PRINCIPAL
- -----------------------------------------------
<C> <C> <C> <C>
1. Stated Principal Collected 0.00
2. Principal Prepayments 0 0.00
3. Liquidation Proceeds 0 0.00
4. Repurchased Contracts 0 0.00
Total Primary Principal Distribution Amount 0.00
5. Additional Principal Distribution Amount 0.00
6. Principal Balance before giving effect to Principal Pool Factor
Distributions -----------
(a) Class A-1 Notes 0.00000000 0.00
(b) Class A-2 Notes 0.00000000 0.00
(c) Class A-3 Notes 0.00000000 0.00
(d) Class A-4 Notes 0.00000000 0.00
(e) Certificate 0.00000000 0.00
7. Remaining Principal Shortfall
(a) Class A-1 Notes 0.00
(b) Class A-2 Notes 0.00
(c) Class A-3 Notes 0.00
(d) Class A-4 Notes 0.00
(e) Certificate 0.00
Cost per $1000
8. Principal Distributions ---------------
(a) Class A-1 Notes 0.00000000 0.00
(b) Class A-2 Notes 0.00000000 0.00
(c) Class A-3 Notes 0.00000000 0.00
(d) Class A-4 Notes 0.00000000 0.00
(e) Certificate 0.00000000 0.00
9. Principal Balance after giving effect to Principal Pool Factor
Distributions --------------
(a) Class A-1 Notes 0.00000000 0.00
(b) Class A-2 Notes 0.00000000 0.00
(c) Class A-3 Notes 0.00000000 0.00
</TABLE>
D-2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
(d) Class A-4 Notes 0.00000000 0.00
(e) Certificate 0.00000000 0.00
Loan Excess Additional Enhancement
RESERVE ACCOUNT Sub-Account Sub-Account Sub-Account
--------------- ----------- ----------- -----------
1. Activity
(a) Opening Balance 0.00 0.00 0.00
(b) Deposits 0.00 0.00 0.00
(c) Investment Earnings 0.00 0.00 0.00
(d) Distributions 0.00 0.00 0.00
(e) Ending Balance 0.00 0.00 0.00
Loan Excess Additional Enhancement
Sub-Account Sub-Account Sub-Account
----------- ----------- -----------
Sub-Account
2. Distributions from the Reserve Account
(a) Draws to the Note Distribution Account 0.00 0.00 0.00
(b) Draws to the Certificate Distribution Account 0.00 0.00 0.00
(c) Release to the Collection Account 0.00 0.00 0.00
(d) Distribution to Lender 0.00 0.00 0.00
(e) Distribution to Affiliated Owner 0.00 0.00 0.00
Total Distributions from the Reserve Account 0.00
<CAPTION>
POOL DATA
- -------------------------------------------
Aggregate
No. of Contracts Pool Balance
---------------- ------------
<S> <C> <C> <C>
1. Pool Stated Principal Balance as of 1/0/00 0 0.00
2. Delinquency Information % of Pool Balance
-----------------
(a) 31-59 Days 0 0.00 0.000%
(b) 60-89 Days 0 0.00 0.000%
(a) 90-119 Days 0 0.00 0.000%
(b) 120-180 Days 0 0.00 0.000%
(a) 181 Days+ 0 0.00 0.000%
3. Contracts Repossessed during the Due Period 0 0.00
4. Current Repossession Inventory 0 0.00
5. Net Liquidation Losses for the related Due Period 0
(a) Principal Balance of Liquidated Contracts 0 0.00
(b) Net Liquidation Proceeds on any Liquidated 0.00
Contracts -------
Total Net Liquidation Losses for the related Due 0.00
Period
7. Cumulative Net Losses on all Liquidated Receivables 0 0.00
8. Weighted Average Contract Rate of all Outstanding 0.000%
Contracts
9. Weighted Average Remaining Term to Maturity of all 0.000
Outstanding Contracts
10. Weighted Average Remaining Original Term to Maturity 0.000
of all Outstanding Contracts
TRIGGER ANALYSIS
- ------------------------------------------------
Due Periods
- ------------- Excess Collections Pool Balance
Current Jan-00 0.00 0.00
Prior Month Jan-00 0.00 0.00
Second Prior Month Jan-00 0.00 0.00
</TABLE>
D-3
<PAGE>
<TABLE>
<S> <C> <C> <C>
Sum of Excess Collections 0.00
Annualized (x4) 0.00
Average Pool Balance 0.00
Net Yield 0.000%
Net Yield trigger level 0.000
Net Yield trigger in effect? NO
CREDIT ENHANCEMENT
Required Enhancement
Available Reserve Amount for the next Distribution Date (Initially 27,568,581.
to a floor of 7,351,622.) 0.00
Overcollateralization after the application of all the Principal Distributions
(Initially zero to be increased to 9,189,527. 0.00
Credit enhancement available for the next Distribution Date
0.00 0.00%
Required Enhancement (5.55% of the current Pool Balance to a floor of 0.00 0.00%
16,541,149.)
Additional Credit Enhancement Balance Enhancement Percentage
More than 180 days delinquent 0.00 0.00 0%
Repossessions Inventory 0.00 0.00 0%
Total Additional Enhancement 0.00
Amount on deposits in the Additional Enhancement 0.00
Sub-Account
MISCELLANEOUS
1. Monthly Servicing Fees 0.00
2. Servicer Advances 0.00
3. Reserve Account Loan Activity
(a) Distribution on Loan:
Interest
Principal 0.00
Total P&I 0.00
(b) Beginning Loan Balance 0.00
(c) Principal Payment 0.00
(d) Ending Loan Balance 0.00
</TABLE>
D-4
<PAGE>
EXHIBIT E
TERMINATION - AUCTION PROCEDURES
The following sets forth the auction procedures to be followed in
connection with a sale effected pursuant to Section 11.02 of the Sale and
Servicing Agreement (the "Agreement"), dated as of February 1, 1999 between The
CIT Group Securitization Corporation II, The CIT Marine Trust 1996-A, The CIT
Group/Sales Financing, Inc. and CIT Marine Trust 1999-A. Capitalized terms used
herein that are not otherwise defined shall have the meanings described thereto
in the Agreement. All references herein to "Trustee" shall be references to
Harris Trust and Savings Bank, as Indenture Trustee, pursuant to an Indenture,
dated as of February 1, 1999, between the Trust and the Indenture Trustee.
However, if the Notes have been paid in full, and the Indenture has been
discharged in accordance with its terms, all references herein to "Trustee"
shall be references to the Owner Trustee.
I. Pre-Auction Process
(a) Upon receiving notice of the Auction Date from the Trustee, the
Advisor will initiate its general Auction procedures consisting of the
following: (i) with the assistance of the Servicer, prepare a general
solicitation package along with a confidentiality agreement; (ii) derive a list
of qualified bidders, in a commercially reasonable manner; (iii) initiate
contact with all qualified bidders; (iv) send a confidentiality agreement to all
qualified bidders; (v) upon receipt of a signed confidentiality agreement, send
solicitation packages to all interested bidders on behalf of the Trustee; and
(vi) notify the Servicer and the Trustee of all potential bidders and
anticipated timetable.
(b) The general solicitation package will include: (i) the prospectus from
the public offering of the Notes and Certificates; (ii) a copy of all monthly
servicing reports or a copy of all annual servicing reports and the prior year's
monthly servicing reports; (iii) a form of a Purchase Agreement and Sale and
Servicing Agreement; (iv) a description of the minimum purchase price required
to cause the Trustee to sell the Auction Property as set forth in Section 11.02
of the Agreement; (v) a formal bidsheet; (vi) a detailed timetable; and (vii) a
preliminary data tape of the Pool Balance as of the related Distribution Date
reflecting the same data attributes used to create the tables for the prospectus
supplement dated February 12, 1999 and the accompanying prospectus dated
September 29 ,1998 relating to the public offering of the Notes and
Certificates, and will be prepared by the Servicer no later than the
Distribution Date succeeding the Due Period on which the Pool Balance is 5% or
less of the Initial Pool Balance.
(c) The Trustee, with the assistance of the Servicer and the Advisor, will
maintain an auction package beginning at the time of closing of the transaction,
which will contain terms (i)-(iii) listed in the preceding paragraph. If the
Advisor is unable to perform its role as advisor to the Trustee, the Servicer
acting in its capacity under the Agreement will select a successor Advisor and
inform the Trustee of its actions in writing.
E-1
<PAGE>
(d) The Advisor will send solicitation packages to all bidders at least 15
business days before the Auction Date. Bidders will be required to submit any
due diligence questions in writing to the Advisor for determination of their
relevancy, no later than 10 business days before the Auction Date. The Servicer
and the Advisor will be required to satisfy all relevant questions at least five
Business Days prior to the Auction Date and distribute the questions and answers
to all bidders.
II. Auction Process
(a) The Advisor will be allowed to bid in the Auction, but will not be
required to do so.
(b) The Servicer will also be allowed to bid in the Auction if it deems
appropriate, but will not be required to do so.
(c) On the Auction Date, all bids will be due by facsimile to the offices
of the Trustee by 1:00 p.m., New York City time, with the winning bidder to be
notified by 2:00 p.m., New York City time. All acceptable bids (as described in
Section 11.02 of the Agreement) will be due on a conforming basis on the bid
sheet contained in the solicitation package.
(d) If the Trustee receives fewer than two market value bids from
participants in the market for marine installment sale contract willing and able
to purchase the Auction Property, the Trustee shall decline to consummate the
sale.
(e) Upon notification to the winning bidder, a good faith deposit equal to
one percent (1%) of the Pool Balance will be required to be wired to the Trustee
upon acceptance of the bid no later than 4:00 p.m. New York City time on the
Auction Date. Such deposit will not be invested. This deposit, along with any
interest income attributable to it, will be credited to the purchase price but
will not be refundable. The Trustee will establish a separate Eligible Account
for the acceptance of the good faith deposit, until such time as the account is
fully funded and all monies are transferred into the Collection Account, such
time not to exceed one Business Day before the second Distribution Date
succeeding the related Due Period on which the Pool Balance is 5% or less of the
Initial Pool Balance.
(f) The winning bidder will receive on the Auction Date a copy of the
draft Purchase Agreement, Sale and Servicing Agreement and Servicer's
Representations and Warranties (which shall be substantially identical to the
representations and warranties set forth in Section 8.01 of the Agreement).
