As filed with the Securities and Exchange Commission on December 27, 1994
Registration No. 33-85224
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
AMENDMENT NO. 1
TO
FORM S-11 AND FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
THE CIT GROUP SECURITIZATION CORPORATION II
THE CIT GROUP HOLDINGS, INC.
(Exact name of each registrant as specified in its governing instruments)
------------------
Delaware 22-3328188
Delaware 13-2994534
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
650 CIT Drive
Livingston, New Jersey 07039
(201) 740-5000
(Address of principal executive office)
-------------------------
ERNEST D. STEIN
Executive Vice President, General Counsel & Secretary
The CIT Group Holdings, Inc.
1211 Avenue of the Americas
New York, New York 10036
(Name and address of agent for service)
Please send copies of all communications to:
PAUL N. WATTERSON, JR.
Schulte Roth & Zabel
900 Third Avenue
New York, New York 10022
-------------------------
Approximate date of commencement of proposed sale of securities to the public:
From time to time after the effective date of this Amendment.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [x]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
Proposed Proposed
Amount maximum maximum Amount of
Title of each class of to be offering price aggregate registration
securities to be registered Registered per unit(1) offering price(1) fee (2)
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<S> <C> <C> <C> <C>
Manufactured Housing Contract
Pass-Through Certificates.......
- ------------------------------------- $500,000,000 100% $500,000,000 $172,070.00
Limited Guarantees of The CIT
Group Holdings, Inc. (3)
====================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee on
the basis of the proposed maximum aggregate offering price, pursuant to
Rule 457(c).
(2) Pursuant to Rule 457(b), the required fee paid herewith has been reduced
by $344.83, which is the amount equal to the fee previously paid with
respect to this registration statement pursuant to Rule 457.
(3) To be issued in connection with issuance of the Manufactured Housing
Pass-Through Certificates of The CIT Group Securitization Corporation II.
No additional consideration will be paid for the Limited Guarantee;
accordingly, no separate filing fee is being paid herewith, pursuant to
Rule 457(n).
-------------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that the Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
<PAGE>
CROSS REFERENCE SHEET
Pursuant to Item 501(b) of Regulation S-K
Item on Form S-11 Caption in Prospectus
----------------- ---------------------
1. Forepart of Registration
Statement and Outside Front
Cover Page of Prospectus..... Front Cover Page of Registration Statement;
Outside Front Cover Page of Prospectus
2. Inside Front and Outside
Back Cover Pages of
Prospectus... ............... Inside Front and Outside Back Cover Pages of
Prospectus
3. Summary Information,
Risk Factors and
Ratio of earnings to
Fixed Charges................ Summary of Terms; Special Considerations;
Yield Considerations; Maturity and Prepay-
ment Considerations; Certain Legal Aspects
of the Contracts**
4. Determination of
Offering Price.............. *
5. Dilution.................... *
6. Selling Security Holders.... *
7. Plan of Distribution........ Underwriting**
8. Use of Proceeds............. Use of Proceeds**
9. Selected Financial Data..... *
10. Management's Discussion
and Analysis of Financial
Condition and Results of
Operations................... *
11. General Information as to
Registrant................... The Trust; The CIT Group Securitization
Corporation II, Seller**
12. Policy with Respect to
Certain Activities........... Outside Front Cover Page of Prospectus;
Special Considerations; Descriptions of the
Certificates; The CIT Group Securitization
Corporation II, Seller**
13. Investment Policies of
Registrant................... Outside Front Cover Page of Prospectus; The
Trust; Description of the Certificates; The
CIT Group Securitization Corporation II,
Seller**
14. Description of Real
Estate....................... The Trust**
15. Operating Data............... *
16. Tax Treatment of Registrant
and Its Security Holders..... Certain Federal Income Tax Consequences**
17. Market Price of and Dividends
on Registrant's Common Equity
and Related Stockholder
Matters...................... *
<PAGE>
18. Description of Registrant's
Securities................... Outside Front Cover Page of Prospectus; The
Trust; Special Considerations; Yield Con-
siderations; Maturity and Prepayment Con-
siderations; Description of the Certifi-
cates; Description of FHA Insurance and VA
Guarantees; Certain Legal Aspects of the
Contracts; Certain Federal Income Tax Con-
sequences; ERISA Considerations; Legal In-
vestment Considerations**
19. Legal Proceedings............ *
20. Security Ownership of
Certain Beneficial Owners
and Management............... *
21. Directors and Executive
Officers..................... *
22. Executive Compensation....... *
23. Certain Relationships and
Related Transactions......... *
24. Selection, Management and
Custody of Registrant's
Investments.................. The Trust; Description of the Certificates;
The CIT Group Securitization Corporation II,
Seller**
25. Policies with Respect to
Certain Transactions......... *
26. Limitations of Liability..... Description of the Certificates
27. Financial Statements and
Information.................. *
28. Interests of Named Experts
and Counsel.................. Legal Matters
29. Disclosure of Commission
Position of Indemnification
for Securities Act
Liabilities.................. See Part II
30. Other Expenses of Issuance
and Distribution............. See Part II
31. Sales to Special Parties..... *
32. Recent Sales of Unregistered
Securities................... See Part II
33. Indemnification of Directors
and Officers................. See Part II
34. Treatment of Proceeds from
Stock Being Registered....... *
35. Financial Statements and
Exhibits..................... See Part II
36. Undertakings................. See Part II
- --------------
* Omitted since item is not applicable or answer is negative.
** To be completed or provided from time to time by Prospectus Supplement.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED DECEMBER 27, 1994
PROSPECTUS SUPPLEMENT
(To Prospectus dated _________, 1994)
$___________ (Approximate)
The CIT Group Securitization Corporation II, Seller
Manufactured Housing Contract
[Senior/Subordinate] Pass-Through Certificates
Series 199__
$_______ (Approximate) ___% Class A (Senior)
[$_______ (Approximate) ___% Class B (Subordinate)]
(Principal and interest payable on the __th day of
each of each month beginning _________,199__)
(The CIT Group/Sales Financing Inc., Servicer)
The Manufactured Housing Contract [Senior/Subordinate] Pass-Through
Certificates, Series 199__ will represent interests in a trust (the "Trust")
consisting of, among other things, a pool of manufactured housing installment
sales contracts and installment loan agreements (collectively, the "Contracts")
and certain related property conveyed by The CIT Group Securitization
Corporation II (the "Company") to the Trust. The CIT Group/Sales Financing, Inc.
("CITSF") will act as servicer of the Contracts (in such capacity, referred to
herein as the "Servicer"). The Contracts were purchased by the Company from
CITSF. The Contracts were originated or acquired by CITSF [and The CIT
Group/Consumer Finance, Inc. (NY), a wholly-owned subsidiary of The CIT Group
Holdings, Inc.] in the ordinary course of its business. [Monies will be on
deposit in a separate trust account (the "Pre-Funding Account") to be maintained
with the Trustee, which will be used to purchase additional manufactured housing
installment sales contracts and installment loan agreements from time to time
during the Funding Period in the manner described herein.] The term
"Approximate", with respect to the aggregate principal amount of the
Certificates, means subject to a permitted variance of plus or minus 5%. Terms
used and not otherwise defined herein shall have the respective meanings
ascribed to such terms in the Prospectus dated _________, 1994 attached hereto
(the "Prospectus").
The Certificates will consist of one class of Senior Certificates (the
"Class A Certificates") and two classes of Subordinated Certificates (the "Class
B Certificates" and the "Class R Certificates"). Only the Class A Certificates
[and the Class B Certificates] are being offered hereby in aggregate principal
amount of $______ of which $_______ aggregate principal amount is Class A
Certificates [and $_______ aggregate principal amount is Class B Certificates].
The Class A Certificates will evidence an initial __% undivided interest in the
Trust, the Class B Certificates will evidence an initial __% undivided interest
in the Trust, and the Class R Certificates will evidence an interest in a
portion of the payments on the Contracts. The Trust will be created on
_________, 199_, pursuant to a Pooling and Servicing Agreement among the
Company, CITSF and _______, as trustee. The Trust property will include all
rights to receive payments due on each Contract after ______, 199_ or the date
of origination, if later, security interests in the manufactured homes securing
the Contracts (the "Manufactured Homes"), all rights under certain hazard
insurance policies with respect to the Manufactured Homes, and rights to amounts
in the Certificate Account referred to below [, all rights under the FHA/VA
Regulations pertaining to any FHA/VA Contract] [and any credit enhancement with
respect to the Class B Certificates] [and the Limited Guarantee of The CIT Group
Holdings, Inc. ("CIT")] [and any funds or other instruments on deposit in the
PreFunding Account.] The obligations of the Servicer with respect to the
Certificates are limited to its contractual servicing obligations. CITSF will
make certain representations and warranties relating to the Contracts. In the
event of an uncured breach of any representation or warranty that materially
adversely affects the Trust's interest in a Contract, CITSF will be obligated to
repurchase such Contract or substitute another contract therefor.
Principal and interest are payable on the __th day of each month (or, if
the __th day is not a business day, the next business day thereafter) (a
"Remittance Date") beginning on ________, 199_. On each Remittance Date, the
Class A Certificateholders [and the Class B Certificateholders] will be entitled
to receive distributions, from and to the extent of funds available in the
Certificate Account, in the amounts and priorities calculated as set forth
herein. The rights of the Holders of [the Class B Certificates and] the Class R
Certificates to receive distributions with respect to the Contracts are
subordinated to the rights of the Class A Certificateholders as and to the
extent described herein.
[The Class B Certificateholders will have the benefit of a limited
guarantee (the "Limited Guarantee") of CIT to protect against losses that would
otherwise be absorbed by the Class B Certificateholders. To the extent that
funds in the Certificate Account are insufficient to distribute to the holders
<PAGE>
of the Class B Certificates the Class B Formula Distribution Amount (as defined
below), CIT will be obligated to pay the Guarantee Payment (as defined herein).
See "Description of Certificates--Limited Guarantee of CIT" herein.]
[An election will be made to treat the Trust as a real estate mortgage
investment conduit (a "REMIC") for federal income tax purposes. As described
more fully herein, the Class A Certificates and the Class B Certificates will
constitute "regular interests" in the REMIC and the Class R Certificates will
constitute "residual interests" in the REMIC. See "Certain Federal Income Tax
Consequences" herein and in the Prospectus.]
The interests of the owners of the Class A Certificates [and the Class B
Certificates] (the "Certificate Owners") will be represented by book-entries on
the records of The Depository Trust Company and participating members thereof.
See "Description of the Certificates--Registration of Class A Certificates [and
Class B Certificates]" herein.
_______________ (the "Underwriters") intend to make a secondary market in
the Class A Certificates [and the Class B Certificates], but have no obligation
to do so. There can be no assurance that a secondary market for the Class A
Certificates [or the Class B Certificates] will develop, or if it does develop,
that it will continue.
The Class A Certificates [and the Class B Certificates] will not be insured
or guaranteed by any governmental agency or instrumentality, by the Underwriters
or any of their affiliates or by the Company, the Servicer, The CIT Group
Holdings, Inc. or any of their affiliates. Payments will be made on such Class A
Certificates only from the Amount Available on any Determination Date. [Payments
will be made on such Class B Certificates only from the Remaining Amount
Available and the Available Credit Enhancement Amount on any Remittance Date.]
See "Special Considerations" herein.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Price to Public(1) Underwriting Discount Proceeds to Company(2)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Class A Certificate............. % % %
- ----------------------------------------------------------------------------------------------------------------------------------
[Per Class B Certificate............ % % %]
- ----------------------------------------------------------------------------------------------------------------------------------
Total............................... $ $ $
- ----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Plus accrued interest, if any, at the applicable rate from ____________ __, 19__.
(2) Before deducting expenses, estimated to be $________________.
</FN>
</TABLE>
-------------------
[The Class A Certificates [and the Class B Certificates] are being offered
by the Underwriters from time to time in negotiated transactions or otherwise at
varying prices to be determined, in each case, at the time of sale.] The Class A
Certificates [and the Class B Certificates] are offered subject to prior sale,
when, as and if issued by the Trust and accepted by the Underwriters and subject
to their right to reject orders in whole or in part. It is expected that
delivery of the Class A Certificates [and the Class B Certificates] will be made
in book-entry form only through the Same Day Funds Settlement system of The
Depository Trust Company on or about ________, 199__.
The date of this Prospectus Supplement is_______, 199__.
<PAGE>
[IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A
CERTIFICATES [OR THE CLASS B CERTIFICATES] OFFERED HEREBY AT LEVELS ABOVE THOSE
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.]
-------------------
This Prospectus Supplement does not contain complete information about the
offering of the Class A Certificates [or the Class B Certificates]. Additional
information is contained in the Prospectus and purchasers are urged to read both
this Prospectus Supplement and the Prospectus in full. Sales of the Class A
Certificates [or the Class B Certificates] may not be consummated unless the
purchaser has received both this Prospectus Supplement and the Prospectus. To
the extent, if any, that any statement in this Prospectus Supplement is
inconsistent with statements contained in the Prospectus, the statements in this
Prospectus Supplement shall control.
-------------------
Until ___________, 199_, all dealers effecting transactions in the Class A
Certificates [or the Class B Certificates], whether or not participating in this
distribution, may be required to deliver a Prospectus Supplement and Prospectus.
This is in addition to the obligation of dealers to deliver a Prospectus
Supplement and Prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
-------------------
S-2
<PAGE>
SUMMARY OF TERMS
This summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus Supplement and the
accompanying Prospectus. Reference is made to the Index of Defined Terms for the
location of certain defined terms contained in this Prospectus Supplement and to
the Glossary contained in the Prospectus.
Securities Offered ....... The Class A Certificates [and the Class B Certifi-
cates] of the Manufactured Housing Contract
[Senior/Subordinate] Pass-Through Certificates,
Series 199___ (the "Class A Certificates" [and the
"Class B Certificates", respectively]). The
Certificates also include [the Class B
Certificates and] the Class R Certificates, which
are not being offered hereby.
Seller .................. The CIT Group Securitization Corporation II (the
"Company"), a wholly-owned, limited purpose
subsidiary of The CIT Group Holdings, Inc.
("CIT"). Neither CIT nor any of its affiliates,
including the Company and The CIT Group/Sales
Financing, Inc. ("CITSF"), has guaranteed, insured
or is otherwise obligated with respect to the
Certificates. See "Special Considerations" in the
Prospectus.
Servicer ................ The CIT Group/Sales Financing, Inc.(the"Servicer"),
a wholly-owned subsidiary of CIT.
Trustee ................. ________________ (the "Trustee").
Cut-off Date Pool
Principal Balance ..... $______________ (Approximate. Subject to a permitted
variance of plus or minus 5%).
Original Class A
Principal Balance ..... $______________ (Approximate. Subject to a permitted
variance of plus or minus 5%).
Original Class B
Principal Balance ..... $______________ (Approximate. Subject to a permitted
variance of plus or minus 5%).
Class A
Remittance Rate ....... ____% per annum, computed on the basis of a
360-day year of twelve 30-day months.
[Class B
Remittance Rate ....... ___% per annum, computed on the basis of a 360-day
year of twelve 30-day months.]
S-3
<PAGE>
Remittance Date......... The ___ day of each calendar month (or, if such
day is not a business day, the next succeeding
business day), commencing on __________, 199__.
Record Date ............ The last business day of the month prior to the
month of the related Remittance Date [or, in the
case of the first Remittance Date, the day prior
to such Remittance Date].
Cut-off Date ........... __________, 199_ for all Contracts[, including any
Contract which has a date of origination after
__________, 199_].
Agreement ............... The Pooling and Servicing Agreement, dated as of
_______, 199_ (the "Agreement"), among the
Company, CITSF as Servicer, and the Trustee.
Description of
Certificates .......... The Class A Certificates are Senior Certificates and
the Class B Certificates and the Class R
Certificates are Subordinated Certificates, all as
described herein. The [Class B Certificates and
the] Class R Certificates are not being offered
hereby. The undivided percentage interest (the
"Percentage Interest") of any Class A Certificate
[or any Class B Certificate] in the distributions
on the Class A Certificates [or the Class B
Certificates, respectively,] will be equal to the
percentage obtained from dividing the denomi-
nation specified on such Class A Certificate [or
Class B Certificate] by the Original Class A
Principal Balance [or the Original Class B
Principal Balance, respectively]. The Class A
Certificates will be offered in [book-entry]
[fully registered] form, in denominations of
$1,000 and integral multiples of $1,000 in excess
thereof. [The Class B Certificates will be offered
in [book-entry] [fully registered] form, in
denominations of $25,000 and integral multiples of
$1,000 in excess thereof.] See "Description of the
Certificates-- Registration of Class A
Certificates [and Class B Certificates]".
Due Period .............. For each Remittance Date, the Period commencing on
the _____ day of the month (or, if the _____ day
is not a business day, the day following the first
preceding business day) in the second month
preceding the month of such Remittance Date (or
S-4
<PAGE>
the Cut-off Date, in the case of the first
Remittance Date) and ending on the _____ day of
the month (or, if such day is not a business day,
the preceding business day) in the month preceding
the month of such Remittance Date.
Class A [and Class B]
Stated Maturity Date... The stated maturity date of the Class A [and Class
B] Certificates[, respectively] is ________ __,
____, which is the Remittance Date following the
stated maturity date of the Contract with the
latest stated maturity date.
[Accrual Period.......... With respect to each Remittance Date, interest will
accrue on the principal balance outstanding on the
Stated Maturity Date... The stated maturity date of the Class A [and Class
B] Certificates[, respectively] is ________ __,
____, which is the Remittance Date following the
stated maturity date of the Contract with the
latest stated maturity date.
[Accrual Period.......... With respect to each Remittance Date, interest will
accrue on the principal balance outstanding on the
cateholders [and the Class B
Certificateholders] will be made in an amount
equal to their respective Percentage Interests
multiplied by the Class A Distribution Amount [or
the Class B Distribution Amount, respectively] (as
described below). Distributions will be made on
each Remittance Date to Holders commencing in
__________, 1994 of record on the preceding Record
Date, except that the final distribution in
respect of the Class A Certificates [and the Class
B Certificates] will only be made upon
presentation and surrender of the Class A
Certificates [or the Class B Certificates,
respectively,] at the office or agency appointed
by the Trustee for that purpose in _________,
--------.
Distributions will be applied first to the payment
of interest, then to the payment of principal on
such Class. Following the Remittance Date in which
the Principal Balance of the Class A Certificates
[or the Class B Certificates, respectively] are
reduced to zero, no further distributions will be
S-5
<PAGE>
made to the Holders of the Class A Certificates
[and the Class B Certificates, respectively].
The "Class A Distribution Amount" for any Remittance
Date will equal the sum (such sum referred to as
the "Class A Formula Distribution Amount") of (i)
the amount of interest calculated as described
under "A. Interest on Class A Certificates" below
and (ii) the amount of principal calculated as
described under "B. Principal (including
Prepayments) on Class A Certificates" below;
except that, if the Class A Formula Distribution
Amount exceeds the amount of funds available for
distribution in the Certificate Account on such
Remittance Date (the "Amount Available"), then the
Class A Distribution Amount will instead equal
the Amount Available. The Amount Available will be
determined as set forth in "Description of the
Certificates -- Payments on Contracts;
Distributions on Certificates". Following the
Cross-over Date, no further distributions will be
made to the Class A Certificateholders. The
"Cross-over Date" is the Remittance Date on which
the Principal Balance of the Class A Certificates
is reduced to zero.
[The "Class B Distribution Amount" for any
Remittance Date will equal the sum (such sum
referred to as the "Class B Formula Distribution
Amount") of (i) the amount of interest calculated
as described under "C. Interest on Class B
Certificates" below and (ii) the amount of
principal calculated as described under "D.
Principal (including Prepayments) on Class B
Certificates" below; except that if the Class B
Formula Distribution Amount exceeds the Amount
Available in the Certificate Account available for
distribution to the Class B Certificateholders
(after giving effect to the distribution made to
Class A Certificateholders) on a Remittance Date
(the "Remaining Amount Available"), then the Class
B Distribution Amount will equal the sum of the
Remaining Amount Available, if any [and the
Guarantee Payment, if any, pursuant to the Limited
Guarantee, as described below][, and the Class B
Enhancement Payment, if any]. [The "Class B Credit
S-6
<PAGE>
Enhancement" for the Class B Certificates will be
provided from funds deposited into a cash
collateral account from which the Trustee may from
time to time withdraw amounts up to the "Available
Credit Enhancement Amount" as described below
under "Payments to Class B Certificateholders
Pursuant to the Class B Credit Enhancement".] The
"Class B Enhancement Payment" equals the lesser of
(i) the Available Credit Enhancement Amount (as
described below under "Payments to Class B
Certificateholders Pursuant to the Class B Credit
Enhancement") for such Remittance Date and (ii)
the amount, if any, by which the Class B Formula
Distribution Amount exceeds the Remaining Amount
Available for such Remittance Date, and will be
[withdrawn by the Trustee from the Cash Collateral
Account and deposited in the Certificate Account]
[paid to the Trustee by the Credit Enhancer
pursuant to the Enhancement Agreement and
deposited in the Certificate Account].]
The "Principal Balance" of a Class of Certificates
as of any Remittance Date is the Original
Principal Balance of such Class of Certificates
less all amounts distributed to such Class in
respect of principal on previous Remittance Dates.
[See "Description of the Certificates" for a detailed
description of the amounts on deposit in the
Certificate Account that will constitute the
Remaining Amount Available, if any, and the
[Guarantee Payment] Class B Enhancement Payment,
if any, on each Remittance Date. The Remaining
Amount Available will include amounts otherwise
payable to the Credit Enhancer as the Enhancement
Fee [to CIT as the Guarantee Fee] or to the Class
R Certificateholders. See "Description of the
Certificates--Subordination of [Class B
Certificates and] Class R Certificates".]
On each Remittance Date, Certificateholders will
be entitled to receive payments of interest and
principal in the amounts, and according to the
S-7
<PAGE>
priorities, as set forth in subsections A. through
[D.] below.
A. Interest on
Class A Certificates.... Interest on the then outstanding Class A Principal
Balance will be paid on the Class A Certificates
on each Remittance Date, to the extent of the
Amount Available [(including any Monthly
Advances)] for such date in the Certificate
Account, at the Class A Remittance Rate.
In the event that, on a particular Remittance
Date, the Amount Available [(including any Monthly
Advances)] in the Certificate Account is not
sufficient to make a full distribution of interest
to the Holders of the Class A Certificates, the
amount of the shortfall will be carried forward
and added to the amount such Holders will be
entitled to receive (to the extent of funds
available for the payment thereof) on the next
Remittance Date and every Remittance Date
thereafter until paid. Any such amount so carried
forward will bear interest at the Class A
Remittance Rate, to the extent legally
permissible. See "Description of the
Certificates".
B. Principal (including
Prepayments) on
Class A Certificates... Commencing on the first Remittance Date and
on each Remittance Date thereafter on or prior to
the Cross-Over Date, Class A Certificateholders
will be entitled to receive as payments of
principal, to the extent of the Amount Available
in the Certificate Account after payment of all
amounts described under "A. Interest on Class A
Certificates" above, an amount equal to the sum
(such sum referred to as the "Formula Principal
Distribution Amount") of (i) with respect to
Precomputed Contracts, all payments of principal
due on each outstanding precomputed Contract
during the Due Period which ended during the month
preceding the month in which the Remittance Date
occurs, and, with respect to simple interest
Contracts, all payments of principal received in
respect of each outstanding simple interest
Contract during such Due Period, (ii) the
Scheduled Principal Balance of each Contract
which, during the related Due Period, was
purchased by CITSF pursuant to the Agreement on
S-8
<PAGE>
account of certain breaches of its representations
and warranties, (iii) all partial principal
prepayments applied and all principal prepayments
in full received during such Due Period, (iv) the
Scheduled Principal Balance of each Contract that
became a Liquidated Contract during such Due
Period and (v) any Formula Principal Distribution
Amount for any prior Remittance Date which was not
distributed on a prior Remittance Date. In
addition, the Class A Certificateholders will be
entitled to receive, to the extent of any
Remaining Amount Available, the amount, if any, by
which the Pool Scheduled Principal Balance is less
than the Class A Principal Balance (after giving
effect to the distribution on such Remittance
Date).
The "Scheduled Principal Balance" of a Contract as
of any Remittance Date is (i) with respect to a
Precomputed Contract, its principal balance as
determined by calculating the present value of all
remaining principal and interest payments due with
respect to such Contract as of any date of
determination at the Contract Rate for such
Contract, after giving effect to any previous
partial principal prepayments and to the scheduled
payment due on the Due Date during such Due
Period, but without giving effect to any
adjustments due to bankruptcy or similar
proceedings, and (ii) with respect to a simple
interest Contract, its unpaid principal balance.
The "Due Date" for a Contract is its scheduled
payment date. The "Pool Scheduled Principal
Balance" is the aggregate of the Scheduled
Principal Balances of Contracts outstanding at the
end of a Due Period. A Liquidated Contract is a
defaulted Contract as to which all amounts that
the Servicer expects to recover through the date
of disposition of the manufactured home securing
such Contract (the "Manufactured Home") have been
recovered. [The "Contract Rate" with respect to
any fixed rate Contract is the rate of interest
specified in that Contract and with respect to any
variable rate Contract is the rate of interest
calculated as provided in such Contract.]
[Any amounts on deposit in the Pre-Funding Account
at the end of the Pre-Funding Period will be
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<PAGE>
distributed on the first Remittance Date following
the end of the Pre-Funding Period to Holders of
the Class A Certificates as a principal
prepayment.]
[C. Interest on
Class B Certificates ... Following the payment to the Class A Certificate-
holders of the Class A Distribution Amount,
interest will be paid to the Class B
Certificateholders on each Remittance Date, to the
extent of the Remaining Amount Available, if any,
[and the Guarantee Payment] and the Class B
Enhancement Payment, if any, in the Certificate
Account on such Remittance Date, at the Class B
Remittance Rate on the then outstanding Class B
Principal Balance.
In the event that, on a particular Remittance
Date, the Remaining Amount Available, if any, and
the Class B Enhancement Payment, if any, in the
Certificate Account [plus any amounts actually
paid under the Limited Guarantee] are not
sufficient to make a full distribution of interest
to the Class B Certificateholders, the amount of
the deficiency will be carried forward as an
amount that the Class B Certificateholders are
entitled to receive (to the extent of funds
available for the payment thereof) on the next
Remittance Date and every Remittance Date
thereafter until paid. Any amount so carried
forward will bear interest at the Class B
Remittance Rate, to the extent legally
permissible. See "Description of the
Certificates".]
[D. Principal
(including Prepayments)
on Class B Certificates.. Except for payments of the Class B Principal
Liquidation Loss Amount (described below),
payments of principal on the Class B Certificates
will not commence until the Cross-over Date (the
Remittance Date on which the Class A
Certificateholders have received principal
payments equal in the aggregate to the Original
Class A Principal Balance).
On each Remittance Date prior to the Cross-over
Date, the Class B Certificateholders will be
entitled to receive (to the extent of the
Remaining Amount Available, if any, and the Class
B Enhancement Payment, if any, in the Certificate
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<PAGE>
Account on such date after payments in respect of
interest, as described under "C. Interest on Class
B Certificates" above, have been made to the Class
B Certificateholders [and pursuant to the Limited
Guarantee]) the amount, if any (the "Class B
Principal Liquidation Loss Amount"), by which the
sum of the Class A Principal Balance and the Class
B Principal Balance for such Remittance Date
exceeds the Pool Scheduled Principal Balance for
such Remittance Date (after giving effect to all
distributions in respect of principal and interest
to the Class A Certificateholders on such
Remittance Date). The Class B Principal
Liquidation Loss Amount represents future
principal payments on the Contracts that, because
of the subordination of the Class B Certificates
and liquidation losses on Liquidated Contracts,
will not be paid to the Class B
Certificateholders.
On each Remittance Date on and after the Cross-
over Date, the Class B Certificateholders will be
entitled to receive in respect of principal the
Formula Principal Distribution Amount to the
extent of the Remaining Amount Available, if any,
and the Class B Enhancement Payment, if any, in
the Certificate Account on such date after
payments in respect of interest, as described
under "C. Interest on Class B Certificates" above,
have been made to the Class B Certificateholders
[and the application of the Guarantee Payment, if
any, for such date].]
Subordination of
[Class B and] Class R
Certificates..............The rights of Holders of [the Class B Certificates
and] the Class R Certificates to receive
distributions with respect to the Contracts in the
Trust will be subordinated, to the extent
described herein, to such rights of the Holders of
the Class A Certificates. This subordination is
intended to enhance the likelihood of regular
receipt by the Holders of the Class A Certificates
of the full amount of their scheduled monthly
payments of principal and interest and to afford
such Holders protection against losses on
Liquidated Contracts.
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<PAGE>
The protection afforded to the Holders of Class A
Certificates by means of the subordination of the
[Class B and] Class R Certificates will be
accomplished by the preferential right of the
Class A Certificateholders to receive, prior to
any distribution being made on a Remittance Date
in respect of the [Class B and] Class R
Certificates, the amounts of principal and
interest due them on each Remittance Date out of
the Amount Available on such date in the
Certificate Account and, if necessary, by the
right of such Class A Certificateholders to
receive future distributions of Amounts Available
that would otherwise be payable to the Holders of
the [Class B and] Class R Certificates. [If a
Class B Principal Liquidation Loss Amount is
realized for any Remittance Date and [CIT fails to
pay such amount pursuant to its Limited Guarantee]
[the Available Credit Enhancement Amount is less
than such amount], the Class B Certificateholders
may incur losses on their investment in the Class
B Certificates to the extent such losses are not
made up from future payments on the Contracts. No
assurance can be given that the Class B
Certificateholders will not experience losses due
to the subordination feature of the Class B
Certificates. See "Special Considerations - 1.
General".]
[The rights of the Holders of the Class R
Certificates to receive distributions with respect
to the Contracts on each Remittance Date will be
subordinated to the rights of the Holders of the
Class A and Class B Certificates.] See
"Description of the Certificates -- Subordination
of [Class B Certificates and] Class R
Certificates".
[Payments to Class B
Certificateholders
Pursuant to the Class
B Credit Enhancement..... [In order to mitigate the effect of the subordin-
ation of the Class B Certificates, the Class B
Certificateholders (and only the Class B
Certificateholders) are entitled to receive on
each Remittance Date the Class B Enhancement
Payment, if any, for such Remittance Date. The
"Class B Enhancement Payment" payable to the Class
B Certificates on any Remittance Date will equal
S-12
<PAGE>
the lesser of (i) the Available Credit Enhancement
Amount for such Remittance Date and (ii) the
amount, if any, by which the Class B Formula
Distribution Amount for such Remittance Date
exceeds the Remaining Amount Available for such
Remittance Date. An amount equal to the Class B
Enhancement Payment would otherwise be absorbed by
the Class B Certificates on account of the
subordination feature. The Available Credit
Enhancement Amount is limited (see "Description of
the Certificates -- Class B Credit Enhancement")
and no assurance can be given that the Class B
Certificateholders will not experience losses due
to the subordination feature of the Class B
Certificates. See "Special Considerations - 1.
General".]
[The "Available Credit Enhancement Amount" on any
Remittance Date will equal ___________.]
[The "Class B Credit Enhancement" for the Class B
Certificates will be __________.]
[The "Class B Credit Enhancement" for the Class B
Certificates will be provided from funds deposited
into a reserve account or cash collateral account
(the "Cash Collateral Account") established
pursuant to a Cash Collateral Agreement or
pursuant to the Agreement or a separate reserve
account or escrow agreement. The Trust will have
the benefit of the right to receive payments from
the Cash Collateral Account under certain
circumstances specified below. [The Cash
Collateral Account will be funded in the amount of
$______________ (the "Initial Cash Collateral
Amount") from the proceeds of a loan to be made by
one or more financial institutions selected by the
Company (the "Cash Collateral Depositor").] With
respect to any Remittance Date, the amount
available in the Cash Collateral Account (the
"Available Credit Enhancement Amount") will equal
the lesser of the amount on deposit in the Cash
Collateral Account or the Required Cash Collateral
Amount. The "Required Cash Collateral Amount" with
respect to any Remittance Date means __% of the
Pool Scheduled Principal Balance as of the first
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<PAGE>
day of the related Due Period, but in no event
less than $_____________, subject to adjustment
based on delinquencies and losses on the Contracts
as described in "The Certificates--The Cash
Collateral Account." If the amount deposited in
the Cash Collateral Account is reduced to zero,
Certificateholders will bear the credit and other
risks associated with ownership of the Contracts,
including the risk that Certificateholders may not
have a perfected security interest in the
Manufactured Homes. See "Certain Legal Aspects of
the Contracts."
With respect to any Remittance Date, all or a
portion (specified in the Agreement) of the Excess
Collections, if any, will be deposited in the Cash
Collateral Account. "Excess Collections" for any
Remittance Date will generally equal the amounts
remaining in the Certificate Account on a
Remittance Date after taking into account
distributions to be made on the Certificates and
payments and reimbursements made to the Servicer
on such Remittance Date. Any Excess Collections
not needed to fund the Cash Collateral Account up
to the Required Cash Collateral Amount with
respect to any Remittance Date will be withdrawn
from the Cash Collateral Account and paid to the
Cash Collateral Depositor. See "The
Certificates--Distributions from the Certificate
Account."
If, on any Remittance Date, the amount on deposit
in the Cash Collateral Account exceeds the
Required Cash Collateral Amount, such excess will
be withdrawn from the Cash Collateral Account and
paid to the Cash Collateral Depositor. See "The
Certificates--The Cash Collateral Account."]
[Guarantee Payments
to Class B Certi-
ficateholders under
the Limited Guar-
antee of CIT .......... In order to mitigate the effect of the subordin-
ation of the Class B Certificates and liquidation
losses and delinquencies on the Contracts, the
Class B Certificateholders are entitled to receive
on each Remittance Date the amount equal to the
Guarantee Payment, if any, under the Limited
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<PAGE>
Guarantee of CIT. Prior to the Cross-over Date,
the Guarantee Payment will equal the amount, if
any, by which (a) the sum of (i) the Class B
Formula Distribution Amount (which will be equal
to one month's interest on the Class B Principal
Balance) for such Remittance Date and (ii) the
Class B Principal Liquidation Loss Amount, if any,
exceeds (b) the Class B Distribution Amount for
such Remittance Date; provided, however, that the
aggregate Guaranty Payments shall in no event
exceed the Guarantee Amount. The Guaranty Amount
shall be ___________. On each Remittance Date on
and after the Cross-over Date, the Guarantee
Payment will equal the amount, if any, by which
the Class B Formula Distribution Amount (which
will include both interest and principal) exceeds
the Amount Available for such Remittance Date;
provided, however, that the aggregate Guaranty
Payments shall in no event exceed the Guarantee
Amount.
The Limited Guarantee will be an unsecured general
obligation of CIT and will not be supported by any
letter of credit or other credit enhancement
arrangement.]
[Losses on Liquidated
Contracts................As described above, the distribution of principal to
the Class A Certificateholders is intended to
include the Scheduled Principal Balance of each
Contract that became a Liquidated Contract during
the Due Period preceding the Remittance Date. If
the Net Liquidation Proceeds from such Liquidated
Contract are less than the Scheduled Principal
Balance of such Liquidated Contract, the
deficiency will, in effect, be absorbed by the
Class R Certificateholders [and then the Class B
Certificateholders] since a portion of the future
Amount Available equal to such deficiency and
otherwise distributable to them will be paid to
the Class A Certificateholders.
If the Amount Available is not sufficient to cover
the entire amount distributable to the Class A
Certificateholders on a particular Remittance
Date, then the amount of the Pool Scheduled
Principal Balance available to the Class B
Certificates (i.e., such Pool Scheduled Principal
S-15
<PAGE>
Balance less the Class A Principal Balance), on
future Remittance Dates will be reduced by the
amount of such deficiency and a Class B Principal
Liquidation Loss Amount will be realized.
But for the effect of the payment [under the
Limited Guarantee as described above] [of the
Class B Enhancement Payment described above], the
subordination of the Class R Certificates and the
[Guarantee Fee] [Enhancement Fee] and excess
interest collections, the Class B
Certificateholders would absorb (i) all losses on
each Liquidated Contract in the amount by which
its Net Liquidation Proceeds are less than its
unpaid principal balance plus accrued and unpaid
interest thereon and (ii) all delinquent payments
on the Contracts. See "Description of the
Certificates--Subordination of [Class B
Certificates and] Class R Certificates" and "Yield
and Prepayment Considerations".]
If further delinquencies and liquidation losses
were to continue to decrease the Pool Scheduled
Principal Balance (which is reduced by scheduled
principal payments and all other collections of
principal on the Contracts and the Scheduled
Principal Balances of all Contracts that become
Liquidated Contracts or are repurchased by CITSF
pursuant to the Agreement, including Contracts
repurchased as a result of certain breaches of
representations and warranties) faster than
distributions of principal to the Class A
Certificateholders reduce the Class A Principal
Balance, then the amount of the Pool Scheduled
Principal Balance available to the Class B
Certificates, and therefore the level of
protection afforded by the subordination of the
Class B Certificates for the benefit of the Class
A Certificates, would be reduced. In the event
that the Pool Scheduled Principal Balance is
reduced by delinquencies and liquidation losses to
an amount less than or equal to the Class A
Principal Balance, all additional losses on
Liquidated Contracts, to the extent not covered
by excess interest collections, will be absorbed
by the Class A Certificates.
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<PAGE>
Optional Repurchase
of the Contracts
by the Servicer
or the Company.......... At its option, [either] the Servicer [or the
Company] may repurchase from the Trust all
remaining Contracts, and thereby effect early
retirement of the Certificates, on any Remittance
Date when, among other things, the Pool Scheduled
Principal Balance is less than ___% of the Cut-off
Date Pool Principal Balance. See "Description of
the Certificates--Repurchase Option".
The Contracts........... [Conventional] [FHA-insured] [VA-guaranteed] [fixed-
rate] [variable rate] manufactured housing
installment sales contracts and installment loan
agreements, including any and all rights to
receive payments due thereunder after the Cut-off
Date and (i) security interests in Manufactured
Homes purchased with the proceeds of such
Contracts and/or (ii) with respect to certain of
the Contracts liens on the real estate on which
the related Manufactured Homes are located ("Land-
Secured Contracts"). [Additional Contracts may be
purchased by the Trust, from time to time, during
the period beginning on _______ __, 1994 and
ending on _________, 1994, (the "Subsequent
Contracts") from monies on deposit in the
Pre-Funding Account as described in "The Contract
Pool".] The Contracts [(other than the Subsequent
Contracts)] are secured by Manufactured Homes
and/or real estate located in __ states [and the
District of Columbia] and have been selected by
CITSF from its portfolio of manufactured housing
contracts based on the criteria specified in the
Agreement. All [but ___, or ___% by Cut-off Date
Pool Principal Balance,] of the Contracts [(other
than the Subsequent Contracts)] are conventional
Contracts (i.e., not insured or guaranteed by any
governmental agency). The contractual rate of
interest on the Contracts [(other than the
Subsequent Contracts)] ranges from ___% to ___%
with a weighted average of approximately ___%. The
Contracts [(other than the Subsequent Contracts)]
had a weighted average term to scheduled maturity,
as of origination, of ___ months, and a weighted
average remaining term to scheduled maturity,
as of the Cut-off Date, of ___ months. The final
scheduled payment date on the Contract with the
S-17
<PAGE>
latest maturity will be in ______, 20__. See "The
Contract Pool".
Security Interests
and Certain Other
Aspects of the Con-
tracts; Repurchase
or Substitution
Obligations............. In connection with the transfer of the Contracts to
the Trustee, CITSF has assigned the security
interests in the Manufactured Homes and/or the
liens on the underlying real property, as
appropriate, to the Company and the Company has
assigned such security interests and liens to the
Trust. Because of the expense and administrative
inconvenience involved, [CITSF will not amend the
certificates of title to name CITSF as the
lienholder where CITSF is not the originator of
the Contract and] CITSF will not amend any
certificate of title to name the Company or the
Trustee as the lienholder and the Company will not
deliver any certificate of title to the Trustee or
note thereon the Trustee's interest. Consequently,
in some states, in the absence of such an
amendment to the certificate of title, the
successive assignments to [CITSF,] the Company and
the Trustee of the security interest in the
Manufactured Home may not be effective or such
security interest may not be perfected and, in the
absence of such notation or delivery to the
Trustee, the assignment of the security interest
in the Manufactured Home to the Trustee may not be
effective against other creditors or a trustee in
bankruptcy. Because of the expense and
administrative inconvenience involved, CITSF will
not record the successive assignments to [CITSF,]
the Company and the Trustee of the mortgage, deed
of trust or similar instrument securing each
Land-Secured Contract. Consequently, in some
states, in the absence of such recordation, the
assignment to the Trustee of the mortgage, deed of
trust or similar instrument securing a
Land-Secured Contract may not be effective and, in
the absence of such recordation, the assignment of
the mortgage, deed of trust or similar instrument
to the Trustee may not be effective against other
creditors or a trustee in bankruptcy.
CITSF has agreed to repurchase, or, at its option,
substitute another contract which is an "Eligible
S-18
<PAGE>
Contract" (as defined in the Agreement) for, any
Contract as to which the Trustee does not have a
valid and perfected security interest in the
Manufactured Home securing such Contract, if such
failure materially adversely affects the Trust's
interest in the Contract unless such failure has
been cured within 85 days of CITSF receiving
notice of such failure or within 90 days after
CITSF otherwise becomes aware of such failure.
Subject to the foregoing, the Servicer has agreed
to maintain the Trustee's perfected first priority
security interest in each Manufactured Home and
first or second lien on each mortgaged property
securing a Contract so long as the related
Contract is the property of the Trust. See
"Special Considerations--5. Security Interests and
Certain Other Aspects of the Contracts" and
"Certain Legal Aspects of the Contracts--The
Contracts (Other than Land-Secured Contracts)" and
"--Land-Secured Contracts" in the Prospectus.
Certain Federal Income
Tax Consequences...........[For federal income tax purposes, an election will
be made to treat the Trust as a real estate
mortgage investment conduit ("REMIC"). The Class A
Certificates [and the Class B Certificates] will
constitute "regular interests" in the REMIC and
generally will be treated as debt instruments of
the Trust for federal income tax purposes with
payment terms equivalent to the terms of such
Certificates. The Class R Certificates will
constitute "residual interests" in the REMIC. The
Holders of the Class A [and Class B] Certificates
will be required to include in income interest on
such Certificates (including any original issue
discount) in accordance with the accrual method of
accounting. See "Certain Federal Income Tax
Consequences" in the Prospectus.]
[The Trust will not be treated as a real estate
mortgage investment conduit ("REMIC") for federal
S-19
<PAGE>
income tax purposes. See "Certain Federal Income
Tax Consequences" in the Prospectus.]
ERISA Considerations...... Subject to the conditions described herein, the
Class A Certificates may be purchased by employee
benefit plans that are subject to the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"). See "ERISA Considerations" herein and
in the Prospectus.
[No transfer of a Class B Certificate will be
permitted to be made to any employee benefit plan
subject to ERISA or to the Internal Revenue Code
of 1986, as amended, unless the opinion of counsel
described under "ERISA Considerations" is
delivered to the Trustee. See "ERISA
Considerations" herein and in the Prospectus.]
Legal Investment
Considerations.......... [The Class A and the Class B Certificates offered
hereby will constitute "mortgage related
securities" under the Secondary Mortgage Market
Enhancement Act of 1984 ("SMMEA") and, as such,
will be "legal investments" for certain types of
institutional investors to the extent provided in
SMMEA. See "Legal Investment Considerations" in
the Prospectus.]
[Because the Class B Certificates will not be
rated in one of its two highest rating categories
by a nationally recognized statistical rating
organization, the Class B Certificates will not
constitute "mortgage related securities" for
purposes of SMMEA. Accordingly, many institutions
with legal authority to invest in more highly
rated securities based on first mortgage loans may
not be legally authorized to invest in the Class B
Certificates. See "Legal Investment
Considerations" herein and in the Prospectus. No
representations are made as to any regulatory
requirements or considerations (including without
limitation regulatory capital requirements)
applicable to the purchase of Class B Certificates
by banks, savings and loan associations or other
financial institutions, which institutions should
consult their own counsel as to such matters.]
S-20
<PAGE>
Rating.................... It is a condition to the issuance of the Certifi-
cates on the Closing Date that the Class A
Certificates be rated at least "_____" by _______.
[It is a condition to the issuance of the Class B
Certificates that they be rated at least "_______"
by ________.] A security rating is not a
recommendation to buy, sell or hold securities and
may be subject to revision or withdrawal at any
time by the rating agency.
Registration of
Class A [and Class B]
Certificates........... [Each of] the Class A [and Class B] Certificates
initially will be represented by one or more
certificates registered in the name of Cede & Co.,
as the nominee of The Depository Trust Company
("DTC"), and will only be available in the form of
book-entries on the records of DTC and its
participants. Certificates representing the Class
A [and Class B] Certificates will be issued in
definitive form only under the limited
circumstances described herein. All references
herein to "Holders" or "Certificateholders" shall
reflect the rights of Certificate Owners as they
may indirectly exercise such rights through DTC
and its participants, except as otherwise
specified herein. See "Description of the
Certificates--Registration of Class A Certificates
[and Class B Certificates]" herein and
"Description of the Certificates--Global
Certificates" in the Prospectus.
S-21
<PAGE>
SPECIAL CONSIDERATIONS
Prospective Certificateholders should consider, in addition to the risk
factors described under "Special Considerations" in the Prospectus, the
following risk factors in connection with the purchase of the Class A
Certificates [or the Class B Certificates]:
1. General. An investment in the Class A Certificates [or the Class B
Certificates] may be affected by, among other things, a downturn in
regional or local economic conditions. These regional or local economic
conditions are often volatile and historically have affected the
delinquency, loan loss and repossession experience of pools of
manufactured housing installment sales contracts. In the event of
defaults by the Obligors under the Contracts, the Trust will have to
look primarily to the value of the Manufactured Homes for recovery of
the outstanding principal and unpaid interest of the defaulted
Contracts. Regardless of its location, manufactured housing generally
depreciates in value. See "The Contract Pool--Delinquency, Loan Loss and
Repossession Experience" herein and "The Trust--The Contract Pools" in
the Prospectus. Consequently, it is possible that the market value of
certain Manufactured Homes could be or become lower than the outstanding
principal balances of the Contracts that they secure. Sufficiently high
delinquencies and liquidation losses on the Contracts will have the
effect of reducing, and could eliminate [(a)] the protection against
loss afforded to the Class A Certificates by the subordination of the
Class B and the Class R Certificates [and (b) the protection against
loss afforded to the Class B Certificates by any monthly excess cashflow
otherwise distributable to the Company and the Class R
Certificateholders]. If [such protection] [the protection under (a)] is
eliminated, the Class A Certificateholders will bear the risk of loss on
the Contracts. [If the protection under (b) is eliminated and [CIT fails
to make payments as required under the Limited Guarantee,] the Available
Credit Enhancement Amount is reduced to zero, the Class B
Certificateholders will bear the risk of losses on the Contracts.]
2. Limited Obligations. The Class A Certificates [ and the Class B
Certificates] will not represent an interest in or an obligation of the
Company or any Servicer (including CITSF). [Except as set forth here
with respect to the Limited Guarantee] the Class A Certificates [and the
Class B Certificates] will not be insured or guaranteed by any
government agency or instrumentality, CIT or any of its affiliates,
including the Company and CITSF, the Underwriters or any of their
affiliates, or any other Servicer or any of its affiliates.
3. Limited Liquidity. There can be no assurance that a secondary market
will develop for the Class A [or Class B] Certificates or, if it does
develop, that it will provide the Holders of the Class A [or Class B]
Certificates with liquidity of investment or that it will remain for the
term of the Class A [or Class B] Certificates. [In addition, the Class B
Certificates will not constitute "mortgage related securities" for
purposes of the Secondary Mortgage Market Enhancement Act of 1984
("SMMEA"). Accordingly, many institutions with legal authority to invest
in SMMEA securities will not be able to invest in the Class B
Certificates, limiting the market for such securities.] See "Legal
Investment Considerations" in the Prospectus.
S-22
<PAGE>
4. Insurance. The insurance policies on the Contracts or all or any part
of the Trust will not cover all contingencies and will cover certain
contingencies only to a limited extent. See "Description of the
Certificates--Servicing--Hazard Insurance" in the Prospectus. The
Company and CITSF have not verified the extent to which the Manufactured
Homes are covered by flood insurance, but CITSF believes that
Manufactured Homes in manufactured housing parks and Land-Secured
Contracts which, at the time of origination were, and continue to be,
located within a federally designated special flood hazard area, are
covered by flood insurance, although the amount of such coverage may be
less than the principal balance due from the Obligor under the related
Contract. For all other Contracts, the Company and CITSF can give no
assurance that flood insurance coverage has been obtained with respect
to the related Manufactured Home.
5. Prepayment Considerations. The prepayment experience on the Contracts
may affect the average life of the Class A Certificates [and the Class B
Certificates]. Prepayments on the Contracts (which include both
voluntary prepayments and liquidations following default) may be
influenced by a variety of economic, geographic, social and other
factors, including repossessions, aging, seasonality, market interest
rates, changes in housing needs, job transfers, casualty losses and
unemployment. In the event a Contract is prepaid in full, interest on
such Contract will accrue only to the date of prepayment. If Class A
Certificates [or Class B Certificates] are purchased at a discount and
the purchaser calculates its anticipated yield to maturity based on an
assumed rate of payment of principal on such Certificates that is faster
than the rate actually realized, such purchaser's actual yield to
maturity will be lower than the yield so calculated by such purchaser.
See "Yield and Prepayment Considerations" herein and "Maturity and
Prepayment Considerations" in the Prospectus. [To the extent that
amounts on deposit in the Pre-Funding Account have not been fully
applied to the purchase of Subsequent Contracts by or on behalf of the
Trust by the end of the Pre-Funding Period, the Holders of the Class A
Certificates will receive a prepayment of principal in an amount equal
to the funds remaining in the Pre-Funding Account at such time, which
prepayment will be made on the first Remittance Date following the end
of the Pre-Funding Period. It is anticipated that the principal amount
of Subsequent Contract purchased by or on behalf of the Trust will not
be exactly equal to the amount on deposit in the Pre-Funding Account and
that therefore there will be at least a nominal amount of principal
prepaid to the Holders of the Class A Certificates.]
[6. Distributions of Principal. The yield to maturity on the Class A
Certificates [and Class B Certificates] will be affected by the rate at
which Contracts become Liquidated Contracts and the severity of ensuing
losses on such Liquidated Contracts and the timing thereof. Prior to the
time that the Class A Principal Balance is reduced to zero, the Class A
Certificateholders will receive all payments of principal that are made
on the Contracts and the Class B Certificateholders only will receive
distributions of principal to the extent [that any Guarantee Payments
paid under the Limited Guarantee represent a Class B Principal
Liquidation Loss Amount] of any Class B Principal Liquidation Loss
Amount. It is not possible to predict the timing of the occurrence of
the Remittance Date, if any, on which the Class A Principal Balance is
reduced to zero, which occurrence will be affected by rate of voluntary
principal prepayments in addition to prepayments due to default and
subsequent liquidation. Prepayments on Contracts may be influenced by a
variety of economic, geographic, social and other factors, including
repossessions, aging, seasonality, market interest rates, changes in
S-23
<PAGE>
housing needs, job transfers and unemployment. See "Yield and Prepayment
Considerations" herein and "Maturity and Prepayment Considerations" in
the Prospectus.]
7. Security Interests and Certain Other Aspects of the Contracts. A
variety of factors may limit the ability of the Certificateholders to
realize upon the manufactured homes securing the Contracts (the
"Manufactured Homes") or may limit the amount realized to less than the
amount due. See "Special Considerations" and "Certain Legal Aspects of
the Contracts" in the Prospectus.
8. Certain Matters Relating to Insolvency. CITSF and the Company intend
that each transfer of Contracts from CITSF to the Company and from the
Company to the related Trust constitutes a sale, rather than a pledge of
the Contracts to secure indebtedness. However, if CITSF or the Company
were to become a debtor under Title 11 of the United States Code, 11
U.S.C.ss.101 et seq. (the "Bankruptcy Code"), it is possible that a
creditor, receiver, other party in interest or trustee in bankruptcy of
CITSF or the Company, or CITSF or the Company as debtor-in-possession,
may argue that the sale of the Contracts by CITSF or the Company, or by
the Company to the Trust, respectively, was a pledge of the Contracts
rather than a sale and that, accordingly, such Contracts should be part
of such entity's bankruptcy estate. Such a position, if presented to a
court, even if ultimately unsuccessful, could result in a delay in or
reduction of distributions to the Certificateholders.
9. Subordination. While the subordination feature is intended to enhance
the likelihood of timely payment of principal and interest to the Class
A Certificateholders, shortfalls on the Class A Certificates could occur
if the Pool Scheduled Principal Balance is less than the Class A
Principal Balance and losses on Liquidated Contracts are not covered by
excess interest collections.
STRUCTURE OF THE TRANSACTION
The Company will establish the Trust and transfer the Contracts and related
rights to the Trust pursuant to the Agreement. The Certificates represent
fractional undivided interests in the Trust, the corpus of which will consist of
the Contracts (including all rights to receive payments due on such Contracts
after ________, 199_ (the "Cut-off Date") [or the date of origination, if later]
and security interests in the Manufactured Homes securing such Contracts),
rights under certain hazard insurance policies with respect to the Manufactured
Homes, amounts held for the Trust in the Certificate Account (as defined below)
[, all rights under the FHA/VA Regulations pertaining to any FHA/VA Contract]
[any credit enhancement with respect to the Class B Certificates] [and any funds
or other instruments on deposit in the Pre-Funding Account] and all proceeds in
any way derived from any of the foregoing. CITSF will service the Contracts for
the Trust. The Contracts will be held by CITSF on behalf of the Trustee.
Payments by obligors under the Contracts generally will be deposited in a
separate account maintained at an Eligible Institution in the name of the
Trustee (the "Certificate Account") no later than two business days after
receipt. However, subject to the terms of the Agreement, as long as CITSF
remains the Servicer under the Agreement and is a direct or indirect subsidiary
of The CIT Group Holdings, Inc. (the parent of the Servicer) ("CIT"), if CIT
S-24
<PAGE>
maintains a short-term debt rating of [___ or higher by _____________________ or
___ or higher by _______________________], [and the Trustee shall have received
an opinion of counsel that any action taken pursuant to this sentence shall not
adversely affect the status of the Trust as a REMIC or result in the imposition
of a tax on the Trust,] the Servicer will not be required to deposit payments by
obligors on the Contracts in the Certificate Account within two business days
after the date of receipt. In such an event, the Servicer may make such deposits
on a monthly basis but not later than the business day immediately preceding the
next Remittance Date in an amount equal to the net amount of such deposits and
payments which would have been made had the conditions of the proceeding
sentence not applied. Certain payments deposited in the Certificate Account in
respect of each Due Period will be applied on the __th day of the next month
(or, if such day is not a business day, the next succeeding business day) (a
"Remittance Date") to make the distributions to certificateholders described
under "Description of the Certificates--Distributions" and, to the extent not
netted from deposits to the Certificate Account, [to reimburse the Servicer for
unreimbursed Monthly Advances and] to pay certain other amounts to the Servicer
including to pay certain monthly fees to Servicer as compensation for servicing
the Contracts [and to [CIT for the Limited Guarantee] [to the Credit Enhancer
for providing the Class B Credit Enhancement]. CITSF, in its capacity as
Servicer of the Contracts, and any successor servicer are referred to herein as
the "Servicer."
For each Remittance Date, the "Due Period" is the period commencing on the
_____ day of the month (or, if the _____ day of such month is not a business
day, the day following the first preceding business day) in the second month
preceding the month in which such Remittance occurs (or the Cut-off Date, in the
case of the first Remittance Date) and ending on the ____ day of the month (or,
if such day is not a business day, the preceding business day) in the month
preceding the month in which such Remittance Date occurs. For each Remittance
Date, the determination date (the "Determination Date") is the [third] business
day prior to such Remittance Date.
CITSF's transfer of the Contracts to the Company and the Company's
conveyance of the Contracts to the Trust is without recourse, except for certain
representations and warranties made by CITSF in the Agreement and certain
indemnities by the Servicer described under "Description of the Certificates --
Indemnification".
THE CONTRACT POOL
The Contract Pool consists of ______ [conventional] [FHA-insured]
[VA-guaranteed] [fixed-rate] [variable rate] manufactured housing installment
sales contracts and installment loan agreements (collectively, the "Contracts")
having an [approximate] aggregate principal balance as of the Cut-off Date [(or,
in the case of Contracts originated after the Cut-off Date, the date of
origination)] of $____________ (the "Cut-off Date Pool Principal Balance"),
which represents [the sum of] [the aggregate principal balance of each Contract
that is] [an actuarial Contract or a Rule of 78s Contract (collectively referred
to herein as "Precomputed Contracts")] and [the aggregate unpaid principal
amount of each Contract that is a simple interest Contract]. For the purposes of
the discussion of the characteristics of the Contracts on the Cut-off Date
contained herein, the principal balance of each Contract is the Scheduled
Principal Balance of such Contract as of the Cut-off Date. [The composition of
the Contracts in the Contract Pool will change to the extent Subsequent
Contracts are purchased from funds on deposit in the Pre-Funding Account. In
addition, certain information set forth below does not take into account any of
the Subsequent Contracts to the extent such information cannot yet be
determined.]
S-25
<PAGE>
[____% of the Contracts (by remaining principal balance) as of the Cut-off
Date are actuarial Contracts. An "actuarial Contract" is a Contract as to which
the allocation of its monthly payments to interest and principal is precomputed
for each Due Date on an actuarial basis and, unlike a simple interest Contract,
is not affected by a monthly payment being made before or after its Due Date.]
[____% of the Contracts (by remaining principal balance) as of the Cut-off
Date are Rule of 78s Contracts. A "Rule of 78s Contract" is a Contract that
provides for the payment by the borrower of a specified total amount of
payments, payable in equal monthly installments, which total represents the
principal amount financed plus add-on interest in an amount calculated on the
basis of the stated interest rate for such Contract. Under the "Rule of 78s",
the amount of a monthly payment allocable to interest on a Contract is
determined by multiplying the total amount of add-on interest payable over the
term of the Contract by a fraction derived as described below. ("Add-on
interest" is interest that is "added on" to the principal balance of a Rule of
78s Contract at the origination thereof, with the sum thereof being used to
derive the amount of the monthly payment due thereon, by dividing such sum by
the number of monthly payments.) The fraction used in the calculation of add-on
interest earned each month under a Rule of 78s Contract has as its denominator a
number equal to the sum of a series of numbers representing the number of
monthly payments due under the Contract. For example, with a Contract providing
for 12 payments, the denominator of each month's fraction will be 78, the sum of
a series of numbers from 1 to 12. The numerator of the fraction for a given
month is the number of payments remaining before giving effect to the payment to
which the fraction is being applied. Accordingly, in the example of a
twelve-payment Contract, the fraction for the first payment is 12/78, for the
second payment 11/78, for the third payment 10/78, and so on through the final
payment, for which the fraction is 1/78. The applicable fraction is then
multiplied by the total add-on interest payment over the entire term of the
Contract, and the resulting amount is the amount of add-on interest earned that
month. The difference between the amount of the monthly payment and the amount
of earned add-on interest calculated for the month is applied to "principal"
reduction.]
[For purposes of the Agreement, each Rule of 78s Contract will be amortized
on an actuarial basis. The Scheduled Principal Balance of a Rule of 78s Contract
as of the Cut-off Date is the sum of the present value of each monthly payment
due under such Rule of 78s Contract on or after the Cut-off Date for the
calculated number of months remaining to maturity, discounted on a monthly basis
(assuming a 360-day year of twelve 30-day months), using the actual contractual
rate of interest for such Rule of 78s Contract as the discount rate. The
scheduled amortization of such Scheduled Principal Balance will be computed, and
each monthly payment thereon will be allocated to principal and interest, as if
such Rule of 78s Contract were an actuarial Contract having a Contract Rate
equal to the contractual rate of interest for such Rule of 78s Contract.]
[____% of the Contracts (by remaining principal balance) are simple
interest Contracts. A "simple interest Contract" is a Contract as to which
interest is calculated each day on the basis of the actual principal balance
outstanding on such day.]
[Approximately ___% of the Contracts (measured by outstanding principal
balance as of the Cut-off Date) are step-up rate Contracts. See "The Trust--The
Contract Pools" in the Prospectus for a description of the general features of
step-up rate Contracts. [All] [Approximately ___%] of the step-up rate Contracts
are still bearing interest at their initial Contract Rate (the period during
which such Contracts bear interest at their initial Contract Rate being referred
to herein as the "Low Rate Period"). During the Low Rate Period, the total
amount and the principal portion of each monthly payment is determined on a
basis that would cause the Contract to be fully amortized over its term if the
Contract were to bear interest during its entire term at its initial Contract
S-26
<PAGE>
Rate and were to have level payments over its entire term. The total amount and
principal portion of each monthly payment due after the end of the applicable
Low Rate Period is determined on a basis that would cause the Contract (which
would then be bearing interest at a stepped-up rate) to be fully amortized over
its remaining term on a level-payment basis. The Low Rate Periods will end no
earlier than_______ and no later than __________. The increases in Contract
Rates at the end of the Low Rate Periods range from ___ percentage points to ___
percentage points. The increases in monthly payments range from $__________ to
$__________. (Approximately ___% of the Contracts, by aggregate principal
balance as of the Cut-off Date, constitute step-up rate Contracts that were
underwritten on the basis of the lower monthly payments due during the Low Rate
Period.) The statistical information concerning the Contracts which is set forth
below, to the extent it relates to the Contract Rates of the step-up rate
Contracts, takes into account only their Contract Rates as of the Cut-off Date.]
The Contracts were originated between ___________, 19__ and ___________,
19__. [All Contracts are manufactured housing installments sales contracts
originated by a manufactured housing dealer in the ordinary course of its
business and purchased by CITSF [and The CIT Group/Consumer Finance, Inc. (NY),
a wholly-owned subsidiary of CIT ("CITCF-NY")] in the ordinary course of its
business, or manufactured housing installment loan agreements originated
directly by CITSF [and CITCF-NY] in the ordinary course of its business.]
[The aggregate amount of the Original Class A Principal Balance and the
Original Class B Principal Balance exceeds the Cut-off Date Pool Principal
Balance by $___________. Funds in the amount of such excess [plus certain
additional amounts in respect of interest] have been deposited into a separate
trust account maintained by the Trustee (the "Pre-Funding Account"). Additional
Contracts may be purchased by or on behalf of the Trust, from time to time,
during the period beginning on _________ ___, 1994 and ending on ___________
____, 1994 (the "Pre-Funding Period") from monies on deposit in the Pre-Funding
Account. Such additional Contracts will be purchased by or on behalf of the
Trust pursuant to a contract in which the [formula to determine the] price, the
characteristics of the Contracts to be purchased and the delivery dates of such
Contracts are identified. Deposits into the Pre-Funding Account may be in the
form of cash or certain short-term permitted investments, which shall consist of
[ ]. The conditions precedent which must be complied with prior to the transfer
of Contracts purchased from funds on deposit in the Pre- Funding Account are as
follows:[ ]. Any amounts on deposit in the Pre-Funding Account at the end of the
Pre-Funding Period will be distributed on the first Remittance Date following
the end of the Pre-Funding Period to Holders of the Class A Certificates as a
principal prepayment.]
All [but ___%] of the Contracts (by remaining principal balance) are
conventional contracts, meaning that they are not insured or guaranteed by any
governmental agency.
Each Contract (a) is secured by a Manufactured Home and/or by a lien on the
real estate on which the Manufactured Home is located, [(b) is fully amortizing
with a fixed contractual rate of interest (the "Contract Rate") and provides for
level payments over the term of such Contract] and (c) is dated on or after
__________, 19__. [Each Contract has a fixed Contract Rate.] A detailed
description of the Contracts is included in the Agreement. Approximately ___% of
the Cut-off Date Pool Principal Balance is attributable to loans to purchase
Manufactured Homes which were new and approximately ___% is attributable to
loans to purchase Manufactured Homes which were used at the time the related
Contract was originated. All Contracts have a Contract Rate of at least _____%.
[Approximately ____% of the Contracts by Cut-off Date Pool Principal Balance
have Contract Rates less than _____% (equal to the Class B Remittance Rate plus
S-27
<PAGE>
the Monthly Servicing Fee).] The Contracts have remaining maturities, as of the
Cut-off Date (or the date of origination, if later), of at least ___ months but
not more than ____ months, original maturities of at least ___ months but not
more than ____ months, and a weighted average remaining term to scheduled
maturity, as of the Cut-off Date (or the date of origination, if later), of ___
months. The average remaining principal balance per Contract, as of the Cut-off
Date (or the date of origination, if later), was $_________ and the outstanding
principal balances of the Contracts, as of the Cut-off Date (or the date of
origination, if later), ranged from $__________ to $_________. All but ___, or
____% by Cut-off Date Pool Principal Balance, of the Contracts had loan-to-value
ratios at the time of origination of 90% or less. [The weighted average
loan-to-value ratio of the Contracts, as of the origination of the Contracts,
was ________%.] "Value" in such calculation is equal to (i) in the case of a
Land-Secured Contract, the sum of the original appraised market value of the
Manufactured Home and the real estate securing such Contract, if available, or
the total delivered sales price for such Manufactured Home, plus taxes, fees and
insurance, (ii) in the case of a new Manufactured Home, the total delivered
sales price for such Manufactured Home, if available, or its appraised market
value, plus taxes, fees and insurance and (iii) in the case of a used
Manufactured Home, the lesser of the total delivered sales price for such
Manufactured Home and its appraised market value (or whichever of the price or
appraised value is available to the extent one of the two is not available), in
each case plus taxes, fees and insurance. Manufactured Homes, unlike site-built
homes, generally depreciate in value. Consequently, at any time after
origination it is possible, especially in the case of Contracts with high
loan-to-value ratios at origination, that the market value of a Manufactured
Home may be lower than the principal amount outstanding under the related
Contract.
The Contracts are secured by Manufactured Homes located in ___ states [and
the District of Columbia], of which approximately ____% of the Contracts by
remaining principal balance are secured by Manufactured Homes located in _____.
No other state represented more than 5% of the Contracts.
Set forth below is a description of certain characteristics of the
Contracts. [References to "Cut-off Date" in the following tables shall refer to
the Cut-off Date in the case of Contracts originated on or prior to the Cut-off
Date and to the date of origination in the case of a Contract originated after
the Cut-off Date.] [The information set forth below does not relate to the
Subsequent Contracts.]
S-28
<PAGE>
Geographical Distribution of Manufactured Homes
<TABLE>
<CAPTION>
% of Contract
% of Contract Pool by
Number of Pool by Number Aggregate Principal Principal Balance
Contracts of Contracts Balance Outstanding Outstanding
State As of Cut-off Date As of Cut-off Date As of Cut-off Date As of Cut-off Date
- ----- ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Alabama......................... % $ %
Arizona.........................
Arkansas........................
California......................
Colorado........................
Connecticut.....................
Delaware........................
District of Columbia............
Florida.........................
Georgia.........................
Idaho...........................
Illinois........................
Indiana.........................
Iowa............................
Kansas..........................
Kentucky........................
Louisiana.......................
Maine...........................
Maryland........................
Massachusetts...................
Michigan........................
Minnesota.......................
Mississippi.....................
Missouri........................
Montana.........................
Nebraska........................
Nevada..........................
New Hampshire...................
New Jersey......................
New Mexico......................
New York........................
North Carolina..................
North Dakota....................
Ohio............................
Oklahoma........................
Oregon..........................
Pennsylvania....................
South Carolina..................
South Dakota....................
Tennessee.......................
Texas...........................
Utah............................
Vermont.........................
Virginia........................
Washington......................
West Virginia...................
Wisconsin.......................
Wyoming......................... --------- -------- --------------- --------
Total........................... 100.00% $ 100.00%
========= ======== =============== ========
</TABLE>
S-29
<PAGE>
Years of Origination of Contracts
<TABLE>
<CAPTION>
% of Contract Pool
Number of Aggregate Principal By Principal
Contracts Balance Outstanding Balance Outstanding
Year of Origination As of Cut-off Date As of Cut-off Date As of Cut-off Date
- ------------------- ------------------ ------------------ ------------------
<S> <C> <C> <C>
1981............................................... $ %
1982...............................................
1983...............................................
1984...............................................
1985...............................................
1986...............................................
1987...............................................
1988...............................................
1989...............................................
1990...............................................
1991...............................................
1992...............................................
1993............................................... -------- -------------- --------
Total................................... $ 100.00%
======== ============== ========
</TABLE>
Distribution of [Remaining] [Original] Contract Amounts
<TABLE>
<CAPTION>
[Remaining] % of Contract Pool
[Original] Contract Number of Aggregate Principal By Principal
Amount (in Contracts Balance Outstanding Balance Outstanding
Dollars)(1) As of Cut-off Date As of Cut-off Date As of Cut-off Date
- ------------- ------------------ ------------------ ------------------
<S> <C> <C> <C>
Less than $10,000.................................. $ %
$10,000-$19,999.99.................................
$20,000-$29,999.99.................................
$30,000-$39,999.99.................................
$40,000-$49,999.99.................................
$50,000-$59,999.99.................................
$60,000-$69,999.99.................................
$70,000-$79,999.99................................. -------- -------------- --------
Total................................... $ 100.00%
======== ============== ========
</TABLE>
- ------------
(1) The largest [original] [Remaining] Contract amount is $__________, which
represents __% of the Cut-off Date Pool Principal Balance.
S-30
<PAGE>
Distribution of Original Loan-to-Value Ratios
<TABLE>
<CAPTION>
% of Contract Pool
Loan-to Number of Aggregate Principal By Principal
Value Contracts Balance Outstanding Balance Outstanding
Ratio(1) As of Cut-off Date As of Cut-off Date As of Cut-off Date
- ---------- ------------------ ------------------ ------------------
<S> <C> <C> <C>
Less than 61%...................................... $ %
61-65%.............................................
66-70%.............................................
71-75%.............................................
76-80%.............................................
81-85%.............................................
86-90%.............................................
Over 90%........................................... ----------- -------------- --------
Total................................... $ 100.00%
=========== ============== ========
</TABLE>
- ------------
(1) [Rounded to the nearest 1%. The term "Value" as used in this table is
defined above. The loan-to-value ratios on the Contracts may be subject to
a variance of up to 5% from the tabular presentation. Such variances were
caused by information input by CITSF's personnel in regional offices with
respect to incidental items financed in the loans, such as dealer-installed
equipment, the costs of which were estimated at the time the loan
applications were approved.]
Contract Rates
<TABLE>
<CAPTION>
% of Contract Pool
Number of Aggregate Principal By Principal
Range of Contracts Contracts Balance Outstanding Balance Outstanding
By Contract Rates As of Cut-off Date As of Cut-off Date As of Cut-off Date
- ----------------- ------------------ ------------------ ------------------
<S> <C> <C> <C>
9.25%-10.00%...................................... $ %
10.01%-11.00%......................................
11.01%-12.00%......................................
12.01%-13.00%......................................
13.01%-14.00%......................................
14.01%-15.00%......................................
15.01%-16.00%......................................
16.01%-16.50%......................................
Over 16.50%........................................ ----------- -------------- --------
Total................................... $ 100.00%
=========== ============== ========
</TABLE>
S-31
<PAGE>
Remaining Months to Maturity
<TABLE>
<CAPTION>
% of Contract Pool
Number of Aggregate Principal By Principal
Months Remaining Contracts Balance Outstanding Balance Outstanding
As of Cut-off Date As of Cut-off Date As of Cut-off Date As of Cut-off Date
- ------------------- ------------------ ------------------ ------------------
<S> <C> <C> <C>
Less than 31....................................... $ %
31-60.............................................
61-90.............................................
91-120............................................
121-150............................................
151-180............................................
181-210............................................
211-240............................................
Over 240........................................... ----------- -------------- --------
Total................................... $ 100.00%
=========== ============== ========
</TABLE>
Delinquency, Loan Loss and Repossession Experience
The following Delinquency Experience and Loan Loss/Repossession Experience
tables set forth data for CITSF's and CITCF-NY's originated non-recourse
conventional manufactured housing portfolio. The following table sets forth the
delinquency experience for the four years ended December 31, 1993 and the nine
months ended September 30, 1994 of the portfolio of conventional manufactured
housing contracts serviced by CITSF (other than contracts already in
repossession), excluding contracts which are subject to dealer recourse
arrangements, contracts acquired by CITSF through portfolio purchases and
contracts which are serviced for others. All of the Contracts in the Trust are
conventional Contracts.
Delinquency Experience
(Dollars in thousands)
<TABLE>
<CAPTION>
Nine months
Years Ended December 31, ended
------------------------------------------------------ September 30,
1990 1991 1992 1993(3) 1994(3)
-------- -------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Number of Contracts
Outstanding.................. 2,631 4,348 5,590 9,021 11,889
Principal Balance of Contracts
Serviced..................... $ 76,724 $137,669 $186,476 $ 289,001 $405,184
Principal Balance of Delinquent
Contracts(1):
30-59 Days................ $ 369 $ 720 $ 1,043 $ 1,678 $ 2,222
60-89 Days................ 85 294 428 189 1,080
90 Days or More........... 81 486 647 991 1,199
-------- -------- -------- --------- --------
Principal Balance of Delinquent
Contracts.................... $ 535 $ 1,500 $ 2,118 $ 2,858 $ 4,501
======== ======== ========= ========= ========
Delinquencies as a
Percent of Principal Balances
Outstanding(2)............... 0.70% 1.09% 1.14% .99% 1.11%
</TABLE>
- ---------------------
(1) The period of delinquency is based on the number of days payments are
contractually past due (assuming 30-day months). Consequently, a contract
due on the first day of a month is not 30 days delinquent until the first
day of the next month.
(2) Based on dollar percent delinquent.
(3) Includes Contracts securitized in July, 1993.
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<PAGE>
The following table sets forth the loan loss and repossession experience
for the four years ended December 31, 1993 and the nine months ended September
30, 1994, of the portfolio of conventional manufactured housing contracts
serviced by CITSF, excluding contracts which are subject to dealer recourse
arrangements, contracts acquired by CITSF through portfolio purchases and
contracts which are serviced for others.
Loan Loss/Repossession Experience
(Dollars in thousands)
<TABLE>
<CAPTION>
Nine months
Years Ended December 31, ended
----------------------------------------------------- September 30,
1990 1991 1992 1993(6) 1994(6)
-------- -------- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
Number of Contracts(1). 2,631 4,348 5,590 9,021 11,889
Principal Balance of
Contracts Serviced(1) $ 76,724 $137,669 $186,746 $289,001 $ 405,184
Contract Liquidations(2) 0.11% 0.37% 0.39% 0.57% 0.89%(5)
Net Losses:
Dollars(3)........... $ 168 $ 206 $ 547 $ 1,310 $ 1,409
Percentage(4)........ 0.22% 0.15% 0.29% 0.45% 0.46%(5)
</TABLE>
- ---------------------
(1) As of period end.
(2) As a percentage of the total number of contracts being serviced as of
period end.
(3) The calculation of net loss includes unpaid interest to the date of
repossession and all expenses of repossession and liquidation.
(4) As a percentage of the principal balance of contracts as of period end.
(5) Annualized.
(6) Includes Contracts securitized in July, 1993.
CITSF began originating nonrecourse to dealer manufactured housing loans in
1989. CITSF's targeted customer under these guidelines has stable residence and
employment history and good credit performance at the time of origination.
CITSF's program generally requires down payments (which may include a mortgage
interest in the land on which the Manufactured Home is located) in excess of 10%
of the original purchase price or appraised value of the manufactured home and
focuses on a high percentage of borrowers who own the underlying real estate
associated with the manufactured home. Down payments of less than 10% to a
minimum of 5% of the original purchase price are considered on a case by case
basis. For homes placed in manufactured housing parks, CITSF focuses on better
than average parks in terms of amenities and location, which CITSF believes
attracts both higher quality borrowers and strong collateral.
During the period from 1989 through 1991, CITSF utilized a manual credit
approval system, requiring strict adherence to the above established
underwriting criteria. In 1992, CITSF introduced an automated credit scoring
system. Such automated system was developed based on the credit performance
S-33
<PAGE>
of loans underwritten under the manual system. The automated credit scoring
system incorporates CITSF's underwriting guidelines and assists loan officers in
the credit approval process, resulting in more consistent decision making.
Additionally, the system provides CITSF home office credit personnel with timely
information to measure adherence to credit criteria and monitor trends.
In July 1994 CITSF's credit criteria was changed in line with industry
practice to include manufactured housing units located on land leased by the
Obligor from a third party and to permit greater reliance on credit scores and
overall evaluation instead of using specific disqualifying criteria (e.g., five
years of employment). Interest rates charged are adjusted in accordance with the
underwriter's evaluation of each such individual application. It is possible
that this change may result in higher delinquency and loan loss experience than
is shown on the above charts.
The management of CITSF believes that its underwriting, high quality park
criteria, and emphasis on financing borrowers who own the underlying real estate
have contributed to low delinquency, default and loss rates during the period
from January 1990 through September 30, 1994. Since 1990, the level of
delinquency (more than 30 days past due after contractual due date) in CITSF's
nonrecourse manufactured housing portfolio has approximated 1%. Since 1990 the
delinquency ratio ranged from .70% to 1.14% and stands at 1.11% as of September
30, 1994. This trend reflects the normal seasoning of the portfolio. The
annualized net charge-off rate on the portfolio for the period from 1990 through
the third quarter of 1994 has ranged from .15% to .46%. The increase in the
annualized net charge-off rate in 1993 and the first three quarters of 1994 to
.45% and .46%, respectively, was well within loan losses that had been expected
for these receivables at their stage of seasoning.
The data presented in the foregoing tables are for illustrative purposes
only. The data presented above relates to the performance of CITSF's entire
nonrecourse manufactured housing portfolio, and is not historical data regarding
solely the portion of CITSF's portfolio constituting the Contracts. There is no
assurance that the delinquency, loan loss or repossession experience of the
Contracts will be similar to that set forth above. The delinquency, loan loss
and repossession experience of manufactured housing contracts historically has
been sharply affected by a downturn in regional or local economic conditions.
[In recent years, such a downturn and higher levels of delinquency, loan loss
and repossession were experienced in many areas of the country in which the
Manufactured Homes are located, including New England and areas dependent on the
oil and gas industry, notably certain areas of Texas, Oklahoma and Louisiana.]
These regional or local economic conditions are often volatile, and no
predictions can be made regarding future economic conditions in any of the
regions in which the Manufactured Homes are located. These downturns have tended
to increase the severity of loss on repossession because of the increased supply
of used units, which in turn may affect the supply in other regions. [In order
to achieve geographic dispersion and to limit the effect of regional and local
economic conditions on the Contract Pool, Contracts originated in any one state
(except with respect to Contracts secured by Manufactured Homes located in
____________) will not exceed ___% of the Cut-Off Date Pool Principal Balance.]
YIELD AND PREPAYMENT CONSIDERATIONS
The following information supplements, and to the extent inconsistent
therewith supersedes, the information in the Prospectus under the heading "Yield
Considerations".
S-34
<PAGE>
The Contracts have maturities at origination ranging from _ years to __
years, but may be prepaid in full or in part at any time. The prepayment
experience of the Contracts (including prepayments due to liquidations of
defaulted Contracts) will affect the average life of the Class A Certificates
[and the Class B Certificates]. Based on CITSF's experience with the portfolio
of manufactured housing contracts serviced by it, CITSF anticipates that a
number of the Contracts will be prepaid prior to their maturity. A number of
factors, including homeowner mobility, general and regional economic conditions
and prevailing interest rates, may influence prepayments. In addition,
repurchases of Contracts by CITSF on account of certain breaches of
representations and warranties have the effect of prepaying such Contracts and
therefore would affect the average life of the Class A [and Class B]
Certificates. [Furthermore, any amounts on deposit in the Pre-Funding Account at
the end of the Pre-Funding Period will be distributed to the Holders of the
Class A Certificates as a prepayment of principal and therefore would affect the
average life of the Class A Certificates.] The prepayment experience on
manufactured housing contracts varies greatly. Although most of the Contracts
contain a "due-on-sale" clause that would permit the Servicer to accelerate the
maturity of a Contract upon the sale of the related Manufactured Home, CITSF
currently expects to permit assumptions of Contracts if the purchaser of the
related Manufactured Home satisfies CITSF's then-current underwriting standards.
The allocation of distributions to the Class A Certificateholders on each
Remittance Date will have the effect of accelerating the amortization of the
Class A Certificates compared to the amortization that would be applicable if
the principal were distributed pro rata according to the Class A Principal
Balance and the Class B Principal Balance. If the Class A Certificates are
purchased at a discount and the purchaser calculates their anticipated yield to
maturity based on an assumed rate of payment of principal on such Class A
Certificates that is faster than the rate actually realized, such purchaser's
actual yield to maturity will be lower than the yield so calculated by such
purchaser.
[Until the Class A Principal Balance has been reduced to zero, the Class A
Certificateholders will receive all payments of principal which are made on the
Contracts. [The Class B Certificateholders will only receive distributions of
principal prior to the Cross-over Date to the extent that any Remaining Amount
Available and [Guarantee Payment] Class B Enhancement Payment (after the payment
of interest on the Class B Certificates) represent a Class B Principal
Liquidation Loss Amount. The rate of principal payments on the Class B
Certificates and the aggregate amount of distributions on the Class B
Certificates will be affected by the rate of obligor defaults resulting in
delinquencies on the Contracts and losses on Liquidated Contracts, by the
severity of those losses and by the timing of those delinquencies and losses.