(g) On the Auction Date, the Advisor will provide to the Trustee a letter
concluding whether or not the winning bid is a fair market value bid. The
Advisor will also provide such letter if it is the winning bidder. In the case
where the Advisor or the Servicer is the winning bidder it will in its letter
provide for market comparable and valuations.
E-2
<PAGE>
(h) The Advisor will stipulate that the Servicer be retained to service
the Contracts sold pursuant to the terms of the Purchase and Sale Agreement and
Servicing Agreement.
E-3
EXHIBIT 10.1
PURCHASE AGREEMENT
This Purchase Agreement dated as of February 1, 1999 (the "Agreement"), is
between THE CIT GROUP SECURITIZATION CORPORATION II, as purchaser (the
"Purchaser"), and THE CIT GROUP/SALES FINANCING, INC., as seller (the "Seller").
Subject to the terms hereof, the Seller agrees to sell, and the Purchaser
agrees to purchase, the marine installment sale contracts and direct loans set
forth on Exhibit A (collectively, the "Contracts"), having an aggregate
outstanding principal balance as of February 1, 1999 (the "Cut-off Date"), of
approximately $438,114,527.
It is the intention of the Seller and the Purchaser that the Purchaser
shall sell the Contracts to the CIT Marine Trust 1999-A (the "Trust") and shall
enter into a Sale and Servicing Agreement, dated as of the date hereof, with the
Trust and the Seller (the "Sale and Servicing Agreement"), pursuant to which the
sale of 6.20% Asset-Backed Certificates (the "Certificates") and the Class A-1
5.45% Asset-Backed Notes, the Class A-2 5.80% Asset-Backed Notes, the Class A-3
5.85% Asset-Backed Notes and the Class A-4 6.25% Asset-Backed Notes
(collectively, the "Notes" and, together with the Certificates, the
"Securities"), will be issued by the Trust.
The Purchaser and the Seller wish to prescribe the terms and conditions of
the purchase by the Purchaser of the Contracts and the servicing and
administration of the Contracts.
In consideration of the premises and the mutual agreements hereinafter set
forth, the Purchaser and the Seller agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Certain capitalized terms used in this
Agreement shall have the respective meanings assigned to them in the Sale and
Servicing Agreement. All references in this Purchase Agreement to Articles,
Sections, subsections and exhibits are to the same contained in or attached to
this Purchase Agreement unless otherwise specified.
ARTICLE II
SALE AND CONVEYANCE OF CONTRACTS;
CONTRACT FILES
SECTION 2.01. Sale and Conveyance of Contracts. On the Closing Date,
subject to the terms and conditions hereof, the Seller shall and by execution of
this Agreement does, sell, transfer, assign absolutely, set over and otherwise
convey to the Purchaser without recourse, except for the terms of this
Agreement, and the Purchaser shall, and by execution of this
<PAGE>
Agreement hereby does, purchase (i) all the right, title and interest of the
Seller in and to the Contracts and all the rights, benefits, and obligations
arising from and in connection with each Contract, (ii) an assignment of the
security interests in the Financed Boats granted by the Obligors and any
accessions thereto pursuant to the Contracts, (iii) all monies received by the
Seller on or with respect to the Contracts on or after the Cut-off Date
(exclusive of (a) payments with respect to Post Cut-off Date Insurance Add-Ons
and (b) interest due and payable prior to the Cut-off Date), (iv) the interest
of the Seller in the Financed Boats (including any right to receive future Net
Liquidation Proceeds) that secures the Contracts and that shall have been
repossessed by the Servicer by or on behalf of the Trust; (v) all rights of the
Seller to proceeds from Insurance Policies covering individual Financed Boats or
the Obligors and the Contracts, (vi) the proceeds from any Servicer's Errors and
Omissions Protection Policy, any fidelity bond and any blanket physical damage
policy, to the extent such proceeds relate to any Financed Boat, (vii) all
rights of recourse against any cosigner or under any personal guarantee with
respect to the Contracts (other than any right as against a Dealer under a
Dealer Agreement), (viii) all amounts credited to the Collection Account, (ix)
all proceeds in any way derived from any of the foregoing items, and (x) all
documents contained in the Contract Files relating to the Contracts. The parties
intend and agree that the conveyance of the Seller's right, title and interest
in and to the Contracts pursuant to this Agreement shall constitute an absolute
sale.
The Seller hereby declares and covenants that it shall at no time have any
legal, equitable or beneficial interest in, or any right, including without
limitation any reversionary or offset right, to the Collection Account and the
Reserve Account, and that, in the event it receives any of the same, it shall
hold same in trust for the benefit of the Trust on behalf of the Securityholders
and shall immediately endorse over to the Trust any such amount it receives.
SECTION 2.02. Purchase Price; Payments on the Contracts.
(a) The purchase price for the Contracts shall be an amount equal to
$438,114,527. Such purchase price shall be payable in immediately available
funds on the Closing Date.
(b) The Purchaser shall be entitled to all payments of principal and
interest received on or after the Cut-off Date (other than interest due and
payable prior to the Cut-off Date). All payments of principal and interest
received before the Cut-off Date shall belong to the Seller. The Seller shall
hold in trust for the Purchaser and shall promptly remit to the Purchaser, any
payments on the Contracts received by the Seller that belong to the Purchaser
under the terms of this Agreement.
SECTION 2.03. Conditions to Sale of Contracts. The Purchaser's obligations
hereunder are subject to the following conditions:
(a) The Purchaser shall have received (i) the Sale and Servicing Agreement
executed by all the parties thereto, (ii) all documents required by the Sale and
Servicing Agreement and (iii) such other opinions and documents as the Purchaser
may reasonably require in connection with the purchase of the Contracts
hereunder or the sale of the Notes and the Certificates;
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(b) The representations and warranties of the Seller and the Servicer made
in the Sale and Servicing Agreement shall be true and correct on the Closing
Date; and
(c) The Purchaser shall have received from counsel to the Seller a letter
stating that the Purchaser may rely on such counsel's opinion delivered pursuant
to the Sale and Servicing Agreement and such counsel's opinions to Moody's
Investors Service, Inc. and Standard and Poor's in respect of the sale of the
Contracts to the Purchaser by the Seller, or such opinions may be addressed and
delivered to the Purchaser.
SECTION 2.04. Examination of Files. The Seller will make the Contract
Files with respect to the Contracts available to the Purchaser or its agent for
examination at the Trust's offices or such other location as otherwise shall be
agreed upon by the Purchaser and the Seller.
SECTION 2.05. Transfer of Contracts. Pursuant to the Sale and Servicing
Agreement, the Purchaser will assign all of its right, title and interest in and
to the Contracts to the Trust for the benefit of the Securityholders. The
Purchaser has the right to assign its interest under this Agreement as may be
required to effect the purposes of the Sale and Servicing Agreement, by written
notice to the Seller and without the consent of the Seller, and the assignee
shall succeed to the rights and obligations hereunder of the Purchaser.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER;
REPURCHASE OF CONTRACTS
SECTION 3.01. Representations and Warranties of the Seller.
(a) The representations and warranties of the Seller contained in the Sale
and Servicing Agreement are incorporated herein, and are made to the Purchaser
on the date hereof, as if set forth herein and as if made to the Purchaser on
the date hereof. The Seller will make such representations and warranties in the
Sale and Servicing Agreement directly to the Trust and will become obligated in
respect of such representations and warranties pursuant to the Sale and
Servicing Agreement. On the Closing Date, the Seller shall deliver to the
Purchaser an Officers' Certificate, dated the Closing Date, to the effect that
the representations and warranties made in the Sale and Servicing Agreement by
the Seller are true and correct as of the Closing Date.
(b) It is understood and agreed that the representations and warranties
incorporated by reference in this Agreement by Section 3.01(a) hereof shall
remain operative and in full force and effect, shall survive the transfer and
conveyance of the Contracts by the Seller to the Purchaser and by the Purchaser
to the Trust, and shall inure to the benefit of the Purchaser, the Trust and
their successors and permitted assignees.
(c) The Seller shall indemnify the Purchaser and the Servicer and hold the
Purchaser and the Servicer harmless against any loss, penalties, fines,
forfeitures, legal fees and related costs, judgments and other costs and
expenses resulting from any claim, demand, defense or assertion based on or
grounded upon, or resulting from, a breach of the Seller's representations
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and warranties contained or incorporated by reference in this Agreement. It is
understood and agreed that the obligation of the Seller set forth in this
Section 3.01 to indemnify the Purchaser and the Servicer as provided in this
Section 3.01 constitutes the sole remedy of the Purchaser and the Servicer
respecting a breach of the foregoing representations and warranties. The Trust
shall also have the remedies provided in the Sale and Servicing Agreement.
(d) Each indemnified party shall give prompt notice to the Seller of any
action commenced against it with respect to which indemnity may be sought
hereunder but failure to so notify an indemnifying party shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement, unless the failure to notify materially prejudices the rights and
condition of the Seller. The Seller shall be entitled to participate in any such
action, and to assume the defense thereof, and after notice from the Seller to
an indemnified party of its election to assume the defense thereof, the Seller
will not be liable to such indemnified party under this Section for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof.
(e) Any cause of action against the Seller or relating to or arising out
of the breach of any representations and warranties made or incorporated by
reference in this Section 3.01 shall accrue as to any Contract upon (i)
discovery of such breach by the Purchaser or the Servicer or notice thereof by
the Seller to the Purchaser and the Servicer, (ii) failure by the Seller to cure
such breach and (iii) demand upon the Seller by the Purchaser for all amounts
payable in respect of such Contract.
ARTICLE IV
MISCELLANEOUS PROVISIONS
SECTION 4.01. Amendment. This Agreement may be amended from time to time
by the Seller and the Purchaser by written agreement signed by the Seller and
the Purchaser.
SECTION 4.02. Counterparts. For the purpose of facilitating the execution
of this Agreement as herein provided and for other purposes, this Agreement may
be executed simultaneously 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.
SECTION 4.03. Termination. The Seller's obligations under this Agreement
shall survive the sale of the Contracts to the Purchaser.
SECTION 4.04. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance with
such laws.
SECTION 4.05. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed by
first class mail, postage prepaid, to (i) in the case of the Seller, The CIT
Group/Sales Financing, Inc., 650 CIT Drive, Livingston, New Jersey 07039,
Attention: President, or such other address as may
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hereafter be furnished to Purchaser in writing by the Seller or (ii) in the case
of the Purchaser, The CIT Group Securitization Corporation II, 650 CIT Drive,
Livingston, New Jersey 07039, Attention: President, or such other address as may
hereafter be furnished to the Seller by the Purchaser.
SECTION 4.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
SECTION 4.07. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the Seller and the Purchaser and their respective
successors and assigns, as may be permitted hereunder.
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IN WITNESS WHEREOF, the Seller and the Purchaser have caused their names
to be signed hereto by their respective officers thereunto duly authorized as of
the day and year first above written.
THE CIT GROUP SECURITIZATION
CORPORATION II,
as Purchaser
By: /s/ Frank J. Madeira
------------------------------------
Name: Frank J. Madeira
Title: Vice President
THE CIT GROUP/SALES FINANCING, INC.,
as Seller
By: /s/ Frank Garcia
------------------------------------
Name: Frank Garcia
Title: Vice President
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EXHIBIT A
List of Contracts
EXHIBIT 10.2
LOAN AGREEMENT
LOAN AGREEMENT, dated as of February 1, 1999, among CIT Marine Trust
1999-A (the "Trust"), Harris Trust and Savings Bank, as collateral agent for the
Securityholders, the Insurer and the Trust (together with its successors and
assigns as trustee, the "Indenture Trustee"), The CIT Group/Sales Financing,
Inc., as servicer (the "Servicer"), and The CIT Group/Sales Financing, Inc., as
lender (the "Lender").
The CIT Group Securitization Corporation II, as seller (the "Seller"), the
Servicer CIT Marine Trust 1996-A (the "Selling Trust") and the Trust have
entered into the Sale and Servicing Agreement dated as of February 1, 1999 (as
the same may from time to time be amended, modified or otherwise supplemented,
the "Sale and Servicing Agreement"). Pursuant to the Sale and Servicing
Agreement, the Trust is to issue $11,028,156 aggregate principal amount of 6.20%
Asset Backed Certificates (the "Certificates"), representing interests in the
Trust. The Trust will also issue $325,000,000 Class A-1 5.45% Asset-Backed
Notes, $179,000,000 Class A-2 5.80% Asset-Backed Notes, $117,000,000 Class A-3
5.85% Asset-Backed Notes and $103,134,000 Class A-4 6.25% Asset-Backed Notes
(the "Notes" and, together with the Certificates, the "Securities") pursuant to
the Indenture dated February 1, 1999 between the Trust and Harris Trust and
Savings Bank, as trustee. The corpus of the Trust will consist of a pool of
marine installment sale contracts and direct loans and certain related rights
and other property (the "Contracts") to be acquired by the Trust from the Seller
and the Selling Trust and serviced on behalf of the Trust by the Servicer. The
payment of principal of and interest on the Notes and Certificates is to be
funded by, among other things, payments of principal and interest received by
the Trust on the Contracts.
It is a condition to the issuance of the Securities that the Lender make a
loan (the "Loan") to the Trust in the amount of $27,568,581, the proceeds of
which are to be deposited in the Loan Sub-Account to provide additional funds to
make payments on the Securities.
In consideration of the premises and the mutual agreements hereinafter set
forth, the parties hereto hereby agree as follows:
Section 1. Defined Terms. Capitalized terms used but not defined in this
Agreement, including the recitals, shall have the meanings given to such terms
in the Sale and Servicing Agreement.
Section 2. Loan. The Lender shall make the Loan to the Trust on the
Closing Date. The Trust shall deposit the proceeds of the Loan in the Loan
Sub-Account. The Lender shall have no obligation to deposit any funds in the
Loan Sub-Account other than as provided in this Section 2. No one other than the
Trust, as the sole owner, beneficially and otherwise, of the Loan Sub-Account,
shall have any interest in the Loan Sub-Account or the other Reserve Account
Property.
<PAGE>
Section 3. Repayment of the Loan.
(a) The outstanding principal amount of the Loan shall be due and payable
to the Lender by the Trust on the date (the "Maturity Date") which is the
earlier of (i) the close of business on the Certificate Final Distribution Date
or (ii) the date on which the Trust has terminated pursuant to Section 7.1 of
the Trust Agreement. On each Distribution Date prior to the Maturity Date, the
Trust, acting in accordance with instructions from the Servicer, shall make a
prepayment of the principal amount of the Loan from funds available therefor in
the Loan Sub-Account, such prepayment to be in an amount equal to the lesser of
the outstanding principal amount of the Loan and the Reserve Account Surplus
with respect to such Distribution Date remaining after making payments from the
Excess Sub-Account in accordance with Section 3(h) and after paying any accrued
and unpaid interest on the Loan in accordance with Section 3(e).
(b) (I) On each Distribution Date, the Trust, acting in accordance with
the instructions from the Servicer, shall, to the extent of funds available,
make, or cause to be made, the following payments to the Lender hereunder from
the Loan Sub-Account:
(i) Investment Earnings on funds on deposit in the Loan Sub-Account.
(ii) The Reserve Account Surplus with respect to such Distribution
Date remaining after payments from the Excess Sub-Account in accordance
with Section 3(h), in an amount equal to any accrued and unpaid interest
on the Loan required to be paid on such Distribution Date pursuant to
Section 3(e), the extent not previously paid.
(II) On each Distribution Date, the Trust, acting in accordance with the
instructions from the Servicer, shall, to the extent of funds available, make,
or cause to be made, the following payments to the Lender hereunder from the
Collection Account pursuant to Section 5.05(b)(viii) of the Sale and Servicing
Agreement:
(i) an amount equal to any accrued and unpaid interest on the Loan
required to be paid on such Distribution Date pursuant to Section 3(e)(i)
and (iii).
(c) On the Maturity Date, the Indenture Trustee, after the payment of all
amounts payable from the Reserve Account to the Securityholders, as provided in
Section 5.06 of the Sale and Servicing Agreement, and to the Lender, as provided
in clauses (a) and (b) above and clause (h) below, shall withdraw from the
Reserve Account all amounts on deposit in the Reserve Account and (A) shall pay
or cause to be paid to the Lender the outstanding principal amount of the Loan
and any accrued and unpaid interest on the Loan on such date and (B) shall pay
or cause to be paid any excess of such amounts over the amount in clause (A) to
the Holder of the AO Interest as provided in Section 5.06 of the Sale and
Servicing Agreement.
(d) On each Distribution Date, amounts paid to the Lender shall be applied
by the Lender first to the payment of any accrued and unpaid interest on the
Loan and second to the payment of unpaid principal of the Loan.
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(e) The Loan shall bear interest during each Interest Accrual Period at a
rate per annum determined such that the interest payable on the Loan is equal to
the sum of the following:
(i) 1.00% per annum of the average unpaid principal amount of the
Loan during such Interest Accrual Period, plus
(ii) the Investment Earnings on funds on deposit in the Loan
Sub-Account, plus
(iii) LIBOR plus 2.00% (the "Lender Rate") applied to the portion,
if any, of the average unpaid principal amount of the Loan during such
Interest Accrual Period in excess of the average amount on deposit in the
Loan Sub-Account (including the principal amount of all Eligible
Investments held, but excluding Investment Earnings thereon) during such
Interest Accrual Period.
"LIBOR" means, with respect to each Interest Accrual Period, the London
interbank offered rate for one-month United States dollar deposits determined by
the Lender for each Interest Accrual Period as follows: On each LIBOR
Determination Date, the Lender will determine LIBOR on the basis of the rate for
one-month United States dollar deposits that appears on the display page of the
Dow Jones Telerate Service currently designated as Telerate page 3750 (or such
other page as may replace that page on that service for the purpose of
displaying comparable rates or prices), as of 11:00 a.m., London time, on such
date. If such rate does not appear on such page, the rate for that date will be
determined on the basis of the rates at which one-month loans in United States
dollars are offered by four major banks in the London interbank market, selected
by the Lender, at approximately 11:00 a.m., London time, on that day to banks in
the London interbank market. The Lender will request the principal London office
of each such bank to provide a quotation of its rate. If at least two such
quotations are provided, the rate for that date will be the arithmetic mean of
the quotations. If fewer than two quotations are provided as requested, the rate
for that date will be the arithmetic mean of the rates quoted by major banks in
New York City, selected by the Lender, at approximately 11:00 a.m., New York
City, on that day for one-month loans in United States dollars to leading
European banks. If no major banks are quoting rates for such loans at such time,
"LIBOR" will be deemed to mean LIBOR as in effect as of the preceding LIBOR
Determination Date. For purposes of this Agreement, "LIBOR Determination Date"
shall mean the second London Business Day prior to the commencement of each
Interest Period and "London Business Day" shall mean any Business Day in which
dealings in deposits in United States Dollars are transacted in the London
interbank market.
(f) Interest shall be payable monthly in arrears on each Distribution Date
to the Lender by the Trust, from the amounts payable pursuant to Section 3(b)
hereof. Interest on the Loan shall be calculated on the basis of the actual
number of days elapsed divided by 365, provided that interest in respect of the
Lender Rate shall be calculated on the basis of the actual number of days
elapsed divided by 360. Each determination thereof by the Lender pursuant to the
provisions of this Agreement shall be conclusive and binding on the Trust, the
Servicer and the Indenture Trustee, in the absence of manifest error.
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(g) If any portion of interest due and payable on a Distribution Date is
not paid on such Distribution Date (other than by reason of the Lender having
failed to provide information which is required by the Servicer, the Trust or
the Indenture Trustee to calculate the amount of such interest), the unpaid
portion of such interest shall be due and payable to the Lender by the Trust on
the next succeeding Distribution Date. Any interest which is not paid when due
shall accrue interest from the Distribution Date on which such interest was due
and payable to the date such interest is actually paid at a rate per annum equal
to the Lender Rate (in effect from time to time). The Lender shall, as soon as
practicable, notify the Servicer and the Indenture Trustee of each determination
of the Lender Rate.
(h) On each Distribution Date, the Trust, acting in accordance with
instructions from the Servicer shall, to the extent of the funds available,
make, or cause to be made, the following payments from the Excess Sub-Account in
the following order and priority:
(i) To the Lender, the Reserve Account Surplus, if any, in an amount
equal to the excess, if any, of any accrued and unpaid interest on the
Loan required to be paid on such Distribution Date pursuant to Section
3(e)(i) and (iii) and the actual amount distributed to the Lender pursuant
to Section 5.05(b)(viii) of the Sale and Servicing Agreement.
(ii) To the Lender, the Reserve Account Surplus, if any, in an
amount equal to the excess, if any, of the outstanding principal amount of
the Loan over the amount on deposit in the Loan Sub-Account.