See "Description of the Class B Certificates--Subordination of [Class B
Certificates and] Class R Certificates" for a description of the manner in which
such losses are borne by the Class B Certificateholders. If the Class B
Certificates are purchased at a discount and the purchaser calculates its
anticipated yield to maturity based on an assumed rate of payment of principal
on the Class B Certificates that is faster than the rate actually realized, such
purchaser's actual yield to maturity will be lower than the yield so calculated
by such purchaser.]]
There can be no assurance that the delinquency or repossession experience
for CITSF's portfolio set forth under "The Contract Pool--Delinquency, Loan Loss
and Repossession Experience" will be representative of the results that may be
experienced with respect to the Contracts.
[Each of the Company and] the Servicer has the option to purchase from the
Trust all remaining Contracts, and thereby effect early retirement of the
Certificates, on any Remittance Date when the Pool Scheduled Principal Balance
is less than __% of the Cut-off Date Pool Principal Balance. See "Description of
the Certificates--Repurchase Option".
S-35
<PAGE>
Although Contract Rates on the Contracts vary, prepayments on Contracts
will not affect the Class A Remittance Rate or the Class B Remittance Rate
because such rates are fixed and do not exceed the Contract Rate on any
Contract. Although partial prepayments of principal on Contracts are applied on
scheduled payment dates for such Contracts, obligors are not required to pay
interest on Contracts after the date of a full prepayment of principal. As a
result, full prepayments on Contracts in advance of the scheduled payment dates
for such Contracts in any Due Period will reduce the amount of interest received
from obligors during such Due Period and available to be passed through to
Holders of Certificates on the following Remittance Date. Subject to the
availability of the subordination provided by the Class B and Class R
Certificates, such subordination would apply to the net shortfall of interest
received on account of prepayments in full in any Due Period so that the amount
of interest paid on the Class A Certificates on the following Remittance Date
would not be affected by such shortfall.
[The yield to Class A Certificateholders [and Class B Certificateholders]
will be below that otherwise produced by the Class A Remittance Rate [and the
Class B Remittance Rate, respectively], because, while interest will accrue in
respect of each Due Period, the distribution of interest will be made on the
__th day (or, if such day is not a business day, the next business day) of the
month following the Due Period in which it accrues.]
The final scheduled payment date on the Contract with the latest maturity
is in , .
Certain statistical information relating to the payment behavior of
nonrecourse manufactured housing contracts originated by CITSF is set forth
below. In evaluating the information contained in this table and its
relationship to the expected prepayment behavior of the Contracts, prospective
Certificateholders should consider that the Company has performed no statistical
analysis to determine whether the contracts to which the table relates
constitute a statistically significant sample of nonrecourse manufactured
housing contracts for purposes of determining expected prepayment behavior.
Furthermore, no assurance can be given that the prepayment experience of the
Contracts will exhibit prepayment behavior similar to the behavior summarized in
the following table. In addition to the foregoing, prospective Class A [and
Class B] Certificateholders should consider that the table set forth below is
limited to the period covered therein and thus cannot reflect the effects, if
any, of aging on the prepayment behavior of manufactured housing contracts
beyond such periods.
The following table sets forth, with respect to all of the nonrecourse
manufactured housing contracts originated by CITSF and CITCF-NY in each year
since 1990, the aggregate initial principal balance of the contracts originated
in such year, the approximate aggregate principal balance outstanding on the
contracts originated in such year as of the last day of such year and the
approximate aggregate principal balance outstanding on the contracts originated
in such year as of the end of the subsequent fiscal quarter.
S-36
<PAGE>
Information Regarding Principal Reduction on Nonrecourse Manufactured
Housing Contracts Originated by CITSF and CITCF-NY
(Dollars in Thousands)
<TABLE>
<CAPTION>
Year of Origination 1990 1991 1992 1993
- ------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Volume (1)..................................... $69,611 $74,262 $70,109 $139,200
Aggregate Principal Balance (2):
12/31/90........................................ $62,800
03/31/91........................................ 61,900
06/30/91........................................ 61,000
09/30/91........................................ 59,900
12/31/91........................................ 59,100 $65,700
03/31/92........................................ 56,700 63,400
06/30/92........................................ 54,000 61,500
09/30/92........................................ 52,100 59,700
12/31/92........................................ 50,400 57,900 $67,200
03/31/93........................................ 48,700 56,700 65,200
06/30/93........................................ 47,100 54,900 61,900
09/30/93........................................ 44,600 53,000 59,900
12/31/93........................................ 41,200 49,800 56,700 $134,400
03/31/94........................................ 38,900 47,300 53,600 130,500
06/30/94........................................ 37,000 44,700 51,100 127,000
09/30/94........................................ 35,400 42,800 49,400 124,400
</TABLE>
- ------------------------------------
(1) Volume represents aggregate initial principal balance of each contract
originated in a particular year.
(2) Approximate aggregate principal balance as of any date represents the
approximate aggregate principal balance outstanding on each contract
originated in a particular year.
This table includes Contracts securitized in July, 1993.
Weighted Average Life of the Class A Certificates
The following information is given solely to illustrate the effect of
prepayments of the Contracts on the weighted average life of the Class A
Certificates under the stated assumptions and is not a prediction of the
prepayment rate that might actually be experienced by the Contracts.
Weighted average life refers to the average amount of time from the date of
issuance of a security until each dollar of principal of such security will be
repaid to the investor. The weighted average life of the Class A Certificates
will be influenced by the rate at which principal on the Contracts is paid.
Principal payments on Contracts may be in the form of scheduled amortization or
prepayments (for this purpose, the term "prepayment" includes repayments and
liquidations due to default or other dispositions of Contracts). Prepayments on
Contracts may be measured by a prepayment standard or model. The model used in
this Prospectus ("MH Prepayment Model") is based on an assumed rate of
prepayment each month of the then unpaid principal balance of a pool of new
Contracts.
S-37
<PAGE>
As used in the following tables, a prepayment assumption of "100% of the MH
Prepayment Model" assumes constant prepayment rates of 3.7% per annum of the
then unpaid principal balance of such Contracts in the first month of the life
of the Contracts and an additional 0.1% per annum in each month thereafter until
the 24th month. Beginning in the 24th month and in each month thereafter during
the life of all of the Contracts, 100% of the MH Prepayment Model assumes a
constant prepayment rate of 6.0% per annum each month. As used in the following
table "0% of the MH Prepayment Model" assumes no prepayments on the Contracts;
"50% of the MH Prepayment Model" assumes the Contracts will prepay at rates
equal to 50% of the MH Prepayment Model assumed prepayment rates; "150% of the
MH Prepayment Model" assumes the Contracts will prepay at rates equal to 150% of
the MH Prepayment Model assumed prepayment rates; "175% of the MH Prepayment
Model" assumes the Contracts will prepay at rates equal to 175% of the MH
Prepayment Model assumed prepayment rates; "200% of the MH Prepayment Model"
assumes the Contracts will prepay at rates equal to 200% of the MH Prepayment
Model assumed prepayment rates; and "300% of the MH Prepayment Model" assumes
the Contracts will prepay at rates equal to 300% of the MH Prepayment Model
assumed prepayment rates.
There is no assurance, however, that prepayment of the Contracts will
conform to any level of the MH Prepayment Model, and no representation is made
that the Contracts will prepay at the prepayment rates shown or any other
prepayment rate. The rate of principal payments on pools of manufactured housing
contracts is influenced by a variety of economic, geographic, social and other
factors, including the level of interest rates and the rate at which
manufactured homeowners sell their manufactured homes or default on their
contracts. Other factors affecting prepayment of contracts include changes in
obligors' housing needs, job transfers, unemployment and obligors' net equity in
the manufactured homes. In the case of mortgage loans secured by site-built
homes, in general, if prevailing interest rates fall significantly below the
interest rates on such mortgage loans, the mortgage loans are likely to be
subject to higher prepayment rates than if prevailing interest rates remained at
or above the rates borne by such mortgage loans. Conversely, if prevailing
interest rates rise above the interest rates on such mortgage loans, the rate of
prepayment would be expected to decrease. In the case of manufactured housing
contracts, however, because the outstanding principal balances are, in general,
much smaller than mortgage loan balances and the original term to maturity of
each such contract is generally shorter, the reduction or increase in the size
of the monthly payment on a contract arising from a change in the interest rate
thereon is generally much smaller. Consequently, changes in prevailing interest
rates may not have a similar effect, or may have a similar effect, but to a
smaller degree, on the prepayment rates on manufactured housing contracts.
The percentages and weighted average lives in the following table were
determined assuming that (i) scheduled interest and principal payments on the
Contracts are received in a timely manner and prepayments are made at the
indicated percentages of the MH Prepayment Model set forth in the table; (ii)
[the Servicer does not exercise] [neither the Servicer nor the Company
exercises] its right of optional termination described above; (iii) the Cut-off
Date Pool Principal Balance is $ , the Contracts have a weighted average term to
maturity, as of origination, of months, a weighted average remaining term to
maturity, as of the Cut-off Date, of months, a weighted average Contract Rate of
%; (iv) the Class A Certificates initially represent $ of the Cut-off Date
Pool Principal Balance and will have a Class A Remittance Rate of %; (v) no
interest shortfalls will arise in connection with prepayment in full of the
Contracts; (vi) no delinquencies or losses are experienced on the Contracts;
(vii) distributions are made on the Class A Certificates on the __th
day of each month, commencing __________, 199_; (viii) the
Class A Certificates are issued on , 199- [and (ix no mandatory redemption
of the Class A Certificates at the end of the Pre-Funding Period].
S-38
<PAGE>
No representation is made that the Contractswill not experience delinquencies
or losses.
Since the table was prepared on the basis of the assumptions in the
preceding paragraph, there are discrepancies between the characteristics of the
actual Contracts and the characteristics of the Contracts assumed in preparing
the table. Any such discrepancy may have an effect upon the percentages of the
Original Principal Balances outstanding and the weighted average life of the
Class A Certificates set forth in the table. In addition, since the actual
Contracts and the Trust have characteristics which differ from those assumed in
preparing the table set forth below, the distributions of principal on the Class
A Certificates may be made earlier or later than as indicated in the table.
It is not likely that Contracts will prepay at any constant percentage of
the MH Prepayment Model to maturity or that all Contracts will prepay at the
same rate. In addition, the diverse remaining terms to maturity of the Contracts
(which include recently originated Contracts) could produce slower distributions
of principal than as indicated in the tables at the various percentages of the
MH Prepayment Model specified even if the weighted average remaining term to
maturity of the Contracts is months.
Investors are urged to make their investment decisions on a basis that
includes their determination as to anticipated prepayment rates under a variety
of the assumptions discussed herein.
Based on the foregoing assumptions, the following table indicates the
projected weighted average life the Class A Certificates and set forth
percentages of the Original Class A Principal Balance that would be outstanding
after each of the dates shown at the indicated percentages of the MH Prepayment
Model.
Percentage of the Original Principal Balance of the Class A
Certificates at the Respective Percentages of the MH
Prepayment Model Set Forth Below:
<TABLE>
<CAPTION>
Date 0% 50% 100% 150% 175% 200% 300%
- ---- -- --- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Weighted Average Life
(1)(years)....................
</TABLE>
- ----------------
(1) [The weighted average life of a Class A Certificate is determined by (i)
multiplying the amount of cash distributions in reduction of the principal
balance of such Class A Certificate by the number of years from the date of
issuance of such Class A Certificate to the stated Remittance Date, (ii)
adding the results, and (iii) dividing the sum by the initial principal
balance of such Class A Certificate.]
S-39
<PAGE>
[Weighted Average Life of the Class B Certificates
The following information is given solely to illustrate the effect of
prepayments of the Contracts on the weighted average life of the Class B
Certificates under the stated assumptions and is not a prediction of the
prepayment rate that might actually be experienced by the Contracts.
As described under "Description of the Certificates--Principal (including
Prepayments)--Class B Certificates," except for payments, if any, of [Guarantee
Payments] Class B Enhancement Payments representing Class B Principal
Liquidation Loss Amounts, payments of principal on the Class B Certificates will
not commence until the Class A Certificateholders have received principal
payments equal in the aggregate to the Original Class A Principal Balance, equal
to $ . This will have the effect of accelerating the amortization of the
Class A Certificates while, in the absence of Class B Principal Liquidation Loss
Amounts, increasing the respective interest in the Trust of the Class B
Certificates.
The percentages and weighted average lives in the following table were
determined assuming that (i) scheduled interest and principal payments on the
Contracts are received in a timely manner and prepayments are made at the
indicated percentages of the MH Prepayment Model set forth in the table; (ii)
[the Servicer does not exercise] [neither the Servicer nor the Company
exercises] its right of optional termination described above; (iii) the Cut-off
Date Pool Principal Balance is $ , the Contracts have a weighted average term
to maturity, as of origination, of months, a weighted average remaining term
to maturity, as of the Cut-off Date, of months, and a weighted average
Contract Rate of %; (iv) the Class B Certificates initially represent $ of
the Cut-off Date Pool Principal Balance and have a Class B Remittance Rate of
%, the Class A Certificates initially represent $ of the Cut-off Date Pool
Principal Balance and will have a Class A Remittance Rate of %; (v) no
interest shortfalls will arise in connection with prepayment in full of the
Contracts; (vi) no delinquencies or losses are experienced on the Contracts;
(vii) distributions are made on the Class B Certificates on the __th day of each
month, commencing , 199 ; and (viii) the Class B Certificates are issued on ,
199 . No representation is made that the Contracts will not experience
delinquencies or losses.
Since the table was prepared on the basis of the foregoing assumptions,
there are discrepancies between the characteristics of the actual Contracts and
the characteristics of the Contracts assumed in preparing the table. Any such
discrepancy may have an effect upon the percentages of the Original Class B
Principal Balance outstanding and the weighted average life of the Class B
Certificates set forth in the table. In addition, since the actual Contracts and
the Trust have characteristics which differ from those assumed in preparing the
table set forth below, the distributions of principal on the Class B
Certificates may be made earlier or later than as indicated in the table.
It is not likely that Contracts will prepay at any constant percentage of
the MH Prepayment Model to maturity or that all Contracts will prepay at the
same rate. In addition, the diverse remaining terms to maturity of the Contracts
(which include recently originated Contracts) could produce slower distributions
of principal than as indicated in the table at the various percentages of the MH
Prepayment Model specified even if the weighted average remaining term to
maturity of the Contracts is months.
Investors are urged to make their investment decisions based on their
determination of anticipated prepayment rates in light of the assumptions
discussed herein.
Based on the foregoing assumptions, the following table indicates the
projected weighted average life of the Class B Certificates and sets forth the
percentage of the Original Class B Principal Balance that would be outstanding
S-40
<PAGE>
after each of the dates shown at the indicated percentages of the MH Prepayment
Model.
Percentage of the Original Principal Balance of the Class B
Certificates at the Respective Percentages of the MH
Prepayment Model Set Forth Below:
<TABLE>
<CAPTION>
Date 0% 50% 100% 150% 175% 200% 300%
- ---- -- --- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Weighted Average Life
(1) (years)....................
</TABLE>
- ----------------
(1) [The weighted average life of a Class B Certificate is determined by (i)
multiplying the amount of cash distributions in reduction of the principal
balance of such Class B Certificate by the number of years from the date of
issuance of such Class B Certificate to the stated Remittance Date, (ii)
adding the results, and (iii) dividing the sum by the initial principal
balance of such Class B Certificate.]]
DESCRIPTION OF THE CERTIFICATES
The following information supplements, and to the extent inconsistent
therewith supersedes, the information in the Prospectus under "Description of
the Certificates".
The Certificates will be issued pursuant to the Agreement between the
Company, CITSF as Servicer, and the Trustee. A copy of the execution form of the
Agreement will be filed in a Current Report on Form 8-K with the Securities and
Exchange Commission after the initial issuance of the Certificates. The
following summary describes certain terms of the Agreement, does not purport to
be complete and is qualified in its entirety by the Agreement, which is
incorporated herein by reference. Wherever provisions of the Agreement are
referred to, such provisions are incorporated herein by reference.
General
The Class A Certificates will be issued in [book-entry] [fully registered]
form only in denominations equal to $1,000 or any integral multiple of $1,000 in
excess thereof, except for one Class A Certificate with a denomination
representing any remainder of the Original Class A Principal Balance. The
percentage interest (the "Percentage Interest") of a Class A Certificate will be
equal to the percentage obtained from dividing its denomination by the Original
Class A Principal Balance.
S-41
<PAGE>
[The Class B Certificates will be issued in [book-entry] [fully registered]
form only in denominations equal to $25,000 or any integral multiple of $1,000
in excess thereof, except for one Class B Certificate with a denomination
representing any remainder of the Original Class B Principal Balance. The
Percentage Interest of a Class B Certificate will be equal to the percentage
obtained from dividing its denomination by the Original Class B Principal
Balance.]
The Trust will consist of the Contracts and the rights, benefits,
obligations and proceeds arising therefrom or in connection therewith and any
related mortgages, deeds of trust or similar instruments, all rights under
certain hazard insurance on individual Manufactured Homes, proceeds from the
errors and omissions protection policy and any blanket hazard insurance policies
maintained pursuant to the Agreement, to the extent such proceeds relate to any
Manufactured Homes, [all rights under the FHA/VA Regulations pertaining to any
FHA/VA Contract,] [the rights of the Class B Certificateholders to receive
Guarantee Payments pursuant to the Limited Guarantee of CIT] [the Class B Credit
Enhancement with respect to the Class B Certificates] amounts held for the Trust
in the Certificate Account, all documents contained in the Contract files [, any
funds or other instruments on deposit in the Pre-Funding Account] and all
proceeds in any way derived from any of the foregoing. (Section 1.02.)
Distributions on the Certificates will be made by the paying agent as
specified in the Agreement, which shall be an Eligible Institution (the "Paying
Agent") on each Remittance Date to persons in whose names the Certificates are
registered as of the preceding Record Date. The Remittance Date for the
Certificates will be the __th day of each month (or if such __th day is not a
business day, the next succeeding business day) commencing with the month
following the month of issuance. Payments will be made by check mailed to such
Certificateholder at the address appearing on the Certificate Register, provided
that a Certificateholder who holds an aggregate Percentage Interest of at least
5% of the Class A Certificates [or at least 5% of the Class B Certificates] may
request payment by wire transfer or immediately available funds pursuant to
written instructions delivered to the Trustee at least 10 days prior to such
Remittance Date. Final payments will be made only upon tender of the
Certificates to the Paying Agent for cancellation. (Articles I and VIII.) See
"Registration of Class A Certificates [and Class B Certificates]" below.
Conveyance of Contracts
In addition to the representations and warranties described in the Prospectus
under "Description of the Certificates--Conveyance of Contracts," CITSF has also
made certain warranties with respect to the Contracts in the aggregate,
including that (i) the aggregate principal amount payable by the obligors on the
Contracts as of the Cut-off Date, or the date of origination, if later, equals
the Cut-off Date Pool Principal Balance [and each fixed rate Contract and
variable rate Contract has a maximum Contract Rate or a minimum Contract Rate,
as applicable, equal to or greater than the Class A [and Class B] Remittance
Rate]; (ii) as of the Cut-off Date, or the date of origination, if later, no
more than __% of the Contracts by Cut-off Date Pool Principal Balance are
secured by Manufactured Homes located in any one state (except with respect to
Contracts secured by Manufactured Homes located in ), no more than __% of
the Contracts by remaining principal balance are secured by Manufactured Homes
located in an area with the same zip code; (iii) no more than % of the Cut-off
Date Pool Principal Balance is attributable to loans to purchase used
Manufactured Homes; (iv) no Contract has a remaining maturity of less than ___
months or more than months; (v) the date of each Contract is on or after
_______ __, 19__ and (vi) except for the effect of the representations and
warranties of CITSF, no adverse selection procedures were employed in selecting
the Contracts. (Article III.)
S-42
<PAGE>
Payments on Contracts; Distributions on Certificates
The Trustee, on behalf of the Trust, will establish and maintain the
Certificate Account at a depository institution or trust company (which may be
the Trustee or an affiliate of the Trustee) organized under the laws of the
United States or any state, the deposits of which are insured to the full extent
permitted by law by the Bank Insurance Fund (currently administered by the
Federal Deposit Insurance Corporation), which is subject to supervision and
examination by federal or state authorities and whose short-term securities or
unsecured long-term debt (or, in the case of the principal bank of a bank
holding company system, the short-term securities or unsecured long-term debt of
such bank holding company) has a rating of [P-1 or higher by Moody's Investors
Services, Inc. ("Moody's")] in the case of short-term securities, or in one of
the two highest rating categories by [Moody's] in the case of unsecured
long-term debt (an "Eligible Institution"). (Section 1.02.) The Servicer may
authorize the Trustee to invest the funds in the Certificate Account in Eligible
Investments (as defined in the Agreement) that will mature not later than the
business day preceding the applicable monthly Remittance Date. "Eligible
Investments" include, among other investments, obligations of the United States
or of any agency thereof backed by the full faith and credit of the United
States; federal funds, certificates of deposit, time deposits and bankers'
acceptances sold by eligible financial institutions; certain repurchase
agreements with eligible institutions; corporate securities assigned at least
____ rating by _______________________; commercial paper assigned an ___ rating
by at the time of such investment; and money market funds rated _____ or ____by
(which may include money market or other funds for which the Trustee or an
affiliate of the Trustee serves as an investment advisor, administrator,
shareholder servicing agent and/or custodian or subcustodian and collects
certain fees and expenses in connection therewith). (Section 5.05.)
All payments from obligors on the Contracts received by the Servicer,
including principal prepayments and advance payments by obligors not
constituting principal prepayments ("Advance Payments"), shall be paid into the
Certificate Account no later than two business days following receipt thereof,
except amounts received as late payment fees, extension fees, assumption fees or
similar fees, which fees, together with any net income and gain from investments
of funds in the Certificate Account, are included as part of the Servicer's
servicing fees; provided, however, that, subject to compliance with the
Agreement, for as long as CITSF remains the Servicer under the Agreement and
CITSF remains a direct or indirect subsidiary of CIT, and if CIT has and
maintains a short-term debt rating of ___ or higher by _________________ or ___
or higher by __________, [and the Trustee shall have received an opinion of
counsel that any action taken pursuant to this sentence shall not adversely
affect the status of the Trust as a REMIC or result in the imposition of a tax
on the Trust,] the Servicer will not be required to make such deposits into the
Certificate Account (the "Delayed Deposits") until the business day immediately
preceding the Remittance Date following the last day of the Due Period within
which such payments were processed by the Servicer. See "Description of the
Certificates--Servicing--Servicing Compensation and Payment of Expenses" in the
Prospectus. In addition, (i) amounts paid by CITSF for Contracts repurchased as
a result of breach of warranties under the Agreement, (ii) amounts required to
be deposited upon substitution of a Contract because of breach of warranties, as
described under "Description of the Certificates -- Conveyance of Contracts" in
the Prospectus, [(iii) Monthly Advances,] (iv) the cash proceeds (net of
Liquidation Expenses) received in connection with the liquidation of certain
defaulted Contracts and (v) insurance proceeds with respect to the Contracts
shall be paid into the Certificate Account. "Liquidation Expenses" are
out-of-pocket expenses incurred by the Servicer in connection with the
liquidation of certain defaulted Contracts, including, without limitation, legal
fees and expenses. (Sections 1.02 and 8.02.) [Except with respect to Monthly
Advances as set forth below,] [The Servicer will not make any advances in
respect of delinquent payments on the Contracts.]
S-43
<PAGE>
On the third business day prior to each Remittance Date (the "Determination
Date"), the Servicer will determine the Amount Available and the amounts to be
distributed on the Certificates for such Remittance Date. The Amount Available
is the amount in the Certificate Account on the last day of the preceding Due
Period (or the Delayed Deposit, if applicable) less the following amounts: any
repossession profits on defaulted Contracts, Advance Payments in respect of the
Due Period just ended; [amounts payable to the Servicer to reimburse it for any
REMIC "prohibited transaction" tax imposed on the Trust and paid by the
Servicer;] Liquidation Expenses incurred and taxes and insurance advanced by the
Servicer in respect of Manufactured Homes that are reimbursable to the Servicer
under the Agreement; any amounts incorrectly deposited in the Certificate
Account; and net investment earnings on the funds in the Certificate Account due
to the Servicer pursuant to the Agreement and any other amounts permitted to be
withdrawn from the Certificate Account by the Servicer pursuant to the
Agreement. (Sections 1.02 and 8.02.)
The Trustee will withdraw funds from the Certificate Account to make
payments to Certificateholders at the direction of the Servicer. From time to
time, as provided in the Agreement, the Trustee will also withdraw funds from
the Certificate Account to pay [the Guarantee Fee to CIT] [the Enhancement Fee
to the Credit Enhancer as compensation for providing the Class B Credit
Enhancement] and to make payments to the Servicer. (Sections 1.02 and 8.02.)
Distributions
Distributions of interest and principal on each Remittance Date will be
made first to Holders of Class A Certificates [and then to Class B
Certificates].
Distributions of interest and principal to Holders of Class A Certificates
will be made on each Remittance Date in an amount equal to the sum of their
respective Percentage Interests multiplied by the Class A Distribution Amount.
Distributions to Class A Certificateholders will be applied first to the payment
of interest and then to the payment of principal. The "Class A Distribution
Amount" for any Remittance Date will equal the sum (such sum referred to as the
"Class A Formula Distribution Amount") of (i) the amount of interest calculated
as set forth under "Interest--Class A Certificates" below and (ii) the amount of
principal calculated as described in "Principal (including Prepayments)--Class A
Certificates" below; except that, if the Class A Formula Distribution Amount
exceeds the Amount Available in the Certificate Account on such Remittance Date,
then the Class A Distribution Amount shall instead equal the Amount Available.
(Sections 1.02 and 8.01.)
[Following the payment to the Class A Certificateholders of the Class A
Distribution Amount, distributions of interest and principal to Holders of Class
B Certificates will be made on each Remittance Date in an amount equal to their
respective Percentage Interests multiplied by the Class B Distribution Amount.
Distributions to the Class B Certificateholders will be applied first to the
payment of interest and then to the payment of principal. The "Class B
Distribution Amount" for any Remittance Date will equal the sum (such sum
referred to as the "Class B Formula Distribution Amount") of (i) the amount of
interest calculated as set forth under "Interest--Class B Certificates" below
and (ii) an amount of principal calculated as described under "Principal
(including Prepayments)--Class B Certificates" below; except that if the Class B
Formula Distribution Amount exceeds the Amount Available in the Certificate
Account available for distribution to the Class B Certificateholders (after
giving effect to any distribution made to Class A Certificateholders) on such
Remittance Date (the "Remaining Amount Available"), then the Class B
Distribution Amount will equal the sum of the Remaining Amount Available, if
any, [and the Class B Enhancement Payment, if any] [and CIT will be obligated to
pay the lesser of the sum of such deficiency and an amount equal _________
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(the "Guaranteed Amount"). Such payment will constitute a Guarantee Payment.]
[The "Class B Credit Enhancement" for the Class B Certificates will be provided
from funds deposited into a Cash Collateral Account from which the Trustee may
from time to time withdraw amounts up to the "Available Credit Enhancement
Amount" as described below under "Payments to Class B Certificateholders
Pursuant to the Class B Credit Enhancement".] The "Class B Enhancement Payment"
for any Remittance Date will equal the lesser of (i) the Available Credit
Enhancement Amount (as described below) for such Remittance Date and (ii) the
amount, if any, by which the Class B Formula Distribution Amount for such
Remittance Date exceeds the Remaining Amount Available for such Remittance Date,
and will be [withdrawn by the Trustee from the Cash Collateral Account and
deposited in the Certificate Account] [paid to the Trustee by the Credit
Enhancer pursuant to the Enhancement Agreement and deposited in the Certificate
Account]. (Sections 1.02 and 8.01.)]
Each distribution with respect to a Book-Entry Certificate will be paid to
DTC, which will credit the amount of such distribution to the accounts of its
Participants in accordance with its normal procedures. Each Participant will be
responsible for disbursing such distribution to the Certificate Owners that it
represents and to each indirect participating brokerage firm (a "brokerage firm"
or "indirect participating firm") for which it acts as agent. Each brokerage
firm will be responsible for disbursing funds to the Certificate Owners that it
represents. All such credits and disbursements with respect to a Book-Entry
Certificate are to be made by DTC and the Participants in accordance with DTC's
rules.
The Servicer will furnish to the Trustee, and the Trustee, so long as it
has received such statement or statements, will send with each distribution on a
Remittance Date to each holder of Class A Certificates [and Class B
Certificates] (or to DTC), a statement or statements setting forth, among other
things, (i) the amount of such distribution allocable to principal (including
principal prepayments, if any) and (ii) the amount of such distribution
allocable to interest. (Section 6.05.)
On each Remittance Date on or before the Cross-over Date, the Amount
Available in the Certificate Account will be distributed to Class A
Certificateholders and the Class B Certificateholders in the amounts and order
of priority set forth below:
Interest - Class A Certificates
One month's interest[, accruing from the ___ day of the month preceding the
applicable Remittance Date through the ___ of the month of the applicable
Remittance Date computed on the basis of a 360 day year of twelve 30 day
months,) on the then outstanding Class A Principal Balance will be paid on the
Class A Certificates on each Remittance Date, to the extent of the Amount
Available [(including any Monthly Advance)] in the Certificate Account on such
date, at the related Remittance Rate. (Sections 1.02 and 8.01.) The Class A
Principal Balance as of any Remittance Date is the Original Class A Principal
Balance less all amounts previously distributed to holders of Class A
Certificates in respect of principal. (Section 1.02.) In the event that, on a
particular Remittance Date, the Amount Available in the Certificate Account is
not sufficient to make a full distribution of interest to the Holders of Class A
Certificates, the Amount Available [(including any Monthly Advances)] will be
distributed among the outstanding Class A Certificateholders pro rata based on
their Percentage Interest in such Class, and the amount of the shortfall will be
carried forward and added to the amount such Holders will be entitled to receive
on the next Remittance Date and every succeeding Remittance Date thereafter
until paid ("Unpaid Class A Interest Shortfall"). (Section 1.02.) Such a
shortfall could occur, for example, if delinquencies or losses realized on
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the Contracts were exceptionally high and were concentrated in a particular Due
Period. Any such amount so carried forward will bear interest at the Class A
Remittance Rate, to the extent permitted by law.
Principal (including Prepayments) - Class A Certificates
Commencing on the first Remittance Date and on each Remittance Date
thereafter, Holders of Class A Certificates will be entitled to receive on each
Remittance Date as payment of principal, to the extent of the Amount Available
in the Certificate Account on such date after the payment of interest on the
Class A Certificates, the sum (such sum referred to as the "Formula Principal
Distribution Amount") of (i) with respect to Precomputed Contracts, all payments
of principal due on each outstanding Precomputed Contract during the Due Period
which ends during the month preceding the month in which the Remittance Date
occurs (after adjustments for previous partial principal prepayments on the
Contracts but before any adjustment by reason of any bankruptcy of an Obligor or
similar proceeding or any moratorium or similar waiver or grace period) and with
respect to simple interest Contracts, all payments of principal received in
respect of each outstanding simple interest Contract during such Due Period,
(ii) the Scheduled Principal Balance of each Contract which, during the Due
Period next preceding such Remittance Date, was purchased by CITSF pursuant to
the Agreement, including on account of certain breaches of its representations
and warranties, (iii) all partial principal prepayments applied and all
principal prepayments in full received during such Due Period, (iv) the
Scheduled Principal Balance of each Contract that became a Liquidated Contract
during such Due Period and (v) any Formula Principal Distribution Amount for any
prior Remittance Date which was not distributed on a prior Remittance Date.
The "Scheduled Principal Balance" of a Contract as of any Remittance Date
is (i) with respect to a Precomputed Contract, its principal balance as
determined by calculating the present value of all remaining principal and
interest payments due with respect to such Contract as of any date of
determination at the Contract Rate for such Contract, after giving effect to any
previous partial principal prepayments and to the scheduled payment due on the
Due Date during such Due Period, but without giving effect to any adjustments
due to bankruptcy or similar proceedings, and (ii) with respect to a simple
interest Contract, its unpaid principal balance. The "Due Date" for a Contract
is its scheduled payment date. The "Pool Scheduled Principal Balance" is the
aggregate of the Scheduled Principal Balances of Contracts outstanding at the
end of a Due Period. A "Liquidated Contract" is a defaulted Contract as to which
all amounts that the Servicer expects to recover through the date of disposition
of the Manufactured Home have been received. (Section 1.02.)
The Formula Principal Distribution Amount will be distributed, to the
extent of the Amount Available after payment of interest on the Class A
Certificates, to the Class A Certificateholders until the Class A Principal
Balance has been reduced to zero. When the Class A Principal Balance is reduced
to zero, no further distributions will be made to the Class A
Certificateholders.
[Any amounts on deposit in the Pre-Funding Account at the end of the
Pre-Funding Period will be distributed on the first Remittance Date following
the end of the Pre-Funding Period to Holders of the Class A Certificates as a
principal prepayment.]
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[Interest - Class B Certificates
Following the payment to the Class A Certificateholders of the Class A
Distribution Amount, one month's interest[, accruing from the ___ day of the
month preceding the applicable Remittance Date through the ___ day of the month
of the applicable Remittance Date computed on the basis of a 360 day year of
twelve 30 day months,] will be paid to the Class B Certificateholders on each
Remittance Date, to the extent of the Remaining Amount Available [(including any
Monthly Advances)], if any, and the [amount paid pursuant to the Limited
Guarantee] Class B Enhancement Payment, if any, in the Certificate Account on
such Remittance Date, at the Class B Remittance Rate on the then outstanding
Class B Principal Balance. The Class B Principal Balance is the Original Class B
Principal Balance less the sum of all amounts previously distributed to Class B
Certificateholders in respect of principal. In the event that, on a particular
Remittance Date, the Remaining Amount Available, if any, and the Class B
Enhancement Payment, if any, in the Certificate Account are not sufficient to
make a full distribution to the Class B Certificateholders [and CIT fails to pay
such amount under the Limited Guarantee], the amount of such deficiency will be
carried forward and added to the amount such Holders will be entitled to receive
on the next Remittance Date, and every Remittance Date thereafter until paid
("Unpaid Class B Interest Shortfall"). Any such amount so carried forward will
bear interest at the Class B Remittance Rate, to the extent permitted by law.]
[Principal (including Prepayments) - Class B Certificates
Except for distributions of any amounts representing a Class B Principal
Liquidation Loss Amount as described below, prior to the Cross-over Date, there
will be no distributions of principal on the Class B Certificates.
On each Remittance Date prior to the Cross-over Date, the Class B
Certificateholders will be entitled to receive (to the extent of the Remaining
Amount Available, if any, and the Class B Enhancement Payment, if any, in the
Certificate Account on such date after payments in respect of interest, as
described under "Interest--Class B Certificates" above, to the Class B
Certificateholders [and pursuant to the Limited Guarantee]) the amount, if any
(the "Class B Principal Liquidation Loss Amount"), by which the sum of Class A
Principal Balance and the Class B Principal Balance for such Remittance Date
exceeds the Pool Scheduled Principal Balance for such Remittance Date (after
giving effect to all distributions of principal on such Remittance Date). The
Class B Principal Liquidation Loss Amount represents future principal payments
on the Contracts that, because of the subordination of the Class B Certificates
and liquidation losses on Liquidated Contracts, will not be paid to the Class B
Certificateholders.
On each Remittance Date on and after the Cross-over Date, Class B
Certificateholders will be entitled to receive, as payments of principal, the
Formula Principal Distribution Amount (as described above) to the extent of the
Remaining Amount Available, if any, and the Class B Enhancement Payment, if any,
in the Certificate Account on such date after payments in respect of interest,
as described under "Interest--Class B Certificates" above, to the Class B
Certificateholders [and the Guarantee Payment, if any].]
Notwithstanding the distributions to Certificateholders described above,
amounts otherwise distributable to Certificateholders pursuant to the Agreement
which are required to be withheld and remitted to a taxing authority shall be
withheld and remitted to such taxing authority and such amounts shall be treated
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as actually distributed to such Certificateholders for all purposes of the
Agreement.
Subordination of [Class B Certificates and] Class R Certificates
The rights of the Holders of [the Class B Certificates and] the Class R
Certificates to receive distributions with respect to the Contracts in the Trust
will be subordinated to such rights of the Class A Certificateholders to the
extent described herein. The protection afforded to the Class A
Certificateholders by means of the subordination feature will be accomplished by
the preferential right of the Class A Certificateholders to receive, prior to
any distribution being made on a Remittance Date in respect of [the Class B
Certificates and] the Class R Certificates, the amount of principal and interest
due them on each Remittance Date out of the Amount Available in the Certificate
Account on such date and, to the extent described below, by the right of the
Class A Certificateholders to receive future distributions on the Contracts that
would otherwise be payable to the Holders of [Class B and] Class R Certificates.
This subordination is intended to enhance the likelihood of regular receipt by
the Class A Certificateholders of the full amount of their scheduled monthly
payments of principal and interest and to afford such Holders protection against
losses on Liquidated Contracts. [On each Remittance Date, the Class B
Certificateholders will be entitled to receive only amounts described above
under "Interest--Class B Certificates" and "Principal (including
Prepayments)--Class B Certificates".]
The rights of the Class R Certificateholders to receive distributions with
respect to the Contracts in the Trust will be subordinated to the rights of the
Class A [and the Class B] Certificateholders. On each Remittance Date the Class
R Certificateholders will receive the Remaining Amount Available, if any, after
payment of the amount distributed to the Class A Certificateholders [and Class B
Certificateholders] as described above (less the Monthly Servicing Fee[, the
Enhancement Fee payable to the Credit Enhancer] [and the Guarantee Fee payable
to CIT] and less amounts retained by the Servicer to reimburse itself for taxes
paid in respect to prohibited transactions) plus aggregate Repossession Profits
(as defined in the Agreement) and all other amounts which the Servicer is
entitled to withdraw from the Certificate Account pursuant to the Agreement.
As described above, prior to the Cross-over Date, the distribution of
principal to the Class A Certificateholders is intended to include the Scheduled
Principal Balance of each Contract that became a Liquidated Contract during the
Due Period next preceding the Remittance Date. If the Liquidation Proceeds, net
of related Liquidation Expenses, from such Liquidated Contract are less than its
Scheduled Principal Balance plus accrued interest thereon, the deficiency will,
in effect, be absorbed by amounts otherwise distributable to [the Class B and]
the Class R Certificateholders, since a portion of the Amount Available equal to
such deficiency and otherwise distributable to them will be paid to the Class A
Certificateholders. If the Amount Available is not sufficient to cover the
amounts distributable to the Class A Certificateholders on a particular
Remittance Date, then the amount of the Pool Scheduled Principal Balance
available to the Class B Certificates (i.e., such Pool Scheduled Principal
Balance less the Class A Principal Balance) on future Remittance Dates will be
reduced. [Consequently, but for the effect of the relative subordination of [the
Monthly Servicing Fee payable to the Servicer,] [the Enhancement Fee payable to
the Credit Enhancer,] [and the Guarantee Fee payable to CIT] amounts otherwise
distributable to the Class R Certificateholders, amounts [paid under the Limited
Guarantee] applied from the Available Credit Enhancement Amount as described
below and excess interest collections, the Class B Certificateholders would
absorb (i) all losses on each Liquidated Contract in the amount by which its
Liquidation Proceeds, net of the related Liquidation Expenses, are less than its
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unpaid principal balance plus accrued and unpaid interest thereon [less the
Monthly Servicing Fee] and (ii) all delinquent payments on the Contracts.] [If
CIT fails to make a payment required under the Limited Guarantee, the Class B
Certificateholders will therefore incur a loss on their investment in the Class
B Certificates.]
If further delinquencies and liquidation losses were to continue to
decrease the Pool Scheduled Principal Balance (which is reduced by scheduled
principal payments and all other collections of principal on the Contracts and
the Scheduled Principal Balances of all Contracts that become Liquidated
Contracts or are repurchased by CITSF pursuant to the Agreement, including
Contracts repurchased as a result of certain breaches of representations and
warranties) faster than distributions of principal to the Class A
Certificateholders reduce the Class A Principal Balance, then the amount of the
Pool Scheduled Principal Balance available to the Class B Certificates, and
therefore the level of protection afforded by the subordination of the Class B
Certificates for the benefit of the Class A Certificates, would be reduced. In
the event that the Pool Scheduled Principal Balance is reduced by delinquencies
and liquidation losses to an amount less than or equal to the Class A Principal
Balance, all additional losses on Liquidated Contracts, to the extent not
covered by excess interest collections, will be absorbed by the Class A
Certificates.
[Limited Guarantee of CIT
In order to mitigate the effect of the subordination of the Class B
Certificates and liquidation losses and delinquencies on the Contracts, CIT will
provide a guarantee (the "Limited Guarantee") against losses that would
otherwise be absorbed by the Class B Certificates. Each payment required to be
made under the Limited Guarantee is referred to as a "Guarantee Payment". Prior
to the Cross-over Date, the Guarantee Payment will equal the amount, if any, by
which (i) the sum of (a) the Class B Formula Distribution Amount for such
Remittance Date (which will be one month's interest at the Class B Remittance
Rate on the Class B Principal Balance) and (b) the Class B Principal Liquidation
Loss Amount for such Remittance Date exceeds (ii) the Class B Distribution
Amount for such Remittance Date; provided, however, the aggregate Guaranty
Payments shall in no event exceed the Guaranty Amount. The Guaranty Amount shall
be __________. On each Remittance Date after the Remittance Date on which the
Class A Principal Balance is reduced to zero, the Guarantee Payment will equal
the amount, if any, by which (i) the Class B Formula Distribution Amount for
such Remittance Date (which will include both interest and principal) exceeds
(ii) the Amount Available for such Remittance Date; provided, however, the
aggregate Guaranty Payments shall in no event exceed the Guaranty Amount. The
Class B Principal Liquidation Loss Amount for any Remittance date equals the
amount, if any, by which the sum of the Class A Principal Balance and the Class
B Principal Balance for such Remittance Date exceeds the Pool Scheduled
Principal Balance for such Remittance Date. The Class B Principal Liquidation
Loss Amount is, in substance, the amount of delinquencies and losses experienced
on the Contracts during the related due period that was not absorbed by the
Guarantee Fee or the Class R Certificates.
The Limited Guarantee will be an unsecured general obligation of CIT and
will not be supported by any letter of credit or other credit enhancement
arrangement. The Limited Guarantee will not benefit in any way, or result in any
payment to, the Class A or Class R Certificateholders.
The Agreement will specify the circumstances under which distributions that
would otherwise be paid to the Class R Certificateholders will instead be paid
to CIT to reimburse it for Guarantee Payments and interest thereon.
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As compensation for providing the Limited Guarantee, CIT will be entitled
to receive a Guarantee Fee on each Remittance Date equal to [the lesser of (a)
the Amount Available less the Class A Distribution Amount, the Class B
Distribution Amount, the Monthly Servicing Fee and any other amounts required to
be paid to the Servicer, and (b) an amount equal to 1/12 of the product of __%
and the Pool Scheduled Principal Balance for such Remittance Date].]
[Class B Credit Enhancement
In order to mitigate the effect of the subordination of the Class B
Certificates and liquidation losses and delinquencies on the Class B
Certificateholders, the Class B Credit Enhancement will provide a mechanism to
protect Class B Certificateholders against losses that would otherwise be
absorbed by them. [The "Class B Credit Enhancement" will be ________________.]
[The Cash Collateral Account
The "Class B Credit Enhancement" will be provided from a reserve account,
escrow account or cash collateral account (the "Cash Collateral Account"). The
Trust will have the benefit of the right to receive payments from the Cash
Collateral Account under certain circumstances specified below. The Cash
Collateral Account will be funded in the amount of $____________ from the
proceeds of a loan to be made by the Cash Collateral Depositor.
On each Remittance Date, the amount available to be withdrawn from the Cash
Collateral Account (the "Available Credit Enhancement Amount") will be equal to
the lesser of the amount on deposit in the Cash Collateral Account (before
giving effect to any deposit to be made to the Cash Collateral Account on such
Remittance Date) and the Required Cash Collateral Amount.
On each Determination Date, the Servicer will determine the amounts, if
any, required to be withdrawn from the Cash Collateral Account, up to the
Available Credit Enhancement Amount, as described below on the related
Remittance Date. The Trustee will withdraw funds from the Cash Collateral
Account in such amount and will deposit the proceeds of such demand into the
Certificate Account on the Business Day before the Remittance Date with respect
to which such demand was made.
On each Remittance Date, (i) the Trustee will deposit into the Cash
Collateral Account an amount equal to all or a portion (specified in the
Agreement) of the Excess Collections, if any, after giving effect to any deposit
to be made to, and any withdrawal to be made from, the Cash Collateral Account
on such Remittance Date, and (ii) the Trustee will withdraw from the Cash
Collateral Account an amount equal to the amount by which the amount on deposit
in the Cash Collateral Account exceeds the Required Cash Collateral Amount and
pay such amounts to the Cash Collateral Depositor. Any such amounts paid to the
Cash Collateral Depositor will not be available for distribution to
Certificateholders.
The Required Cash Collateral Amount with respect to any Remittance Date
will equal __% of the Pool Scheduled Principal Balance as of the first day of
the related Due Period, but in no event less than $___________.]
Each payment required to be made pursuant to the Class B Credit Enhancement
is referred to as a "Class B Enhancement Payment". Prior to the Cross-over Date,
the Class B Enhancement Payment will equal the lesser of (i) the Available
Credit Enhancement Amount for such Remittance Date and (ii) the amount, if any,
by which the Class B Formula Distribution Amount for such Remittance Date (which
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will be one month's interest on the Class B Certificates and the Class B
Principal Liquidation Loss Amount, if any) for such Remittance Date exceeds the
Remaining Amount Available for such Remittance Date. The Class B Principal
Liquidation Loss Amount for any Remittance Date equals the amount, if any, by
which the sum of the Class A Principal Balance and the Class B Principal Balance
for such Remittance Date exceeds the Pool Scheduled Principal Balance for such
Remittance Date (after giving effect to all distributions on account of
principal and interest to the Class A Certificateholders). The Class B Principal
Liquidation Loss Amount is, in substance, the amount of delinquencies and losses
experienced on the Contracts during the related Due Period that was not absorbed
by the Enhancement Fee, excess interest collections or the Class R Certificates.
On or after the Cross-over Date, the Class B Enhancement Payment will equal the
lesser of (i) the Available Credit Enhancement Amount for such Remittance Date
and (ii) the amount, if any, by which the Class B Formula Distribution Amount
(which will be one month's interest on the Class B Certificates and the Formula
Principal Distribution Amount) for such Remittance Date exceeds the Remaining
Amount Available for such Remittance Date.
The "Available Credit Enhancement Amount" on any Remittance Date will be
___________.
The Class B Credit Enhancement and the Available Credit Enhancement Amount
will not benefit in any way, or result in any payment to, the Class A or Class R
Certificateholders.
As compensation for providing the Class B Credit Enhancement, the Credit
Enhancer will be entitled to receive an "Enhancement Fee" on each Remittance
Date equal to .]
Servicing Compensation and Payment of Expenses
[The Servicer will receive on each Remittance Date a Servicing Fee equal to
1/12th of the product of ___% and the Pool Scheduled Principal Balance.]
The Servicer is obligated to pay certain on-going expenses associated with
the Contract Pool and incurred by the Servicer in connection with its
responsibilities under the Agreement. See "Description of the
Certificates--Servicing--Servicing Compensation and Payment of Expenses" in the
Prospectus for information regarding other possible compensation to the Servicer
and for information regarding expenses payable by the Servicer.
[Advances
The Servicer is obligated to make advances of cash for distribution to the
Certificateholders equal to the difference between the amount due to them and
the amount in the Certificate Account to be distributed to them pursuant to the
Agreement, but only to the extent such difference is attributable to delinquent
payments of principal and interest during the prior Due Period which the
Servicer determines will be recoverable from future payments and collections on
the Contracts ("Monthly Advances"). Monthly Advances are intended to maintain a
regular flow of scheduled interest and principal payments to the
Certificateholders, not to guarantee or insure against losses. Accordingly, any
funds so advanced are recoverable by the Servicer out of amounts received on the
related Contracts which represent late collections respecting which any such
Monthly Advance is made.]
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[FHA Insurance and VA Guarantee
____% and ____%, respectively (by aggregate principal balance as of Cut-off
Date) are subject to FHA insurance and VA guarantees. See "Description of FHA
Insurance and VA Guarantees" in the Prospectus.]
Indemnification
The Agreement requires CITSF to defend and indemnify the Company, the
Trust, the Trustee and the Certificateholders for any taxes which may at any
time be asserted with respect to, and as of the date of, the conveyance of the
Contracts to the Trust (but not including any federal, state or other tax
arising out of the creation of the Trust and the issuance of the Certificates or
distributions with respect thereto). (Article X.)
The Agreement also requires the Servicer, in connection with its duties as
servicer of the Contracts, to defend, hold harmless and indemnify the Company,
the Trust, the Trustee and the Certificateholders (which indemnification will
survive any removal of the Servicer as servicer of the Contracts) against any
and all costs, expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel and expenses of litigation, in respect
of any negligent or wrongful action taken by the Servicer with respect to any
Contract while it was the Servicer. (Section 10.04.)
Reports to Class A Certificateholders
The Servicer will furnish to the Trustee, and the Trustee will include with
each distribution to a Class A Certificateholder, a statement in respect of the
related Remittance Date setting forth, among other things:
(a) the amount of such distribution to holders of the Class A
Certificates allocable to interest separately identifying any Unpaid Class
A Interest Shortfall included therein;
(b) the amount of such distribution to holders of the Class A
Certificates allocable to principal, separately identifying the aggregate
amount of any principal prepayments included therein;
(c) the amount, if any, by which the Class A Formula Distribution
Amount exceeds the Class A Distribution Amount for such Remittance Date;
(d) the Class A Principal Balance after giving effect to the
distribution of principal on such Remittance Date;
(e) the Pool Scheduled Principal Balance of the Contracts for the
following Remittance Date;
(f) the Class A Percentage for the following Remittance Date;
(g) the Pool Factor (a percentage derived from a fraction the
numerator of which is the amount specified in (e) and the denominator of
which is the Cut-Off Date Pool Principal Balance);
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(h) the number and aggregate principal balance of Contracts delinquent
(i) 30-59 days and (ii) 60 or more days;
(i) the number of Manufactured Homes that were repossessed during the
Due Period ending immediately prior to such Remittance Date;
(j) the number of Manufactured Homes that were repossessed but remain
in inventory as of the last day of the Due Period ending immediately prior
to such Remittance Date;
(k) the weighted average Contract Rate of all outstanding Contracts;
and
(l) during the Pre-Funding Period, the amount of funds on deposit in
the Pre-Funding Account.
Information furnished pursuant to clauses (a) through (d) will be expressed
as dollar amounts for a Class A Certificate with a 1% Percentage Interest or per
$1,000 denomination of Class A Certificate. (Section 6.05.)
[Reports to Class B Certificateholders
The Servicer will furnish to the Trustee, and the Trustee will include with
each distribution to a Class B Certificateholder, a statement in respect of the
related Remittance Date setting forth, among other things:
(a) the amount of such distribution to Holders of Class B Certificates
allocable to interest separately identifying any Unpaid Class B Interest
Shortfall included therein;
(b) the amount of such distribution to Holders of Class B Certificates
principal, identifying separately the aggregate amount of any principal
prepayments included therein;
(c) the amount, if any, by which the Class B Formula Distribution
Amount exceeds the Remaining Amount Available for such Remittance Date;
(d) the Class B Principal Liquidation Loss Amount, if any, for such
Remittance Date;
(e) the [Guarantee Payment] [Class B Enhancement Payment], if any, for
such Remittance Date;
(f) the Class B Principal Balance after giving effect to the
distribution of principal on such Remittance Date;
(g) the Pool Scheduled Principal Balance of the Contracts for the
following Remittance Date;
(h) the Pool Factor (a percentage derived from a fraction the
numerator of which is the amount specified in (g) and the denominator of
which is the Cut-off Date Pool Principal Balance);
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(i) the number and aggregate principal balance of Contracts delinquent
(i) 30-59 days and (ii) 60 or more days;
(j) the number of Manufactured Homes that were repossessed during the
Due Period ending immediately prior to such Remittance Date;
(k) the number of Manufactured Homes that were repossessed but remain
in inventory as of the last day of the Due Period ending immediately prior
to such Remittance Date;
(l) the weighted average Contract Rate of all outstanding Contracts;
and
(m) during the Pre-Funding Period, the amount of funds on deposit in
the Pre-Funding Account.
Information furnished pursuant to clauses (a) through (d) will be expressed
as dollar amounts for a Class B Certificate with a l% Percentage Interest or per
$l,000 denomination of Class B Certificate.]
Repurchase Option
The Agreement provides that on any Remittance Date on which the Pool
Scheduled Principal Balance is less than __% of the Cut-off Date Pool Principal
Balance, [the Company or] the Servicer will have the option to repurchase for
cash, upon [the Company or] the Servicer giving notice mailed to the
Certificateholders no earlier than the 15th day and no later than the 25th day
of the month next preceding the month of such final distribution, all
outstanding Contracts at a price equal to the greater of (i) the sum of (A) 100%
of the Scheduled Principal Balance of each Contract (other than any Contract as
to which the related Manufactured Home has been repossessed and whose fair
market value is included pursuant to clause (B) below as of the final Remittance
Date), and (B) the fair market value of such acquired property (as determined by
the Servicer on the third business day next preceding the date upon which notice
of such termination is furnished to Certificateholders pursuant to the
Agreement), (ii) the aggregate fair market value (as determined by the Servicer
as of the close of business on such third business day) of all of the assets of
the Trust, and (iii) the remaining Pool Scheduled Principal Balance as of the
close of business on such third business day, plus, in each case, any unpaid
interest on the Class A Certificates and any unpaid interest on the Class B
Certificates, as well as one month's interest at the applicable Contract Rate on
the Scheduled Principal Balance of each Contract (including any Contract as to
which the related Manufactured Home has been repossessed). (Section 8.03.)
Termination of the Agreement
The Agreement will terminate upon the last action required to be taken by
the Trustee on the final Remittance Date following the earlier of (i) the
purchase by the [Company or the] Servicer of all Contracts and all property
acquired in respect of any Contract remaining in the Trust as described under
"Repurchase Option" above or (ii) the final payment or other liquidation of the
last Contract remaining in the Trust or the disposition of all property acquired
upon repossession of any Manufactured Home.
Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed, in the following order of priority, to
Certificateholders on the final Remittance Date in proportion to their
respective Percentage Interests an amount equal to (i) as to the Class A
Certificates, the Class A Principal Balance, together with any unpaid interest
at the Class A Remittance Rate and one month's interest at the Class A
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Remittance Rate on the Class A Principal Balance, (ii) as to the Class B
Certificates, the Class B Principal Balance together with any unpaid interest
thereon at the Class B Remittance Rate and one month's interest at the Class B
Remittance Rate on the Class B Principal Balance, and (iii) as to the Class R
Certificates, the amount which remains on deposit in the Certificate Account
(other than amounts retained to meet claims) after application pursuant to
clauses (i)-(iii) above. (Section 12.03.)
Amendment
The Agreement may be amended by agreement of the Trustee, the Company and
the Servicer at any time, without the consent of the Certificateholders, to
correct manifest error, to cure any ambiguity, to correct or supplement any
provision which may be inconsistent with any other provision, [to make such
changes as are necessary to maintain the status of the Trust as a REMIC,] to add
or amend any provision as required by __________ or any other nationally
recognized statistical rating organization to improve or maintain the rating of
the Class A Certificates [or the Class B Certificates] or to add other
provisions not inconsistent with the Agreement upon receipt of an Opinion of
Counsel to the Servicer that such amendment will not adversely affect in any
material respect the interests of any Certificateholder. (Section 12.07.)
Neither the Company nor the Servicer is obligated to take any action to maintain
or improve the rating given the Class A Certificates [or the Class B
Certificates].
The Agreement may also be amended from time to time by the Trustee, the
Company and the Servicer, with the consent of the holders of Certificates of
each Class affected thereby evidencing, as to each such Class, Percentage
Interests aggregating at least 51%, provided that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, collections of
payments on Contracts or distributions which are required to be made on any
Certificate without the consent of the holder of each Certificate affected
thereby, (ii) reduce the aforesaid percentages of Certificateholders required
for any amendment of the Agreement, without the unanimous consent of the
Certificateholders or, (c) result in the disqualification of the Trust as a
REMIC under the Code or adversely affect the status of the Trust as a REMIC or
the status of the Certificates as "regular interests" therein, or cause any tax
to be imposed on the Trust or (d) adversely affect in any material respect the
interest of the Class R Certificateholders without the unanimous written consent
of the Class R Certificateholders. (Section 12.07.)
[The Agreement may also be amended from time to time, without the consent
of any Certificateholders, by the Company, the Trustee and the Servicer to
modify, eliminate or add to the provisions of the Agreement to (i) maintain the
qualification of the Trust as a REMIC under the Code and under relevant state
and local law or avoid, or reduce the risk of, the imposition of any tax on the
Trust under the Code that would be a claim against the Trust assets, provided
that (A) an Opinion of Counsel is delivered to the Trustee to the effect that
such action is necessary to maintain such qualification or avoid any such tax or
reduce the risk of its imposition and (B) such amendment shall not materially
adversely affect the interests of any Certificateholder or (ii) prevent the
Trust from entering into any "prohibited transaction" as defined in Section 860F
of the Code.]
The Trustee is required under the Agreement to furnish Certificateholders
affected thereby with notice promptly upon execution of any amendment to the
Agreement pursuant to the second preceding paragraph. (Section 12.07.)
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The Trustee
___________________________ (the "Trustee") has its corporate trust offices
at ________________________________. The Trustee [and certain of its affiliates]
maintain commercial banking relationships with [CIT, CITSF and the Company].
The Agreement requires the Trustee to maintain, at its own expense, an
office or agency in ____________________, _________________________ where
Certificates may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Trustee and the certificate registrar
and transfer agent in respect of the Certificates pursuant to the Agreement may
be served. On the date hereof, the Trustee's offices for such purposes are
located at ________________, ______________________________,
_____________________________. The Trustee will promptly give written notice to
the Certificateholders of any change thereof. (Section 12.02.)
Registration of Class A Certificates [and Class B Certificates]
The Class A Certificates [and the Class B Certificates] will be registered
in the name of Cede & Co., the nominee of The Depository Trust Company ("DTC").
DTC is a limited-purpose trust company organized under the laws of the State of
New York, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended. DTC accepts securities for deposit from its
participating organizations ("Participants") and facilitates the clearance and
settlement of securities transactions between Participants in such securities
through electronic book-entry changes in accounts of Participants, thereby
eliminating the need for physical movement of certificates. Participants include
securities brokers and dealers, banks and trust companies and clearing
corporations and may include certain other organizations. Indirect access to the
DTC system is also available to others such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly ("indirect participants").
Certificate Owners who are not Participants but desire to purchase, sell or
otherwise transfer ownership of Class A Certificates [or Class B Certificates]
may do so only through Participants (unless and until Definitive Class A
Certificates [or Definitive Class B Certificates], as defined below, are
issued). In addition, Certificate Owners will receive all distributions of
principal of, and interest on, the Class A Certificates [or the Class B
Certificates] from the Trustee through DTC and Participants. Certificate Owners
will not receive or be entitled to receive certificates representing their
respective interests in the Class A Certificates [or the Class B Certificates,
as the case may be], except under the limited circumstances described below.
Unless and until Definitive Class A Certificates [or Definitive Class B
Certificates] are issued, it is anticipated that the only "Certificateholder" of
the Class A Certificates [or the Class B Certificates, respectively,] will be
Cede & Co., as nominee of DTC. Certificate Owners will not be Certificateholders
as that term is used in the Agreement and will not receive reports or payments
directly from the Trustee or the Servicer. Certificate Owners are only permitted
to exercise the rights of Certificateholders indirectly through Participants and
DTC.
While the Class A Certificates [or the Class B Certificates] are
outstanding (except under the circumstances described below), under the rules,
regulations and procedures creating and affecting DTC and its operations (the
"DTC Rules"), DTC is required to make book-entry transfers among Participants on
whose behalf it acts with respect to the Class A Certificates [or the Class B
S-56
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Certificates, respectively], and is required to receive and transmit
distributions of principal of, and interest on, the Class A Certificates [and
the Class B Certificates]. Participants with whom Certificate Owners have
accounts with respect to Class A Certificates [or Class B Certificates] are
similarly required to make book-entry transfers and receive and transmit such
distributions on behalf of their respective Certificate Owners. Accordingly,
although Certificate Owners will not possess certificates, the DTC Rules provide
a mechanism by which Certificate Owners will receive distributions and will be
able to transfer their interests.
Class A Certificates [and Class B Certificates] will be issued in
registered form to Certificate Owners, or their nominees, rather than to DTC
(such Certificates being referred to herein as "Definitive Class A Certificates"
[and "Definitive Class B Certificates"]), respectively, if (i) DTC or the
Company advises the Trustee in writing that DTC is no longer willing or able to
discharge its responsibilities as depository with respect to the Class A
Certificates [or the Class B Certificates, respectively,] and the Company or the
Trustee is unable to locate a qualified successor or (ii) the Company at its
sole option advises the Trustee in writing that it elects to terminate the
book-entry system through DTC. Upon issuance of Definitive Class A Certificates
[or Definitive Class B Certificates] to Certificate Owners, such Certificates
will be transferable directly (and not exclusively on a book-entry basis) and
registered holders will deal directly with the Trustee with respect to
transfers, notices and distributions.
DTC has advised the Company and the Trustee that DTC will take any action
permitted to be taken by a Certificateholder under the Agreement only at the
direction of one or more Participants to whose DTC accounts the Class A
Certificates [or Class B Certificates, respectively,] are credited. DTC has
advised the Company that DTC will take such action with respect to any
Percentage Interests of the Class A Certificates [or Class B Certificates] only
at the direction of and on behalf of such Participants with respect to such
Percentage Interests of the Class A Certificates [or Class B Certificates,
respectively]. DTC may take actions, at the direction of the related
Participants, with respect to some Class A Certificates [or some Class B
Certificates] which conflict with actions taken with respect to other Class A
Certificates [or other Class B Certificates, respectively].
Issuance of the Class A Certificates [and the Class B Certificates] in
book-entry form rather than as physical certificates may adversely affect the
liquidity of the Class A Certificates [or the Class B Certificates] in the
secondary market and the ability to Certificate Owners to pledge them. In
addition, since distributions on the Class A Certificates [and the Class B
Certificates] will be made by the Trustee to DTC and DTC will credit such
distributions to the accounts of its Participants, which will further credit
them to the accounts of indirect participants of Certificate Owners, Certificate
Owners may experience delays in the receipt of such distributions.
USE OF PROCEEDS
Substantially all of the net proceeds to be received from the sale of the
Class A Certificates [and the Class B Certificates] will be used by the Company
to purchase the Contracts from CITSF and to pay expenses connected with pooling
the Contracts and issuing the Certificates.
S-57
<PAGE>
ERISA CONSIDERATIONS
The following information supplements, and to the extent inconsistent
therewith supersedes, the information in the Prospectus under "ERISA
Considerations".
[Class A Certificates]
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain restrictions on employee benefit plans that are subject to ERISA
("Plans") and on persons who are fiduciaries with respect to such Plans.
Employee benefit plans that are governmental plans (as defined in Section 3(32)
of ERISA) and certain church plans (as defined in Section 3(33) of ERISA) are
not subject to ERISA requirements. Accordingly, assets of such plans may be
invested in the Class A Certificates without regard to the ERISA restrictions,
subject to applicable provisions of other federal and state laws. However, any
such governmental or church plan which is qualified under Section 401(a) of the
Code and exempt from taxation under Section 501(a) of the Code is subject to the
prohibited transaction rules set forth in Section 503 of the Code.
The U.S. Department of Labor ("DOL") has granted to _______________ an
administrative exemption (the "Exemption") from certain of the prohibited
transaction rules of ERISA and the Code with respect to the initial purchase,
the holding, and the subsequent resale by Plans of certificates representing
interests in asset-backed pass-through trusts that consist of certain
receivables, loans and other obligations that meet the conditions and
requirements of the Exemption. The receivables covered by the Exemption include
manufactured housing installment sales contracts and installment loan agreements
such as the Contracts. The Exemption will apply to the acquisition, holding, and
resale of the Class A Certificates by a Plan, provided that specified conditions
(certain of which are described below) are met.
Among the conditions which must be satisfied for the Exemption to apply to
the Class A Certificates are the following:
(1) The acquisition of the Class A Certificates by a Plan is on terms
(including the price for the Class A Certificates) that are at least as
favorable to the Plan as they would be in an arm's-length transaction with
an unrelated party;
(2) The rights and interests evidenced by the Class A Certificates
acquired by the Plan are not subordinated to the rights and interests
evidenced by other certificates of the Trust;
(3) The Class A Certificates acquired by the Plan have received a
rating at the time of such acquisition that is in one of the three highest
generic rating categories from either Standard & Poor's Corporation,
Moody's Investors Service Inc., Duff & Phelps Inc. or Fitch Investors
Service, Inc.;
(4) The Trustee is not an affiliate of any member of the Restricted
Group (as defined below);
(5) The sum of all payments made to the Underwriters in connection
with the distribution of the Class A Certificates represents not more than
reasonable compensation for underwriting the Class A Certificates. The sum
of all payments made to and retained by the Company pursuant to the sale of
the Contracts to the Trust represents not more than the fair market value
S-58
<PAGE>
of such Contracts. The sum of all payments made to and retained by the
Servicer represents not more than reasonable compensation for the
Servicer's services under the Agreement and reimbursement of the Servicer's
reasonable expenses in connection therewith; and
(6) The Plan investing in the Class A Certificates is an "accredited
investor" as defined in Rule 501(a)(1) of Regulation D of the Securities
and Exchange Commission under the Securities Act of 1933.
Moreover, the Exemption would provide relief from certain
self-dealing/conflict of interest prohibited transactions only if, among other
requirements, (i) in the case of the acquisition of Class A Certificates in
connection with the initial issuance, at least fifty (50) percent of the Class A
Certificates are acquired by persons independent of the Restricted Group (as
defined below), (ii) the Plan's investment in Class A Certificates does not
exceed twenty-five (25) percent of all of the Class A Certificates outstanding
at the time of the acquisition and (iii) immediately after the acquisition, no
more than twenty-five (25) percent of the assets of the Plan are invested in
certificates representing an interest in one or more trusts containing assets
sold or serviced by the same entity. The Exemption does not apply to Plans
sponsored by the Company, the Underwriters, the Trustee, the Servicer, any
obligor with respect to Contracts included in the Trust constituting more than
five percent of the aggregate unamortized principal balance of the assets in the
Trust, or any affiliate of such parties (the "Restricted Group").
The Company believes that the Exemption will apply to the acquisition and
holding of Class A Certificates sold by the Underwriter and by Plans and that
all conditions of the Exemption other than those within the control of the
investors have been met. In addition, as of the date hereof, no obligor with
respect to Contracts included in the Trust constitutes more than five percent of
the aggregate unamortized principal balance of the assets of the Trust.
Any Plan fiduciary who proposes to cause a Plan to purchase Class A
Certificates should consult with its own counsel with respect to the potential
consequences under ERISA and the Code of the Plan's acquisition and ownership of
the Class A Certificates. Assets of a Plan or individual retirement account
should not be invested in the Class A Certificates unless it clear that the
assets of the Trust will not be plan assets or unless it is clear that the
Exemption or a prohibited transaction class exemption will apply and exempt all
potential prohibited transactions. See "ERISA Considerations" in the Prospectus.
[Class B Certificates
No transfer of Class B Certificates will be permitted to be made to a Plan
unless such Plan, at its expense, delivers to the Trustee and the Company an
opinion of counsel (in form satisfactory to the Trustee and the Company) to the
effect that the purchase or holding of a Class B Certificate by such Plan will
not result in the assets of the Trust being deemed to be "plan assets" and
subject to the prohibited transaction provisions of ERISA and the Code and will
not subject the Trustee, the Company or the Servicer to any obligation or
liability in addition to those undertaken in the Agreement. Unless such opinion
is delivered, each person acquiring a Class B Certificate will be deemed to
represent to the Trustee, the Company and the Servicer that such person is
neither a Plan, nor acting on behalf of a Plan, subject to ERISA or to Section
4975 of the Code.]
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<PAGE>
LEGAL INVESTMENT CONSIDERATIONS
[The Class A Certificates offered hereby will constitute "mortgage related
securities" under the Secondary Mortgage Market Enhancement Act of 1984
("SMMEA") and, as such, will be "legal investments" for certain types of
institutional investors to the extent provided in that Act. See "Legal
Investment Considerations" in the Prospectus.]
[The Class B Certificates will not constitute "mortgage related securities"
under SMMEA. The appropriate characterization of the Class B Certificates under
various legal investment restrictions, and thus the ability of investors subject
to these restrictions to purchase Class B Certificates, may be subject to
significant interpretive uncertainties. All investors whose investment authority
is subject to legal restrictions should consult their own legal advisors to
determine whether, and to what extent, the Class B Certificates will constitute
legal investments for them.]
[The Company makes no representation as to the proper characterization of
the Class B Certificates for legal investment or financial institution
regulatory purposes, or as to the ability of particular investors to purchase
Class B Certificates under applicable legal investment restrictions. The
uncertainties described above (and any unfavorable future determinations
concerning legal investment or financial institution regulatory characteristics
of the Class B Certificates) may adversely affect the liquidity of the Class B
Certificates.]
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement dated
________, 19__ (the "Underwriting Agreement"), among CITSF, the Company and
____________________ and _________ (the "Underwriters"), the Company has agreed
to sell and the Underwriters have agreed to purchase the respective principal
amounts of Class A Certificates [and the Class B Certificates] offered hereby
upon issuance, as set forth opposite their names below:
Principal Amount of
Underwriter Class A Certificates [Class B Certificates]
- ----------- -------------------- ----------------------
$ $
$ $
The Underwriting Agreement provides that the obligations of the Underwriters are
subject to certain conditions precedent and that the Underwriters will be
obligated to purchase all such Class A Certificates [and all such Class B
Certificates] if any are purchased.
[Distribution of the Class A Certificates [and the Class B Certificates]
will be made from time to time in negotiated transactions or otherwise at
varying prices to be determined at the time of sale. Proceeds to the Company
from the sale of the Class A Certificates [and the Class B Certificates] will be
_____% of the Original Class A Principal Balance [and _____% of the Original
Class B Principal Balance, in each case] plus accrued interest thereon from the
Cut-off Date, but before deducting expenses payable by the Company.] The
Underwriters propose to offer the Class A Certificates [and the Class B
Certificates] in part directly to purchasers at the initial public offering
price set forth on the cover page of this Prospectus Supplement and in part to
securities dealers at such prices less concessions not to exceed ___% of the
Class A Principal Balance [and ___% of the Class B Principal Balance]. The
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<PAGE>
Underwriters may allow, and such dealers may reallow, concessions not to exceed
___% of the Class A Principal Balance [and ___% of the Class B Principal
Balance] to certain brokers and dealers. After the Class A Certificates [and the
Class B Certificates] are released for sale to the public, the offering price
and other selling terms may be waived by the Underwriters. In connection with
the purchase and sale of the Class A Certificates [and the Class B Certificates]
offered hereby, the Underwriters may be deemed to have received compensation
from the Company in the form of underwriting discounts.
CITSF has agreed to indemnify the Underwriters against certain civil
liabilities, including liabilities under the Securities Act of 1933, or to
contribute to payments the Underwriters may be required to make in respect
thereof.
S-61
<PAGE>
INDEX OF DEFINED TERMS
Page
Add-on interest.......................................................... 26
Advance Payments......................................................... 43
Agreement................................................................ 4
Amount Available......................................................... 6
Available Credit Enhancement
Amount................................................................ 13
Bankruptcy Code.......................................................... 24
[Cash Collateral Depositor............................................... 13]
Certificate Account...................................................... 24
Certificate Owners....................................................... 2
Certificateholder(s)..................................................... 21
CIT...................................................................... 1
CITCF-NY................................................................. 27
CITSF.................................................................... 1
Class A Certificates..................................................... 1
Class A Distribution Amount.............................................. 6
Class A Formula Distribution Amount...................................... 6
Class B Certificates..................................................... 1
Class B Credit Enhancement............................................... 7
Class B Distribution Amount.............................................. 6
Class B Enhancement Payment.............................................. 7
Class B Formula Distribution Amount...................................... 6
Class B Principal Liquidation Loss Amount................................ 11
Class R Certificates..................................................... 1
Company.................................................................. 1
Contract Rate............................................................ 9
Contract Pool............................................................ 25
Contracts................................................................ 1
Cross-over Date.......................................................... 6
Cut-off Date............................................................. 24
Cut-off Date Pool Principal Balance...................................... 25
Definitive Class A Certificates.......................................... 57
Definitive Class B Certificates.......................................... 57
Delayed Deposits......................................................... 43
Determination Date....................................................... 25
DOL...................................................................... 58
DTC...................................................................... 21
DTC Rules................................................................ 56
Due Date................................................................. 9
Due Period............................................................... 25
Eligible Contract........................................................ 18
Eligible Institution..................................................... 43
Eligible Investment...................................................... 43
Enhancement Fee.......................................................... 51
ERISA.................................................................... 20
[Excess Collections...................................................... 4]
S-62
<PAGE>
Page
Exemption................................................................ 58
Formula Principal Distribution Amount.................................... 8
[Guarantee Fee........................................................... 50]
[Guarantee Payment....................................................... 49]
Holders.................................................................. 21
[Initial Cash Collateral Amount.......................................... 13]
Land-Secured Contracts................................................... 17
[Limited Guarantee....................................................... 1]
Liquidated Contract...................................................... 46
Liquidation Expenses..................................................... 43
Low Rate Period.......................................................... 26
Manufactured Home........................................................ 1
MH Prepayment Model...................................................... 38
[Monthly Advances........................................................ 51]
[Moody's................................................................. 43]
Participants............................................................. 56
Paying Agent............................................................. 42
Percentage Interest...................................................... 4
Plans.................................................................... 58
Pool Scheduled Principal Balance......................................... 9
[Precomputed Contracts................................................... 25]
[Pre-Funding Account..................................................... 1]
[Pre-Funding Period...................................................... 27]
Principal Balance........................................................ 7
Prospectus............................................................... 1
Remaining Amount Available............................................... 6
REMIC.................................................................... 2
Remittance Date.......................................................... 1
Restricted Group......................................................... 59
Rule of 78s.............................................................. 26
Rule of 78s Contract..................................................... 26
Scheduled Principal Balance.............................................. 9
Servicer................................................................. 1
simple interest Contract................................................. 26
SMMEA.................................................................... 20
[Subsequent Contracts.................................................... 17]
[Trust................................................................... 1]
Trustee.................................................................. 3
Underwriters............................................................. 2
Underwriting Agreement................................................... 60
Unpaid Class A Interest Shortfall........................................ 45
Unpaid Class B Interest Shortfall........................................ 47
Value.................................................................... 28
S-63
<PAGE>
No dealer, salesperson or other individual has been authorized to give any
information or make any representations not contained in this Prospectus
Supplement or the Prospectus in connection with the offering covered by this
Prospectus. If given or made, such information or representation may not be
relied upon as having been authorized by the Company, CITSF or the Underwriter.
This Prospectus Supplement and the Prospectus do not constitute an offer to
sell, or a solicitation of an offer to buy the Class A Certificates [or Class B
Certificates] in any jurisdiction where, or to any person to whom, it is
unlawful to make such offer or solicitation. Neither the delivery of this
Prospectus Supplement or the Prospectus nor any sale made hereunder shall, under
any circumstances, create an implication that there has not been any change in
the facts set forth in this Prospectus Supplement or the Prospectus or in the
affairs of the Company since the date hereof.
____________________
TABLE OF CONTENTS
Prospectus Supplement
Page
Summary of Terms..................................................... S-3
Special Considerations............................................... S-22
Structure of the Transaction......................................... S-24
The Contract Pool.................................................... S-25
Yield and Prepayment Considerations.................................. S-34
Description of the Certificates...................................... S-41
Use of Proceeds...................................................... S-57
ERISA Considerations................................................. S-58
Legal Investment Considerations...................................... S-60
Underwriting......................................................... S-60
Index of Defined Terms............................................... S-62
Prospectus
Reports to Certificateholders........................................ 2
Additional Information............................................... 2
Documents Incorporated by Reference.................................. 2
Summary of Terms..................................................... 4
Special Considerations............................................... 12
The Trust............................................................ 14
Use of Proceeds...................................................... 16
The CIT Group Securitization Corporation II, Seller ................. 16
The CIT Group/Sales Financing, Inc., Servicer........................ 17
Yield Considerations................................................. 22
Maturity and Prepayment Considerations............................... 22
CIT.................................................................. 23
Description of the Certificates...................................... 24
Description of FHA Insurance and VA Guarantees....................... 42
Certain Legal Aspects of the Contracts............................... 43
ERISA Considerations................................................. 50
Certain Federal Income Tax Consequences.............................. 52
Legal Investment Considerations...................................... 66
Ratings.............................................................. 67
Underwriting......................................................... 67
Legal Matters........................................................ 68
Experts.............................................................. 68
Index of Defined Terms............................................... 69
Glossary............................................................. 70
----------------
The CIT Group Securitization
Corporation II, Seller
(The CIT Group/Sales Financing, Inc., Servicer)
$______________ (Approximate)
Manufactured Housing Contract
[Senior/Subordinate] Pass-Through
Certificates, Series 199_
$_____________ (Approximate) ____% Class A
[$_____________ (Approximate) ____% Class B]
--------------------
PROSPECTUS SUPPLEMENT
_____ __, 199__
--------------------
[Underwriters]
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED DECEMBER 27, 1994
PRELIMINARY PROSPECTUS DATED _____, 1994
THE CIT GROUP SECURITIZATION CORPORATION II, SELLER
MANUFACTURED HOUSING CONTRACT
PASS-THROUGH CERTIFICATES
(Issuable In Series)
(The CIT Group/Sales Financing, Inc., Servicer)
Manufactured Housing Contract Pass-Through Certificates of one or more
series (each, a "Series") may be sold from time to time under this Prospectus
and a Prospectus Supplement for each such Series. The Certificates of each
Series may be issued in one or more Classes or subclasses, as further described
herein. If the Certificates of a Series are issued in more than one Class, all
or less than all of such Classes may be sold under this Prospectus, and there
may be separate Prospectus Supplements for one or more of such Classes so sold.
Any reference herein to the Prospectus Supplement relating to a Series comprised
of more than one Class should be understood to refer to each of the Prospectus
Supplements relating to the Classes sold hereunder.
The Certificates evidence specified interests in separate pools of
manufactured housing installment sales contracts and installment loan agreements
(the "Contracts"), as more particularly described herein, and in certain other
property conveyed by The CIT Group Securitization Corporation II (the
"Company"). The Contracts included in any pool of contracts will be described in
the related Prospectus Supplement. Except as otherwise specified in the related
Prospectus Supplement, the Contracts will have been originated in the ordinary
course of business by The CIT Group/Sales Financing, Inc. ("CITSF") or its
affiliates or by a manufactured housing dealer and purchased by CITSF or its
affiliates in the ordinary course of business. See "The CIT Group/Sales
Financing, Inc., Servicer--Contract Origination". CITSF will act as Servicer (in
such capacity referred to herein as the "Servicer") of the Contracts. Specific
information, to the extent available, regarding the size and composition of the
pool of Contracts relating to each Series of Certificates will be set forth in
the related Prospectus Supplement. The related Prospectus Supplement may provide
that monies will be on deposit in a separate trust account (the "Pre-Funding
Account") to be maintained with the Trustee, which will be used to purchase
additional manufactured housing installment sales contracts and installment loan
agreements from the Company from time to time during the funding period
specified in such Prospectus Supplement in the manner set forth therein. In
addition, if specified in the related Prospectus Supplement, a pool insurance
policy, letter of credit, surety bond, a guarantee by The CIT Group Holdings,
Inc. ("CIT"), its affiliates or an unaffiliated third party (which may be
limited in nature), cash reserve fund, or other form of credit enhancement, or
any combination thereof, may be provided with respect to a Series of
Certificates (which may include one or more Classes of Senior Certificates), or
one or more Classes of such Series, evidencing interests in the Contracts.
Each Series of Certificates will consist of one or more Classes of
Certificates, which may include one or more senior Classes of Certificates and
one or more subordinate Classes of Certificates. Certificates of a Series may be
divided into two or more Classes or sub-classes representing interests in
specified percentages (which may be 0%) of principal or interest, or both, in
distributions on the pool of Contracts relating to such Series, as specified in
the related Prospectus Supplement. Each Prospectus Supplement will describe the
Series and Class or Classes of Certificates offered thereby.
The Prospectus Supplement will set forth the Remittance Rate that will be
paid to Certificateholders of each Class or sub-class of such Series. Such
Remittance Rate may be fixed, variable or adjustable, as specified in the
related Prospectus Supplement.
Except as otherwise specified in the related Prospectus Supplement, the
only obligations of CITSF with respect to a Series of Certificates will be
pursuant to certain limited representations and warranties. Except for certain
representations and warranties relating to the Contracts and certain other
exceptions, the Servicer's obligations with respect to the Certificates
evidencing interests in a pool of Contracts are limited to its contractual
servicing obligations. If so specified in the related Prospectus Supplement, the
Servicer may be obligated, under certain terms and conditions, to advance the
amount of any delinquent payments of principal and interest during the
immediately preceding Due Period (as defined herein), but only to the extent the
Servicer determines such advances are recoverable from future payments and
collections on the Contracts or otherwise. See "Description of the
Certificates--Advances" and "--Distributions on Certificates".
<PAGE>
There will have been no public market for any Certificates sold hereunder
prior to the offering thereof and there is no assurance that any such market
will develop. The Underwriters named in the Prospectus Supplement relating to a
Series may from time to time buy and sell Certificates of such Series, but there
can be no assurance that an active secondary market therefor will develop, and
there is no assurance that any such market, if established, will continue.