(iii) To the Holder of the AO Interest, the Reserve Account Surplus,
if any, in an amount equal to the lesser of (A) such Reserve Account
Surplus or (B)(i) if the Net Yield on such Distribution Date (or any prior
Distribution Date) is (or was) less than 1.5%, an amount such that the
amount remaining on deposit in the Excess Sub-Account (after making this
payment) is not less than $3,675,811, or (ii) if the Net Yield on such
Distribution Date (or any prior Distribution Date) is (or was) less than
1.25%, an amount such that the amount remaining on deposit in the Excess
Sub-Account (after making this payment) is not less than the Specified
Reserve Amount for such Distribution Date.
Section 4. Limited Obligation; Waiver of Setoff.
Notwithstanding any provision in this Agreement to the contrary, only the
Trust is obligated to repay the Loan, together with interest thereon as provided
in Section 3, and such obligation, with respect to the Trust, shall be with
recourse solely to the funds from the Collection Account, the Reserve Account
Surplus and Investment Earnings on the Loan Sub-Account to the extent required
to be distributed in accordance with Section 3(b) hereof and amounts required to
be distributed in accordance with Section 3(c) hereof, in each case to the
extent payable to the Lender under the Sale and Servicing Agreement. No other
person or entity, including the Seller, the Servicer (or any person or
organization acting on the behalf of either of them, or any affiliate of either
of them), the Owner Trustee, the Indenture Trustee, the holder of the AO
Interest, the Trust, the Insurer, any Certificateholder or any Noteholder or any
officer or director of any of them, shall have any obligation to pay principal
of or interest on the Loan,
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except for the direct recourse indemnification obligation of each successor
Servicer pursuant to Section 6 hereof. The Lender agrees that it shall not have,
and hereby waives to the fullest extent permitted by law, any right of setoff or
lender's lien against any obligations or property of the Seller, the Servicer,
the Trust, the Owner Trustee, the Indenture Trustee, the Insurer, or any
Noteholder or Certificateholder.
Section 5. Investments; Information; Amendments to the Sale and Servicing
Agreement.
(a) The Indenture Trustee shall from time to time during the term of this
Agreement invest all amounts on deposit in the Loan Sub-Account in such Eligible
Investments as the Lender shall direct, which investments shall at all times be
made in compliance with the terms of the Sale and Servicing Agreement.
(b) The Servicer shall, to the extent the Servicer is in possession of
such information, provide the Lender with such information and data with respect
to the Reserve Account as the Lender may reasonably request.
Section 6. Servicer Agreement; Servicing Transfer.
(a) In the event that a successor Servicer is appointed pursuant to the
Sale and Servicing Agreement, from and after the effective date of such
appointment, the successor Servicer appointed pursuant to the Sale and Servicing
Agreement, and not the former Servicer, shall agree in writing to (i) be
responsible for the performance of all servicing functions to be performed from
and after such date, (ii) be bound by the terms, covenants and conditions
contained herein applicable to the Servicer and subject to the duties and
obligations of the Servicer hereunder and (iii) indemnify and hold harmless the
Lender from and against any and all claims, damages, losses, liabilities, costs
or expenses whatsoever which the Lender may incur (or which may be claimed
against the Lender) by reason of the gross negligence or willful misconduct of
the successor Servicer in exercising its powers and carrying out its obligations
under the Sale and Servicing Agreement. Such transfer of servicing shall not
affect any rights or obligations of the former Servicer acting as Servicer which
arose prior to the effective date of the transfer of servicing or the rights or
obligations of the former Servicer under this Agreement whether arising before
or after such date, except that such former Servicer shall have no obligation to
indemnify the Lender as a result of any act or failure to act of any successor
Servicer in the performance of the servicing functions.
(b) The Servicer shall forward to the Lender each document referred to in
Sections 4.13(a) and 4.13(b) of the Sale and Servicing Agreement and shall not
agree to amend the Sale and Servicing Agreement except in accordance with the
terms thereof (as amended from time to time).
(c) The Servicer agrees to indemnify and hold harmless the Lender from and
against any and all claims, damages, losses, liabilities, cost or expenses which
the Lender may incur (i) by reason of the gross negligence or willful misconduct
of the Servicer in exercising its powers and carrying out its obligations under
this Agreement and (ii) under the Securities Act of
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1933, as amended, the Securities Exchange Act of 1934, as amended, or any other
federal or state law or regulation arising out of or based upon any untrue
statement of a material fact in the Prospectus Supplement dated February 12,
1999 to the Prospectus dated September 29, 1998 relating to the issuance and
sale of the Securities (the "Prospectus") or other material provided to
investors and prospective investors by or on behalf of the Seller or the
Servicer in connection with the offer and sale of the Securities or any
amendments thereof or any supplement thereto or arising out of or based upon the
omission to state a material fact to make the statements in the Prospectus or
such other material or any amendment thereof or supplement thereto, in light of
the circumstances in which they were made, not misleading.
Section 7. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of New York applicable to contracts made and to be
performed in such State, without regard to principles of conflicts of law, and
the obligations, rights and remedies of the parties hereunder shall be
determined in accordance with such laws.
Section 8. Termination. This Agreement shall terminate on the later to
occur of: (a) the date on which the Trust terminates in accordance with Section
7.1 of the Trust Agreement, or (b) the payment in full of all amounts owed to
the Lender hereunder.
Section 9. Notices. Unless specifically indicated otherwise herein, all
notices and other communications provided for hereunder shall be in writing and,
if to the Lender, addressed to:
The CIT Group/Sales Financing, Inc.
650 CIT Drive
Livingston, New Jersey 07039
Attention: President
Telephone: 973-740-5000
Telecopy: 973-740-5410
or, if to the Servicer, addressed to:
The CIT Group/Sales Financing, Inc.
650 CIT Drive
Livingston, New Jersey 07039
Attention: President
Telephone: 973-740-5000
Telecopy: 973-740-5410
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or, if to the Trust or the Indenture Trustee, addressed to:
Harris Trust and Savings Bank
311 West Monroe Street
12th Floor
Chicago, IL 60606
Telephone: 312-461-4662
Telecopy : 312-461-3525
or as to any party at such other address as shall be designated by such party in
a written notice hereunder to the other parties.
Any notice or other communication shall be sufficiently given and shall be
deemed given when delivered to the addressee in writing, when mailed by
registered or certified mail, return receipt requested, or when transmitted by
telecopier, receipt of which by the addressee is confirmed by telephone.
Section 10. Bankruptcy. To the extent that the Indenture Trustee makes a
payment to the Lender, or the Lender receives any payment or proceeds with
respect to the Loan, which payment or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, receiver or any other party under any state or federal
insolvency or bankruptcy law then, to the extent such payment is set aside, the
amount or part thereof intended to be satisfied shall be revived and continue in
full force and effect, as if such payment had not been received by the Lender.
Section 11. Limitation of Remedies. The Lender shall not have the right to
accelerate or otherwise cause the Loan or any portion thereof to become due and
payable prior to the Maturity Date for the Loan except as set forth in Section
3(a).
Section 12. No Petition. Notwithstanding any prior termination of this
Agreement the Lender shall not, prior to the date which is one year and one day
after the final payment of all of the Securities issued by the Trust, acquiesce,
petition or otherwise invoke or cause the Trust or the Seller to invoke the
process of any governmental authority for the purpose of commencing or
sustaining a case against the Trust or the Seller under any Federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Trust or the Seller or any substantial part of its property or ordering the
winding up or liquidation of the affairs of the Trust or the Seller.
Section 13. Participation; Miscellaneous. The Lender may, upon prior
written notice to the other parties hereto, sell participations to one or more
banks or other entities (each a "Participant") in all or a portion of its rights
under this Agreement (including all or a portion of the Loan); provided,
however, that (i) the Lender's rights and obligations under this Agreement shall
remain unchanged, (ii) the Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) the Indenture
Trustee, the Trust, the Seller, the Insurer and the Servicer shall continue to
deal solely and directly with the Lender in the exercise of its rights and
obligations under this Agreement, (iv) the Lender shall retain the sole right to
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enforce the obligations of the Trust, the Indenture Trustee, the Insurer, or the
Servicer under this Agreement and to approve any amendment, modification or
waiver of any provision of this Agreement and (v) such Participant expressly
agrees to be bound by the provisions contained in Sections 4 and 12 hereof.
Unless the Servicer consents in writing to such participation within 15 days of
receipt of notice of such participation, neither the Trust nor the Servicer
shall be obligated to the Lender for amounts payable under this Agreement in
excess of such amounts which would have been due and owing had such
participation not been granted.
Section 14. Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument.
Section 15. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 16. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Servicer, the Trust, the Indenture Trustee, the
Lender, and their respective successors and assigns.
8
<PAGE>
IN WITNESS WHEREOF, the parties have caused their names to be signed
hereto by their respective officers thereunto duly authorized, all as of the day
and year first above written.
CIT MARINE TRUST 1999-A
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but solely
as Owner Trustee on behalf of the Trust
By: /s/ Denis Kelly
------------------------------------------
Name: Denis Kelly
Title: Trust Officer
HARRIS TRUST AND SAVINGS BANK, not
in its individual capacity but
solely as Indenture Trustee on
behalf of the Trust
By: /s/ Robert D. Foltz
------------------------------------------
Name: Robert D. Foltz
Title: Vice President
THE CIT GROUP/SALES FINANCING, INC.,
as Servicer
By: /s/ Frank J. Madeira
------------------------------------------
Name: Frank J. Madeira
Title: Vice President
THE CIT GROUP/SALES FINANCING, INC.,
as Lender
By: /s/ Frank J. Madeira
------------------------------------------
Name: Frank J. Madeira
Title: Vice President
9
<PAGE>
Acknowledged as of date first above written:
THE CIT GROUP SECURITIZATION CORPORATION II,
as Seller
By: /s/ Frank Garcia
-----------------------------------
Name: Frank Garcia
Title: Vice President
EXHIBIT 10.3
MBIA INSURANCE CORPORATION
FINANCIAL GUARANTY INSURANCE POLICY
February 23, 1999
Policy No. 28601
Re: CIT Marine Trust 1999-A (the "Trust")
$325,000,000 Class A-1 5.45% Asset-Backed
Notes, $179,000,000 Class A-2 5.80%
Asset-Backed Notes, $117,000,000 Class A-3
5.85% Asset-Backed Notes, and $103,134,000
Class A-4 6.25% Asset-Backed Notes
(collectively, the "Notes").
Insured Obligation: Obligation to pay timely interest and
ultimate principal on the Notes and the
amount of any collateralization shortfall.
Beneficiary: Harris Trust and Savings Bank, as indenture
trustee (the "Indenture Trustee") under the
Indenture dated as of February 1, 1999 (the
"Indenture") between the Trust and the
Indenture Trustee (together with any
successor indenture trustee duly appointed
and qualified under the Indenture) for the
benefit of the Noteholders (as defined
below).
MBIA INSURANCE CORPORATION ("MBIA"), for consideration received, hereby
unconditionally and irrevocably guarantees to the Indenture Trustee, subject
only to the terms of this Financial Guaranty Insurance Policy (the "Policy"),
payment of the Insured Obligation. MBIA agrees to pay to the Indenture Trustee,
in respect of (i) each Distribution Date (other than the Final Scheduled
Distribution Date with respect to a Class of Notes), an amount equal to the
amount by which the Note Interest Distribution Amount exceeds that portion of
the Available Amount allocated to pay such amounts as provided in the Sale and
Servicing Agreement (as defined below) after giving effect to amounts available
therefor from the Reserve Account, (ii) each Distribution Date which is a Final
Scheduled Distribution Date with respect to a Class of Notes, (A) an amount
equal to the amount by which the Note Interest Distribution Amount for such
Class of Notes exceeds that portion of the Available Amount allocated to pay
such amounts as provided in the Sale and Servicing Agreement after giving effect
to amounts available therefor from the Reserve Account and (B) an amount equal
to the outstanding principal balance of such
<PAGE>
Class of Notes after giving effect to the payment of any Note Primary Principal
Distribution Amount or Additional Principal Distribution Amount for such Class
of Notes and any amounts available therefor from the Reserve Account, and (iii)
each Distribution Date, an amount equal to the Collateralization Shortfall, if
any, on such Distribution Date (the "Note Policy Claim Amount"). MBIA also
agrees to pay an amount equal to any Avoided Payment (as defined below). MBIA's
obligations under this Policy will be discharged to the extent funds equal to
the amounts described above are received by the Indenture Trustee, whether or
not such funds are properly applied by the Indenture Trustee. Payments hereunder
shall be made only at the time set forth in this Policy. This Policy shall not
guarantee payments of principal on the Notes other than the outstanding
principal amount of each Class of Notes on the Final Scheduled Distribution Date
for such Class of Notes and the Collateralization Shortfall, and will not
guarantee payment of any amounts that become due on an accelerated basis as a
result of (a) a default by the Trust, (b) the occurrence of an Event of Default
under (and as defined in) the Indenture, or (c) any other cause. MBIA may elect,
in its sole discretion, to pay in whole or in part such principal due upon
acceleration. MBIA may elect, in its sole discretion, to pay all or a portion of
any shortfalls in the amount of such Available Amount to make distributions of
principal on the Notes, other than distributions of principal with respect to a
class of Notes on the Final Scheduled Distribution Date therefor and the
Collateralization Shortfall, which is guaranteed by MBIA as provided above. In
no event shall a payment made hereunder with respect to principal exceed the
Policy Amount. As used herein in the "Policy Amount" means the aggregate
principal balance of the Notes as of the Closing Date less all payments made
hereunder with respect to principal.
Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned to them in the Sale and Servicing Agreement dated as of
February 1, 1999 among The CIT Group Securitization Corporation II, as seller
(the "Seller"), The CIT Group/Sales Financing, Inc. ("CITSF" or the "Servicer"),
CIT Marine Trust 1996-A (the "Selling Trust"), and the Trust (the "Sale and
Servicing Agreement").
As used herein the term "Insolvency Proceeding" means (i) the
commencement, after the date hereof, of any bankruptcy, insolvency, readjustment
of debt, reorganization, marshalling of assets and liabilities or similar
proceedings by or against the Trust, the Seller, the Servicer, the Selling Trust
or The CIT Group, Inc. ("CIT"), (ii) the commencement, after the date hereof, of
any proceedings by or against the Trust, the Seller, the Servicer, the Selling
Trust or CIT for the winding up or liquidation of its affairs, or (iii) the
consent, after the date hereof, to the appointment of a trustee, conservator,
receiver or liquidator in any bankruptcy, insolvency, readjustment of debt,
reorganization, marshalling of assets and liabilities or similar proceedings of
or relating to the Trust, the Seller, the Servicer, the Selling Trust or CIT.
As used herein the term "Noteholder" means each Noteholder who on the
applicable Distribution Date is entitled under the terms of the related Note to
receive payments thereunder.
Payment of amounts hereunder shall be made in immediately available funds
on the later of (a) 3:00 p.m., New York City time, on the related Distribution
Date and (b) 3:00 p.m., New York City time, on the third Business Day following
presentation to State Street Bank and Trust Company, N.A., as Fiscal Agent for
MBIA or any successor fiscal agent appointed by MBIA (the "Fiscal Agent") (as
hereinafter provided) of a notice for payment in the form of Exhibit A
-2-
<PAGE>
hereto ("Notice for Payment"), appropriately completed and executed by the
Indenture Trustee. A Notice for Payment under this Policy may be presented to
the Fiscal Agent on any Business Day on or following the Determination Date in
respect of which the Notice for Payment is being presented, but in any event,
not later than the third Business Day prior to the applicable Distribution Date,
by (a) delivery of the original Notice for Payment to the Fiscal Agent at its
address set forth below, or (b) facsimile transmission of the original Notice
for Payment to the Fiscal Agent at its facsimile number set forth below. If
presentation is made by facsimile transmission, the Indenture Trustee shall (i)
simultaneously confirm transmission by telephone to the Fiscal Agent at its
telephone number set forth below, and (ii) as soon as reasonably practicable,
deliver the original Notice for Payment to the Fiscal Agent at its address set
forth below. Any Notice for Payment received by the Fiscal Agent after 3:00
p.m., New York City time, on a Business Day, or on any day that is not a
Business Day, will be deemed to be received by the Fiscal Agent on the next
succeeding Business Day.
Subject to the foregoing, if the payment of any amount guaranteed by this
Policy and previously distributed to a Noteholder in respect of the Notes that
is recoverable and sought to be recovered as a voidable preference in an
Insolvency Proceeding in accordance with a nonappealable order of a court having
competent jurisdiction is voided ("Avoided Payment"), MBIA will make such
Avoided Payment on behalf of the Noteholder upon receipt by the Fiscal Agent
from the Indenture Trustee on behalf of such Noteholder of (i) a certified copy
of a final, nonappealable order of a court having competent jurisdiction to the
effect that the Noteholder is required to return any principal or interest paid
on the Notes prior to the Termination Date of this Policy because such payment
was voided under applicable law (the "Order") together with a certificate of
such Noteholder that such Order is final and not subject to appeal, (ii) an
assignment, substantially in the form attached hereto as Exhibit B, properly
completed and executed by such Noteholder irrevocably assigning to MBIA all
rights and claims of such Noteholder relating to or arising under such Avoided
Payment, (iii) a Notice for Payment in the form of Exhibit A hereto
appropriately completed and executed by the Indenture Trustee, and (iv)
appropriate instruments to effect the appointment of MBIA as agent for such
Noteholder in any legal proceeding relating to such Avoided Payment.
MBIA shall make payments due in respect of Avoided Payments no later than
12:00 noon, New York City time on the Business Day which is no earlier than (a)
the third Business Day following receipt by the Fiscal Agent of the documents
required under clauses (i) through (iv) of the preceding paragraph and (b) the
date that such documents are received by the Fiscal Agent, if at least three
Business Days prior to such receipt, the Fiscal Agent shall have received
written notice from the Indenture Trustee that such documents were to be
delivered on such date and such date was specified in such notice. Any such
documents received by the Fiscal Agent after 3:00 p.m. New York City time on any
Business Day or on any day that is not a Business Day shall be deemed to have
been received by the Fiscal Agent prior to 3:00 p.m. on the next succeeding
Business Day. All payments made by MBIA hereunder on account of any Avoided
Payment shall be made to the receiver or the trustee in bankruptcy named in the
Order on behalf of the Noteholder and not to the Indenture Trustee or any
Noteholder directly unless such Noteholder has returned such Avoided Payment to
such receiver or trustee in bankruptcy, in which case such payment will be
disbursed to the Indenture Trustee on behalf of such Noteholder
-3-
<PAGE>
upon proof of such payment reasonably satisfactory to MBIA.
If any Notice for Payment received by the Fiscal Agent is not in proper
form or is otherwise insufficient for the purpose of making a claim hereunder,
it shall be deemed not to have been received by the Fiscal Agent, and MBIA or
the Fiscal Agent, as the case may be, shall promptly so advise the Indenture
Trustee, and the Indenture Trustee may submit an amended Notice for Payment.
Payments due hereunder unless otherwise stated herein will be disbursed by
the Fiscal Agent to the Indenture Trustee on behalf of the Noteholders by wire
transfer of immediately available funds in the amount of such payment, less, in
respect of Avoided Payments, any amounts held by the Indenture Trustee for the
payment of such Avoided Payment and legally available therefor.
The Fiscal Agent is the agent of MBIA only, and the Fiscal Agent shall in
no event be liable to Noteholders for any acts of the Fiscal Agent or any
failure of MBIA to deposit or cause to be deposited sufficient funds to make
payments due under this Policy.
MBIA shall be subrogated to the rights of each Noteholder to receive
payments under the Notes to the extent of any payment by MBIA hereunder. MBIA's
rights of subrogation acquired as a result of any payment made under this Policy
shall, in all respects, be subordinate and junior in right of payment to the
prior indefeasible payment in full of all amounts due the Indenture Trustee on
account of payments due under the Notes.
MBIA hereby waives and agrees not to assert any and all rights to require
the Indenture Trustee to make demand on or to proceed against any person, party
or security prior to the Indenture Trustee demanding payment under this Policy.
No defenses, set-offs and counterclaims of any kind available to MBIA so
as to deny payment of any amount due in respect of this Policy will be valid and
MBIA hereby waives and agrees not to assert any and all such defenses, set-offs
and counterclaims, including, without limitation, any such rights acquired by
subrogation, assignment or otherwise.
This Policy is neither transferable nor assignable, in whole or in part,
except to a successor to the Indenture Trustee pursuant to the Indenture. All
notices, presentations, transmissions, deliveries and communications made by the
Indenture Trustee to MBIA with respect to this Policy shall specifically refer
to the number of this Policy and shall be made to MBIA at:
MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Attention: Insured Portfolio Management, Structured Finance
Telephone: (914) 273-4949
Facsimile: (914) 765-3163
-4-
<PAGE>
or such other address, telephone number or facsimile number as MBIA may
designate to the Indenture Trustee in writing from time to time. Each such
notice, presentation, transmission, delivery and communication shall be
effective only upon actual receipt by MBIA.