The Company may elect to cause the Trust relating to a Series of
Certificates to be treated as a real estate mortgage investment conduit (a
"REMIC") for federal income tax purposes. See "Certain Federal Income Tax
Consequences" herein.
THE CERTIFICATES WILL NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF CIT, THE
COMPANY, CITSF, THE SERVICER OR ANY OF THEIR AFFILIATES, EXCEPT TO THE LIMITED
EXTENT DESCRIBED HEREIN OR IN THE RELATED PROSPECTUS SUPPLEMENT. THE
CERTIFICATES WILL NOT BE INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY, OR (EXCEPT AS OTHERWISE SPECIFIED IN THE RELATED PROSPECTUS
SUPPLEMENT) BY ANY OTHER PERSON OR ENTITY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus may not be used to consummate sales of a Series of
Certificates unless aTUS
SUPPLEMENT) BY ANY OTHER PERSON OR ENTITY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus may not be used to consummate ADDITIONAL INFORMATION
This Prospectus contains, and the Prospectus Supplement for each Series of
Certificates will contain, a summary of certain material terms of certain of the
documents referred to herein and therein, but neither contains nor will contain
all of the information set forth in the Registration Statement of which this
Prospectus is a part (the "Registration Statement"). For further information,
reference is made to such Registration Statement and the exhibits thereto which
the Company has filed with the Securities and Exchange Commission (the
"Commission"), under the Securities Act of 1933, as amended. Statements
contained in this Prospectus and any Prospectus Supplement describing a
provision of any contract or other document are summaries, and if this
Prospectus or such Prospectus Supplement indicates that such contract or other
document has been filed as an exhibit to the Registration Statement, reference
is made to the copy of the contract or other document filed as an exhibit. CIT
is subject to the informational requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and in accordance therewith, files
reports and other information with the Commission. Such reports, copies of the
Registration Statement and other information can be inspected and copied at the
offices of the Commission, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549; Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661; and Seven World Trade Center, 13th Floor,
New York, New York 10048. Copies of such material can be obtained from the
Public Reference Section of the Commission, at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549; at prescribed rates. Certain securities of
CIT are listed on the New York Stock Exchange and reports and other information
concerning CIT can also be inspected at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005.
The Company will be subject to the informational requirements of the
Securities Exchange Act of 1934 and, in connection therewith, will file reports
and other information with the Commission. Such reports and other information
filed by the Company will be available for inspection as set forth above.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the Commission by CIT are incorporated
by reference in this Prospectus:
(a) CIT's Annual Report on Form 10-K for the year ended December 31,
1993 together with the report of KPMG Peat Marwick LLP, independent
certified public accountants. The report of KPMG Peat Marwick LLP covering
the aforementioned financial statements refers to a change in the method of
accounting for post-retirement benefits other than pensions in 1993;
(b) CIT's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1994, June 30, 1994 and September 30, 1994; and
(c) CIT's Current Reports on Form 8-K dated January 14, 1994, February
28, 1994, April 12, 1994, July 14, 1994 and October 13, 1994.
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<PAGE>
All documents filed by CIT pursuant to Sections 13(a) and (c), 14, or 15(d)
of the Exchange Act after the date hereof and prior to the termination of the
offering of the securities offered hereby shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
CIT will provide without charge to each person to whom this Prospectus is
delivered, upon request, a copy of any or all of the foregoing documents
described above which have been or may be incorporated by reference in this
Prospectus other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Such request should
be directed to:
Corporate Secretary
The CIT Group Holdings, Inc.
1211 Avenue of the Americas
New York, New York 10036
(212) 536-1950
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<PAGE>
SUMMARY OF TERMS
This summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus and on the accompanying
Prospectus Supplement. Reference is made to the Index of Defined Terms and the
Glossary for the location herein of the definitions of certain capitalized terms
used herein. Unless the context requires otherwise, capitalized terms used in
this Prospectus and in any accompanying Prospectus Supplement refer only to the
particular Series being offered by such Prospectus Supplement.
Title of Securities ........ Manufactured Housing Contract Pass-Through Certi-
ficates (Issuable in Series)(the "Certificates").
Seller ..................... The CIT Group Securitization Corporation II (the
"Company"), a wholly-owned, limited purpose
subsidiary of The CIT Group Holdings, Inc.
("CIT"). Neither The CIT Group/Sales Financing,
Inc. ("CITSF") nor any of its affiliates,
including the Company and CIT, has guaranteed or
is otherwise obligated with respect to the
Certificates, except as otherwise specified in
the related Prospecuts Supplement. See "Special
Considerations".
Servicer .................. The CIT Group/Sales Financing, Inc. (the "Serv-
icer"), a wholly-owned subsidiary of CIT.
Special Considerations .... Certain special considerations are particularly
relevant to a decision to invest in any
Certificates sold hereunder. See "Special
Considerations," herein.
Securities Offered ........ Certificates evidencing interests in pools of Con-
tracts (as defined herein) may be issued from
time to time in Series pursuant to separate
Pooling and Servicing Agreements (each, an
"Agreement") between the Company, as Seller,
CITSF, as Servicer, and the Trustee specified in
the related Prospectus Supplement for such Series
of Certificates (the "Trustee").
The Contracts ............. The Contracts evidenced by a Series of Certificates
(the "Contract Pool") will be fixed or variable
rate Contracts. Such Contracts, as specified in
the related Prospectus Supplement, will consist
of manufactured housing installment sales
contracts and installment loan agreements, some
of which may be conventional contracts insured by
the Federal Housing Administration ("FHA") or
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<PAGE>
partially guaranteed by the Veterans
Administration ("VA"). Each Contract will be
secured by a new or used Manufactured Home (as
defined herein) and/or, in certain cases, by a
mortgage, deed of trust or similar instrument on
the real estate on which the manufactured home is
located (a "Land-Secured Contract"). Under the
laws of the jurisdiction in which such real
estate is located the Manufactured Home may or
may not be deemed permanently affixed to the real
estate on which such Manufactured Home is
situated and may or may not be considered or
classified as part of the real estate regardless
of whether the Manufactured Home is deemed
affixed to the real estate on which it is
situated.
The Prospectus Supplement for each Series will
provide information with respect to (i) the
aggregate principal balance of the Contracts
comprising the Contract Pool, as of the date
specified in the Prospectus Supplement (the "Cut-
off Date"); (ii) the weighted average contractual
rate of interest (the "Contract Rate") on the
Contracts; (iii) the weighted average term to
scheduled maturity as of origination; (iv) the
weighted average term to scheduled maturity as of
the Cut-off Date and the range of terms to
maturity; (v) the percentage amount of Contracts
secured by new or used Manufactured Homes; (vi)
the average outstanding principal balance of the
Contracts, as of the Cut-off Date; (vii) the
range of loan-to-value ratios at the time of
origination of the Contracts ("Loan-to-Value
Ratios"); and (viii) the geographic location and
types of Manufactured Homes securing the
Contracts.
Except as otherwise specified in the related
Prospectus Supplement, the Contracts will have
been originated by CITSF (or a subsidiary of CIT)
on an individual basis in the ordinary course of
its business or by a manufactured housing dealer
acting in the ordinary course of its business and
purchased by CITSF (or a subsidiary of CIT) in
the ordinary course of its business. See "The CIT
Group/Sales Financing, Inc., Servicer--Contract
Origination".
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<PAGE>
If so provided in the related Prospectus
Supplement, the original principal amount of a
Series of Certificates may exceed the principal
balance of the Contracts initially being
delivered to the Trustee. Cash in an amount equal
to such difference will be deposited into a
separate trust account (the "Pre-Funding
Account") maintained with the Trustee. During the
period set forth in the related Prospectus
Supplement, amounts on deposit in the Pre-Funding
Account may be used to purchase additional
Contracts for the related Trust. In addition, if
so provided in the related Prospectus Supplement,
certain additional amounts in respect of interest
will be deposited into the Pre-Funding Account or
in a separate trust account. Any amounts
remaining in the Pre-Funding Account at the end
of such period will be distributed as a principal
prepayment to the holders of the related Series
of Certificates at the time and in the manner set
forth in the related Prospectus Supplement, which
will affect the average life of each such Class
of Certificates.
Description of
Certificates............ Each Class of Certificates within a Series will
evidence the interest specified in the related
Prospectus Supplement in the Contract Pool and
certain other property held in trust for the
benefit of the Certificateholders (the "Trust").
Each Series of Certificates may consist of one or
more Classes, one or more of which may be senior
Certificates ("Senior Certificates") and one or
more of which may be subordinated Certificates
("Subordinated Certificates"). A Class of
Certificates of a Series may be divided into two
or more sub-classes, as and on the terms
specified in the related Prospectus Supplement.
Within a Class, one or more of the sub-classes
may be subordinated to other sub-classes or may
be entitled to a specified priority in
distributions specified in the related Prospectus
Supplement. Each Class or sub-class of a Series
may evidence the right to receive a specified
portion (which may be 0%) of each distribution of
principal or interest, or both, on the Contracts.
Each Class or sub-class of a Series may be
assigned a principal balance (the "Stated
Balance") based on the cash flow from the assets
in the Trust, and a fixed, variable or adjustable
stated annual interest rate, and may be entitled
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<PAGE>
to receive distributions in reduction of Stated
Balance to the extent available therefor in the
manner, priority and amounts specified in the
related Prospectus Supplement. A Class or
sub-class of Certificates may be Compound
Interest Certificates on which interest will
accrue, but not be paid for the period set forth
in the related Prospectus Supplement. The
Certificates will be issuable in fully registered
form in the authorized denominations specified in
the related Prospectus Supplement. See
"Description of the Certificates". The Subordi-
nated Certificates of a Series will be
subordinated in certain respects to the Senior
Certificates of the same Series. If a Series of
Certificates contains more than one Class of
Subordinated Certificates, distributions and
losses will be allocated among such Classes in
the manner specified in the related Prospectus
Supplement. The Certificates will not be
guaranteed or insured by any government agency
or, unless otherwise specified in the related
Prospectus Supplement, other insurer and, except
as described below and in the related Prospectus
Supplement, the Contracts will not be guaranteed
or insured by any government agency or other
insurer.
Subordinated
Certificates ............ One or more Classes or sub-classes of any Series
may be Subordinated Certificates, as specified in
the related Prospectus Supplement. The rights of
the Subordinated Certificateholders to receive
any or a specified portion of distributions with
respect to the Contracts will be subordinated to
the rights of Senior Certificateholders to the
extent and in the manner specified in the related
Prospectus Supplement. If a Series of
Certificates contains more than one Class (or
sub-class) of Subordinated Certificates,
distributions and losses will be allocated among
such classes in the manner specified in the
related Prospectus Supplement. The rights of the
Subordinated Certificateholders, to the extent
not subordinated, may be on a parity with those
of Senior Certificateholders. This subordination
is intended to enhance the likelihood of regular
receipt by Senior Certificateholders of the full
amount of scheduled monthly payments of principal
and interest due them and to protect the Senior
Certificateholders against losses.
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<PAGE>
Credit Enhancement ........ As an alternative, or in addition, to the subordin-
ation of the Subordinated Certificates, credit
enhancement with respect to a Series of
Certificates (which may include one or more
Classes of Senior Certificates) may be provided
by a pool insurance policy, letter of credit,
surety bond, a guarantee by CIT, its affiliates
or an unaffiliated third party (which may be
limited in nature), cash reserve fund, cash
collateral account or other form of enhancement,
or any combination thereof, acceptable to each
nationally recognized statistical rating
organization rating such Series of Certificates,
in each case as described in the related
Prospectus Supplement.
Interest .................. Except as otherwise set forth in the related
Prospectus Supplement, interest on the
Certificates will be paid on the dates specified
in the related Prospectus Supplement (each, a
"Remittance Date"), commencing on the date
specified in the related Prospectus Supplement.
The related Prospectus Supplement will set forth
for each Class or sub-class of Certificates the
interest rate, if any, for each such Class or
sub-class or the method of determining such
interest rate. See "Yield Considerations" and
"Description of the Certificates". As specified
in the related Prospectus Supplement, Classes of
a Series of Certificates or sub-classes within a
Class may be entitled to receive no interest or
interest which is not proportionate to the
principal allocable to such Certificates.
Principal
(Including Prepayments) ... Except as otherwise set forth in the related
Prospectus Supplement, principal on each
Contract, including any principal prepayments,
will be passed through on each Remittance Date.
See "Maturity and Prepayment Considerations" and
"Description of the Certificates". If so
specified in the Prospectus Supplement with
respect to a Class or sub-class of a Series
having a Stated Balance, such distributions may
be made in reduction of the Stated Balance, in an
amount equal to the Certificate Remittance Amount
or such other amounts as are specified in the
related Prospectus Supplement. See "Maturity and
Prepayment Considerations" and "Description of
the Certificates-- Distributions on Certificates"
and "--Payments on Contracts".
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<PAGE>
Optional Termination ...... Unless otherwise specified in the related Pros-
pectus Supplement, CITSF may at its option
repurchase all Contracts relating to a Series of
Certificates remaining outstanding at such time
and under the circumstances specified in such
Prospectus Supplement. Unless otherwise provided
in the related Prospectus Supplement, the
repurchase price will equal the principal amount
of such Contracts plus accrued interest from the
first day of the month of repurchase to the first
day of the next succeeding month at the Contract
Rates borne by such Contracts. See "Description
of the Certificates--Termination of the
Agreement".
Global Certificate ........ Unless otherwise specified in the related Pros-
pectus Supplement, the Certificates of a Series,
or of one or more Classes within a Series, will
be issuable in the form of one or more global
certificates (each, a "Global Certificate") to be
held by a depositary (the "Depositary") on behalf
of the beneficial owners of the Certificates, as
described herein under "Description of the
Certificates-- Global Certificates." The
description of the Certificates in this
Prospectus assumes that the Certificates of a
Series will not be issued in the form of Global
Certificates. If some or all of the Certificates
of a Series are issued in the form of one or more
Global Certificates, the term "Global
Certificateholder," as used herein, will refer to
such beneficial owners of such Certificates and
the rights of such Certificateholders will be
limited as described herein under "Description of
the Certificates--Global Certificates".
Representations
and Warranties
of CITSF ................ As a condition to CITSF's conveyance of any
Contract Pool to the Company and the Company's
conveyance of such Contract Pool to the Trust,
CITSF will be required to make certain
representations and warranties in the related
Agreement regarding the Contracts. Under the
terms of the Agreement, if CITSF becomes aware of
a breach of any such representation or warranty
that materially and adversely affects the Trust's
interest in any Contract or receives written
notice of such a breach from the Trustee or the
Servicer, then CITSF will be obligated either to
cure such breach or to repurchase or substitute
for the affected Contract, in each case under the
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<PAGE>
conditions further described herein. See
"Description of the Certificates--Conveyance of
Contracts" herein.
Federal Income
Tax Considerations ....... If an election (a "REMIC Election") is made to
treat the Trust represented by a Series of
Certificates or a segregated portion thereof as a
"real estate mortgage investment conduit" (a
"REMIC") under the Internal Revenue Code of 1986,
as amended (the "Code"), each class of
Certificates which is offered hereby will
constitute "regular interests" in such REMIC
under the Code, with the tax consequences under
the Code described herein and in such Prospectus
Supplement. If so specified in the applicable
Prospectus Supplement, a Class of Certificates
offered hereby may represent interests in a
"two-tier" REMIC, but all interests in the first
and second tier REMIC will be created under the
same Pooling and Servicing Agreement. See
"Certain Federal Income Tax Consequences--REMIC
Series".
If a REMIC Election is not made with respect to a
Series of Certificates, the Trust represented by
such Certificates will be treated as a grantor
trust for federal income tax purposes and will
not be classified as an association taxable as a
corporation. In such event, each
Certificateholder will be treated as the owner of
an undivided pro rata interest in income and
corpus attributable to the related Contract Pool
and any other assets held by the Trust and will
be considered the equitable owner of an undivided
interest in the Contracts included in such
Contract Pool. See "Certain Federal Income Tax
Consequences--Non-REMIC Series".
ERISA Considerations ...... A fiduciary of any employee benefit plan subject to
the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or the Code, should
review carefully with its legal advisors whether
the purchase or holding of Certificates could
give rise to a transaction prohibited or
otherwise impermissible under ERISA or the Code.
See "ERISA Considerations" herein.
Legal Investment .......... Unless otherwise indicated in the applicable
Prospectus Supplement, any Certificates offered
hereby and by the related Prospectus Supplement
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<PAGE>
that are rated by at least one nationally
recognized statistical rating organization in one
of its two highest rating categories will
constitute "mortgage related securities" under
the Secondary Mortgage Market Enhancement Act of
1984, as amended, and as such (unless otherwise
indicated in the applicable Prospectus
Supplement) will be "legal investments" for
certain types of institutional investors to the
extent provided in that Act. Some Classes of
Certificates offered hereby may not be rated in
one of the two highest rating categories by at
least one nationally recognized statistical
rating organization and thus would not constitute
"mortgage related securities". See "Legal
Investment Considerations" herein.
Ratings .................. It is a condition precedent to the issuance of any
Class of Certificates sold under this Prospectus
that they be rated in one of the four highest
rating categories (within which there may be sub-
categories or gradations indicating relative
standing) of at least one nationally recognized
statistical rating organization. A security
rating is not a recommendation to buy, sell or
hold securities and may be subject to revision or
withdrawal at any time by the assigning rating
agency. See "Ratings" herein.
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<PAGE>
SPECIAL CONSIDERATIONS
Prospective investors in Certificates should consider, among other things,
the following risk factors in connection with the purchase of the Certificates:
1. General. An investment in Certificates may be affected by, among other
things, a downturn in regional or local economic conditions. These regional or
local economic conditions are often volatile, and historically have affected the
delinquency, loan loss and repossession experience of the Contracts. In the
event of defaults by the obligors under the Contracts, the Trust will have to
look primarily to the value of the Manufactured Homes securing such Contracts
for recovery of the outstanding principal and unpaid interest of the defaulted
Contracts. Regardless of its location, manufactured housing generally
depreciates in value. Consequently, it is possible that the market value of a
Manufactured Home could be or become lower than the outstanding principal
balances of the Contracts that it secures. To the extent that losses on the
Contracts are not covered by the subordination of other Classes of Certificates,
if any, or by any other form of credit enhancement, Holders of the Certificates
of a Series evidencing interests in such Contracts will bear all risk of loss
resulting from default by obligors and will have to look primarily to the value
of the Manufactured Homes for recovery of the outstanding principal and unpaid
interest on the defaulted Contracts. See "The Trust--The Contract Pools".
2. Limited Obligations. The Certificates will not represent an interest in
or obligation of the Company or any Servicer (including CITSF), except to the
limited extent described herein. The Certificates will not be insured or
guaranteed by any governmental agency or instrumentality, any Underwriter or its
affiliates, CIT or any of its affiliates (except as otherwise specified in the
related Prospectus Supplement), including the Company and CITSF, or any Servicer
or any of its affiliates and will be payable only from amounts collected on the
Contracts (except as otherwise specified in the related Prospectus Supplement).
3. Limited Liquidity. There can be no assurance that a secondary market
will develop for the Certificates of any Series, or, if it does develop, that it
will provide the Holders of any of the Certificates with liquidity of investment
or that it will continue for the term of any Series of Certificates. Unless
otherwise specified in the related Prospectus Supplement, Certificateholders
have no right to request the repurchase of the Certificates.
4. Prepayment Considerations. The prepayment experience on the related
Contracts will affect the average life of each Class of Certificates.
Prepayments on the Contracts (which include both voluntary prepayments and
liquidations following default) may be influenced by a variety of economic,
geographic, social and other factors, including repossessions, aging,
seasonality, market interest rates, changes in housing needs, job transfers,
casualty losses and unemployment. In the event a Contract is prepaid in full,
interest on such Contract will accrue only to the date of prepayment. If the
Certificates of any Series are purchased at a discount and the purchaser
calculates its anticipated yield to maturity based on an assumed rate of payment
of principal on such Certificates that is faster than the rate actually
realized, such purchaser's actual yield to maturity will be lower than the yield
so calculated by such purchaser. See "Maturity and Prepayment Considerations".
5. Security Interests and Certain Other Aspects of the Contracts. Each
Contract will be secured by a security interest in a Manufactured Home (and/or,
in the case of a Land-Secured Contract, by a mortgage, deed of trust or similar
instrument on the real estate on which the Manufactured Home is located).
Perfection of security interests in the Manufactured Homes and enforcement of
rights to realize upon the value of the Manufactured Homes as collateral for
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<PAGE>
the Contracts are subject to a number of federal and state laws, including the
Uniform Commercial Code (the "UCC") as adopted in each state and, in most
states, certificate of title statutes, but generally not state real estate laws.
The steps necessary to perfect the security interest in a Manufactured Home will
vary from state to state. In most cases, the certificates of title relating to
the Manufactured Homes name the originator of the contract (or its affiliates or
predecessors) as the secured party. Because of the expense and administrative
inconvenience involved, CITSF will not amend the certificates of title to name
CITSF as the lienholder where CITSF is not the originator of the Contract and
CITSF will not amend any certificate of title to name the Company or the Trustee
as the lienholder and the Company will not deliver any certificate of title to
the Trustee or note thereon the Trustee's interest. Consequently, in some
states, in the absence of such an amendment to the certificate of title of the
successive assignments (directly or by mesne assignment) to CITSF, the Company
and the Trustee of the security interest in the Manufactured Home may not be
effective, or such security interest may not be perfected, and, in the absence
of such notation or delivery to the Trustee, the assignment of the security
interest in the Manufactured Home to the Trustee may not be effective against
other creditors or a trustee in bankruptcy. Because of the expense and
administrative inconvenience involved, CITSF will not record the successive
assignments (directly or by mesne assignment) to CITSF, the Company and the
Trustee of the mortgage, deed of trust or similar instrument securing each
Land-Secured Contract. Consequently, in some states, in the absence of such
recordation the assignment to the Trustee of the mortgage, deed of trust or
similar instrument securing a Land-Secured Contract may not be effective and, in
the absence of such recordation, the assignment of the mortgage, deed of trust
or similar instrument to the Trustee may not be effective against other
creditors or a trustee in bankruptcy.
In addition, numerous federal and state consumer protection laws impose
requirements on lenders under installment sales contracts and installment loan
agreements, such as the Contracts. The failure by the lender or seller of goods
to comply with such requirements could give rise to liabilities of assignees for
amounts due under such agreements and the right to set-off against claims by
such assignees. These laws would apply to the Trust as assignee of the
Contracts. Neither the Trust nor the Company has obtained any license required
under any federal or state consumer or mortgage banking laws or regulations, and
the absence of such licenses may impede the enforcement of certain rights or
give rise to certain defenses in actions seeking enforcement rights. From time
to time, CITSF has been involved in administrative proceedings before
governmental and regulatory bodies and in litigation under consumer or debtor
protection laws, some of which have been class actions.
Pursuant to the Agreement, CITSF will represent and warrant that each
Contract complies with all requirements of law and will provide certain
warranties relating to the validity, perfection and priority of the security
interest in each Manufactured Home securing a Contract. A breach by CITSF of any
such warranty that materially adversely affects any Contract would require CITSF
to repurchase, or at its option substitute another manufactured housing contract
which is an Eligible Substitute Contract (as herein defined) for, such Contract
unless such breach is cured within 85 days after it receives written notice of
such breach or within 90 days after it becomes aware of such breach. If CITSF
does not honor its repurchase obligation in respect of a Contract and such
Contract were to become defaulted, recovery of amounts due on such Contract
would be dependent on repossession and resale of the Manufactured Home securing
such Contract. Certain other factors may limit the ability of the
Certificateholders to realize upon the Manufactured Homes or may limit the
amount realized to less than the amount due. See "Certain Legal Aspects of the
Contracts".
6. Certain Matters Relating to Insolvency. CITSF and the Company intend
that each transfer of Contracts from CITSF to the Company and from the Company
to the related Trust constitutes a sale, rather than a pledge of the Contracts
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to secure indebtedness. However, if CITSF or the Company were to become a debtor
under Title 11 of the United States Code, 11 U.S.C. ss.101 et seq. (the
"Bankruptcy Code"), it is possible that a creditor, receiver, other party in
interest or trustee in bankruptcy of CITSF or the Company, or CITSF or the
Company as debtor-in-possession, may argue that the sale of the Contracts by
CITSF to the Company, or by the Company to the Trust, respectively, was a pledge
of the Contracts rather than a sale and that, accordingly, such Contracts should
be part of such entity's bankruptcy estate. Such a position, if presented to a
court, even if ultimately unsuccessful, could result in a delay in or reduction
of distributions to the Certificateholders.
A case recently decided by the United States Court of Appeals for the Tenth
Circuit contains language to the effect that accounts sold by an entity which
subsequently became bankrupt remained property of the debtor's bankruptcy
estate. Although the Contracts constitute chattel paper rather than accounts
under the UCC, sales of chattel paper, like sales of accounts, are governed by
Article 9 of the UCC. If the Company were to become a debtor under the federal
bankruptcy code and a court were to follow the reasoning of the Tenth Circuit
and apply such reasoning to chattel paper, Certificateholders could experience a
delay or reduction in distributions.
THE TRUST
General
Each Trust will include (i) a Contract Pool, (ii) the amounts held from
time to time in a trust account (the "Certificate Account") maintained by the
Trustee pursuant to the Agreement, (iii) proceeds from certain hazard insurance
on individual Manufactured Homes and Manufactured Homes (or the related real
estate, in the case of Land-Secured Contracts) acquired by repossession, (iv)
any letter of credit, guarantee, surety bond, insurance policy, cash reserve
fund or other credit enhancement securing payment of all or part of a Series of
Certificates, and (v) such other property as may be specified in the related
Prospectus Supplement.
Each Certificate will evidence the interest specified in the related
Prospectus Supplement in one Trust, containing one Contract Pool comprised of
Contracts having the aggregate principal balance as of the specified day of the
month of the creation of the pool (the "Cut-off Date") specified in the related
Prospectus Supplement. Holders of Certificates of a Series will have interests
only in such Contract Pool and will have no interest in the Contract Pool
created with respect to any other Series of Certificates.
Except as otherwise specified in the related Prospectus Supplement, all of
the Contracts will have been originated by CITSF (or a subsidiary of CIT) on an
individual basis in the ordinary course of its business or by a manufactured
housing dealer in the ordinary course of its business and purchased by CITSF (or
a subsidiary of CIT). The following is a brief description of the Contracts
expected to be included in the Trust. Specific information respecting the
Contracts will be provided in the Prospectus Supplement and, to the extent not
contained in the related Prospectus Supplement, in a report on Form 8-K to be
filed with the Securities and Exchange Commission within fifteen days after the
initial issuance of such Certificates. A copy of the Agreement with respect to
each Series of Certificates will be attached to the Form 8-K and will be
available for inspection at the corporate trust office of the Trustee specified
in the related Prospectus Supplement. A schedule of the Contracts relating to
such Series will be attached to the Agreement delivered to the Trustee upon
delivery of the Certificates.
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Whenever in this Prospectus terms such as "Contract Pool," "Trust,"
"Agreement" or "Remittance Rate" are used, those terms respectively apply,
unless the context otherwise indicates, to the Contract Pool, Trust, Agreement
and Remittance Rate applicable to the related Series of Certificates.
The Contract Pools
Except as otherwise specified in the related Prospectus Supplement, each
pool of Contracts with respect to a Series of Certificates (the "Contract Pool")
will consist of manufactured housing installment sales contracts and installment
loan agreements (collectively, the "Contracts") originated by CITSF (or a
subsidiary of CIT) on an individual basis in the ordinary course of business or
by a manufactured housing dealer in the ordinary course of its business and
purchased by CITSF (or a subsidiary of CIT) in the ordinary course of business
and conveyed to the Company. The Contracts may be conventional manufactured
housing contracts or contracts insured by the Federal Housing Administration
(the "FHA") or partially guaranteed by the Veterans Administration (the "VA").
Each Contract will be secured by a Manufactured Home (as defined below) and/or
by a mortgage, deed of trust or similar instrument relating to the real estate
to which the Manufactured Home is deemed permanently affixed or, in certain
cases, by a mortgage, deed of trust or similar instrument relating to the real
estate on which such Manufactured Home is situated, which Manufactured Home is
not considered or classified as part of the real estate under the laws of the
jurisdiction in which such real estate is located (a "Land-Secured Contract").
Except as otherwise specified in the related Prospectus Supplement, the
Contracts will be fully amortizing and will bear interest at a fixed or variable
annual percentage rate (the "Contract Rate").
CITSF will represent that the Manufactured Homes securing the Contracts
consist of manufactured homes within the meaning of 42 United States Code,
Section 5402(6), which defines a "manufactured home" as "a structure,
transportable in one or more sections, which in the traveling mode, is eight
body feet or more in width or forty body feet or more in length, or, when
erected on site, is three hundred twenty or more square feet, and which is built
on a permanent chassis designed to be used as a dwelling with or without a
permanent foundation when connected to the required utilities, and includes the
plumbing, heating, air-conditioning, and electrical systems contained therein;
except that such term shall include any structure which meets all the
requirements of (this) paragraph except the size requirements and with respect
to which the manufacturer voluntarily files a certification required by the
Secretary of Housing and Urban Development and complies with the standards
established under [this] chapter."
For each Series of Certificates, the Company will assign the Contracts
constituting the Contract Pool to the trustee named in the related Prospectus
Supplement (the "Trustee"). CITSF, as Servicer (in such capacity referred to
herein as the "Servicer"), will service the Contracts pursuant to the Agreement.
See "Description of the Certificates--Servicing". Unless otherwise specified in
the related Prospectus Supplement, the Contract documents will be held by the
Servicer as custodian for the Trustee.
Each Contract Pool will be composed of Contracts bearing interest at the
annual fixed or variable Contract Rates specified in the Prospectus Supplement.
Unless otherwise stated in the related Prospectus Supplement, each registered
Holder of a Certificate will be entitled to receive periodic distributions,
which will be monthly unless otherwise specified in the related Prospectus
Supplement, of all or a portion of principal on the underlying Contracts or
interest on the principal balance of such Certificate at the Remittance Rate, or
both.
The related Prospectus Supplement will specify for the Contracts contained
in the related Contract Pool, among other things, the dates of origination of
the Contracts; the Contract Rates on the Contracts; the loan-to-value ratios
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at the time of origination of the Contracts (the "Loan-to-Value Ratios"), the
minimum and maximum outstanding principal balances as of the Cut-off Date and
the average outstanding principal balance; the outstanding principal balances of
the Contracts included in the Contract Pool; and the original maturities of the
Contracts and the last maturity date of any Contract.
If provided in the related Prospectus Supplement, the original principal
amount of a Series of Certificates may exceed the principal balance of the
Contracts initially being delivered to the Trustee. Cash in an amount equal to
such difference will be deposited into a separate trust account (the
"Pre-Funding Account") maintained with the Trustee. During the period set forth
in the related Prospectus Supplement, amounts on deposit in the Pre-Funding
Account may be used to purchase additional Contracts for the related Trust. In
addition, if so provided in the related Prospectus Supplement, certain
additional amounts in respect of interest will be deposited into the Pre-Funding
Account or in a separate trust account. The related Prospectus Supplement will
specify the conditions which must be satisfied prior to the transfer of any such
additional Contracts, including the requisite characteristics of such Contracts.
Any amounts remaining in the Pre-Funding Account at the end of such period will
be distributed as a principal prepayment to the holders of the related Series of
Certificates at the time and in the manner set forth in the related Prospectus
Supplement.
CITSF will make representations and warranties as to the types and
geographical distribution of the Contracts included in a Contract Pool and as to
the accuracy in all material respects of certain information furnished to the
Trustee in respect of each such Contract. Upon a breach of any representation
that materially and adversely affects the interests of the Certificateholders in
a Contract, CITSF will be obligated either to cure the breach in all material
respects, to purchase the Contract or to substitute another Contract as
described below. This repurchase or substitution obligation constitutes the sole
remedy available to the Certificateholders or the Trustee for a breach of
representation by CITSF. See "Description of the Certificates--Conveyance of
Contracts".
USE OF PROCEEDS
Unless otherwise specified in an applicable Prospectus Supplement,
substantially all of the net proceeds to be received from the sale of each
Series of Certificates will be used by the Company to purchase the Contracts
from CITSF and to pay expenses connected with pooling the Contracts and issuing
the Certificates of such Series.
THE CIT GROUP SECURITIZATION CORPORATION II, SELLER
The CIT Group Securitization Corporation II (the "Company") was
incorporated in the State of Delaware on June 24, 1994 and is a wholly-owned,
limited purpose finance subsidiary of The CIT Group Holdings, Inc., a Delaware
corporation ("CIT"), which is a successor to a company founded in St. Louis,
Missouri, in February 1908. CIT is 60% owned by The Dai-Ichi Kangyo Bank, Ltd.
and 40% owned by MHC Holdings (Delaware) Inc., a subsidiary of Chemical Banking
Corporation. The Company maintains its principal office at 650 CIT Drive,
Livingston, New Jersey 07039. Its telephone number is (201) 740-5000.
As described herein and in the related Prospectus Supplement, the
obligations, if any, of the Company with respect to any Series of Certificates
are limited. The Company will have no ongoing servicing obligations or
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responsibilities with respect to any Contract Pool and will not make any
representations or warranties regarding the Contracts.
CITSF is an affiliate of the Company. The Company will acquire each
Contract Pool in a privately negotiated transaction from CITSF. If so specified
in the related Prospectus Supplement, CITSF will acquire a portion of the
Contracts from The CIT Group/Consumer Finance, Inc. (NY), a wholly-owned
subsidiary of CIT.
Unless otherwise specified in the related Prospectus Supplement, neither
CIT nor any of its affiliates, including the Company and CITSF, will be
obligated with respect to any Series of Certificates. Accordingly, the Company
has determined that financial statements of CITSF and its affiliates, including
the Company, are not material to the offering of any Series of Certificates. If,
with respect to a Series of Certificates any such financial statements are
material, they will be included in the related Prospectus Supplement.
THE CIT GROUP/SALES FINANCING, INC., SERVICER
General
The CIT Group/Sales Financing, Inc., a Delaware corporation ("CITSF"), is a
wholly-owned subsidiary of CIT. It has its principal executive office at 650 CIT
Drive, Livingston, New Jersey 07039, and its telephone number is (201) 740-5000.
CITSF originates, purchases, sells and services conditional sales contracts
for manufactured housing, recreational vehicles and other consumer goods
throughout the United States. CITSF has been a lender to the manufactured
housing industry for more than 30 years. CITSF has Regional Business Centers in
five cities and a centralized asset service facility (the "Asset Service
Center") in Oklahoma City, Oklahoma. Working through dealers and manufacturers,
CITSF offers retail installment credit. In addition to purchasing manufactured
housing contracts from dealers on an individual basis, CITSF makes bulk
purchases of manufactured housing contracts and services, on behalf of other
owners, manufactured housing contracts that were not originated by CITSF. These
bulk purchases may be from, and these servicing arrangements may be made with
respect to, the portfolios of other lending institutions or finance companies,
the portfolios of governmental agencies or instrumentalities or the portfolios
of other entities that purchase and hold manufactured housing contracts.
The Asset Service Center of CITSF services consumer credit transactions in
50 states and the District of Columbia. It provides full servicing for
manufactured housing and recreational vehicle retail installment credit
supplemented by outside collectors and field remarketers located throughout the
United States.
As of September 30, 1994, CITSF serviced for itself and others
approximately 95,000 contracts (consisting primarily of manufactured housing and
recreational vehicle contracts), representing an outstanding balance of
approximately $2.3 billion. Of this portfolio, approximately 38,000 contracts
(representing approximately $800 million outstanding balance) consisted of
manufactured housing contracts.
Since December 1991, CITSF has entered into arrangements to service, on
behalf of other owners, approximately 15,000 manufactured housing contracts
(determined as of September 30, 1994) which were originated by other
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institutions. CITSF's management currently intends to pursue both the bulk
purchase of manufactured housing contracts and arrangements under which it would
service manufactured housing contracts, on behalf of other owners, that it
neither purchased nor originated.
CITSF's general policies with regard to the origination of manufactured
housing installment loans and the purchase of manufactured housing installment
sales contracts from manufactured housing dealers are described below under
"Contract Origination" and "CITSF's Underwriting Guidelines". See "Servicing"
below for a description of certain of CITSF's servicing policies.
Contract Origination
The following information on CITSF's origination practices is presented for
illustrative purposes and may not relate to each or any Contract in a particular
Contract Pool. As described in the related Prospectus Supplement, some or all of
the Contracts in a Contract Pool may not have been originated by CITSF.
Through its Regional Business Centers, CITSF arranges to purchase
manufactured housing contracts from manufactured housing dealers located
throughout the United States. Regional Business Center personnel contact the
dealers located in their territories and explain CITSF's available financing
plans, terms, prevailing rates and credit and financing policies. If the dealer
wishes to use CITSF's available customer financing, the dealer must make an
application for dealer approval. Upon satisfactory results of CITSF's
investigation of the dealer's creditworthiness and general business reputation,
CITSF and the dealer execute a dealer agreement. CITSF also originates
manufactured housing installment loan agreements directly. In addition, CITSF
purchases portfolios of manufactured housing contracts from other lending
institutions or finance companies, and from governmental agencies or
instrumentalities.
Contracts that CITSF purchases from dealers or originates itself (as
opposed to portfolios of contracts purchased from other lenders) are purchased
or originated on an individually approved basis in accordance with CITSF's
underwriting guidelines.
CITSF's Underwriting Guidelines
Manufactured housing contracts are either originated by being purchased by
CITSF from dealers or being entered into directly by CITSF with customers
referred by dealers or purchased by CITSF in bulk from third party financial
institutions. Forms for all contracts are provided by CITSF and are originated
on an individually approved basis. For all contracts, CITSF's general practice
is to have the dealer submit the customer's credit application, manufacturer's
invoice (if the contract is for a new home) and certain other information
relating to the contract to the applicable Regional Business Center. Personnel
at the Regional Business Center make an analysis of the creditworthiness of the
customer and of other aspects of the proposed transaction.
Since 1992, each credit application is entered into an automated
application processing system. CITSF's underwriting guidelines require, and have
required, a credit officer at a Regional Business Center with the appropriate
level of credit authority to examine each applicant's credit history, residence
history, employment history and debt-to-income payment ratio. Although, with
respect to these criteria, CITSF has, and has had, certain minimum requirements,
as described below, CITSF's management does not believe that these minimum
requirements are themselves generally sufficient to warrant credit approval of
an applicant. Thus, there were and are no requirements on the basis of which, if
they are met, credit is routinely approved. Based on credit score and other risk
factors, each applicant is either approved, declined or, if necessary, referred
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to a credit officer with a higher credit authority. Funding of a contract is
authorized after verification of the conditions of approval of the application
and satisfactory delivery of the related manufactured home.
The targeted retail customer has a five year residence, employment and
credit history, a minimum of two years in his or her present job, a housing
ratio of 30% or less (the ratio of payments on the contract and park rental
payments to gross monthly income), a debt ratio (the ratio of total installment
debt and housing expenses to gross monthly income) of 40% or less, a down
payment of at least 15% and an overall favorable credit profile. Approval of
retail customers that do not meet the above-described retail customer profile
are considered by the appropriate level credit officer, on a case by case basis.
Such approval, if granted, is based on the applicant's length and likelihood of
continued employment, ability to pay, and a review of the applicants' paying
habits. No guarantors, endorsers or co-signers are to be considered in
considering whether to accept or reject an application.
Prior to implementing the automated credit scoring system, applicants
required a five year residence history, with no less than the last two years
verified, a minimum five years of employment history with a minimum of three
years or five years in his or her present job for home owners and renters,
respectively, which employment must be verified, a housing ratio of 28% or less,
a debt ratio of 40% or less, and a minimum of five years of established credit
history. The credit history was evidenced by a current credit bureau report
confirming a minimum of the last two years of good ratings indicated.
The credit review and approval practices of each Regional Business Center
are subject to internal reviews and internal audits that, through sampling,
examine the nature of the verification of credit histories, residence histories,
employment histories, debt ratios and housing ratios of the applicants and
evaluate the credit risks associated with the contracts purchased through such
regional office by rating the obligors on such contracts according to their
credit histories, employment histories, debt ratios and housing ratios.
The underwriting policies or standards applied by originators of contracts
other than CITSF may differ from those applied by CITSF.
Servicing
CITSF services, through its Asset Service Center, manufactured housing,
home equity, recreational vehicle and other consumer loans. CITSF services all
of the manufactured housing contracts it purchases or originates, whether on an
individual basis or in bulk. CITSF is actively seeking arrangements pursuant to
which it will service manufactured housing contracts held by other entities.
Such contracts would not be purchased by CITSF or sold to such other entities by
CITSF. Generally, such servicing responsibilities are, and would be, also
carried out through CITSF's Asset Service Center. Servicing responsibilities
include collecting principal and interest payments, taxes, insurance premiums,
where applicable, and other payments from obligors and, where such contracts
have been sold, remitting principal and interest payments to the holders
thereof, to the extent such holders are entitled thereto. Collection procedures
include repossession and resale of manufactured homes securing defaulted
contracts and, if deemed advisable by CITSF, entering into workout arrangements
with obligors under certain defaulted contracts. Although decisions as to
whether to repossess any manufactured home are made on an individual basis,
CITSF's general policy is to institute repossession procedures promptly after
Asset Service Center personnel determine that it is unlikely that a defaulted
contract will be brought current, and thereafter to diligently pursue the resale
of such manufactured homes if the market is favorable. See "The Contract
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Pool--Delinquency, Loan Loss and Repossession Experience" in the Prospectus
Supplement for certain historical statistical data relating to the delinquency
and repossession experience of the contracts serviced through CITSF's Asset
Service Center.
The following table shows the composition of the CITSF portfolio, including
conventional manufactured housing contracts serviced by CITSF on the dates
indicated:
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<TABLE>
THE CIT GROUP/SALES FINANCING, INC.
<CAPTION>
At December 31, At
--------------------------------------------------------------------------------
1990 1991 1992 1993 September 30, 1994
------------------- ---------------- ----------------- ---------------- -------------------
(Number) (Dollars) (Number) (Dollars) (Number) (Dollars) (Number) (Dollars) (Number) (Dollars)
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unpaid principal balance of
contracts being serviced
MH - Non-Recourse ........ 5,500 $163,287 11,397 $275,999 9,282 $281,838 9,959 $251,371 14,112 $395,480
MH - Recourse............. 23,423 260,076 19,739 215,568 17,081 183,129 14,031 142,246 527 6,098
MH - Service Retained(1).. 0 0 0 0 3,328 43,831 6,983 175,554 8,454 196,358
MH - Serviced For Others.. 0 0 675 17,833 19,949 296,547 16,925 240,499 14,810 201,830
------ ------- ------ ------- ------ ------- ------ ------- ------ -------
Total MH................. 28,923 $423,363 31,811 $509,400 49,640 $805,345 47,898 $809,670 37,903 $799,766
RV-Owned................. 32,487 660,555 39,648 845,601 43,309 930,326 40,547 1,021,983 40,913 895,405
RV-Service Retained(1).. 0 0 0 0 0 0 0 0 5,082 125,419
------ ------- ------ ------- ------ ------- ------ --------- ------ -------
Total RV................ 32,487 $660,555 39,648 $845,601 43,309 $930,326 40,547 $1,021,983 45,995 $1,020,824
Home Equity.............. 0 0 0 0 0 0 3,545 131,322 9,049 388,925
Other.................... 33,896 336,304 6,942 101,022 1,126 19,485 1,572 41,944 2,440 66,029
------ ------- ------ ------- ------ ------- ----- ------- ------ -------
Total Contracts Serviced..... 95,306 $1,420,222 78,401 $1,456,023 94,075 $1,755,156 93,562 $2,004,919 95,387 $2,275,544
</TABLE>
- ---------------------
MH = Manufactured Housing
RV = Recreation Vehicle
(1) Represents Contracts securitized with servicing retained.
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YIELD CONSIDERATIONS
The Remittance Rates and the weighted average Contract Rate of the
Contracts relating to each Series of Certificates will be set forth in the
related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, each
monthly accrual of interest on a Contract is calculated at one-twelfth of the
product of the Contract Rate and the principal balance outstanding on the
scheduled payment date for such Contract in the preceding month. Unless
otherwise specified in the related Prospectus Supplement, the Remittance Rate
with respect to each Certificate will be calculated similarly.
The Prospectus Supplement for each Series will indicate that a lower rate
of principal prepayments than anticipated would negatively affect the total
return to investors of any Class or such sub-class of Certificates that is
offered at a discount to its principal amount, and a higher rate of principal
prepayments than anticipated would negatively affect the total return to
investors of any such Class or sub-class of Certificates that is offered at a
premium to its principal amount or without any principal amount.
If a Series of Certificates contains Classes or sub-classes of Certificates
entitled to receive distributions of principal or interest or both, in a
specified order other than as a specified percentage of each distribution of
principal or interest or both, the Prospectus Supplement will set forth
information, measured relative to a prepayment standard or model specified in
such Prospectus Supplement, with respect to the projected weighted average life
of each such Class or sub-class and the percentage of the original Stated
Balance of each such Class or sub-class that would be outstanding on specified
Remittance Dates for such Series based on the assumptions stated in such
Prospectus Supplement, including assumptions that prepayments on the Contracts
in the related Trust are made at rates corresponding to the various percentages
of such prepayment standard or model.
MATURITY AND PREPAYMENT CONSIDERATIONS
Maturity
Unless otherwise described in an applicable Prospectus Supplement, all of
the Contracts will have maturities at origination of not more than 25 years.
Prepayment Considerations
Contracts generally may be prepaid in full or in part without penalty. FHA
Contracts and VA Contracts may be prepaid at any time without penalty. Based on
CITSF's experience with the portfolio of manufactured housing contracts serviced
by it, CITSF anticipates that a number of the Contracts will be prepaid prior to
their maturity. A number of factors, including homeowner mobility, general and
regional economic conditions and prevailing interest rates, may influence
prepayments. In addition, repurchases of Contracts on account of certain
breaches of representations and warranties have the effect of prepaying such
Contracts and therefore would affect the average life of the Certificates. Most
of the Contracts contain a "due-on-sale" clause that would permit the Servicer
to accelerate the maturity of a Contract upon the sale of the related
Manufactured Home. In the case of those Contracts that do contain due-on-sale
clauses, the Servicer will permit assumptions of such Contracts if the purchaser
of the related Manufactured Home satisfies CITSF's then-current underwriting
standards.
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Information regarding the Payment Model or any other rate of assumed
prepayment, as applicable, will be set forth in the Prospectus Supplement with
respect to a Series of Certificates.
See "Description of the Certificates--Termination of the Agreement" for a
description of CITSF's or the Company's option to repurchase the Contracts
comprising part of a Trust when the aggregate outstanding principal balance of
such Contracts is less than a specified percentage of the initial aggregate
outstanding principal balance of such Contracts as of the related Cut-off Date.
See also "The Trust--The Contract Pools" for a description of the obligations of
CITSF to repurchase a Contract in case of a breach of a representation or
warranty relative to such Contract.
CIT
CIT is a successor to a company founded in St. Louis, Missouri on February
11, 1908. It has its principal executive offices at 1211 Avenue of the Americas,
New York, New York 10036, and its telephone number is (212) 536-1950. CIT,
operating directly or through its subsidiaries primarily in the United States,
engages in financial services activities through a nationwide distribution
network. CIT provides financing primarily on a secured basis to commercial
borrowers, ranging from middle-market to larger companies and to consumers in
connection with manufactured housing, recreational vehicles and boat financing,
as well as residential mortgages. While these secured lending activities reduce
the risk of losses from extending credit, CIT's results of operations can also
be affected by other factors, including general economic conditions, competitive
conditions, the level and volatility of interest rates, concentrations of credit
risk and government regulation and supervision. CIT does not finance the
development or construction of commercial real estate. CIT has eight strategic
business units, seven of which offer corporate financing, dealer and
manufacturer financing, and factoring products and services to clients, and an
eighth strategic business unit which commenced operations in the last quarter of
1992 offering consumer second mortgage financing and which began offering home
equity lines of credit and purchase money mortgage loans to consumers in 1994.
Effective at year-end 1989, The Dai-Ichi Kangyo Bank, Limited ("DKB")
purchased sixty percent (60%) of the issued and outstanding shares of common
stock of CIT from Manufacturers Hanover Corporation ("MHC"). MHC retained a
forty percent (40%) common stock interest in CIT. Effective March 29, 1990, MHC
transferred its forty percent (40%) common stock interest in CIT to MHC Holdings
(Delaware) Inc., a wholly-owned subsidiary of MHC ("MHC Holdings"). On December
31, 1991, MHC and Chemical Banking Corporation merged in a stock-for-stock
transaction. The merged corporation is called Chemical Banking Corporation
("CBC"). CBC retains a forty percent (40%) common stock interest in CIT through
MHC Holdings.
In accordance with a stockholders agreement among DKB, CBC, as successor to
MHC, and CIT (the "Stockholders Agreement"), CIT amended its Certificate of
Incorporation and its By-Laws in conformity therewith. Pursuant to the
Stockholders Agreement, immediately after MHC sold the sixty percent (60%)
interest in CIT to DKB, the stockholders elected a new Board of Directors
comprised of the President and Chief Executive Officer and the Vice Chairman of
CIT, six nominees designated by DKB, and two nominees designated by MHC. The
Stockholders Agreement also contains provisions for the management of CIT,
majority voting by DKB on CIT's Executive Committee, consent of MHC Holdings
with respect to major corporate and business changes, and restrictions with
respect to the transfer of stock of CIT to third parties.
CIT is subject to the informational requirements of the Exchange Act and,
in accordance therewith, files reports and other information with the
Commission. Such reports and other information can be inspected and copied at
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the offices of the Commission and at the offices of the New York Stock Exchange,
Inc. See "Additional Information."
DESCRIPTION OF THE CERTIFICATES
Each Series of Certificates will be issued pursuant to a separate pooling
and servicing agreement (each an "Agreement") to be entered into among the
Company, as Seller, CITSF, as Servicer with respect to a Series of Certificates
evidencing an interest in the Contracts, and the trustee named in the related
Prospectus Supplement (the "Trustee"), and such other parties, if any, as are
described in the applicable Prospectus Supplement. The following summaries
describe certain provisions expected to be common to each Agreement and the
related Certificates, but do not purport to be complete and are subject to, and
are qualified in their entirety by reference to, the provisions of the related
Agreement and the description set forth in the related Prospectus Supplement.
Section references contained herein refer to sections of the form of Agreement
filed as an exhibit to the Registration Statement of which this Prospectus is a
part (the "Registration Statement"). The portions of such sections described
herein may be contained in different numbered sections in the actual Agreement
pursuant to which any Series of Certificates is issued. The provisions of the
form of Agreement filed as an exhibit to the Registration Statement that are not
described herein may differ from the provisions of any actual Agreement. The
material differences will be described in the related Prospectus Supplement.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to them in the form of Agreement filed as an exhibit to the
Registration Statement.
Each Series of Certificates will have been rated in the rating category and
by the rating agency or agencies specified in the related Prospectus Supplement.
General
The Certificates may be issued in one or more Classes or sub-classes (each
referred to in this Prospectus as a "Class"). If the Certificate of a Series are
issued in more than one Class, the Certificates of all or less than all of such
Classes may be sold pursuant to this Prospectus, and there may be separate
Prospectus Supplements relating to one or more of such Classes so sold. Any
reference herein to the Prospectus Supplement relating to a Series comprised of
more than one Class should be understood as a reference to each of the
Prospectus Supplements relating to the Classes sold hereunder. Any reference
herein to the Certificates of a Class should be understood to refer to the
Certificates of a Class within a Series, the Certificates of a sub-class within
a Series or all of the Certificates of a single-Class Series, as the context may
require.
The Certificates of each Series will be issued in fully registered form
only and will represent the interests specified in the related Prospectus
Supplement in a separate trust fund (the "Trust") created pursuant to the
related Agreement. The Trust will be held by the Trustee for the benefit of the
Certificateholders. Each Trust, to the extent specified in the related
Prospectus Supplement, will include (i) Contracts (the "Contract Pool") which
are subject to the Agreement from time to time and any related mortgages, deeds
of trust or similar instruments, (ii) the amounts held in the Certificate
Account from time to time, (iii) proceeds from certain hazard insurance on
individual Manufactured Homes and Manufactured Homes (or the related real estate
in the case of Land-Secured Contracts) acquired by repossession, (iv) any letter
of credit, guarantee, surety bond, insurance policy, cash reserve fund, cash
collateral account or other credit enhancement securing payment of all or part
of a Series of Certificates and (v) such other property (including amounts on
deposit in the Pre-Funding Account) as may be specified in the related
Prospectus Supplement. Except as otherwise specified in the related
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Prospectus Supplement, the Certificates will be freely transferable and
exchangeable at the corporate trust office of the Trustee at the address set
forth in the related Prospectus Supplement. No service charge will be made for
any registration of exchange or transfer of Certificates, but the Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge.
Ownership of each Contract Pool may be evidenced by one or more classes of
Certificates, each representing the interest in the Contract Pool specified in
the related Prospectus Supplement. One or more Classes of Certificates
evidencing interests in Contracts may be Subordinated Certificates, evidencing
the right of the Holders thereof to receive any or a portion of distributions of
principal or interest or both on the Contracts subordinate to the rights of the
Holders of other Classes of Certificates ("Senior Certificates") as provided in
the related Prospectus Supplement. If a Series of Certificates contains more
than one Class of Subordinated Certificates, losses will be allocated among such
Classes in the manner described in the Prospectus Supplement.
A Series of Certificates may consist of Classes of Certificates evidencing
the right to receive distributions of principal or interest or both in the order
specified in the related Prospectus Supplement. A Class of Certificates of a
Series may be divided into two or more sub-classes. The related Prospectus
Supplement will specify whether a Class has been so divided and the terms of
each sub-class. Within a Class, one or more of the sub-classes may be
subordinated to other sub-classes or may be entitled to a specified priority in
the distributions specified in the related Prospectus Supplement. The Holders of
each sub-class of a Class of Certificates will be entitled to the percentages
(which may be 0%) of principal or interest payments or both on the related
Contracts as specified in the related Prospectus Supplement. The related
Prospectus Supplement will specify the minimum denomination or initial principal
amount of Contracts evidenced by a single Certificate of each Class of
Certificates of a Series (a "Single Certificate").
Distributions of principal and interest on the Certificates will be made on
the payment dates set forth in the related Prospectus Supplement (each, a
"Remittance Date") to the persons in whose names the Certificates are registered
at the close of business on the related record date specified in the related
Prospectus Supplement (the "Record Date"). Distributions will be made by check
mailed to the address of the person entitled thereto as it appears on the
Certificate Register, or, to the extent described in the related Agreement by
wire transfer, except that the final distribution in retirement of Certificates
will be made only upon presentation and surrender of the Certificates at the
office or agency of the Trustee specified in the final distribution notice to
Certificateholders.
Global Certificates
The Certificates of ahClassatey Prospectus Supplement (the "Record Date").
Distributions will be made by chec mailed to the address of the person entitled
thereto as it appears on the Certificate Register, or, to the extent described
in the related Agreement by wire transfer, except that the final distribution in
retirement of Certificates will be made only upon presentation and surrender of
the Certificates at the office o form. If the Certificates of a Class are issued
in the form of one or more Global Certificates, the term "Certificateholder"
should be understood to refer to the beneficial owners of the Global
Certificates, and the rights of such Certificateholders will be limited as
described under this subheading.
Global Certificates will be issued in registered form. Unless and until it
is exchanged in whole or in part for Certificates in definitive form, a Global
Certificate may not be transferred except in whole by the Depositary for such
Global Certificate to a nominee of such Depositary or by a nominee of such
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Depositary to such Depositary or another nominee of such Depositary or by such
Depositary or any such nominee to a successor of such Depositary or a nominee of
such successor.
The specific terms of the depositary arrangement with respect to any
Certificates of a Class will be described in the related Prospectus Supplement.
It is anticipated that the following provisions will apply to all depositary
arrangements:
Upon the issuance of a Global Certificate, the Depositary for such Global
Certificate will credit on its book-entry registration and transfer system,
the respective denominations of the Certificates represented by such Global
Certificate to the accounts of institutions that have accounts with such
Depositary ("participants"). Ownership of beneficial interests in a Global
Certificate will be limited to participants or persons that may hold
interests through participants. Ownership of beneficial interests in such
Global Certificate will be shown on, and the transfer of that ownership
will be effected only through records maintained by the Depositary for such
Global Certificate or by participants or persons that hold through
participants. The laws of some states require that certain purchases of
securities take physical delivery of such securities in definitive form.
Such limits and such laws may impair the ability to transfer beneficial
interests in a Global Certificate.
So long as the Depositary for a Global Certificate, or its nominee, is the
owner of each Global Certificate, such Depositary or such nominee, as the
case may be, will be considered the sole owner or Holder of the
Certificates represented by such Global Certificate for all purposes under
the Agreement relating to such Certificates. Except as set forth below,
owners of beneficial interests in a Global Certificate will not be entitled
to have Certificates of the Series represented by such Global Certificate
registered in their names, will not receive or be entitled to reserve
physical delivery of Certificates of such Series in definitive form and
will not be considered the owners or Holders thereof under the Agreement
governing such Certificates.
Distributions or payments on Certificates registered in the name of or held
by a Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner for the Holder of the
Global Certificate representing such Certificates. In addition, all reports
required under the applicable Agreement to be made to Certificateholders
(as described below under "Reports to Certificateholders") will be
delivered to the Depositary or its nominee, as the case may be. None of the
Company, Servicer, Trustee, or any agent thereof (including any applicable
Certificate Registrar or Paying Agent), will have any responsibility or
liability for any impact of the records relating to or payments made on
account of beneficial ownership interests in a Global Certificate or for
maintaining, supervising or reviewing any records relating to such
beneficial ownership interests or for providing reports to the related
beneficial owners.
The Company expects that the Depositary for Certificates of a Class, upon
receipt of any distribution or payment in respect of a Global Certificate,
will credit immediately participants' accounts with payments in amounts
proportionate to their respective beneficial interest in such Global
certificate as shown on the records of such Depositary. The Company also
expects that payments by participants to owners of beneficial interests in
such Global Certificate held through such participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in "street name,"
and will be the responsibility of such participants.
If a Depositary for Certificates of a Class is at any time unwilling or
unable to continue as Depositary and a successor depositary is not
appointed by or on behalf of the Company within the time period specified
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in the Agreement, the Company will cause to be issued Certificates of such
Class in definitive form in exchange for the related Global Certificate or
Certificates. In addition, the Company may at any time and in its sole
discretion determine not to have any Certificates of a Class represented by
one or more Global Certificates and, in such event, will cause to be issued
Certificates of such Class in definitive form in exchange for the related
Global Certificate or Certificates. Further, if the Company so specifies
with respect to the Certificates of a Class, an owner of a beneficial
interest in a Global Certificate representing Certificates of such Class
may, on terms acceptable to the Company and the Depositary for such Global
Certificate, receive Certificates of such Class in definitive form. In any
such instance, an owner of a beneficial interest in a Global Certificate
will be entitled to physical delivery in definitive form of Certificates of
the Class represented by such Global Certificate equal in denominations to
such beneficial interest and to have such Certificates registered in its
name.
Conveyance of Contracts
The Company will sell, transfer, assign, set over and otherwise convey to
the Trustee on behalf of the Trust all right, title and interest of the Company
in the Contracts, including, without limitation, all security interests created
thereby and any related mortgages, deeds of trust or similar instruments, all
principal and interest received on or with respect to the Contracts after the
Cut-off Date (other than receipts of principal and interest due on or with
respect to the Contracts on or before the Cut-off Date), all principal and
interest received by the Company on or before the Cut-off Date which was due
after the Cut-off Date, all rights under certain hazard insurance policies on
the related Manufactured Homes, the proceeds from any errors and omissions
protection policy and any blanket hazard insurance policy maintained pursuant to
an Agreement to the extent such proceeds relate to the Contracts or the
Manufactured Homes, all documents contained in the Contract files, all rights to
the related portion of certain hazard insurance premiums for policies purchased
by CITSF prior to the Cut-off Date and all proceeds derived from any of the
foregoing. (Section 2.01.) On behalf of the Trust, as the issuer of the related
Series of Certificates, the Trustee, concurrently with such conveyance, will
execute and deliver the Certificates to the order of the Company. The Contracts
will be as described on a list attached to the Agreement. (Sections 1.02 and
2.02.) Such list will include, among other things, the approximate amount of
monthly payments due from obligors under the Contracts as of the Cut-off Date,
the Contract Rate on each Contract as of the Cut-off Date and the maturity date
of each Contract. Such list will be available for inspection by any
Certificateholder at the principal executive office of the Servicer. (Sections
1.02 and 5.04.) Prior to the conveyance of the Contracts to the Trust, CITSF
will complete a review of all of the Contract files, including the certificates
of title to, or other evidence of a perfected security interest in, the
Manufactured Homes and confirm the accuracy of the list of Contracts delivered
to the Trustee. Any Contract discovered not to agree with such list in a manner
that is materially adverse to the interests of the Trust in such Contract will
be repurchased by CITSF or replaced with another Contract, or, if the
discrepancy relates to the unpaid principal balance of a Contract, CITSF may
deposit cash in the separate account maintained at an Eligible Institution in
the name of the Trustee (the "Certificate Account") in an amount sufficient to
cure such discrepancy. (Section 3.05.) If the Trust includes a Pre-Funding
Account, the related Prospectus Supplement will specify the conditions that must
be satisfied prior to any transfer of Contracts purchased from funds on deposit
in the Pre-Funding Account, including the requisite characteristics of such
Contracts.
The Agreement will designate CITSF as custodian to maintain possession, as
the Trustee's agent, of the Contracts and any other documents related to the
Manufactured Homes. (Sections 2.03 and 4.01.) To facilitate servicing and save
administrative costs, the documents will not be physically segregated from other
similar documents that are in CITSF's possession. Uniform Commercial Code
financing statements will be filed in Oklahoma and New Jersey reflecting the
sale and assignment of the Contracts by CITSF to the Company and by the Company
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to the Trustee and CITSF's and the Company's accounting records and computer
systems will also reflect such sales and assignments. The Contracts will not be
stamped to reflect their assignment by CITSF to the Company and by the Company
to the Trustee. Therefore, if through fraud, negligence or otherwise, a
subsequent purchaser from CITSF or the Company were able to take physical
possession of the Contracts without knowledge of the assignment, the Trustee's
interest in the Contracts could be defeated. See "Special Considerations -- 5.
Security Interests and Certain Other Aspects of the Contracts". The Agreement
will designate the Servicer as the Trustee's agent, to maintain possession of
the documents relating to all Land-Secured Contracts.
Except as otherwise specified in the related Prospectus Supplement, CITSF
will make certain warranties in the Agreement with respect to each Contract as
of the Closing Date, including that (a) as of the Cut-off Date, or the date of
origination, if later, the most recent scheduled payment was made or was not
delinquent more than 60 days; (b) no provision of a Contract has been waived,
altered or modified in any respect, except by instruments or documents contained
in the Contract file; (c) each Contract is a legal, valid and binding obligation
of the obligor under such Contract (the "Obligor") and is enforceable in
accordance with its terms (except as may be limited by laws affecting creditors'
rights generally); (d) no right of rescission, set-off, counterclaim or defense
has been asserted with respect to any Contract; (e) each Contract is covered by
hazard insurance described below under "Servicing--Hazard Insurance"; (f) each
Contract was either (i) originated by a manufactured housing dealer acting in
the ordinary course of its business and was purchased by CITSF in the ordinary
course of its business, (ii) originated by an originating institution in the
ordinary course of its business or (iii) originated by CITSF in the ordinary
course of its business; (g) no Contract was originated in or is subject to the
laws of any jurisdiction whose laws would make the transfer of the Contract to
the Company pursuant to a purchase and sale agreement or to the Trustee pursuant
to the Agreement or pursuant to transfers of the Certificates or ownership of
the Trust unlawful; (h) each Contract complies with all requirements of law; (i)
no Contract has been satisfied, subordinated in whole or in part or rescinded,
and the Manufactured Home securing the Contract has not been released from the
lien of the Contract in whole or in part; (j) each Contract (other than a
Land-Secured Contract) creates a valid and enforceable perfected first priority
security interest in favor of CITSF (or, if CITSF did not originate the
Contract, the related contract originator or a successor to such contract
originator by direct or mesne assignment) in the Manufactured Home covered
thereby and, with respect to each Land-Secured Contract, the lien created
thereby is a valid and enforceable first or second lien in favor of CITSF (or,
if CITSF did not originate the Contract, the related contract originator or a
successor to such contract originator by direct or mesne assignment) on the
related real property (which, in a Land-Secured Contract, includes the
Manufactured Home) and such security interest or lien has been assigned by CITSF
to the Company and from the Company to the Trustee on behalf of the Trust; (k)
all parties to each Contract had legal capacity to execute such Contract; (l) no
Contract has been sold, assigned or pledged by CITSF to any person other than
the Company and, prior to the transfer of the Contracts by CITSF to the Company
and the Company to the Trust, CITSF had good and marketable title to each
Contract, free and clear of any encumbrance, equity, loan, pledge, charge, claim
or security interest, and was the sole owner and had full right to transfer such
Contract to the Company; (m) as of the Cut-off Date, or the date of origination
if later, there was no default, breach, violation or event permitting
acceleration under any Contract (except for payment delinquencies permitted by
clause (a) above), no event which with notice and the expiration of any grace or
cure period would constitute a default, breach, violation or event permitting
acceleration under such Contract, and CITSF has not waived any of the foregoing
(except for payment delinquencies permitted by clause (a) above); (n) as of the
Closing Date, there were, to the best of CITSF's knowledge, no liens or claims
which have been filed for work, labor or materials affecting a Manufactured Home
or any related Mortgaged Property securing a Contract, which are or may be liens
prior or equal to the lien of the Contract; (o) each Contract is a
fully-amortizing loan with a fixed Contract Rate and provides for level payments
over the term of such Contract; (p) each Contract contains customary and
enforceable provisions such as to render the rights and remedies of the
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Holder thereof adequate for realization against the collateral of the benefits
of the security provided thereby (except as may be limited by creditors' rights
generally); (q) the description of each Contract set forth in the list delivered
to the Trustee is true and correct; (r) except as specified in the related
Prospectus Supplement, no more than 85% of the Contracts had a Loan-to-Value
Ratio at origination greater than 90% and none of the Contracts had a
Loan-to-Value Ratio at origination greater than 125%; (s) if a Manufactured Home
is considered or classified as part of the real estate on which it is located
under the laws of the jurisdiction in which it is located (i) a UCC fixture
filing was made or (ii) a mortgage, deed of trust or similar instrument was
recorded, or (iii) under applicable law, even though the Manufactured Home is
part of the real estate on which it is located, no fixture filing or mortgage
recording is required to protect the priority of CITSF's security interest on
these Manufactured Homes or (iv) irrespective of (i), (ii) or (iii) foregoing,
no person in fact holds a security interest or mortgage lien upon the
Manufactured Home prior to CITSF's security interest therein; (t) the related
Manufactured Home is a "manufactured home" within the meaning of 42 United
States Code, Section 5402(6), and each Contract was originated by (i) a savings
and loan association, savings bank, commercial bank, credit union, insurance
company, or similar institution which is supervised and examined by a federal or
state authority, (ii) a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to Sections 203 and 211 of the National Housing Act, or
(iii) a financial institution approved for insurance by the Secretary of Housing
and Urban Development pursuant to Section 2 of the National Housing Act; and (u)
if a Contract was, at the time of its origination, insured by the FHA or
partially guaranteed by the VA, it has been serviced in accordance with the
contractual agreements and regulations of the FHA or the VA ("FHA/VA
Regulations"), the insurance or guarantee of the Contract under the FHA/VA
Regulations and related laws is in full force and effect, and no event has
occurred which, with or without notice or lapse of time or both, would impair
such insurance or guarantee. (Article III.)
If the Company elects to cause the Trust relating to a Series of
Certificates to be treated as a REMIC, CITSF will make warranties in the
Agreement with respect to the related Contracts as of the Closing Date,
including that (a) each Contract is a "qualified mortgage" under Section
860G(a)(3) of the Code, (b) each Manufactured Home is a "single family
residence" within the meaning of Section 25(e)(10) of the Code and (i) has a
minimum of 400 square feet of living space, (ii) has a minimum width in excess
of 102 inches and (iii) is of a kind customarily used at a fixed location and
(c) none of the Contracts had a loan-to-value ratio greater than 125% at the
time of origination, and in the case of a Contract that has been modified, at
the time of origination and at the time such Contract has been modified. For
purposes of computing such loan-to-value ratio for a Contract which, with
respect to the real estate on which the related Manufactured Home is located, is
not secured by a first mortgage, the fair market value of the Manufactured Home
and other property securing the Contract must be reduced by the amount of any
lien that is senior to the Contract, and must be further reduced by a
proportionate amount of any lien that is in parity with the Contract.
Under the terms of the Agreement and subject to the conditions specified in
the preceding paragraph and to CITSF's option to effect a substitution as
described in the next paragraph, CITSF will be obligated to repurchase for the
Repurchase Price (as defined below) any Contract not later than 85 days after
CITSF receives written notice from the Trustee or the Servicer or not later than
90 days after CITSF becomes aware of (i) a breach of any representation or
warranty of CITSF in the Agreement that materially adversely affects the Trust's
interest in any Contract if such breach has not been cured or (ii) the
occurrence of certain other events specified in the Agreement, including events
rendering such Contract unenforceable, which have not been cured. (Section
3.05.) The Repurchase Price for any Contract will be the remaining principal
amount outstanding on such Contract on the date of repurchase plus accrued and
unpaid interest thereon at its Contract Rate to the Due Date in the month
immediately preceding such repurchase. (Section 1.02.) This repurchase
obligation constitutes the sole remedy available to the Trust and the
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Certificateholders for a breach of a warranty under the Agreement with respect
to the Contracts (but not with respect to any other breach by CITSF of its
obligations under the Agreement). If a prohibited transaction tax under the
REMIC provisions of the Code is incurred in connection with such repurchase and
a REMIC Election has been made with respect to such Series, distributions
otherwise payable to the Holders of the Class which constitutes the "residual
interest" in such REMIC will be applied to pay such tax. CITSF will be required
to pay the amount of such tax that is not funded out of such distributions.
(Section 3.05.)
In lieu of purchasing a Contract as specified in the preceding paragraph,
during the two-year period following the Closing Date, CITSF may, at its option,
substitute an Eligible Substitute Contract (as defined below) for the Contract
that it is otherwise obligated to repurchase (referred to herein as the
"Replaced Contract"). An Eligible Substitute Contract is a Contract that
satisfies or does not cause to be incorrect, as of the date of its substitution,
the representations and warranties specified in Article III of the Agreement,
has a Scheduled Principal Balance that is not greater than the Scheduled
Principal Balance of the Replaced Contract, has a Contract Rate that is at least
equal to the Contract Rate of the Replaced Contract and has a remaining term to
scheduled maturity that is not greater than the remaining term to scheduled
maturity of the Replaced Contract. (Section 1.02.) CITSF will be required to
deposit in the Certificate Account cash in the amount, if any, by which the
Scheduled Principal Balance of the Replaced Contract exceeds the Schedule
Principal Balance of the Contract being substituted. Such deposit will be deemed
to be a Partial Principal Prepayment. (Sections 1.02 and 3.05.)
Payments on Contracts
Each Certificate Account will be a trust account established by the Trustee
on behalf of the Trust as to each Series of Certificates in the name of the
Trustee with the Trustee or any depository institution or trust company (which
may be the Trustee or an Affiliate of the Trustee) organized under the laws of
the United States or any state, the deposits of which are insured to the full
extent permitted by law by the Bank Insurance Fund (presently administered by
the Federal Deposit Insurance Corporation), which is subject to supervision and
examination by federal or state authorities and whose short-term securities or
unsecured long-term debt has been rated P-1 or higher by Moody's Investors
Service, Inc. ("Moody's") in the case of short-term securities, or in one of the
two highest rating categories by Moody's in the case of unsecured long-term
debt, or with an institution otherwise acceptable to the rating agency without
reduction or withdrawal of the rating assigned to the relevant certificates. The
collateral eligible to secure accounts in the Certificate Account is limited to
United States government securities and other high-quality investments
("Eligible Investments"). A Certificate Account may be maintained as an interest
bearing account, or the funds held therein may be invested pending each
succeeding Remittance Date in Eligible Investments.
Unless otherwise specified herein or in the related Prospectus Supplement,
the Servicer will deposit in the Certificate Account no later than two business
days following receipt thereof the following payments and collections received
or made by it subsequent to the Cut-off Date (including scheduled payments of
principal and interest due after the Cut-off Date but received by the Servicer
on or before the Cut-off Date):
(i) all Obligor payments in respect of principal, ncluding principal
prepayments, on the Contracts;
(ii) all Obligor payments in respect of interest on the Contracts except
amounts received as late payment fees, extension fees, assumption fees or
similar fees, which fees together with any net income and gain from
investments of funds in the Certificate Account, are included as part of
the Servicer's servicing fees;
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(iii) all amounts received and retained in connection with the liquidation of
defaulted Contracts ("Liquidation Proceeds"), net of liquidation
expenses ("Net Liquidation Proceeds");
(iv) all proceeds received under any hazard or other insurance policy
covering any Contract, other than proceeds to be applied to the
restoration or repair of the Manufactured Home or released to the
Obligor;
(v) any Advances made as described under "Advances" below, and certain other
amounts required under the Agreement to be deposited in the Certificate
Account; and
(vi) all amounts received from any credit enhancement provided with respect to
a Series of Certificates.
Subject to compliance with the Agreement, for as long as CITSF remains the
Servicer under the Agreement, and CITSF remains a direct or indirect subsidiary
of CIT, and if CIT has and maintains a short-term debt rating of P-1 by Moody's
and the Trustee shall have received an opinion of counsel that any action taken
pursuant to this sentence shall not adversely affect the status of the Trust as
a REMIC, if applicable, or result in the imposition of a tax on the trust, the
Servicer will not be required to make such deposits into the Certificate Account
(the "Delayed Deposits") until the business day immediately preceding the next
Remittance Date.
Distributions on Certificates
Except as otherwise provided in the related Prospectus Supplement, on each
Remittance Date, the Trustee will withdraw from the applicable Certificate
Account and distribute to the Certificateholders of each Class (other than a
Series having a Class or sub-class of Subordinated Certificates, as described
below), either the specified interest of such Class in the Contract Pool times
the aggregate of all amounts on deposit in the Certificate Account as of the
third business day preceding the Remittance Date or such other date as may be
specified in the related Prospectus Supplement (the "Determination Date"), or,
in the case of a Series of Certificates comprised of Classes which have been
assigned a Stated Balance, payments of interest and payments in reduction of the
Stated Balance from all amounts on deposit in the Certificate Account on the
Determination Date, in the priority and calculated in the manner set forth in
the related Prospectus Supplement, except in each case: (i) all payments on the
Contracts that were due on or before the Cut-off Date; (ii) all payments or
collections received after the Due Period preceding the month in which the
Remittance Date occurs; (iii) all scheduled payments of principal and interest
due on a date or dates subsequent to the Due Period preceding the Determination
Date; (iv) amounts representing reimbursement for Advances, such reimbursements
being limited, if so specified in the related Prospectus Supplement, to amounts
received on particular Contracts as late collections of principal or interest as
to which the Servicer has made an unreimbursed Advance; and (v) amounts
representing reimbursement for any unpaid Servicing Fees (as defined below) and
expenses from Liquidation Proceeds, condemnation proceeds and proceeds of
insurance policies with respect to the related Contracts and other amounts which
either are not required to be deposited in the Certificate Account or which may
be withdrawn from the Certificate Account as set forth in the Agreement. The
"Due Period" is the period for which interest and principal on the Contracts is
calculated for a related Remittance Date, as specified in the related Prospectus
Supplement. The amounts on deposit in the Certificate Account on a Determination
Date, less the amounts specified in (i) through (v) above, with respect to a
Series of Certificates having a Class or sub-class of Subordinated Certificates,
are referred to herein as the "Amount Available".
Unless otherwise specified in the related Prospectus Supplement, with
respect to a Series of Certificates having a Class or sub-class of Subordinated
Certificates, on each Remittance Date, the Trustee will withdraw from the
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applicable Certificate Account and distribute to the Holders of Senior
Certificates, in the aggregate, the lesser of (i) the Senior Distribution Amount
plus the Outstanding Senior Shortfall (each defined below) or (ii) the
percentage interest (which may vary as specified in the related Prospectus
Supplement) of the Classes (or sub-classes) of Senior Certificates times the
Amount Available plus (A) the percentage interest (which may vary as specified
in the related Prospectus Supplement) of the Classes (or sub-classes) of
Subordinated Certificates times the Amount Available not to exceed the Available
Subordinate Amount, if any, as defined in the related Prospectus Supplement and
(B) Advances, if any, made by the Servicer. The distributions made to the
Certificateholders of each Class or sub-class of Senior Certificates shall be
calculated as described in the related Prospectus Supplement and may vary as to
the allocation of principal or interest or both. Unless otherwise specified in
the related Prospectus Supplement, the "Senior Distribution Amount" is an amount
equal to the percentage interest of the Classes of Senior Certificates times:
(i) all regularly scheduled payments of principal and interest which were
due on Contracts during the related Due Period, whether or not received,
with the interest portions thereof adjusted to the Remittance Rate;
(ii) all Principal Prepayments made by the Obligor during the prior Due
Period;
(iii) with respect to each Contract not described in (iv) below, all insurance
proceeds, all condemnation awards and any other cash proceeds from a
source other than the Obligor, to the extent required to be deposited in
the Certificate Account, which were received during the prior Due
Period, net of related unreimbursed Advances and net of any portion
thereof which, as to any Contract, constitutes late collections;
(iv) with respect to each Contract as to which a receipt of Liquidation
Proceeds has been received during the prior Due Period or other event of
termination of the Contract has occurred during the prior Due Period, an
amount equal to the principal amount of the Contract outstanding
immediately prior to the date of receipt of such Liquidation Proceeds or
such other event of termination, reduced by the principal portion of any
unpaid payments due on or before such date to the extent previously
advanced against or otherwise received by the Certificateholder, plus
interest thereon from the most recent Due Date at the Remittance Rate;
and
(v) with respect to each Contract repurchased by CITSF for which the
repurchase price was not distributed previously, an amount equal to the
principal amount of the Contract outstanding on the date of such
repurchase reduced by the principal portion of any unpaid payments due
on or before such date (but only to the extent advanced against or
otherwise received by the Certificateholders), plus interest thereon to
the most recent Due Date.
The "Outstanding Senior Shortfall" for any sub-class of Senior Certificates
means as of any date, to the extent not previously paid, the aggregate of the
amounts by which the Senior Distribution Amount for such sub-class for any
Remittance Date exceeded the amount actually paid on such Remittance Date plus
interest at the Remittance Rate.
Unless otherwise specified in the related Prospectus Supplement, on each
Remittance Date, the Servicer shall distribute to the Classes (and sub-classes)
of Subordinate Certificateholders, in the order set forth in the Related
Prospectus Supplement, the balance of the Amount Available, if any, after the
payment to the Senior Certificateholders, as described above.
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Unless otherwise specified in the Prospectus Supplement relating to a
Series of Certificates, one or more Classes or sub-classes of which have been
assigned a Stated Balance, distributions in reduction of the Stated Balance of
such Certificates will be made on each Remittance Date to the Certificateholders
of the Class or sub-class then entitled to receive such Certificate
distributions until the aggregate amount of such distributions have reduced the
Stated Balance of the Certificates of such Class or sub-class to zero.
Allocation of distributions in reduction of Stated Balance will be made to each
Class or sub-class of such Certificates in the order specified in the related
Prospectus Supplement, which, if so specified in such Prospectus Supplement, may
be concurrently. Unless otherwise specified in the related Prospectus
Supplement, distributions in reduction of the Stated Balance of each Certificate
of a Class or sub-class then entitled to receive such distributions will be made
pro rata among the Certificates of such Class or sub-class.
Unless otherwise specified in the related Prospectus Supplement, the
maximum amount which will be distributed in reduction of Stated Balance to
Holders of Certificates of a Class or sub-class then entitled thereto on any
Remittance Date will equal, to the extent funds are available, the sum of (i)
the amount of the interest, if any, that has accrued but is not yet payable on
the Compound Interest Certificates of such Series, if any, from the prior
Remittance Date (or since the date specified in the related Prospectus
Supplement in the case of first Remittance Date), (ii) the Certificate
Remittance Amount and (iii) the applicable percentage of the Excess Cash Flow,
if any, specified in such Prospectus Supplement.
The "Certificate Remittance Amount" means, unless otherwise specified in
the related Prospectus Supplement, with respect to a Series of Certificates
providing for sequential distributions in reduction of the Stated Balance of the
Classes of such Series, as of any Remittance Date, the amount, if any, by which
the then outstanding Stated Balance of the Classes of Certificates of such
Series (before taking into account the amount of interest accrued on any Class
of Compound Interest Certificates to be added to the Stated Balance thereof on
such Remittance Date) exceeds the asset value of the Contracts included in the
Trust for such Series as of the end of the related Due Period. "Compound
Interest Certificates" are Certificates on which interest may accrue but not be
paid for the period described in the related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, the
Certificate Remittance Amount with respect to a Remittance Date will equal the
amount, if any, by which the then outstanding Stated Balance of the Certificates
of the related Classes or sub-classes of Compound Interest Certificates of such
Series (before taking into account the amount of interest accrued on any Class
or sub-class of Compound Interest Certificates of such Series to be added to the
Stated Balance thereof on such Remittance Date) exceeds the asset value of the
Contracts in the Contract Pool underlying such Series as of the end of the
applicable Due Period specified in the related Prospectus Supplement. For the
purposes of determining the Certificate Remittance Amount with respect to a
Remittance Date, the asset value of the Contracts will be reduced to take into
account the interest evidenced by such Classes or sub-classes of Certificates in
the principal distributions on or with respect to such Contracts received by the
Trustee during the preceding Due Period.