Any notice hereunder delivered to the Fiscal Agent of MBIA may be made at
the address listed below for the Fiscal Agent of MBIA or such other address as
MBIA shall specify in writing to the Indenture Trustee.
The notice address of the Fiscal Agent is 61 Broadway, 15th Floor, New
York, New York 10006 Attention: Municipal Registrar and Paying Agency,
Facsimile: (212) 612-3203 or such other address as the Fiscal Agent shall
specify to the Indenture Trustee in writing.
The obligations of MBIA under this Policy are irrevocable, primary,
absolute and unconditional (except as expressly provided herein) and neither the
failure of the Trust, the Indenture Trustee, CIT, the Seller, the Servicer or
any other person to perform any covenant or obligation in favor of MBIA (or
otherwise), nor the failure or omission to make a demand permitted hereunder,
nor the commencement of any bankruptcy, debtor or other insolvency proceeding by
or against the Trust, the Indenture Trustee, CIT, the Seller, the Servicer or
any other person shall in any way affect or limit MBIA's obligations under this
Policy. If a successful action or proceeding to enforce this Policy is brought
by the Indenture Trustee, the Indenture Trustee shall be entitled to recover
from MBIA costs and expenses reasonably incurred, including without limitation
reasonable fees and expenses of counsel.
This Policy and the obligations of MBIA hereunder shall terminate on the
date (the "Termination Date") that is the earlier to occur of (a) ninety-one
days following the earlier of (i) the latest Final Scheduled Distribution Date
and (ii) the date on which all amounts required to be paid to the Noteholders
have been paid in full, provided, that, if any Insolvency Proceeding is existing
by or against the Trust, the Selling Trust, the Seller, the Servicer or CIT
during such ninety-one day period, then this Policy and MBIA's obligations
hereunder shall terminate on the date of the conclusion or dismissal of such
Insolvency Proceeding without continuing jurisdiction by the court in such
Insolvency Proceeding, provided, further that, and notwithstanding anything
herein to the contrary, this Policy shall not terminate prior to the date on
which MBIA has made all payments required to be made under the terms of this
Policy in respect of Avoided Payments; and (b) the Business Day following the
date that MBIA receives written notice from the Servicer terminating this Policy
pursuant to Section 12.12 of the Sale and Servicing Agreement; provided,
however, that no termination under this clause (b) shall be effective until (x)
all amounts owed to MBIA under the Insurance Agreement on the date such written
notice is received by MBIA are paid in full in cash and (y) the original of this
Policy is received by MBIA.
All payments made hereunder by MBIA shall be made with MBIA's own funds.
The payment by MBIA to the Indenture Trustee of any amount guaranteed by the
first paragraph of this Policy, and the payment by MBIA of any Avoided Payment
shall constitute "payments" for all purposes under this Policy. In no event
shall any payment be made under this Policy on
-5-
<PAGE>
account of (a) the failure of the Indenture Trustee to deliver the proceeds of
any such payment to any Noteholder or (b) the failure of any such Noteholder to
claim any such proceeds from the Indenture Trustee.
This Policy is not covered by the property/casualty insurance fund
specified in Article Seventy-Six of the New York State insurance law.
This Policy sets forth in full the undertaking of MBIA, and shall not,
except with the prior written consent of the Indenture Trustee or otherwise in
accordance with the express terms hereof, be modified, altered or affected by
any other agreement or instrument, including any modification or amendment
thereto and may not be canceled or revoked by MBIA prior to the Termination
Date.
This Policy shall be returned to MBIA by the Indenture Trustee on the
Termination Date.
THIS POLICY SHALL BE CONSTRUED, AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HEREUNDER SHALL BE DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES OR THE
APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION.
-6-
<PAGE>
IN WITNESS WHEREOF, MBIA has caused this Policy to be executed on the date
first written above.
MBIA INSURANCE CORPORATION
/s/ M. Antonicelli
------------------------------------
Michael Antonicelli
Vice President
-7-
<PAGE>
Exhibit A to Financial Guaranty Insurance Policy, Number 28601
MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Attention: Insured Portfolio Management,
Structured Finance
NOTICE FOR PAYMENT
UNDER FINANCIAL GUARANTY INSURANCE POLICY NUMBER 28601
Harris Trust and Savings Bank, as indenture trustee (the "Indenture
Trustee"), hereby certifies to MBIA Insurance Corporation ("MBIA") with
reference to that certain Financial Guaranty Insurance Policy, Number 28601,
dated February 23, 1999 (the "Policy"), issued by MBIA in favor of the Indenture
Trustee under the Indenture, dated as of February 1, 1999 between CIT Marine
Trust 1999-A and the Indenture Trustee, in such capacity as follows:
1. The Indenture Trustee is the Indenture Trustee under the Indenture and
the Beneficiary under the Policy.
2. The Indenture Trustee is entitled to make a demand under the Policy
[pursuant to Section 5.09 of the Sale and Servicing Agreement] [in connection
with an Avoided Payment as defined in the Policy].
[For a Notice for Payment in respect of a Distribution Date use the following
paragraphs 3, 4 and 5.]
3. This notice relates to the [insert date] Distribution Date. The amount
claimed under the Policy, as specified to the Indenture Trustee by the Servicer,
for such Distribution Date is $_______. The amount demanded by this notice does
not exceed amounts permitted to be drawn under the Policy.
4. The Indenture Trustee demands payment of $___________ which is an
amount equal to the Note Policy Claim Amount for such Distribution Date.
5. The amount demanded is to be paid in immediately available funds to the
Note Distribution Account at ______________, account number _______________.
[For a Notice for Payment in respect of an Avoided Payment use the following
paragraphs 3 and 4.]
3. The Indenture Trustee hereby represents and warrants, based upon
information available to it, that (i) the amount entitled to be drawn under the
Policy on the date hereof in respect of Avoided Payments is the amount paid or
to be paid simultaneously with such draw on the Policy, by all Noteholders
[$ ] (the "Avoided Payment Amount"), (ii) each Noteholder with respect to
which the drawing is being made under the Policy has paid or simultaneously with
such draw on the Policy will pay such Avoided Payment, and (iii) the
A-1
<PAGE>
documents required by the Policy to be delivered in connection with such Avoided
Payment and Avoided Payment Amount have previously been presented to MBIA or are
attached hereto.
4. The amount demanded is to be paid in immediately available funds by
wire transfer to [ ].
[For a Notice for Payment relating to both an Avoided Payment and a
Distribution Date, use the following paragraphs 3, 4, 5 and 6.]
3. This notice relates to the [insert date] Distribution Date. The amount
claimed under the Policy, as specified to the Indenture Trustee by the Servicer,
for such Distribution Date is $________. The amount demanded by this notice does
not exceed amounts permitted to be drawn under the Policy.
4. The Indenture Trustee demands payment of $_____________ which is an
amount equal to the Note Policy Claim Amount for such Distribution Date.
5. The Indenture Trustee hereby represents and warrants, based upon
information available to it, that (i) the amount entitled to be drawn under the
Policy on the date hereof in respect of Avoided Payments is the amount paid or
to be paid simultaneously with such draw on the Policy, by all Noteholders
[$ ] (the "Avoided Payment Amount"), (ii) each Noteholder with respect to
which the drawing is being made under the Policy has paid or simultaneously with
such draw on the Policy will pay such Avoided Payment, and (iii) the documents
required by the Policy to be delivered in connection with such Avoided Payment
and Avoided Payment Amount have previously been presented to MBIA or are
attached hereto.
6. The amount demanded is to be paid in immediately available funds by
wire transfer to [ ].
Any Person Who Knowingly And With Intent To Defraud Any Insurance Company
Or Other Person Files An Application For Insurance Or Statement Of Claim
Containing Any Materially False Information, Or Conceals For The Purpose Of
Misleading Information Concerning Any Fact Material Thereof, Commits A
Fraudulent Insurance Act, Which Is A Crime, And Shall Also Be Subject To A Civil
Penalty Not To Exceed Five Thousand Dollars And The Stated Value Of The Claim
For Each Such Violation.
Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned to them in the Policy.
A-2
<PAGE>
IN WITNESS WHEREOF, this notice has been executed this ____ day of
__________, _______.
Harris Trust and Savings Bank
By:________________________________
Authorized Officer
A-3
<PAGE>
Exhibit B to Financial Guaranty Insurance Policy, Number 28601
Form of Assignment
Reference is made to the Financial Guaranty Insurance Policy No. 28601,
dated February 23, 1999, (the "Policy") issued by MBIA Insurance Corporation
("MBIA") relating to the CIT Marine Trust 1999-A Class A-1 5.45% Asset-Backed
Notes, Class A-2 5.80% Asset- Backed Notes, Class A-3 5.85% Asset-Backed Notes
and Class A-4 6.25% Asset-Backed Notes. Unless otherwise defined herein,
capitalized terms used in this Assignment shall have the meanings assigned
thereto in the Policy as incorporated by reference therein. In connection with
the Avoided Payment of [$ ] paid by the undersigned (the "Holder") on
[ ] and the payment by MBIA in respect of such Avoided Payment pursuant
to the Policy, the Holder hereby irrevocably and unconditionally, without
recourse, representation or warranty (except as provided below), sells, assigns,
transfers, conveys and delivers all of such Holder's rights, title and interest
in and to any rights or claims, whether accrued, contingent or otherwise, which
the Holder now has or may hereafter acquire, against any person relating to,
arising out of or in connection with such Avoided Payment. The Holder represents
and warrants that such claims and rights are free and clear of any lien or
encumbrance created or incurred by such Holder.
________________________________
Holder of Certificate(1)
- ----------
(1) In the event that the terms of this form of assignment are reasonably
determined to be insufficient solely as a result of a change of law or
applicable rules after the date of the Policy to fully vest all of the Holder's
right, title and interest in such rights and claims, the Holder and MBIA shall
agree on such other form as is reasonably necessary to effect such assignment,
which assignment shall be without recourse, representation or warranty except as
provided above.
B-1
EXHIBIT 10.4
MBIA INSURANCE CORPORATION
FINANCIAL GUARANTY INSURANCE POLICY
February 23, 1999
Policy No. 28602
Re: CIT Marine Trust 1999-A (the "Trust")
$11,028,156 6.20% Asset-Backed Certificates
(the "Certificates").