Unless otherwise specified in the Prospectus Supplement relating to a
Series of Certificates, one or more Classes or sub-classes of which have been
assigned a Stated Balance, Excess Cash Flow represents the excess of (i) the
interest evidenced by such Classes or sub-classes of Certificates in the
distributions received on the Contracts underlying such Series in the Due Period
preceding a Remittance Date for such Series (and, in the case of the first Due
Period, the amount deposited in the Certificate Account on the closing date for
the sale of such Certificates), together with income from the reinvestment
thereof, (ii) the sum of all interest accrued, whether or not then payable, on
the Certificates of such Classes or sub-classes since the preceding Remittance
Date (or since the date specified in the related Prospectus Supplement in the
case of the first Remittance Date), the Certificate Remittance Amount for the
then current Remittance Date and, if applicable, any payments made on any
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Certificates of such Class or sub-class pursuant to any special distributions in
reduction of Stated Balance during such Due Period.
Within the time specified in the Agreement and described in the related
Prospectus Supplement, the Servicer will furnish a statement to the Trustee
setting forth the amount to be distributed on the related Remittance Date on
account of principal and interest, stated separately, and a statement setting
forth certain information with respect to the Contracts.
If there are not sufficient funds in the Certificate Account to make the
full distribution to Certificateholders described above on any Remittance Date,
the Servicer will distribute the funds available for distribution to the
Certificateholders of each Class in accordance with the respective interests
therein, except that Subordinated Certificateholders, if any, will not, subject
to the limitations described in the related Prospectus Supplement, receive any
distributions until Senior Certificateholders receive the Senior Distribution
Amount plus the Outstanding Senior Shortfall. The difference between the amount
which the Certificateholders would have received if there had been sufficient
eligible funds in the Certificate Account and the amount actually distributed,
plus interest at the Remittance Rates of the respective Contracts to which such
shortfall is attributable, will be added to the amount which the
Certificateholders are entitled to receive on the next Remittance Date.
Special Distributions. To the extent specified in the Prospectus Supplement
relating to a Series of Certificates, one or more Classes or sub-classes of
which have been assigned a Stated Balance and having less frequent than monthly
Remittance Dates, such Classes or sub-classes may receive special distributions
in reduction of Stated Balance ("Special Distributions") in any month, other
than a month in which a Remittance Date occurs, if, as a result of principal
prepayments on the Contracts in the related Contract Pool or low reinvestment
yields, the Trustee determines, based on assumptions specified in the related
Agreement, that the amount of cash anticipated to be on deposit in the
Certificate Account on the next Remittance Date for such Series and available to
be distributed to the Holders of the Certificates of such Classes or sub-classes
may be less than the sum of (i) the interest scheduled to be distributed to
Holders of the Certificates of such Classes or sub-classes and (ii) the amount
to be distributed in reduction of Stated Balance of such Certificates on such
Remittance Date. Any such Special Distributions will be made in the same
priority and manner as distributions in reduction of Stated Balance would be
made on the next Remittance Date.
Subordinated Certificates. The rights of a Class or sub-class of
Certificateholders of a Series to receive any or a specified portion of
distributions of principal or interest or both with respect to the Contracts, to
the extent specified in the related Agreement and described in the related
Prospectus Supplement, may be subordinated to such rights of other
Certificateholders. With respect to a Series of Certificates having a Class or
sub-class of Subordinated Certificates, the Prospectus Supplement will set
forth, among other things, the extent to which such Class or sub-class is
subordinated (which may include a formula for determining the subordinated
amount or for determining the allocation of the Amount Available among Senior
Certificates and Subordinated Certificates), the allocation of losses among the
Classes or sub-classes of Subordinated Certificates, the period or periods of
such subordination, the minimum subordinated amount, if any, and any
distributions or payments which will not be affected by such subordination. The
protection afforded to the Senior Certificateholders from the subordination
feature described above will be effected by the preferential right of the Senior
Certificateholders to receive current distributions from the Contract Pool.
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Advances
To the extent provided in the related Prospectus Supplement, the Servicer
is obligated to make periodic advances ("Advances") of cash from its own funds
or, if so specified in the related Prospectus Supplement, from excess funds in
the Certificate Account not then required to be distributed to
Certificateholders for distribution to the Certificateholders (other than
Subordinated Certificateholders) in an amount equal to the difference between
the amount due to them and the amount in the Certificate Account eligible for
distribution to them pursuant to the Agreement, but only to the extent such
difference is due to delinquent payments of principal and interest for the
preceding Due Period and only to the extent the Servicer determines such
advances are recoverable from future payments and collections on the Contracts.
The Servicer's obligation to make Advances, if any, may, as specified in the
related Prospectus Supplement, be limited in amount. If so specified in the
related Prospectus Supplement, the Servicer will not be obligated to make
Advances until all or a specified portion of the Reserve Fund, if any, for the
related Series is depleted. Advances are intended to maintain a regular flow of
scheduled interest and principal payments to the Senior Certificateholders, not
to guarantee or insure against losses. Accordingly, any funds so advanced are
recoverable by the Servicer out of amounts received on particular Contracts
which represent late recoveries of principal or interest respecting which any
such Advance was made.
Example of Distributions
The following is an example of the flow of funds as it would relate to a
hypothetical series of Certificates issued, and with a Cut-off Date occurring in
June, 1994 (all days are assumed to be business days):
June 26 - July 25 .... (1) Due Period. Servicer receives scheduled payments
on the Contracts and any Principal Prepayments
made by Obligors and applicable interest thereon.
July 30 .............. (2) Record Date.
August 12 ............ (3) Determination Date. Distribution amount determined.
August 15 ............ (4) Remittance Date.
- --------
(1) Scheduled payments and Principal Prepayments may be received at any time
during this period and will be deposited in the Certificate Account by the
Servicer for distribution to Certificateholders. When a Contract is prepaid
in full, interest in the amount prepaid is collected from the Obligor only
to the date of payment.
(2) Distributions on the Remittance Date will be made to Certificateholders
of record at the close of business or the last business day of the month
immediately preceding the month of distribution.
(3) On August 12 (the third business day prior to the Remittance Date), the
Servicer will determine the amounts of principal and interest which will be
passed through on the Remittance Date. In addition, the Servicer may
advance funds to cover any delinquencies, in which event the distribution
to Certificateholders on the Remittance Date will include the full amounts
of principal and interest due during the Due Period. The Servicer will also
calculate any changes in the relative interests evidenced by the Senior
Certificates and the Subordinated Certificates in the Trust.
(4) On August 15, the amounts determined on August 12 will be distributed to
Certificateholders.
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Succeeding months follow the pattern of (2) through (4). The flow of funds
with respect to any Series of Certificates may differ from the above example, as
specified in the related Prospectus Supplement.
Indemnification
The Agreement requires CITSF to defend, hold harmless and indemnify the
Company, the Trustee and the Certificateholders (which indemnification will
survive any removal of the Servicer as servicer of the Contracts) from and
against any and all liability, loss, costs and expenses resulting from any
affirmative claims for recovery asserted or collected by Obligors under the
Contracts. (Section 11.10.) The Agreement also requires CITSF to pay, and to
defend, indemnify and hold harmless the Company, the Trust, the Trustee and the
Certificateholders for any taxes which may at any time be asserted with respect
to, and as of the date of, the conveyance of the Contracts to the Trust (but not
including any tax arising out of the creation of the Trust and the issuance of
the Certificates or distributions with respect thereto) and the costs, expenses
and reasonable counsel fees in defending the same. (Section 10.02.)
The Agreement also requires the Servicer, in connection with its duties as
servicer of the Contracts, to defend and indemnify the Company, the Trust, the
Trustee and the Certificateholders against any and all costs, expenses, losses,
damages, claims and liabilities, including reasonable fees and expenses of
counsel and expenses of litigation, in respect of any negligent or wrongful
action taken or failed to be taken by the Servicer with respect to any Contract
while it was the Servicer. (Section 10.03.)
Servicing
Pursuant to the Agreement, the Servicer will service and administer the
Contracts assigned to the Trustee as more fully set forth below. The Servicer
will perform diligently all services and duties specified in each Agreement,
exercising the degree of skill and care consistent with the same degree of skill
and care that the Servicer exercises with respect to similar contracts serviced
by it for its own account. The duties to be performed by the Servicer will
include collection and remittance of principal and interest payments, collection
of insurance claims and, if necessary, repossessions.
The Servicer will make reasonable efforts to collect all payments called
for under the Contracts and, consistent with the Agreement and any FHA insurance
and VA guaranty, will follow such collection procedures as it follows with
respect to mortgage loans or contracts serviced by it that are comparable to the
Contracts.
Hazard Insurance. Except as otherwise specified in the related Prospectus
Supplement, the terms of the Agreement will require the Servicer to cause to be
maintained with respect to each Contract and each Manufactured Home that has
been repossessed in connection with certain defaulted Contracts one or more
Hazard Insurance Policies which provide, at a minimum, the same coverage as a
standard form fire and extended coverage insurance policy that is customary for
manufactured housing, issued by a company authorized to issue such policies in
the state in which the Manufactured Home is located, and in an amount which is
not less than the maximum insurable value of such Manufactured Home or the
principal balance due from the Obligor on the related Contract, whichever is
less; provided, however, that the amount of coverage provided by each Hazard
Insurance Policy shall be sufficient to avoid the application of any co-
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insurance clause contained therein and provided further that such Hazard
Insurance Policies may provide for customary deductible amounts. Each Hazard
Insurance Policy caused to be maintained by the Servicer shall contain a
standard loss payee clause in favor of the Servicer and its successors and
assigns. If any Obligor is in default in the payment of premiums on its Hazard
Insurance Policy or Policies, the Servicer shall pay such premiums out of its
own funds, and may add separately such premium to the Obligor's obligation as
provided by the Contract, but may not add such premium to the remaining
principal balance of the Contract.
The Servicer may maintain, in lieu of causing individual Hazard Insurance
Policies to be maintained with respect to each Manufactured Home, and shall
maintain, to the extent that the related Contract does not require the Obligor
to maintain a Hazard Insurance Policy with respect to the related Manufactured
Home, one or more blanket insurance policies covering losses on the Obligors'
interest in the Contracts resulting from the absence or insufficiency of
individual Hazard Insurance Policies. Any such blanket policy shall be
substantially in the form and in the amount carried by the Servicer as of the
date of the Agreement. The Servicer shall pay the premium for such policy on the
basis described therein but shall not be required to deposit any deductible
amount with respect to claims under individual Hazard Insurance Policies
maintained as described in the immediately preceding paragraph or claims under
any blanket insurance policy. If the insurer thereunder shall cease to be
acceptable to the Servicer, the Servicer shall exercise its best reasonable
efforts to obtain from another insurer a replacement policy comparable to such
policy.
If the Servicer shall have repossessed a Manufactured Home on behalf of the
Trustee, the Servicer shall maintain at its expense hazard insurance with
respect to such Manufactured Home.
Evidence as to Compliance. Unless otherwise specified in the related
Prospectus Supplement, each Agreement will require the Servicer to deliver to
the Trustee a monthly report prior to each Remittance Date, setting forth
certain information regarding the Contract Pool and the Certificates of such
Series as is specified in the related Prospectus Supplement. Each such report to
the Trustee will be accompanied by a statement from an appropriate officer of
the Servicer certifying the accuracy of such report and stating that the
Servicer has not defaulted in the performance of its obligations under the
Agreement. Unless otherwise specified in the related Prospectus Supplement, each
Agreement will require that on or before April 1 of each year, the Servicer will
deliver to the Trustee a report of independent public accountants stating that
such firm has, with respect to the Servicer's overall servicing operations,
examined such operations in accordance with the requirements of the Uniform
Single Audit Program for Mortgage Bankers, and stating such firm's conclusions
relating thereto.
The Servicer will furnish to the Trustee such reasonably pertinent
underlying data as can be generated by the Servicer's existing data processing
system without undue modification or expense. (Article VI.)
Certain Matters Regarding the Servicer. The Servicer may not resign from
its obligations and duties under an Agreement except upon a determination that
its duties thereunder are no longer permissible under such Agreement or
applicable law. No such resignation will become effective until the Trustee or a
successor servicer has assumed the Servicer's responsibilities and obligations
under such Agreement. The Servicer can only be removed as servicer pursuant to
an Event of Termination as discussed below. Any person with which the Servicer
is merged or consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Servicer is a party, or any person
succeeding to the business of the Servicer, will be the successor to the
Servicer under the Agreement. (Section 12.01.)
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Unless otherwise specified in the related Prospectus Supplement, each
Agreement will also provide that neither the Servicer nor the Company, nor any
director, officer, employee or agent of the Servicer or the Company, will be
under any liability to the Trustee or the Certificateholders for any action
taken or for refraining from the taking of any action in good faith pursuant to
the Agreement, or for errors in judgment; provided, however, that the Servicer,
the Company or any such person will not be protected against any liability which
would otherwise be imposed by reason of the failure to perform its obligations
in compliance with the standards of care set forth in the Agreement. The
Servicer or the Company may, in its discretion, undertake any such action which
it may deem necessary or desirable with respect to the Agreement and the rights
and duties of the parties thereto and the interests of the Certificateholders
thereunder. In such event, the legal expenses and costs of such action and any
liability resulting therefrom will be expenses, costs and liabilities of the
Trust and the Servicer and the Company will be entitled to be reimbursed
therefor out of the Certificate Account.
The Servicer shall keep in force throughout the term of the Agreement (i)
at such time as the long-term debt of its parent is rated less than A3 by
Moody's, a policy or policies of insurance covering errors and omissions for
failure to maintain insurance as required by this Agreement, and (ii) a fidelity
bond. Such policy or policies and such fidelity bond shall be in such form and
amount as is generally customary among persons which service a portfolio of
manufactured housing contracts having an aggregate principal amount of $100
million or more and which are generally regarded as servicers acceptable to
institutional investors.
To the extent that nonpayment of any taxes or charges would result in the
creation of a lien upon any Manufactured Home having a priority equal or senior
to the lien of the related Contract (except for real estate taxes that would
create a lien for taxes that are not yet due and payable), the Servicer shall
advance any such delinquent tax or charge and be reimbursed by the related
Obligor or from Liquidation Proceeds in respect of such Contract.
Servicing Compensation and Payment of Expenses. For its servicing of the
Contracts, the Servicer will receive servicing fees ("Servicing Fees") which
include a monthly Servicing Fee ("Monthly Servicing Fee") for each Due Period
(paid on the next succeeding Remittance Date) which, unless otherwise stated in
the related Prospectus Supplement, will be equal to 1/12th of the product of
1.00% and the Pool Scheduled Principal Balance for such Remittance Date.
The Monthly Servicing Fee provides compensation for customary manufactured
housing contract third-party servicing activities to be performed by the
Servicer for the Trust and for additional administrative services performed by
the Servicer on behalf of the Trust. Customary servicing activities include
collecting and recording payments, communicating with Obligors, investigating
payment delinquencies, providing billing and tax records to obligors and
maintaining internal records with respect to each Contract. Administrative
services performed by the Servicer on behalf of the Trust include calculating
distributions to Certificateholders and providing related data processing and
reporting services for Certificateholders and on behalf of the Trustee. Expenses
incurred in connection with the servicing of the Contracts and paid by the
Servicer from its Servicing Fees include, without limitation, payments of all
fees and expenses incurred in connection with the enforcement of Contracts
(except Liquidation Expenses) and payment of expenses incurred in connection
with distributions and reports to Certificateholders. The Servicer will be
reimbursed out of the Liquidation Proceeds of a Liquidated Contract for all
ordinary and necessary Liquidation Expenses incurred by it in realizing the
related Manufactured Home. (Section 5.08.)
As part of its Servicing Fees, the Servicer will also be entitled to
retain, as compensation for the additional services provided in connection
therewith, any fees for late payments made by Obligors, extension fees paid by
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Obligors for the extension of scheduled payments and assumption fees for
permitted assumptions of Contracts by purchasers of the related Manufactured
Homes. (Section 1.02.) As part of its Servicing Fees, the Servicer will also be
entitled to retain the net income and gain from the investment of funds in the
Certificate Account.
Events of Termination. Except as otherwise specified in the related
Prospectus Supplement, Events of Termination under each Agreement will include
(i) any failure by the Servicer to make deposits required under an Agreement and
such failure continues unremedied for 5 business days (or such other period
specified in the related Prospectus Supplement) after the Servicer has become
aware that such deposit was required; (ii) any failure by the Servicer duly to
observe or perform in any material respect any other of its covenants or
agreements in the Agreement which continues unremedied for 30 days after the
giving of written notice of such failure; (iii) any assignment by the Servicer
of its duties or rights under the Agreement, except as specifically permitted
under the Agreement, or any attempt to make such an assignment; (iv) certain
events of insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings regarding the Servicer; and (v) the Servicer
is no longer an Eligible Servicer (as defined in the applicable Agreement).
Notice as used herein shall mean notice to the Servicer by the Trustee or the
Company, or to the Company, the Servicer and the Trustee by the Holders of
Certificates representing interests aggregating not less than 25% of the Trust.
Rights Upon Event of Termination. Except as otherwise specified in the
related Prospectus Supplement, so long as an Event of Termination remains
unremedied, the Trustee may, and at the written direction of the
Certificateholders of a Series evidencing interests aggregating 25% or more of
the related Trust, shall, unless prohibited by applicable law, terminate all
(but not less than all) of the Servicer's management, administrative, servicing
and collection functions under the related Agreement, whereupon (subject to
applicable law regarding the Trustee's ability to make advances), unless
prohibited by applicable law, the Trustee under the Agreement will succeed to
all the responsibilities, duties and liabilities of the Servicer under the
Agreement and will be entitled to similar compensation arrangements; provided,
however, that the Trustee will not assume any obligation of CITSF to repurchase
Contracts pursuant to the Agreement, including for breaches of representations
or warranties. Notwithstanding such termination, the Servicer shall be entitled
to payment of certain amounts payable to it prior to such termination, for
services rendered prior to such termination. No such termination will affect in
any manner CITSF's obligation to repurchase certain Contracts pursuant to the
Agreement, including for breaches of representations or warranties under the
Agreement. In the event that the Trustee would be obligated to succeed the
Servicer but is unwilling or unable so to act, it may appoint, or petition to a
court of competent jurisdiction for the appointment of, a Servicer. Pending such
appointment, the Trustee is obligated to act in such capacity, unless the
Trustee is prohibited by law from so acting. The Trustee and such successor may
agree upon the servicing compensation to be paid, which in no event (unless 100%
of the Certificateholders consent in writing) may be greater than the
compensation to the Servicer under the Agreement.
No Certificateholder will have any right under an Agreement to institute
any proceeding with respect to such Agreement unless the Holders of Certificates
evidencing interests aggregating not less than 25% of the related Trust
requested the Trustee in writing to institute such proceeding in its own name as
Trustee and have offered to the Trustee reasonable indemnity. The Trustee will
be under no obligation to take any action or institute, conduct or defend any
litigation under the Agreement at the request, order or direction of any of the
Holders of Certificates, unless such Certificateholders have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which the Trustee may incur.
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Reports to Certificateholders
The Servicer or the Trustee, as applicable, will forward to each
Certificateholder on each Remittance Date, or as soon thereafter as is
practicable, a report, as described in the related Prospectus Supplement.
In addition, within a reasonable period of time after the end of each
calendar year, the Servicer or Trustee, as applicable, will furnish to each
Certificateholder of record at any time during such calendar year a report
containing information relating to interest accrued and principal paid on its
Certificates during such calendar year and such other information as the
Servicer deems necessary or desirable for Certificateholders to prepare their
tax returns. Information in the monthly and annual reports provided to the
Certificateholders will not have been examined and reported upon by an
independent public accountant. However, the Servicer will provide to the Trustee
annually a report by independent public accountants with respect to the
servicing of the Contracts as described under "Servicing--Evidence as to
Compliance" above.
In addition, to the extent applicable, such report shall include:
(i) in the case of Certificates which are assigned a Stated Balance, the
amount of the distribution being made in reduction of Stated Balance
specified in the related Prospectus Supplement, and the Stated Balance
of each such Class of Certificates and a Single Certificate of the
Holder's Class after giving effect to the distribution in reduction of
Stated Balance made on such Remittance Date and after giving effect to
all Special Distributions since the preceding Remittance Date or since
the Closing Date in the case of the first Remittance Date; and
(ii) with respect to a Compound Interest Certificate (but only if the Holder
thereof shall not have received on such Remittance Date a distribution
of interest equal to the entire amount of interest accrued on such
Certificate during the related Due Period with respect to such
Remittance Date):
(A) the interest accrued on such Class of Compound Interest
Certificates and on a Single Certificate of such Class during the Due
Period (or specified interest accrual period) with respect to such
Remittance Date and added to the principal of such Compound Interest
Certificates; and
(B) the Stated Balance of such Class of Compound Interest
Certificates and of a Single Certificate of such Class after giving
effect to the addition thereto of all interest accrued thereon during
the Due Period (or specified interest accrual period) with respect to
such Remittance Date.
Amendment
Unless otherwise specified in the related Prospectus Supplement, the
Agreement may be amended by the Company, the Servicer and the Trustee without
the consent of the Certificateholders (i) to correct manifest error or to cure
any ambiguity, (ii) to correct or supplement any provision therein that may be
inconsistent with any other provision therein, (iii) if an election has been
made with respect to a particular Series of Certificates to treat the Trust as a
real estate mortgage investment conduit ("REMIC") within the meaning of Section
860D(a) of the Internal Revenue Code of 1986, as amended, to maintain the REMIC
status of the Trust and to avoid the imposition of certain taxes on the REMIC or
(iv) to make any other provisions with respect to matters or questions arising
under such Agreement that are not inconsistent with the provisions thereof,
provided that such action will not adversely affect in any material respect the
interests of the Certificateholders of the related Series.
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Unless otherwise specified in the related Prospectus Supplement, the
Agreement may be amended by the Company, the Servicer and the Trustee with the
consent of the Certificateholders evidencing, as to each Class of Certificates
affected thereby, interests aggregating not less than 51% of such Class, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of such Agreement or of modifying in any manner the rights of
the Certificateholders; provided, however, that no such amendment that reduces
in any manner the amount of, or delays the timing of, any payment received on or
with respect to Contracts which are required to be distributed on any
Certificate may be effective without the consent of the Holders of each such
Certificate.
Termination of the Agreement
The obligations created by each Agreement will terminate upon the date
calculated as specified in the Agreement, generally upon the last action
required to be taken by the Trustee on the final Remittance Date following the
earlier of (i) the purchase by the Servicer of all Contracts and all property
acquired in respect of any Contract remaining in the Trust as described below,
or (ii) the final payment or other liquidation of the last Contract remaining in
the Trust or the disposition of all property acquired upon repossession of any
Manufactured Home. In addition, unless otherwise specified in the related
Prospectus Supplement, the Company or the Servicer may, at its option, with
respect to any Series of Certificates, repurchase all Certificates or Contracts
remaining outstanding at such time as the aggregate unpaid principal balance of
such Contracts is less than the percentage of the aggregate unpaid principal
balance of the Contracts on the Cut-off Date specified with respect to such
Series in the related Prospectus Supplement. Unless otherwise provided in the
related Prospectus Supplement, the repurchase price will equal the principal
amount of such Contracts plus accrued interest from the first day of the month
of repurchase to the first day of the next succeeding month at the Contract
Rates borne by such Contracts.
The Trustee
The Prospectus Supplement for a Series of Certificates will specify the
Trustee under the related Agreement. The Trustee may have normal banking
relationships with the Company or its affiliates and the Servicer or its
affiliates.
The Trustee may resign at any time, in which event the Company will be
obligated to appoint a successor Trustee. The Company may also remove the
Trustee if the Trustee ceases to be eligible to continue as such under the
Agreement or if the Trustee becomes insolvent. Any resignation or removal of the
Trustee and appointment of a successor Trustee will not become effective until
acceptance of the appointment by the successor Trustee.
The Trustee will make no representation as to the validity or sufficiency
of the Agreement or the Certificates (other than its authentication or execution
thereof) or any Contract, Contract file or related document, and will not be
accountable for the use or application by the Company or CITSF of any funds paid
to the Company or CITSF in consideration of the conveyance of the Contracts or
deposited into or withdrawn from the Certificate Account. (Section 11.03.) If no
Event of Termination has occurred and after the curing of all Events of
Termination which may have occurred, the Trustee will be required to perform
only those duties specifically required of it under the Agreement. However, upon
receipt of the various certificates, reports or other instruments required to be
furnished to it, the Trustee will be required to examine them to determine
whether they conform as to form to the requirements of the Agreement. (Section
11.01.) Whether or not an Event of Termination has occurred and after the curing
of all Events of Termination which may have occurred, the Trustee is not
required to expend or risk its own funds or otherwise incur any financial
liability in the performance of its duties or the exercise of its powers if it
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has reasonable grounds to believe that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
(Section 11.01.)
Under the Agreement, CITSF agrees to pay to the Trustee on each Remittance
Date (a) reasonable compensation for all services rendered by it thereunder
(which compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust) and (b) reimbursement for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any provision of the Agreement (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to the
Trustee's negligence or bad faith. The Servicer has agreed to indemnify the
Trustee for, and to hold it harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the Trust and the Trustee's
duties thereunder, including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or performance of any of
the Trustee's powers or duties thereunder. (Section 11.05.)
DESCRIPTION OF FHA INSURANCE AND VA GUARANTEES
Certain of the Contracts may be insured by the Federal Housing
Administration (the "FHA") or guaranteed by the Veterans' Administration (the
"VA"), the payments upon which, subject to the following discussion, are insured
by the FHA under Title I of the National Housing Act or partially guaranteed by
the VA.
The regulations governing FHA manufactured home insurance provide that
insurance benefits are payable upon the repossession and resale of the
collateral and assignment of the contract to the United States Department of
Housing and Urban Development ("HUD"). With respect to a defaulted FHA contract,
the servicer must follow applicable regulations before initiating repossession
procedures. These regulations include requirements that the lender arrange a
face-to-face meeting with the borrower, initiate a modification or repayment
plan, if feasible, and give the borrower 30 days' notice of default prior to any
repossession. The insurance claim is paid in cash by HUD. For manufactured
housing contracts, the amount of insurance benefits generally paid by FHA is
equal to 90% of the sum of (i) the unpaid principal amount of the contract at
the date of default and uncollected interest earned to the date of default
computed at the contract rate, after deducting the best price obtainable for the
collateral (based in part on a HUD-approved appraisal) and all amounts retained
or collected by the lender from other sources with respect to the contract, (ii)
accrued and unpaid interest on the unpaid amount of the contract from the date
of default to the date of submission of the claim plus 15 calendar days (but in
no event more than nine months) computed at a rate of 7% per anum, (iii) costs
paid to a dealer or other third party to repossess and preserve the manufactured
home, (iv) the amount of any sales commission paid to a dealer or other third
party for the resale of the property, (v) with respect to a Land-Secured
Contract, property taxes, special assessments and other similar charges and
hazard insurance premiums, prorated to the date of disposition of the property,
(vi) uncollected court costs, (vii) legal fees, not to exceed $500, and (viii)
expenses for recording the assignment of the lien on the collateral to the
United States.
The insurance available to a lender under FHA Title I insurance is subject
to the limit of a reserve amount equal to 10% of the original principal balance
of all Title I insured loans originated by the lender, which amount is reduced
by all claims paid to the lender and by an annual reduction in the reserve
amount of 10% of the reserve amount, and which is increased by an amount equal
to 10% of the original principal balance of insured loans subsequently
originated by the lender. If CITSF were replaced as Servicer of the Contracts
under the Agreement, it is not clear from the FHA regulations what portion of
this reserve amount would be available for claims in respect of the
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FHA-insured Contracts. The obligation to pay insurance premiums to FHA is the
obligation of CITSF, as Servicer of the FHA-insured Contracts.
The maximum guarantee that may be issued by the VA for a VA-guaranteed
contract is the lesser of (a) the lesser of $20,000 and 40% of the principal
amount of the contract and (b) the maximum amount of guaranty entitlement
available to the obligor veteran (which may range from $20,000 to zero). The
amount payable under the guarantee will be the percentage of the VA contract
originally guaranteed applied to indebtedness outstanding as of the applicable
date of computation specified in the VA regulations, interest accrued on the
unpaid balance of the loan to the appropriate date of computation and limited
expenses of the contract Holder, but in each case only to the extent that such
amounts have not been recovered through resale of the manufactured home. The
amount payable under the guarantee may in no event exceed the amount of the
original guarantee.
CERTAIN LEGAL ASPECTS OF THE CONTRACTS
The following discussion contains summaries of certain legal aspects of
manufactured housing contracts, including Land-Secured Contracts, which are
general in nature. Because such legal aspects are governed by applicable state
law (which laws may differ substantially from state to state), the summaries do
not purport to be complete nor to reflect the laws of any particular state, nor
to encompass the laws of all states in which the security for the Contracts or
Land-Secured Contracts is situated. The summaries are qualified in their
entirety by reference to the applicable federal and state laws governing the
Contracts or Land-Secured Contracts.
The Contracts (Other than Land-Secured Contracts)
General. As a result of the assignment of the Contracts to the Trustee, the
Trust will succeed collectively to all of the rights (including the right to
receive payment on the Contracts) and will assume the obligations of the obligee
under the Contracts. Each Contract evidences both (a) the obligation of the
Obligor to repay the loan evidenced thereby, and (b) the grant of a security
interest in the Manufactured Home to secure repayment of such loan. Certain
aspects of both features of the Contracts are described more fully below.
The Contracts generally are "chattel paper" as defined in the Uniform
Commercial Code (the "UCC") in effect in the states in which the Manufactured
Homes initially were registered. Pursuant to the UCC, the sale of chattel paper
is treated in a manner similar to perfection of a security interest in chattel
paper. Under the Agreement, the Servicer will retain possession of the Contracts
as custodian of the Trustee, and will make an appropriate filing of a UCC-1
financing statement in Oklahoma and New Jersey to give notice of the Trustee's
ownership of the Contracts. The Contracts will not be stamped to reflect their
assignment from CITSF to the Company or from the Company to the Trustee.
Therefore, if through negligence, fraud or otherwise, a subsequent purchaser
were able to take physical possession of the Contracts without notice of such
assignment, the Trustee's interest in the Contracts could be defeated.
Security Interests in the Manufactured Homes. The Manufactured Homes
securing the Contracts may be located in all 50 states and the District of
Columbia. Security interests in manufactured homes may be perfected either by
notation of the secured party's lien on the certificate of title or by delivery
of the required documents and payment of a fee to the state motor vehicle
authority, depending on state law. In some nontitle states, perfection pursuant
to the provisions of the UCC is required. CITSF effects such notation or
delivery of the required documents and fees, and obtains possession of the
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certificate of title, as appropriate under the laws of the state in which a
Manufactured Home is registered. However, contract originators other than CITSF
may not have effected such notation or delivery of the required documents and
fees, and may not have obtained possession of the certificate of title, as
appropriate under the laws of the state in which any manufactured home securing
a manufactured housing conditional sales contract is registered. In the event
CITSF or a contract originator other than CITSF fails, due to clerical error
t
ceetificate of title, as appropriate under the laws of the state in which a
Manufactured Home is registered. However, contract originators other than CITSF
may not have effected such notation or delivery of the required documents and
fees, and may not have obtained possession of the certificate of title, as
appropriate under the laws of the state in which any manufactured home securing
a manufactured housing conditional sales contract is registered. In the event
ufactured homes, under certain circumstances, may become subject to real
estate title and recording laws. As a result, a security interest in a
manufactured home could be rendered subordinate to the interests of other
parties claiming an interest in the home under applicable state real estate law.
In order to perfect a security interest in a manufactured home under real estate
laws of some states, the holder of the security interest must file either a
"fixture filing" under the provisions of the UCC or a real estate mortgage under
the real estate laws of the state where the home is located. See "Land-Secured
Contracts" below. These filings must be made in the real estate records office
of the county where the home is located. CITSF believes that a large portion of
the Contracts will contain provisions prohibiting the Obligor from permanently
attaching the Manufactured Home to its site. So long as the Obligor does not
violate this agreement, a security interest in the Manufactured Home will be
governed by the certificate of title laws or the UCC, and (depending upon the
requirements of applicable state law) the notation of the security interest on
the certificate of title or the filing of a UCC financing statement will be
effective to maintain the priority of the security interest in the Manufactured
Home. If, however, a Manufactured Home becomes permanently attached to its site,
other parties could obtain an interest in the Manufactured Home which is prior
to the security interest originally retained by the seller and subsequently
transferred to the Company. CITSF will represent that at the date of the initial
issuance of the related Series of Certificates it has obtained a perfected first
priority security interest with respect to the Manufactured Homes securing the
Contracts. Such representation will not, however, be based upon any inspection
of the sites of the Manufactured Homes.
The Company will cause the security interest in the Manufactured Homes to
be assigned to the Trustee on behalf of the Certificateholders. CITSF believes
that in most cases, the certificate of title names the contract originator (or
its affiliates or predecessors or assignee, directly or by mesne assignment) as
the secured party. Unless otherwise specified in the related Prospectus
Supplement, CITSF, the Company and the Trustee will not amend the certificates
of title to identify the Trustee as the new secured party or deliver the
certificates of title to the Trustee or note thereon the interest of the
Trustee. Accordingly, CITSF, or the related contract originator (or its
affiliate, predecessor or assignee) if other than CITSF, will continue to be
named as the secured party on the certificates of title relating to some of the
Manufactured Homes. In most states, such assignment from the related contract
originator (if other than CITSF) to CITSF, from CITSF to the Company and from
the Company to the Trustee is an effective conveyance of such security interest
without amendment of any lien noted on the related certificate of title and the
new secured party succeeds to the rights of the related contract originator (if
other than CITSF), CITSF or the Company, as the case may be, as the secured
party. However, in a few states in the absence of an amendment to the
certificate of title, any such assignment of the security interest in the
Manufactured Home may not be held effective or such security interest may not be
perfected, and, in the absence of such notation or delivery to the Trustee, the
assignment of the security interest in the Manufactured Home may not be
effective against creditors or a trustee in bankruptcy or against CITSF or the
Company as debtor-in-possession.
If there are any Manufactured Homes as to which the security interest
assigned to the Trustee is not perfected, such security interest would be
subordinate to, among others, subsequent purchasers for value of the Manu-
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factured Homes and holders of perfected security interest therein. There also
exists a risk in not identifying the Trustee as the new secured party on the
certificate of title that, through fraud or negligence, the security interest of
the Trustee could be released.
In the event that the owner of a Manufactured Home moves it to a state
other than the state in which such Manufactured Home initially is registered,
under the laws of most states the perfected security interest in the
Manufactured Home would continue for four months after such relocation and
thereafter only if and after the owner re-registers the Manufactured Home in
such state. If the owner were to relocate a Manufactured Home to another state
and not re-register the Manufactured Home in such state, and if steps were not
taken to re-perfect the Trustee's security interest in such state, the security
interest in the Manufactured Home would cease to be perfected. A majority of
states generally require surrender of a certificate of title to re-register a
Manufactured Home; accordingly, the Trustee (or the Servicer, as custodian for
the Trustee) must surrender possession if it holds the certificate of title to
such Manufactured Home or, in the case of Manufactured Homes registered in
states which provide for notation of lien, the contract originator would receive
notice of surrender if the security interest in the Manufactured Home is noted
on the certificate of title and the Servicer may not receive notice.
Accordingly, the Trustee would have the opportunity to re-perfect its security
interest in the Manufactured Home in the state of relocation in the case where
the Servicer holds the certificate of title and is noted as the secured party
thereon and may not have such an opportunity to re-perfect in other cases. In
states which do not require a certificate of title for registration of a
manufactured home, re-registration could defeat perfection. In the ordinary
course of servicing the manufactured housing conditional sales contracts, the
Servicer takes steps to effect such re-perfection upon receipt of notice of
re-registration or information from the obligor as to relocation. Similarly,
when an obligor under a Contract sells a Manufactured Home, the Trustee (or the
Servicer, as custodian for the Trustee) must surrender possession of the
certificate of title or will receive notice as a result of its lien noted
thereon and, accordingly, will have an opportunity to require satisfaction of
the related manufactured housing conditional sales contract before release of
the lien. Such protections generally would not be available in the case of
security interests in manufactured homes located in nontitle states where
perfection of such security interest is achieved by appropriate filings under
the UCC (as in effect in such state). Under the Agreement, the Servicer is
obligated to take such steps, at the Servicer's expense, as are necessary to
maintain perfection of security interests in the Manufactured Homes.
Under the laws of most states, liens for repairs performed on a
Manufactured Home and liens for personal property taxes take priority over a
perfected security interest. Such liens could arise at any time during the term
of a Contract. No notice will be given to the Trustee or Certificateholders in
the event such a lien arises.
Enforcement of Security Interests in Manufactured Homes. The Servicer on
behalf of the Trustee, to the extent required by the related Agreement, may take
action to enforce the Trustee's security interest with respect to Contracts in
default by repossession and resale of the Manufactured Homes securing such
defaulted Contracts. So long as the Manufactured Home has not become subject to
real estate laws, a creditor can repossess a Manufactured Home securing a
Contract by voluntary surrender, by "self-help" repossession that is "peaceful"
(i.e., without breach of the peace) or, in the absence of voluntary surrender
and the ability to repossess without breach of the peace, by judicial process.
The holder of a Contract must give the debtor a number of days' notice, which
varies from 10 to 30 days depending on the state, prior to commencement of any
repossession. The UCC and consumer protection laws in most states place
restrictions on repossession sales, including requiring prior notice to the
debtor and commercial reasonableness in effecting such a sale. The law in most
states also requires that the debtor be given notice of any sale prior to resale
of the unit so that the debtor may redeem at or before such resale. In the event
of such repossession and resale of a Manufactured Home, the Trustee would be
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entitled to be paid out of the sale proceeds before such proceeds could be
applied to the payment of the claims of unsecured creditors or the holders of
subsequently perfected security interests or, thereafter, to the debtor.
Under the laws applicable in most states, a creditor is entitled to obtain
a deficiency judgment from a debtor for any deficiency on repossession and
resale of the manufactured home securing such a debtor's loan. However, some
states impose prohibitions or limitations on deficiency judgments, and in many
cases the defaulting borrower would have no assets with which to pay a judgment.
Certain other statutory provisions, including federal and state bankruptcy
and insolvency laws and general equitable principles, may limit or delay the
ability of a lender to repossess and resell collateral or enforce a deficiency
judgment.
Under the terms of the federal Soldiers' and Sailors' Civil Relief Act of
1940, as amended (the "Relief Act"), an Obligor who enters military service
after the origination of such Obligor's Contract (including an Obligor who is a
member of the National Guard or is in reserve status at the time of the
origination of the Contract and is later called to active duty) may not be
charged interest above an annual rate of 6% during the period of such Obligor's
active duty status, unless a court orders otherwise upon application of the
lender. It is possible that such action could have an effect, for an
indeterminate period of time, on the ability of the Servicer to collect full
amounts of interest on certain of the Contracts. Any shortfall in interest
collections resulting from the application of the Relief Act, to the extent not
covered by the subordination of a Class of Subordinated Certificates, could
result in losses to the Holders of a Series of Certificates. In addition, the
Relief Act imposes limitations which would impair the ability of the Servicer to
foreclose on an affected Contract during the Obligor's period of active duty
status. Thus, in the event that such a Contract goes into default, there may be
delays and losses occasioned by the inability to realize upon the Manufactured
Home in a timely fashion.
Land-Secured Contracts
General. The Land-Secured Contracts will be secured by (i) a first or
second mortgage, deed of trust, or similar instrument, upon the land on which
the Manufactured Home is located and (ii) either (A) a perfected first security
interest or (B) a recorded first mortgage, deed of trust or similar instrument
on the Manufactured Home (depending on whether the Manufactured Home is affixed
to the land and upon the specific provisions of applicable state law). A
mortgage creates a lien upon the real property described in the mortgage. There
are two parties to a mortgage: the mortgagor, who is the borrower, and the
mortgagee, who is the lender. In a mortgage state, the mortgagor delivers to the
mortgagee a note or bond evidencing the loan and the mortgage. Although a deed
of trust is similar to a mortgage, a deed of trust has three parties: the
borrower, a lender as beneficiary, and a third-party grantee called the trustee.
Under a deed of trust, the borrower grants the property, irrevocably until the
debt is paid, in trust, generally with a power of sale, to the trustee to secure
payment of the loan. The trustee's authority under a deed of trust and the
mortgagee's authority under a mortgage are governed by the express provisions of
the deed of trust or mortgage, applicable law, and, in some cases, with respect
to the deed of trust, the directions of the beneficiary.
Foreclosure. Foreclosure of a mortgage is generally accomplished by
judicial action. Generally, the action is initiated by the service of legal
pleadings upon all parties having an interest of record in the real property.
Delays in completion of the foreclosure occasionally may result from
difficulties in locating any necessary party defendant. When the mortgagee's
right to foreclosure is contested, the legal proceedings necessary to resolve
the issue can be time-consuming and expensive. After the completion of a
judicial foreclosure proceeding, the court may issue a judgment of foreclosure
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and appoint a receiver or other officerto conduct the sale of the property. In
some states, mortgages may also be foreclosed by advertisement, pursuant to a
power of sale provided in the mortgage. Foreclosure of a mortgage by
advertisement is essentially similar to foreclosure of a deed of trust by
non-judicial power of sale.
Foreclosure of a deed of trust is generally accomplished by a non-judicial
trustee's sale under a specific provision in the deed of trust that authorizes
the trustee to sell the property to a third party upon any default by the
borrower under the terms of the note or deed of trust. In certain states, such
foreclosure also may be accomplished by judicial action in the manner provided
for foreclosure of mortgages. In some states, the trustee must record a notice
of default and send a copy to the borrower-trustor and to any person who has
recorded a request for a copy of a notice of default and the notice of sale. In
addition, the trustee must provide notice in some states to any other individual
having an interest of record in the real property, including any junior
lienholder. If the deed of trust is not reinstated within any applicable cure
period, a notice of sale must be posted in a public place and, in most states,
published for a specified period of time in one or more newspapers. In addition,
some state laws require that a copy of the notice of sale be posted on the
property and sent to all parties having an interest of record in the property.
In some states, the borrower-trustor has the right to reinstate the loan at
any time following default until shortly before the trustee's sale. In general,
the borrower, or any other person having a junior encumbrance on the real
estate, may, during a reinstatement period, cure the default by paying the
entire amount in arrears plus the costs and expenses incurred in enforcing the
obligation. Certain state laws control the amount of foreclosure expenses and
costs, including attorneys' fees, that may be recovered by a lender.
In the case of foreclosure under either a mortgage, deed of trust or
similar instrument, the sale by the receiver or other designated officer, or by
the trustee, is a public sale. However, because of the difficulty a potential
buyer at the sale would have in determining the exact status of title and
because the physical condition of the property may be deteriorated during the
foreclosure proceedings, it is not common for a third party to purchase the
property at the foreclosure sale. Rather, the lender generally purchases the
property from the trustee or receiver. Thereafter, subject to the right of the
borrower in some states to remain in possession during the redemption period,
the lender will assume the burdens of ownership, including obtaining hazard
insurance and making such repairs at its own expense as are necessary to render
the property suitable for sale. The lender commonly will obtain the services of
a real estate broker and pay the broker a commission in connection with the sale
of the property. Depending upon market conditions, the ultimate proceeds of the
sale of the property may not equal the lender's investment in the property.
Rights of Redemption. In some states, after sale pursuant to a deed of
trust or foreclosure of a mortgage, the borrower and certain foreclosed junior
lienors are given a statutory period in which to redeem the property from the
foreclosure sale. In certain other states, this right of redemption applies only
to sale following judicial foreclosure, and not sale pursuant to a non-judicial
power of sale. In most states where the right of redemption is available,
statutory redemption may occur upon payment of the foreclosure purchase price,
accrued interest and taxes. In some states, the right to redeem is an equitable
right. The effect of a right of redemption is to diminish the ability of the
lender to sell the foreclosed property. The exercise of a right of redemption
would defeat the title of any purchaser at a foreclosure sale, or of any
purchaser from the lender subsequent to judicial foreclosure or sale under a
deed of trust. Consequently, the practical effect of the redemption right is to
force the lender to maintain the property and pay the expenses of ownership
until the redemption period has run.
Anti-Deficiency Legislation and Other Limitations on Lenders. Certain
states have imposed statutory restrictions that limit the remedies of a
beneficiary under a deed of trust or a mortgagee under a mortgage relating to a
single family residence. In some states, statutes limit the right of the
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beneficiary or mortgagee to obtain a deficiency judgment against the borrower
following foreclosure or sale under a deed of trust. A deficiency judgment is a
personal judgment against the borrower equal in most cases to the difference
between the amount due to the lender and the net amount realized upon the
foreclosure sale.
Some state statutes may require the beneficiary or mortgagee to exhaust the
security afforded under a deed of trust or mortgage by foreclosure in an attempt
to satisfy the full debt before bringing a personal action against the borrower.
In certain other states, the lender has the option of bringing a personal action
against the borrower on the debt without first exhausting such security;
however, in some of these states, the lender, following judgment on such
personal action, may be deemed to have elected a remedy and may be precluded
from exercising remedies with respect to the security. Consequently, the
practical effect of the election requirement, when applicable, is that lenders
will usually proceed first against the security rather than bringing a personal
action against the borrower.
Other statutory provisions may limit any deficiency judgment against the
former borrower following a foreclosure sale to the excess of the outstanding
debt over the fair market value of the property at the time of such sale. The
purpose of these statutes is to prevent a beneficiary or a mortgagee from
obtaining a large deficiency judgment against the former borrower as a result of
low or no bids at the foreclosure sale.
In some states, exceptions to the anti-deficiency statutes are provided for
in certain instances where the value of the lender's security has been impaired
by acts or omissions of the borrower, for example, in the event of waste of the
property.
In addition to anti-deficiency and related legislation, numerous other
federal and state statutory provisions, including the federal bankruptcy laws,
the Relief Act and state laws affording relief to debtors, may interfere with or
affect the ability of a secured mortgage lender to realize upon its security. A
bankruptcy court may grant a debtor in a bankruptcy case a reasonable time to
cure a payment default, and in the case of a mortgage loan not secured by the
debtor's principal residence, also may reduce the monthly payments due under
such mortgage loan, change the rate of interest and alter the mortgage loan
repayment schedule. Certain court decisions have applied such relief to claims
secured by the debtor's principal residence. For example, with respect to a
Land-Secured Contract, in a bankruptcy case commenced under Chapter 13 of the
Bankruptcy Code, when it has been determined that the value of a home is less
than the principal balance of the loan, bankruptcy courts historically have
prevented a lender from foreclosing on the home, and, as part of the
rehabilitation plan, reduced the amount of the secured indebtedness to the value
of the home as of the date the bankruptcy case was commenced, leaving the lender
with a general unsecured claim for the difference between that value and the
amount of outstanding indebtedness. This result may be sharply curtailed,
however, as a result of a recent decision by the United States Supreme Court
which denied confirmation of a Chapter 13 debtor's plan of rehabilitation which
proposed to bifurcate a lender's secured claim on the debtor's principal
residence into secured and unsecured claims and reduce the mortgage lien to the
fair market value of the debtor's residence.
The Code provides priority to certain tax liens over the lien of the
mortgage, deed of trust or similar instrument. The laws of some states provide
priority to certain tax liens over the lien of the mortgage, deed of trust or
similar instrument. Numerous federal and some state consumer protection laws
impose substantive requirements upon mortgage lenders in the connection with the
origination, servicing and enforcement of mortgage loans. These laws include the
federal Truth in Lending Act, Real Estate Settlement Procedures Act, Equal
Credit Opportunity Act, Fair Credit Billing Act, Fair Credit Reporting Act, and
related statutes and regulations. These federal laws and state laws impose
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specific statutory liabilities upon lenders who originate or service mortgage
loans and who fail to comply with the provisions of the law. In some cases, this
liability may affect assignees of the Contracts.
Certain Matters Relating to Insolvency
Each of CITSF, as seller of the Contracts to the Company, and the Company,
as seller of the Contracts to the Trustee, intend that the transfer of such
Contracts from CITSF to the Company and from the Company to a Trust,
respectively, will constitute a sale rather than a pledge of the Contracts to
secure indebtedness of CITSF or the Company, respectively. However, if CITSF or
the Company were to become a debtor under the Bankruptcy Code, it is possible
that a creditor, receiver, other party-in-interest or trustee in bankruptcy of
CITSF or the Company, or CITSF or the Company as a debtor-in-possession may
argue that the sale of the Contracts by CITSF to the Company or by the Company
to the Trust, respectively, was a pledge of the Contracts rather than a sale and
that, accordingly, such Contracts should be part of such entity's bankruptcy
estate. Such a position, if presented to a court, even if ultimately
unsuccessful, could result in a delay in or reduction of distributions to the
related Certificateholders.
A case (Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th Cir.),
cert. denied 114 S. Ct. 554 (1993)) decided by the United States Court of
Appeals for the Tenth Circuit contains language to the effect that accounts sold
by a debtor under Article 9 of the UCC would remain property of the debtor's
bankruptcy estate. Although the Contracts constitute chattel paper under the UCC
rather than accounts, sales of chattel paper are similarly governed by Article 9
of the UCC. If, following a bankruptcy of the Company, a court were to follow
the reasoning of the Tenth Circuit and apply such reasoning to chattel paper,
then delays or reductions in payments of collections on or in respect of the
Contracts could occur.
Consumer Protection Laws
The so-called "Holder-in-Due-Course" rule of the Federal Trade Commission
is intended to defeat the ability of the transferor of a consumer credit
contract which is the seller of goods which gave rise to the transaction (and
certain related lenders and assignees) to transfer such contract free of notice
of claims by the debtor thereunder. The effect of this rule is to subject the
assignee of such a Contract (such as the Trust) to all claims and defenses which
the Obligor could assert against the seller of the Manufactured Home. Liability
under this rule is limited to amounts paid under a contract; however, the
Obligor also may be able to assert the rule to set off remaining amounts due as
a defense against a claim brought by the Trust against such Obligor. Numerous
other federal and state consumer protection laws impose requirements applicable
to the origination and lending pursuant to the Contracts, including the Truth in
Lending Act, the Federal Trade Commission Act, the Fair Credit Billing Act, the
Fair Credit Reporting Act, the Equal Credit Opportunity Act, the Fair Debt
Collection Practices Act and the Uniform Consumer Credit Code. In the case of
some of these laws, the failure to comply with their provisions may affect the
enforceability of the related Contract. Neither the Trust nor the Company has
obtained any license required under any federal or state consumer or mortgage
banking laws or regulations, and the absence of such licenses may impede the
enforcement of certain rights or give rise to certain defenses in actions
seeking enforcement rights.
Transfers of Manufactured Homes, Enforceability of "Due-on-Sale" Clauses
The Contracts, in general, prohibit the sale or transfer of the related
Manufactured Homes without the consent of the Servicer and permit the
acceleration of the maturity of the Contracts by the Servicer upon any such sale
or transfer that is not consented to. In the case of those Contracts that do not
contain such due-on-sale clauses, CITSF may permit assumptions of such Contracts
if the purchaser of the related Manufactured Home satisfies CITSF's current
underwriting standards.
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In the case of a transfer of a Manufactured Home after which the Servicer
desires to accelerate the maturity of the related Contract, the Servicer's
ability to do so will depend on the enforceability under state law of the
"due-on-sale" clause. The Garn-St. Germain Depository Institutions Act of 1982
preempts, subject to certain exceptions and conditions, state laws prohibiting
enforcement of "due-on-sale" clauses applicable to the Manufactured Homes.
Consequently, the Servicer may be prohibited from enforcing a "due-on-sale"
clause in respect of certain Manufactured Homes to the limited extent provided
in the Garn-St. Germain Depository Institutions Act of 1982.
Applicability of Usury Laws
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980, as amended ("Title V"), provides that, subject to the following
conditions, state usury limitations shall not apply to any loan which is secured
by a first lien on certain kinds of manufactured housing. The Contracts would be
covered if they satisfy certain conditions, among other things, governing the
terms of any prepayments, late charges and deferral fees and requiring a 30-day
notice period prior to instituting any action leading to repossession of or
foreclosure with respect to the related unit.
Title V authorized any state to reimpose limitations on interest rates and
finance charges by adopting before April 1, 1983 a law or constitutional
provision which expressly rejects application of the federal law. Fifteen states
adopted such a law prior to the April 1, 1983 deadline. In addition, even where
Title V was not so rejected, any state is authorized by the law to adopt a
provision limiting discount points or other charges on loans covered by Title V.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA")
imposes certain requirements on employee benefit plans subject to ERISA
("Plans") and on persons who are fiduciaries with respect to such Plans.
Generally, ERISA applies to investments made by such Plans. Among other
requirements, ERISA mandates that the assets of Plans be held in trust and that
the trustee, or other duly authorized fiduciary, have exclusive authority and
discretion to manage and control the assets of such Plans. ERISA also imposes
certain duties on persons who are fiduciaries of such Plans. Under ERISA, any
person who exercises any authority or control with respect to the management or
disposition of the assets of a Plan is considered to be a fiduciary of such
Plan, subject to the standards of fiduciary conduct under ERISA. These standards
include the requirements that the assets of Plans be invested and managed for
the exclusive benefit of Plan participants and beneficiaries, a determination by
the Plan fiduciary that any such investment is permitted under the governing
Plan instruments and is prudent and appropriate for the Plan in view of its
overall investment policy and the composition and diversification of its
portfolio. Certain employee benefit plans, such as governmental plans (as
defined in ERISA Section 3(32)) and certain church plans (as defined in ERISA
Section 3(33)), are not subject to ERISA. Accordingly, assets of such plans may
be invested in Certificates without regard to the ERISA considerations described
herein, subject to provisions of other federal and applicable state laws. Any
such plan which is qualified and exempt from taxation under Sections 401(a) and
501(a) of the Code, however, is subject to the prohibited transaction rules set
forth in Section 503 of the Code.
In addition to the imposition of general fiduciary standards of investment
prudence and diversification, ERISA, and the corresponding provisions of the
Code, prohibit a broad range of transactions involving Plan assets and persons
having certain specified relationships to a Plan ("parties in interest" and
"disqualified persons"). Such transactions are treated as "prohibited
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transactions" under Sections 406 and 407 of ERISA and excise taxes are imposed
upon such persons by Section 4975 of the Code. An investment in the Certificates
by a Plan might constitute prohibited transactions under the foregoing
provisions unless an administrative exemption applies. In addition, if an
investing Plan's assets were deemed to include an interest in the assets of the
Contract Pool and not merely an interest in the Certificates, transactions
occurring in the operation of the Contract Pool might constitute prohibited
transactions unless an administrative exemption applies. Certain such exemptions
which may be applicable to the acquisition and holding of the Certificates or to
the servicing and operation of the Contract Pool are noted below.
The Department of Labor ("DOL") has issued a regulation (29 C.F.R. Section
2510.3-101) (the "DOL Regulation") concerning the definition of what constitutes
the assets of a Plan. The DOL Regulation provides that, as a general rule, the
underlying assets and properties of corporations, partnerships, trusts and
certain other entities in which a Plan makes an "equity" investment will be
deemed for purposes of ERISA to be assets of the investing plan unless certain
exceptions apply. However, the DOL Regulation provides that, generally, the
assets of a corporation or partnership in which a Plan invests will not be
deemed for purposes of ERISA to be assets of such Plan if the equity interest
acquired by the investing Plan is a publicly-offered security. A
publicly-offered security, as defined under the DOL Regulation, is a security
that is widely held, freely transferable, and registered under the Securities
Exchange Act of 1934, as amended. The Certificates are not expected to be
publicly-offered securities under the terms of the DOL Regulation.
Relief from the prohibited transaction rules of Section 406 and 407 of
ERISA (and from the prohibited transaction excise provisions of Section 4975 of
the Code) may be found under the provisions of specific statutory or
administrative exemptive relief authorities under Section 408 of ERISA. In
Prohibited Transaction Exemption 83-1 ("PTE 83-1"), which amended Prohibited
Transaction Exemption 81-7, the DOL exempted from ERISA's prohibited transaction
rules certain transactions relating to the operation of residential mortgage
pool investment trusts and the purchase, sale and holding of "mortgage pool
pass-through certificates" in the initial issuance of such certificates. PTE
83-1 permits, subject to certain conditions, transactions which might otherwise
be prohibited between Plans and parties in interest with respect to those Plans
related to the origination, maintenance and termination of mortgage pools
consisting of mortgage loans secured by first or second mortgages or deeds of
trust on single-family residential property, and the acquisition and holding of
certain mortgage pool pass-through certificates representing an interest in such
mortgage pools by Plans. If the general conditions of PTE 83-1 are satisfied,
investments by a Plan in certificates that represent interests in a mortgage
pool consisting of single family loans will be exempt from the prohibitions of
Sections 406(a) and 407 of ERISA (relating generally to transactions with
parties in interest who are not fiduciaries) if the Plan purchases such
certificates at no more than fair market value, and will be exempt from the
prohibitions of Section 406(b)(1) and (2) of ERISA (relating generally to
transactions with fiduciaries) if, in addition, the purchase is approved by an
independent fiduciary, no sales commission is paid to the pool sponsor, the Plan
does not purchase more than 25% of such certificates, and at least 50% of all
such certificates are purchased by persons independent of the pool sponsor or
pool trustee. However, PTE 83-1 does not provide an exemption for transactions
involving subordinate certificates or for certificates representing an interest
in conditional sales contracts and installment sales or loan agreements secured
by manufactured housing like the Contracts.
There can be no assurance that any of the exceptions set forth in the DOL
Regulation, PTE 83-1 or any other administrative exemption under ERISA, will
apply to the purchase of Certificates offered hereby, and, as a result, an
investing Plan's assets could be considered to include an undivided interest in
the Contracts and any other assets held in the Contract Pool. In the event that
assets of a Contract Pool are considered assets of an investing Plan, the
Company, the Servicer, the Trustee and other persons, in providing services with
respect to the Contracts, may be considered fiduciaries to such Plan and subject
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to the fiduciary responsibility provisions of Title I of ERISA and the
prohibited transaction provisions of Section 4975 of the Code with respect to
transactions involving such assets unless a statutory or administrative
exemption applies.
In addition, certain affiliates of the Company may be considered to be
parties in interest or disqualified persons with respect to some Plans. An
investment by such a Plan may be a prohibited transaction under ERISA and the
Code unless such investment is subject to a statutory or administrative
exemption.
Any Plan fiduciary considering the purchase of a Certificate should consult
with its counsel with respect to the potential applicability of ERISA and the
Code to such investment. Moreover, each Plan fiduciary should determine whether,
under the general fiduciary standards of investment prudence and
diversification, an investment in the Certificates is appropriate for the Plan,
taking into account the overall investment policy of the Plan and the
composition of the Plan's investment portfolio.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General
The following is a general discussion of certain federal income tax
consequences relating to the purchase, ownership, and disposition of the
Certificates. The discussion is based upon laws, regulations, rulings, and
decisions now in effect, including Treasury Regulations issued on December 23,
1992 (the "REMIC Regulations"), all of which are subject to change or possibly
differing interpretations. The discussion does not purport to deal with federal
income tax consequences applicable to all categories of investors, some of which
may be subject to special rules. Investors should consult their own tax advisors
to determine the federal, state, local, and other tax consequences of the
purchase, ownership, and disposition of the Certificates.
Many aspects of the federal tax treatment of the purchase, ownership, and
disposition of the Certificates will depend upon whether an election is made to
treat the Trust, or a segregated portion thereof evidenced by a particular
series or sub-series of Certificates, as a REMIC within the meaning of Section
860D(a) of the Code. The Prospectus Supplement for each series will indicate
whether or not an election to be treated as a REMIC has been or will be made
with respect thereto. The following discussion deals first with Series with
respect to which a REMIC Election is made and then with Series with respect to
which a REMIC Election is not made.
REMIC Series
With respect to each Series of Certificates for which a REMIC Election is
made, counsel to the Company identified in the applicable Prospectus Supplement
will have advised the Company that in its opinion, assuming (i) the making of
that election in accordance with the requirements of the Code and (ii) ongoing
compliance with the applicable Agreement, and in reliance upon the
representations and warranties in the Agreement, at the initial issuance of the
Certificates in such Series the Trust will qualify as a REMIC and the
Certificates in such Series ("REMIC Certificates") will be treated either as
regular interests in the REMIC within the meaning of Section 860G(a)(1) of the
Code ("Regular Certificates") or as residual interests in the REMIC within the
meaning of Section 860G(a)(2) of the Code ("Residual Certificates").
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Qualification as a REMIC. Qualification as a REMIC involves ongoing
compliance with certain requirements and the following discussion assumes that
such requirements will be satisfied by the Trust as long as there are any REMIC
Certificates outstanding. Substantially all of the assets of the REMIC must
consist of "qualified mortgages" and "permitted investments" as of the close of
the third month beginning after the day on which the REMIC issues all of its
regular and residual interests (the "Startup Day") and at all times thereafter.
The term "qualified mortgage" means any obligation (including a participation or
certificate of beneficial ownership in such obligation) which is principally
secured by an interest in real property that is transferred to the REMIC on the
Startup Day in exchange for regular or residual interests in the REMIC or is
purchased by the REMIC within the three-month period beginning on the Startup
Day if such purchase is pursuant to a fixed price contract in effect on the
Startup Day. The REMIC Regulations provide that an obligation is principally
secured by an interest in real property if the fair market value of the real
property securing the obligation is at least equal to either (i) 80% of the
issue price (generally, the principal balance) of the obligation at the time it
was originated or (ii) 80% of the adjusted issue price (the then-outstanding
principal balance, with certain adjustments) of the obligation at the time it is
contributed to a REMIC. In the case of a second mortgage, the fair market value
of the underlying real property must be reduced by the amount of any lien that
is senior to such mortgage, and must be further reduced by a proportionate
amount of any lien which is in parity with such mortgage. Alternatively, an
obligation is principally secured by an interest in real property if
substantially all of the proceeds of the obligation were used to acquire or to
improve or protect an interest in real property that, at the origination date,
is the only security for the obligation (other than the personal liability of
the obligor). A qualified mortgage also includes a qualified replacement
mortgage that is used to replace any qualified mortgage within three months of
the Startup Day or to replace a defective mortgage within two years of the
Startup Day. The REMIC Regulations provide that obligations secured by
manufactured housing which are treated as "single family residences" under
Section 25(e)(10) of the Code will qualify as obligations secured by real
property without regard to state law classifications. See the discussion below
under "REMIC Series - Status of Manufactured Housing Contracts."
Permitted Investments. Permitted investments consist of (a) temporary
investments of cash received under qualified mortgages before distribution to
holders of interests in the REMIC ("cash-flow investments"), (b) amounts, such
as a fund (a "reserve fund"), if any, reasonably required to provide for full
payment of expenses of the REMIC, the principal and interest due on regular or
residual interests in the event of defaults on qualified mortgages, lower than
expected returns on cash-flow investments, prepayment interest shortfalls or
certain other contingencies ("qualified reserve assets"), and (c) certain
property acquired as a result of foreclosure of defaulted qualified mortgages
("foreclosure property"). Certain credit enhancement arrangements which provide
for full or partial payment on one or more classes of Regular Interests in the
event of defaults or delinquencies on qualified mortgages, unanticipated losses
or expenses incurred by the REMIC or lower than expected returns on cash flow
investments are not treated as separate assets of the REMIC under the REMIC
Regulations and payments under such arrangements are treated as payments
received on qualified mortgages. In addition, the REMIC Regulations do not treat
certain reserve funds maintained outside of the REMIC as an asset of the REMIC.
A reserve fund will not be qualified if more than 30% of the gross income from
the assets in the reserve fund is derived from the sale or other disposition of
property held for less than three months, unless such sale is necessary to
prevent a default in payment of principal or interest on a regular interest as
the result of a default on a qualified mortgage. In accordance with Section
860G(a)(7) of the Code, a reserve fund must be "promptly and appropriately"
reduced as payments on Contracts are received. Foreclosure property will be a
permitted investment only to the extent that such property is not held for more
than two years.
The Code requires that in order to qualify as a REMIC an entity must make
reasonable arrangements designed to ensure that certain specified entities,
generally including governmental entities or other entities that are exempt
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from United States tax, including the tax on unrelated business income
("Disqualified Organizations"), not hold residual interests in the REMIC.
Consequently, in the case of any Trust for which a REMIC Election is made the
transfer, sale or other disposition of a Residual Certificate to a Disqualified
Organization will be prohibited and the ability of a Residual Certificate to be
transferred will be conditioned on the Trustee's receipt of a certificate or
other document representing that the proposed transferee is not a Disqualified
Organization. The transferor of a Residual Certificate must not, as of the time
of the transfer, have actual knowledge that such representation is false. The
Code further requires that reasonable arrangements must be made to enable a
REMIC to provide the Internal Revenue Service (the "Service") and certain other
parties, including transferors of residual interests in a REMIC, with the
information needed to compute the tax imposed by Section 860E(e)(1) of the Code
if, in spite of the steps taken to prevent Disqualified Organizations from
holding residual interests, such an organization does, in fact, acquire a
residual interest.
If the Trust fails to comply with one or more of the ongoing requirements
for qualification as a REMIC, the Trust will not be treated as a REMIC for the
year during which such failure occurs and thereafter unless the Service
determines, in its discretion, that such failure was inadvertent (in which case,
the Service may require any adjustments which it deems appropriate). If the
ownership interests in the assets of the Trust consist of multiple classes,
failure to treat the Trust as a REMIC may cause the Trust to be treated as an
association taxable as a corporation. Such treatment could result in income of
the Trust being subject to corporate tax in the hands of the Trust and in a
reduced amount being available for distribution to Certificateholders as a
result of the payment of such taxes.
Status of Manufactured Housing Contracts. The REMIC Regulations provide
that obligations secured by interests in manufactured housing, which qualify as
"single family residences" within the meaning of Section 25(e)(10) of the Code,
are to be treated as "qualified mortgages" for a REMIC. Under Section 25(e)(10)
of the Code, the term "single family residence" includes any manufactured home
which has a minimum of 400 square feet of living space and a minimum width in
excess of 102 inches and which is of a kind customarily used at a fixed
location. The Company will represent and warrant that each of the manufactured
homes securing the Contracts which is part of a Trust which makes a REMIC
Election meets this definition of a "single family residence." See the
discussion above under "REMIC Series --Qualification as a REMIC."
Two-Tier REMIC Structures. For certain Series of Certificates, two separate
elections may be made to treat segregated portions of the assets of a single
Trust as REMICs for federal income tax purposes (respectively, the "Subsidiary
REMIC" and the "Master REMIC"). Upon the issuance of any such Series of
Certificates, counsel will have advised the Company, as described above, that at
the initial issuance of the Certificates, the Subsidiary REMIC and the Master
REMIC will each qualify as a REMIC for federal income tax purposes, and that the
Certificates in such a series will be treated either as Regular Certificates or
Residual Certificates of the appropriate REMIC. Solely for the purpose of
determining whether such Regular Certificates will constitute qualifying real
estate or real property assets for certain categories of financial institutions
or real estate investment trusts as described below, both REMICs in a two-tier
REMIC structure will be treated as one. See the discussion below under "REMIC
Series -- Taxation of Regular Interests".
Taxation of Regular Interests. Regular Certificates will be treated as new
debt instruments issued by the REMIC on the Startup Day. Stated interest on a
Regular Certificate will be taxable as ordinary income. Holders of Regular
Certificates that would otherwise report income under a cash method of
accounting will be required to report income with respect to such Regular
Certificates under the accrual method. Under Temporary Treasury Regulations, if
a Trust, with respect to which a REMIC Election is made, is considered to be a
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"single-class REMIC," a portion of the REMIC's servicing fees, administrative
and other non-interest expenses, including assumption fees and late payment
charges retained by the Company, will be allocated as a separate item to those
Regular Certificateholders that are "pass-through interest holders". Generally,
a single-class REMIC is defined as a REMIC that would be treated as a fixed
investment trust under applicable law but for its qualification as a REMIC, or a
REMIC that is substantially similar to an investment trust but is structured
with the principal purpose of avoiding this allocation requirement imposed by
the Temporary Treasury Regulations. Generally, a pass-through interest holder
refers to individuals, entities taxed as individuals, such as certain trusts and
estates, which hold their Regular Certificates either directly or through
certain pass-through entities. Such a Holder of a Regular Certificate in a
single-class REMIC will be allowed to deduct the foregoing expenses under
Section 212 of the Code only to the extent that, in the aggregate and combined
with certain other miscellaneous itemized deductions, they exceed 2% of the
adjusted gross income of the holder. In addition, Section 68 of the Code
provides that the amount of certain itemized deductions (including those
provided for in Section 212 of the Code) otherwise allowable for the taxable
year for an individual whose adjusted gross income exceeds an inflation-adjusted
threshold amount specified in the Code ($111,800 for taxable years beginning in
1994, in the case of a joint return) will be reduced by the lesser of (i) 3% of
the excess of adjusted gross income over the specified threshold amount or (ii)
80% of the amount of itemized deductions otherwise allowable for such taxable
year. As a result of the foregoing limitations, certain Holders of Regular
Certificates in "single-class REMICs" may not be entitled to deduct all of any
part of the foregoing expenses.
Tax Status of REMIC Certificates. In general, (i) Regular Certificates held
by a financial institution described in Section 593(a) of the Code will
represent interests in "qualifying real property loans" within the meaning of
Section 593(d) of the Code; (ii) Regular Certificates held by a "domestic
building and loan association" within the meaning of Section 7701(a)(19) of the
Code will constitute "a regular ... interest in a REMIC" within the meaning of
Section 7701(a)(19)(c)(xi) of the Code; and (iii) Regular Certificates held by a
real estate investment trust will constitute "real estate assets" within the
meaning of Section 856(c)(5)(A) of the Code and interest thereon will be
considered "interest on obligations secured by mortgages on real property"
within the meaning of Section 856(c)(3)(B) of the Code. If less than 95% of the
average adjusted basis of the assets comprising the REMIC are assets qualifying
under any of the foregoing Sections of the Code (including assets described in
Section 7701(a)(19)(C) of the Code), then the Regular Certificates will be
qualifying assets only to the extent that the assets comprising the REMIC are
qualifying assets. Treasury Regulations promulgated pursuant to Section 593 on
the Code define "qualifying real property loans" to include a loan secured by
manufactured housing treated as a single family residence under Section
25(e)(10) of the Code. Section 7701(a)(19)(C)(v) of the Code provides that
"loans secured by an interest in real property" includes loans secured by mobile
homes not used on a transient basis. Treasury Regulations promulgated pursuant
to Section 856 of the Code provide that the term "real estate asset" includes
manufactured housing treated as a single family residence under Section
25(e)(10) of the Code. Furthermore, interest paid with respect to Certificates
held by a real estate investment trust will be considered "interest on
obligations secured by mortgages on real property or on interests in real
property" within the meaning of Section 856(c)(3)(B) of the Code to the same
extent that the Certificates themselves are treated as real estate assets.
Regular Certificates held by a regulated investment company or a real estate
investment trust will not constitute "Government securities" within the meaning
of Sections 851(b)(4)(A)(i) and 856(c)(5)(A) of the Code, respectively. In
addition, the REMIC Regulations provide that payments on Contracts held and
reinvested pending distribution to Certificateholders will be considered to be
"qualifying real property loans" within the meaning of Section 593(b) of the
Code and "real estate assets" within the meaning of Section 856(c)(5)(A) of the
Code. Entities affected by the foregoing provisions of the Code that are
considering the purchase of Certificates should consult their own tax advisors
regarding these provisions.
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Original Issue Discount. Regular Certificates may be issued with "original
issue discount". Rules governing original issue discount are set forth in
Sections 1271-1273 and 1275 of the Code and Treasury Regulations issued
thereunder in January 1994 (the "OID Regulations"). Although the rules relating
to original issue discount contained in the Code were modified by the Tax Reform
Act of 1986 specifically to address the tax treatment of securities, such as the
Regular Certificates, on which principal is required to be prepaid based on
prepayments of the underlying assets, regulations under that legislation have
not yet been finalized. Certificateholders also should be aware that the OID
Regulations do not address certain issues relevant to prepayable securities such
as the Regular Certificates. Moreover, under the OID Regulations, there is some
uncertainty as to the requirements for treating stated interest on a debt
obligation like a Regular Certificate as "qualified stated interest". If the
stated interest payments on a Regular Certificate were not considered to be
"qualified stated interest", such interest would be treated as OID in the manner
described below and, in the case of a Regular Certificate otherwise issued with
de minimis OID, would cause all of the OID on such a Regular Certificate to be
treated as non-de minimis OID.
In general, in the hands of the original Holder of a Regular Certificate,
original issue discount, if any, is the difference between the "stated
redemption price at maturity" of the Regular Certificate and its "issue price".
The original issue discount with respect to a Regular Certificate will be
considered to be zero if it is less than .25% of the Regular Certificate's
stated redemption price at maturity multiplied by the number of complete years
from the date of issue of such Regular Certificate to its maturity date. The OID
Regulations, however, provide a special de minimis rule to apply to obligations
such as the Regular Certificates that have more than one principal payment or
that have interest payments that are not qualified stated interest as defined in
the OID Regulations, payable before maturity ("installment obligations"). Under
the special rule, original issue discount on an installment obligation is
generally considered to be zero if it is less than .25% of the stated redemption
price at maturity (generally the principal amount) of the obligation multiplied
by the weighted average maturity of the obligation as defined in the OID
Regulations. Because of the possibility of prepayments, it is not clear whether
or how the de minimis rules will apply to the Regular Certificates. It is
possible that the anticipated rate of prepayments assumed in pricing the debt
instrument (the "Prepayment Assumption") will be required to be used in
determining the weighted average maturity of the Regular Certificates. In the
absence of authority to the contrary, the Company expects to apply the de
minimis rule applicable to installment obligations by using the Prepayment
Assumption. The OID Regulations provide a further special de minimis rule
applicable to any Regular Certificates that provide for payments of principal no
more rapidly than a "self-amortizing installment obligation," i.e., an
obligation that provides for equal payments composed of principal and qualified
stated interest payable unconditionally at least annually during its entire
term, with no significant additional payment required at maturity. Under this
special rule, original issue discount is generally considered to be zero if it
is less than .167% of the stated redemption price at maturity (generally the
principal amount) of the obligation multiplied by the number of complete years
from the date of issue of such a Regular Certificate to its maturity date.
Generally, the original Holder of a Regular Certificate that includes a de
minimis amount of original issue discount includes that original issue discount
in income as principal payments are made. The amount includable in income with
respect to each principal payment equals a pro rata portion of the entire amount
of de minimis original issue discount with respect to that Regular Certificate.
Any de minimis amount of original issue discount includable in income by a
Holder of a Regular Certificate is generally treated as a capital gain if the
Regular Certificate is a capital asset in the hands of the Holder thereof.
Pursuant to the OID Regulations, a Holder of a Regular Certificate may, however,
elect to include in gross income all interest that accrues on a Regular
Certificate, including any de minimis original issue discount and market
discount, by using the constant yield method described below with respect to
original issue discount.
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The stated redemption price at maturity of a Regular Certificate generally
will be equal to the sum of all payments, whether denominated as principal or
interest, to be made with respect thereto other than "qualified stated
interest". Pursuant to the OID Regulations, qualified stated interest is stated
interest that is unconditionally payable at least annually at a single fixed
rate of interest (or, under certain circumstances, a variable rate tied to an
objective index. See "REMIC Series--Variable Rate Regular Certificates" below)
during the entire term of the Regular Certificate (including short periods). In
the absence of authority to the contrary and if otherwise appropriate, the
Company expects to determine the stated redemption price at maturity of a
Regular Certificate, by assuming that the anticipated rate of prepayment for all
Contracts will occur in such a manner that the initial Remittance Rate for a
Certificate will not change. Accordingly, interest at the initial Remittance
Rate will constitute qualified stated interest payments for purposes of applying
the original issue discount provisions of the Code. In general, the issue price
of a Regular Certificate is the price paid by the first buyer of the particular
Regular Certificate or, in the case of a Regular Certificate included in a class
that is publicly offered, the initial offering price to the public at which a
substantial amount of the Regular Certificates of such class are sold to the
public (excluding bond houses, brokers or similar persons or organizations
acting in the capacity of underwriters or wholesalers). If a portion of the
initial offering price of a Regular Certificate is allocable to interest that
has accrued prior to its date of issue, the issue price of such a Regular
Certificate includes that pre-issuance accrued interest.
If the Regular Certificates are determined to be issued with original issue
discount, a Holder of a Regular Certificate must generally include the original
issue discount in ordinary gross income for federal income tax purposes as it
accrues in advance of the receipt of any cash attributable to such income. The
amount of original issue discount, if any, required to be included in a Regular
Certificateholder's ordinary gross income for federal income tax purposes in any
taxable year will be computed in accordance with Section 1272(a) of the Code and
the OID Regulations. Under such Section and the OID Regulations, original issue
discount accrues on a daily basis under a constant yield method that takes into
account the compounding of interest. The amount of original issue discount to be
included in income by a holder of a debt instrument, such as a Regular
Certificate, under which principal payments may be subject to acceleration
because of prepayments of other debt obligations securing such instruments, is
computed by taking into account the Prepayment Assumption.
The amount of original issue discount includable in income by a Holder of a
Regular Certificate is the sum of the "daily portions" of the original issue
discount for each day during the taxable year on which the Holder held the
Regular Certificate. The daily portions of original issue discount are
determined by allocating to each day in any "accrual period" a pro rata portion
of the excess, if any, of the sum of (i) the present value of all remaining
payments to be made on the Regular Certificate as of the close of the "accrual
period" and (ii) the payments during the "accrual period" of amounts included in
the stated redemption price of the Regular Certificate over the "adjusted issue
price" of the Regular Certificate at the beginning of the "accrual period".
Generally, the "accrual periods" for the Regular Certificates correspond to the
intervals at which amounts are paid or compounded with respect to such Regular
Certificates beginning with their date of issuance and ending with their
maturity date. The "adjusted issue price" of a Regular Certificate at the
beginning of any accrual period is the sum of the issue price and accrued
original issue discount for each prior accrual period reduced by the amount of
payments other than payments of qualified stated interest made during each prior
accrual period. The Code requires the present value of the remaining payments to
be determined on the basis of (a) the original yield to maturity (determined on
the basis of compounding at the close of each accrual period and properly
adjusted for the length of the accrual period), (b) events including actual
prepayments, which have occurred before the close of the accrual period, and (c)
the assumption that the remaining payments will be made in accordance with the
original Prepayment Assumption. The effect of this method is to increase the
portions of original issue discount that a Regular Certificateholder must
include in income to take into account prepayments with respect to the Contracts
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held by the Trust that occur at a rate that exceeds the Prepayment Assumption
and to decrease (but not below zero for any period) the portions of original
issue discount that a Regular Certificateholder must include in income to take
into account prepayments with respect to the Contracts that occur at a rate that
is slower than the Prepayment Assumption. Although original issue discount will
be reported to Regular Certificateholders based on the Prepayment Assumption, no
representation is made to Regular Certificateholders that the Contracts will be
prepaid at that rate or at any other rate.
A subsequent purchaser of a Regular Certificate will also be required to
include in such purchaser's ordinary gross income for federal income tax
purposes the original issue discount, if any, accruing with respect to such
Regular Certificate, unless the price paid equals or exceeds the Regular
Certificate's outstanding principal amount. If the price paid exceeds the sum of
the Regular Certificate's issue price plus the aggregate amount of original
issue discount accrued with respect to the Regular Certificate, but does not
equal or exceed the outstanding principal amount of the Regular Certificate, the
amount of original issue discount to be accrued will be reduced in accordance
with a formula set forth in Section 1272(a)(7)(B) of the code.
The Company believes that the Holder of a Regular Certificate determined to
be issued with non-de minimis original issue discount will be required to
include the original issue discount in ordinary gross income for federal income
tax purposes computed in the manner described above. However, the OID
Regulations either do not address or are subject to varying interpretations with
respect to several issues concerning the computation of original issue discount
for obligations such as the Regular Certificates.
Variable Rate Regular Certificates. Regular Certificates may bear interest
at a variable rate. Under the OID Regulations, if a variable rate Regular
Certificate provides for qualified stated interest payments computed on the
basis of certain qualified floating rates or objective rates, then any original
issue discount on such a Regular Certificate is computed and accrued under the
same methodology that applies to Regular Certificates paying qualified stated
interest at a fixed rate. Accordingly, if the issue price of such a Regular
Certificate is equal to its stated redemption price at maturity, the Regular
Certificate will not have any original issue discount. Under the OID
Regulations, certain variable interest rates payable on Regular Certificates,
including rates based upon the weighted average interest rate of a Pool of
Contracts, may not be treated as qualified stated interest. In such case, the
OID Regulations would treat interest under such rates as contingent interest
which generally must be included in income by the Regular Certificateholder when
the interest becomes fixed, as opposed to when it accrues. Further information
regarding the treatment of variable interest that does not constitute qualified
stated interest will be provided, when necessary, in the Prospectus Supplement
relating to the issuance of such Regular Certificates.
For purposes of applying the original issue discount provisions of the
Code, all or a portion of the interest payable with respect to a variable rate
Regular Certificate may not be treated as qualified stated interest in certain
circumstances, including the following: (i) if the variable rate of interest is
subject to one or more minimum or maximum rate ceilings which are not fixed
throughout the term of the Regular Certificate and which are reasonably expected
as of the issue date to cause the rate in certain accrual periods to be
significantly higher or lower than the overall expected return on the Regular
Certificate determined without such minimum or maximum rates; (ii) if it is
reasonably expected that the average value of the variable rate during the first
half of the term of the Regular Certificate will be either significantly less
than or greater than the average value of the rate during the final half of the
term of the Regular Certificate; or (iii) if interest is not payable in all
circumstances. In these situations, as well as others, it is unclear under the
OID Regulations whether or to what extent such interest payments constitute
qualified stated interest payments, must be treated either as part of a Regular
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Certificate's stated redemption price at maturity resulting in original issue
discount, or represent contingent payments which are recognized as ordinary
gross income for federal income tax purposes only as the interest payments
become fixed in each accrual period.
If a variable rate Regular Certificate is deemed to have been issued with
original issue discount, as described above, the amount of original issue
discount accrues on a daily basis under a constant yield method that takes into
account the compounding of interest; provided, however, that the interest
associated with such a Regular Certificate generally is assumed to remain
constant throughout the term of the Regular Certificate at a rate that, in the
case of a qualified floating rate, equals the value of such qualified floating
rate as of the issue date of the Regular Certificate, or, in the case of an
objective rate, at a fixed rate that reflects the yield that is reasonably
expected for the Regular Certificate. A Holder of such a Regular Certificate
would then recognize original issue discount during such accrual period at a
rate equal to such a Regular Certificate's original, assumed yield to maturity,
adjusted to reflect the difference between the assumed and actual interest rate.
The OID Regulations either do not address or are subject to varying
interpretations with respect to several issues concerning the computation of
original issue discount with respect to the Regular Certificates, including
variable rate Regular Certificates. When available, additional information
regarding the manner of reporting original issue discount to the Service and to
Holders of variable rate Regular Certificates will be set forth in the
Prospectus Supplement relating to the issuance of such Regular Certificates.
Market Discount. Regular Certificates, whether or not issued with original
issue discount, will be subject to the market discount rules of the Code. A
purchaser of a Regular Certificate who purchases the Regular Certificate at a
market discount (i.e., a discount from its original issue price plus any accrued
original issue discount, if any, as described above) will be required to
recognize accrued market discount as ordinary income as payments of principal
are received on such Regular Certificate or upon the disposition of the Regular
Certificate. In general, the Holder of a Regular Certificate may elect to treat
market discount as accruing either (i) under a constant yield method that is
similar to the method for the accrual of original issue discount or (ii) in
proportion to accruals of original issue discount (or, if there es no angiacc
ed
original t, in proportion to accruals of stated interest), in each case
computed taking into account the Prepayment Assumption.
The Code provides that the market discount in respect of a Regular
Certificate will be considered to be zero if the amount allocable to the Regular
Certificate is less than 0.25% of the Regular Certificate's stated redemption
price at maturity multiplied by the number of complete years remaining to its
maturity after the Holder acquired the obligation. If market discount is treated
as de minimis under this rule, the actual discount would be allocated among a
portion of each scheduled distribution representing the stated redemption price
of such Regular Certificate and that portion of the discount allocable to such
distribution would be reported as income when such distribution occurs or is
due.
The Code further provides that any principal payment with respect to a
Regular Certificate acquired with market discount or any gain on disposition of
such a Regular Certificate shall be treated as ordinary income to the extent it
does not exceed the accrued market discount at the time of such payment. The
amount of accrued market discount for purposes of determining the amount of
ordinary income to be recognized with respect to subsequent payments on such a
Regular Certificate is to be reduced by the amount previously treated as
ordinary income.
The Code grants authority to the Treasury Department to issue regulations
providing for the computation of accrued market discount on debt instruments
such as the Regular Certificates. Until such time as regulations are issued,
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rules described in the legislative history for these provisions of the Code will
apply. Under those rules, as described above, the Holder of a Regular
Certificate with market discount may elect to accrue market discount either on
the basis of a constant interest rate or according to certain other methods.
Certificateholders who acquire a Regular Certificate at a market discount should
consult their tax advisors concerning various methods which are available for
accruing that market discount.
In general, limitations imposed by the Code that are intended to match
deductions with the taxation of income may require a Holder of a Regular
Certificate having market discount to defer a portion of the interest deductions
attributable to any indebtedness incurred or continued to purchase or carry such
Regular Certificate. Alternatively, a Holder of a Regular Certificate may elect
to include market discount in gross income as it accrues and, if he makes such
an election, is exempt from this rule. The adjusted basis of a Regular
Certificate subject to such election will be increased to reflect market
discount included in gross income, thereby reducing any gain or increasing any
loss on a sale or taxable disposition.
Amortizable Premium. A Holder of a Regular Certificate who holds the
Regular Certificate as a capital asset and who purchased the Regular Certificate
at a cost greater than its outstanding principal amount will be considered to
have purchased the Regular Certificate at a premium. In general, the Regular
Certificateholder may elect to deduct the amortizable bond premium as it accrues
under a constant yield method. A Regular Certificateholder's tax basis in the
Regular Certificate will be reduced by the amount of the amortizable bond
premium deducted. In addition, it appears that the same methods which apply to
the accrual of market discount on installment obligations are intended to apply
in computing the amortizable bond premium deduction with respect to a Regular
Certificate. It is not clear, however, (i) whether the alternatives to the
constant-yield method which may be available for the accrual of market discount
are available for amortizing premium on Regular Certificates and (ii) whether
the Prepayment Assumption should be taken into account in determining the term
of a Regular Certificate for this purpose. Certificateholders who pay a premium
for a Regular Certificate should consult their tax advisors concerning such an
election and rules for determining the method for amortizing bond premium.
Gain or Loss on Disposition. If a Regular Certificate is sold, the seller
will recognize gain or loss equal to the difference between the amount realized
from the sale and the seller's adjusted basis in such Regular Certificate. The
adjusted basis generally will equal the cost of such Regular Certificate to the
seller, increased by any original issue discount included in the seller's
ordinary gross income with respect to such Regular Certificate and reduced (but
not below zero) by any payments on the Regular Certificate previously received
or accrued by the seller (other than qualified stated interest payments) and any
amortizable premium. Similarly, a Regular Certificateholder who receives a
principal payment with respect to a Regular Certificate will recognize gain or
loss equal to the difference between the amount of the payment and the Holder's
allocable portion of his or her adjusted basis in the Regular Certificate.
Except as discussed below or with respect to market discount, any gain or loss
recognized upon a sale, exchange, retirement, or other disposition of a Regular
Certificate will be capital gain if the Regular Certificate is held as a capital
asset.
Gain from the disposition of a Regular Certificate that might otherwise be
capital gain, including any gain attributable to de minimis original issue
discount, will be treated as ordinary income to the extent of the excess, if
any, of (i) the amount that would have been includable in the Holder's income if
the yield on such Regular Certificate had equaled 110% of the applicable federal
rate determined as of the beginning of such Holder's holding period, over (ii)
the amount of ordinary income actually recognized by the Holder with respect to
such Regular Certificate.
Certain Taxes on the REMIC. The REMIC provisions of the Code impose a 100%
tax on any net income derived by a REMIC from certain prohibited transactions.
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Such transactions are (i) any disposition of a qualified mortgage, other than
pursuant to the substitution of a qualified replacement mortgage for a qualified
mortgage (or the repurchase in lieu of substitution of a defective obligation),
a disposition incident to the foreclosure, default, or imminent default of a
mortgage, the bankruptcy or insolvency of the REMIC, or a qualified liquidation
of the REMIC; (ii) the receipt of income from assets other than qualified
mortgages and permitted investments; (iii) the receipt of compensation for
services; and (iv) the receipt of gain from the dispositions of cash flow
investments. The REMIC Regulations provide that the modification of the terms of
a Contract occasioned by default or a reasonably foreseeable default of the
Contract, the assumption of the Contract, the waiver of a due-on-sale clause or
the conversion of an interest rate by an Obligor pursuant to the terms of a
convertible adjustable-rate Contract will not be treated as a disposition of the
Contract. The Code also imposes a 100% tax on contributions to a REMIC made
after the Startup Day, unless such contributions are payments made to facilitate
a cleanup call or a qualified liquidation of the REMIC, payments in a nature of
a guaranty, contributions during the three-month period beginning on the Startup
Day or contributions to a qualified reserve fund of the REMIC by a Holder of a
residual interest in the REMIC. The Code also imposes a tax on a REMIC at the
highest corporate rate on certain net income from foreclosure property that the
REMIC derives from the management, sale, or disposition of any real property, or
any personal property incident thereto, acquired by the REMIC in connection with
the default or imminent default of a loan. Generally, it is not anticipated that
a Trust which makes a REMIC Election will generate a significant amount of such
income.
Liquidation of the REMIC. A REMIC may liquidate without the imposition of
entity-level tax only in a "qualified liquidation". A liquidation is considered
qualified if a REMIC adopts a plan of complete liquidation and sells all of its
assets (other than cash) within the ninety-day period beginning on the date of
the adoption of the plan of liquidation, provided that it distributes to Holders
of Regular or Residual Certificates, on or before the last day of the ninety-day
liquidation period, all the proceeds of the liquidation (plus all cash), less
amounts remained to meet claims.
Taxation of Certain Foreign Investors. For purposes of this discussion, a
"Foreign Holder" is a Certificateholder who holds a Regular Certificate and who
is not (i) a citizen or resident of the United States, (ii) a corporation,
partnership, or other entity organized in or under the laws of the United States
or a political subdivision thereof or (iii) an estate or trust the income of
which is includable in gross income for United States tax purposes regardless of
its source. Unless the interest on a Regular Certificate is effectively
connected with the conduct by the Foreign Holder of a trade or business within
the United States, the Foreign Holder is not subject to federal income or
withholding tax on interest (or original issue discount, if any) on a Regular
Certificate (subject to possible backup withholding of tax, discussed below),
provided the Foreign Holder is not a controlled foreign corporation related to
the Company (or subsequent holder of the Residual Certificates) and does not own
actually or constructively 10% or more of the voting stock of the Company (or
subsequent holder of the Residual Certificates). To qualify for this tax
exemption, the Foreign Holder will be required to provide periodically a
statement signed under penalties of perjury certifying that the Foreign Holder
meets the requirements for treatment as a Foreign Holder and providing the
Foreign Holder's name and address. The statement, which may be made on a Form
W-8 or substantially similar substitute form, generally must be provided in the
year a payment occurs or in either of the two preceding years. The statement
must be provided either directly or through a clearing organization or financial
institution intermediaries, to the person that otherwise would withhold tax.
This exemption may not apply to a Foreign Holder that owns both Regular
Certificates and Residual Certificates. If the interest on a Regular Certificate
is effectively connected with the conduct by a Foreign Holder of a trade or
business within the United States, then the Foreign Holder will be subject to
tax at the regular graduated rates and such a Foreign Holder may avoid
withholding of tax on such interest (or original issue discount, if any) if the
Foreign Holder provides a properly completed Form 4224. Foreign Holders should
consult their own tax advisors regarding the specific tax consequences of their
owning a Regular Certificate.
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Any gain recognized by a Foreign Holder upon a sale, retirement or other
taxable disposition of a Regular Certificate generally will not be subject to
United States federal income tax unless either (i) the Foreign Holder is a
non-resident alien individual who holds the Regular Certificate as a capital
asset and who is present in the United States for 183 days or more in the
taxable year of the disposition and either the gain is attributable to an office
or other fixed place of business maintained in the U.S. by the individual or the
individual has a "tax home" in the United States, or (ii) the gain is
effectively connected with the conduct by the Foreign Holder of a trade or
business within the United States.
A Regular Certificate will not be includible in the estate of a Foreign
Holder who does not own actually or constructively 10% or more of the voting
stock of the Company (or subsequent holder of the Residual Certificates).
Backup Withholding. Under certain circumstances, a REMIC Certificateholder
may be subject to "backup withholding" at a 31% rate. Backup withholding may
apply to a REMIC Certificateholder who is a United States person if the Holder,
among other circumstances, fails to furnish his Social Security number or other
taxpayer identification number to the Trustee. Backup withholding may apply,
under certain circumstances, to a REMIC Certificateholder who is a foreign
person if the REMIC Certificateholder fails to provide the trustee or the REMIC
Certificateholder's securities broker with the statement necessary to establish
the exemption from federal income and withholding tax on interest on the REMIC
Certificate. Backup withholding, however, does not apply to payments on a
Certificate made to certain exempt recipients, such as corporations and
tax-exempt organizations, and to certain foreign persons. REMIC
Certificateholders should consult their tax advisors for additional information
concerning the potential application of backup withholding to payments received
by them with respect to a Certificate.
Reporting Requirements and Tax Administration. The Trustee will report
annually to the Service, Holders of record of the Regular Certificates that are
not excepted from the reporting requirements and, to the extent required by the
Code, other interested parties, information with respect to the interest paid or
accrued on the Regular Certificates, original issue discount, if any, accruing
on the Regular Certificates and information necessary to compute the accrual of
any market discount or the amortization of any premium on the Regular
Certificates.
The Treasury Department has issued temporary regulations concerning certain
aspects of REMIC tax administration. Under those regulations, a Residual
Certificateholder must be designated as the REMIC's "tax matters person". The
tax matters person generally has responsibility for overseeing and providing
notice to the other Residual Certificateholders of certain administrative and
judicial proceedings regarding the REMIC's tax affairs. Unless otherwise
indicated in the related Prospectus Supplement, the Company will be designated
as the tax matters person for each REMIC, and in conjunction with the Trustee
will act as the agent of the Residual Certificateholders in the preparation and
filing of the REMIC's federal and state income tax and other information
returns.
Non-REMIC Series
Tax Status of the Trust. In the case of a Trust evidenced by a series or
sub-series of Certificates, or a segregated portion thereof, with respect to
which a REMIC Election is not made ("Non-REMIC Certificates"), counsel to the
Company identified in the applicable Prospectus Supplement will have advised the
Company that, in its opinion, each Contract Pool and the arrangement to be
administered by the Company under which the Trustee will hold and the Company
will be obligated to service the Contracts and pursuant to which Non-REMIC
Certificates will be issued to Non-REMIC Certificateholders will not be
classified as an association taxable as a corporation or a "taxable mortgage
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pool," within the meaning of Code Section 7701(i), but rather will be classified
as a grantor trust under Subpart E, Part 1 of Subchapter J of the Code. Each
Non-REMIC Certificateholder will be treated as the owner of a pro rata undivided
interest in the ordinary income and corpus portions of the trust attributable to
the Contract Pool in which its Certificate evidences an ownership interest and
will be considered the equitable owner of a pro rata undivided interest in each
of the Contracts included therein.
Tax Status of Non-REMIC Certificates. In general, (i) Certificates held by
a financial institution taxed as described in Section 593(a) of the Code may
represent interests in "qualifying real property loans" within the meaning of
Section 593(d) of the Code, (ii) Certificates held by a "domestic building and
loan association" within the meaning of Section 7701(a)(19) of the Code may be
considered to represent "qualifying real property loans" within the meaning of
Section 7701(a)(19)(C)(v) of the Code, and (iii) Certificates held by a real
estate investment trust may constitute "real estate assets" within the meaning
of Section 856(c)(5)(A) of the Code and interest thereon may be considered
"interest on obligations secured by mortgages on real property" within the
meaning of Section 856(c)(3)(B) of the Code. Treasury Regulations promulgated
pursuant to Section 593 on the Code define "qualifying real property loans" to
include a loan secured by a mobile unit "permanently fixed to real property"
except during a brief period in which the unit is transported to its site.
Section 7701(a)(19)(C)(v) of the Code provides that "loans secured by an
interest in real property" includes loans secured by mobile homes not used on a
transient basis. Investors should review the related Prospectus Supplement for a
discussion of the treatment of Non-REMIC Certificates and Contracts under these
Code sections and should, in addition, consult with their own tax advisors with
respect to these matters.
Tax Treatment of Non-REMIC Certificates. Non-REMIC Certificateholders will
be required to report on their federal income tax returns, and in a manner
consistent with their respective methods of accounting, their pro rata share of
the entire income arising from the Contracts comprising such Contract Pool,
including interest, original issue discount, if any, prepayment fees, assumption
fees, and late payment charges received by the Company, and any gain upon
disposition of such Contracts. (For purposes of this discussion, the term
"disposition" when used with respect to the Contracts, includes scheduled or
prepaid collections with respect to the Contracts, as well as the sale or
exchange of a Non-REMIC Certificate.) Non-REMIC Certificateholders will be
entitled under Section 162 or 212 of the Code to deduct their pro rata share of
related servicing fees, administrative and other non-interest expenses,
including assumption fees and late payment charges retained by the Company. An
individual, an estate, or a trust that holds a Non-REMIC Certificate either
directly or through a pass-through entity will be allowed to deduct such
expenses under Section 212 of the Code only to the extent that, in the aggregate
and combined with certain other miscellaneous itemized deductions, they exceed
2% of the adjusted gross income of the Holder. In addition, Section 68 of the
Code provides that the amount of certain itemized deductions (including those
provided for in Section 212 of the Code) otherwise allowable for the taxable
year for an individual whose adjusted gross income exceeds an inflation-adjusted
threshold amount specified in the Code ($111,800 for taxable years beginning in
1994, in the case of a joint return) will be reduced by the lesser of (i) 3% of
the excess of adjusted gross income over the specified threshold amount or (ii)
80% of the amount of itemized deductions otherwise allowable for such taxable
year. To the extent that a Non-REMIC Certificateholder is not permitted to
deduct servicing fees allocable to a Non-REMIC Certificate, the taxable income
of the Non-REMIC Certificateholder attributable to that Non-REMIC Certificate
will exceed the net cash distributions related to such income. Non-REMIC
Certificateholders may deduct any loss on disposition of the Contracts to the
extent permitted under the Code.
Under current Service interpretations of applicable Treasury Regulations
the Company would be able to sell or otherwise dispose of any subordinated
Non-REMIC Certificates. In general, such subordination should not affect the
federal income tax treatment of either the subordinated or senior Certificates.
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Holders of subordinated classes of Certificates should be able to recognize any
losses allocated to such class when and if losses are realized.
Gain on the prepayment of a Contract on which the obligor is an individual
will be treated as ordinary income. To the extent that any of the Contracts
comprising a Contract Pool were originated on or after March 2, 1984 and under
circumstances giving rise to original issue discount, Certificateholders will be
required to report annually an amount of additional interest income attributable
to such discount in such Contracts prior to receipt of cash related to such
discount. See the discussion above under "REMIC Series--Original issue
Discount". Similarly, Code provisions concerning (i) market discount will apply
to the Contracts comprising of a Contract Pool to the extent that the loans were
purchased after April 30, 1993 and (ii) amortizable bond premiums will apply to
the Contracts comprising a Contract Pool to the extent that the loans were
originated after September 27, 1985. See the discussions above under "REMIC
Series--Market Discount" and "REMIC Series--Amortizable Premium".
Stripped Non-REMIC Certificates. Certain classes of Non-REMIC Certificates
may be subject to the stripped bond rules of Section 1286 of the Code and for
purposes of this discussion will be referred to as "Stripped Certificates". In
general, a Stripped Certificate will be subject to the stripped bond rules where
there has been a separation of ownership of the right to receive some or all of
the principal payments on a Contract from an ownership of the right to receive
some or all of the related interest payments. Non-REMIC Certificates will
constitute Stripped Certificates and will be subject to these rules under
various circumstances, including the following: (i) if any servicing
compensation is deemed to exceed a reasonable amount; (ii) if the Company or any
other party retains a Retained Yield with respect to the Contracts comprising a
Contract Pool; (iii) if two or more classes of Non-REMIC Certificates are issued
representing the right to non-pro rata percentages of the interest or principal
payments on the Contracts; or (iv) if Non-REMIC Certificates are issued which
represent the right to interest only payments or principal only payments.
Although not entirely clear, each Stripped Certificate should be considered
to be a single debt instrument issued on the day it is purchased for purposes of
calculating any original issue discount. Original issue discount with respect to
a Stripped Certificate, if any, must be included in ordinary gross income for
federal income tax purposes as it accrues in accordance with the constant-yield
method that takes into account the compounding of interest and such accrual of
income may be in advance of the receipt of any cash attributable to such income.
See "REMIC Series -- Original Issue Discount" above. For purposes of applying
the original issue discount provisions of the Code, the issue price of a
Stripped Certificate will be the purchase price paid by each Holder thereof and
the stated redemption price at maturity may include the aggregate amount of all
payments to be made with respect to the Stripped Certificate whether or not
denominated as interest. The amount of original issue discount with respect to a
Stripped Certificate may be treated as zero under the original issue discount de
minimis rules described above. A purchaser of a Stripped Certificate will be
required to account for any discount on the certificate as market discount
rather than original issue discount if either (i) the amount of original issue
discount with respect to the certificate was treated as zero under the original
issue discount de minimis rule when the certificate was stripped or (ii) no more
than 100 basis points (including any amount of servicing in excess of reasonable
servicing) is stripped off of the Contracts. See "REMIC Series -- Market
Discount" above.
When an investor purchases more than one class of Stripped Certificates it
is currently unclear whether for federal income tax purposes such classes of
Stripped Certificates should be treated separately or aggregated for purposes of
applying the original issue discount rules described above.
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It is possible that the Service may take a contrary position with respect
to some or all of the foregoing tax consequences. For example, a Holder of a
Stripped Certificate may be treated as the owner of (i) as many stripped bonds
or stripped coupons as there are scheduled payments of principal and/or interest
on each Contract or (ii) a separate installment obligation for each Contract
representing the Stripped Certificate's pro rata share of principal and/or
interest payments to be made with respect thereto. As a result of these possible
alternative characterizations, investors should consult their own tax advisors
regarding the proper treatment of Stripped Certificates for federal income tax
purposes.
Gain or Loss on Disposition. Upon sale or exchange of a Non-REMIC
Certificate, a Non-REMIC Certificateholder will recognize gain or loss equal to
the difference between the amount realized in the sale and its aggregate
adjusted basis in the Contracts represented by the Non-REMIC Certificate.
Generally, the aggregate adjusted basis will equal the Non-REMIC
Certificateholder's cost for the Non-REMIC Certificate increased by the amount
of any previously reported income and gain with respect to the Non-REMIC
Certificate and decreased by the amount of any losses previously reported with
respect to the Non-REMIC Certificate and the amount of any distributions
received thereon. Except as provided above with respect to the original issue
discount and market discount rules, any such gain or loss would be capital gain
or loss if the Non-REMIC Certificate was held as a capital asset.
Tax Treatment of Certain Foreign Investors. Generally, interest or original
issue discount paid to or accruing for the benefit of a Non-REMIC
Certificateholder who is a Foreign Holder (as defined in "REMIC Series--Taxation
of Certain Foreign Investors") will be treated as "portfolio interest" and
therefore will be exempt from the 30% withholding tax, but only to the extent
the Contracts were originated after July 18, 1984 and provided that such
Non-REMIC Certificateholder periodically provides the Trustee (or other person
who would otherwise be required to withhold tax) with a statement certifying
under penalty of perjury that such Non-REMIC Certificateholder is not a United
States person and providing the name and address of such Non-REMIC
Certificateholder. The statement, which may be made on a Form W-8 or
substantially similar substitute form, generally must be provided in the year a
payment occurs or in either of the two preceding years. The statement must be
provided either directly or through clearing organization or financial
institution intermediaries, to the person that otherwise would withhold tax. If
the interest on a Non-REMIC Certificate is effectively connected with the
conduct by a Foreign Holder of a trade or business within the United States,
then the Foreign Holder will be subject to tax at the regular graduated rates
and such a foreign holder may avoid withholding tax on such interest (or
original issue discount, if any) if the Foreign Holder provides a properly
completed Form 4224. For additional information concerning the treatment of a
sale or exchange of a Non-REMIC Certificate by a Foreign Holder, which will
generally have the same tax consequences as the sale of a Regular Certificate,
see the discussion above under "REMIC Series -- Taxation of Certain Foreign
Investors".
Tax Administration and Reporting. The Trustee will furnish to each
Non-REMIC Certificateholder with each distribution a statement setting forth the
amount of such distribution allocable to principal and to interest. In addition,
the Trustee will furnish, within a reasonable time after the end of each
calendar year, to each Non-REMIC Certificateholder who was a Certificateholder
at any time during such year, information regarding the amount of servicing
compensation received by the Company and any sub-servicer and such other
customary factual information as the Trustee deems necessary or desirable to
enable Certificateholders to prepare their tax returns. Reports will be made
annually to the Service and to Holders of record that are not excepted from the
reporting requirements regarding information as may be required with respect to
interest and original issue discount, if any, with respect to the Non-REMIC
Certificates.
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Other Tax Consequences
No advice has been received as to local income, franchise, personal
property, or other taxation in any state or locality, or as to the tax effect of
ownership of Certificates in any state or locality. Certificateholders are
advised to consult their own tax advisors with respect to any state or local
income, franchise, personal property, or other tax consequences arising out of
their ownership of Certificates.
LEGAL INVESTMENT CONSIDERATIONS
Unless otherwise indicated in the applicable Prospectus Supplement, any
Certificates offered hereby that are rated in one of the two highest rating
categories by at least one nationally recognized statistical rating organization
will constitute "mortgage related securities" for purposes of the Secondary
Mortgage Market Enhancement Act of 1984 ("SMMEA") and, as such, will be legal
investments for persons, trusts, corporations, partnerships, associations,
business trusts and business entities (including depository institutions, life
insurance companies and pension funds) created pursuant to or existing under the
laws of the United States or of any state whose authorized investments are
subject to state regulation to the same extent as, under applicable law,
obligations issued by or guaranteed as to principal and interest by the United
States or any such entities. Under SMMEA, certain states have created
legislation specifically limiting the legal investment authority of any such
entities with respect to "mortgage related securities," in which case the
Certificates will constitute legal investments for entities subject to such
legislation only to the extent provided therein. SMMEA provides, however, that
in no event will be enactment of any such legislation affect the validity of any
contractual commitment to purchase, hold or invest in Certificates, or require
the sale or other disposition of Certificates, so long as such contractual
commitment was made or such Certificates were acquired prior to the enactment of
such legislation.
SMMEA also amended the legal investment authority of federally chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal in Certificates
without limitation as to the percentage of their assets represented thereby;
federal credit unions may invest in Certificates; and national banks may
purchase Certificates for their own account without regard to the limitations
generally applicable to investment securities set forth in 12 U.S.C. ss.24
(Seventh), subject in each case to such regulations as the applicable federal
regulatory authority may prescribe.
Some Classes of Certificates offered hereby may not be rated in one of the
two highest rating categories and, thus, would not constitute "mortgage related
securities" for purposes of SMMEA.
The Federal Financial Institutions Examination Council, the Federal Deposit
Insurance Corporation, the Office of Thrift Supervision, the Office of the
Comptroller of the Currency and the National Credit Union Administration have
proposed or adopted guidelines regarding investment in various types of
mortgage-backed securities. In addition, certain state regulators have taken
positions that may prohibit regulated institutions subject to their jurisdiction
from holding securities representing residual interests, including securities
previously purchased. There may be other restrictions on the ability of certain
investors, including depository institutions, either to purchase Certificates or
to purchase Certificates representing more than a specified percentage of the
investor's assets. Investors should consult their own legal advisors in
determining whether and to what extent the Certificates constitute legal
investments for such investors.
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<PAGE>
RATINGS
It is a condition precedent to the issuance of any Class of Certificates
sold under this Prospectus that they be rated by at least one nationally
recognized statistical rating organization in one of its four highest rating
categories (within which there may be sub-categories or gradations indicating
relative standing). A security rating is not a recommendation to buy, sell or
hold securities and may be subject to revision or withdrawal at any time by the
assigning rating agency. The security rating of any Series of Certificates
should be evaluated independently of similar security ratings assigned to other
kinds of securities.
UNDERWRITING
The Company may sell Certificates of each Series to or through underwriters
(the "Underwriters") by a negotiated firm commitment underwriting and public
reoffering by the Underwriters, and also may sell and place Certificates
directly to other purchasers or through agents. The Company intends that
Certificates will be offered through such various methods from time to time and
that offerings may be made concurrently through more than one of these methods
or that an offering of a particular Series of Certificates may be made through a
combination of such methods.
The distribution of the Certificates may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
If so specified in the Prospectus Supplement relating to a Series of
Certificates, the Company, CITSF or any affiliate thereof may purchase some or
all of one or more Classes of Certificates of such Series from the Underwriter
or Underwriters at a price specified in such Prospectus Supplement. Such
purchaser may thereafter from time to time offer and sell, pursuant to this
Prospectus, some or all of such Certificates so purchased directly, through one
or more Underwriters to be designated at the time of the offering of such
Certificates or through broker-dealers acting as agent and/or principal. Such
offering may be restricted in the manner specified in such Prospectus
Supplement. Such transactions may be effected at market prices prevailing at the
time of sale, at negotiated prices or fixed prices.
In connection with the sale of the Certificates, Underwriters may receive
compensation from the Company or from purchasers of Certificates for whom they
may act as agents in the form of discount, concessions or commissions.
Underwriters may sell the Certificates of a Series to or through dealers and
such dealers may receive compensation in the form of discounts, concessions or
commissions from the Underwriters and/or commissions from the purchasers for
whom they may act as agents. Underwriters, dealers and agents that participate
in the distribution of the Certificates of a Series may be deemed to be
Underwriters, and any discounts or commissions received by them from the Company
and any profit on the resale of the Certificates by them may be deemed to be
underwriting discounts and commissions under the Securities Act of 1933, as
amended (the "Act"). Any such Underwriters or agents will be identified, and any
such compensation received from the Company will be described, in the Prospectus
Supplement.
Under agreements which may be entered into by the Company, underwriters and
agents who participate in the distribution of the Certificates may be entitled
to indemnification by the Company against certain liabilities, including
liabilities under the Act.
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<PAGE>
If so indicated in the Prospectus Supplement, the Company will authorize
Underwriters or other persons acting as the Company's agents to solicit offers
by certain institutions to purchase the Certificates from the Company pursuant
to a contract providing for payment and delivery on a future date. Institutions
with which such contracts may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational or
charitable institutions and others, but in all cases such institutions must be
approved by the Company. The obligation of any purchaser under any such contract
will be subject to the condition that the purchaser of the offered Certificates
shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject from purchasing such
Certificates. The Underwriters and such other agents will not have
responsibility in respect of the validity or performance of such contracts.
The Underwriters may, from time to time, buy and sell Certificates, but
there can be no assurance that an active secondary market will develop and there
is no assurance that any such market, if established, will continue.
Certain of the Underwriters and their associates may engage in transactions
with and perform services for the Company, CIT or their affiliates in the
ordinary course of business.
LEGAL MATTERS
The legality of the Certificates will be passed upon for the Company by
Schulte Roth & Zabel, New York, New York. The material federal income tax
consequences of the Certificates will be passed upon for the Company by Schulte
Roth & Zabel. Paul N. Roth, a director of CIT, is a partner of Schulte Roth &
Zabel.
EXPERTS
The financial statements and schedule listed under the heading "Exhibits,
Financial Statement Schedule and Reports on Form 8-K" in the Corporation's 1993
Annual Report on Form 10-K incorporated by reference herein have been
incorporated by reference herein in reliance upon the reports of KPMG Peat
Marwick LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing. The report of KPMG Peat Marwick LLP covering the December 31, 1993
consolidated financial statements refers to a change in the method of accounting
for post-retirement benefits other than pensions in 1993.
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<PAGE>
INDEX OF DEFINED TERMS
Page
Act ................................................................... 67
Advances............................................................... 35
Agreement.............................................................. 4
Amount Available....................................................... 31
Asset Service Center................................................... 17
Bankruptcy Code........................................................ 14
Certificate Account.................................................... 14
Certificate Remittance Amount.......................................... 33
Certificateholder...................................................... 25
Certificates........................................................... 4
CIT.................................................................... 1
CITSF.................................................................. 1
Class.................................................................. 24
Code................................................................... 10
Commission............................................................. 2
Company................................................................ 1
Compound Interest Certificates......................................... 33
Contract Pool.......................................................... 4
Contract Rate.......................................................... 5
Contracts.............................................................. 1
Cut-off Date........................................................... 5
Delayed Deposits....................................................... 31
Depositary............................................................. 9
Determination Date..................................................... 31
Disqualified Organizations............................................. 54
disqualified persons................................................... 50
DOL.................................................................... 51
DOL Regulation......................................................... 51
Due Period............................................................. 31
Due-on-Sale............................................................ 22
Eligible Investments................................................... 30
ERISA.................................................................. 10
FHA.................................................................... 4
FHA/VA Regulations..................................................... 29
Foreign Holder......................................................... 61
Global Certificate..................................................... 9
Global Certificateholder............................................... 9
HUD.................................................................... 42
Land-Secured Contract.................................................. 5
Liquidation Proceeds................................................... 31
Loan-to-Value Ratio.................................................... 71
Manufactured Home...................................................... 71
Master REMIC........................................................... 54
Monthly Servicing Fee.................................................. 38
Moody's................................................................ 30
Net Liquidation Proceeds............................................... 31
Non-REMIC Certificates................................................. 62
Obligor................................................................ 28
OID Regulations........................................................ 56
Outstanding Senior Shortfall........................................... 32
Plans.................................................................. 50
Pre-Funding Account.................................................... 1
Prepayment Assumption.................................................. 56
PTE 83-1............................................................... 51
Record Date............................................................ 25
Registration Statement................................................. 2
Regular Certificates................................................... 52
Relief Act............................................................. 46
REMIC.................................................................. 2
REMIC Election......................................................... 10
Remittance Date........................................................ 8
Remittance Rate........................................................ 15
Replaced Contract...................................................... 30
Residual Certificates.................................................. 52
Senior Certificates.................................................... 6
Senior Distribution Amount............................................. 32
Series................................................................. 1
Service................................................................ 54
Servicer............................................................... 1
Servicing Fees......................................................... 38
Single Certificate..................................................... 25
SMMEA.................................................................. 66
Special Distributions.................................................. 34
Startup Day............................................................ 53
Stated Balance......................................................... 6
Stripped Certificates.................................................. 64
Subordinated Certificates.............................................. 6
Subsidiary REMIC....................................................... 54
Trust.................................................................. 6
Trustee................................................................ 4
UCC.................................................................... 13
Underwriters........................................................... 67
VA..................................................................... 5
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<PAGE>
GLOSSARY
There follows abbreviated definitions of certain capitalized terms used in
this Prospectus and the Prospectus Supplement. Reference is also made to the
Index of Defined Terms herein and in the Prospectus Supplement. The Agreement
may contain a more complete definition of certain of the terms defined herein
and reference should be made to the Agreement for a more complete definition of
all such terms.
"Advances" means the advances made by a Servicer (including from advances
made by a sub-servicer) on any Remittance Date pursuant to an Agreement.
"Agreement" means each Pooling and Servicing Agreement by and among the
Company, CITSF, as Servicer, and the Trustee.
"Amount Available" means, with respect to each Series of Certificates,
certain amounts on deposit in the Certificate Account on a Determination Date.
"Asset Service Center" means CITSF's asset service facility in Oklahoma
City, Oklahoma.
"Bankruptcy Code" means Title 11 of United States Code, 11 U.S.C. ss. 101
et seq.
"Certificate Account" means the account maintained by the Servicer or the
Trustee, as specified in the related Prospectus Supplement.
"Certificate Remittance Amount" means, unless otherwise specified in the
related Prospectus Supplement, with respect to a Series of Certificates
providing for sequential distributions in reduction of the Stated Balance of the
Classes of such Series, as of any Remittance Date, the amount, if any, by which
the then outstanding Stated Balance of the Classes of Certificates of such
Series (before taking into account the amount of interest accrued on any Class
of Compound Interest Certificates to be added to the Stated Balance thereof on
such Remittance Date) exceeds the asset value of the Contracts included in the
Trust for such Series as of the end of the related Due Period.
"Certificates" means the Manufactured Housing Contract Pass-Through
Certificates issued pursuant to an Agreement.
"CIT" means The CIT Group Holdings, Inc.
"CITSF" means The CIT Group/Sales Financing, Inc.
"Code" means the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder.
"Company" means The CIT Group Securitization Corporation II.
"Compound Interest Certificates" means Certificates on which interest may
accrue but not be paid for the period described in the related Prospectus
Supplement.
"Contract Pool" means, with respect to each Series of Certificates, the
pool of manufactured housing installment sales contracts and installment loan
agreements transferred by the Company to the Trustee.
"Contract Rate" means, with respect to each Contract, the interest rate
specified in the Contract.
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"Contracts" means the manufactured housing installment sales contracts and
installment loan agreements, which constitute the corpus of a Trust.
"Cut-off Date" means the date specified in the related Prospectus
Supplement as the date from which principal and interest payments on the
Contracts are included in the Trust.
"Determination Date" means, unless otherwise specified in the related
Prospectus Supplement, the third Business Day immediately preceding the related
Remittance Date.
"DOL" means the United States Department of Labor.
"Due Period" means the period for which interest and principal on the
Contracts is calculated for a related Remittance Date, as specified in the
related Prospectus Supplement.
"Eligible Investments" means one or more of the investments specified in
the Agreement in which moneys in the Certificate Account and certain other
accounts are permitted to be invested.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"FHA" means the Federal Housing Administration.
"HUD" means the United States Department of Housing and Urban Development.
"Land-Secured Contract" means a Contract that is secured by a new or used
Manufactured Home and/or in certain cases, a mortgage, deed of trust or similar
instrument on real estate on which the related Manufactured Home is located.
Under the laws of the jurisdiction in which such real estate is located the
Manufactured Home may or may not be deemed permanently affixed to the real
estate on which such Manufactured Home is situated and may or may not be
considered or classified as part of the real estate regardless of whether the
Manufactured Home is deemed affixed to the real estate on which it is situated.
"Liquidation Proceeds" means all amounts received and retained in
connection with the liquidation of defaulted Contracts.
"Loan-to-Value Ratio" means the loan-to-value ratio at the time of
origination of the Contract.
"Manufactured Home" means a unit of manufactured housing, including all
accessions thereto, securing the indebtedness of the Obligor under the related
Contract.
"Obligor" means each person who is indebted under a Contract or who has
acquired a Manufactured Home subject to a Contract.
"Record Date" means the date specified in the related Prospectus Supplement
for the list of Certificateholders entitled to distributions on the
Certificates.
"Relief Act" means the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
"REMIC" means a "real estate mortgage investment conduit" as defined in the
Code.
"Remittance Date" means the date specified in the related Prospectus
Supplement for payments on the Certificates.
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<PAGE>
"Remittance Rate" means, as to a Certificate, the rate or rates of interest
thereon specified in the related Prospectus Supplement.
"Senior Certificates" means, with respect to each Series of Certificates,
the Class or Classes which have rights senior to another Class or Classes in
such Series.
"Senior Distribution Amount" means, with respect to a Series of
Certificates having Subordinated Certificates, as of each Remittance Date and
for each Class of Senior Certificates, the amount due the holders of such Class
of Senior Certificates.
"Series" means a series of Certificates.
"Servicer" means, with respect to each Series of Certificates evidencing
interests in Contracts, the Servicer specified in the related Prospectus
Supplement.
"Servicing Fee" means the amount of the annual fee paid to the Servicer or
the Trustee as specified in the related Prospectus Supplement.
"Single Certificate" means, unless otherwise specified in the related
Prospectus Supplement, for each Class of Certificates of any Series, the initial
principal amount of Contracts evidenced by a single Certificate of such class.
"SMMEA" means the Secondary Mortgage Market Enhancement Act of 1984.
"Stated Balance" means, with respect to a Series of Certificates providing
for sequential distributions in reduction of Stated Balance of the Classes of
such Series, the maximum specified dollar amount (exclusive of interest at the
related interest rate) to which the Holder thereof is entitled from the cash
flow of the Trust.
"Subordinated Certificates" means, with respect to each Series of
Certificates, the Class or Classes with rights subordinate to another Class or
Classes of such Series.
"Trust" means, with respect to each Series of Certificates, the trust
created by the related Agreement.
"Trustee" means the Trustee for a Series of Certificates specified in the
related Prospectus Supplement.
"UCC" means the Uniform Commercial Code.
"VA" means the Veterans' Administration.
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PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 30. Other Expenses of Issuance and Distribution
The following is an itemized list of the estimated expenses to be incurred
in connection with the offering of the securities being offered hereunder other
than underwriting discounts and commissions.
Registration Fee....................................... $172,415.00
Blue Sky Fees and Expenses............................. 30,000.00
Accountant's Fee and Expenses.......................... 50,000.00
Attorney's Fees and Expenses........................... 195,000.00
Trustee's Fees and Expenses............................ 20,000.00
Printing and Engraving Expenses........................ 60,000.00
Rating Agency Fees..................................... 35,000.00
Miscellaneous Fees and Expenses........................ 5,000.00
------------
Total............................................ $567,415.00
Item 31. Sales to Special Parties
Not Applicable
Item 32. Recent Sales of Unregistered Securities
During June 1994, The CIT Group Securitzation Corporation II (the
"Company") issued 200 shares of its Common Stock, no par value per share, to The
CIT Group Holdings, Inc. ("CIT"). No underwriters were involved in connection
with such issuance, which was exempt from registration pursuant to Section 4(2)
of the Securities Act of 1933, as amended (the "Securities Act").
Listed below are all other unregistered securities sold by the Company
since its formation. These Certificates were distributed by the placement agent
listed below and privately placed by such placement agent with institutional
investors in transactions exempt from the registration provisions of the
Securities Act.
Principal Amount Placement
Series Issue Date of Certificates Agent
------ ---------- ---------------- ---------
1994-1 July 14, 1994 $42,033,000 (Class A) Goldman, Sachs & Co.
(Approximate)
II-1
<PAGE>
Item 33. Indemnification of Directors and Officers.
Subsection (a) of Section 145 of the General Corporation Law of Delaware
empowers a corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee, or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit, or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation except that no indemnification may be made in
respect of any claim, issue, or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine that despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
Section 145 further provides that to the extent a director, officer,
employee, or agent of a corporation has been successful in the defense of any
action, suit, or proceeding referred to in subsections (a) and (b) or in the
defense of any claim, issue, or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith; that indemnification provided for by Section 145 shall not
be deemed exclusive of any other rights to which the indemnified party may be
entitled; and empowers the corporation to purchase and maintain insurance on
behalf of any person acting in any of the capacities set forth in the second
preceding paragraph against any liability asserted against him or incurred by
him in any such capacity or arising out of his status as such whether or not the
corporation would have the power to indemnify him against such liabilities under
Section 145.
The Company's By-Laws provide for indemnification of directors and officers
of the Company to the full extent permitted by Delaware law.
Article X of the By-laws of CIT provides, in effect, that, in addition to
any rights afforded to an officer, director or employee of CIT by contract or
operation of law, CIT may indemnify any person who is or was a director,
officer, employee, or agent of CIT, or of any other corporation which he served
at the request of CIT, against any and all liability and reasonable expense
incurred by him in connection with or resulting from any claim, action, suit, or
proceeding (whether brought by or in the right of CIT or such other corporation
or otherwise), civil or criminal, in which he may have become involved, as a
party or otherwise, by reason of his being or having been such director,
officer, employee, or agent of CIT or such other corporation, whether or not he
continues to be such at the time such liability or expense is incurred, provided
that such person acted in good faith and in what he reasonably believed to be
II-2
<PAGE>
the best interests of CIT or such other corporation, and, in connection with any
criminal action proceeding, had no reasonable cause to believe his conduct was
unlawful.
Article X further provides that any person who is or was a director,
officer, employee, or agent of CIT or any direct or indirect wholly-owned
subsidiary of CIT shall be entitled to indemnification as a matter of right if
he has been wholly successful, on the merits or otherwise, with respect to any
claim, action, suit, or proceeding of the type described in the foregoing
paragraph.
In addition, the Registrants maintain directors' and officers'
reimbursement and liability insurance pursuant to standard form policies with
aggregate limits of $65,000,000. The risks covered by such policies do not
exclude liabilities under the Securities Act of 1933.
Pursuant to the form of Underwriting Agreement, the Underwriters will
agree, subject to certain conditions, to indemnify the Registrants, their
directors, certain of their officers and persons who control the Registrants
within the meaning of the Securities Act of 1933 against certain liabilities.
Item 34. Treatment of Proceeds from Stock Being Registered
Not Applicable
Item 35. Financial Statements and Exhibits
(a) Financial Statements:
Not Applicable
(b) Exhibits:
1.1* Form of Underwriting Agreement
3(i).1* Certificate of Incorporation of The CIT Group Securitization
Corporation II
3(ii).1* Bylaws of The CIT Group Securitization Corporation II
4.1* Form of Pooling and Servicing Agreement
4.2* Form of Limited Guarantee
5.1* Opinion and Consent of Schulte Roth & Zabel
8.1* Opinion of Schulte Roth & Zabel as to tax matters
10.1* Form of Sale and Purchase Agreement
10.2* Form of Subsequent Sale and Purchase Agreement
12.1* Computation of Ratios of Earnings to Fixed Charges
24.1* Consent of Schulte Roth & Zabel (included as part of Exhibit
5.1)
24.2* Consent of KPMG Peat Marwick LLP
25.1* Powers of attorney of The CIT Group Securitization Corporation
II (included on page II-6)
25.2* Powers of attorney of The CIT Group Holdings, Inc.
--------------
* Filed herewith
II-3
<PAGE>
Item 36. Undertakings.
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement; provided, however, that paragraphs (1)(i) and
(1)(ii) do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed by CIT pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in
the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to rule
424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed
to be part of this registration statement as of the time it was declared
effective.
(5) That, for purposes of determining any liability under Securities
Act, each filing of CIT's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that is incorporated
by reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bonafide offering thereof.
The undersigned Registrants hereby agree to provide to the underwriters at
the closing specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the foregoing provisions, or otherwise, the Registrants
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrants of expenses incurred or paid by a director, officer or controlling
person of the Registrants in the successful defense of any action, suit or
II-4
<PAGE>
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrants will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-11 and has duly caused this amendment
to the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Town of Livingston, State of New Jersey, on
December 21, 1994.
THE CIT GROUP SECURITIZATION CORPORATION II
By: /s/ JAMES J. EGAN, JR.
-----------------------
Name: James J. Egan, Jr.
Title: President
*By: /s/ JAMES J. EGAN, JR.
-----------------------
Name: James J. Egan, Jr.
Title: Attorney-in-Fact
POWER OF ATTORNEY
Each person whose signature to this Registration Statement appears below
hereby constitutes and appoints James J. Egan, Jr., Joseph M. Leone and Norman
H. Rosen, or any of them (with the full power of each of them to act alone), as
his true and lawful attorney-in-fact and agent, with full power of substitution,
to sign on his behalf individually and in the capacity stated below and to
perform any acts necessary to be done in order to file all amendments and
post-effective amendments to this Registration Statement, and any and all
instruments or documents filed as part of or in connection with this
Registration Statement or the amendments thereto, and each of the undersigned
does hereby ratify and confirm all that said attorney-in-fact and agent, or his
substitutes, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* President and Director December 21, 1994
- -------------------------
James J. Egan, Jr.
* Executive Vice President and Director December 21, 1994
- -------------------------
Joseph M. Leone
* Vice President and Director December 21, 1994
- -------------------------
Edward A. Farley
* Vice President, Treasurer and Controller December 21, 1994
- -------------------------
Robin H. Gordon (principal financial and accounting officer)
</TABLE>
II-6
<PAGE>
Original powers of attorney authorizing James J. Egan, Jr., Joseph M. Leone and
Norman H. Rosen and each of them to sign the Registration Statement and
amendments thereto on behalf of the directors and officers of the Registrant
indicated above are held by the Corporation and available for examination
pursuant to Item 302(b) of Registration S-T.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in The City of New York and State of New York, on
December 21, 1994.
THE CIT GROUP HOLDINGS, INC.
By: /s/ ERNEST D. STEIN
----------------------------------------
Ernest D. Stein
Executive Vice President, General Counsel
and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
Signature and Title Date
------------------- ----
*
- ------------------------------------------------
Albert R. Gamper, Jr.
President, Chief, Executive Officer, and Director
(principal executive officer)
*
- -------------------------------------------------
Hisao Kobayashi
Director
*
- ------------------------------------------------- *By /s/ ERNEST D. STEIN
Michio Murata -----------------------
Director Ernest D. Stein
Attorney-in-fact
*
- ------------------------------------------------- December 21, 1994
Joseph A. Pollicino
Director
*
- ------------------------------------------------
Paul N. Roth
Director
*
- ------------------------------------------------
Hideo Kitahara
Director
II-8
<PAGE>
Signature and Title Date
------------------- ----
*
- ------------------------------------------------
Peter J. Tobin
Director
*
- ------------------------------------------------
Toshiji Tokiwa
Director
*
- ------------------------------------------------
Keiji Torii
Director
*
- ------------------------------------------------
William H. Turner
Director
/s/ JOSEPH J. CARROLL December 21, 1994
- ----------------------------------------------------
Joseph J. Carroll
Executive Vice President and Chief Financial Officer
(principal financial and accounting officer)
Original powers of attorney authorizing Albert R. Gamper, Jr., Ernest D.
Stein, and Donald J. Rapson and each of them to sign the Registration Statement
and amendments thereto on behalf of the directors and officers of the Registrant
indicated above are held by The CIT Group Holdings, Inc. and available for
examination pursuant to Item 302(b) of Regulation S-T.
II-9
<PAGE>
Exhibit 1.1
Form of Underwriting Agreement
<PAGE>
THE CIT GROUP SECURITIZATION CORPORATION II, SELLER
Manufactured Housing Contract
Pass-Through Certificates
UNDERWRITING AGREEMENT
, 199
[Name(s) and Address(es) of
Underwriters]
Dear Sirs:
The CIT Group Securitization Corporation II (the "Company"), a Delaware
corporation with its principal place of business in Livingston, New Jersey, is a
wholly-owned limited-purpose finance subsidiary of the CIT Group Holdings, Inc.,
a Delaware corporation. The Company has authorized the issuance by the Trustee
(as defined below) and sale of Manufactured Housing Contract Pass-Through
Certificates (the "Certificates") evidencing interests in manufactured housing
installment sales contracts and installment loan agreements (the "Contracts")
and having aggregate outstanding principal balances of up to $_____________. The
Certificates may be issued in various series, and, within each series, in one or
more classes, and, within each class, in one or more sub-classes, in one or more
offerings on terms determined at the time of sale each such series, a "Series"
and each such class, a "Class"). Each Series of the Certificates will be issued
under a separate Pooling and Servicing Agreement (each, a "Pooling and Servicing
Agreement") with respect to such Series among the Company, as seller, The CIT
Group/Sales Financing, Inc. (in such capacity, the "Servicer") and a trustee to
be identified in the prospectus supplement for each such Series (the "Trustee").
The Certificates of each Series will evidence specified interests in separate
pools of Contracts (each, a "Contract Pool") and certain other property held in
trust with respect to such Series (each, a "Trust Fund"). The form of each
Pooling and Servicing Agreement has been filed as an exhibit to the Registration
Statement (hereinafter defined).
<PAGE>
The Certificates are more fully described in a Registration Statement which
the Company has furnished to you. Capitalized terms used but not defined herein
shall have the meanings given to them in the Pooling and Servicing Agreement.
The term "you" as used herein, unless the context otherwise requires, shall mean
[managing underwriter] and such persons as are named as co-managers in the
applicable Terms Agreement (defined below).
Upon a determination by the Company to make an offering of a Series of
Certificates through you as managing underwriter or through an underwriting
syndicate managed by you, it will enter into an agreement (the "Terms
Agreement") providing for the sale of such Certificates to, and the purchase and
offering thereof by, you and such other underwriters, if any, selected by you as
have authorized you to enter into such Terms Agreement on their behalf (the
"Underwriters," which term shall include you whether acting alone in the sale of
Certificates or as a member of an underwriting syndicate). The Terms Agreement
relating to such offering of a Series of Certificates shall specify, among other
things, the principal amount or amounts of Certificates to be issued, the price
or prices at which the Certificates are to be purchased by the Underwriters from
the Company and the initial public offering price or prices or the method by
which the price or prices at which such Certificates are to be sold will be
determined. A terms agreement relating to such Series of Certificates, which
shall be substantially in the form of Exhibit A hereto (a "Terms Agreement"),
may take the form of an exchange of any standard form of written
telecommunication between you and the Company. The offering of any such Series
of Certificates will be governed by this Agreement, as supplemented by the
applicable Terms Agreement, and this Agreement and such Terms Agreement shall
inure to the benefit of and be binding upon the Underwriters participating in
the offering of such Certificates. Subject to Section 3(g), the Company may, in
its sole discretion, offer a Series of Certificates through an underwriter other
than you, or through an underwriting syndicate which is not managed by you.
The Company and The CIT Group Holdings, Inc. have filed with the Securities
and Exchange Commission (the "Commission") a registration statement on Form S-3
and Form S-11 (No. 33-85224 and _______, the "registration statement") relating
to the Certificates, and the offering thereof from time to time in accordance
with Rule 415 under the Securities Act of 1933 (the "1933 Act"), and have filed,
and propose to file, such amendments thereto as may have been required to the
date hereof pursuant to the 1933 Act and the rules of the Commission thereunder
(the "Regulations"). Such registration statement, as amended at the time when it
becomes effective under the 1933 Act, and the prospectus relating to the sale of
Certificates by the Company constituting a part thereof, as from time to time
each is amended or supplemented pursuant to the 1933 Act or otherwise, are
referred to herein as the "Registration Statement" and the "Prospectus"
respectively; provided, however, that a supplement to the Prospectus
contemplated by Section 3(a) hereof (a "Prospectus Supplement") shall be deemed
to have supplemented the Prospectus only with respect to the offering or
offerings of Certificates to which it relates.
SECTION 1. Representations and Warranties. The Company represents and
warrants to you as of the date hereof, and to the Underwriters named in any
-2-
<PAGE>
Terms Agreement, all as of the date of such Terms Agreement (in each case, the
"Representation Date"), as follows:
(1) The Registration Statement and the Prospectus, at the time the
Registration Statement became effective did, and as of the applicable
Representation Date will, comply in all material respects with the
requirements of the 1933 Act and the Regulations. The Registration
Statement, at the time it became effective did not, and as of the
applicable Representation Date will not, contain 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, in the light of the
circumstances under which they were made, not misleading. The Prospectus,
as amended or supplemented at the time the Registration Statement became
effective did not, and as amended or supplemented as of the applicable
Representation Date will not, contain any untrue statement of a material
fact or omit 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; provided, however, that the representations and
warranties in this subsection shall not apply to statements in, or
omissions from, the Registration Statement or Prospectus made in reliance
upon and in conformity with information furnished to the Company in writing
by the Underwriters or by any third-party provider of credit enhancement
expressly for use in the Registration Statement or Prospectus. The
conditions to the use by the Company of a registration statement on Form
S-3 and Form S-11 under the 1933 Act, as set forth in the General
Instructions to Form S-3 and Form S-11, have been satisfied with respect to
the Registration Statement and the Prospectus. There are no contracts or
documents of the Company which are required to be filed as exhibits to the
Registration Statement pursuant to the 1933 Act or the Regulations which
have not been so filed.
(2) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware with
corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Prospectus and to enter into and
perform its obligations under this Agreement, the applicable Pooling and
Servicing Agreement and such Terms Agreement; and 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 its
business, properties, assets, or condition (financial or other).
(3) The Company is not 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
-3-
<PAGE>
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 Company or which
might materially and adversely affect the properties or assets thereof.
(4) The execution and delivery by the Company of this Agreement, such
Terms Agreement and the applicable Pooling and Servicing Agreement are
within the corporate power of the Company and have been duly authorized by
all necessary corporate action on the part of the Company; and neither the
issuance and sale of the Certificates to the Underwriters, nor the
execution and delivery by the Company of this Agreement and the Pooling and
Servicing Agreement, nor the consummation by the Company of the
transactions therein contemplated, nor compliance by the Company with the
provisions hereof or thereof, 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 Company or its properties or the certificate of
incorporation or by-laws of the Company, or any of the provisions of any
indenture, mortgage, contract or other instrument to which the Company is a
party or by which it 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.
(5) This Agreement has been, and such Terms Agreement when executed
and delivered as contemplated hereby and thereby will have been, duly
authorized, executed and delivered by the Company, and each constitutes, or
will constitute when so executed and delivered, a legal, valid and binding
instrument enforceable against the Company in accordance with its terms,
subject (i) to applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws affecting creditors' rights generally,
(ii) as to enforce-ability, 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.
(6) Each applicable Pooling and Servicing Agreement when executed and
delivered as contemplated hereby and thereby will have been duly
authorized, executed and delivered by the Company, and will constitute when
so executed and delivered, a legal, valid and binding instrument
enforceable against the Company 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).
-4-
<PAGE>
(7) As of the Closing Time (as defined below) with respect to the
Series of Certificates to which such Terms Agreement relates, the
Certificates will have been duly and validly authorized by the Company,
and, when executed and authenticated as specified in the related Pooling
and Servicing Agreement, will be validly issued and outstanding and will be
entitled to the benefits of the related Pooling and Servicing Agreement.
(8) 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 the Company of the transactions
contemplated by this Agreement, the applicable Pooling and Servicing
Agreement or such Terms Agreement, except such as may be required under the
1933 Act, the Regulations, or state securities or Blue Sky laws.
(9) The Company possesses all material licenses, certificates,
authorities or permits issued by the appropriate state, federal or foreign
regulatory agencies or bodies necessary to conduct the business now
operated by it and as described in the Prospectus, other than such
licenses, the failure of which to possess would not have a material adverse
effect on the interests of Certificateholders under the Pooling and
Servicing Agreement, and the Company has received no notice of proceedings
relating to the 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 the Company.
(10) As of the Closing Time with respect to the Series of Certificates
to which such Terms Agreement relates, the Contracts constituting a portion
of the Trust Fund will have been duly and validly assigned to the Trustee
in accordance with the applicable Pooling and Servicing Agreement; and when
such assignment 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 Company will have
occurred.
(11) As of the Closing Time with respect to the Series of Certificates
to which such Terms Agreement relates, each of the Contracts will meet the
eligibility criteria described in the Prospectus.
(12) Neither the Company nor the Trust Fund created by the applicable
Pooling and Servicing Agreement will be subject to registration as an
"investment company" under the Investment Company Act of 1940, as amended
(the "1940 Act").
-5-
<PAGE>
(13) The Certificates, the applicable Pooling and Servicing Agreement,
and any Standard Hazard Insurance Policies, Letter of Credit or other form
of credit enhancement conform in all material respects to the descriptions
thereof contained in the Prospectus.
(14) At the Closing Time with respect to a Series of Certificates, the
Certificates shall have received the certificate rating or ratings
specified in such Terms Agreement.
(15) At the Closing Time with respect to a Series of Certificates,
each of the representations and warranties of the Company set forth in the
related Pooling and Servicing Agreement will be true and correct in all
material respects.
Any certificate signed by an officer of the Company and delivered to you or
counsel for the Underwriters in connection with an offering of Certificates
shall be deemed, and shall state that it is, a representation and warranty as to
the matters covered thereby to each person to whom the representations and
warranties in this Section 1 are made.
SECTION 2 . Purchase and Sale. The commitment of the Underwriters to
purchase Certificates pursuant to any Terms Agreements shall be deemed to have
been made on the basis of the representations and warranties herein contained
and shall be subject to the terms and conditions herein set forth.
Payment of the purchase price for, and delivery of, any Certificates to be
purchased by the Underwriters pursuant to any Terms Agreement shall be made at
the office of [name and address of managing underwriter], or at such other place
as shall be agreed upon by you and the Company, at such time or date as shall be
agreed upon by you and the Company in such Terms Agreement (each such time and
date being referred to as a "Closing Time"). Unless otherwise specified in such
Terms Agreement, payment shall be made to the Company, at the option of the
Company, either (a) by certified or official bank check or checks in New York
Clearing House or similar next day funds payable to the order of the Company, or
(b) in immediately available Federal funds wired to such bank as may be
designated by the Company. Such Certificates shall be in such denominations and
registered in such names as you may request in writing at least two business
days prior to the applicable Closing Time. Such Certificates, which may be in
temporary form, will be made available for examination and packaging by you no
later than 12:00 noon on the first business day prior to the applicable Closing
Time.
SECTION 3. Covenants of the Company. In connection with each offering of a
Series of Certificates made through you as managing underwriter or through an
underwriting syndicate managed by you, the Company covenants with you and the
Underwriters named in the related Terms Agreement, as follows:
-6-
<PAGE>
(a) Immediately following the execution of such Terms Agreement, the
Company will prepare a Prospectus Supplement setting forth the principal
amount of Certificates covered thereby, the price or prices at which the
Certificates are to be purchased by the Underwriters from the applicable
Trust, either the initial public offering price or prices or the method by
which the price or prices by which the Certificates are to be sold will be
determined, the selling concession(s) and reallowance(s), if any, and any
delayed delivery arrangements, which information shall be provided by you
to the Company, and such other information as you and the Company deem
appropriate in connection with the offering of the Certificates. The
Company will promptly transmit copies of such Prospectus Supplement to the
Commission for filing pursuant to Rule 424 under the 1933 Act and will
furnish to such Underwriters as many copies of the Prospectus and such
Prospectus Supplement as you shall reasonably request.
(b) If at any time when the Prospectus relating to such Series of
Certificates is required by the 1933 Act to be delivered in connection with
sales of the Certificates by you or the Underwriters, any event shall occur
or condition exist as a result of which it is necessary, in the opinion of
your counsel, counsel for the Company, or otherwise, to further amend or
supplement such Prospectus in order that such Prospectus will not include
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of circumstances
existing at the time it is delivered to a purchaser, not misleading or if
it shall be necessary, in the opinion of any such counsel or otherwise, at
any such time to amend or supplement the Registration Statement or such
Prospectus in order to comply with the requirements of the 1933 Act or the
Regulations thereunder, the Company will promptly prepare and file with the
Commission such amendment or supplement as may be necessary to correct such
untrue statement or omission or to make the Registration Statement comply
with such requirements, and within two business days of such filing will
furnish to the Underwriters as many copies of the Prospectus, as so amended
or supplemented, as you shall reasonably request.
(c) The Company will give you reasonable notice, with respect to such
Series of Certificates, of its intention to file any amendment to the
Registration Statement or any amendment or supplement to the Prospectus
relating to such Series of Certificates, whether pursuant to the 1933 Act
or otherwise, will furnish you with copies of any such amendment or
supplement or other documents proposed to be filed a reasonable time in
advance of filing, and will not file any such amendment or supplement or
other documents in a form to which you or your counsel shall object.
(d) The Company will notify you immediately, with respect to such
Series of Certificates, and confirm the notice in writing, (i) of the
effectiveness of any amendment to the Registration Statement, (ii) of the
-7-
<PAGE>
mailing or the delivery to the Commission for filing of any supplement to
the Prospectus relating to such Series of Certificates or any document,
other than quarterly and annual reports to be filed pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act") relating to
such Series of Certificates, (iii) of the receipt of any comments from the
Commission with respect to the Registration Statement, the Prospectus or
any Prospectus Supplement relating to such Series of Certificates, (iv) of
any request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectus relating to such
Series of Certificates or for additional information, and (v) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the initiation of any proceedings for that
purpose. The Company will make every reasonable effort to prevent the
issuance of any such stop order and, if any such stop order is issued, to
obtain the lifting thereof at the earliest possible moment.
(e) The Company will deliver to you as many as three signed and as
many conformed copies of the Registration Statement (as ordinarily filed)
and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein and documents incorporated by reference
in the Prospectus) as you may reasonably request.
(f) The Company will endeavor, in cooperation with you, to qualify
such Certificates for offering and sale under the applicable securities
laws of such states and other jurisdictions of the United States as you may
designate, and will maintain or cause to be maintained such qualifications
in effect for as long as may be required for the distribution of the
Certificates; provided, however, that the Company will not be required to
qualify to do business in any state in which it is not currently so
qualified. The Company will file or cause the filing of such statements and
reports as may be required by the laws of each jurisdiction in which the
Certificates have been qualified as above provided.
(g) The Company will not, without your prior consent, publicly offer
or sell any other pass-through certificates for a period of 30 days from
the date of any Terms Agreement.
(h) If the Company has elected to cause the applicable Contract Pool
to be treated as a real estate mortgage investment conduit (a "REMIC"), the
Company will prepare, or cause to be prepared, and file, or cause to be
filed a timely election to treat the Contract Pool as a REMIC for federal
income tax purposes.
SECTION 4. Conditions of Underwriters' Obligations. The Obligations of the
Underwriters to purchase Certificates pursuant to any Terms Agreement are
subject to the accuracy of the representations and warranties on the part of the
-8-
<PAGE>
Company herein contained, to the accuracy of the statements of the Company's
officers made pursuant hereto, to the performance by the Company of all of its
obligations hereunder and to the following further conditions:
(a) At the applicable Closing Time (i) no stop order suspending the
effectiveness of the Registration Statement shall have been issued or, to
the knowledge of the Company or you, proceedings therefor initiated or
threatened by the Commission, (ii) the Certificates shall have received the
rating or ratings specified in the applicable Terms Agreement, and (iii)
there shall not have come to your attention any facts that would cause you
to believe that the Prospectus, together with the applicable Prospectus
Supplement at the time it was required to be delivered to a purchaser of
the Certificates, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in light of the circumstances existing at such time, not
misleading.
(b) At the applicable Closing Time you shall have received:
(1) The favorable opinion, dated as of the applicable Closing
Time, of in-house General Counsel for the Company and the Servicer, in
form and substance satisfactory to such of you as may be named in the
applicable Terms Agreement, to the effect that:
(i) The Company and the Servicer have each been duly
organized and are validly existing as corporations in good
standing under the laws of the State of Delaware.
(ii) The Company and the Servicer 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 properties in connection therewith.
(iii) The Company and the Servicer are each corporations
duly organized, validly existing and in good standing under the
laws of the jurisdiction of their organization and each has the
corporate power to own its assets and to transact the business in
which it is currently engaged. The Company and the Servicer 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
Company or the Servicer, respectively.
-9-
<PAGE>
(iv) This Agreement and the applicable Terms Agreement have
been duly authorized, executed and delivered by each of the
Company and the Servicer, and each is a valid and binding
obligation of the Company and the Servicer enforceable against
each of the Company and the Servicer 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) The applicable Pooling and Servicing Agreement has been
duly authorized, executed and delivered by the Company and the
Servicer, and is a valid and binding obligation of each of the
Company and the Servicer enforceable against each of the Company
and the Servicer 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).
(vi) The execution and delivery by the Company and the
Servicer of this Agreement, the applicable Terms Agreement and
the applicable Pooling and Servicing Agreement and the signing of
the Registration Statement by the Company are within the
corporate power of the Company and the Servicer, as applicable,
and have been duly authorized by all necessary corporate action
on the part of the Company and the Servicer as applicable; and
neither the issue and sale of the Certificates, nor the
consummation of the transactions contemplated herein nor the
fulfillment of the terms hereof 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 assets of the
Company or the Servicer pursuant to, any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to
which the Company or the Servicer is a party or by which either
may be bound or to which the property or assets of the Company or
the Servicer are subject (which contracts, indentures, mortgages,
loan agreements, notes, leases and other such instruments have
-10-
<PAGE>
been identified by the Company or the Servicer to such counsel),
nor will such action result in any violation of the provisions of
the certificate of incorporation or by-laws of the Company or the
Servicer 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
Company or the Servicer.
(vii) 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 or federal court or
governmental authority or agency is required for the consummation
by the Company or the Servicer of the transactions contemplated
by this Agreement or the applicable Terms Agreement, except such
as may be required under the 1933 Act or the Regulations, or
state securities or Blue Sky laws.
(2) The favorable opinion, dated as of the applicable Closing
Time, of Lowenstein, Sandler, Kohl, Fisher, and Boylan, special local
New Jersey counsel for the Company and the Servicer, in form and
substance satisfactory to such of you as may be named in the
applicable Terms Agreement, to the effect that the Security interest
of the Trustee in the Contracts and in the proceeds thereof will be
perfected and will constitute a first perfected security interest upon
the taking of possession of the Contracts by the Servicer as custodian
for the Trustee and upon the filing of UCC financing statements in the
offices of the Secretary of State of New Jersey naming the Company as
the debtor and the Trustee as secured party; provided, however, that
(i) for purposes of its opinion in this paragraph such counsel may
assume that (a) the Company has good title and is the sole owner and
holder of each Contract free and clear of any right of rescission,
set-off, defense or counterclaim, charges, security interests or other
rights of any nature and has full right and authority, subject to no
agreement with any other party, to sell, pledge and assign the same,
(b) immediately prior to conveyance thereof to the Company, the
Servicer was the obligee under the Contracts and the Servicer has
assigned all of its right, title and interest in the Contracts to the
Company, (c) no Contract constitutes proceeds of any property subject
to a third party's security interest and (d) that the Company's chief
executive office is in the State of New Jersey; (ii) for purposes of
its opinion in this paragraph, such counsel may assume that (a) the
Trustee took the assignment of the Contracts in good faith for value
and without notice or knowledge of any adverse claims, liens or
encumbrances or of any defense against or claim to the Contracts on
the part of any person; and (b) the Trustee gave value for the
-11-
<PAGE>
Contracts and the Servicer took possession of the Contracts as agent
for the Trustee in the ordinary course of the Trustee's business; and
(iii) such counsel need express no opinion (a) as to the continuation
of a security interest in the Contracts in the event the Servicer
relinquishes possession of such Contracts and a subsequent purchaser
takes possession without notice of the Trustee's interest, (b) as to
the continuation of a security interest in the Contracts if
continuation statements are not filed as required by the Pooling and
Servicing Agreement, and (c) as to the priority of any security
interest in the Contracts against any liens, claims or other interests
that arise by operation of law and do not require any filing or
similar action in order to take priority over perfected security
interests. In addition, because it is not practicable to review each
of the Contracts, in rendering its opinion such counsel may assume
that each Contract evidences a monetary obligation and a security
interest in a Manufactured Home that constituted personal property,
and not real property, at the origination thereof.
(3) The favorable opinion, dated as of the applicable Closing
Time, of Schulte Roth & Zabel, special counsel for the Company and the
Servicer, in form and substance satisfactory to such of you as may be
named in the applicable Terms Agreement, to the effect that:
(i) The Certificates have been duly authorized and, when
executed and authenticated as specified in the related Pooling
and Servicing Agreement and issued and delivered and paid for as
contemplated by the Registration Statement, will be duly issued
and entitled to the benefits of the related Pooling and Servicing
Agreement.
(ii) The Registration Statement became effective under the
1933 Act as of the date and time specified in the order of the
Commission with respect thereto and, to the best of such
counsel's knowledge and information, no stop order suspending the
effectiveness of the Registration Statement has been issued under
the 1933 Act or proceedings therefor initiated or threatened by
the Commission.
(iii) The Pooling and Servicing Agreement is not required to
be qualified under the Trust Indenture Act of 1939. as amended.
(iv) The conditions to the use by the Company of a
registration statement on Form S-3 and Form S-11 under the 1933
Act, as set forth in the General Instructions to Form S-3 and
-12-
<PAGE>
Form S-11, have been satisfied with respect to the Registration
Statement and the Prospectus. To the best of such counsel's
knowledge, there are no contracts or documents of the Company
which are required to be filed as exhibits to the Registration
Statement pursuant to the 1933 Act or the Regulations thereunder
which have not been so filed.
(v) The statements in the Prospectus under the heading
"Certain Federal Income Tax Consequences," to the extent that
they constitute matters of law or legal conclusions with respect
thereto, have been prepared or reviewed by such counsel and are
correct in all material respects.
(vi) The Trust Fund created by the applicable Pooling and
Servicing Agreement is not, and will not as a result of the offer
and sale of the Certificates as contemplated in the Prospectus
and in this Agreement become, required to register as an
"investment company" under the 1940 Act.
(vii) The statements in the Prospectus Supplement under the
caption "Description of the Certificates," insofar as such
statements purport to summarize certain terms of the Certificates
and the applicable Pooling and Servicing Agreement, Present a
fair summary of such documents.
(viii) The Registration Statement and the Prospectus (other
than the financial statements and other financial, statistical
and numerical information included therein, as to which no
opinion need be rendered) as of their respective effective or
issue dates, and each amendment thereof and supplement thereto,
as of their respective effective or issue dates, complied as to
form in all material respects with the requirements of the 1933
Act and the Regulations thereunder.
Such counsel shall state that it has participated in the
conferences with officers and other representatives of the Company and
the Servicer, your counsel, representatives of the independent
accountants for the Company and the Servicer and you at which the
contents of the Registration Statement and the Prospectus were
discussed and, although such counsel is not passing upon and does not
assume responsibility for, the factual accuracy, completeness or
fairness of the statements contained in the Registration Statement or
the Prospectus (except as stated in paragraphs 4(b)(3)(v) and
4(b)(3)(vii) above) and has made no independent check or verification
thereof for the purpose of rendering this opinion, on the basis of the
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<PAGE>
foregoing (relying as to materiality to a large extent upon the
certificates of officers and other representatives of the Company and
the Servicer), no facts have come to their attention that leads such
counsel to believe that the Registration Statement, 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
Registration Statement and the Prospectus on their respective dates
contained, and the Prospectus on the date of first use contains, any
untrue statement of a material fact or omitted 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, except that such counsel need express no view with respect
to the financial statements, schedules and other financial,
statistical and numerical data included in or incorporated by
reference into the Registration Statement or the Prospectus, or as to
any information furnished to the Company for inclusion in the
Prospectus by any third-party provider of credit enhancement.
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.
The Company shall cause legal counsel to deliver to you such
additional opinions addressing the transfer by the Company to the
Trustee of its right title and interest in and to the Contracts and
other property included in the Trust Fund on the Closing Time as may
be required by each Rating Agency rating the Certificates.
(4) The favorable opinion of counsel, which may be in-house
counsel to the Trustee, dated as of the applicable Closing Time,
addressed to you and in form and scope satisfactory to your counsel,
to the effect that:
(i) The applicable Pooling and Servicing Agreement has been
duly authorized, executed and delivered by the Trustee and is
enforceable against the Trustee in accordance with its terms,
subject to customary and usual exceptions.
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<PAGE>
(ii) The Trustee has full power and authority to execute and
deliver the applicable Pooling and Servicing Agreement and to
perform its obligations thereunder.
(iii) To the best of such counsel's knowledge, there are no
actions, proceedings or investigations pending or threatened
against or affecting the Trustee before or by any court,
arbitrator, administrative agency or other governmental authority
which, if adversely decided, would materially and adversely
affect the ability of the Trustee to carry out the transactions
contemplated in the Pooling and Servicing Agreement.
(iv) No consent, approval or authorization of, or
registration, declaration or filing with, any court or
governmental agency or body of the jurisdiction of incorporation
of the Trustee is required for the execution, delivery or
performance by the Trustee of the Pooling and Servicing
Agreement.
In rendering such opinion, such counsel may rely, as to matters
of fact, to the extent deemed proper and stated therein, on
certificates of responsible officers of the Trustee or public
officials.
(5) The favorable opinion or opinions, dated as of the applicable
Closing Time, of counsel for the Underwriters with respect to the
issue and sale of the Certificates the Registration Statement, this
Agreement, the Prospectus, the applicable Prospectus Supplement and
other related matters as the Underwriters may require.
(c) At the applicable Closing Time you shall have received a
certificate of the President or a Vice President of the Company, dated as
of such Closing Time, to the effect that the representations and warranties
of the Company contained in Section 1 are true and correct with the same
force and effect as though such Closing Time were a Representation Date.
(d) You shall have received from independent certified public
accountants acceptable to you, a letter, dated as of the date of the
applicable Terms Agreement and as of the applicable Closing Time, delivered
at such times, in a form acceptable to you and to us.
(e) At the Closing Time you shall have received, addressed to you, any
additional opinions delivered by counsel pursuant to the request of the
Rating Agency or Rating Agencies rating the Certificates.
-15-
<PAGE>
(f) At the applicable Closing Time, 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 Certificates 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 Company in
connection with the issuance and sale of the Certificates as herein
contemplated shall be satisfactory in form and substance to you and counsel
for the Underwriters.
(g) At the applicable Closing Time with respect to a Series of
Certificates, you shall have received any Letter of Credit providing credit
enhancement with respect to such Series or any Class thereof, and you shall
have received an opinion of counsel from counsel to the provider of any
such Letter of Credit, in form and substance satisfactory to you, to the
effect that such Letter of Credit has been duly and validly authorized,
executed and delivered by, and will constitute a legal, valid and binding
obligation of, the provider of such Letter of Credit, enforceable in
accordance with its terms, subject to applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting
creditors' rights generally and as to enforceability, to general principles
of equity (regardless whether enforcement is sought in a proceeding in
equity or at law).
If any condition specified in this Section shall not have been fulfilled
when and as required to be fulfilled, and which nonfulfillment has, in your
reasonable judgment, a material and adverse effect on your ability to issue and
sell the Certificates as herein contemplated, the applicable Terms Agreement may
be terminated by you by notice to the Company at any time at or prior to the
applicable Closing Time, and such termination shall be without liability of any
party to any other party except as provided in Section 5.
SECTION 5. Payment of Expenses. The Company will pay all expenses incident
to the performance of its obligations under this Agreement, including without
limitation those related to (i) the filing of the Registration Statement and all
amendments thereto, (ii) the printing and delivery to the Underwriters, in such
quantities as you may reasonably request, of copies of this Agreement, each
Terms Agreement, (iii) the preparation, issuance and delivery of the
Certificates to the Underwriters, (iv) the fees and disbursements of the
Company's counsel and accountants, (v) the qualification of the Certificates
under securities and Blue Sky laws and the determination of the eligibility of
the Certificates for investment in accordance with the provisions of Section
3(f), including filing fees, and the fees and disbursements of counsel for the
Underwriters in connection therewith and in connection with the preparation of
any Blue Sky Survey and Legal Investment Survey, (vi) the printing and delivery
to the Underwriters, in such quantities as you may reasonably request,
-16-
<PAGE>
hereinafter stated, of copies of the Registration Statement and Prospectus
relating to a Series of Certificates underwritten by such Underwriters and all
amendments and supplements thereto, and of any Blue Sky Survey and Legal
Investment Survey, (vii) the printing and delivery to the Underwriters, in such
quantities as you may reasonably request, of copies of each Pooling and
Servicing Agreement relating to a Series of Certificates underwritten by such
Underwriters, (viii) the fees charged by investment rating agencies for rating
the Certificates, (ix) the fees and expenses incurred in connection with the
listing of the Certificates on any national securities exchange, (x) the fees
and expenses incurred with respect to the National Association of Securities
Dealers, Inc., including the fees and disbursements of counsel for the
Underwriters in connection therewith and (xi) the fees and expenses of the
Trustee and its counsel.
If a Terms Agreement is terminated by you in accordance with the provisions
of Section 4 or Section 9(i) hereof, the Company shall reimburse you for all
reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Underwriter.
SECTION 6. Indemnification. (a) The Servicer agrees to indemnify and hold
harmless the Underwriters and each person, if any, who controls the Underwriters
within the meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever arising out of any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement (or any
amendment thereto), or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Prospectus (or
any amendment or supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever to the extent of the aggregate amount paid in settlement of any
litigation, or investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever based upon any
such untrue statement or omission, if such settlement is effected with the
written consent of the Company and the Servicer; and
(iii) against any and all expense whatsoever (including, subject to
Section 6(c), the fees and disbursements of counsel chosen by you,
reasonably incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, to the extent that any such expense is not
paid under (i) or (ii) above;
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<PAGE>
unless any such untrue statement or omission or alleged untrue statement or
omission referred to in clauses (i), (ii) and (iii) above was made in reliance
upon and in conformity with, written information furnished to the Company or the
Servicer by the Underwriters expressly for use in the Registration Statement (or
any amendment thereto) or the Prospectus (or any amendment or supplement
thereto).
This indemnity agreement will be in addition to any liability which the
Company or the Servicer may otherwise have. Insofar as this indemnity may permit
indemnification for liabilities under the 1933 Act of any person who is a
partner of the Underwriters entitled to indemnity hereby or who controls the
Underwriters within the meaning of Section 15 of the 1933 Act and who, at the
date of this Agreement, is a director, officer or controlling person of the
Company, such indemnity agreement is subject to the undertaking of the Company
in the Registration Statement.
(b) Each Underwriter severally agrees to indemnify and hold harmless the
Company and the Servicer, each of the Company's or the Servicer's directors,
each of the Company's officers who signed the Registration Statement, and each
person, if any, who controls the Company or the Servicer within the meaning of
Section 15 of the 1933 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto) or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by that Underwriter expressly for use in the Registration Statement (or
any amendment thereto) or the Prospectus (or any amendment or supplement
thereto). This indemnity agreement will be in addition to any liability which
such Underwriter may otherwise have.
(c) Each indemnified party shall give prompt notice to each indemnifying
party 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. An indemnifying party may participate at its own
expense in the defense of such action. In no event shall the indemnifying
parties be liable for the fees and expenses of more than one counsel (in
addition to its own counsel) for all indemnified parties in connection with any
one action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances.
SECTION 7. Contribution. (a) In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 hereof is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company and the
Servicer on the one hand, and the Underwriters, on the other, shall contribute
to the aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by said indemnity agreement incurred by the Servicer and one or
more of the Underwriters in such proportion as is appropriate to reflect not
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<PAGE>
only the relative benefits received by the Company and the Servicer on the one
hand and the Underwriters on the other from the offering of the Certificates but
also the relative fault of the Company and the Servicer on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, liabilities, claims, damages and expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company and the Servicer 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 (before deducting expenses) received by the Company bear to the
difference between (i) the total price at which the Certificates underwritten by
the Underwriters and distributed to the public were offered to the public, and
(ii) the portion of the total net proceeds from the offering (before deducting
expenses) received by the Company attributable to the Certificates. 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 related to information supplied by the
Company, the Servicer or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company, the Servicer and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 7 were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 7. The amount paid by an indemnified party as a result
of the losses, liabilities, claims, damages and expenses referred to in the
first sentence of this Section 7(a) 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
Section 7(a). Notwithstanding the provisions of this Section 7(a), the
Underwriters shall not be required to contribute any amount in excess of the
amount by which the total price at which the Certificates underwritten by them
and distributed to the public were offered to the public exceeds the amount of
any damages which the Underwriters have 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 1933 Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(b) The obligations of the Company and the Servicer under this Section 7
shall be in addition to any liability which the Company may otherwise have and
shall extend, upon the same terms and conditions, to each person, if any, who
controls the Underwriters within the meaning of the 1933 Act; and the
obligations of the Underwriters under this Section 7 shall be in addition to any
liability which the Underwriters may otherwise have and shall extend, upon the
same terms and conditions, to the officers of the Company and the Servicer who
signed the Registration Statement or any amendment thereof, to its directors,
and to each person who controls the Company and the Servicer within the meaning
of the 1933 Act.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement, or
contained in certificates of officers of the Company and the Servicer submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
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<PAGE>
of any termination of this Agreement, or any investigation made by or on behalf
of the Underwriters or controlling person thereof, or by or on behalf of the
Company and the Servicer and shall survive delivery of any Certificates to the
Underwriters.