Insured Obligation: Obligation to pay timely interest and
ultimate principal on the Certificates and
the amount of any collateralization
shortfall.
Beneficiary: CIT Marine Trust 1999-A, a Delaware
statutory business trust, under the Amended
and Restated Trust Agreement dated as of
February 1, 1999 (the "Trust Agreement")
between The CIT Group Securitization
Corporation II and Chase Manhattan Bank
Delaware, as owner trustee (the "Owner
Trustee") (together with any successor owner
trustee duly appointed and qualified under
the Trust Agreement) for the benefit of the
Certificateholders (as defined below).
MBIA INSURANCE CORPORATION ("MBIA"), for consideration received, hereby
unconditionally and irrevocably guarantees to the Trust, subject only to the
terms of this Financial Guaranty Insurance Policy (the "Policy"), payment of the
Insured Obligation. MBIA agrees to pay to the Trust, in respect of (i) each
Distribution Date (other than the Certificate Final Distribution Date with
respect to the Certificates), an amount equal to the amount by which the
Certificate Interest Distribution Amount exceeds that portion of the Available
Amount allocated to pay such amounts as provided in the Sale and Servicing
Agreement (as defined below) after giving effect to amounts available therefor
from the Reserve Account, (ii) the Distribution Date which is the Certificate
Final Distribution Date with respect to the Certificates, (A) an amount equal to
the amount by which the Certificate Interest Distribution Amount for the
Certificates exceeds that portion of the Available Amount allocated to pay such
amounts as provided in the Sale and Servicing Agreement after giving effect to
amounts available therefor from the Reserve Account and (B) an amount equal to
the outstanding Certificate Balance after giving effect to the payment of the
Certificate Primary Principal Distribution Amount or Additional Principal
<PAGE>
Distribution Amount for the Certificates and any amounts available
therefor from the Reserve Account, and (iii) each Distribution Date, an amount
equal to the Collateralization Shortfall, if any, on such Distribution Date,
after giving effect to any draws on the Note Policy made in connection therewith
(the "Certificate Policy Claim Amount"). MBIA also agrees to pay an amount equal
to any Avoided Payment (as defined below). MBIA's obligations under this Policy
will be discharged to the extent funds equal to the amounts described above are
received by the Trust, whether or not such funds are properly applied by the
Trust. Payments hereunder shall be made only at the time set forth in this
Policy. This Policy shall not guarantee payments of principal on the
Certificates other than the outstanding principal amount of the Certificates on
the Certificate Final Distribution Date for such Certificates and the
Collateralization Shortfall, and will not guarantee payment of any amounts that
become due on an accelerated basis as a result of (a) a default by the Trust,
(b) the occurrence of an Event of Default under (and as defined in) the
Indenture, or (c) any other cause. MBIA may elect, in its sole discretion, to
pay all or a portion of any shortfalls in the amount of such Available Amount to
make distributions of principal on the Certificates, other than distributions of
principal with respect to the Certificates on the Final Certificate Distribution
Date therefor and the Collateralization Shortfall, which is guaranteed by MBIA
as provided above. In no event shall a payment made hereunder with respect to
principal exceed the Policy Amount. As used herein the term "Policy Amount"
means the Certificate Balance as of the Closing Date less all payments made
hereunder with respect to principal.
Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned to them in the Sale and Servicing Agreement dated as of
February 1, 1999 among The CIT Group Securitization Corporation II, as seller
(the "Seller"), The CIT Group/Sales Financing, Inc. ("CITSF" or "Servicer"), CIT
Marine Trust 1996-A (the "Selling Trust"), and the Trust (the "Sale and
Servicing Agreement").
As used herein the term "Insolvency Proceeding" means (i) the
commencement, after the date hereof, of any bankruptcy, insolvency, readjustment
of debt, reorganization, marshalling of assets and liabilities or similar
proceedings by or against the Trust, the Seller, the Servicer, the Selling Trust
or The CIT Group, Inc. ("CIT"), (ii) the commencement, after the date hereof, of
any proceedings by or against the Trust, the Seller, the Servicer, the Selling
Trust or CIT for the winding up or liquidation of its affairs, or (iii) the
consent, after the date hereof, to the appointment of a trustee, conservator,
receiver or liquidator in any bankruptcy, insolvency, readjustment of debt,
reorganization, marshalling of assets and liabilities or similar proceedings of
or relating to the Trust, the Seller, the Servicer, the Selling Trust or CIT.
As used herein the term "Certificateholder" means each Certificateholder
who on the applicable Distribution Date is entitled under the terms of the
related Certificate to receive payments thereunder.
Payment of amounts hereunder shall be made in immediately available funds
on the later of (a) 3:00 p.m., New York City time, on the related Distribution
Date and (b) 3:00 p.m., New York City time, on the third Business Day following
presentation to State Street Bank and Trust Company, N.A., as Fiscal Agent for
MBIA or any successor fiscal agent appointed by MBIA (the "Fiscal Agent") (as
hereinafter provided) of a notice for payment in the form of Exhibit A
-2-
<PAGE>
hereto ("Notice for Payment"), appropriately completed and executed by the
Trust. A Notice for Payment under this Policy may be presented to the Fiscal
Agent on any Business Day on or following the Determination Date in respect of
which the Notice for Payment is being presented, but in any event, not later
than the third Business Day prior to the applicable Distribution Date, by (a)
delivery of the original Notice for Payment to the Fiscal Agent at its address
set forth below, or (b) facsimile transmission of the original Notice for
Payment to the Fiscal Agent at its facsimile number set forth below. If
presentation is made by facsimile transmission, the Trust shall (i)
simultaneously confirm transmission by telephone to the Fiscal Agent at its
telephone number set forth below, and (ii) as soon as reasonably practicable,
deliver the original Notice for Payment to the Fiscal Agent at its address set
forth below. Any Notice for Payment received by the Fiscal Agent after 3:00
p.m., New York City time, on a Business Day, or on any day that is not a
Business Day, will be deemed to be received by the Fiscal Agent on the next
succeeding Business Day.
Subject to the foregoing, if the payment of any amount guaranteed by this
Policy and previously distributed to a Certificateholder in respect of the
Certificates that is recoverable and sought to be recovered as a voidable
preference in an Insolvency Proceeding in accordance with a nonappealable order
of a court having competent jurisdiction is voided ("Avoided Payment"), MBIA
will make such Avoided Payment on behalf of the Certificateholder upon receipt
by the Fiscal Agent from the Trust on behalf of such Certificateholder of (i) a
certified copy of a final, nonappealable order of a court having competent
jurisdiction to the effect that the Certificateholder is required to return any
principal or interest paid on the Certificates prior to the Termination Date of
this Policy because such payment was voided under applicable law (the "Order")
together with a certificate of such Certificateholder that such Order is final
and not subject to appeal, (ii) an assignment, substantially in the form
attached hereto as Exhibit B, properly completed and executed by such
Certificateholder irrevocably assigning to MBIA all rights and claims of such
Certificateholder relating to or arising under such Avoided Payment, (iii) a
Notice for Payment in the form of Exhibit A hereto appropriately completed and
executed by the Trust, and (iv) appropriate instruments to effect the
appointment of MBIA as agent for such Certificateholder in any legal proceeding
relating to such Avoided Payment.
MBIA shall make payments due in respect of Avoided Payments no later than
12:00 noon, New York City time on the Business Day which is no earlier than (a)
the third Business Day following receipt by the Fiscal Agent of the documents
required under clauses (i) through (iv) of the preceding paragraph and (b) the
date that such documents are received by the Fiscal Agent, if at least three
Business Days prior to such receipt, the Fiscal Agent shall have received
written notice from the Trust that such documents were to be delivered on such
date and such date was specified in such notice. Any such documents received by
the Fiscal Agent after 3:00 p.m. New York City time on any Business Day or on
any day that is not a Business Day shall be deemed to have been received by the
Fiscal Agent prior to 3:00 p.m. on the next succeeding Business Day. All
payments made by MBIA hereunder on account of any Avoided Payment shall be made
to the receiver or the trustee in bankruptcy named in the Order on behalf of the
Certificateholder and not to the Trust or any Certificateholder directly unless
such Certificateholder has returned such Avoided Payment to such receiver or
trustee in bankruptcy, in which case such payment will be disbursed to the Trust
on behalf of such Certificateholder
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<PAGE>
upon proof of such payment reasonably satisfactory to MBIA.
If any Notice for Payment received by the Fiscal Agent is not in proper
form or is otherwise insufficient for the purpose of making a claim hereunder,
it shall be deemed not to have been received by the Fiscal Agent, and MBIA or
the Fiscal Agent, as the case may be, shall promptly so advise the Trust, and
the Trust may submit an amended Notice for Payment.
Payments due hereunder unless otherwise stated herein will be disbursed by
the Fiscal Agent to the Trust on behalf of the Certificateholders by wire
transfer of immediately available funds in the amount of such payment, less, in
respect of Avoided Payments, any amounts held by the Trust for the payment of
such Avoided Payment and legally available therefor.
The Fiscal Agent is the agent of MBIA only, and the Fiscal Agent shall in
no event be liable to Certificateholders for any acts of the Fiscal Agent or any
failure of MBIA to deposit or cause to be deposited sufficient funds to make
payments due under this Policy.
MBIA shall be subrogated to the rights of each Certificateholder to
receive payments under the Certificates to the extent of any payment by MBIA
hereunder. MBIA's rights of subrogation acquired as a result of any payment made
under this Policy shall, in all respects, be subordinate and junior in right of
payment to the prior indefeasible payment in full of all amounts due the Trust
on account of payments due under the Certificates.
MBIA hereby waives and agrees not to assert any and all rights to require
the Trust to make demand on or to proceed against any person, party or security
prior to the Trust demanding payment under this Policy.
No defenses, set-offs and counterclaims of any kind available to MBIA so
as to deny payment of any amount due in respect of this Policy will be valid and
MBIA hereby waives and agrees not to assert any and all such defenses, set-offs
and counterclaims, including, without limitation, any such rights acquired by
subrogation, assignment or otherwise.
This Policy is neither transferable nor assignable, in whole or in part,
except to a successor to the Trust pursuant to the Trust Agreement. All notices,
presentations, transmissions, deliveries and communications made by the Trust to
MBIA with respect to this Policy shall specifically refer to the number of this
Policy and shall be made to MBIA at:
MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Attention: Insured Portfolio Management, Structured Finance
Telephone: (914) 273-4949
Facsimile: (914) 765-3163
or such other address, telephone number or facsimile number as MBIA may
designate to the Trust in writing from time to time. Each such notice,
presentation, transmission, delivery and
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communication shall be effective only upon actual receipt by MBIA.