SECTION 9. Termination of Agreement. This Agreement may be terminated for
any reason at any time by any of the Company, the Servicer or you (insofar as
this Agreement relates to a Series of Certificates underwritten by you) upon the
giving of thirty days' written notice of such termination to the other party
hereto. You, as Representative of the Underwriters named in any Terms Agreement,
may also terminate such Terms Agreement, immediately upon notice to the Company
and the Servicer, at any time at or prior to the applicable Closing Time (i) if
there has been, since the date of such Terms Agreement or since the respective
dates as of which information is given in the Registration Statement or
Prospectus any change, or any development involving a prospective change in, or
affecting, the condition, financial or otherwise, earnings, affairs or business
of the Company or the Servicer whether or not arising in the ordinary course of
business, which in your reasonable judgment would materially impair the market
for, or the investment quality of, the Certificates subject to the applicable
Terms Agreement, or (ii) if there has occurred any outbreak of hostilities or
other calamity or crisis the effect of which on the financial markets of the
United States is such as to make it, in your judgment, impracticable to market
the Certificates subject to the applicable Terms Agreement or enforce contracts
for the sale of the Certificates, or (iii) if trading generally on either the
New York Stock Exchange or the American Stock Exchange has been suspended, or
minimum or maximum prices for securities have been required, by either of said
exchanges or by order of the Commission or any other governmental authority, or
if a banking moratorium has been declared by either Federal, New York or New
Jersey authorities. In the event of any such termination, (A) the covenants set
forth in Section 3 with respect to any offering of Certificates shall remain in
effect so long as the Underwriters own any such Certificates purchased from the
Company pursuant to the applicable Terms Agreement and (B) the covenant set
forth in Section 3(c), the provisions of Section 5, the indemnity agreement set
forth in Section 6, and the contribution provisions set forth in Section 7, and
the provisions of Sections 8 and 13 shall remain in effect.
SECTION 10. Default by One or More of the Underwriters. If one or more of
the Underwriters participating in an offering of Certificates shall fail at the
applicable Closing Time to purchase the Certificates which it or they are
obligated to purchase hereunder and under the applicable Terms Agreement (the
"Defaulted Certificates"), then such of you as are named therein shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted Certificates in such amounts as may be agreed
upon and upon the terms herein set forth. If, however, you have not completed
such arrangements within such 24-hour period, then:
(a) if the aggregate principal amount of Defaulted Certificates does
not exceed ___% of the aggregate principal amount of the Certificates to be
purchased pursuant to such Terms Agreement, the non-defaulting Underwriters
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<PAGE>
named in such Terms Agreement shall be obligated to purchase the full
amount thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all such
non-defaulting Underwriters, or
(b) if the aggregate principal amount of Defaulted Certificates
exceeds ___% of the aggregate principal amount of the Certificates to be
purchased pursuant to such Terms Agreement, the applicable Terms Agreement
shall terminate, without any liability on the part of any non-defaulting
Underwriters.
No action taken pursuant to this Section shall relieve any defaulting
Underwriters from liability with respect to any default of such Underwriters
under this Agreement and the applicable Terms Agreement.
In the event of a default by any Underwriters as set forth in this Section,
either you or the Company shall have the right to postpone the applicable
Closing Time for a period of time not exceeding seven days in order that any
required changes in the Registration Statement or Prospectus or in any other
documents or arrangements may be effected.
SECTION 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication; a copy of any notice
transmitted by telecopier shall be delivered by registered or certified mail,
and any such telecopied notice shall be deemed to have been duly given only upon
the receipt of a written acknowledgement from the party receiving such notice.
Notices to the Underwriter shall be directed to you at the address set forth on
the first page hereof, attention Syndicate Department. Notices to the Company
shall be directed to The CIT Group Securitization Corporation II, 650 CIT Drive,
Livingston, New Jersey 07039, attention James J. Egan, Jr., President. Notices
to the Servicer shall be directed to The CIT Group/Sales Financing, Inc., 650
CIT Drive, Livingston, New Jersey 07039, attention James J. Egan, Jr.,
President.
SECTION 12. Parties. This Agreement shall inure to the benefit of and be
binding upon you the Company and the Servicer and any Terms Agreement shall
inure to the benefit of and be binding upon the Company and any Underwriter who
becomes a party to a Terms Agreement, and their respective successors. Nothing
expressed or mentioned in this Agreement or a Terms Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
parties hereto or thereto and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives any legal or equitable right, remedy or claim
under or with respect to this Agreement or a Terms Agreement or any provision
herein or therein contained. This Agreement and any Terms Agreement and all
conditions and provisions hereof or thereof are intended to be for the sole and
exclusive benefit of the parties and their respective successors and said
controlling persons and officers and directors and their heirs and legal
representatives (to the extent of their rights as specified herein and therein)
and for the benefit of no other person, firm or corporation. No purchaser of
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<PAGE>
Certificates from any Underwriters shall be deemed to be a successor by reason
merely of such purchase.
SECTION 13. Governing Law and Time. This Agreement and each Terms Agreement
shall be governed by the laws of the State of New York. Specified times of day
refer to New York City time.
SECTION 14. Counterparts. This Agreement and any Terms Agreement may be
executed in counterparts, each of which shall constitute an original of any
party whose signature appears on it, and all of which shall together constitute
a single instrument.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this instrument
along with all counterparts will become a binding agreement between you and the
Company in accordance with its terms.
Very truly yours,
THE CIT GROUP SECURITIZATION CORPORATION II
By: _______________________________________
Name:
Title:
THE CIT GROUP/SALES FINANCING, INC.
By: _______________________________________
Name:
Title:
CONFIRMED AND ACCEPTED, as of
the date first above written:
[Underwriter(s)]
By: ____________________________
Name:
Title:
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<PAGE>
EXHIBIT A
MANUFACTURED HOUSING CONTRACT
PASS-THROUGH CERTIFICATES OF
THE CIT GROUP SECURITIZATION CORPORATION II, AS SELLER
TERMS AGREEMENT
---------------
Dated: , 199
To: The CIT Group Securitization Corporation II, as seller (the "Seller") under
the Pooling and Servicing Agreement dated as of , 199 (the
"Pooling Servicing Agreement")
Re: Underwriting Agreement dated June , 1993 (the "Agreement")
Series Designation: Manufactured Housing Contract
[Senior/Subordinate] Pass-Through
Certificates Series 1993-_
Terms of the Certificates and Underwriting Compensation:
Initial
Principal Remittance
Class Balance* Rate
- ----- -------- --------
- -----------------
* Approximate. Subject to permitted variance of plus or minus 5%.
Certificate Rating(s):
- ----------------------
Class : " " by
REMIC Election: [Yes] [No]
- ---------------
Trust Fund:
- -----------
The Trust Fund shall include the Contracts listed in Exhibit A to the
Pooling and Servicing Agreement.
A-1
<PAGE>
Credit Enhancement:
- -------------------
Payment Dates: The day of each month (or if such day is not a business day,
the next succeeding business day) commencing , 199 .
Purchase Price:
- ---------------
The purchase price payable by you for (i) the Class Certificates is
% of the principal amount thereof to be issued plus accrued interest
thereon at % per annum from , 199 , [(ii) the Class
Certificates in % of the principal amount thereof to be issued plus
accrued interest thereon at % per annum from , 199 and (iii)
the Class Certificates in % of the principal amount thereof to be
issued plus accrued interest at % per annum from , 199 .
Underwriting Commission:
- ------------------------
Notwithstanding anything to the contrary in the Underwriting Agreement, no
additional underwriting commission shall be payable by the Company to the
Underwriter in connection with the purchase of the Certificates.
Public Offering Price and/or method of determining price at which the
Underwriter will sell the Certificates to the public:
Reallowance:
- ------------
Selling Concession:
- -------------------
Closing Date and Location: , 199 , offices of [Schulte Roth &
Zabel, 900 Third Avenue, New York, New York].
[Underwriter(s)]
By: ________________________
Name:
Title:
ACCEPTED:
THE CIT GROUP SECURITIZATION CORPORATION II
By: _________________________________________
Name:
Title:
A-2
<PAGE>
Exhibit 3(i).1
Certificate of Incorporation of The CIT Group
Securitization Corporation II
<PAGE>
CERTIFICATE OF INCORPORATION
OF
THE CIT GROUP SECURITIZATION CORPORATION II
FIRST: The name of the Corporation is The CIT Group Securitization
Corporation II (hereinafter referred to as the "Corporation").
SECOND: The address of the registered office of the corporation in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, City of
Wilmington, County of New Castle 19801. The name of the registered agent at that
address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is limited to: (a) issuing and
selling one or more series of bonds, pass-through certificates or other
securities secured primarily by mortgages, deeds of trust, manufactured housing,
recreational vehicle or marine retail installment contracts or any other type of
loan agreements (all of the foregoing collectively referred to herein as the
"Contracts"), investing in certain Contracts to be purchased with the proceeds
of bonds, pass-through certificates or other securities secured by Contracts and
taking certain other action with respect thereto, (b) selling interests in
Contracts, evidencing such interests with bonds, pass-through certificates or
other securities secured by the Contracts, using the proceeds of the sale of
such bonds, pass-through certificates or other securities secured by the
Contracts, to acquire Contracts, retaining or acquiring an interest (including a
subordinated interest) in Contracts acquired and sold, and taking certain other
action with respect thereto, and (c) acting as settlor or depositor of trusts or
other entities formed to issue bonds, pass-through certificates or other
securities secured by Contracts and investing in or selling beneficial interests
in the same. The Corporation is not otherwise authorized to trade or deal in
securities, or engage in any other activity other than (a) issuing and selling
bonds, pass-through certificates or other securities under an indenture, trust
agreement, pooling and servicing agreement or other agreement, (b) acting as
settlor or depositor of a trust or other entity formed to issue and sell bonds,
pass-through certificates or other securities and investing in or selling
beneficial interests in the same, (c) acquiring, owning, holding and pledging or
selling interests in Contracts, (d) investing cash balances on an interim basis
in certain short-term investments and (e) engaging in activities incidental to
and necessary to accomplish the foregoing.
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is 200 shares of no par Common Stock.
FIFTH:
(1) The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors.
(2) In furtherance and not in limitation of the power conferred upon the
directors by law, the directors shall, with the approval of 100% of the
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directors (including the Independent Director, or if there is more than one, all
of the Independent Directors), have power to make, adopt, alter, amend and
repeal from time to time by-laws of the Corporation, subject to the right of the
stockholders entitled to vote with respect thereto to alter and repeal by-laws
made by the directors.
(3) The number of directors of the Corporation shall be as from time to
time fixed by, or in the manner provided in, the By-Laws of the Corporation.
Election of directors need not be by written ballot unless the By-Laws so
provide. At least one director (the Independent Director, or if there is more
than one, all of the Independent Directors) and one executive officer of the
Corporation (who may be the same person) will not be a director, officer or
employee of any direct or ultimate parent of the Corporation or of any direct or
indirect subsidiary of such parent.
(4) In addition to the powers and authority hereinbefore or by statute
expressly conferred upon them, the directors are hereby empowered to exercise
all such powers and do all such acts and things as may be exercised or done by
the Corporation, subject, nevertheless, to the provisions of the General
Corporation Law of the State of Delaware (the "GCL"), this Certificate of
Incorporation and any By-Laws adopted by the stockholders; provided, however,
that no By-Laws hereafter adopted by the stockholders shall invalidate any prior
act of the directors which would have been valid if such By-Laws had not been
adopted. The Corporation's board of directors will duly authorize all of the
Corporation's actions.
(5) The Corporation's assets will not be commingled with those of any
direct or ultimate parent of the Corporation or any subsidiary or affiliate
thereof.
(6) The Corporation will maintain separate corporate records and books of
account from those of any direct or ultimate Parent of the Corporation or any
subsidiary or affiliate thereof.
(7) The Corporation will maintain and conduct its business from an office
separate from that of any direct or ultimate parent, or affiliate, of the
Corporation or any subsidiary or affiliate thereof.
SIXTH: Meetings of stockholders may be held within or without the State of
Delaware, as the By-Laws may provide. The books of the Corporation may be kept
(subject to any provision contained in the GCL) outside the State of Delaware at
such place or places as may be designated from time to time by the Board of
Directors or in the By-Laws of the Corporation.
SEVENTH: The Corporation shall, to the maximum extent permitted from time
to time under the law of the State of Delaware, indemnify and upon request shall
advance expenses to any person who is or was a party or is threatened to be made
a party to any threatened, pending or completed action, suit, proceeding or
claim, whether civil, criminal, administrative or investigative, by reason of
the fact that such person is or was or has agreed to be a director or officer of
this corporation or while a director or officer is or was serving at the request
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of this corporation as a director, officer, partner, trustee, employee or agent
of any corporation, partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, against expenses
(including attorney's fees and expenses), judgments, fines, penalties and
amounts paid in settlement incurred in connection with the investigation,
preparation to defend or defense of such action, suit, proceeding or claim;
provided, however, that the foregoing shall not require the Corporation to
indemnify or advance expenses to any person in connection with any action, suit,
proceeding, claim or counterclaim initiated by or on behalf of such person. Such
indemnification shall not be exclusive of other indemnification rights arising
under any by-law, agreement, vote of directors or stockholders or otherwise and
shall inure to the benefit of the heirs and legal representatives of such
person. Any person seeking indemnification under this Article SEVENTH shall be
deemed to have met the standard of conduct required for such indemnification
unless the contrary shall be established. Any repeal or modification of the
foregoing provisions of this Article SEVENTH shall not adversely affect any
right or protection of a director or officer of the Corporation with respect to
any acts or omissions of such director or officer occurring prior to such repeal
or modification.
EIGHTH: No director shall be personally liable to the Corporation or any of
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) pursuant to Section 174 of the GCL or (iv) for any transaction from
which the director derived an improper personal benefit. Any repeal or
modification of this Article NINTH by the stockholders of the Corporation shall
not adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification with respect to acts or
omissions occurring prior to such repeal or modification.
NINTH: The Corporation shall not, without the affirmative vote of one
hundred percent (100%) of the directors (including the Independent Director, or
if there is more than one, all of the Independent Directors), institute
proceedings to be adjudicated bankrupt or insolvent; or consent to the
institution of bankruptcy or insolvency proceedings against it; or file a
petition seeking, or consent to, reorganization or relief under any applicable
federal or state law relating to bankruptcy; or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of this corporation or a substantial part of its property; or make any
assignment for the benefit of creditors; or admit in writing its inability to
pay its debts generally as they become due; or take any corporate action in
furtherance of any such action.
TENTH: For so long as the Corporation is able to pay its debts generally as
they become due, the Corporation shall not institute proceedings to be
adjudicated bankrupt or insolvent; or consent to the institution of bankruptcy
or insolvency proceedings against it; or file a petition seeking, or consent to,
reorganization or relief under any applicable federal or state law relating to
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bankruptcy; or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the corporation or of a
substantial part of its property; or make any assignment for the benefit of
creditors; or admit in writing its inability to pay its debts generally as they
become due; or take any corporate action in furtherance of any such action.
ELEVENTH: The Corporation will not issue any securities (other than common
or preferred stock of the Corporation), nor will it act as settlor or depositor
of any trust or other entity which issues securities of any securities, if
either such action would result in the downgrading by any nationally recognized
statistical rating organization (as defined in Rule 15c3-1 under the Securities
Exchange Act of 1934 or any successor Rule) of any outstanding securities of
either the Corporation or any trust or other entity of which the Corporation is
the settlor or depositor, which securities are then rated by such nationally
recognized statistical rating organization.
TWELFTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation, provided that, none
of Article FIFTH, EIGHTH, NINTH, TENTH or ELEVENTH shall be amended without the
affirmative vote of all the directors, including the Independent Director, or if
there is more than one, all of the Independent Directors.
THIRTEENTH: Martin I. Fineberg is the Sole Incorporator and his mailing
address is c/o Schulte Roth & Zabel, 900 Third Avenue, New York, New York 10022.
Dated: June 24, 1994
/s/ Martin I. Fineberg
----------------------
Martin I. Fineberg
c/o Schulte Roth & Zabel
900 Third Avenue
New York, New York 10022
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Exhibit 3(ii).1
Bylaws of The CIT Group Securitization Corporation II
<PAGE>
BY-LAWS
OF
THE CIT GROUP SECURITIZATION CORPORATION II
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the Corporation both
within shall be in the City of Wilmington, County of New Castle, State of
Delaware.
Section 2. Other Offices. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders for the election
of directors or for any other purpose shall be held at such time and place,
either within or without the State of Delaware as shall be designated from time
to time by the Board of Directors and stated in the notice of the meeting or in
a duly executed waiver of notice thereof.
Section 2. Annual Meetings. The Annual Meetings of Stockholders shall be
held on such date and at such time as shall be designated from time to time by
the Board of Directors and stated in the notice of the meeting, at which
meetings the stockholders shall elect by a plurality vote a Board of Directors,
and transact such other business as may properly be brought before the meeting.
Written notice of the Annual Meeting stating the place, date and hour of the
meeting shall be given to each stockholder entitled to vote at such meeting not
less than ten, nor more than sixty days before the date of the meeting.
Section 3. Special Meetings. Unless otherwise prescribed by law or by the
Certificate of Incorporation, Special Meetings of Stockholders, for any purpose
or purposes, may be called by either (i) the Chairman, if there be one, or (ii)
the President, (iii) any Vice President, if there be one, (iv) the Secretary or
(v) any Assistant Secretary, if there be one, and shall be called by any such
officer at the request in writing of a majority of the Board of Directors or at
the request in writing of stockholders owing a majority of the capital stock of
the Corporation issued and outstanding and entitled to vote. Such request shall
state the purpose or purposes of the proposed meeting. Written notice of a
Special Meeting stating the place, date and hour of the meeting and the purpose
<PAGE>
or purposes for which the meeting is called shall be given not less than ten nor
more than sixty days before the date of the meeting to each stockholder entitled
to vote at such meeting.
Section 4. Quorum. Except as otherwise provided by law or by the
Certificate of Incorporation, the holders of a majority of the capital stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. If, however, such quorum shall not
be present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed. If the adjournment is for more than thirty days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder entitled to vote at
the meeting.
Section 5. Voting. Unless otherwise required by law, the Certificate of
Incorporation or these By-Laws (including without limitation Article III,
Section 7, Article VII, Sections 5 and 6 and Article IX, Section 1 hereof), any
question brought before any meeting of stockholders shall be decided by the vote
of the holders of a majority of the stock represented and entitled to vote
thereat. Each stockholder represented at a meeting of stockholders shall be
entitled to cast one vote for each share of the capital stock entitled to vote
thereat held by such stockholder. Such votes may be cast in person or by proxy
but, no proxy shall be voted on or after three years from its date, unless such
proxy provides for a longer period. The Board of Directors, in its discretion,
or the officer of the Corporation presiding at a meeting of stockholders, in his
discretion, may require that any votes cast at such meeting shall be cast by
written ballot.
Section 6. Consent of Stockholders in Lieu of Meeting. Unless otherwise
provided in the Certificate of Incorporation, any action required or permitted
to be taken at any Annual or Special Meeting of Stockholders of the Corporation,
may be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
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all shares entitled to vote thereof were present and voted. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
Section 7. List of Stockholders Entitled to Vote. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder of the Corporation who is
present.
Section 8. Stock Ledger. The stock ledger of the Corporation shall be the
only evidence as to who are the stockholders entitled to examine the stock
ledger, the list required by Section 7 of this Article II or the books of the
Corporation, or to vote in person or by proxy at any meeting of stockholders.
ARTICLE III
DIRECTORS
Section 1. Number, Election and Removal of Directors. The Board of
Directors shall consist of not less than one nor more than fifteen members, the
exact number of which shall initially be fixed by the Incorporator and
thereafter from time to time by the Board of Directors. The Board of Directors
shall at all times include at least one Director (the "Independent Director")
who is not a director, officer, 5% stockholder, employee or former employee of
the Corporation's direct or indirect parent or its subsidiaries. Except as
provided in Section 2 of this Article, directors shall be elected by a plurality
of the votes cast at Annual Meetings of Stockholders, and each director so
elected shall hold office until the next Annual Meeting and until his successor
is duly elected and qualified, or until his earlier resignation or removal. Any
director may resign at any time upon notice to the Corporation. Directors need
not be stockholders. At any time, Directors may be removed and their successors
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chosen by the unanimous written consent of the holders of the outstanding stock
of the Corporation entitled to vote on the election of Directors.
Section 2. Vacancies. Subject to Section 1 of this Article, vacancies and
newly created directorships resulting from any increase in the authorized number
of directors may be filled by a majority of the directors then in office, though
less than a quorum, or by a sole remaining director, and the directors so chosen
shall hold office until the next annual election and until their successors are
duly elected and qualified, or until their earlier resignation or removal.
Section 3. Duties and Powers. The business of the Corporation shall be
managed by or under the direction of the Board of Directors which may exercise
all such powers of the Corporation and do all such lawful acts and things as are
not by statute or by the Certificate of Incorporation or by these By-Laws
directed or required to be exercised or done by the stockholders. The directors
of the Corporation shall act independently and in the interests of the
Corporation and in a manner consistent will the purposes stated herein and in
the Articles of Incorporation of the Corporation.
Section 4. Meetings. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without the State of
Delaware. Regular meetings of the Board of Directors may be held without notice
at such time and at such place as may from time to time be determined by the
Board of Directors. Special meetings of the Board of Directors may be called by
the Chairman, if there be one, the President, or any two directors. Notice
thereof stating the place, date and hour of the meeting shall be given to each
director either by mail not less than forty-eight (48) hours before the date of
the meeting, by telephone or telegram on twenty-four (24) hours notice, or on
such shorter notice as the person or persons calling such meeting may deem
necessary or appropriate in the circumstances.
Section 5. Quorum. Except as may be otherwise specifically provided by law,
the Certificate of Incorporation or these By-Laws, at all meetings of the Board
of Directors, a majority of the entire Board of Directors shall constitute a
quorum for the transaction of business and the act of a majority of the
directors present at any meeting at which there is a quorum shall be the act of
the Board of Directors. If a quorum shall not be present at any meeting of the
Board of Directors, the directors present thereat may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present.
Section 6. Actions of Board. Unless otherwise provided by the Certificate
of Incorporation or these By-Laws, any action required or permitted to be taken
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at any meeting of the Board of Directors or of any committee thereof may be
taken without a meeting, if all the members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
Section 7. Meetings by Means of Conference Telephone. Unless otherwise
provided by the Certificate of Incorporation or these By-Laws, members of the
Board of Directors of the Corporation, or any committee designated by the Board
of Directors, may participate in a meeting of the Board of Directors or such
committee by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting pursuant to this Section 7 shall constitute
presence in person at such meeting.
Section 8. Committees. The Board of Directors may, by resolution passed by
a majority of the entire Board of Directors, designate one or more committees,
each committee to consist of one or more of the directors of the Corporation.
The Board of Directors may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of any such committee. In the absence or disqualification of a member of
a committee, and in the absence of a designation by the Board of Directors of an
alternate member to replace the absent or disqualified member, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any absent or
disqualified member. Any committee, to the extent allowed by law and provided in
the resolution establishing such committee, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation. Each committee shall keep regular minutes and
report to the Board of Directors when required.
Section 9. Compensation. The directors may be paid their expenses, if any,
of attendance at each meeting of the Board of Directors and may be paid a fixed
sum for attendance at each meeting of the Board of Directors or a stated salary
as director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefore. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
Section 10. Interested Directors. No contract or transaction between the
Corporation and one or more of its directors or officers, or between the
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Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose if (i) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board of Directors
or committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (ii) the material facts as to
his or their relationship or interest and as to the contract or transaction are
disclosed or are known to the shareholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
shareholders; or (iii) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified, by the Board of
Directors, a committee thereof or the shareholders. Common or interested
directors may be counted in determining the presence of a quorum at a meeting of
the Board of Directors or of a committee which authorizes the contract or
transaction.
Section 11. Voluntary Bankruptcy, Insolvency or Other Similar Proceeding.
No amendment, modification or waiver of the Corporate Separateness Agreement
dated as of July 1, 1994 and no voluntary bankruptcy, insolvency or other
similar proceeding may be filed, instituted, approved or take place on behalf of
the Corporation without in each case the prior unanimous vote of the full Board
of Directors (including the Independent Director, or if there is more than one,
all of the Independent Directors) that specifically approves and authorizes such
action.
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Corporation shall be chosen by the
Board of Directors and shall be a President, a Vice President, a Secretary and a
Treasurer. The Board of Directors, in its discretion, may also choose a Chairman
of the Board of Directors (who must be a director) and one or more Assistant
Vice-Presidents, Assistant Secretaries, Assistant Treasurers and other officers.
The Corporation shall at all times have at least one executive officer (the
"Independent Officer") who is not a director, officer or employee of the
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director indirect parent of the Corporation (such executive officer may be the
same person as the one Director, referred to in Article III, Section 1, who is
not a director, officer or employee of the direct or indirect parent of the
Corporation). Any number of offices may be held by the same person, unless
otherwise prohibited by law, the Certificate of Incorporation or these By-Laws.
The officers of the Corporation need not be stockholders of the Corporation nor,
except in the case of the Chairman of the Board of Directors, need such officers
be directors of the Corporation. The officers of the Corporation shall act
independently and in the interests of the Corporation and in a manner consistent
with the purposes stated herein or in the Articles of Incorporation of the
Corporation.
Section 2. Election. The Board of Directors at its first meeting held after
each Annual Meeting of Stockholders shall elect the officers of the Corporation
who shall hold their offices for such terms and shall exercise such powers and
perform such duties as shall be determined from time to time by the Board of
Directors; and all officers of the Corporation shall hold office until their
successors are chosen and qualified, or until their earlier resignation or
removal. Any officer elected by the Board of Directors may be removed at any
time by the affirmative vote of a majority of the Board of Directors. Any
vacancy occurring in any office of the Corporation shall be filled by the Board
of Directors. The salaries of all officers of the Corporation shall be fixed by
the Board of Directors.
Section 3. Voting Securities Owned by the Corporation. Powers of attorney,
proxies, waivers of notice of meeting, consents and other instruments relating
to securities owned by the Corporation may be executed in the name of and on
behalf of the Corporation by the President or any Vice-President and any such
officer may, in the name of and on behalf of the Corporation, take all such
action as any such officer may deem advisable to vote in person or by proxy at
any meeting of security holders of any corporation in which the Corporation may
own securities and at any such meeting shall possess and may exercise any and
all rights and power incident to the ownership of such securities and which, as
the owner thereof, the Corporation might have exercised and possessed if
present. The Board of Directors may, by resolution, from time to time confer
like powers upon any other person or persons.
Section 4. Chairman of the Board of Directors. The Chairman of the Board of
Directors, if there be one, shall preside at all meetings of the stockholders
and of the Board of Directors. He shall be the Chief Executive Officer of the
Corporation, and except where by law the signature of the President is required,
the Chairman of the Board of Directors shall possess the same power as the
President to sign all contracts, certificates and other instruments of the
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Corporation which may be authorized by the Board of Directors. During the
absence or disability of the President, the Chairman of the Board of Directors
shall exercise all the powers and discharge all the duties of the President. The
Chairman of the Board of Directors shall also perform such other duties and may
exercise such other powers as from time to time may be assigned to him by these
By-Laws or by the Board of Directors.
Section 5. President. The President shall, subject to the control of the
Board of Directors and, if there be one, the Chairman of the Board of Directors,
have general supervision of the business of the Corporation and shall see that
all orders and resolutions of the Board of Directors are carried into effect. He
shall execute all bonds, mortgages, contracts and other instruments of the
Corporation requiring a seal, under the seal of the Corporation, except where
required or permitted by law to be otherwise signed and executed and except that
the other officers of the Corporation may sign and execute documents when so
authorized by these By-Laws, the Board of Directors or the President. In the
absence or disability of the Chairman of the Board of Directors, the President
shall be the Chief Executive Officer of the Corporation. The President shall
also perform such other duties and may exercise such other powers as from time
to time may be assigned to him by these By-Laws or by the Board of Directors.
Section 6. Vice-Presidents. At the request of the President or in his
absence or in the event of his inability or refusal to act (and if there be no
Chairman of the Board of Directors), the Vice-President or the Vice-Presidents
if there is more than one (in the order designated by the Board of Directors)
shall perform the duties of the President, and when so acting, shall have all
the powers of and be subject to all the restrictions upon the President. Each
Vice-President shall perform such other duties and have such other powers as the
Board of Directors from time to time may prescribe. If there be no Chairman of
the Board of Directors and no Vice-President, the Board of Directors shall
designate the officer of the Corporation who, in the absence of the President or
in the event of the inability or refusal of the President to act, shall perform
the duties of the President, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the President.
Section 7. Secretary. The Secretary shall attend all meetings of the Board
of Directors and all meetings of stockholders and record all the proceedings
thereat in a book or books to be kept for that purpose; the Secretary shall also
perform like duties for the standing committees when required. The Secretary
shall give, or cause to be given, notice of all meetings of the stockholders and
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special meetings of the Board of Directors, and shall perform such other duties
as may be prescribed by the Board of Directors or President, under whose
supervision he shall be. If the Secretary shall be unable or shall refuse to
cause to be given notice of all meetings of the stockholders and special
meetings of the Board of Directors, and if there be no Assistant Secretary, then
either the Board of Directors or the President may choose another officer to
cause such notice to be given. The Secretary shall have custody of the seal of
the Corporation and the Secretary or any Assistant Secretary, if there be one,
shall have authority to affix the same to any instrument requiring it and when
so affixed, it may be attested by the signature of the Secretary or by the
signature of any such Assistant Secretary. The Board of Directors may give
general authority to any other officer to affix the seal of the Corporation and
to attest the affixing by his signature. The Secretary shall see that all books,
reports, statements, certificates and other documents and records required by
law to be kept or filed are properly kept or filed, as the case may be.
Section 8. Treasurer. The Treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the Corporation in
such depositories as may be designated by the Board of Directors. The Treasurer
shall disburse the funds of the Corporation as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, and shall render to
the President and the Board of Directors, at its regular meetings, or when the
Board of Directors so requires, an account of all his transactions as Treasurer
and of the financial condition of the Corporation. If required by the Board of
Directors, the Treasurer shall give the Corporation a bond in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of his office and for the restoration to
the Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation.
Section 9. Assistant Secretaries. Except as may be otherwise provided in
these By-Laws, Assistant Secretaries, if there be any, shall perform such duties
and have such powers as from time to time may be assigned to them by the Board
of Directors, the President, any Vice-President, if there be one, or the
Secretary, and in the absence of the Secretary or in the event of his disability
or refusal to act, shall perform the duties of the Secretary, and when so
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acting, shall have all the powers of and be subject to all the restrictions upon
the Secretary.
Section 10. Assistant Treasurers. Assistant Treasurers, if there be any,
shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice-President,
if there be one, or the Treasurer, and in the absence of the Treasurer or in the
event of his disability or refusal to act, shall perform the duties of the
Treasurer, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the Treasurer. If required by the Board of Directors,
an Assistant Treasurer shall give the Corporation a bond in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of his office and for the restoration to
the Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation.
Section 11. Other Officers. Such other officers as the Board of Directors
may choose shall perform such duties and have such powers as from time to time
may be assigned to them by the Board of Directors. The Board of Directors may
delegate to any other officer of the Corporation the power to choose such other
officers and to prescribe their respective duties and powers.
ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder of stock in the Corporation
shall be entitled to have a certificate signed, in the name of the Corporation
(i) by the Chairman of the Board of Directors, the President or a Vice-President
and (ii) by the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the Corporation, certifying the number of shares owned by
him in the Corporation.
Section 2. Signatures. Where a certificate is countersigned by (i) a
transfer agent other than the Corporation or its employee, or (ii) a registrar
other than the Corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
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certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
Section 3. Lost Certificates. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or his legal representative, to advertise the same in such manner
as the Board of Directors shall require and/or to give the Corporation a bond in
such sum as it may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
Section 4. Transfers. Stock of the Corporation shall be transferable in the
manner prescribed by law and in these By-Laws. Transfers of stock shall be made
on the books of the Corporation only by the person named in the certificate or
by his attorney lawfully constituted in writing and upon the surrender of the
certificate therefor, which shall be cancelled before a new certificate shall be
issued.
Section 5. Record Date. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders of
any adjournment thereof, or entitled to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action, the Board of Directors may fix in advance, a
record date, which shall not be more than sixty days nor less than ten days
before the date of such meeting, nor more than sixty days prior to any other
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
Section 6. Beneficial Owners. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
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it shall have express or other notice thereof, except as otherwise provided by
law.
ARTICLE VI
NOTICES
Section 1. Notices. Whenever written notice is required by law, the
Certificate of Incorporation or these By-Laws, to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder, at his address
as it appears on the records of the Corporation, with postage thereon prepaid,
and such notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Written notice may also be given personally
or by telegram, telex or cable.
Section 2. Waivers of Notice. Whenever any notice is required by law, the
Certificate of Incorporation or these By-Laws, to be given to any director,
member of a committee or stockholder, a waiver thereof in writing, signed, by
the person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the Corporation,
subject to the provisions of the Certificate of Incorporation, if any, may be
declared by the Board of Directors at any regular or special meeting, and may be
paid in cash, in property, or in shares of the capital stock. Before payment of
any dividend, there may be set aside out of any funds of the Corporation
available for dividends such sum or sums as the Board of Directors from time to
time, in its absolute discretion, deems proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the Corporation, or for any proper purpose, and the Board of
Directors may modify or abolish any such reserve.
Section 2. Disbursements. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
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Section 3. Fiscal Year. The fiscal year of the Corporation shall be fixed
by resolution of the Board of Directors.
Section 4. Corporate Seal. The corporate seal shall have inscribed thereon
the name of the Corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced, or otherwise.
Section 5. Separate Books and Records; Separate Accounts. The Corporation
shall (i) keep correct and complete books and records of account on an
unconsolidated basis, (ii) ensure that its funds and other assets are not
deposited in the same account as, or commingled with, those of its parent or any
subsidiary or affiliate of its parent, and (iii) maintain separate financial
statements, corporate records and books of account from those of its parent or
any subsidiary or affiliate of its parent.
Section 6. No Advances or Guarantees. The Corporation shall not (i) make
any advances to, or guarantees on behalf of, its parent or any subsidiary or
affiliate thereof, or (ii) receive from its parent or any subsidiary or
affiliate thereof any advance or guarantee on the Corporation's behalf.
ARTICLE VIII
INDEMNIFICATION
Section 1. Power to Indemnify in Actions, Suits or Proceedings Other Than
Those by or in the Right of the Corporation. Subject to Section 3 of this
Article VIII, the Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
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termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, has reasonable cause to believe that his conduct was unlawful.
Section 2. Power to Indemnify in Actions, Suits or Proceedings by or in the
Right of the Corporation. Subject to Section 3 of this Article VIII, the
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation; except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
Corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnify for such
expenses which the Court of Chancery or such other court shall deem proper.
Section 3. Authorization of Indemnification. Any indemnification under this
Article VIII (unless ordered by a court) shall be made by the Corporation only
as authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the circumstances because
he has met the applicable standard of conduct set forth in Section 1 or Section
2 of this Article VIII, as the case may be. Such determination shall be made (i)
by the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to such action, suit or proceeding, or (ii) if such quorum
is not obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (iii) by the
stockholders. To the extent, however, that a director, officer, employee or
agent of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding described above, or in defense of any
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claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith, without the necessity of authorization in the specific
case.
Section 4. Good Faith Defined. For purposes of any determination under
Section 3 of this Article VIII, a person shall be deemed to have acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, or, with respect to any criminal action or
proceeding, to have had no reasonable cause to believe his conduct was unlawful,
if his action is based on the records or books of account of the Corporation or
another enterprise, or on information supplied to him by the officers of the
Corporation or another enterprise in the course of their duties, or on the
advice of legal counsel for the Corporation or another enterprise or on
information or records given or reports made to the Corporation or another
enterprise by an independent certified public accountant or by an appraiser or
other expert selected with reasonable care by the Corporation or another
enterprise. The term "another enterprise" as used in this Section 4 shall mean
any other corporation or any partnership, joint venture, trust or other
enterprise of which such person is or was serving at the request of the
Corporation as a director, officer, employee or agent. The provisions of this
Section 4 shall not be deemed to be exclusive or to limit in any way the
circumstances in which a person may be deemed to have met the applicable
standard of conduct set forth in Sections 1 or 2 of this Article VIII, as the
case may be.
Section 5. Indemnification by a Court. Notwith-standing any contrary
determination in the specific case under Section 3 of this Article VIII, and
notwithstanding the absence of any determination thereunder, any director,
officer, employee or agent may apply to any court of competent jurisdiction in
the State of Delaware for indemnification to the extent otherwise permissible
under Sections 1 and 2 of this Article VIII. The basis of such indemnification
by a court shall be a determination by such court that indemnification of the
director, officer, employee or agent is proper in the circumstances because he
has met the applicable standards of conduct set forth in Sections 1 or 2 of this
Article VIII, as the case may be. Notice of any application for indemnification
pursuant to this Section 5 shall be given to the Corporation promptly upon the
filing of such application.
Section 6. Expenses Payable in Advance. Expenses incurred in defending or
investigating a threatened or pending action, suit or proceeding may be paid by
the Corporation in advance of the final disposition of such action, suit or
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proceeding as authorized by the Board of Directors in the specific case upon
receipt of an undertaking by or on behalf of the director, officer, employee or
agent to repay such amount unless it shall ultimately be determined that he is
entitled to be indemnified by the Corporation as authorized in this Article
VIII.
Section 7. Non-exclusivity and Survival of Indemnification. The
indemnification provided by this Article VIII shall not be deemed exclusive of
any other rights to which those seeking indemnification may be entitled under
any By-Law, agreement, contract, vote of stockholders or disinterested directors
or pursuant to the direction (howsoever embodied) of any court of competent
jurisdiction or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, it being the policy of the
Corporation that indemnification of the persons specified in Sections 1 and 2 of
this Article VIII shall be made to the fullest extent permitted by law. The
provisions of this Article VIII shall not be deemed to preclude the
indemnification of any person who is not specified in Sections 1 or 2 of this
Article VIII but whom the Corporation has the power or obligation to indemnify
under the provisions of the General Corporation Law of the State of Delaware, or
otherwise. The indemnification provided by this Article VIII shall continue as
to a person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and administrators of such
person.
Section 8. Insurance. The Corporation may purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or another enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power or the obligation to
indemnify him against such liability under the provisions of this Article VIII.
Section 9. Meaning of "Corporation" for Purposes of Article VIII. For
purposes of this Article VIII, references to "the Corporation" shall include, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had the power and authority
to indemnify its directors, officers, and employees or agents, so that any
person who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
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joint venture, trust or other enterprise, shall stand in the same position under
the provisions of this Article VIII with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
ARTICLE XI
AMENDMENTS
Section 1. Amendment of By-Laws. Except as otherwise set forth in this
Article IX, these By-Laws may be altered, amended or repealed, in whole or in
part, or new By-Laws may be adopted by the stockholders or by the Board of
Directors; provided, however, that notice of such alteration, amendment, repeal
or adoption of new By-Laws be contained in the notice of such meeting of
stockholders or Board of Directors, as the case may be. All such amendments must
be approved by either the holders of a majority of the outstanding capital stock
entitled to vote thereon or by a majority of the entire Board of Directors then
in office. Section 11 of Article III and Sections 5 and 6 of Article VII of
these By-Laws may be altered, amended or repealed only upon the unanimous vote
of the full Board of Directors (including the Independent Director, or if there
is more than one, all of the Independent Directors); provided, however, that
notice of such alteration, amendment, repeal or adoption of new By-Laws be
contained in the notice of such meeting of the Board of Directors.
Section 2. Entire Board of Directors. As used in this Article IX and in
these By-Laws generally, the term "entire Board of Directors" means the total
number of directors that the Corporation would have if there were no vacancies.
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Exhibit 4.1
Form of Pooling and Servicing Agreement
<PAGE>
- --------------------------------------------------------------------------------
Manufactured Housing Contract
[Senior/Subordinate]
Pass-Through Certificates
Series 199_-_
POOLING AND SERVICING AGREEMENT
among
THE CIT GROUP SECURITIZATION CORPORATION II
as Seller,
THE CIT GROUP/SALES FINANCING, INC.
as Servicer,
and
[TRUSTEE]
not in its individual capacity but solely as Trustee
Dated as of ___________, 199_
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS.....................................................1
SECTION 1.01. General....................................................... 1
SECTION 1.02. Specific Terms................................................ 1
ARTICLE II ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACTS................. 17
SECTION 2.01. Closing....................................................... 17
SECTION 2.02. Conditions of the Closing..................................... 17
SECTION 2.03. Acceptance by Trustee......................................... 19
SECTION 2.04. REMIC Designations............................................ 19
SECTION 2.05. REMIC Tax Matters............................................. 19
SECTION 2.06. REMIC Certificate Maturity Date............................... 19
ARTICLE III REPRESENTATIONS AND WARRANTIES................................ 20
SECTION 3.01. Representations and Warranties Regarding CITSF............... 20
SECTION 3.02. Representations and Warranties Regarding Each
Contract.................................................... 21
SECTION 3.03. Representations and Warranties Regarding the
Contracts in the Aggregate.................................. 25
SECTION 3.04. Representations and Warranties Regarding the
Contract Files.............................................. 25
SECTION 3.05. Repurchase of Contracts or Substitution of
Contracts for Breach of Representations and
Warranties.................................................. 26
ARTICLE IV PERFECTION OF TRANSFER AND PROTECTION OF
SECURITY INTERESTS.......................................... 29
SECTION 4.01. Custody of Contracts.......................................... 25
SECTION 3.04. Representations and Warranties Regarding the
Contract Files.............................................. 25
SECTION 3.0 30
SECTION 4.04. Chief Executive Office........................................ 31
SECTION 4.05. Costs and Expenses............................................ 31
ARTICLE V SERVICING OF CONTRACTS........................................ 32
SECTION 5.01. Responsibility for Contract Administration.................... 32
SECTION 5.02. Standard of Care.............................................. 32
SECTION 5.03. Records....................................................... 32
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SECTION 5.04. Inspection; Computer Tape..................................... 32
SECTION 5.05. Certificate Account........................................... 33
SECTION 5.06. Enforcement................................................... 35
SECTION 5.07. Trustee to Cooperate.......................................... 36
SECTION 5.08. Costs and Expenses............................................ 36
SECTION 5.09. Maintenance of Insurance...................................... 36
SECTION 5.10. REMIC Compliance.............................................. 38
SECTION 5.11. Repossession.................................................. 39
SECTION 5.12. Retitling..................................................... 40
ARTICLE VI REPORTS....................................................... 41
SECTION 6.01. Monthly Reports to the Trustee................................ 41
SECTION 6.02. Certificate of Servicing Officer.............................. 41
SECTION 6.03. Other Data.................................................... 41
SECTION 6.04. Annual Report of Accountants.................................. 41
SECTION 6.05. Statements to Certificateholders.............................. 42
ARTICLE VII SERVICE TRANSFER.............................................. 43
SECTION 7.01. Event of Termination.......................................... 43
SECTION 7.02. Transfer...................................................... 44
SECTION 7.03. Trustee to Act; Appointment of Successor...................... 44
SECTION 7.04. Notification to Certificateholders and to
Rating Agency............................................... 45
SECTION 7.05. Effect of Transfer............................................ 45
SECTION 7.06. Transfer of Certificate Account. ............................. 46
ARTICLE VIII DISTRIBUTIONS AND WITHDRAWALS FROM
CERTIFICATE ACCOUNT......................................... 47
SECTION 8.01. Monthly Distributions......................................... 47
SECTION 8.02. Permitted Withdrawals from the Certificate
Account..................................................... 49
SECTION 8.03. Repurchase Option............................................. 49
SECTION 8.04. Credit Enhancement for [Class A]
[Class B] Certificates...................................... 50
ARTICLE IX THE CERTIFICATES.............................................. 51
SECTION 9.01. The Certificates.............................................. 51
SECTION 9.02. Registration of Transfer and Exchange of
Certificates................................................ 51
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SECTION 9.03. No Charge; Disposition of Void Certificates................... 57
SECTION 9.04. Mutilated, Destroyed, Lost or Stolen
Certificates................................................ 57
SECTION 9.05. Persons Deemed Owners......................................... 57
SECTION 9.06. Access to List of Certificateholders' Names
and Addresses............................................... 58
SECTION 9.07. Authenticating Agents......................................... 58
ARTICLE X INDEMNITIES................................................... 59
SECTION 10.01. Liabilities to Obligors....................................... 59
SECTION 10.02. Tax Indemnification........................................... 59
SECTION 10.03. Servicer's Indemnities........................................ 59
SECTION 10.04. Operation of Indemnities...................................... 59
ARTICLE XI THE TRUSTEE................................................... 60
SECTION 11.01. Duties of Trustee............................................. 60
SECTION 11.02. Certain Matters Affecting the Trustee......................... 61
SECTION 11.03. Trustee Not Liable for Certificates or
Contracts................................................... 62
SECTION 11.04. Rights of Certificateholders to Direct Trustee
and to Waive Events of Termination.......................... 62
SECTION 11.05. Servicer to Pay Trustee's Fees and Expenses................... 63
SECTION 11.06. Eligibility Requirements for Trustee.......................... 64
SECTION 11.07. Resignation or Removal of Trustee............................. 64
SECTION 11.08. Successor Trustee............................................. 65
SECTION 11.09. Merger or Consolidation of Trustee............................ 65
SECTION 11.10. Obligor Claims................................................ 66
SECTION 11.11. Separate Trustees and Co-Trustees............................. 67
SECTION 11.12. Trustee May Own Certificates.................................. 68
SECTION 11.13. Agents of Trustee............................................. 68
ARTICLE XII MISCELLANEOUS................................................. 69
SECTION 12.01. Servicer Not To Resign. ..................................... 69
SECTION 12.02. Maintenance of Officer or Agency.............................. 69
SECTION 12.03. Termination................................................... 69
SECTION 12.04. Acts of Certificateholders.................................... 71
SECTION 12.05. Calculations.................................................. 72
SECTION 12.06. Assignment or Delegation by the Servicer;
Merger or Consolidation of the Company,
CITSF or the Servicer....................................... 72
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SECTION 12.07. Amendment..................................................... 73
SECTION 12.08. Contribution of Assets........................................ 75
SECTION 12.09. Notices....................................................... 75
SECTION 12.10. Merger and Integration........................................ 76
SECTION 12.11. Headings...................................................... 77
SECTION 12.12. Governing Law................................................. 77
SECTION 12.13. Counterparts.................................................. 78
Exhibit A. Form of Class A Certificates............................... A-1
[Exhibit B. Form of Class B Certificate................................ B-1]
Exhibit C. Form of Class R Certificate................................ C-1
Exhibit D. Form of Assignment......................................... D-1
Exhibit E. Certificate of Officers of CITSF........................... E-1
Exhibit F. Form of Opinion of Counsel for
CITSF.................................................... F-1
Exhibit G. Form of Trustee's Acknowledgement and
Certification............................................ G-1
Exhibit H. Certificate of Servicing Officers.......................... H-1
Exhibit I-1. Certificate Regarding Repurchased
Contracts................................................ I-1
Exhibit I-2. Certificate Regarding Substituted
Contracts................................................ I-2
Exhibit J. Form of Investment Letter.................................. J-1
Exhibit K-1. Form of Transferor's Certificate........................... K-1
Exhibit K-2. Form of Transferee's Certificate........................... K-2
Exhibit L. Form of Monthly Report to
Certificateholders....................................... L-1
Exhibit M. Form of Transfer Affidavit................................. M-1
Exhibit N. List of Contracts.......................................... N-1
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AGREEMENT, dated as of _________ ___, ____, among The CIT Group
Securitization Corporation II, as seller (together with its permitted successors
and assigns, the "Company"), 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 ______________, a
_____________________ organized and existing under the laws of ______________,
not in its individual capacity but solely as Trustee (together with permitted
successors and assigns, the "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.
"Advance Payment" means any payment by an Obligor in advance of the Due
Period in which it would be due under such Contract and which payment is not a
Principal Prepayment.
"Affiliate" of any specified Person means any other Person controlling or
controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
"Agreement" means this Pooling and Servicing Agreement.
"Amount Available" means, as to any Remittance Date, an amount equal to (a)
the amount on deposit (or which would have been on deposit on such day but for
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the operation of the penultimate sentence of Section 5.05(a)) in the Certificate
Account as of the close of business on the last day of the related Due Period
less (b) the sum, as of the close of business on the Business Day preceding such
Remittance Date, of (i) aggregate Repossession Profits, (ii) the Amount Held for
Future Distribution, and (iii) amounts permitted to be withdrawn by the Servicer
from the Certificate Account in respect of the Contracts pursuant to clauses (b)
- - (g), inclusive, of Section 8.02.
"Amount Held for Future Distribution" means, as to any Remittance Date, the
total of the amounts on deposit (or which would have been on deposit on such day
but for the operation of the penultimate sentence of Section 5.05(a)) in the
Certificate Account as of the close of business on the last day of the related
Due Period on account of Advance Payments in respect of such Due Period.
"Applicants" has the meaning assigned in Section 9.06.
"Appraised Value" means, with respect to any Manufactured Home, the value
of such Manufactured Home as determined by a professional appraiser (who may be
an employee of CITSF).
"Assumption Fee" means any assumption or other similar fee paid by the
Obligor on a Contract.
"Authenticating Agent" means any authenticating agent appointed pursuant to
Section 9.07.
"Book-Entry Certificate" means any Certificate registered in the name of
the Depository or its nominee, ownership of which is reflected on the books of
the Depository or on the books of a person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
"Business Day" means any day other than (a) a Saturday or a Sunday or (b)
another day on which national banking institutions in the States of Oklahoma,
__________ or New York are authorized or obligated by law, executive order, or
governmental decree to be closed.
"Certificate" means a Manufactured Housing Contract Pass-Through
Certificate executed and delivered by the Trustee substantially in the form of
Exhibits A, B or C.
"Certificate Account" means a separate trust account maintained in the name
of the Trust in an Eligible Institution.
"Certificate Owner" means the person who is the beneficial owner of a
Book-Entry Certificate.
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"Certificate Register" means the register maintained pursuant to Section
9.02.
"Certificate Registrar" or "Registrar" means the registrar appointed
pursuant to Section 9.02.
"Certificateholder" or "Holder" means the person in whose name a
Certificate is registered on the Certificate Register, except that, solely for
the purposes of giving any consent, waiver, request or demand pursuant to this
Agreement, any Class A Certificate [and any Class B Certificate] registered in
the name of the Contract Seller, the Servicer or any Affiliate of the Contract
Seller or the Servicer shall be deemed not to be outstanding, and the Percentage
Interest evidenced thereby shall not be taken into account in determining
whether the requisite Percentage Interest necessary to effect any such consent,
request, waiver or demand has been obtained unless all the Class A Certificates
[or all the Class B Certificates] are held by such Persons; provided, however,
that in determining whether the Trustee shall be protected in relying upon any
such consent, waiver, request or demand only Class A Certificates [and Class B
Certificates] which the Trustee knows to be so owned shall be so disregarded.
"CITSF" means The CIT Group/Sales Financing Inc., and its successors in
interest as permitted hereunder.
"Class," "Class A," ["Class B"] or "Class R" means pertaining to Class A
Certificates[, Class B Certificates] and/or Class R Certificates, as the case
may be.
"Class A Certificate" means any one of the certificates executed and
delivered by the Trustee and authenticated by the Authenticating Agent
substantially in the form set forth in Exhibit A and evidencing an interest
designated as a "regular interest" in the Trust for purposes of the REMIC
Provisions[, which certificates shall be senior to the Class B Certificates].
"Class A Interest Distribution Amount" means, as to any Remittance Date, an
amount equal to the sum of (a) one month's interest at the Class A Remittance
Rate on the Class A Principal Balance and (b) the Unpaid Class A Interest
Shortfall, if any, for such Remittance Date.
"Class A Interest Shortfall" means, as to any Remittance Date, any amount
by which the amount distributed to Holders of the Class A Certificates on such
Remittance Date is less than the Class A Interest Distribution Amount for such
Remittance Date.
"Class A Principal Balance" means, as to any Remittance Date, the Original
Class A Principal Balance less all amounts previously distributed to Holders of
Class A Certificates on account of principal.
"Class A Remittance Rate" means ____% per annum, computed on the basis of a
360-day year of twelve 30-day months.
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["Class B Certificate" means any one of the certificates executed by the
Trustee and authenticated by the Authenticating Agent substantially in the form
set forth in Exhibit B hereto and evidencing an interest designated as a
"regular interest" in the Trust for purposes of the REMIC Provisions which
certificates shall be subordinate to the Class A Certificates.]1
["Class B Enhancement Payment" means _______________.]
["Class B Interest Distribution Amount" means, as to any Remittance Date,
the sum of (a) one month's interest at the Class B Remittance Rate on the Class
B Principal Balance and (b) the Unpaid Class B Interest Shortfall, if any, for
such Remittance Date.]
["Class B Interest Shortfall" means, as to any Remittance Date, any amount
by which the amount distributed to Holders of Class B Certificates on such
Remittance Date is less than the Class B Interest Distribution Amount for such
Remittance Date.]
["Class B Principal Balance" means, as to any Remittance Date, the Original
Class B Principal Balance minus the sum of all amounts previously distributed to
Class B Certificateholders on account of principal.]
["Class B Principal Loss Liquidation Amount" means, as to any Remittance
Date prior to the Cross-over Date, the amount, if any, by which the sum of the
Class A Principal Balance and the Class B Principal Balance for such Remittance
Date exceeds the Pool Scheduled Principal Balance for such Remittance Date.]
["Class B Remittance Rate" means ____% per annum, computed on the basis of
a 360-day year of twelve 30-day months.]
"Class R Certificate" means any one of the Certificates executed by the
Trustee and authenticated by the Authenticating Agent substantially in the form
set forth in Exhibit C hereto and evidencing an interest designated as a
"residual interest" in the Trust for purposes of the REMIC Provisions.
"Class R Certificateholder" means the person in whose name a Class R
Certificate is registered on the Certificate Register.
"Class R Distribution Amount" means, as to any Remittance Date, the amount,
if any, payable to the Holders of the Class R Certificates pursuant to
subsection 8.01(c)(iii).
"Closing Date" means _________ __, 199_.
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1 Class B definitions apply only where the regular interests in the REMIC are
represented by a senior (Class A) and a subordinated (Class B) class.
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"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means The CIT Group Securitization Corporation II and its
permitted successors in interest.
"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(s)" means one or more of the manufactured housing installment
sales contracts and installment loan agreements described in the List of
Contracts, which constitute part of the corpus of the Trust, and which Contracts
are to be assigned by the Company to the Trustee; including, without limitation,
all related security interests, collateral, liens, insurance policies and
guarantees of the obligations of the related Obligor (other than guarantees, if
any, by the related dealer) and any and all rights to receive payments which are
due, in the case of Precomputed Contracts, or received, in the case of simple
interest Contracts, pursuant thereto from and after the Cut-off Date, but
excluding any rights to receive payments which are due, in the case of
Precomputed Contracts, or received, in the case of simple interest contracts,
pursuant thereto prior to the Cut-off Date.
"Contract File" means, as to each Contract, other than a Land-Home
Contract, (a) the original copy of the Contract, (b) either (i) the original
title document for the related Manufactured Home or a duplicate certified by the
appropriate governmental authority which issued the original thereof or the
application for such title document, or (ii) if the laws of the jurisdiction in
which the related Manufactured Home is located do not provide for the issuance
of title documents for manufactured housing, other evidence of ownership of the
related Manufactured Home which is customarily relied upon in such jurisdiction
as evidence of title to a manufactured housing unit; (c) evidence of one or more
of the following types of perfection of the security interest in the related
Manufactured Home granted by such Contract, as appropriate: (i) notation of such
security interest on the title document, (ii) a financing statement meeting the
requirements of the UCC, with evidence of recording indicated thereon, or (iii)
such other evidence of perfection of a security interest in a manufactured
housing unit as is customarily relied upon in the jurisdiction in which the
related Manufactured Home is located; (d) each assignment of the Contract
evidencing the chain of title of the Contract from the originator thereof (if
other than CITSF) to CITSF; and (e) any extension, modification or waiver
agreement(s).
"Contract Holders' Errors and Omissions Protection Policy" means the
contract holders' errors and omissions policy maintained by the Servicer or any
similar replacement policy, if any, pursuant to Section 5.09(c).
["Contract Originator" means .]
"Contract Rate" means, with respect to any particular Contract, the rate of
interest specified in that Contract and computed on a precomputed basis with an
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actuarial rebate of unearned interest upon prepayment, provided that the rebate
upon prepayment of Contracts originated in California and Oklahoma may be
computed on the simple interest method if so required by applicable law or
regulations.
"Contract Seller" means CITSF.
"Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of the execution of this Agreement is located at the
address set forth in Section 12.09.
"Cross-over Date" means the Remittance Date on which the Class A Principal
Balance (after giving effect to the distributions and adjustments on the Class A
Certificates on such Remittance Date) is reduced to zero.
"Cut-off Date" means __________ __, 199_.
"Cut-off Date Pool Principal Balance" means the aggregate of the Cut-off
Date Principal Balances of the Contracts.
"Cut-off Date Principal Balance" means, as to any Contract, the unpaid
Scheduled Principal Balance thereof at the Cut-off Date.
"Defaulted Contract" means, with respect to any Due Period, a Contract in
respect of which payments exceeding $25 in the aggregate were delinquent 120
days or more as of the last day of such Due Period, provided that any Contract
in respect of which such delinquencies were permitted by the Soldiers' and
Sailors' Relief Act of 1940 shall not be deemed a Defaulted Contract.
"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 Participant" means a broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Determination Date" means the third Business Day prior to each Remittance
Date during the term of this Agreement.
"Due Date" means, as to any Contract, the date of the month on which the
scheduled monthly payment for such Contract is due.
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"Due Period" means, as to any Remittance Date, the period commencing on the
26th day of the month (or, if the 25th day of such month is not a Business Day,
the day following the first preceding Business Day) in the second month
preceding the month of such Remittance Date (or the Cut-off Date, in the case of
the first Remittance Date) and ending on the 25th day of the month (or, if such
day is not a Business Day, the preceding Business Day) in the month preceding
the month of such Remittance Date.
"Electronic Ledger" means the electronic master record of installment sales
contracts of the Servicer.
"Eligible Institution" means the Trustee or any depository institution or
trust company (which may be the Trustee or an Affiliate of the Trustee)
organized under the laws of the United States or any state, the deposits of
which are insured to the full extent permitted by law by the Bank Insurance Fund
(presently administered by the Federal Deposit Insurance Corporation), which is
subject to supervision and examination by federal or state authorities and whose
short term securities or unsecured long-term debt has been rated [A-1 or higher
by Standard & Poor's and P-1 or higher by Moody's] in the case of short term
securities, or in one of the two highest rating categories by [Standard & Poor's
and Moody's] in the case of unsecured long-term debt.
"Eligible Investments" has the meaning assigned in Section 5.05(b).
"Eligible Servicer" means CITSF or any Person qualified to act as Servicer
of the Contracts under applicable federal and state laws and regulations, which
Person services not less than $100,000,000 in outstanding principal amount of
manufactured housing installment sales contracts and installment loan agreements
[and, so long as any FHA/VA Contract is outstanding, which Person is qualified
under FHA/VA Regulations to act as a servicer of all such FHA/VA Contracts].
"Eligible Substitute Contract" means, as to any Replaced Contract for which
such Eligible Substitute Contract is being substituted pursuant to Section
3.05(b), a Contract that (a) as of the date of its substitution, satisfies all
of the representations and warranties (which, except when expressly stated to be
as of origination, shall be deemed to be determined as of the date of its
substitution rather than as of the Cut-off Date or the Closing Date) in Section
3.02 and does not cause any of the representations and warranties in Section
3.03, after giving effect to such substitution, to be incorrect, (b) after
giving effect to the scheduled payment due in the month of such substitution,
has a Scheduled Principal Balance that is not greater than the Scheduled
Principal Balance of such Replaced Contract, (c) has a Contract Rate that is at
least equal to the Contract Rate of such Replaced Contract and (d) has a
remaining term to scheduled maturity that is not greater than the remaining term
to scheduled maturity of the Replaced Contract. Notwithstanding the foregoing,
in the event that on any date more than one Eligible Substitute Contract is
substituted for one or more Replaced Contracts, the requirement set forth in
clause (b) above with respect to the Scheduled Principal Balance may be
satisfied if the aggregate of the Scheduled Principal Balances of such Eligible
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Substitute Contracts is not greater than the aggregate of the Scheduled
Principal Balances of such Replaced Contracts, the requirement set forth in
clause (c) above with respect to the Contract Rate may be satisfied if the
weighted average Contract Rate of such Eligible Substitute Contracts is at least
equal to the weighted average Contract Rate of such Replaced Contracts; and the
requirement set forth in clause (d) above with respect to remaining term to
scheduled maturity may be satisfied if the weighted average remaining term to
scheduled maturity of such Eligible Substitute Contracts is not greater than the
weighted average remaining term to scheduled maturity of such Replaced
Contracts.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Termination" has the meaning assigned in Section 7.01.
["FHA/VA Contract" means a Contract that, at its origination, was insured
by the Federal Housing Administration or partially guaranteed by the Veterans
Administration.]
["FHA/VA Regulations" means, as to any FHA/VA Contract, the contractual
agreements and regulations of the Federal Housing Administration or the Veterans
Administration, as the case may be, providing or governing the terms of the
insurance for such Contract by the Federal Housing Administration or the partial
guarantee for such Contract by the Veterans Administration, as the case may be.]
"Extension Fee" means any extension or other similar fee paid by the
Obligor on a Contract.
"Final Remittance Date" means the Remittance Date on which the final
distribution in respect of Certificates is made pursuant to Section 12.03.
"Formula Principal Distribution Amount" means, as to any Remittance Date,
the sum of (i) in the case of each Contract which is a Precomputed Contract, all
scheduled payments of principal due on each Outstanding Contract during the Due
Period which ends during the month preceding the month in which such Remittance
Date occurs as specified in the amortization schedule at the time applicable
thereto (after adjustments for previous Partial Principal Prepayments but before
any adjustment to such amortization schedule by reason of any bankruptcy of an
Obligor or similar proceeding or any moratorium or similar waiver or grace
period) and, in the case of each Contract which is a simple interest Contract,
any payments in respect of principal received during such Due Period; (ii) all
Partial Principal Prepayments applied and all Principal Prepayments in Full
received during such preceding Due Period; (iii) the Scheduled Principal Balance
of each Contract that became a Liquidated Contract during such preceding Due
Period; and (iv) the Scheduled Principal Balance of each Contract which was
repurchased immediately prior to such Remittance Date pursuant to Section 3.05.
"Hazard Insurance Policy" means, with respect to each Contract, the policy
of fire and extended coverage insurance (and federal flood insurance, if the
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<PAGE>
Manufactured Home is located in a federally designated special flood area)
required to be maintained for the related Manufactured Home, as provided in
Section 5.09, and which, as provided in said Section 5.09, may be a blanket
policy maintained by the Servicer in accordance with the terms and conditions of
said Section 5.09.
"Holder" has the same meaning as "Certificateholder".
"Independent" means, with respect to any specified Person, any person or
firm rendering an opinion at Closing or any Person who (a) is in fact
independent of the specified Person, (b) does not have any direct financial
interest or any material indirect financial interest in the specified Person or
any Affiliate of the specified Person (other than acting as outside counsel for
the specified Person or such Affiliate), and (c) is not connected with the
specified Person as an officer, employee, promoter, underwriter, trustee,
partner, director (other than a law firm a member of which is a director) or
person performing similar functions. Except with respect to any person or firm
rendering an opinion at the Closing, whenever it is herein provided that any
Independent Person's opinion or certificate shall be furnished to the Trustee,
such person shall be approved by the Trustee and such opinion or certificate
shall state that the signer has read this definition and that the signer is
independent within the meaning hereof.
"Insurance Proceeds" means proceeds paid by any insurer pursuant to any
insurance policy or contract [or any FHA/VA Contracts].
"Land-Home Contract" means a Contract that is secured by a mortgage or deed
of trust on real estate on which the related Manufactured Home is situated, and
which Manufactured Home is considered or classified as part of the real estate
under the laws of the jurisdiction in which it is located.
"Land-Home Contract File" means, as to each Land-Home Contract, (a) the
original copy of the Land-Home Contract; (b) the related Mortgage with evidence
of recording thereon and any title document for the related Manufactured Home;
(c) each assignment of the Land-Home Contract evidencing the chain of title from
the originator thereof (if other than CITSF) to CITSF; and (d) any extension,
modification or waiver agreement(s).
"Land-in-Lieu Contract" means a Contract that is secured by (i) a security
interest in a Manufactured Home, and (ii) a mortgage or deed of trust on real
estate on which such Manufactured Home is situated, but such Manufactured Home
is not considered or classified as part of the real estate under the laws of the
jurisdiction in which it is located.
"Late Payment Fees" means late payment fees paid by Obligors on Contracts.
"Liquidated Contract" means any Defaulted Contract as to which the Servicer
has determined that all amounts which it expects to recover from or on account
of such Contract have been recovered; provided that any Defaulted Contract in
respect of which the related Manufactured Home and, in the case of Land-Home
Contracts and Land-in-Lieu Contracts, Mortgaged Property, have been realized
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upon and disposed of and the proceeds of such disposition have been received
shall be deemed to be a Liquidated Contract.
"Liquidation Expenses" means out-of-pocket expenses (exclusive of any
overhead expenses) which are incurred by the Servicer in connection with the
liquidation of any Defaulted Contract, on or prior to the date on which the
related Manufactured Home and, in the case of Land-Home Contracts and
Land-in-Lieu Contracts, Mortgaged Property, are disposed of, including, without
limitation, legal fees and expenses, and any related and unreimbursed
expenditures for property taxes, property preservation or restoration of the
property to marketable condition.
"Liquidation Proceeds" means cash (including Insurance Proceeds) received
in connection with the liquidation of Defaulted Contracts, whether through
repossession, foreclosure sale or otherwise, including any rental income
realized from the repossessed Manufactured Home.
"List of Contracts" means the list attached hereto as Exhibit N identifying
each Contract constituting part of the corpus of the Trust, which list (a)
identifies each Contract and (b) sets forth as to each Contract (i) the Cut-off
Date Principal Balance, (ii) the amount of monthly payment due from the Obligor,
(iii) the Contract Rate and (iv) the maturity date.
"Loan-to-Value Ratio" means, with respect to any Contract, the original
principal amount thereof divided by the Original Value of the Manufactured Home
[plus, in the case of a Land-Home Contract or a Land-in-Lieu Contract, the
Original Value of the Mortgaged Property other than the Manufactured Home].
"Manufactured Home" means a unit of manufactured housing, including all
accessions thereto, securing the indebtedness of the Obligor under the related
Contract.
"Monthly Report" has the meaning assigned in Section 6.05. The forms of the
Monthly Report for the Certificates are attached as Exhibit L hereto.
"Monthly Servicing Fee" means, as to any Remittance Date, one-twelfth of
the product of ____% and the Pool Scheduled Principal Balance for such
Remittance Date.
["Moody's" means Moody's Investors Service Inc. or any successor thereto.]
"Mortgage" means the mortgage or deed of trust creating a first lien on an
estate in fee simple in the real property securing a Contract.
"Mortgaged Property" means the property subject to a Mortgage.
"Net Liquidation Loss" means, with respect to a Liquidated Contract, the
amount, if any, by which (a) the outstanding principal balance of such
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Liquidated Contract plus accrued and unpaid interest thereon to the date on
which such Liquidated Contract became a Liquidated Contract exceeds (b) the Net
Liquidation Proceeds for such Liquidated Contract.
"Net Liquidation Proceeds" means, as to any Liquidated Contract,
Liquidation Proceeds net of Liquidation Expenses.
"NRSRO" means any nationally recognized statistical rating organization.
"Obligor" means each Person who is indebted under a Contract.
"Officers' Certificate" means a certificate signed by the chairman of the
board, president or any vice president of the Servicer and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion of counsel acceptable to the
Trustee, who may be counsel for the Servicer, except that any opinion of counsel
relating to the qualification of the Trust as a REMIC or compliance with the
REMIC Provisions must be an opinion of counsel Independent with respect to the
Company and the Servicer.
"Original Class A Principal Balance" means $_____________.
["Original Class B Principal Balance" means $____________.]
["Originating Institution" means ______________.]
"Original Value" means (a) with respect to any Manufactured Home that was
new at the time the related Contract was originated, the purchase price of such
Manufactured Home, plus taxes, fees and insurance, (b) with respect to any
Manufactured Home that was used at the time the related Contract was originated,
the lesser of the total delivered sales price or the Appraised Value of such
Manufactured Home, plus taxes, fees and insurance and (c) with respect to
Mortgaged Property other than the Manufactured Home, the appraised value thereof
used by the originator of the related Land-Home Contract or Land-in-Lieu
Contract to underwrite that Contract.
"Outstanding Contract" means, as to any Due Period, a Contract which was
not the subject of a Principal Prepayment in Full prior to such Due Period,
which did not become a Liquidated Contract prior to such Due Period, which was
not purchased prior to such Due Period pursuant to Section 3.05 and the
scheduled maturity date (as it existed on the Cut-off Date) of which has not
occurred prior to such Due Period.
"Ownership Interest" means with respect to any Certificate, any ownership
or security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether direct
or indirect, legal or beneficial.
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"Partial Principal Prepayment" means (a) any Principal Prepayment other
than a Principal Prepayment in Full and (b) any cash amount deposited in the
Certificate Account pursuant to the proviso in Section 3.05(a) or pursuant to
Section 3.05(b).
"Paying Agent" has the meaning assigned in Section 8.01(e).
"Percentage Interest" means, as to any Certificate, the percentage interest
evidenced thereby in distributions made on the related Class, such percentage
interest being equal to, in the case of the Class A Certificates, the percentage
(carried to eight places) obtained from dividing the denomination of such
Certificate by the aggregate denomination of all Class A Certificates (which
equals the Original Class A Principal Balance) [and the aggregate denomination
of all Class B Certificates (which equals the Original Class B Principal
Balance) in the case of the Class B Certificates] and, in the case of the Class
R Certificates, being equal to the percentage specified on the face of such
Certificate. The aggregate Percentage Interests for each Class of Certificates
shall equal 100%.
"Permitted Transferee" means, as to any Class R Certificateholder or any
other prospective transferee of a Class R Certificate, any Person other than (a)
the United States, a State or any political subdivision thereof, any possession
of the United States, a foreign government, an international organization, or
any agency or instrumentality of any of the foregoing, (b) an organization
(other than a cooperative described in Section 521 of the Code) which would not
be subject to tax under the Code (including the tax on unrelated business
taxable income, as defined in Section 512(a)(1) of the Code) on any excess
inclusions (as defined in Section 860E(c)(1) of the Code) with respect to any
Class R Certificate, or (c) an organization which is engaged in furnishing
electrical energy, or providing telephone service, to persons in rural areas (as
described in Section 1381(a)(2)(C) of the Code). The terms "United States,"
"State" and "international organization" shall have the meanings set forth in
Code Section 7701 or any successor provision. A corporation will not be treated
as an instrumentality of the United States or of any State or political
subdivision thereof, if all of the activities are subject to tax, and, with the
exception of the Federal Home Loan Mortgage Corporation, a majority of its board
of directors is not selected by such governmental unit.
"Person" means 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.
"Pool Factor" means, at any time, the percentage derived from a fraction,
the numerator of which is the aggregate Principal Balance of each Class of
Certificates at such time and the denominator of which is the Cut-off Date Pool
Principal Balance.
"Pool Scheduled Principal Balance" means, as to any Remittance Date, the
aggregate of the Scheduled Principal Balance of each Contract that was an
Outstanding Contract on the last day of the Due Period next preceding such
Remittance Date.
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"Precomputed Contract" means any Contract as to which its scheduled monthly
payment for each Due Date is, by the terms thereof, applied to interest and
principal in accordance with a precomputed allocation, regardless of whether
such scheduled monthly payment is paid on such Due Date; provided that a Rule of
78s Contract shall be deemed to be a Precomputed Contract.
"Principal Prepayment" means a payment or other recovery of principal on a
Contract (exclusive of Liquidation Proceeds) 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 due on such Contract prior to the date or dates on
which such principal amount is due.
"Principal Prepayment in Full" means any Principal Prepayment of the entire
principal balance of a Contract.
"Qualified Bank" means any depositary institution whose unsecured long-term
debt is rated at least __ by Rating Agency.
["Qualified Institutional Buyer" shall have the meaning specified in Rule
144A.]
"Rating Agency" means or any successor thereto; provided that
if [Rating Agency] no longer has a rating outstanding on any Class of the
Certificates, then references herein to [Rating Agency] shall be deemed to refer
to the NRSRO then rating any Class of the Certificates (or, if more than one
such NRSRO is then rating any Class of the Certificates, to such NRSRO as may be
designated by the Servicer), and references herein to ratings by or requirements
of [Rating Agency] shall be deemed to have the equivalent meanings with respect
to ratings by or requirements of such NRSRO.
"Record Date" means the last Business Day of any calendar month.
"REMIC" means a "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC Certificate Maturity Date" means the "latest maturity date" of the
Class A Certificates [and Class B Certificates] as that term is defined in
Section 2.06.
"REMIC Change of Law" means any proposed, temporary or final regulation,
revenue ruling, revenue procedure or other official announcement or
interpretation relating to the REMIC and the REMIC Provisions issued after the
Closing Date.
"REMIC Provisions" means provisions of the federal income tax law and the
applicable state and local law relating to REMICs and related provisions, and
regulations promulgated thereunder, as the foregoing may be in effect from time
to time.
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"Remittance Date" means the _____________ day of each calendar month during
the term of this Agreement, or if such day is not a Business Day, the next
succeeding Business Day, commencing __________ __, 199_.
"REO Disposition" means a disposition of REO Property, as described in
Section 5.10.
"REO Property" means any Manufactured Home acquired in a repossession or
foreclosure.
"Replaced Contract" has the meaning given in Section 3.05(b).
"Repossession Profits" means, as to any Remittance Date, the excess, if
any, of Liquidation Proceeds in respect to each Contract that became a
Liquidated Contract during the Due Period next preceding such Remittance Date
over the sum (a) of the unpaid principal balance of the related Liquidated
Contract plus (b) accrued and unpaid interest at the related Contract Rate on
the unpaid principal balance thereof from the Due Date to which interest was
last paid by the Obligor to the Due Date for such Contract in the month in which
such Contract became a Liquidated Contract plus (c) Liquidation Expenses plus
(d) amounts required to be paid to the Obligor or any party with an interest in
the related Manufactured Home that is senior to the interest of the Trust.
"Repurchase Event" shall mean (a) any Contract being subject to any right
of rescission, setoff, counterclaim or defense, including the defense of usury,
(b) the operation of any of the terms of any Contract or the exercise of any
right thereunder (i) rendering such Contract unenforceable in whole or in part
or (ii) subjecting such Contract to any right of rescission, setoff,
counterclaim or defense, including the defense of usuary; and in each case such
condition materially adversely affects the Trust's interest in such Contract.
"Repurchase Price" means, with respect to a Contract to be repurchased
hereunder, an amount equal to the remaining principal amount outstanding on such
Contract on the date of repurchase plus accrued and unpaid interest thereon at
its Contract Rate up to the Due Date in the month of such repurchase.
"Responsible Officer" means, with respect to the Trustee, the chairman and
any vice chairman of the board of directors, the president, the chairman and
vice chairman of any executive committee of the board of directors, every vice
president, assistant vice president, the secretary, every assistant secretary,
cashier or any assistant cashier, controller or assistant controller, the
treasurer, every assistant treasurer, every trust officer, assistant trust
officer and every other officer or assistant officer of the Trustee customarily
performing functions similar to those performed by persons who at the time shall
be such officers, respectively, or to whom a corporate trust matter is referred
because of knowledge of, familiarity with, and authority to act with respect to
a particular matter.
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"Rule of 78s Contract" means a Contract, under the terms of which the
earned finance charge is computed on the basis of the Rule of 78s method of
computing earned finance charges.
["Rule 144A" shall mean Rule 144A under the Securities Act, as such Rule
may be amended from time to time.]
"Sale and Purchase Agreement" means the Sale and Purchase Agreement, dated
as of __________ __, 199_ between CITSF and the Company, providing for the sale
of the Contracts from CITSF to the Company.
"Scheduled Principal Balance" means (a) as to any Contract which as a
Precomputed Contract and any Remittance Date or the Cut-off Date, the principal
balance of such Contract as of the Due Date in the Due Period next preceding
such Remittance Date or as of the Due Date next preceding the Cut-off Date, as
specified in the amortization schedule at the time relating thereto (before any
adjustment to such amortization schedule by reason of any bankruptcy of an
obligor or similar proceeding or any moratorium or similar waiver or grace
period), after giving effect to any previous Partial Principal Prepayments and
to the payment of principal due on such Due Date and irrespective of any
delinquency in payment by, or extension granted to, the related Obligor, and (b)
as to any Contract which is a simple interest Contract and any Remittance Date
or the Cut-off Date, the unpaid principal balance thereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Service Transfer" has the meaning assigned in Section 7.02.
"Servicer" means CITSF until any Service Transfer hereunder, and thereafter
means the new servicer appointed pursuant to Article VII.
"Servicing Fee" means, as to any Remittance Date, the sum of (a) the
Monthly Servicing Fee for such Remittance Date, (b) any Late Payment Fees paid
during the preceding calendar month, (c) any Extension Fees paid during the
preceding calendar month, (d) any Assumption Fees paid during the preceding
calendar month, and (e) any net investment earnings due to the Servicer as of
such Remittance Date.
"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 Officers' Certificate
furnished to the Trustee by the Servicer, as the same may be 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.
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["Standard & Poor's" means Standard & Poor's Corporation or any successor
thereto.]
"Transfer" means any direct or indirect transfer or sale of any Ownership
Interest in a Certificate.
"Transferee" means any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
"Treasury Regulations" means any proposed, temporary or final regulation
promulgated under the Code.
"Trust" means the trust created by this Agreement, the corpus of which
consists of (a) all the rights, benefits, and obligations arising from and in
connection with each Contract and any related Mortgage, (b) all rights under any
Hazard Insurance Policy relating to a Manufactured Home securing a Contract for
the benefit of the creditor of such Contract and proceeds from any Contract
Holders' Errors and Omissions Protection Policy and any blanket hazard policy to
the extent such proceeds relate to any Manufactured Home,[ (c) all rights under
any FHA/VA Regulations pertaining to any FHA/VA Contract,] (d) all remittances,
deposits and payments made into the Certificate Account and amounts in the
Certificate Account, (e) all proceeds in any way derived from any of the
foregoing items and (f) all documents contained in the Contract Files and the
Land-Home Contract Files [and (g) [description of credit enhancement, if any]].
"Trustee's Fee" means the fees and expenses of the Trustee as described in
Section 11.05.
"UCC" means the Uniform Commercial Code as in effect in the relevant
jurisdiction.
"Unpaid Class A Interest Shortfall" means, as to any Remittance Date, the
amount, if any, of the Class A Interest Shortfall for the prior Remittance Date,
plus accrued interest (to the extent payment thereof is legally permissible) at
the Class A Remittance Rate on the amount thereof from such prior Remittance
Date to such current Remittance Date.
["Unpaid Class B Interest Shortfall" means, as to any Remittance Date, the
amount, if any, of the Class B Interest Shortfall for the prior Remittance Date,
plus accrued interest (to the extent payment thereof is legally permissible) at
the Class B Remittance Rate on the amount thereof from such prior Remittance
Date to such current Remittance Date.]
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ARTICLE II
ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACTS
SECTION 2.01. Closing.
(a) There is hereby created, by the Company as settlor, a separate trust
which shall be known as Manufactured Housing Contract Pass-Through Certificate
Trust 199_. [By the execution and delivery of this Agreement, the Company has
agreed that it will elect, or cause an election to be made, to treat the pool of
assets comprising the Trust as a REMIC.] The Trust shall be administered
pursuant to the provisions of this Agreement for the benefit of
Certificateholders.
(b) On the Closing Date, the Company shall sell, transfer, assign, set over
and otherwise convey to the Trust by execution of an assignment substantially in
the form of Exhibit D hereto (i) all the right, title and interest of the
Company in and to the Contracts, including, without limitation, the security
interest created thereby and any related Mortgages and all interest and
principal received by the Company on or with respect to the Contracts (other
than principal and interest due on the Contracts before the Cut-off Date or the
date of origination, if later), (ii) all rights under any Hazard Insurance
Policy relating to a Manufactured Home securing a Contract for the benefit of
the creditor of such Contract, (iii) [all rights under all FHA/VA Regulations
pertaining to any FHA/VA Contract, (iv)] the proceeds from any Contract Holders'
Errors and Omissions Protection Policy and all rights under any blanket hazard
insurance policy to the extent they relate to the Manufactured Homes, (v) all
documents contained in the Contract Files or the Land-Home Contract Files, and
(vi) all proceeds in any way derived from any of the foregoing. The parties
intend that the conveyance of the Company's right, title and interest in and to
the Contracts pursuant to this Agreement shall constitute an absolute sale.
SECTION 2.02. Conditions of the Closing.
On or before the Closing Date, the Servicer shall deliver the following
documents to the Trustee:
(a) The List of Contracts.
(b) A certificate of officers of CITSF, substantially in the form of
Exhibit E hereto.
(c) Opinions of counsel for CITSF, substantially in the form of Exhibit F
hereto.
(d) A letter from _________________, or another nationally recognized
accounting firm that is Independent with respect to CITSF, stating that such
firm has reviewed the Contracts on a statistical sampling basis [and, based on
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such sampling, concluding that the Contracts conform in all material respects to
the List of Contracts, generally to a confidence level of ____%, with an error
rate of ____%, specifying those Contracts which do not so conform].
(e) Copies of resolutions of the board of directors of CITSF approving the
execution, delivery and performance of this Agreement and the transactions
contemplated hereunder.
(f) Officially certified recent evidence of due organization and good
standing of CITSF.
(g) Evidence of filing with the appropriate office in the following
jurisdictions of the following UCC-1 financing statements, each listing the
Contracts: (i) UCC-1 financing statement executed by CITSF as debtor, naming the
Company as secured party and filed in [New Jersey and Oklahoma] to perfect the
sale from CITSF to the Company; (ii) UCC-1 financing statement executed by the
Company as debtor, naming the Trustee as secured party and filed in [New Jersey
and Oklahoma] to perfect the sale from the Company to the Trustee and (iii) such
other filings under the UCC as may be appropriate.
(h) A blanket assignment of the Contracts for each of the transfers
specified in Section 2.02(g).
(i) An Officers' Certificate listing the Servicer's Servicing Officers.
(j) An Officers' Certificate stating that the Servicer has reviewed each
Contract, Contract File and Land-Home Contract File, and confirming that each
Contract and Contract File conforms in all material respects to the List of
Contracts, that each Contract File and Land-Home Contract File is complete in
all material respects, and that each Manufactured Home securing a Contract is
covered by a Hazard Insurance Policy as required by Section 3.02(f).
(k) Letter[s] from ______________ confirming that the Class __ Certificates
have been assigned a rating of "__".
[(l) Letters from [Rating Agency] confirming that the Class ___
Certificates have been assigned a rating of "___".]
(m) Evidence of deposit in the Certificate Account of all funds received
with respect to the Contracts from the Cutoff Date to the Closing Date, other
than amounts due before the Cutoff Date, together with an Officer's Certificate
to the effect that such amount is correct.
(n) Any other documents or certificates that the Trustee may reasonably
request.
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SECTION 2.03. Acceptance by Trustee. On the Closing Date, if the conditions
set forth in Section 2.02 have been satisfied, the Trustee shall deliver a
certificate to the Company substantially in the form of Exhibit G hereto
acknowledging conveyance of the Contracts, Contract Files and Land-Home Contract
Files to the Trustee and declaring that the Trustee, through the Servicer, as
custodian, pursuant to Section 4.01 hereof, will hold all Contracts that have
been delivered in trust, upon the trusts herein set forth, for the use and
benefit of all Certificateholders, and shall issue to or upon the order of the
Company Certificates representing ownership of a beneficial interest in 100% of
the Trust.
SECTION 2.04. REMIC Designations.
The Closing Date is hereby designated as the "start-up day" of the REMIC
within the meaning of Section 860G(a)(9) of the Code. The Company hereby
designates each of the Class A Certificates [and the Class B Certificates] as a
class of "regular interests", and the Class R Certificates as the single class
of "residual interests" in the Trust for purposes of the REMIC Provisions.
SECTION 2.05. REMIC Tax Matters.
The tax year of the Trust shall be the calendar year, and the Trust shall
use the accrual method of reporting income and loss.
SECTION 2.06. REMIC Certificate Maturity Date.
Solely for purposes of satisfying Section 1.860G-1(a)(4)(iii) of the
Treasury Regulations, and based upon certain assumptions described below, the
"latest possible maturity date" of each of the Class A [and Class B]
Certificates is no later than __________ __, ____. The foregoing date represents
the date by which the Certificates would be reduced to zero as determined under
a hypothetical scenario which assumes, among other things, that (i) no scheduled
interest and principal payments on the Contracts are received after the
respective Due Date, (ii) there are no principal prepayments and (iii) the
Company and the Servicer will not exercise its option to purchase the
Certificates pursuant to Section 8.03 of this Agreement and thereby cause a
termination of the Trust pursuant to Section ______ of this Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties Regarding CITSF.
CITSF represents and warrants that:
(a) 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.
(b) 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 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.
(c) 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.
(d) 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.
(e) 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.
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SECTION 3.02. Representations and Warranties Regarding Each Contract.
The Contracts have been sold by CITSF to the Company pursuant to the Sale
and Purchase Agreement. In connection with such sale, CITSF made the
representations and warranties in Sections 3.02, 3.03 and 3.04 to the Company
and assumed the obligations in Section 3.05. As a condition of the purchase by
the Company, the Company has required that CITSF make such representations and
warranties directly to the Trustee and the Certificateholders so that the
Trustee may recover directly against CITSF on such representations and
warranties rather than indirectly through claims by the Company against CITSF.
Consequently, CITSF represents and warrants to the Trustee and the
Certificateholders 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. As of the Cut-off Date, the scheduled payment 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 at
the request of CITSF) or was not delinquent for more than 60 days.
(c) No Waivers. The terms of the Contract have not been waived, altered or
modified in any respect, except by instruments or documents identified in the
Contract File or the Land-Home Contract File.
(d) Binding Obligation. The Contract is the legal, valid and binding
obligation of the Obligor thereunder and is enforceable in accordance with its
terms, except as such enforceability may be limited by laws affecting the
enforcement of creditors' rights generally.
(e) No Defenses. No right of rescission, setoff, counterclaim or defense,
including the defense of usury, has been asserted with respect to the Contract.
(f) Insurance. The Manufactured Home securing the Contract is or will be
covered by a Hazard Insurance Policy in the amount required by Section 5.09. All
premiums due as of the Closing Date on such insurance have been paid in full.
(g) Origination. The Contract was [either (i) originated by a manufactured
housing dealer acting in the ordinary course of its business and was purchased
by CITSF or an Originating Institution in the ordinary course of its business,
(ii) originated by an Originating Institution in the ordinary course of its
business or (iii)] originated by CITSF in the ordinary course of its business.
(h) Lawful Assignment. The Contract was not originated in and is not
subject to the laws of any jurisdiction whose laws would make the transfer of
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the Contract to the Company under the Sale and Purchase Agreement, to the
Trustee under this Agreement or pursuant to transfers of Certificates, or the
ownership of the Contracts by the Trust, unlawful.
(i) 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 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 Trustee's inspection, and shall deliver to the Trustee upon
demand, evidence of compliance with all such requirements.
(j) Contract in Force. The Contract has not been satisfied or subordinated
in whole or in part or rescinded, and the Manufactured Home securing the
Contract has not been released from the lien of the Contract in whole or in
part.
(k) Valid Security Interest. The Contract (other than a Land-Home Contract)
creates a valid and enforceable perfected first priority security interest in
favor of CITSF [(or, if CITSF is not the Contract Originator, such Contract
Originator)] in the Manufactured Home covered thereby as security for payment of
the Cut-off Date Principal Balance of such Contract[, which security interest
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 Manufactured Home covered thereby, to the Company, and the Company has
assigned all of its right, title and interest in such Contract and related
Manufactured Home to the Trustee. Subject to the effect of Section 4.02, the
Trustee has and will have a valid and perfected and enforceable first priority
security interest in such Manufactured Home. The Trustee, pursuant to the sale
in Section 2.01, has and will have a valid and perfected ownership interest in
such Contract. Each Mortgage is a valid first lien on real property in favor of
CITSF [(or, if CITSF is not the Contract Originator, such Contract Originator)]
securing the amount owed by the Obligor under the Contract subject only to (i)
the lien of current real property taxes and assessments, (ii) covenants,
conditions and restrictions, rights of way, easements and other matters of
public record as of the date of recording of such Mortgage, such exceptions
appearing of record being acceptable to mortgage lending institutions generally
in the area wherein the property subject to the Mortgage is located or
specifically reflected in the appraisal obtained in connection with the
origination of the related Contract obtained by the Originator and (iii) other
matters to which like properties are commonly subject which do not materially
interfere with the benefits of the security intended to be provided by such
Mortgage. CITSF has assigned to the Company, and the Company has assigned to the
Trustee, all of its right, title and interest in such Mortgage. Subject to the
effect of Section 4.02, the Trustee has and will have a valid and perfected and
enforceable first priority security interest in such Mortgage. The Trustee,
pursuant to the sale in Section 2.01, has and will have a valid and perfected
ownership interest in such Mortgage.
(l) Capacity of Parties. All parties to the Contract had legal capacity to
execute the Contract.
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(m) Good Title. CITSF purchased the Contract for fair value and took
possession thereof in the ordinary course of its business, without knowledge
that the Contract was subject to a security interest. CITSF has not sold,
assigned or pledged the Contract to any person other than the Company and prior
to the transfer of the Contract by CITSF to the Company and the Company to the
Trust, CITSF had good and marketable title thereto free and clear of any
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 Company paid fair value to CITSF for the Contract.
(n) No Defaults. As of the Cut-off Date (or the date of origination, if
later), there was no default, breach, violation or event permitting acceleration
existing under the Contract and no event which, with notice and the expiration
of any grace or cure period, would constitute such a default, breach, violation
or event permitting acceleration under such Contract (except payment
delinquencies permitted by clause (b) above). CITSF has not waived any such
default, breach, violation or event permitting acceleration except payment
delinquencies permitted by clause (c) above.
(o) No Liens. As of the Closing Date there are, to the best of CITSF's
knowledge, no liens or claims which have been filed for work, labor or materials
affecting the Manufactured Home or any related Mortgaged Property securing the
Contract which are or may be liens prior to, or equal or coordinate with, the
lien of the Contract.
(p) Equal Installments. The Contract [has a fixed Contract Rate and
provides for level monthly payments which fully amortize the loan over its
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) Loan-to-Value Ratio. At the time of their origination, (i) all [but
__%] of the Contracts had Loan-to-Value Ratios not greater than __% and (ii)
each of the Contracts had a Loan-to-Value Ratio not greater than 125%.
(s) Not Real Estate. With respect to each Contract other than a Land-Home
Contract, the related Manufactured Home is not considered or classified as part
of the real estate on which it is located under the laws of the jurisdiction in
which it is located or, if such Manufactured Home is considered or classified as
part of the real estate on which it is located under the laws of the
jurisdiction in which it is located, no person holds a lien upon the
Manufactured Home prior to CITSF's security interest therein because CITSF has
failed to take such action to the extent required by applicable law in order to
maintain a first priority security interest in such Manufactured Home, including
the filing of a "fixture filing" under the provisions of the UCC or a mortgage
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or deed of trust under the real estate laws of the state in which the
Manufactured Home is located.
(t) Notation of Security Interest. With respect to each Contract other than
a Land-Home Contract, if the related Manufactured Home is located in a state in
which notation of a security interest on the title document is required or
permitted to perfect such security interest, the title document shows, or if a
new or replacement title document with respect to such Manufactured Home is
being applied for such title document will be issued within 180 days and will
show [the Contract Originator or] CITSF as the holder of a first priority
security interest in such Manufactured Home; if the related Manufactured Home is
located in a state in which the filing of a financing statement under the UCC is
required to perfect a security interest in manufactured housing, such filings or
recordings have been duly made and show [the Contract Originator or] CITSF as
secured party. If the related Manufactured Home secures a Land-Home Contract,
such Manufactured Home is subject to a Mortgage properly filed in the
appropriate public recording office or such Mortgage will be properly filed in
the appropriate public recording office within 180 days, naming [the Contract
Originator or] CITSF as mortgagee.
(u) Secondary Mortgage Market Enhancement Act. The related Manufactured
Home is a "manufactured home" within the meaning of 42 United States Code,
Section 5402(6). Each Contract was originated by, (i) a savings and loan
association, savings bank, commercial bank, credit union, insurance company, or
similar institution which is supervised and examined by a federal or state
authority, (ii) a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to Sections 203 and 211 of the National Housing Act, or
(iii) a financial institution approved for insurance by the Secretary of Housing
and Urban Development pursuant to Section 2 of the National Housing Act.
(v) Qualified Mortgage for REMIC. Each Contract is a "qualified mortgage"
under Section 860G(a)(3) of the Code, and the related Manufactured Home is a
"single family residence" within the meaning of Section 25(e)(10) of the Code.
Each Manufactured Home (i) has a minimum of 400 square feet of living space,
(ii) has a minimum width in excess of 102 inches and (iii) is of a kind
customarily used at a fixed location. As of the Cut-off Date, no Contract was in
repossession nor did CITSF consider acceleration and liquidation of any
particular Contract to be reasonably foreseeable.
[(w) FHA/VA Contracts. If the Contract is a FHA/VA Contract, the Contract
has been serviced in accordance with the FHA/VA Regulations, the insurance or
guarantee of the Contract under FHA/VA Regulations and related laws is in full
force and effect, and no event has occurred which, with or without notice or
lapse of time or both, would impair such insurance or guarantee.]
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SECTION 3.03. Representations and Warranties Regarding the Contracts in the
Aggregate.
CITSF represents and warrants to the Trustee and the Certificateholders,
that:
(a) Amounts. The aggregate principal amounts payable by Obligors under the
Contracts as of the Cut-off Date equal the Cut-off Date Pool Principal Balance.
(b) Characteristics. The Contracts have the following characteristics as of
the Cut-off Date: (i) not more than __% of the Contracts are located in any one
state (except Contracts secured by Manufactured Homes located in ___________,
which represent ___% of the Cut-off Date Pool Principal Balance); (ii) not more
than __% of the Contracts by remaining principal balance are secured by
Manufactured Homes located in an area with the same zip code; (iii) no Contract
has a remaining maturity of less than __ months or more than ___ months; (iv)
the final scheduled payment date on the Contract with the latest maturity is in
_________, ____; (v) no more than __% of the Cut-off Date Pool Principal Balance
is attributable to loans for purchases of used Manufactured Homes; (vi) no
Contract was originated before _____ __, 19__; (vii) the Contract Rate on each
Contract is not less than ___% and not greater than __%; (viii) the Scheduled
Principal Balance of each Contract is not less than $______[; and (ix) not more
than __% of the Cut-off Date Pool Principal Balance represents Land-Home
Contracts or Land-in-Lieu Contracts].
(c) Computer Tape. The Computer Tape made available by the Servicer was
complete and accurate as of its date and includes a description of the same
Contracts that are described in the List of Contracts.
(d) Marking Records. By the Closing Date, CITSF has 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. Except for the effect of the representations and
warranties made in Section 3.02 and 3.03 hereof, no adverse selection procedures
have been employed in selecting the Contracts.
SECTION 3.04. Representations and Warranties Regarding the Contract Files.
CITSF represents and warrants to the Trustee and the Certificateholders
that:
(a) Possession. Immediately prior to the Closing Date, CITSF will have
possession of each original Contract and the related Contract File or Land-Home
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.
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(b) Bulk Transfer Laws. The transfer, assignment and conveyance of the
Contracts and the Contract Files or the Land-Home Contract Files to the Company
are not subject to the bulk transfer or any similar statutory provisions in
effect in any applicable jurisdiction.
SECTION 3.05. Repurchase of Contracts or Substitution of Contracts for
Breach of Representations and Warranties.
(a) Subject to Section 3.05(b), CITSF shall repurchase a Contract, at its
Repurchase Price, not later than 85 days after CITSF receives written notice
from the Trustee or the Servicer, or not later than 90 days after CITSF
otherwise becomes aware, of (i) a breach of any representation or warranty of
CITSF set forth in Section 3.02 or 3.03 of this Agreement that materially
adversely affects the Trust's interest in such Contract and which breach has not
been cured or (ii) the occurrence of a Repurchase Event which has not been
cured. CITSF shall effect such repurchase by paying to the Servicer for deposit
in the Certificate Account on the Business Day immediately preceding the
Remittance Date in the month following the month in which the loan was
repurchased the aggregate of the Repurchase 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 3.05, CITSF may, in lieu of repurchasing
such Contract, deposit in the Certificate Account, not later than one Business
Day after the first Determination Date which is more than 90 days after CITSF
becomes aware or receives written notice from the Trustee or the Servicer of
such incorrect description, cash in an amount sufficient to cure such deficiency
or discrepancy. CITSF shall send written notice of any such cash deposit to
[Rating Agency] as promptly as possible following such deposit. Notwithstanding
any other provision of the Agreement, the obligation of CITSF under this Section
shall not terminate upon a Service Transfer pursuant to Article VII.
Notwithstanding the provisions of the preceding paragraph, but subject to
Section 3.05(b), CITSF will not be required to repurchase a Contract (or deposit
cash in the Certificate Account as provided in the preceding paragraph) as a
result of a breach of a representation or warranty or the occurrence of a
Repurchase Event unless the Trustee has received an Opinion of Counsel that such
repurchase (or deposit of cash) will not cause the Trust to fail to qualify as a
REMIC at any time under the then applicable REMIC Provisions. The Servicer shall
attempt to obtain such Opinion of Counsel. CITSF shall, subject to Section
3.05(b), repurchase such Contract (or deposit cash in the Certificate Account as
provided in the preceding paragraph) and shall guarantee the payment of any tax
imposed under the REMIC Provisions as a result of such repurchase or deposit by
paying to the Trustee the amount of such tax not later than five Business Days
before such tax shall be due and payable to the extent that amounts previously
paid over to and then held by the Trustee pursuant to Section 5.10 hereof are
insufficient to pay such tax and all other taxes chargeable under Section 5.10.
Pursuant to Section 5.10, the Servicer is hereby directed to withhold, and shall
withhold and pay over to the Trustee, an amount sufficient to pay such tax and
any other taxes imposed on "prohibited transactions" under Section 860F(a)(i) of
the Code or imposed on "contributions after start up date" under Section 860G(d)
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of the Code from amounts otherwise distributable to Class R Certificateholders.
The Servicer shall give notice to the Trustee at the time of such repurchase (or
deposit) of the amounts due from CITSF pursuant to the guarantee of CITSF and
notice as to who should receive such payment.
The Trustee shall have no obligation to pay any such amounts pursuant to
this Section other than from moneys provided to it by CITSF or from moneys held
in the funds and accounts created under this Agreement. The Trustee shall be
deemed conclusively to have complied with this Section if it follows the
directions of CITSF.
In the event any tax that is guaranteed by CITSF is refunded to the Trust
or otherwise is determined not to be payable, CITSF shall be repaid the amount
of such refund or that portion of any guarantee payment made by CITSF that is
not applied to the payment of such tax.
(b) On or prior to the date that is the second anniversary of the Closing
Date, CITSF, at its election, may substitute an Eligible Substitute Contract for
a Contract that it is obligated to repurchase pursuant to Section 3.05(a) (such
Contract being referred to as the "Replaced Contract") upon satisfaction of the
following conditions:
(i) CITSF shall have conveyed to the Trustee the Contract to be
substituted for the Replaced Contract and the Contract File related to such
Contract and CITSF shall have marked the Electronic Ledger indicating that
such Contract constitutes part of the Trust;
(ii) the Contract to be substituted for the Replaced Contract is an
Eligible Substitute Contract and CITSF delivers an Officers' Certificate,
substantially in the form of Exhibit I-2 hereto, to the Trustee certifying
that such Contract is an Eligible Substitute Contract;
(iii) CITSF shall have delivered to the Trustee evidence of filing of
a UCC-1 financing statement executed by CITSF naming the Trustee as secured
party and filed in _______, listing such Contract;
(iv) CITSF shall have delivered to the Trustee an Opinion of Counsel
to the effect that the substitution of such Contract for such Replaced
Contract will not cause the Trust to fail to qualify as a REMIC at any time
under then applicable REMIC Provisions or cause any "prohibited
transaction" that will result in the imposition of a tax under such REMIC
Provision; and
(v) if the Scheduled Principal Balance of such Replaced Contract is
greater than the Scheduled Principal Balance of the Contract being
substituted, CITSF shall have deposited in the Certificate Account the
amount of such excess and shall have included in the Officers' Certificate
required by clause (ii) above a certification that such deposit has been
made.
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Upon satisfaction of such conditions, the Trustee shall add such Contract
to, and delete such Replaced Contract from, the List of Contracts. Such
substitution shall be effected prior to the expiration of the period in
which CITSF is otherwise obligated to repurchase such Replaced Contract
pursuant to Section 3.05(a). Promptly after any substitution of Contract,
CITSF shall give written notice of such substitution to [Rating Agency].
(c) Promptly after the repurchase referred to in Section 3.05(a) or the
substitution referred to in Section 3.05(b), the Trustee shall execute such
documents as are presented to it by CITSF and are reasonably necessary to
reconvey the repurchased Contract or Replaced Contract, as the case may be, to
CITSF.
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ARTICLE IV
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS
SECTION 4.01. Custody of Contracts.
(a) Subject to the terms and conditions of this Section 4.01, the Servicer
shall act as custodian of the Contract Files and the Land-Home Contract Files
for the benefit of the Certificateholders and the Trustee.
(b) The Servicer agrees to maintain the related Contract Files at its
offices in the State of New Jersey, or at such of its offices of the Servicer in
the State of Oklahoma as shall from time to time be identified to the Trustee by
written notice. The Servicer may temporarily move individual Contract Files or
any portion thereof without notice as necessary to conduct collection and other
servicing activities in accordance with its customary practices and procedures.
(c) As custodian, the Servicer shall have and perform the following powers
and duties:
(i) hold the Contract Files and Land-Home Contract Files on behalf of
the Certificateholders and the Trustee, maintain accurate records
pertaining to each Contract to enable it to comply with the terms and
conditions of this Agreement, maintain a current inventory thereof, conduct
annual physical inspections of Contract Files and Land-Home Contract Files
held by it under this Agreement and certify to the Trustee annually that it
continues to maintain possession of such Contract Files and such Land-Home
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 and Land-Home Contract Files on the Servicers' premises and
the receipting for Contract Files and Land-Home 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 and the Land-Home Contracts Files on behalf of the
Certificateholders and the Trustee.
(d) In performing its duties under this Section 4.01, 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 Trustee any failure by it to
hold the Contract Files as herein provided and shall promptly take appropriate
action to remedy any such failure. In acting as custodian of the Contract Files,
the Servicer agrees further not to assert any beneficial ownership interests in
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the Contracts or the Contract Files. The Servicer agrees to indemnify the
Certificateholders and the Trustee for any and all liabilities, obligations,
losses, damages, payments, costs, or expense of any kind whatsoever which may be
imposed on, incurred or asserted against the Certificateholders and the 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 any Certificateholder or the Trustee.
SECTION 4.02. Filings.
On or prior to the Closing Date, the Servicer shall cause the UCC-1
financing statements referred to in Section 2.02(g) to be filed. The Servicer
shall cause to be filed all necessary continuation statements of the UCC-1
financing statement referred to in Section 2.02(g) on which it is the debtor,
and the Company shall cause to be filed all necessary continuation statements of
the UCC-1 financing statement referred to in Section 2.02(g) 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 Certificateholders' interests in the
Contracts and their proceeds and the Manufactured Homes 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 Trustee's perfected first priority security
interest in each Manufactured Home and a first lien on each Mortgaged Property
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 amend the certificate of title relating to any Manufactured
Home to name CITSF as the lienholder where CITSF is not the Contract Originator,
the Servicer will not amend any certificate of title to name the Company or the
Trustee as the lienholder, and neither the Servicer nor the Company will deliver
any certificate of title to the Trustee or note thereon the Trustee's interest;
and further provided, however, that because of the expense and administrative
inconvenience involved, the Servicer will not record the successive assignments
of the first lien on any Mortgaged Property from the related Contract Originator
to CITSF, from CITSF to the Company and from the Company to the Trustee.
Section 4.03. Name Change or Relocation.
(a) 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 Trustee 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 [Rating Agency].
(b) 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
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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 file, or cause to be filed, such amendments or financing
statements as may be required to preserve, perfect and protect the
Certificateholders' interests in the Contracts and proceeds thereof and in the
Manufactured Homes.
SECTION 4.04. Chief Executive Office.
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.
SECTION 4.05. Costs and Expenses.
The Servicer agrees to pay all reasonable costs and disbursements in
connection with the perfection and the maintenance of perfection, as against all
third parties, of the Certificateholders' right, title and interest in and to
the Contracts (including, without limitation, the security interest in the
Manufactured Homes granted thereby).
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ARTICLE V
SERVICING OF CONTRACTS
SECTION 5.01. Responsibility for Contract Administration.
The Servicer 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 Trustee, 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. CITSF is hereby appointed the Servicer until such time as any Service
Transfer shall be effected under Article VII.
SECTION 5.02. Standard of Care.
In managing, administering, servicing and making collections on the
Contracts pursuant to this Agreement, the Servicer will exercise that degree of
skill and care consistent with the same degree of skill and care that the
Servicer exercises with respect to similar contracts serviced by the Servicer
for its own account; provided, however, that (i) such degree of skill and care
shall be at least as favorable as the degree of skill and care generally applied
by servicers of manufactured housing installment sales contracts for
institutional investors and (ii) notwithstanding the foregoing, the Servicer
shall not, other than in connection with a default or an imminent default on a
Contract, release or waive the right to collect the unpaid balance on such
Contract, unless the Servicer obtains an Opinion of Counsel to the effect that
such action will not cause the Trust to fail to qualify as a REMIC under the
Code and under the relevant state and local law or result in the imposition of
taxes on the Trust under the REMIC Provisions. [The Servicer shall comply with
FHA/VA Regulations in servicing any FHA/VA Contracts (and will pay any required
premiums) so that the related insurance of the Federal Housing Administration or
partial guarantee of the Veterans Administration remains in full force and
effect, except for good faith disputes relating to FHA/VA Regulations that will
not cause the termination or reduction of such insurance or guarantee.]
SECTION 5.03. Records.
The Servicer shall during the period it is Servicer hereunder, maintain
such books of account and other records as will enable the Trustee to determine
the status of each Contract.
SECTION 5.04. Inspection; Computer Tape.
(a) At all times during the term hereof, the Servicer shall afford the
Trustee and its authorized agents reasonable access during normal business hours
to the Servicer's records relating to the Contracts and will cause its personnel
to assist in any examination of such records by the Trustee or its authorized
agents. The examination referred to in this Section 5.04 will be conducted in a
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manner which does not unreasonably interfere with the Servicer's normal
operations or customer or employee relations. Without otherwise limiting the
scope of the examination the Trustee may make, the Trustee 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 VI and compliance
with the standards represented to exist as to each Contract in this Agreement.
(b) At all times during the term hereof, the Servicer shall keep available
a copy of the List of Contracts at its principal executive office for inspection
by Certificateholders.
SECTION 5.05. Certificate Account.
(a) On or before the Closing Date, the Trustee shall establish the
Certificate Account on behalf of the Trust with an Eligible Institution. The
Certificate Account shall be entitled "_________________________ as trustee for
the benefit of Holders of Manufactured Housing Contract Pass-Through
Certificates, Series _____ (The CIT Group/Sales Financing, Inc., Servicer)." The
Servicer shall, subject to the second following sentence, deposit in the
Certificate Account, no later than two Business Days after the Closing Date, any
amounts representing (i) scheduled payments of principal and interest due on
Precomputed Contracts on or after the Cut-off Date (but not including payments
received after the Cut-off Date but due before the Cut-off Date) regardless of
when the Servicer received such payments and (ii) payments received on the
simple interest Contracts on or after the Cut-off Date, regardless of when due.
The Servicer shall, subject to the following sentence, pay into the Certificate
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 (other than in respect of principal of and interest on the
Precomputed Contracts due before the Cut-off Date), including all loan payments
from Obligors, Liquidation Proceeds (net of Liquidation Expenses) and any
Repurchase Price (or cash deposit) paid pursuant to Section 3.05.
Notwithstanding anything in this Agreement to the contrary, for so long as, and
only so long as, CITSF shall remain the Servicer hereunder, if (i) The CIT Group
Holdings, Inc. shall have and maintain a short-term debt rating of at least __
by [Rating Agency] and (ii) the Trustee shall have received an Opinion of
Counsel that any action taken pursuant to this sentence shall not adversely
affect the status of the Trust as a REMIC or result in the imposition of a tax
upon the Trust, the Servicer may make the deposits to the Certificate Account
specified in the two preceding sentences on a monthly basis, but not later than
the Business Day immediately preceding the Remittance 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 made to the Certificate Account during such Due Period but for the
provisions of this paragraph. All amounts paid into the Certificate Account
under this Agreement shall be held in trust for the Certificateholders until
payment of any such amounts is authorized under this Agreement.
(b) The Eligible Institution maintaining the Certificate Account shall, in
the name of the Trustee, as trustee, invest the amounts in the Certificate
Account solely in Eligible Investments that mature not later than one Business
Day prior to the next succeeding Remittance Date, in accordance with
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instructions provided to the Trustee by the Servicer in writing. Once such funds
are invested, such Eligible Institution shall not change the investment of such
funds. All net income and gain from such investments shall be deposited in the
Certificate Account. All income and gain realized from any such investments
shall be for the benefit of the Servicer and may be withdrawn by the Servicer on
each Remittance Date pursuant to subsection 8.02(g). An amount equal to any net
loss on such investments shall be deposited in the Certificate Account by the
[Servicer/ Class R Certificateholders] out of its own funds, without right to
reimbursement, immediately as realized. "Eligible Investments" are any of the
following:
(i) direct obligations of, and obligations fully guaranteed by, the
United States of America, the Federal Home Loan Mortgage Corporation, the
Federal National Mortgage Association, or any agency or instrumentality of
the United States of America the obligations of which are backed by the
full faith and credit of the United States of America and which are
non-callable;
(ii) [A] demand and time deposits in, certificates of deposit of,
bankers' acceptances issued by, or federal funds sold by any depository
institution or trust company (including the Trustee or any Affiliate of the
Trustee, acting in its commercial capacity) incorporated under the laws of
the United States of America or any state thereof and subject to
supervision and examination by federal and/or state authorities, so long
as, at the time of such investment or contractual commitment providing for
such investment, the commercial paper or other short-term debt obligations
of such depository institution or trust company have been rated [P-1 by
Moody's/A-1 or higher by Standard & Poor's] [and (B) any other demand or
time deposit or certificate of deposit which is fully insured by the
Federal Deposit Insurance Corporation];
(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 rated at least [P-1 from Moody's/A-1 from 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 [Aa from
Moody's/AA from Standard & Poor's] at the time of such investment;
(v) commercial paper having a rating of at least [P-1 from Moody's/A-1
from Standard & Poor's] at the time of such investment; and
(vi) [shares of an investment company registered under the Investment
Company Act of 1940, whose shares are registered under the Securities Act
of 1933 and have the highest credit rating then available from Moody's or
money market funds rated AAAm or AAAm-G by Standard & Poor's.]
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The Trustee may trade with itself or with an Affiliate on an arm's length
basis in the purchase or sale of such Eligible Investments.
SECTION 5.06. Enforcement.
(a) The Servicer will, consistent with customary servicing procedures and
the terms of this Agreement, act with respect to the Contracts in such manner as
will maximize the receipt of principal and interest on the Contracts and
Liquidation Proceeds in respect of Defaulted Contracts.
(b) The Servicer may sue to enforce or collect upon Contracts, including
foreclosure of any security interest or Mortgaged Property, in its own name, if
possible, or as agent for the Trustee. If the Servicer elects to commence a
legal proceeding to enforce a Contract, the act of commencement shall be deemed
to be an automatic assignment of the Contract to the Servicer for purposes of
collection only. If, however, in any enforcement suit or legal proceeding it is
held that the Servicer may not enforce a Contract on the ground that it is not a
real party in interest or a holder entitled to enforce the Contract, the Trustee
on behalf of the Trust shall, at the Servicer's expense, take such steps as the
Servicer deems necessary to enforce the Contract, including bringing suit in its
name or the names of the Certificateholders.
(c) The Servicer shall exercise any rights of recourse against third
persons that exist with respect to any Contract in accordance with Servicer's
usual practice. In exercising recourse rights, the Servicer is authorized on the
Trustee's behalf to reassign the Contract or to resell the related Manufactured
Home to the person against whom recourse exists at the price set forth in the
document creating the recourse.
(d) Prior to a Service Transfer the Servicer may grant to the Obligor on
any Contract any rebate, refund or adjustment out of the Certificate Account
that the Servicer in good faith believes is required because of prepayment in
full of the Contract. The Servicer will not permit any rescission or
cancellation of any Contract.
(e) Prior to a Service Transfer, the Servicer may, consistent with its
customary servicing procedures and consistent with Section 5.02, grant to the
Obligor on any contract an extension of payments due under such Contract,
provided that such extension does not result in any payments coming due on or
after __________ __, ____, and provided further that Obligors may not be
solicited for extensions and no more than one extension of payments under a
Contract may be granted in any twelve-month period.
(f) 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. If an assumption of a Contract is permitted by the Servicer
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upon the conveyance of the related Manufactured Home, the Servicer shall use its
best efforts to obtain an assumption agreement in connection therewith and
deliver such assumption agreement to the Trustee for addition to the related
Contract File or Land-Home Contract File.
(g) In the event that applicable state law requires that the sale of any
Mortgaged Property to which the Trustee has acquired title, through foreclosure
or otherwise, be conducted through a licensed real estate broker, the Servicer
shall retain such broker, and the fees payable to such broker in connection with
any such sale shall constitute Liquidation Expenses.
SECTION 5.07. Trustee to Cooperate.
Upon payment in full on any Contract, the Servicer will notify the Trustee
by certification of a Servicing Officer (which certification shall include a
statement to the effect that all amounts received in connection with such
payments which are required to be deposited in the Certificate Account pursuant
to Section 5.05 have been so deposited). 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 Manufactured Home
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 5.08. Costs and Expenses.
All costs and expenses incurred by the Servicer in carrying out its duties
hereunder, including all fees and expenses incurred in connection with the
enforcement of Contracts (including enforcement of Defaulted Contracts and
repossessions of Manufactured Homes securing such Contracts), shall be paid by
the Servicer and the Servicer shall not be entitled to reimbursement hereunder,
except that the Servicer shall be reimbursed out of the Liquidation Proceeds of
a Defaulted Contract for customary Liquidation Expenses incurred by it directly
in connection with realizing upon the related Manufactured Home. To the extent
that nonpayment of any taxes or charges would result in the creation of a lien
upon any Manufactured Home having a priority equal or senior to the lien of the
related Contract, the Servicer shall pay any such delinquent tax or charge and
be reimbursed by the related Obligor or from Liquidation Proceeds in respect of
such Contract.
SECTION 5.09. Maintenance of Insurance.
(a) Except as otherwise provided in subsection (b) of this Section 5.09,
the Servicer shall cause to be maintained with respect to each Contract and each
Manufactured Home that has been repossessed in connection with a Defaulted
Contract one or more Hazard Insurance Policies which provide, at a minimum, the
same coverage as a standard form fire and extended coverage insurance policy
that is customary for manufactured housing, issued by a company authorized to
issue such policies in the state in which the related Manufactured Home is
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located, and in an amount which is not less than the maximum insurable value of
such Manufactured Home or the principal balance due from the Obligor on the
related Contract, whichever is less; provided, however, that the amount of
coverage provided by each Hazard Insurance Policy shall be sufficient to avoid
the application of any co-insurance clause contained therein; and provided,
further, that such Hazard Insurance Policies may provide for customary
deductible amounts. When a Manufactured Home's location was, at the time of
origination of the related Contract, and continues to be, within a federally
designated special flood hazard area, the Servicer shall also cause such flood
insurance to be maintained, which coverage shall be at least equal to the
minimum amount specified in the preceding sentence or such lesser amount as may
be available under the federal flood insurance program. Each Hazard Insurance
Policy caused to be maintained by the Servicer shall contain a standard loss
payee clause in favor of the Servicer and its successors and assigns. If any
Obligor is in default in the payment of premiums on its Hazard Insurance Policy
or Policies, the Servicer shall pay such premiums out of its own funds, and may
separately add such premium to the Obligor's obligation as provided by the
Contract, but shall not add such premium to the remaining principal balance of
the Contract.
(b) The Servicer may, in lieu of causing individual Hazard Insurance
Policies to be maintained with respect to each Manufactured Home pursuant to
subsection (a) of this Section 5.09, and shall, to the extent that the related
Contract does not require the Obligor to maintain a Hazard Insurance Policy with
respect to the related Manufactured Home, maintain one or more blanket insurance
policies covering losses on the Obligor's interest in the Contracts resulting
from the absence or insufficiency of individual Hazard Insurance Policies. Any
such blanket policy shall be substantially in the form and in the amount carried
by the Servicer as of the date of this Agreement. The Servicer shall pay the
premium for such policy on the basis described therein. The Servicer shall not,
however, be required to deposit any deductible amount with respect to (a) claims
under individual Hazard Insurance Policies maintained pursuant to subsection (a)
of this Section 5.09, or (b) claims under any blanket insurance policy. If the
insurer under such blanket insurance policy shall cease to be acceptable to the
Servicer, the Servicer shall exercise its best reasonable efforts to obtain from
another insurer a replacement policy comparable to such policy.
(c) The Servicer shall keep in force throughout the term of this Agreement
(i) at such time as the long-term debt of its parent is rated less than [A by
Standard & Poor's], a policy or policies of insurance covering errors and
omissions for failure to maintain insurance as required by this Agreement, and
(ii) a fidelity bond. Such policy or policies and such fidelity bond shall be in
such form and amount as is generally customary among Persons which service a
portfolio of manufactured housing installment sales contracts and installment
loan agreements having an aggregate principal amount of $100,000,000 or more and
which are generally regarded as servicers acceptable to institutional investors.
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SECTION 5.10. REMIC Compliance.
The parties intend that the Trust formed hereunder shall constitute, and
that the affairs of the Trust shall be conducted so as to qualify it as, a "real
estate mortgage investment conduit" as defined in and in accordance with the
REMIC Provisions. In furtherance of such intention, the Trustee covenants and
agrees that it shall, to the extent permitted by applicable law, act as agent
(and the Trustee is hereby appointed to act as agent) on behalf of the Trust and
that in such capacity it shall: (a) cause to be prepared by a nationally
recognized firm of public accountants designated by the Company and filed, all
required federal tax returns for the Trust including, but not limited to, Form
1066 (which must be signed by the Trustee) and Schedule Q, using a calendar year
as the taxable year for the Trust when and as required by the REMIC Provisions
and other applicable federal income tax laws; (b) cause an election to be made,
on behalf of the Trust, to be treated as a REMIC on the federal information tax
return of the Trust for its first taxable year, in accordance with the REMIC
Provisions; (c) prepare and forward or cause to be prepared and forwarded, to
the Certificateholders all information reports as and when required to be
provided to them in accordance with the REMIC Provisions; (d) conduct the
affairs of the Trust at all times that any Class A [or Class B] Certificate is
outstanding so as to maintain the status thereof as a REMIC under the REMIC
Provisions; and (e) not knowingly or intentionally take any action or omit to
take any action that would cause the termination of the REMIC status of the
Trust. The Servicer covenants and agrees that it shall, to the extent permitted
by law, act as agent (and the Servicer is hereby appointed to act as agent) on
behalf of the Trust and in such capacity it shall: (a) pay the amount of any
federal income tax (to the extent that funds distributable to the Class R
Certificateholders are not available), including prohibited transaction penalty
taxes (exclusive of any such tax charged to CITSF (if CITSF is not the Servicer)
pursuant to Section 3.05), imposed on the Trust when and as the same shall be
due and payable (but such obligation shall not prevent the Servicer or any other
appropriate Person from contesting any such tax in appropriate proceedings and
shall not prevent the Servicer from withholding payment of such tax, if
permitted by law, pending the outcome of such proceedings); (b) conduct the
affairs of the Trust at all times that any Class A [or Class B] Certificate is
outstanding so as to maintain the status thereof as a REMIC under the REMIC
Provisions; and (c) not knowingly or intentionally take any action or omit to
take any action that would cause the termination of the REMIC status of the
Trust.
In the event that any tax is imposed on "prohibited transactions" of the
Trust as defined in Section 860F(a)(2) of the Code or on "contributions after
startup date" as defined in Section 860G(d) of the Code, such tax shall be
charged against amounts otherwise distributable to the holders of the Class R
Certificates in accordance with their Percentage Interests to the extent
hereinafter provided. Notwithstanding anything to the contrary contained herein,
the Servicer shall retain from amounts otherwise distributable to the holders of
the Class R Certificates on any Remittance Date sufficient funds for the payment
of such tax, including without limitation any tax payable pursuant to Section
3.05, and shall pay such amount to the Trustee or, if the Servicer (other than
as a Class R Certificateholder) has paid such tax, reimburse the Servicer
therefor (to the extent that the Servicer has not been previously reimbursed or
indemnified therefor). The Servicer agrees first to seek indemnification for any
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such tax payment from any indemnifying parties before reimbursing itself from
amounts otherwise distributable to the holders of the Class R Certificates.
In the event that any Manufactured Home is acquired in a repossession,
foreclosure or other realization procedure (an "REO Property"), the Servicer
shall sell such REO Property within two years of its acquisition by the Trust,
unless, at the request of the Servicer, the Trustee seeks, and subsequently
receives, an Opinion of Counsel, addressed to the Trustee and the Servicer, to
the effect that the holding by the Trust of such REO Property subsequent to two
years after its acquisition will not result in the imposition of taxes on
"prohibited transactions" of the Trust as defined in Section 860F of the Code or
cause the Trust to fail to qualify as a REMIC at any time that any Certificates
are outstanding. The Servicer shall manage, conserve, protect and operate each
REO Property such that it will qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) and will not result in the receipt by the REMIC of
any "income from nonpermitted assets" within the meaning of Section
860F(a)(2)(B) or the Code. Pursuant to its efforts to sell such REO Property,
the Servicer shall either itself or through an agent selected by the Servicer
protect and conserve such REO Property in the same manner and to such extent as
it is customary in the locality where such REO Property is located and may,
incident to its conservation and protection of the interests of the
Certificateholders, rent the same, or any part thereof, as the Servicer deems to
be in the best interest of the Servicer and the Certificateholders for the
period prior to the sale of such REO Property.
The Servicer shall deposit all Liquidation Proceeds (net of Liquidation
Expenses) in the Certificate Account in accordance with Section 5.05(a). The
Servicer shall include with its Monthly Report to the Trustee a separate report
specifying, with respect to each Contract that becomes a Liquidated Contract
during the prior Due Period, the unpaid principal balance and the Liquidation
Proceeds (net of Liquidation Expenses) for such Contract.
SECTION 5.11. Repossession.
Notwithstanding the standard of care specified in Section 5.02, the
Servicer shall commence procedures for the repossession of any Manufactured Home
or the foreclosure upon any Mortgaged Property or take such other steps that in
the Servicer's reasonable judgment will maximize the receipt of principal and
interest or Liquidation Proceeds with respect to the Contract secured by such
Manufactured Home, subject to the requirements of the applicable state and
federal law, no later than five Business Days after the time when such Contract
becomes a Defaulted Contract, provided that if the Servicer has actual knowledge
that a Mortgaged Property is affected by hazardous waste, then the Servicer
shall not cause the Trustee to acquire title to such Mortgaged Property in a
foreclosure or similar proceeding. For purposes of the last proviso in the
preceding sentence, the Servicer shall not be deemed to have actual knowledge
that a Mortgaged Property is affected by hazardous waste unless it shall have
received written notice that hazardous waste is present on such property and
such written notice has been made a part of the Land-Home Contract File with
respect to the related Contract. In connection with such foreclosure or other
conversion, the Servicer shall follow such practices and procedures as it shall
deem necessary or advisable and as shall be consistent with Section 5.02. In the
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event that title to any Mortgaged Property is acquired in foreclosure or by deed
in lieu of foreclosure, the deed or certificate of sale shall be issued to the
Trustee, as Trustee, or, at its election, to its nominee on behalf of the
Trustee, as Trustee.
SECTION 5.12. Retitling.
(a) If, at any time, a Service Transfer has occurred and CITSF is no longer
the Servicer, and the new Servicer is unable to foreclose upon a Manufactured
Home because the title document for such Manufactured Home does not show such
Servicer or the Trustee as the holder of the first priority security interest in
the Manufactured Home, such Servicer shall take all necessary steps to apply for
a replacement title document showing it or the Trustee as the secured party.
(b) In order to facilitate the Servicer's actions, as described in
subsection (a) of this Section 5.12, CITSF will provide the Servicer with any
necessary power of attorney permitting it to retitle the Manufactured Home.
(c) If the Servicer is still unable to retitle the Manufactured Home, CITSF
will take all actions necessary to act with the Servicer to foreclose upon the
Manufactured Home, including, as appropriate, the filing of any UCC-1 or UCC-2
financing statements necessary to perfect the security interest in any
Manufactured Home that constitutes a fixture under the laws of the jurisdiction
in which it is located and all actions necessary to perfect the security
interest in any Manufactured Home that is considered or classified as part of
the real estate on which it is located under the laws of the jurisdictions in
which it is located.
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ARTICLE VI
REPORTS
SECTION 6.01. Monthly Reports to the Trustee.
On the third Business Day next preceding each Remittance Date, the Servicer
shall furnish a report (the "Monthly Report") to the Trustee, any Paying Agent
and (if CITSF is not the Servicer) CITSF. The determination by the Servicer of
the amount of the distributions to be made to the Class A[, the Class B] and the
Class R Certificateholders shall, in the absence of obvious error, be
presumptively deemed to be correct for all purposes hereunder, and the Trustee
shall be protected in relying upon the same without any independent check or
verification.
SECTION 6.02. Certificate of Servicing Officer.-
Each Monthly Report pursuant to Section 6.01 shall be accompanied by a
certificate of a Servicing Officer substantially in the form of Exhibit H,
certifying the accuracy of the Monthly Report and that no Event of Termination
or event that with notice or lapse of time or both would become an Event of
Termination has occurred, or if such event has occurred and is continuing,
specifying the event and its status.
SECTION 6.03. Other Data.
In addition, the Servicer shall, on request of the Trustee, furnish the
Trustee such underlying data as can be generated by the Servicer's existing data
processing system without undue modification or expense.
SECTION 6.04. Annual Report of Accountants.
On or before __________ __ of each year, commencing __________ __, ____,
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 to the Trustee to the effect that such firm
has examined certain documents and records relating to the servicing of
manufactured housing conditional sales contracts under pooling and servicing
agreements similar to and including this Agreement one to another (such
statement to have attached thereto a schedule setting forth the pooling and
servicing agreements covered thereby, including this Agreement) and that, on the
basis of such examination conducted substantially in compliance with generally
accepted auditing standards, such servicing has been conducted in compliance
with such pooling and servicing agreements except for such significant exception
or errors in records that, in the opinion of such firm, generally accepted
auditing standards requires it to report. Copies of the annual statement of
accountants shall also be provided to [Rating Agency].
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SECTION 6.05. Statements to Certificateholders.
Concurrently with each distribution charged to the Certificate Account, the
Trustee, so long as it has received the Monthly Report from the Servicer, shall
forward or cause to be forwarded by mail to each Certificateholder, the Monthly
Report in the form attached as Exhibit L hereto.
The Trustee and the Servicer shall inform any Certificateholder inquiring
by telephone of the information contained in the most recent Monthly Report.
Within a reasonable period of time after the end of each calendar year, the
Trustee shall furnish or cause to be furnished to each Person who at any time
during the calendar year was a Certificateholder a statement containing the
information with respect to interest accrued and principal paid on its
Certificates during such calendar year. Such obligation of the Trustee shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to any requirements of the
Code as from time to time in force.
Copies of all reports provided to the Trustee for the Certificateholders
shall also be provided to [Rating Agency].
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ARTICLE VII
SERVICE TRANSFER
SECTION 7.01. Event 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 and the continuance of such failure for a period
of five Business Days after the Servicer has become aware that such deposit was
required;
(b) Failure on the Servicer's part to observe or perform in any material
respect any covenant or agreement in this Agreement, which failure continues
unremedied for 30 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Servicer by the
Trustee or the Company or to the Servicer and the Trustee by Holders of Class A
Certificates [and Class B Certificates] evidencing, as to such Class, Percentage
Interests aggregating not less than 25%;
(c) Any assignment by the Servicer of its duties or rights hereunder except
as specifically permitted hereunder, or any attempt to make such an assignment;
(d) A court or other governmental authority having jurisdiction in the
premises shall have entered a decree or order for relief in respect of the
Servicer in an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar official) of
the Servicer, as the case may be, or for any substantial liquidation of its
affairs, and such order remains undischarged and unstayed for at least 60 days;
(e) The Servicer shall have commenced a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or shall
have consented to the entry of an order for relief in an involuntary case under
any such law, or shall have consented to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian or sequestrator (or
other similar official) of the Servicer or for any substantial part of its
property, or shall have made any general assignment for the benefit of its
creditors, or shall have failed to, or admitted in writing its inability to, pay
its debts as they become due, or shall have taken any corporate action in
furtherance of the foregoing; or
(f) The failure of the Servicer to be an Eligible Servicer.
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SECTION 7.02. Transfer.
If an Event of Termination has occurred and is continuing, the Trustee may
[or at the written direction of Certificateholders with aggregate Percentage
Interests representing ___% or more of the Trust shall], unless prohibited by
applicable law, terminate all (but not less than all) of the Servicer's
management, administrative, servicing and collection functions (such termination
being herein called a "Service Transfer"). On receipt of such notice (or, if
later, on a date designated therein), all authority and power of the Servicer
under this Agreement, whether with respect to the Contracts, the Contract Files,
the Land-Home Contract Files or otherwise (except with respect to the
Certificate Account, the transfer of which shall be governed by Section 7.06),
shall pass to and be vested in the Trustee pursuant to and under this Section
7.02; and, without limitation, the Trustee is authorized and empowered to
execute and deliver on behalf of the Servicer, as attorney-in-fact or otherwise,
any and all documents and other instruments (including, without limitation,
documents required to make the Trustee or a successor servicer the sole
lienholder or legal title holder of record of each Manufactured Home), 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 the Trustee in effecting the termination of the responsibilities and rights
of the Servicer hereunder, including, without limitation, the transfer to the
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
Certificate Account, or for its own account in connection with its services
hereafter or thereafter received with respect to the Contracts and the execution
of any documents required to make the Trustee or a successor servicer the sole
lienholder or legal title holder of record in respect of each Manufactured Home.
The Servicer shall be entitled to receive any other amounts which are payable to
the Servicer under this Agreement, at the time of the termination of its
activities as Servicer. The Servicer shall transfer to the new Servicer (i) the
Servicer's records relating to the Contracts in such electronic form as the new
Servicer may reasonably request and (ii) the Contracts, the Contract Files and
any Land-Home Contract Files in the Servicer's possession.
SECTION 7.03. Trustee to Act; Appointment of Successor.
On and after the time the Servicer receives a notice of termination
pursuant to Section 7.02, the Trustee shall be the successor in all respects to
the Servicer in its capacity as Servicer under this Agreement and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof, and the Servicer shall be relieved of such
responsibilities, duties and liabilities arising after such Service Transfer;
provided, however, that (i) the Trustee will not assume any obligations of CITSF
pursuant to Section 3.05 and (ii) the Trustee 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 representations and warranties contained herein or
in any related document or agreement. As compensation therefor, the Trustee
shall, except as provided in Section 7.02 and in this
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Section 7.03, 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 Trustee may, if it shall be unwilling so to act,
or shall, if it is legally unable so to act, appoint, or petition a court of
competent jurisdiction to appoint, an Eligible Servicer as the successor to the
Servicer hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Servicer hereunder. Pending appointment of a
successor to the Servicer hereunder, unless the Trustee is prohibited by law
from so acting, the Trustee shall act in such capacity as hereinabove provided.
In connection with such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of payments on Contracts
as it and such successor shall agree; provided, however, that no such
compensation shall, without the written consent of 100% of the
Certificateholders, be in excess of the Servicing Fee. The Trustee and such
successor shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession.
SECTION 7.04. Notification to Certificateholders and to Rating Agency.
(a) Promptly following the occurrence of any Event of Termination, the
Servicer shall give written notice thereof to the Trustee, Certificateholders at
their respective addresses appearing on the Certificate Register and to [Rating
Agency].
(b) Within 10 days following any termination or appointment of a successor
to the Servicer pursuant to this Article VII, the Trustee shall give written
notice thereof to Certificateholders at their respective addresses appearing on
the Certificate Register.
(c) The Trustee shall give written notice to [Rating Agency] at least 30
days prior to the date upon which any Eligible Servicer (other than the Trustee)
is to assume the responsibilities of Servicer pursuant to Section 7.03, naming
such Successor Servicer.
SECTION 7.05. Effect of Transfer.
(a) After the Service Transfer, the Trustee or new Servicer may notify the
Obligors to make payments directly to the new Servicer that are due under the
Contracts after the effective date of the Service Transfer.
(b) After the Service Transfer, the replaced Servicer shall have no further
obligations with respect to the management, administration, servicing or
collection of the Contracts and the new Servicer shall have all of such
obligations, except that the replaced Servicer 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 new Servicer for its own account,
promptly on receipt and in the same form in which received, any amounts
(properly endorsed where required for the new Servicer to collect them) received
as payments upon or otherwise in connection with the Contracts.
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(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 pursuant to Article X and Sections 3.05,
11.05 and 11.10(f)) other than those relating to the management, administration,
servicing or collection of the Contracts.
SECTION 7.06. Transfer of Certificate Account.
Notwithstanding the provisions of Section 7.02, if the Certificate Account
shall be maintained with the Servicer and an Event of Termination shall occur
and be continuing, the Servicer shall, promptly after receipt of a notice of
termination, if any, pursuant to Section 7.02, establish, or cooperate with the
Trustee to establish, a new account or accounts in trust for the
Certificateholders conforming with the requirements of this Agreement at the
trust department of the Trustee or with an Eligible Institution other than the
Servicer and promptly transfer, or cooperate with the Trustee to transfer, all
funds in the Certificate Account to such new account, which shall thereafter be
deemed the Certificate Account for the purposes hereof.
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ARTICLE VIII
DISTRIBUTIONS AND WITHDRAWALS FROM
CERTIFICATE ACCOUNT
SECTION 8.01. Monthly Distributions.
(a) Distributions on the Certificates shall be made from funds in the
Certificate Account (but only to the extent of the Amount Available for the
related Remittance Date). Each Certificateholder as of a Record Date shall be
paid on the next succeeding Remittance Date by check mailed to such
Certificateholder at the address for such Certificateholder appearing on the
Certificate Register (or, if a Class A Certificateholder holds Class A
Certificates with an aggregate Percentage Interest of Class A Certificates of at
least 5%[, a Class B Certificateholder holds Class B Certificates with an
aggregate Percentage Interest as to the Class B Certificates of at least 20%] or
a Class R Certificateholder holds Class R Certificates with an aggregate
Percentage Interest as to the Class R Certificates of at least 20%, and if such
Certificateholder so requests, by wire transfer of immediately available funds
pursuant to written instructions delivered to the Trustee at least 10 days prior
to such Remittance Date, which instructions, until revised, shall remain
operative for all Remittance Dates thereafter), such Certificateholder's
Percentage Interest of the amount to be distributed to the Class A[, the Class
B] or the Class R Certificateholders, as the case may be. Final payment on any
Certificate shall be made only upon presentation of such Certificate at the
office or agency of the Paying Agent.
(b) Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, which shall credit the amount of such distribution to
the accounts of its Depository Participants in accordance with its normal
procedures. Each Depository Participant shall be responsible for disbursing such
distribution to the Certificate Owners that it represents and to each indirect
participating brokerage firm (a "brokerage firm" or "indirect participating
firm") for which it acts as agent. Each brokerage firm shall be responsible for
disbursing funds to the Certificate Owners that it represents. All such credits
and disbursements with respect to a Book-Entry Certificate are to be made by the
Depository and the Depository Participants in accordance with the provisions of
the Book Entry Certificates. Neither the Trustee, the Certificate Registrar, the
Seller nor the Servicer shall have any responsibility therefor except as
otherwise provided by applicable law. To the extent applicable and not contrary
to the rules of the Depository, the Trustee shall comply with the provisions of
the forms of the Class A [and Class B] Certificates as set forth in Exhibit[s] A
[and B] hereto.
(c) On each Remittance Date, the Amount Available in the Certificate
Account will be distributed to Certificateholders in the amounts and in the
priorities set forth below:
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[(i) the Class A Interest Distribution Amount to the Class A
Certificateholders;
(ii) [the Class B Interest Distribution Amount to the Class B
Certificateholders;
(iii) prior to the Cross-over Date, after payment of the amounts
specified in clauses (i) and (ii) above, the Formula Principal Distribution
Amount to the Class A Certificateholders, provided, however, that the
aggregate of all amounts distributed on all Remittance Dates pursuant to
this clause (iii) shall not exceed the sum of the Original Class A
Principal Balance;
(iv) after payment of the amounts specified in clauses (i) through
(iii) above, on and after the Cross-over Date, the Formula Principal
Distribution Amount, and, prior to the Cross-over Date, the Class B
Principal Loss Liquidation Amount to the Class B Certificateholders,
provided that the aggregate of all amounts distributed under this subclause
(iv) shall not exceed the Original Class B Principal Balance; and
(v)] the Class R Distribution Amount to the Class R
Certificateholders.]
(d) Notwithstanding the preceding paragraph, amounts otherwise
distributable to a Certificateholder pursuant to such paragraph which are
required to be withheld and remitted to a taxing authority shall be withheld and
remitted to such taxing authority, and such amounts shall be treated as actually
distributed to such Certificateholder for all purposes of this Agreement.
(e) The Trustee shall appoint an Eligible Institution to be the paying
agent (the "Paying Agent") and cause it to make the payments to the
Certificateholders required hereunder. The Trustee initially appoints [itself],
with its office at , as such Paying Agent. The Trustee shall
require the Paying Agent (if other than the Trustee) to agree in writing that
all amounts held by it for payment hereunder will be held in trust for the
benefit of the Certificateholders and that it will notify the Trustee of any
failure by the Servicer to make funds available to the Paying Agent for the
Payment of amounts due on the Certificates. In respect of each Remittance Date,
the Trustee shall withdraw from the Certificate Account (to the extent of the
related Amount Available) in accordance with this Agreement and deposit in an
account established by the Paying Agent for the purpose of this Section funds
sufficient to make the distribution to Certificateholders pursuant to this
Section. Such funds shall be available to the Paying Agent by ____ A.M. on each
Remittance Date.
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SECTION 8.02. Permitted Withdrawals from the Certificate Account.
The Trustee may, from time to time as provided herein, make withdrawals
from the Certificate Account of amounts deposited in said account pursuant to
Section 5.05 that are attributable to the Contracts for the following purposes:
(a) to make payments to Certificateholders in the amounts and in the
manner provided for in Section 8.01;
(b) to pay to CITSF with respect to each Contract or property acquired
in respect thereof that has been purchased pursuant to Section 3.05, all
amounts received thereon and not required to be distributed to
Certificateholders as of the date on which the related Scheduled Principal
Balance or Repurchase Price is determined;
(c) to reimburse the Servicer out of Liquidation Proceeds for
Liquidation Expenses incurred by it, to the extent such reimbursement is
permitted pursuant to Section 5.08;
(d) to reimburse the Servicer for the payment of taxes as permitted by
Section 5.10;
(e) to withdraw any amount deposited in the Certificate Account that
was not required to be deposited therein;
(f) to pay to the Servicer the Servicing Fee for such Remittance Date
and the Servicing Fee from any prior Remittance Date previously unpaid; and
(g) to pay to the Servicer net investment earnings due to the Servicer
pursuant to Section 5.05(b).
Since, in connection with withdrawals pursuant to clause (b) of the
preceding paragraph, 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 Certificate Account pursuant to such clause.
SECTION 8.03. Repurchase Option.
(a) The Trust created hereby and the respective obligations and
responsibilities of the Company, the Servicer and the Trustee created hereby
(other than the responsibility of the Trustee to make any final distributions to
Certificateholders as set forth below) shall terminate upon the earlier of (i)
the later of the final payment or other liquidation (or any advance with respect
thereto) of the last Contract remaining in the Trust or the termination of the
Trust pursuant to Section 12.03, or (ii) the purchase by the Company or the
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Servicer pursuant to the following sentence. The Company or the Servicer, at
their respective options and subject to Subsection 8.03(b), may purchase all of
the Contracts and all property acquired in respect of any Contract remaining in
the Trust at any time at which the Pool Scheduled Principal Balance is less than
__% of the Cut-off Date Pool Principal Balance at a price equal to the greatest
of (A) the sum of (1) 100% of the principal balance of each Contract (other than
any Contract as to which title to the underlying property has been acquired and
whose fair market value is included pursuant to clause (2) below), plus (2) the
fair market value of such acquired property (as determined by the Servicer as of
the close of business on the third Business Day next preceding the date upon
which notice of any such termination is furnished to Certificateholders pursuant
to Section 12.03), (B) the aggregate fair market value (as determined by the
Servicer as of the close of business on such third Business Day) of all of the
assets of the Trust, and (C) the remaining Pool Scheduled Principal Balance as
of the close of business on such third Business Day, plus, in each case, any
Unpaid Class A Interest Shortfall [and any Unpaid Class B Interest Shortfall] as
well as one month's interest at the applicable Contract Rate on the Scheduled
Principal Balance of each Contract (including any Contract as to which the
related Manufactured Home has been repossessed).
(b) The Servicer or the Company shall not exercise the purchase option in
the last sentence of paragraph (a) above unless it shall have delivered to the
Trustee an Opinion of Counsel in form and substance satisfactory to the Trustee
to the effect that payment of the purchase price to the Certificateholders will
not constitute a voidable preference or a fraudulent transfer under the United
States Bankruptcy Code.
(c) In the case of any purchase by the Company pursuant to the last
sentence of paragraph (a) above, the Servicer shall cooperate fully with the
Company in effecting such purchase and the transfer of the Contracts and related
Contract Files or Land-Home Contract Files and records to the Contracts. In
addition, the Servicer shall provide to the Trustee the certification required
by Section 5.07 and the Trustee shall, promptly following payment of the
purchase price release to the Company or the Servicer the Contract Files or
Land-Home Contract Files pertaining to the Contracts being purchases.
[SECTION 8.04. Credit Enhancement for [Class A] [Class B] Certificates.
[Text to be provided.]]
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ARTICLE IX
THE CERTIFICATES
SECTION 9.01. The Certificates.
The Class A[, the Class B] and the Class R Certificates shall be
substantially in the forms set forth in Exhibits A[, B] and C, respectively, and
shall, on original issue, be executed by manual or facsimile signature of the
Company by any one of its President, Vice Presidents, Secretary, Treasurer or
other authorized officers and authenticated by the Trustee to or upon the order
of the Company upon receipt. The Class A Certificates shall be evidenced by one
or more Class A Certificates representing $___________ initial aggregate
principal balance, beneficial ownership of such Certificates to be held through
Book-Entry Certificates in minimum dollar denominations of $1,000 and integral
dollar multiples of $1,000 in excess thereof. [The Class B Certificates shall be
evidenced by [(i)] one or more Class B Certificates representing $____________
initial aggregate principal balance, beneficial ownership of such Certificate to
be held through one or more [Book-Entry] Certificates in minimum dollar
denominations of $1,000/_________ and integral dollar multiples of $1,000 in
excess thereof [and (ii) a single certificate representing $__________ in
initial principal balance].] The Class R Certificates shall be issuable in
Percentage Interests.
The Certificates shall be authenticated by manual signature on behalf of
the Trustee by a duly authorized Responsible Officer or authorized signatory.
Certificates bearing the signatures of individuals who were at any time the
proper officers of the Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Certificate or did not hold such offices at
the date of such Certificates. No Certificate shall be entitled to any benefit
under this Agreement, or be valid for any purpose, unless such Certificate has
been authenticated by manual signature in accordance with this Section, and such
signature upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication,
except for those Certificates authenticated on the Closing Date, which shall be
dated the Closing Date.
SECTION 9.02. Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall keep at the office or agency to be maintained in
accordance with Section 12.02 a "Certificate Register" in which Trustee shall
provide for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Trustee initially appoints itself to be the
"Certificate Registrar" and transfer agent for the purpose of registering
Certificates and transfers and exchanges of Certificates as provided herein.
Promptly after the Closing Date the Trustee will give the Servicer, in writing,
the names of all [Class B and] Class R Certificateholders and the Trustee will
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give the Servicer, prompt written notice of any change in the [Class B and]
Class R Certificateholders. The Trustee will give prompt written notice to
Certificateholders and the Servicer of any change in the Certificate Registrar.
(b) No transfer of any [Class B or] Class R Certificate or any interest
therein shall be made unless such transfer is made pursuant to an effective
registration statement under the Securities Act and effective registration or
qualification under applicable state securities laws or is made in a transaction
that does not require such registration or qualification. Until such time as the
[Class B and] Class R Certificates shall be registered pursuant to a
registration statement filed under the Securities Act, the [Class B and] Class R
Certificates shall bear a legend to the effect set forth in the preceding
sentence.
In the event that (i) registration of a transfer of a [Class B or] Class R
Certificate is to be made in reliance upon the exemption from registration under
the Securities Act contained in Rule 144A, (ii) the transferor delivers an
officer's certificate substantially in the form of Exhibit K-1 to each of the
Contract Seller and the Trustee, and (iii) the transferee delivers an officer's
certificate in the form of Exhibit K-2 to the Contract Seller and the Trustee,
the Trustee shall register such transfer.
In the event that registration of a transfer of a [Class B or] Class R
Certificate is to be made in reliance upon an exemption from registration under
the Securities Act (other than the exemption from registration contained in Rule
144A) and applicable state securities laws in order to assure compliance with
the Securities Act, the transferor or the transferee shall, as a condition to
the registration of such transfer, deliver to the Trustee and the Seller either
(i) an investment letter from the transferee for such Certificate, in the form
of Exhibit J and which is addressed to the Contract Seller, the Servicer and the
Trustee or (ii) an Opinion of Counsel (which may be internal counsel) that such
transfer may be made pursuant to an exemption from the Securities Act (other
than the exemption from registration contained in Section 3(a)(2) thereof).
The Holder of a [Class B or] Class R Certificate desiring to effect a
transfer of such Certificate shall, and does hereby agree to, indemnify the
Trustee, the Company and the Servicer against any liability that may result if
such transfer is not so exempt or is not made in accordance with such federal
and state laws.
Neither the Seller nor the Trustee is obligated to register the [Class B
or] Class R Certificates under the Securities Act or under any state securities
laws.
Prospective transferor of [Class B or] Class R Certificates, and
prospective transferees of [Class B or] Class R Certificates that are Qualified
Institutional Buyers buying Certificates in reliance upon Rule 144A, may request
from the Servicer information regarding the Trust and the Trust Assets. Within 5
Business Days of any such request, the Servicer shall deliver to any such
prospective transferor or transferee (i) a copy of each Monthly Report delivered
to Certificateholders since the first Remittance Date pursuant to Section 6.05,
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(ii) information relating to the Seller, the Servicer, the Contracts and this
Agreement substantially in the form of [private placement memorandum relating to
the Class B Certificates] [Prospectus and Prospectus Supplement relating to the
Certificates], dated __________ __, ____ and (iii) such other information as may
be required to comply with Rule 144A and any interpretation thereof. The
Contract Seller authorizes the Servicer to so deliver such monthly statements.
(c) [Reserved.]
(d) Each Person who has or who acquires any Ownership Interest in a Class R
Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions and to have
irrevocably appointed the Servicer as its attorney-in-fact to negotiate the
terms of any mandatory sale under clause (vi) below and to execute all
instruments of transfer and to do all other things necessary in connection with
any such sale, and the rights of each Person acquiring any Ownership Interest in
a Class R Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a Class
R Certificate shall be a Permitted Transferee and shall promptly notify the
Servicer of any change or impending change in its status as a Permitted
Transferee.
(ii) No Ownership Interest in a Class R Certificate may be Transferred
without the express written consent of the Servicer, and the Trustee shall
not register the Transfer of any Class R Certificate without such consent
with respect to any proposed Transfer. In connection with any proposed
Transfer of any Ownership Interest in a Class R Certificate, the Servicer
shall, as a condition to such consent, require delivery to it, form and
substance satisfactory to it, and the proposed Transferee shall deliver to
the Servicer, the following:
(A) an affidavit (a "Transfer Affidavit") of the proposed
Transferee, in the form attached as Exhibit M hereto, that it is not a
"disqualified organization" within the meaning of Section 860E(e)(5)
of the Code, and that the proposed Transferee is not acquiring its
Ownership Interest in the Class R Certificate as a nominee, trustee or
agent for, or for the benefit of, any Person who is not a Permitted
Transferee; and
(B) an express agreement by the proposed Transferee to be bound
by and to abide by the provisions of this Section and the restrictions
noted on the face of the Class R Certificates.
(iii) Notwithstanding the delivery of a Transfer Affidavit by a
proposed Transferee under clause (ii) above, if the Servicer has actual
knowledge that the Transfer Affidavit is false, no Transfer of an Ownership
Interest in a Class R Certificate to such proposed Transferee shall be
effected.
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(iv) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall agree (A) to require a Transfer Affidavit from
any other Person to whom such Person attempts to Transfer its Ownership
Interest in a Class R Certificate and (B) not to Transfer its Ownership
Interest in a Class R Certificate or to cause the Transfer of an Ownership
Interest in a Class R Certificate to any other Person if it has actual
knowledge that such Transfer Affidavit is false.
(v) Any attempted or purported Transfer of any Ownership Interest in a
Class R Certificate in violation of the provisions of this Section shall be
absolutely null and void and shall vest no rights in the purported
Transferee. If any purported Transferee shall become a Holder of a Class R
Certificate in violation of the provisions of this Section, then, upon
discovery by or due notification of the Trustee that the registration of
Transfer of such Class R Certificate was not in fact permitted by this
Section, the last preceding Permitted Transferee shall be restored to all
rights as Holder thereof retroactive to the date of registration of
Transfer of such Class R Certificate. The Trustee shall be under no
liability to any Person for any registration of transfer of a Class R
Certificate that is in fact not permitted by this Section or for making any
payments due on such Certificate to the Holder thereof or taking any other
action with respect to such Holder under the provisions of this Agreement
so long as the Transfer was registered with the express prior written
consent of the Servicer. The Trustee shall be entitled but not obligated to
recover from any Holder of a Class R Certificate that was in fact not a
Permitted Transferee at the time it became a Holder or, at such subsequent
time as it became other than a Permitted Transferee, all payments made on
such Class R Certificate at and after either such time. Any such payments
so recovered by the Trustee shall be paid and delivered by the Trustee to
the last preceding Permitted Transferee of such Certificate.
(vi) If any purported Transferee shall become a Holder of a Class R
Certificate in violation of the restrictions in this Section, then the
Servicer shall have the right without notice to the Holder or any prior
Holder of such Class R Certificate, to sell such Class R Certificate to a
purchaser selected by the Servicer on such terms as the Servicer may
choose. Such purchaser may be the Servicer itself or any Affiliate of the
Servicer. The proceeds of such sale, net of commissions (which may include
commissions payable to the Servicer or its Affiliates), expenses and taxes
due, if any, will be remitted by the Servicer to the last preceding
Permitted Transferee of such Class R Certificate, except that in the event
that the Servicer determines that the Holder or any prior Holder of such
Class R Certificate may be liable for any amount due under this Section or
any other provision of this Agreement, the Servicer may withhold a
corresponding amount from such remittance as security for such claim. The
terms and conditions of any sale under this clause (vi) shall be determined
in the sole discretion of the Servicer, and it shall not be liable to any
Person having an Ownership Interest in a Class R Certificate as a result of
its exercise of such discretion.
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Upon notice to the Servicer that any legal or beneficial interest in any
portion of a Class R Certificate has been transferred, either directly or
indirectly to any person that is not a Permitted Transferee or an agent
(including a broker, nominee, or middleman) of such Transferee in contravention
of the foregoing restrictions, the Servicer agrees to furnish to the Internal
Revenue Service and to the transferor of such Class R Certificate or such agent
such information necessary to the application of Section 860E(e) of the Code as
may be required by the Code or any regulations or administrative pronouncements
thereunder, including but not limited to the present value of the total
anticipated excess inclusions with respect to such Class R Certificate (or
portion thereof) for periods after such transfer. At the election of the
Servicer, the Servicer may charge a reasonable fee for computing and furnishing
such information to the transferor or to such agent referred to above; however,
the Servicer shall in no event be excused from furnishing such information to
the Internal Revenue Service. The foregoing restrictions on transfer contained
in this Section 9.02(d) shall cease to apply to Transfers occurring on or after
the date on which there shall have been delivered to the Trustee, the Company
and the Servicer, in form and substance satisfactory to the Servicer, an Opinion
of Counsel that eliminating such restrictions will not cause the Trust to fail
to qualify as a REMIC at any time while the Certificates are outstanding.
(e) At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same Class of authorized denominations of the same
aggregate denomination, upon surrender of the Certificates to be exchanged at
such office. Whenever any Certificates are so surrendered for exchange, the
Company shall execute and deliver, and the Trustee shall authenticate, the
Certificates which the Certificateholder making the exchange is entitled to
receive. Every Certificate presented or surrendered for transfer or exchange
shall be duly endorsed by, or shall be accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by, the holder thereof or his or her attorney duly authorized in
writing.
(f) Except as provided in paragraph (e) below the Book-Entry Certificates
shall at all times remain registered in the name of the Depository or its
nominee and at all times: (i) registration of the Class A [and Class B]
Certificates may not be transferred by the Trustee except to another Depository;
(ii) the Depository shall maintain book-entry records with respect to the
Certificate Owners and with respect to ownership and transfers of such Class A
[and Class B] Certificates; (iii) ownership and transfers of registration of the
Class A [and Class B] Certificates on the books of the Depository shall be
governed by applicable rules established by the Depository; (iv) the Depository
may collect its usual and customary fees, charges and expenses from its
Depository Participants; (v) the Trustee shall deal with the Depository,
Depository Participants and indirect participating firms as representatives of
the Certificate Owners of the Class A [and Class B] Certificates for purposes of
exercising the rights of Holders under this Agreement, and requests and
directions for and votes of such representatives shall not be deemed to be
inconsistent if they are made with respect to different Certificate Owners; and
(vi) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
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Participants and furnished by the Depository Participants with respect to
indirect participating firms and persons shown on the books of such indirect
participating firms as direct or indirect Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owner. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificates Owners
it represents or of brokerage firms for which it acts as agent in accordance
with the Depository's normal procedures.
(g) If (x)(i) the Company or the Depository advises the Trustee in writing
that the Depository is no longer willing or able properly to discharge its
responsibilities as Depository, and (ii) the Trustee or the Company is unable to
locate a qualified successor, or (y) the Company at its sole option advises the
Trustee in writing that it elects to terminate the book-entry system through the
Depository, the Trustee shall notify all Certificate Owners, through the
Depository, of the occurrence of any such event and of the availability of
definitive, fully registered Class A Certificates [or Class B] Certificates (the
"Definitive Certificates") to Certificate Owners requesting the same. Upon
surrender to the Trustee of the Class A Certificates [or Class B Certificates]
by the Depository, accompanied by registration instructions from the Depository
for registration, the Trustee shall issue the Definitive Certificates. Neither
the Company nor the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Certificates all references
herein to obligations imposed upon or to be performed by the Depository shall be
deemed to be imposed upon and performed by the Trustee, to the extent applicable
with respect to such Definitive Certificates and the Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder.
(h) On or prior to the Closing Date, there shall be delivered to the
Depository one Class A Certificate [and one Class B Certificate], each in
registered form registered in the name of the Depository's nominee, Cede & Co.,
the total face amount of which represents 100% of the Original Class A Principal
Balance, [and the Original Class B Principal Balance, respectively]. If,
however, the aggregate principal amount of [a Class of] Class A Certificates [or
the Class B Certificates] exceeds $_______________, one Class A Certificate
[and/or one Class B Certificate] will be issued with respect to each
$_______________________ of principal amount and an additional Certificate [of
such Class or Classes] will be issued with respect to any remaining principal
amount. Each such Class A [or Class B] Certificate registered in the name of the
Depository's nominee shall bear the following legend:
"Unless this Certificate is presented by an authorized representative of
The Depository Trust Company to the Trustee or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as requested by an authorized
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representative of The Depository Trust Company and any payment is made to Cede &
Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein."
SECTION 9.03. No Charge; Disposition of Void Certificates.
No service charge shall be made to a Certificateholder for any transfer or
exchange of Certificates, but the Certificate Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Certificates. All Certificates
surrendered for transfer and exchange shall be disposed of in a manner approved
by the Trustee.
SECTION 9.04. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) 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 (b) there is delivered to
the Certificate Registrar and the Trustee such security or indemnity as may be
required by each to save each of them harmless, then in the absence of notice to
the Certificate Registrar or the Trustee that such Certificate has been acquired
by a bona fide purchaser, the Trustee shall authenticate, and the Company shall
execute and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of [the same Class and]
same denomination. Upon the issuance of any new Certificate under this Section
9.04, the Trustee may require the payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in relation thereto and any
other expenses connected therewith. Any duplicate Certificate issued pursuant to
this Section 9.04 shall constitute complete and indefeasible evidence of
ownership of the Percentage Interest evidenced thereby, as if originally issued,
whether or not the destroyed, lost or stolen Certificate shall be found at any
time.
SECTION 9.05. Persons Deemed Owners.
Prior to due presentation of a Certificate for registration of transfer,
the Servicer, the Company, the Trustee, the Paying Agent and the Certificate
Registrar may treat the person in whose name any Certificate is registered as
the owner of such Certificate for the purpose of receiving remittances pursuant
to Section 8.01 and for all other purposes whatsoever, and none of the Servicer,
the Company, the Trustee, the Certificate Registrar, the Paying Agent or any
agent of the Servicer, the Company, the Trustee, the Paying Agent or the
Certificate Registrar shall be affected by notice to the contrary.
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SECTION 9.06. Access to List of Certificateholders' Names and Addresses.
The Certificate Registrar will furnish to the Trustee, the Servicer and the
Company within five Business Days after receipt by the Certificate Registrar of
a request therefor from the Trustee, the Servicer or the Company, in writing, a
list, in such form as the Trustee, the Servicer or the Company may reasonably
require, of the names and addresses of the Certificateholders as of the most
recent Record Date. If Holders of Certificates evidencing, as to any Class,
Percentage Interests aggregating 25% or more (hereinafter referred to as
"Applicants") apply in writing to the 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 is
accompanied by a copy of the communication which such Applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt of
such application, afford such Applicants access during normal business hours to
the most recent list of Certificateholders held by the Trustee. If such list is
as of a date more than 90 days prior to the date of receipt of such Applicants'
request, the Trustee shall promptly request from the Certificate Registrar a
current list as provided above, and shall afford such Applicants access to such
list promptly upon receipt. Every Certificateholder, by receiving and holding a
Certificate, agrees with the Certificate Registrar and the Trustee that none of
the Company, the Servicer, the Certificate Registrar or the Trustee shall be
held accountable by reason of the disclosure of any such information as to the
names and addresses of the Certificateholders hereunder, regardless of the
source from which such information was derived.
SECTION 9.07. Authenticating Agents.
The Trustee may appoint one or more Authenticating Agents with power to act
on its behalf and subject to its direction in the authentication of the
Certificates. For all purposes of this Agreement, the authentication of
Certificates by the Authenticating Agent pursuant to this Section shall be
deemed to be the authentication of Certificates "by the Trustee."
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ARTICLE X
INDEMNITIES
SECTION 10.01. Liabilities to Obligors.
No liability to any Obligor under any of the Contracts arising out of any
act or omission to act of the Servicer in servicing the Contracts prior to the
Closing Date is intended to be assumed by the Company, the Trust or the
Certificateholders under or as a result of this Agreement and the transactions
contemplated hereby and, to the maximum extent permitted and valid under
mandatory provisions of law, the Company, the Trust and the Certificateholders
expressly disclaim such assumption.
SECTION 10.02. Tax Indemnification.
CITSF agrees to pay, and to indemnify, defend and hold harmless the Trust,
the Trustee, the Certificateholders and the Company from, any taxes which may at
any time be asserted with respect to, and as of the date of, 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 Certificates or distributions with respect
thereto) and costs, expenses and reasonable counsel fees in defending against
the same.
SECTION 10.03. Servicer's Indemnities.
The Servicer shall defend and indemnify the Company, the Trust, the Trustee
and the Certificateholders against any and all costs, expenses, losses, damages,
claims and liabilities, including reasonable fees and expenses of counsel and
expenses of litigation, in respect of any negligent or wrongful action taken or
failed to be taken by the Servicer with respect to any Contract. This indemnity
shall survive any Service Transfer (but a Servicer's obligations under this
Section 10.03 shall not relate to any actions of any subsequent Servicer after a
Service Transfer) and any payment of the amount owing under, or any repurchase
by CITSF of, any such Contract.
SECTION 10.04. Operation of Indemnities.
Indemnification under this Article shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If CITSF or
the Servicer has made any indemnity payments to the Trustee, the Company or the
Certificateholders pursuant to this Article and if either the Trustee, the
Company or the Certificateholders thereafter collects any of such amounts from
others, the Trustee, the Company or the Trust will repay such amounts collected
to CITSF or the Servicer, as the case may be, without interest.
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ARTICLE XI
THE TRUSTEE
SECTION 11.01. Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Termination and after
the curing of all Events of Termination which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. If an Event of Termination has occurred (which has not been cured),
the Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform as to form to the requirements of this Agreement.