Any notice hereunder delivered to the Fiscal Agent of MBIA may be made at
the address listed below for the Fiscal Agent of MBIA or such other address as
MBIA shall specify in writing to the Trust.
The notice address of the Fiscal Agent is 61 Broadway, 15th Floor, New
York, New York 10006 Attention: Municipal Registrar and Paying Agency,
Facsimile: (212) 612-3203 or such other address as the Fiscal Agent shall
specify to the Trust in writing.
The obligations of MBIA under this Policy are irrevocable, primary,
absolute and unconditional (except as expressly provided herein) and neither the
failure of the Trust, the Owner Trustee, CIT, the Seller, the Servicer or any
other person to perform any covenant or obligation in favor of MBIA (or
otherwise), nor the failure or omission to make a demand permitted hereunder,
nor the commencement of any bankruptcy, debtor or other insolvency proceeding by
or against the Trust, the Owner Trustee, CIT, the Seller, the Servicer or any
other person shall in any way affect or limit MBIA's obligations under this
Policy. If a successful action or proceeding to enforce this Policy is brought
by the Trust, the Trust shall be entitled to recover from MBIA costs and
expenses reasonably incurred, including without limitation reasonable fees and
expenses of counsel.
This Policy and the obligations of MBIA hereunder shall terminate on the
date (the "Termination Date") that is the earlier to occur of (a) ninety-one
days following the earlier of (i) the Final Certificate Distribution Date and
(ii) the date on which all amounts required to be paid to the Certificateholders
have been paid in full, provided, that, if any Insolvency Proceeding is existing
by or against the Trust, the Selling Trust, the Seller, the Servicer or CIT
during such ninety-one day period, then this Policy and MBIA's obligations
hereunder shall terminate on the date of the conclusion or dismissal of such
Insolvency Proceeding without continuing jurisdiction by the court in such
Insolvency Proceeding, provided, further that, and notwithstanding anything
herein to the contrary, this Policy shall not terminate prior to the date on
which MBIA has made all payments required to be made under the terms of this
Policy in respect of Avoided Payments; and (b) the Business Day following the
date that MBIA receives written notice from the Servicer terminating this Policy
pursuant to Section 12.12 of the Sale and Servicing Agreement; provided,
however, that no termination under this clause (b) shall be effective until (x)
all amounts owed to MBIA under the Insurance Agreement on the date such written
notice is received by MBIA are paid in full in cash and (y) the original of this
Policy is received by MBIA.
All payments made hereunder by MBIA shall be made with MBIA's own funds.
The payment by MBIA to the Trust of any amount guaranteed by the first paragraph
of this Policy, and the payment by MBIA of any Avoided Payment shall constitute
"payments" for all purposes under this Policy. In no event shall any payment be
made under this Policy on account of (a) the failure of the Trust to deliver the
proceeds of any such payment to any Certificateholder or (b) the failure of any
such Certificateholder to claim any such proceeds from the Trust.
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<PAGE>
This Policy is not covered by the property/casualty insurance fund
specified in Article Seventy-Six of the New York State insurance law.
This Policy sets forth in full the undertaking of MBIA, and shall not,
except with the prior written consent of the Trust or otherwise in accordance
with the express terms hereof, be modified, altered or affected by any other
agreement or instrument, including any modification or amendment thereto and may
not be canceled or revoked by MBIA prior to the Termination Date.
This Policy shall be returned to MBIA by the Trust on the Termination
Date.
THIS POLICY SHALL BE CONSTRUED, AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HEREUNDER SHALL BE DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES OR THE
APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION.
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<PAGE>
IN WITNESS WHEREOF, MBIA has caused this Policy to be executed on the date
first written above.
MBIA INSURANCE CORPORATION
/s/ M. Antonicelli
--------------------------------------
Michael Antonicelli
Vice President
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<PAGE>
Exhibit A to Financial Guaranty Insurance Policy, Number 28602
MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Attention: Insured Portfolio Management,
Structured Finance
NOTICE FOR PAYMENT
UNDER FINANCIAL GUARANTY INSURANCE POLICY NUMBER 28602
CIT Marine Trust 1999-A, hereby certifies to MBIA Insurance Corporation
("MBIA") with reference to that certain Financial Guaranty Insurance Policy,
Number 28602, dated February 23, 1999 (the "Policy"), issued by MBIA in favor of
the Amended and Restated Trust under the Trust Agreement, dated as of February
1, 1999 between The CIT Group Securitization Corporation II and Chase Manhattan
Bank Delaware, as owner trustee (the "Owner Trustee"), in such capacity as
follows:
1. The Trust is the Beneficiary under the Policy.
2. The Trust is entitled to make a demand under the Policy [pursuant to
Section 5.09 of the Sale and Servicing Agreement] [in connection with an Avoided
Payment as defined in the Policy].
[For a Notice for Payment in respect of a Distribution Date use the following
paragraphs 3, 4 and 5.]
3. This notice relates to the [insert date] Distribution Date. The amount
claimed under the Policy, as specified to the Trust by the Servicer, for such
Distribution Date is $_______. The amount demanded by this notice does not
exceed amounts permitted to be drawn under the Policy.
4. The Trust demands payment of $___________ which is an amount equal to
the Certificate Policy Claim Amount for such Distribution Date.
5. The amount demanded is to be paid in immediately available funds to the
Certificate Distribution Account at ______________, account number
_______________.
[For a Notice for Payment in respect of an Avoided Payment use the following
paragraphs 3 and 4.]
3. The Trust hereby represents and warrants, based upon information
available to it, that (i) the amount entitled to be drawn under the Policy on
the date hereof in respect of Avoided Payments is the amount paid or to be paid
simultaneously with such draw on the Policy, by all Certificateholders [$ ]
(the "Avoided Payment Amount"), (ii) each Certificateholder with respect to
which the drawing is being made under the Policy has paid or simultaneously
A-1
<PAGE>
with such draw on the Policy will pay such Avoided Payment, and (iii) the
documents required by the Policy to be delivered in connection with such Avoided
Payment and Avoided Payment Amount have previously been presented to MBIA or are
attached hereto.
4. The amount demanded is to be paid in immediately available funds by
wire transfer to [ ].
[For a Notice for Payment relating to both an Avoided Payment and a
Distribution Date, use the following paragraphs 3, 4, 5 and 6.]
3. This notice relates to the [insert date] Distribution Date. The amount
claimed under the Policy, as specified to the Trust by the Servicer, for such
Distribution Date is $________. The amount demanded by this notice does not
exceed amounts permitted to be drawn under the Policy.
4. The Trust demands payment of $_____________ which is an amount equal to
the Certificate Policy Claim Amount for such Distribution Date.
5. The Trust hereby represents and warrants, based upon information
available to it, that (i) the amount entitled to be drawn under the Policy on
the date hereof in respect of Avoided Payments is the amount paid or to be paid
simultaneously with such draw on the Policy, by all Certificateholders [$ ]
(the "Avoided Payment Amount"), (ii) each Certificateholder with respect to
which the drawing is being made under the Policy has paid or simultaneously with
such draw on the Policy will pay such Avoided Payment, and (iii) the documents
required by the Policy to be delivered in connection with such Avoided Payment
and Avoided Payment Amount have previously been presented to MBIA or are
attached hereto.
6. The amount demanded is to be paid in immediately available funds by
wire transfer to [ ].
Any Person Who Knowingly And With Intent To Defraud Any Insurance Company
Or Other Person Files An Application For Insurance Or Statement Of Claim
Containing Any Materially False Information, Or Conceals For The Purpose Of
Misleading Information Concerning Any Fact Material Thereof, Commits A
Fraudulent Insurance Act, Which Is A Crime, And Shall Also Be Subject To A Civil
Penalty Not To Exceed Five Thousand Dollars And The Stated Value Of The Claim
For Each Such Violation.
Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned to them in the Policy.
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<PAGE>
IN WITNESS WHEREOF, this notice has been executed this ____ day of
__________, _______.
CIT MARINE TRUST 1999-A
By: Chase Manhattan Bank Delaware, not in its
individual capacity but solely as Owner Trustee
By:____________________________________________
Authorized Officer
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<PAGE>
Exhibit B to Financial Guaranty Insurance Policy, Number 28602
Form of Assignment
Reference is made to the Financial Guaranty Insurance Policy No. 28602, dated
February 23, 1999, (the "Policy") issued by MBIA Insurance Corporation ("MBIA")
relating to the CIT Marine Trust 1999-A $11,028,156 6.20% Asset-Backed
Certificates. Unless otherwise defined herein, capitalized terms used in this
Assignment shall have the meanings assigned thereto in the Policy as
incorporated by reference therein. In connection with the Avoided Payment of
[$ ] paid by the undersigned (the "Holder") on [ ] and the
payment by MBIA in respect of such Avoided Payment pursuant to the Policy, the
Holder hereby irrevocably and unconditionally, without recourse, representation
or warranty (except as provided below), sells, assigns, transfers, conveys and
delivers all of such Holder's rights, title and interest in and to any rights or
claims, whether accrued, contingent or otherwise, which the Holder now has or
may hereafter acquire, against any person relating to, arising out of or in
connection with such Avoided Payment. The Holder represents and warrants that
such claims and rights are free and clear of any lien or encumbrance created or
incurred by such Holder.
_______________________________________
Holder of Certificate(1)
- ----------
(1) In the event that the terms of this form of assignment are reasonably
determined to be insufficient solely as a result of a change of law or
applicable rules after the date of the Policy to fully vest all of the Holder's
right, title and interest in such rights and claims, the Holder and MBIA shall
agree on such other form as is reasonably necessary to effect such assignment,
which assignment shall be without recourse, representation or warranty except as
provided above.
B-1
EXHIBIT 23.1
[Letterhead of PricewaterhouseCoopers LLP]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Prospectus Supplement of The
CIT Group Securitization Corporation II relating to CIT Marine Trust 1999-A, of
our report dated February 3, 1998,on our audits of the consolidated financial
statements of MBIA InsuranceCorporation and Subsidiaries as of December 31, 1997
and 1996 and for each ofthe three years in the period ended December 31, 1997.
We also consent to thereference to our firm under the caption "Experts" in such
ProspectusSupplement.
/s/ PricewaterhouseCoopers
February 17, 1999