Subject to Section 11.03, no provision of this Agreement shall be construed
to relieve the Trustee from liability for its own negligent action, its own
negligent failure to act or its own misconduct; provided, however, that:
(a) Prior to the occurrence of an Event of Termination, and after the
curing of all such Events of Termination which may have occurred, the duties and
obligations of the Trustee shall be determined solely by the express provisions
of this Agreement, the Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the Trustee, the Trustee
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished to
the Trustee and conforming to the requirements of this Agreement;
(b) The Trustee shall not be personally liable for an error of judgment
made in good faith by a Responsible Officer of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts;
(c) The Trustee shall not be personally liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance with
the direction of the Holders of Class A Certificates [or Class B Certificates]
evidencing Percentage Interests aggregating 25% or more relating to the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee, under this
Agreement; and
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(d) The Trustee shall not be charged with knowledge of any event referred
to in Section 7.01 unless a Responsible Officer of the Trustee at the Corporate
Trust Office obtains actual knowledge of such event or the Trustee receives
written notice of such event from the Servicer or the Holders of Certificates
evidencing[, as to any Class,] Percentage Interests aggregating 25% or more.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it. None
of the provisions contained in this Agreement shall in any event require the
Trustee to perform, or be responsible for the manner of performance of, any of
the obligations of CITSF, the Company or the Servicer under this Agreement,
except during such time, if any, as the Trustee shall be the successor to, and
be vested with the rights, duties, powers and privileges of, the Servicer in
accordance with the terms of this Agreement.
SECTION 11.02. Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 11.01:
(a) The Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, Officers' Certificate, certificate of a
Servicing Officer, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) The Trustee may consult with counsel and any opinion of any counsel
shall be full and complete authorization and protection in respect of any action
taken or suffered or omitted by it hereunder in good faith and in accordance
with such opinion of counsel;
(c) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Agreement, or to institute, conduct or defend any
litigation hereunder or in relation hereto, at the request, order or direction
of any of the Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby; provided, however, that nothing contained herein
shall relieve the Trustee of the obligations, upon the occurrence of an Event of
Termination (which has not been cured), to exercise such of the rights and
powers vested in it by this Agreement, and to use the same degree of care and
skill in their exercise as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs;
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(d) Prior to the occurrence of an Event of Termination and after the curing
of all Events of Termination which may have occurred, the Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or document, unless
requested in writing so to do by Certificateholders with aggregate Percentage
Interests representing 25% or more the Trust; provided, however, that if the
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Agreement, the Trustee may require
reasonable indemnity against such cost, expense or liability as a condition to
so proceeding. The reasonable expense of every such examination shall be paid by
the Servicer or, if paid by the Trustee, shall be reimbursed by the Servicer
upon demand; and
(e) The Trustee may execute any of the trusts or powers hereunder or
perform by duties hereunder either directly or by or through agents or attorneys
and shall not be liable for any acts or omissions of such agents or attorneys if
appointed by its with due care hereunder.
SECTION 11.03. Trustee Not Liable for Certificates or Contracts.
The Trustee assumes no responsibility for the correctness of the recitals
contained herein or in the Certificates (other than the Trustee's authentication
thereof). The Trustee makes no representations as to the validity or sufficiency
of this Agreement or of the Certificates (other than its authentication or
execution thereof) or of any Contract, Contract File or related document. The
Trustee shall not be accountable for the use or application by the Servicer or
CITSF of funds paid to CITSF in consideration of conveyance of the Contracts to
the Company by CITSF or deposited in or withdrawn from the Certificate Account
by the Servicer.
SECTION 11.04. Rights of Certificateholders to Direct Trustee and to Waive-
Events of Termination.
Holders of Class A Certificates [and Holders of Class B Certificates]
evidencing[, as to each such Class,] Percentage Interests aggregating 25% or
more shall have the right to direct the time, method, and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred on the Trustee; provided, however, that, subject to Section
11.01, the Trustee shall have the right to decline to follow any such direction
of the Trustee being advised by counsel determines that the action so directed
may not lawfully be taken, or if the Trustee in good faith shall, by a
Responsible Officer or Officers of the Trustee, determine that the proceedings
so directed would be illegal or involve it in personal liability or be unduly
prejudicial to the rights of Certificateholders not parties to such direction;
provided further that nothing in this Agreement shall impair the right of the
Trustee to take any action deemed proper by the Trustee and which is not
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inconsistent with such direction by the Certificateholders; and provided further
that the Trustee shall instead follow the directions of the Holders of Class A
Certificates [and Holders of Class B Certificates] evidencing[, as to each such
Class,] Percentage Interests aggregating 51% or more whenever it receives
conflicting directions from Class A Certificateholders and Class B
Certificateholders. Holders of Class A Certificates [and Holders of Class B
Certificates] evidencing[, as to each such Class,] Percentage Interests
aggregating 51% or more may on behalf of Certificateholders waive any past Event
of Termination hereunder and its consequences, except a default in respect of a
covenant or provision hereof which under Section 12.07 cannot be modified or
amended without the consent of all Class A Certificateholders, and upon any such
waiver, such Event of Termination shall cease to exist and shall be deemed to
have been cured for every purpose of this Agreement; but no such waiver shall
extend to any subsequent or other Event of Termination or impair any right
consequent thereon. [Following the Cross-over Date, if all distributions payable
to the Class A Certificateholders have either been made or provided for in
accordance with this Agreement, then to the Holders of Class B Certificates may
exercise the rights given to the Class R Certificateholders under this Section.]
SECTION 11.05. Servicer to Pay Trustee's Fees and Expenses.
The Servicer agrees:
(a) that the Servicer shall pay to the Trustee reasonable compensation
on each Remittance Date for all services rendered by its hereunder (which
compensation is set forth in a letter agreement between the Servicer and
the Trustee dated the Closing Date and which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
(b) except as otherwise expressly provided herein, that the Servicer
shall reimburse the Trustee on each Remittance Date, to the extent
requested by the Trustee, for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provisions
of this Agreement (including the reasonable compensation and the expenses
and disbursements of it agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(c) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration
of the Trust and its duties hereunder, including the costs and expenses of
defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
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The covenants in this Section 11.05 shall be for the benefit of the Trustee
in its capacities as Trustee, Paying Agent and Certificate Registrar hereunder,
and shall survive the termination of this Agreement.
SECTION 11.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation or a national
banking association having its principal office in a state and city acceptable
to the Company and organized and doing business under the laws of the United
States of America or any State, authorized under such laws to exercise corporate
trust powers, and, approved for insurance by the Secretary of Housing and Urban
Development pursuant to Section 2 of the National Housing Act, and shall have a
combined capital and surplus of at least $50,000,000 or shall be a member of a
bank holding system the aggregate combined capital and surplus of which is
$50,000,000 provided that the Trustee's separate capital and surplus shall at
all times be at least the amount required by Section 310(a)(2) of the Trustee
Indenture Act of 1939, as amended and the Trustee shall be subject to
supervision and examination by a federal or state authority having jurisdiction
over depositary institutions. If such corporation publishes reports of condition
at least annually, pursuant to law or to the requirements of a supervising or
examining authority, then for the purposes of this Section 11.06, the combined
capital and surplus of such Person shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 11.06, the Trustee shall resign immediately in the
manner and with the effect specified in Section 11.07.
SECTION 11.07. Resignation or Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Servicer, the Company and
[Rating Agency]. Upon receiving such notice of resignation, the Company shall
promptly appoint a successor Trustee by written instrument, in duplicate, one
copy of which instrument shall be delivered to each of the Servicer and the
Company and one copy to the successor Trustee. If no successor Trustee shall
have been so appointed and shall have accepted appointment within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
If, at any time, the Trustee shall cease to be eligible in accordance with
the provisions of Section 11.06 and shall fail to resign after written request
therefor by the Company, or if at any time the Trustees shall be legally unable
to act, or shall be adjudged a bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then the Company may remove the
Trustee. If the Company shall have removed the Trustee under the authority of
the immediately preceding sentence, the Company shall promptly appoint a
successor Trustee by written instrument, in duplicate, one
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copy of which instrument shall be delivered to the Trustee so removed and one
copy to the successor Trustee. Upon appointment of any successor Trustee, the
Trustee being replaced shall change the name of the Certificate Account to the
name of such successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 11.07 shall not become
effective until acceptance of appointment by the successor Trustee as provided
in Section 11.08.
SECTION 11.08. Successor Trustee.
Any successor Trustee appointed as provided in Section 11.07 shall execute,
acknowledge and deliver to the Servicer, the Company and to its predecessor
Trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor Trustee shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with like effect as if originally named as Trustee. [The
predecessor Trustee shall deliver or cause to be delivered to the successor
Trustee the Contracts, Contract Files and Land-Home Contract Files and any
related documents and statements held by it hereunder.] The Servicer, the
Company and the predecessor Trustee shall execute and deliver such instruments
and do such other things as may reasonably be required for fully and certainly
vesting and confirming in the successor Trustee all such rights, powers, duties
and obligations.
No successor Trustee shall accept appointment as provided in this Section
11.08 unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 11.06.
Upon acceptance of appointment by a successor Trustee as provided in this
Section 11.08, the Servicer shall cause notice of the succession of such Trustee
hereunder to be mailed to each Certificateholder at their addresses as shown in
the Certificate Register. If the Servicer fails to mail such notice within ten
days after acceptance of appointment by the successor Trustee, the successor
Trustee shall cause such notice to be mailed at the expense of the Servicer.
SECTION 11.09. Merger or Consolidation of Trustee.
Any Person into which the Trustee may be merged or converted or with which
it may be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
the corporate trustee business of the Trustee, shall be the successor of the
Trustee hereunder, provided such Person shall be eligible under the provisions
of Section 11.06, 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.
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SECTION 11.10. Obligor Claims.
In connection with any offset defenses, or affirmative claims for recovery,
asserted in legal actions brought by Obligors under one or more Contracts based
upon provisions therein or upon other rights or remedies arising from, any legal
requirements applicable to the Contracts, including, without limitation, the
Federal Trade Commission's Trade Regulation Rule Concerning Preservation of
Consumers' Claims and Defenses (16 C.F.R. ss. 433) as amended from time to time:
(a) The Trustee is not, and shall not be deemed to be, either in any
individual capacity, as trustee hereunder or otherwise, a creditor, or a
joint venturer with or an Affiliate of, or acting in concert or cooperation
with, any seller of Manufactured Homes, in the arrangement, origination or
making of Contracts. The Trustee is the holder of the Contracts only as
trustee on behalf of the Certificateholders, and not as a principal or in
any individual or personal capacity.
(b) The Trustee shall not be personally liable for or obligated to pay
Obligors, any affirmative claims asserted thereby, or responsible to
Certificateholders for any offset defense amounts applied against Contract
payments, pursuant to such legal actions.
(c) The Trustee will pay, solely from available Trust money,
affirmative claims for recovery by Obligors only pursuant to final judicial
orders or judgments, or judicially-approved settlement agreements,
resulting from such legal actions.
(d) The Trustee will comply with judicial orders and judgments which
require its actions or cooperation in connection with Obligors' legal
actions to recover affirmative claims against Certificateholders.
(e) The Trustee will cooperate with and assist Certificateholders in
their defense of legal actions by Obligors to recover affirmative claims if
such cooperation and assistance is not contrary to the interests of the
Trustee as a party such legal actions and if the Trustee is satisfactorily
indemnified for all liability, costs and expenses arising therefrom.
(f) CITSF hereby agrees to indemnify, hold harmless and defend the
Company, the Trustee and Certificateholders from and against any and all
liability, loss, costs and expenses of the Company, the Trustee and
Certificateholders resulting from any affirmative claims for recovery
asserted or collected by Obligors under the Contracts. Notwithstanding any
other provision of this Agreement, the obligation of CITSF under this
Section 11.10(f) shall not terminate upon a Service Transfer pursuant to
Article VII; provided, however, that CITSF is not obligated under this
Section on account of any claims arising due to the actions of any
successor Servicer.
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SECTION 11.11. Separate Trustees and Co-Trustees.
The Company shall have the power from time to time to appoint one or more
persons or corporations to act either as co-trustees jointly with the Trustee,
or as separate trustees, or as custodians, for the purpose of conforming to any
legal requirement, restriction or condition (i) with respect to the holding of
the Contracts, the Contract Files and the Land-Home Contract Files or (ii) with
respect to the enforcement of a Contract in any state in which a Manufactured
Home is located or in any state in which any portion of the Trust is located.
The separate trustees, co-trustees, or custodians so appointed shall be trustees
or custodians for the benefit of all Certificateholders and shall, subject to
the provisions of the following paragraph, have such power, rights and remedies
as shall be specified in the instrument of appointment; provided, however, that
no such appointment shall, or shall be deemed to, constitute the appointee an
agent of the Trustee.
Every separate trustee, co-trustee and custodian shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(a) all powers, duties, obligations and rights conferred upon the
Trustee in respect of the receipt, custody and payment of moneys shall be
exercised solely by the Trustee;
(b) all other rights, powers, duties and obligations conferred or
imposed upon the Trustee, to the extent also imposed upon such separate
trustees, co-trustees or custodians, shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee,
co-trustee, or custodian jointly, except to the extent that under any law
of any jurisdiction in which any particular act or acts are to be
performed, the Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including holding of the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed by such separate trustee,
co-trustee, or custodian;
(c) no separate trustee, co-trustee or custodian hereunder shall be
personally liable by reason of any act or omission or any other separate
trustee, co-trustee or custodian hereunder; and
(d) the Company may at any time accept the resignation of or remove
any separate trustee, co-trustee or custodian, so appointed by it.
If any separate trustee, co-trustee or custodian shall die, become
incapable of acting, resign or be removed, all of its estates, properties,
rights, remedies and trusts shall vest in and be exercised by the Trustee, to
the extent permitted by law, without the appointment of a new or successor
trustee or custodian. The reasonable fees and expenses of any such separate
trustee, co-trustee or custodian shall be treated as additional fees and
expenses of the Trustee subject to Section 11.05 and payable by the Servicer if
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and only to the extent the Servicer shall have consented in writing to his or
its appointment, which consent shall not be unnecessarily withheld.
SECTION 11.12. Trustee May Own Certificates.
The Trustee in its individual or other capacity may become the owner or
pledgee of Certificates representing less than all the beneficial interest in
the Trust with the same rights as it would have if it were not Trustee.
SECTION 11.13. Agents of Trustee.
To the extent not prohibited by law and not inconsistent with the terms of
this Agreement (including, without limitation, Section 11.11), the Trustee may,
with the prior consent of the Company, appoint one or more agents to carry out
ministerial matters on behalf of the Trustee under this Agreement.
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ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Servicer Not To Resign.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon determination that the performance of its duties
hereunder is no longer permissible under applicable law. Any such determination
permitting the resignation of the Servicer shall be evidenced by an Opinion of
Counsel for the Servicer to such effect delivered to the Trustee. No such
resignation shall become effective until the Trustee or a successor Servicer
shall have assumed the responsibilities and obligations of the Servicer in
accordance with Section 7.03.
SECTION 12.02. Maintenance of Officer or Agency.
The Trustee will maintain an office in ______________. Such offices are
currently located at the addresses set forth in Section 12.09. The Trustee will
give prompt written notice to Certificateholders of any change in the location
of the Certificate Register or any such office or agency.
SECTION 12.03. Termination.
(a) Subject to the other provisions of this Section, the respective
obligations and responsibilities of the Company, the Servicer and the Trustee
created hereby (other than the obligation of the Trustee to make certain
payments after the Final Remittance Date to Certificateholders and the
obligation of the Servicer to send certain notices as hereinafter set forth)
shall terminate upon the last action required to be taken by the Trustee on the
Remittance Date pursuant to this Section 12.03 following the earlier of: (i) the
purchase by the Company or the Servicer on any Remittance Date of all Contracts
and all property acquired in respect of any Contract remaining in the Trust
pursuant to Section 8.03 or (ii) the final payment or other liquidation (or any
advance with respect thereto) of the last Contract remaining in the Trust or the
disposition of all property acquired upon repossession of any Manufactured Home;
provided, however, that in no event shall the trust created hereby continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late ambassador of the United States to
the Court of St. James, living on the date hereof.
(b) Notice of any termination, specifying the Final Remittance Date (which
shall be a date that would otherwise be a Remittance Date) upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Servicer (if the Company or the Servicer is exercising its right to purchase the
assets of the Trust) or by the Trustee (in any other case) by letter to
Certificateholders mailed out not earlier than the 15th day and not later than
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the 25th day of the month (or, in the case of final payment of liquidation of
the last contract remaining in the Trust, as promptly as practicable after
receipt of such final payment or liquidation) next preceding the month of such
final distribution specifying (i) the Final Remittance Date upon which final
payment of the Certificates will be made upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein designated, (ii) the
amount of any such final payment and (iii) that the Record Date otherwise
applicable to such Remittance Date is not applicable, payments being made only
upon presentation and surrender of the Certificates at the office or agency of
the Trustee herein specified. [Such notice shall provide that, in addition to
any other office or agency of the Trustee designated therein, the presentation
and surrender of Certificates as aforesaid may occur at an office or agency of
the Trustee in New York City specified therein.] If the Servicer is obligated to
give notice to Certificateholders as aforesaid, it shall give such notice to the
Trustee, the Certificate Registrar and to [Rating Agency] at the time such
notice is given to Certificateholders. In the event such notice is given by the
Servicer, the Company or the Servicer shall deposit in the Certificate Account
on or before the Final Remittance Date in immediately available funds an amount
equal to the purchase price for the assets of the Trust computed as above
provided.
(c) Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders on the Final Remittance Date in
proportion to their respective Percentage Interests an amount equal to (i) as to
Class A Certificates, the Class A Principal Balance, together with any Unpaid
Class A Interest Shortfall and one month's interest at the Class A Remittance
Rate on the Class A Principal Balance[, (ii) as to Class B Certificates, the
Class B Principal Balance together with any Unpaid Class B Interest Shortfall
and one month's interest at the Class B Remittance Rate on the Class B Principal
Balance] and (iii) as to Class R Certificates, the amount which remains on
deposit in the Certificate Account (other than amounts retained to meet claims)
after application pursuant to clauses (i)[, (ii)] and (iii) above. The
distribution on the Final Remittance Date shall be in lieu of the distribution
otherwise required to be made on such Remittance Date in respect of each Class
of Certificates.
(d) In the event that all of the Certificateholders shall not surrender
their Certificates for final payment and cancellation on or before the Final
Remittance Date, the Trustee shall on such date cause all funds in the
Certificate Account not distributed in final distribution to Certificateholders
to be withdrawn therefrom and credited to the remaining Certificateholders by
depositing such funds in a separate escrow account for the benefit of such
Certificateholders, and the Servicer (if the Company or the Servicer exercised
its right to purchase the assets of the Trust) or the Trustee (in any other
case) 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 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 thereof shall be paid out of the funds on deposit in
such escrow account.
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(e) Upon any termination pursuant to this Section, the Trust shall be
terminated in accordance with the following additional requirements, unless the
Trustee has received an Opinion of Counsel to the effect that the failure of the
Trust to comply with the requirements of this Section will not (i) result in the
imposition of taxes on "prohibited transactions" of the Trust as described in
Section 860F of the Code, or (ii) cause the Trust to fail to qualify as a REMIC
at any time that any Class A [or Class B] Certificates are outstanding:
(i) Within 90 days prior to the Final Remittance date set forth in the
notice given by the Servicer or the Trustee under this Section, the Holders
of 100% of the aggregate Percentage Interests evidenced by the Class R
Certificates shall adopt a plan of complete liquidation of the Trust; and
(ii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the Final Remittance Date, the Servicer as
agent of the Trustee shall sell all of the assets of the Trust to the
Company or the Servicer as the case may be, for cash.
By their acceptance of the Class R Certificates, the holders thereof hereby
agree to adopt such a plan of complete liquidation upon the written request of
the Servicer or the Company and to take such other action in connection
therewith as may be reasonably requested by CITSF.
SECTION 12.04. Acts of Certificateholders.
(a) Except as otherwise specifically provided herein, whenever
Certificateholder approval, authorization, direction, notice, consent, waiver,
or other action is required hereunder, such approval, authorization, direction,
notice, consent, waiver or other action shall be deemed to have been given or
taken on behalf of, and shall be binding upon, all Certificateholders if agreed
to by Holders of Certificates of the specified Class or Classes evidencing, as
to each such Class, Percentage Interests aggregating 51% or more.
(b) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
agent duly appointed in writing; and except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and, where required, to the Servicer. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Agreement and (subject to Section 11.01)
conclusive in favor of the Trustee, the Servicer and the Company if made in the
manner provided in this Section.
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(c) The fact and date of the execution by any Certificateholder of any such
instrument or writing may be proved in any reasonable manner which the Trustee
deems sufficient.
(d) The ownership of Certificates shall be proved by the Certificate
Register.
(e) Any request, demand, authorization, direction, notice, consent, waiver
or other act by a Certificateholder shall bind every holder of every Certificate
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof, in respect of anything done, or omitted to be done by the Trustee,
the Servicer or the Company in reliance thereon, whether or not notation of such
action is made upon such security.
(f) The Trustee may require such additional proof of any matter referred to
in this Section as it shall deem necessary.
SECTION 12.05. Calculations.
Except as otherwise provided in this Agreement, all interest rate and basis
point calculations under this Agreement will be made on the basis of a 360-day
year consisting of twelve thirty-day months and will be carried out to at least
three decimal places.
SECTION 12.06. Assignment or Delegation by the Servicer; Merger or
Consolidation of the Company, CITSF or the Servicer.
Except as specifically authorized hereunder, and except for its obligations
as Servicer, in respect of which a transfer thereof is dealt with under Article
VII, the Servicer may not assign or delegate any of its rights or obligations
hereunder, except its right to receive any fees pursuant to this Agreement,
absent the prior written consent of Holders of Certificates of each Class
evidencing, as to each such Class, Percentage Interests aggregating 66-1/2% or
more, and any attempt to do so without such consent shall be void.
Notwithstanding the foregoing, CITSF may not delegate its obligation to
repurchase contracts under Section 3.05.
Notwithstanding the foregoing, any person into which the Company, CITSF or
the Servicer may be merged or consolidated, or any corporation resulting from
any merger or consolidation to which the Company, CITSF or the Servicer shall be
a party, or any Person succeeding to the business of the Company, CITSF or the
Servicer, shall be the successor of the Company, CITSF or 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
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Eligible Servicer. Each of CITSF, the Company and the Servicer shall promptly
notify [Rating Agency] of any such merger to which it is a party.
Neither the Servicer nor the Company, nor any of the directors, officers,
employees or agents of the Servicer or the Company, shall be under any liability
to the Trustee or the Certificateholders 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 breach of warranties or
representations made herein, or failure to perform its or his obligations in
compliance with any standard of care set forth in this Agreement, or any
liability which otherwise would be imposed by reason of any breach of the terms
and conditions of this Agreement. The Servicer, 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. Neither the Servicer nor the Company shall 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 or the Company may
in its discretion undertake any such action which it may deem necessary or
desirable to 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
payable from the Certificate Account and the Servicer and the Company shall be
entitled to be reimbursed therefor out of the Certificate Account.
SECTION 12.07. Amendment.
(a) This Agreement may be amended from time to time by the Company, the
Servicer and the Trustee, without the consent of any of the Certificateholders,
(i) to correct manifest error, to cure any ambiguity, 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, (ii) to add any other
provisions with respect to matters or questions arising under this Agreement
which shall not be inconsistent with the provisions of this Agreement, (iii) to
add or amend any provisions as required by [Rating Agency] or another NRSRO in
order to maintain any rating of the Class A [or Class B] Certificates (it being
understood that, after the rating required by Section 2.02 hereof has been
obtained, neither the Trustee, the Company nor CITSF is obligated to maintain or
improve such rating); provided, however, that such action shall not, as
evidenced by an Opinion of Counsel for the Servicer or the Company, adversely
affect in any material respect the interests of any Certificateholder
(including, without limitation, the maintenance of the status of the Trust as a
REMIC under the Code and under relevant state and local law).
(b) This Agreement may also be amended from time to time by the Company,
the Servicer and the Trustee, with the consent of Holders of Certificates of
each Class affected thereby evidencing, as to each such Class, Percentage
Interests aggregating 51% or more, for the purpose of adding any of the
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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; provided, however, that no such amendment shall (i) reduce
in any manner the amount of, or delay the timing of, collections of payments on
the Contracts or distributions which are required to be made on any Certificate
without the consent of the holder of each Certificate affected thereby, (ii)
reduce the aforesaid percentage required to consent to any such amendment,
without the consent of the holders of all Certificates then outstanding, (iii)
result in the disqualification of the Trust as a REMIC under the Code, (iv)
adversely affect the status of the Trust as a REMIC or the status of the
Certificates as "regular interests" therein, (v) cause any tax (other than any
tax imposed on "net income from foreclosure property" under Section 860G(c)(1)
of the Code that would be imposed without regard to such amendment) to be
imposed on the Trust, including, without limitation, any tax imposed on
"prohibited transactions" under Section 860G(d)(1) of the Code, or (vi)
adversely affect in any material respect the interest of the Class R
Certificateholders without the unanimous consent of the Class R
Certificateholders.
(c) This Agreement may also be amended from time to time, without the
consent of any of the Certificateholders, by the Company, the Servicer and the
Trustee to modify, eliminate or add to the provisions of this Agreement to such
extent as shall be necessary to (i) maintain the qualification of the Trust as a
REMIC under the Code and under relevant state and local law or avoid, or reduce
the risk of, the imposition of any tax on the Trust under the Code that would be
a claim against the Trust assets, provided that (A) there shall have been
delivered an Opinion of Counsel addressed to the Trustee to the effect that such
action is necessary to maintain such qualification or avoid any such tax or
reduce the risk of its imposition and (B) such amendment shall not have any of
the effects described in the proviso to Section 12.07(a), or (ii) prevent the
Trust from entering into any "prohibited transaction" as defined in Section 860F
of the Code, provided that such amendment shall not, as evidenced by an Opinion
of Counsel, adversely affect in any material respect the interests of any
Certificateholder (including, without limitation, the maintenance of the Trust
as a REMIC under the Code and under relevant state and local law).
(d) This Agreement shall not be amended under this section without the
consent of any of the Certificateholders if such amendment would result in the
disqualification of the Trust as a REMIC under the Code or relevant state and
local law.
(e) Promptly after the execution of any amendment or consent pursuant to
this Section, the Trustee shall furnish written notification of the substance of
such amendment to each Certificateholder (but only if such amendment is pursuant
to Section 12.07(b) and affects the Class of Certificates held by such
Certificateholder) and to [Rating Agency], which notification will be prepared
by the Servicer and delivered to the Trustee.
(f) It shall not be necessary for the consent of Certificateholders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
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execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Trustee may prescribe.
(g) The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this Agreement or otherwise.
(h) In connection with any amendment pursuant to this Section, the Trustee
shall be entitled to receive an Opinion of Counsel to the Servicer to the effect
that such amendment is authorized or permitted by the Agreement.
(i) Upon the execution of any amendment or consent pursuant to this
Section, 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 Certificates theretofore or thereafter issued hereunder shall be
bound thereby.
SECTION 12.08. Contribution of Assets.
Following the Closing Date, the Trustee shall not accept any contribution
of additional assets to the Trust unless the Trustee has received an Opinion of
Counsel addressed to the Trustee to the effect that (i) the contribution of such
assets into the Trust will not cause the Trust to fail to qualify as a REMIC
under the Code and under the relevant state and local law and (ii) such
contribution will not cause the imposition of a tax on "prohibited transactions"
(as defined in Section 860F of the Code or under similar provisions under the
relevant state and local law) or on contributions to the Trust after the
"start-up day" (as defined in Section 860G of the Code or under similar
provisions under the relevant state and local law) with respect thereto.
SECTION 12.09. Notices.
All communications and notices pursuant hereto to the Company, the Servicer
and the Trustee and [Rating Agency] 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
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If to the Servicer:
The CIT Group/Sales Financing, Inc.
650 CIT Drive
Livingston, New Jersey 07039
Attention: President
If to the Trustee:
---------------------------------
---------------------------------
---------------------------------
If to the Paying Agent:
---------------------------------
---------------------------------
---------------------------------
If to [Rating Agency]:
---------------------------------
---------------------------------
---------------------------------
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 shall
be in writing and delivered or mailed at the address shown in the Certificate
Register.
SECTION 12.10. 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.
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SECTION 12.11. Headings.
The headings herein are for purposes of reference only and shall not
otherwise affect the meaning or interpretation of any provision hereof.
SECTION 12.12. 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.
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SECTION 12.13. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the 1st
day of _________, 199_.
THE CIT GROUP/SALES FINANCING, INC.
By: ________________________________
Name:
Title:
THE CIT GROUP SECURITIZATION CORPORATION II
By: ________________________________
Name:
Title:
[TRUSTEE]
not in its individual
capacity but solely as
Trustee
By: ________________________________
Name:
Title:
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EXHIBITS TO POOLING AND SERVICING AGREEMENT
<PAGE>
Exhibit A
[FORM OF CLASS A CERTIFICATE]
[SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE.]
Class A (Senior) No._______________________
Remittance Rate: ____%
Date of Pooling and Servicing
Agreement: As of _____ __, 199_ Denomination: $__________
Cut-off Date: _____ __, 199_ Aggregate Denomination of
all Class A Certificates:
$____________
First Remittance Date: Final Remittance Date:
________ __, 199_ ___________ __, ______
Servicer: The CIT Group/Sales CUSIP: _______________
Financing, Inc.
A-1
<PAGE>
MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE PASS-THROUGH CERTIFICATES,
SERIES 199_, CLASS A (SENIOR)
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN THE
CIT GROUP SECURITIZATION CORPORATION II, THE CIT GROUP/SALES FINANCING, INC. OR
ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT SET FORTH IN THE AGREEMENT.
This certifies that ___________________ is the registered owner of the
undivided Percentage Interest represented by the denomination specified above in
certain monthly distributions with respect to a Trust consisting of a pool of
manufactured housing installment sales contracts and installment loan agreements
(including, without limitation, all related security interests and any and all
rights to receive payments which are due pursuant thereto on or after ______ __,
199_) formed and sold by The CIT Group Securitization Corporation II (the
"Company"). The Trust has been created pursuant to a Pooling and Servicing
Agreement (the "Agreement"), dated as of ______ __, 199__, among the Company, as
Seller, The CIT Group/Sales Financing, Inc., as Servicer, and _____________, as
trustee of the Trust (the "Trustee"). This Certificate is one of the
Certificates described in the Agreement and is issued pursuant and subject to
the Agreement. By acceptance of this Certificate, the holder assents to and
becomes bound by the Agreement. To the extent not defined herein, all
capitalized terms have the meanings assigned to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the _____ day
(or if such day is not a Business Day, the next succeeding Business Day) (the
"Remittance Date") of each calendar month commencing ______ __, 199_ so long as
the Agreement has not been terminated, by check (or, if such Certificateholder
holds a Class of Class A Certificates with an aggregate Percentage Interest of
at least 5% and so desires, by wire transfer pursuant to instructions delivered
to the Trustee at least 10 days prior to such Remittance Date) to the registered
Certificateholder at the address appearing on the Certificate Register as of the
last Business Day of the immediately preceding calendar month, in an amount
equal to the Certificateholder's Percentage Interest of the portion of the
[Class A Distribution Amount] to be distributed to such Class of Class A
Certificates. The final scheduled Remittance Date of this Certificate is ______
__, ____ or the next succeeding Business Day if such date is not a Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds in the Certificate Account to the extent
available for distribution to the Certificateholder as provided in the Agreement
for payment hereunder and that the Trustee in its individual capacity is not
personally liable to the Certificateholder for any amounts payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
A-2
<PAGE>
subject to any liability under the Agreement. By acceptance of this Certificate,
the Certificateholder agrees to disclosure of his, her or its name and address
to other Certificateholders under the conditions specified in the Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and immunities of the Trustee. Copies of the Agreement and all Amendments
thereto will be provided to any Certificateholder free of charge upon a written
request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
_____________, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by the
holder thereof or his or her attorney duly authorized in writing, and thereupon
one or more new Certificates evidencing the same aggregate Percentage Interest
will be issued to the designated transferee or transferees.
[Unless this Certificate is presented by an authorized representative of
The Depository Trust Company to the Trustee or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment is made to Cede &
Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.]
The Company, the Servicer, the Trustee, the Paying Agent and the
Certificate Registrar and any agent of the Company, the Servicer, the Trustee,
the Paying Agent or the Certificate Registrar may treat the person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Company, the Servicer, the Trustee, the Paying Agent, the Certificate
Registrar nor any such agent shall be affected by any notice to the contrary.
A-3
<PAGE>
Unless this Certificate has been authenticated by the Trustee or its
Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Company has caused this Certificate to be duly
executed.
Dated: THE CIT GROUP SECURITIZATION
CORPORATION
By:____________________________
Authorized Officer
[Form of Certificate of Authentication]
This is one of the Certificates referred
to in the within-mentioned Agreement.
_______________________, or [TRUSTEE]
Authenticating Agent
By:________________________ By:____________________________
Authorized Signatory
[Signature page to Class A Certificate,
Manufactured Housing Contract Senior/
Subordinate Pass-Through Certificate,
Series _____]
A-4
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ___________ the within Manufactured Housing Contract Senior/Subordinate
Pass-Through Certificate and does hereby irrevocably constitute and appoint
_______________ Attorney to transfer the said certificate on the Certificate
Register maintained by the Trustee, with full power of substitution in the
premises.
Dated: By ____________________________
Signature
A-5
<PAGE>
Exhibit B
[Form of Class B Certificate]
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A CERTIFICATES
TO THE EXTENT SET FORTH IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE SECURITIES OR "BLUE SKY" LAWS
IN RELIANCE UPON EXEMPTIONS PROVIDED BY SUCH ACTS. NO TRANSFER OF THIS
CERTIFICATE SHALL BE MADE UNLESS SUCH TRANSFER IS MADE PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR IS MADE IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT, INCLUDING A TRANSFER MADE
IN ACCORDANCE WITH THE EXEMPTION PROVIDED IN RULE 144A OF THE SECURITIES ACT,
AND APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS, AND UNLESS SUCH TRANSFER IS
MADE IN ACCORDANCE WITH SECTION 9.02 OF THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.]
[SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE.]
Class B (Subordinate) No. ____
Date of Pooling and Servicing Remittance Rate: ____%
Agreement: As of _____ __, 199_
Denomination: $_____________
Cut-off Date: _____ __, 199_ Aggregate Denomination of all
Class B Certificates: $______
First Remittance Date: Final Remittance Date:
_______ __, 199_ _____________ __, ____
Servicer: The CIT Group/Sales CUSIP:________________________
Financing, Inc.
B-1
<PAGE>
MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE PASS-THROUGH CERTIFICATES,
SERIES 199_, CLASS B (SUBORDINATE)
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN THE
CIT GROUP SECURITIZATION CORPORATION II, THE CIT GROUP/SALES FINANCING, INC. OR
ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT SET FORTH IN THE AGREEMENT.
This certifies that ___________________ is the registered owner of the
undivided Percentage Interest represented by the denomination specified above in
certain monthly distributions with respect to a Trust consisting of a pool of
manufactured housing installment sales contracts and installment loan agreements
(including, without limitation, all related security interests and any and all
rights to receive payments which are due pursuant thereto on or after ______ __,
199_) formed and sold by The CIT Group Securitization Corporation II (the
"Company"). The Trust has been created pursuant to a Pooling and Servicing
Agreement (the "Agreement"), dated as of ______ __, 199_, among the Company, as
Seller, The CIT Group/Sales Financing, Inc., as Servicer, and _____________, as
trustee of the Trust (the "Trustee"). This Certificate is one of the
Certificates described in the Agreement and is issued pursuant and subject to
the Agreement. By acceptance of this Certificate the holder assents to and
becomes bound by the Agreement. To the extent not defined herein, all
capitalized terms have the meanings assigned to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the _____ day
(or if such day is not a Business Day, the next succeeding Business Day) (the
"Remittance Date") of each calendar month commencing ______ __, 199_ so long as
the Agreement has not been terminated, by check (or, if such Certificateholder
holds Class B Certificates with an aggregate Percentage Interest of at least 20%
and so desires, by wire transfer pursuant to instructions delivered to the
Trustee at least 10 days prior to such Remittance Date) to the registered
Certificateholder at the address appearing on the Certificate Register as of the
last Business Day of the immediately preceding calendar month, in an amount
equal to the Certificateholder's Percentage Interest of the [Class B
Distribution Amount]. The final scheduled Remittance Date of this Certificate is
______ __, ____ or the next succeeding Business Day if such date is not a
Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds in the Certificate Account [and the Available
Credit Enhancement Amount], to the extent available for distribution to the
Certificateholder as provided in the Agreement, for payment hereunder and that
the Trustee in its individual capacity is not personally liable to the
Certificateholder for any amounts payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement. By acceptance of this Certificate, the
B-2
<PAGE>
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and immunities of the Trustee. Copies of the Agreement and all Amendments
thereto will be provided to any Certificateholder free of charge upon a written
request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
_____________, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by the
holder thereof or his or her attorney duly authorized in writing, and thereupon
one or more new Certificates evidencing the same aggregate Percentage Interest
will be issued to the designated transferee or transferees.
[Unless this Certificate is presented by an authorized representative of
The Depository Trust Company to the Trustee or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment is made to Cede &
Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.]
B-3
<PAGE>
[This Certificate has not been registered or qualified under the Securities
Act or any state securities law.]
[No transfer, sale, pledge or other disposition of any Certificate or any
interest therein shall be made unless such transfer is made pursuant to an
effective registration statement under the Securities Act and effective
registration or qualification under applicable state securities laws or is made
in a transaction that does not require such registration or qualification.]
[In the event that (i) registration of a transfer of this Certificate is to
be made in reliance upon the exemption from registration under the Securities
Act contained in Rule 144A, (ii) the Holder of this Certificate delivers an
officer's certificate substantially in the form of Exhibit K-1 to the Pooling
and Servicing Agreement to each of the Seller and the Trustee, and (iii) the
transferee of this Certificate delivers an officer's certificate in the form of
Exhibit K-2 to the Agreement to the Seller and the Trustee, the Trustee shall
register such transfer.]
[In the event that registration of a transfer is to be made in reliance
upon an exemption from registration under the Securities Act (other than the
exemption from registration contained in Rule 144A) and applicable state
securities laws, the Company shall require, in order to assure compliance with
the Securities Act, the transferee or the transferor of this Certificate to
deliver to the Company and the Trustee either (i) an investment letter from such
transferee in the form of Exhibit J to the Agreement, or (ii) an Opinion of
Counsel that such transfer may be made pursuant to an exemption from the
Securities Act (other than the exemption from registration contained in Section
3(a)(2) thereof).]
[Neither the Company nor the Trustee is obligated to register this
Certificate under the Securities Act or under any state securities laws.]
[No service charge will be made for any such registration of transfer of
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.]
The Company, the Servicer, the Trustee, the Paying Agent and the
Certificate Registrar and any agent of the Company, the Servicer, the Trustee,
the Paying Agent or the Certificate Registrar may treat the person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Company, the Servicer, the Trustee, the Paying Agent, the Certificate
Registrar nor any such agent shall be affected by any notice to the contrary.
B-4
<PAGE>
Unless this Certificate has been authenticated by the Trustee or its
Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Company has caused this Certificate to be duly
executed.
Dated: THE CIT GROUP SECURITIZATION
CORPORATION
By:___________________________
Authorized Officer
[Form of Certificate of Authentication]
This is one of the Certificates referred
to in the within mentioned Agreement.
_______________________, or [TRUSTEE]
Authenticating Agent
By:________________________ By:____________________________
Authorized Signatory Authorized Signatory
B-5
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto __________________________ the within Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificate and does hereby irrevocably
constitute and appoint ________________ Attorney to transfer the said
certificate on the Certificate Register maintained by the Trustee, with full
power of substitution in the premises.
Dated: By______________________
Signature
B-6
<PAGE>
Exhibit C
[FORM OF CLASS R CERTIFICATE]
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A CERTIFICATES
AND THE CLASS B CERTIFICATES TO THE EXTENT SET FORTH IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE SECURITIES OR "BLUE SKY" LAWS
IN RELIANCE UPON EXEMPTIONS PROVIDED BY SUCH ACTS. NO TRANSFER OF THIS
CERTIFICATE SHALL BE MADE UNLESS SUCH TRANSFER IS MADE PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR IS MADE IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT, INCLUDING A TRANSFER MADE
IN ACCORDANCE WITH THE EXEMPTION PROVIDED IN RULE 144A OF THE SECURITIES ACT,
AND APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS, AND UNLESS SUCH TRANSFER IS
MADE IN ACCORDANCE WITH SECTION 9.02 OF THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
[SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE.
THIS CERTIFICATE MAY ONLY BE TRANSFERRED TO A PERMITTED TRANSFEREE (AS DEFINED
IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN); ANY SUCH TRANSFER
MUST ALSO SATISFY THE OTHER REQUIREMENTS OF SECTION 9.02 OF SUCH POOLING AND
SERVICING AGREEMENT.]
Class R (Subordinate) No. ___
Date of Pooling and Servicing Percentage Interest: ____%
Agreement: As of _____ __, 199_
Cut-off Date: ____ __, 199_
First Remittance Date:
_______ __, 199_
Servicer: The CIT Group/Sales
Financing, Inc.
C-1
<PAGE>
C-2
<PAGE>
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATES, SERIES 199_
Initial Principal Amount of the Trust: $________
This certifies that __________ is the registered owner of the undivided
Percentage Interest stated above in the Residual Interest in the Trust referred
to herein, and entitled to certain distributions with respect to such Trust,
which Trust consists of a pool of manufactured housing installment sales
contracts and installment loan agreements, including, without limitation, all
related security interests and any and all rights to receive payments which are
due pursuant thereto on or after ______ __, 199_ (the "Contracts") formed and
sold by The CIT Group Securitization Corporation II (the "Company"). The Trust
has been created pursuant to a Pooling and Servicing Agreement (the
"Agreement"), dated as of ______ __, 199_, between the Company, as Seller, and
The CIT Group/Sales Financing, Inc., as Servicer, and/National Association, as
Trustee of the Trust (the "Trustee"). This Class R Certificate is one of the
Class R Certificates described in the Agreement and is issued pursuant and
subject to the Agreement. By acceptance of this Class R Certificate the holder
assents to and becomes bound by the Agreement. To the extent not defined herein,
all capitalized terms have the meanings assigned to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the _____ day
(or if such is not a Business Day, the next succeeding Business Day) (the
"Remittance Date") of each calendar month commencing ______ __, 199_, so long as
the Agreement has not been terminated, by check (or, if such Class R
Certificateholder holds Class R Certificates with an aggregate Percentage
Interest of at least 20% and so desires, by wire transfer pursuant to
instructions delivered to the Trustee at least ten days prior to such Remittance
Date) to the registered Class R Certificateholder at the address appearing on
the Certificate Register as of the last Business Day of the immediately
preceding calendar month (each such month during the term of this Agreement
constituting a "Due Period"), in an amount equal to [the difference between (A)
the Amount Available, and (B) the sum of (i) [the Class A Distribution Amount],
(ii) [the Class B Distribution Amount], (iii) the Monthly Servicing Fee, (iv)
amounts to reimburse the Class R Certificateholder for expenses incurred by and
reimbursable to it, [and (v) the Credit Enhancement Fee]]. The final scheduled
Remittance Date of this Class C Certificate is ______ __, ____ or the next
succeeding Business Day if such date is not a Business Day.
The Class R Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the funds in the Certificate Account to the
extent available for distribution to the Class R Certificateholder as provided
in the Agreement for payment hereunder and that the Trustee in its individual
capacity is not personally liable to the Class R Certificateholder for any
amounts payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement. By
acceptance of this Certificate, the Certificateholder agrees to disclosure of
his, her or its name and address to other Certificateholders under the
conditions specified in the Agreement.
C-3
<PAGE>
This Class R Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Class R Certificateholder
free of charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Class R Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this Class R
Certificate for registration of transfer at the office or agency maintained by
the Trustee in ________, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by the
holder thereof or his or her attorney duly authorized in writing, and thereupon
one or more new Class R Certificates evidencing the same aggregate amount of
Class R Certificates will be issued to the designated transferee or transferees.
As provided in the Agreement and subject to certain limitations therein set
forth, this Class R Certificate is exchangeable for new Class R Certificates of
authorized denominations evidencing the same aggregate Percentage Interest as
requested by the holder surrendering the same.
No transfer of a Class R Certificate will be made unless such transfer is
exempt from the registration requirements of the Securities Act of 1933, as
amended, and any applicable state securities laws or is made in accordance with
said Act and laws. The Trustee, the Company or CITSF may require an opinion of
counsel acceptable to and in form and substance satisfactory to the Trustee, the
Company and CITSF that such transfer is exempt (describing the applicable
exemption and the basis therefor) from or is being made pursuant to the
registration requirements of the Securities Act of 1933, as amended, and of any
applicable statute of any state, and the transferee shall execute an investment
letter in the form described by the Agreement. The Holder hereof desiring to
effect such transfer shall, and does hereby agree to, indemnify the Trustee, the
Servicer and the Company against any liability that may result if the transfer
is not so exempt or is not made in accordance with such federal and state laws.
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 9.02(d) of the
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.
C-4
<PAGE>
No service charge will be made for any such registration of transfer of
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Company, the Servicer, the Trustee and the Certificate Registrar and
any agent of the Company, the Servicer, the 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 Company, the Servicer, the Trustee, the
Certificate Registrar nor any such agent shall be affected by notice to the
contrary.
[The holder of this Class R Certificate, by acceptance hereof, agrees that,
in accordance with the requirements of Section 860D(b)(1) of the Code, the
federal tax return of the Trust for its first taxable year shall provide that
the Trust elects to be treated as a "real estate mortgage investment conduit" (a
"REMIC") under the Code for such taxable year and all subsequent taxable years.
The Certificates shall be "regular interests" in the REMIC and the Class R
Certificates shall be the "residual interest" in the REMIC.]
Unless this Certificate has been authenticated by the Trustee or its
Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purposes.
IN WITNESS WHEREOF, the Company has caused this Certificate to be duly
executed.
Dated: THE CIT GROUP SECURITIZATION
CORPORATION
By:____________________________
Authorized Officer
[Form of Certificate of Authentication]
This is one of the Certificates referred
to in the within mentioned Agreement.
_______________________, or [TRUSTEE]
Authenticating Agent
By______________________ By:____________________________
Authorized Signatory Authorized Signatory
C-5
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _________________ the within Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificate, and does hereby irrevocably
constitute and appoint _______________ Attorney to transfer the said certificate
on the Certificate Register maintained by the Trustee, with full power of
substitution in the premises.
Dated: By________________________
Signature
C-6
<PAGE>
Exhibit D
[FORM OF ASSIGNMENT]
In accordance with the Pooling and Servicing Agreement (the "Agreement")
dated as of ______ __, 199_, among The CIT Group/Sales Financing Inc. ("CITSF"),
The CIT Group Securitization Corporation II (the "Company"), and
__________________________ Chicago, as trustee (the "Trustee"), the Company does
hereby sell, transfer, assign, set over and otherwise convey to the Trust
created by the Agreement, to be held in trust as provided in the Agreement, (i)
all right, title and interest in the manufactured housing installment sales
contracts and installment loan agreements described in the List of Contracts
(collectively, the "Contracts") and the proceeds thereof (including, without
limitation, all security interests created thereby and any and all rights to
receive payments which are due pursuant thereto from and after ______ __, 199_,
but excluding any rights to receive payments which were due pursuant thereto
prior to ______ __, 199_) identified in the List of Contracts delivered pursuant
to Section 2.02(a) of the Agreement, which List of Contracts is also attached as
an Exhibit to the Agreement, (ii) all rights under any Hazard Insurance Policy
relating to a Manufactured Home securing a Contract for the benefit of the
creditor of such Contract and all rights under any blanket hazard insurance
policy and the proceeds from any Contract Holders' Errors and Omissions
Protection Policy, to the extent they relate to the Manufactured Homes, (iii)
[all rights under all FHA/VA Regulations pertaining to any FHA/VA Contract,]
(iv) all documents contained in the Contract Files and the Land-Home Contract
Files and (v) all proceeds in any way derived from any of the foregoing. All
capitalized terms used herein without definition have the meanings ascribed to
such terms in the Agreement.
This Assignment is made pursuant to and upon the representation and
warranties on the part of the undersigned contained in Article III of the
Agreement and no others.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed this ___ day of ______ __, 199_.
THE CIT GROUP SECURITIZATION
CORPORATION
By: ________________________
Name:
Title:
D-1
<PAGE>
Exhibit E
THE CIT GROUP/SALES FINANCING, INC.
CERTIFICATE OF OFFICERS
The undersigned certify that they are the [title] and [title], respectively
of The CIT Group/Sales Financing, Inc., a corporation organized under the laws
of Delaware ("CITSF"), and that as such they are duly authorized to execute and
deliver this certificate on behalf of CITSF in connection with the Pooling and
Servicing Agreement, dated as of ______ __, 199_ (the "Agreement"), among CITSF,
The CIT Group Securitization Corporation II and _______________, as Trustee (all
capitalized terms used herein without definition having the respective meanings
specified in the Agreement), and further certify that:
(i) attached hereto as Exhibit I is a true and correct copy of the
Articles of Incorporation of CITSF, together with all amendments thereto as
in effect on the date hereof;
(ii) attached hereto as Exhibit II is a true and correct copy of the
By-laws of CITSF, as amended, as in effect on the date hereof;
(iii) the representations and warranties of CITSF contained in
Sections 3.01 and 3.04 of the Agreement are true and correct on and as of
the date hereof and, to the best of their knowledge, the representations
and warranties of CITSF contained in Sections 3.02 and 3.03 of the
Agreement are true and correct on and as of the date hereof;
(iv) no event with respect to CITSF has occurred and is continuing
which would constitute an Event of Termination or an event that, with
notice or lapse of time or both, would become an Event of Termination under
the Agreement; and
E-1
<PAGE>
(v) each of the agreements and conditions of CITSF to be performed on
or before the date hereof pursuant to the Agreement have been performed in
all material respects.
IN WITNESS WHEREOF, we have affixed hereunto our signatures this ______ day
of ______ __, 199_.
________________________________
[Name]
[Title]
________________________________
[Name]
[Title]
E-2
<PAGE>
Exhibit F
[FORM OF OPINION OF COUNSEL FOR THE CIT GROUP/
SALES FINANCING, INC.]
F-1
<PAGE>
Exhibit G
FORM OF TRUSTEE'S ACKNOWLEDGMENT AND CERTIFICATION
______________________________, a National Banking Association organized
under the laws of the United States, acting as trustee (the "Trustee") of the
trust created pursuant to the Pooling and Servicing Agreement dated as of ______
__, 199_ among The CIT Group Securitization Corporation II, The CIT Group/Sales
Financing, Inc. and the Trustee (the "Agreement"), acknowledges, pursuant to
Section 2.03 of the Agreement, that the Trustee has received, and holds in trust
thereunder the following: (i) all right, title and interest in the manufactured
housing installments sales contracts and installment loan agreements (including,
without limitation, all security interests and any and all rights to receive
payments which are due pursuant thereto from and after ______ __, 199_, but
excluding any rights to receive payments which were due pursuant thereto prior
to ______ __, 199_), identified in the List of Contracts delivered pursuant to
Section 2.02(a) of the Agreement, which list of Contracts is also attached as an
Exhibit to the Agreement, (ii) all rights under any Hazard Insurance Policy
relating to a Manufactured Home securing a Contract for the benefit of the
creditor of such Contract and all rights under any blanket hazard insurance
policy and the proceeds from any Contract Holders' Errors and Omissions
Protection Policy, to the extent they relate to the Manufactured Homes, (iii)
[all rights under all FHA/VA Regulations pertaining to any FHA/VA Contract,]
(iv) all documents contained in the Contract Files and the Land-Home Contract
Files, provided that the Contract Files will be held by the Servicer, as
custodian, for the benefit of the Certificateholders and the Trustee, and (v)
all proceeds in any way derived from any of the foregoing. The Trustee shall
issue to, or upon the order of, the Company Certificates representing ownership
of a beneficial interest in 100% of the Trust. Capitalized terms used herein
have the meanings given them in the Agreement.
IN WITNESS WHEREOF, ________________________________, as Trustee, has
caused this acknowledgment to be executed by its duly authorized officer as of
this ___ day of ______, 199_.
[TRUSTEE], as Trustee
By_____________________
Its____________________
By_____________________
Its____________________
G-1
<PAGE>
Exhibit H
THE CIT GROUP/SALES FINANCING, INC.
CERTIFICATE OF SERVICING OFFICERS
The undersigned certify that they are the [title] and [title], respectively
of The CIT Group/Sales Financing, Inc., a corporation organized under the laws
of Delaware ("CITSF"), and that as such they are duly authorized to execute and
deliver this certificate on behalf of CITSF pursuant to Section 6.02 of the
Pooling and Servicing Agreement, dated as of ______ __, 199_ (the "Agreement"),
among CITSF, The CIT Group Securitization Corporation II and
____________________________, as Trustee (all capitalized terms used herein
without definition having the respective meanings specified in the Agreement),
and further certify that:
1. The Monthly Report for the period from _________ to _______ attached to
this certificate is complete and accurate in accordance with the requirements of
Sections 6.01 and 6.02 of the Agreement; and
2. As of the date hereof, no Event of Termination or event that with notice
or lapse of time or both would become an Event of Termination has occurred.
IN WITNESS WHEREOF, we have affixed hereunto our signatures this ____ day
of _____, 199_.
THE CIT GROUP/SALES FINANCING, INC.
By_________________________________
[Name]
[Title]
By_________________________________
[Name]
[Title]
H-1
<PAGE>
Exhibit I-1
THE CIT GROUP/SALES FINANCING, INC.
CERTIFICATE REGARDING REPURCHASED CONTRACTS
The undersigned certify that they are [title] and [title], respectively of
The CIT Group/Sales Financing, Inc., a corporation organized under the laws of
Delaware ("CITSF"), and that as such they are duly authorized to execute and
deliver this certificate on behalf of CITSF pursuant to Section 3.05(a) of the
Pooling and Servicing Agreement, dated as of ______ __, 199_ (the "Agreement"),
among CITSF, The CIT Group Securitization Corporation II and
____________________________, as Trustee (all capitalized terms used herein
without definition having the respective meanings specified in the Agreement),
and further certify that:
1. The Contracts on the attached schedule are to be repurchased on the date
hereof pursuant to Section 3.05 of the Agreement.
2. Upon deposit of the Repurchase Price for such Contracts, such Contracts
may be assigned by the Trustee to CITSF.
IN WITNESS WHEREOF, we have affixed hereunto our signatures this ____ day
of ______, 199_.
THE CIT GROUP/SALES FINANCING, INC.
By:_______________________________
[Name]
[Title]
By:_______________________________
[Name]
[Title]
I-1
<PAGE>
Exhibit I-2
THE CIT GROUP/SALES FINANCING, INC.
CERTIFICATE REGARDING SUBSTITUTED CONTRACTS
The undersigned certify that they are [title] and [title], respectively of
The CIT Group/Sales Financing, Inc., a corporation organized under the laws of
Delaware ("CITSF"), and that as such they are duly authorized to execute and
deliver this certificate on behalf of CITSF pursuant to Section 3.05(b) of the
Pooling and Servicing Agreement, dated as of ______ __, 199_ (the "Agreement"),
among CITSF, The CIT Group Securitization Corporation II and
_______________________________, as Trustee (all capitalized terms used herein
without definition having the respective meanings specified in the Agreement),
and further certify that:
1. The Contract and Contract File for each such Eligible Substitute
Contract [are being held by CITSF, as Servicer] [have been delivered to ______,
the successor Servicer].
2. The Contracts on the attached schedule are to be substituted on the date
hereof pursuant to Section 3.05(b) of the Agreement and each such Contract is an
Eligible Substitute Contract [description, as to each Contract, as to how it
satisfies the definition of "Eligible Substitute Contract"].
3. The UCC-1 financing statements in respect of the Contracts to be
substituted, in the form required by Section 3.05(b)(iii) of the Agreement, has
been filed with the appropriate offices.
[4. There has been deposited in the Certificate Account the amounts listed
on the schedule attached hereto as the amount by which the Scheduled Principal
Balance of each Replaced Contract exceeds the Scheduled Principal Balance of
each Contract being substituted therefor.]
I-2-1
<PAGE>
IN WITNESS WHEREOF, we have affixed hereunto our signatures this ____ day
of ______, 199_.
THE CIT GROUP/SALES FINANCING, INC.
By:_______________________________
[Name]
[Title]
By:_______________________________
[Name]
[Title]
I-2-2
<PAGE>
Exhibit J
FORM OF INVESTMENT LETTER
[Date]
The CIT Group Securitization Corporation II
650 CIT Drive
Livingston, New Jersey 07039
Attention: President
The CIT Group/Sales Financing, Inc.
650 CIT Drive
Livingston, New Jersey 07039
Attention: President
[ ]
Re: Purchase of $_______ Principal Amount of The CIT Group
Securitization Corporation II Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificates Series 199_ -
Class [B] [R] Certificates
Dear Sirs:
In connection with our purchase of the above referenced Certificates (the
"Certificates"), the undersigned (the "Purchaser") hereby certifies and agrees
on behalf of the Purchaser:
1. The Purchaser is an accredited investor and is acquiring the
Certificates for its own account or accounts for which it exercises sole
investment discretion and not with a view to, or for sale in connection
with, any distribution thereof, subject nevertheless to any requirement of
law that the disposition of the Purchaser's property shall at all times be
and remain within its control.
2 . The Purchaser has received (a) a copy of the __________ dated
______ __, ____, relating to the Certificates, (b) a copy of the Pooling
and Servicing Agreement dated as of ______ __, 199_ (the "Pooling and
Servicing Agreement"), among The CIT Group Securitization Corporation II,
the CIT Group/Sales Financing, Inc. and __________________, as Trustee, and
<PAGE>
(c) other information concerning the Certificates and the Contracts (as
defined in the Pooling and Servicing Agreement) requested by the Purchaser
and relevant to the Purchaser's decision to purchase the Certificates.
3. The Purchaser has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Certificates and the Purchaser is able to bear the
economic risks of such an investment.
4. The Purchaser will comply with all applicable federal and state
securities laws in connection with any subsequent resale of the
Certificates by the Purchaser.
5. The Purchaser understands that the Certificates have not been and
will not be registered under the Securities Act of 1933, as amended (the
"Securities Act"), that neither the Company, the Seller nor the Trust (as
such terms are defined in the Pooling and Servicing Agreement) is required
to so register the Certificates, and that the Certificates may be resold
only if registered pursuant to the provisions of the Securities Act or if
an exemption from registration thereunder is available.
6. If the Purchaser sells any of the Certificates, the Purchaser, at
its option, will either (a) obtain from any accredited investor that
purchases any Certificate from it a certificate containing the same
representations, warranties and agreements contained in the foregoing
paragraphs 1, 2(b), 3 through 5 and this paragraph 6, (b) deliver an
opinion of counsel to such institutional investor, addressed to the Seller,
the Servicer and the Trustee (as such terms are defined in the Pooling and
Servicing Agreement), to the effect that such sale is in compliance with
all applicable federal and state securities laws, or (c) comply with the
requirements of paragraph Second of Section 9.02(b) of the Pooling and
Servicing Agreement.
Very truly yours,
________________________
(Name of Purchaser)
By:
(Authorized Officer)
J-2
<PAGE>
Exhibit K-1
[FORM OF TRANSFEROR'S CERTIFICATE]
THE CIT GROUP SECURITIZATION CORPORATION II
MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE PASS-THROUGH CERTIFICATES
SERIES 199_
---------------------------------------------
The undersigned, a duly authorized representative of _______________ (the
"Transferor"), pursuant to the Pooling and Servicing Agreement dated as of
______ __, 199_ (the "Pooling and Servicing Agreement"), among The CIT Group
Securitization Corporation II (the "Company"), The CIT Group/Sales Financing,
Inc. and ______________________________, as trustee (the "Trustee"), does hereby
certify to the Company and the Trustee that:
1. The undersigned is duly authorized to execute and deliver this
Certificate to the Trustee and to the Company.
2. This Certificate is delivered pursuant to Section 9.02(b) of the
Pooling and Servicing Agreement.
3. In connection with the transfer (the "Transfer") of Investor
Certificate No. [B-_] [R-_] from the Transferor to _________ (the
"Transferee"):
(a) the Transferor reasonably believes the Transferee to be a
Qualified Institutional Buyer as defined in Rule 144A ("Rule 144A")
under the Securities Act of 1933, as amended; and
(b) registration of the Transfer is to be made in reliance upon
the exemption from transfer contained in Rule 144A.
IN WITNESS WHEREOF, the undersigned has duly executed this certificate this
____ day of ______, ____.
________________________________
Name:
Title:
K-1
<PAGE>
Exhibit K-2
[FORM OF TRANSFEREE'S CERTIFICATE]
THE CIT GROUP SECURITIZATION CORPORATION II
MANUFACTURED HOUSING CONTRACT
SENIOR/SUBORDINATE PASS-THROUGH CERTIFICATES
SERIES 199_
---------------------------------------------
The undersigned, a duly authorized representative of _______________ (the
"Transferee"), pursuant to the Pooling and Servicing Agreement dated as of
______ __, 199_ (the "Pooling and Servicing Agreement"), among The CIT Group
Securitization Corporation II (the "Company"), The CIT Group/Sales Financing,
Inc. and ____________________, as trustee (the "Trustee"), does hereby certify
to the Company and the Trustee that:
1. The undersigned is duly authorized to execute and deliver this
Certificate to the Trustee and to the Company.
2. This Certificate is delivered pursuant to Section 9.02(b) of the Pooling
and Servicing Agreement.
3. In connection with the transfer (the "Transfer") of Investor Certificate
No. [B-_] [R-_] from _______________ (the "Transferor") to the Transferee:
(a) the Transferee is a Qualified Institutional Buyer as defined in
Rule 144A ("Rule 144A") under the Securities Act of 1933, as amended
(the "Securities Act");
(b) the Transferee acknowledges that the Transferor, the Company and
the Trustee are relying upon the Transferee's representations set
forth herein in order to claim the exemption from registration
contained in Rule 144A;
[(c) the Transferee requested information from the Servicer concerning
the assets of the Trust, and received from the Servicer a copy of the
monthly statements relating to the Trust for the period through _____,
____ [,] [and] the disclosure document annexed hereto as Annex 1 [and
_____________.]
OR
K-2-1
<PAGE>
[(c) the Transferee did not request information from the Servicer and
the Trust Assets.]
The Transferee acknowledges that the Certificate referred to above has not
been registered under the Securities Act or under any state securities or "Blue
Sky" laws, in reliance upon exemptions provided by such Acts.
IN WITNESS WHEREOF, the undersigned has duly executed this certificate this
____ day of ______, ____.
________________________________
Name:
Title:
K-2-2
<PAGE>
Exhibit L
THE CIT GROUP SECURITIZATION CORPORATION II
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
CERTIFICATES, SERIES 199_
MONTHLY REPORT
REMITTANCE DATE:____
CLASS A CERTIFICATES
Distribution Amounts
____________________
1. Aggregate Class A Distribution $
_____________
2. Aggregate Class B Distribution $
_____________
3. Aggregate Class R Distribution $
_____________
Interest
________
1. Aggregate Class A Interest $
_____________
2. Amount applied to Unpaid
Class A Interest Shortfall $
_____________
3. Remaining Unpaid Class A $
Interest Shortfall _____________
Principal
_________
4. Formula Principal Distribution Amount $
_____________
(a} Scheduled Principal $
_____________
(b) Principal Prepayments $
_____________
(c) Liquidated Contracts $
_____________
(d) Repurchases $
_____________
5. Pool Scheduled Principal Balance $
[6. Class A Scheduled Principal Deficiency _____________
L-1
<PAGE>
Amount (if any) following prior
Remittance Date $ ]
_____________
7. Class A Principal Distribution Amount $
_____________
8. Class A Principal Balance $
_____________
9. Class B Principal Balance $
_____________
[10. Class A Scheduled Principal Deficiency
Amount (if any) following current
Remittance Date $ ]
_____________
11. Class A Pool Factor (Pool Scheduled
Principal Balance divided by Cut-off
Date Principal Balance) $
_____________
Delinquency Information
_______________________
Aggregate Principal
Number Balance
______ ____________________
12. Delinquent Contracts
(a) 31-59 days $
______ ____________________
(b) 60 days or more $
______ ____________________
13. Repossessed Contracts $
______ ____________________
14. Repossessed Contracts
Remaining in Inventory $
______ ____________________
CLASS B/CLASS R CERTIFICATES
Amount Available $
_____________
[Available Credit Enhancement Amount] $
_____________
Class B Certificates
____________________
Interest
________
L-2
<PAGE>
1. Aggregate Class B Interest $
_____________
2. Amount applied to Unpaid
Class B Interest Shortfall $
_____________
3. Remaining Unpaid Class B
Interest Shortfall $
_____________
Principal
_________
4. Aggregate Principal (until
Class A Principal Balance reaches zero,
Aggregate Principal equals Class B
Principal Loss Liquidation Amount) $
_____________
5. Principal Prepayments $
_____________
6. Class B Principal Loss Liquidation
Amount $
_____________
7. Amount, if any, by which the [Class B
Distribution Amount] for such Remittance
Date exceeds the Amount Available in the
Certificate Account available for
distributions on Class B Certificates
on such Remittance Date. $
_____________
[8. Class B Enhancement Payment $ ]
_____________
9. Class B Principal Balance $
_____________
Class R Certificates
____________________
10. Class R Residual Payment $
_____________
a. The amount (if any) by which
the Amount Available exceeds
the [Class A Distribution
Amount] and the Class
B Distribution
Amount]. $
_____________
b. Aggregate Repossession Profits
less amount retained by
L-3
<PAGE>
Servicer to reimburse itself for
taxes paid. $
_____________
L-4
<PAGE>
EXHIBIT M
FORM OF TRANSFER AFFIDAVIT
DATE OF )
: ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of __________, the proposed Transferee of
an Ownership Interest in the Class R Certificate of the Manufactured Housing
Contract Senior/Subordinate Pass-Through Certificates Series ____, issued
pursuant to the Pooling and Servicing Agreement, dated as of ______ __, 199_
(the "Agreement"), among The CIT Group Securitization Corporation II, The CIT
Group/Sales Financing, Inc. and _____________________________, as trustee.
Capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the Agreement. The Transferee has authorized the undersigned to
take this affidavit on behalf of the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the date of
the Transfer, a Permitted Transferee. The Transferee is acquiring its Ownership
Interest in the Class R Certificate either (i) for its own account or (ii) as
nominee, trustee or agent for another person and has attached hereto an
Affidavit from such person in substantially the same form as this Affidavit. The
Transferee has no knowledge that any such Affidavit is false.
3. The Transferee has been advised and understands that (i) a tax shall be
imposed on Transfers of Ownership Interests in the Class R Certificate to
persons that are not permitted Transferees; (ii) such tax would be imposed on
the transferor, or, if such Transfer is through an agent (which includes a
broker, nominee or middleman) for a person that is not a permitted Transferee,
on such agent; and (iii) the person otherwise liable for the tax shall be
relieved of liability for the tax if the subsequent Transferee furnishes to such
person an affidavit that such subsequent Transferee is a Permitted transferee
and, at the time of Transfer, such person does not have actual knowledge that
the affidavit is false.
4. The Transferee has been advised and understands that a tax shall be
imposed on a "pass-through entity" holding Ownership Interest in the Class R
Certificate if at any time during the taxable year of the pass-through entity a
person that is not a Permitted Transferee is the record holder of an interest in
such entity. The Transferee understands that no tax will be imposed for any
period for which the record holder furnishes to the pass-through entity an
affidavit stating that the record holder is a Permitted Transferee and the
pass-through entity does not have actual knowledge that such affidavit is false.
(For this purpose, a "pass-through entity" includes a regulated investment
company, a real estate investment trust or common trust fund, a partnership,
trust or estate, and certain cooperatives and, except as may be provided in
M-1
<PAGE>
Treasury Regulations, persons holding interests in pass-through entities as a
nominee for another Person.)
5. The Transferee has reviewed the provisions of Section 9.02 of the
Agreement (attached hereto as Exhibit 1 and incorporated herein by reference)
and understands the legal consequences of the acquisition of an Ownership
Interest in the Class R Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfers and mandatory sales. The Transferee expressly agrees to be bound by
and abide by the provisions of Section 9.02 of the Agreement and the
restrictions noted on the face of the Class R Certificate. The Transferee
understands and agrees that any breach of any of the representations included
herein shall render the attempted Transfer null and void.
6. The Transferee agrees to require a Transfer Affidavit from any person to
whom the Transferee attempts to Transfer its Ownership Interest in the Class R
Certificate, and in connection with any Transfer by a person for whom the
Transferee is acting as nominee, trustee or agent. The Transferee agrees to not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any person that the Transferee knows is not a Permitted
Transferee.
7. The Transferee represents and warrants that (i) no purpose of its
purchase of an Ownership Interest in the Class R Certificates is or will be to
impede the assessment or collection of any tax, and (ii) it has no present
knowledge or expectation that it will become insolvent or subject to a
bankruptcy proceeding for so long as it holds the Class R Certificate.
8. The Transferee's taxpayer identification number is ___________.
M-2
<PAGE>
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer this ___ day of __________.
[NAME OF TRANSFEREE]
By: ________________________
Name:
Title:
M-3
<PAGE>
EXHIBIT N
LIST OF CONTRACTS
N-1
<PAGE>
Exhibit 4.2
Form of Limited Guarantee
<PAGE>
LIMITED GUARANTEE, dated as of _________ __, 199_, made by The CIT Group
Holdings, Inc. ("Holdings") pursuant to Section ____ of the Pooling and
Servicing Agreement dated as of _________, 199_ among The CIT Group
Securitization Corporation II, The CIT Group/Sales Financing, Inc. and
[Trustee], not in its individual capacity but solely as Trustee (the
"Agreement").
Capitalized Terms used herein and not otherwise defined herein shall have
the meaning ascribed to such terms in the Agreement.
To induce the parties to the Agreement to enter into the Agreement and
perform their respective obligations thereunder, Holdings hereby unconditionally
agrees to the following:
1. Not later than the third Business Day prior to each Remittance Date, the
Servicer shall notify Holdings of the amount of the Guarantee Payment, if any,
for such Remittance Date. Not later than the Business Day preceding each
Remittance Date, Holdings shall deposit the Guarantee Payment, if any, for such
Remittance Date into the Certificate Account.
2. The obligations of Holdings under this Limited Guarantee shall not
terminate upon or otherwise be affected by a Service Transfer pursuant to
Article VII of the Agreement.
3. The obligations of Holdings under this Limited Guarantee shall terminate
on the Final Remittance Date.
4. The obligation of Holdings to make the Guarantee Payments described in
subsection 1 above shall be unconditional and irrevocable.
5. If Holdings fails to make a Guarantee Payment in whole or in part,
Holdings shall promptly notify the Trustee, and the Trustee shall promptly
notify Moody's.
[For purposes of this Agreement, "Guarantee Payment" means, (i) with
respect to any Remittance Date prior to the Cross-over Date, the amount, if any,
by which the sum of (A) the Class [B] Interest Distribution Amount for such
Remittance Date and (B) the Class [B] Principal Liquidation Loss Amount, if any
exceeds (C) the amount of principal and interest distributions to be made to the
Class [B] Certificateholders on such Remittance Date pursuant to the Agreement,
and (ii) with respect to any Remittance Date after the Cross-Over Date, the
amount, if any, by which the amount of principal and interest distributions to
the Class [B] Certificateholders on such Remittance Date pursuant to the
Agreement exceeds the Amount Available for such Remittance Date; provided,
however, in each case the aggregate Guarantee Payments made by Holdings
hereunder shall in no event exceed the Guarantee Amount. The Guarantee Amount
shall be ________________.]
-1-
<PAGE>
All payments by Holdings under this Limited Guarantee will be made free and
clear of and without deduction for any present or future income, stamp or other
taxes, levies, imposts, deductions, charges, fees, withholdings, liabilities,
restrictions or conditions of any nature whatsoever now or hereafter imposed,
levied, collected, assessed or withheld by any jurisdiction or by any political
subdivision or taxing authority thereof or therein, and all interest, penalties
or similar liabilities ("Taxes"); provided, however, that Holdings shall not be
obligated to pay any amount allocable to Taxes which the Trust was required to
withhold.
This Limited Guarantee is not secured by a security interest in, pledge of
or lien on any assets of Holdings or any of its subsidiaries.
No amendment of any provision of this Limited Guarantee shall be effective
unless it is in writing and signed by Holdings and each party to the Agreement.
This Limited Guarantee shall be construed in accordance with and governed
by the internal laws of the State of New York applicable to contracts made and
to be performed thereon without regard to conflicts of law principles.
IN WITNESS WHEREOF, The CIT Group Holdings, Inc. has duly executed this
Limited Guarantee as of the day and year first written above.
THE CIT GROUP HOLDINGS, INC.
By:
----------------------------
Name:
Title:
-2-
<PAGE>
Exhibit 5.1
Opinion and Consent of Schulte Roth & Zabel
<PAGE>
December 21, 1994
The CIT Group Securitization Corporation II
The CIT Group Holdings, Inc.
650 CIT Drive
Livingston, New Jersey 07039
Dear Sirs:
We have acted as special counsel to you (the "Corporations") in connection
with the Registration Statement combined on Form S-11 and Form S-3 (the
"Registration Statement"), filed with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), registering the manufactured housing contract pass-through certificates
(the "Certificates") issued by The CIT Group Securitization Corporation II ("CIT
II") and the limited guarantees (the "Guarantees") of certain of the
Certificates by The CIT Group Holdings, Inc. ("Holdings"), each described in the
prospectus and prospectus supplement which form a part of the Registration
Statement (the "Prospectus" and "Prospectus Supplement"). Each series of
Certificates and the related Guarantees will be issued pursuant to a pooling and
servicing agreement (the "Agreement") substantially in the form filed as Exhibit
4.1 to the Registration Statement.
In connection with this opinion, we have examined signed copies of the
Registration Statement and originals, copies certified or otherwise identified
to our satisfaction, of such records of the Corporations and such agreements,
certificates of public officials, certificates of officers or representatives of
the Corporations and others, and such other documents, certificates and
corporate or other records as we have deemed necessary or appropriate as a basis
for this opinion.
<PAGE>
The CIT Group Securitization Corporation II
The CIT Group Holdings, Inc.
December 21, 1994
Page 2
As to all matters of fact, we have relied upon and assumed the accuracy of
statements and representations of officers and other representatives of the
Corporations and others.
In our examination, we have assumed the genuineness of all signatures, the
legal capacity of natural persons signing or delivering any instrument, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such latter documents.
We have also assumed, with respect to the Agreement and the Guarantees,
that: (a) the Agreement will be duly executed and delivered by each of the
parties thereto prior to the issuance of any Certificate thereunder; (b) at the
time of such execution, each such party, other than the Corporations, will be
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and will have all requisite power and authority
to execute, deliver and perform its obligations under the Agreement; (c) the
execution and delivery of the Agreement and performance of such obligations will
have been duly authorized by all necessary actions on the part of each such
party, other than the Corporations; (d) at the time of such execution, the
Agreement will be the legal, valid and binding obligation of each such party,
other than the Corporations, and will be enforceable against each such party,
other than the Corporations, in accordance with its terms; (e) the Guarantees
will be duly executed and delivered by Holdings; and (f) during the period from
the date hereof until the date of such execution and delivery, there will be no
change in (i) any relevant authorization, law or regulation, or interpretation
thereof, (ii) the terms and conditions of the Agreement or the Guarantees, or
(iii) any set of facts or circumstances relating to the Agreement or the
Guarantees.
Based upon the foregoing, we are of the opinion that: (a) the Certificates
have been duly authorized and, when duly executed by CIT II and authenticated in
accordance with the terms of the Agreement and issued and delivered in
accordance with the terms of the Agreement against payment therefor as
contemplated by the Prospectus and Prospectus Supplement, will be legally
issued, fully paid and nonassessable; and (b) the Guarantees have been duly
authorized and, when duly executed by Holdings and issued and delivered in
accordance with the terms of the Agreement as contemplated by the Prospectus and
Prospectus Supplement, will be valid and binding obligations of CIT II and
Holdings, respectively, enforceable against CIT II and Holdings, respectively,
in accordance with their terms, except to the extent that the enforceability
thereof may be limited by (i) applicable bankruptcy, insolvency, fraudulent
<PAGE>
The CIT Group Securitization Corporation II
The CIT Group Holdings, Inc.
December 21, 1994
Page 3
conveyance, reorganization, moratorium or similar laws from time to time in
effect affecting generally the enforcement of creditors' rights and remedies,
and (ii) general principles of equity, including, without limitation, principles
of reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in equity or at law).
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm appearing under the
heading "Legal Matters" in the Prospectus. In giving such consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act or the General Rules and Regulations of
the Commission thereunder.
Very truly yours,
/s/ Schulte Roth & Zabel
Exhibit 8.1
Opinion of Schulte Roth & Zabel as to Tax Matters
<PAGE>
December 21, 1994
The CIT Group Securitization Corporation II
650 CIT Drive
Livingston, New Jersey 07039
Dear Sirs:
We have acted as special counsel to you (the "Corporation") in connection
with the Registration Statement combined on Form S-11 and Form S-3 (the
"Registration Statement"), filed with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), registering the manufactured housing contract pass-through certificates
(the "Certificates") described in the prospectus and prospectus supplement which
forms a part of the Registration Statement (the "Prospectus" and "Prospectus
Supplement"). The Certificates will be issued pursuant to a pooling and
servicing agreement (the "Agreement") substantially in the form filed as Exhibit
4.1 to the Registration Statement.
We hereby confirm that the statements set forth in the Prospectus and the
Prospectus Supplement under the heading "Certain Federal Income Tax
Consequences" accurately describe the material Federal income tax consequences
to holders of the Certificates.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Securities Act or the General Rules and Regulations of the Commission
thereunder.
Very truly yours,
/s/ Schulte Roth & Zabel
Exhibit 10.1
Form of Sale and Purchase Agreement
<PAGE>
SALE AND PURCHASE AGREEMENT
This Sale and Purchase Agreement dated as of _______ __, ____(the
"Agreement"), 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 manufactured housing installment sales contracts and
installment loan agreements set forth on Exhibit A (collectively, the
"Contracts"), having an aggregate outstanding principal balance as of _________
__, 19__ (the "Cut-Off Date") of approximately $__________.
It is the intention of the Seller and the Purchaser that the Purchaser
shall sell the Contracts to a trust and shall enter into a Pooling and Servicing
Agreement, dated as of the date hereof, with ________________________________,
as trustee (the "Trustee"), and the Seller, pursuant to which Manufactured
Housing Contract [Senior/Subordinate] Pass-Through Certificates, Series _____
(the "Certificates"), evidencing ownership interests in the Contracts, will be
issued.
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:
<PAGE>
ARTICLE I
DEFINITIONS
All capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Pooling and Servicing Agreement. The following words and
phrases are defined as follows:
CERTIFICATES: The Manufactured Housing Contract [Senior/Subordinated]
Pass-Through Certificates, Series ____, Class A [and Class B].
CLOSING DATE: _______ __, 19__.
CUT-OFF DATE: _______ __, 19__.
OFFICERS' CERTIFICATE: A certificate signed by the Chairman of the Board,
the Vice Chairman of the Board, the President, an Executive Vice President or a
Vice President of the Seller, and delivered to the Purchaser as required by this
Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may be counsel for
the Seller, reasonably acceptable to the Purchaser.
[PLACEMENT AGENT: ______________________________.]
POOLING AND SERVICING AGREEMENT: The agreement to be entered into by and
among the Purchaser, the Seller (as Servicer) and the Trustee, to be dated as of
the date hereof, pursuant to which Manufactured Housing Contract
[Senior/Subordinate] Pass-Through Certificates, Series _____, evidencing
ownership interests in the Trust created thereby, will be sold. The Pooling and
Servicing Agreement shall be in substantially the form attached hereto as
Exhibit B.
PROSPECTUS: The prospectus filed as part of the registration statement of
The CIT Group Securitization Corporation II, as amended, dated ______, 199_ used
in connection with the offering of the Certificates.
PROSPECTUS SUPPLEMENT: The prospectus supplement, dated ________, 199_,
used in connection with the offering of the Certificates.
PURCHASER: The owner of the Contracts as indicated in the books and records
of the Seller, initially The CIT Group Securitization Corporation II.
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SELLER: The CIT Group/Sales Financing, Inc., or its successor in interest.
SERVICER: The CIT Group/Sales Financing, Inc., or its successors or
assigns, as servicer pursuant to the Pooling and Servicing Agreement.
TRUSTEE: ________________, as trustee pursuant to the Pooling and Servicing
Agreement.
UNDERWRITERS: ________________________.
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 sell, transfer,
assign, set over and convey to the Purchaser, without recourse but subject to
the terms of this Agreement, as of the Closing Date, (a) all right, title and
interest of the Seller in and to the Contracts listed on the List of Contracts,
including, without limitation, the security interest created thereby and any
related Mortgages, all interest and principal received by the Seller on or with
respect to the Contracts after the Cut-Off Date (other than principal and
interest due on the Contracts, on or before the Cut-Off Date) and all principal
and interest received by the Seller on or with respect to the Contracts before
the Cut-Off Date which was due after the Cut-Off Date, (b) all right under any
Hazard Insurance Policies relating to the Manufactured Homes securing the
Contracts for the benefit of the creditors of such Contracts, [(c) all rights
under all FHA/VA Regulations pertaining to any FHA/VA Contracts,] (d) the
proceeds from any Contract Holders' Errors and Omissions Protection Policy and
all rights under any blanket hazard insurance policy, to the extent they relate
to the Manufactured Homes, (e) all documents contained in the Contract Files or
the Land-Home Contract Files, (f) all rights to any rebated portions of
Force-Placed Insurance Premiums and (g) all proceeds in any way derived from any
of the foregoing. The parties intend 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.
SECTION 2.02. Purchase Price; Payments on the Contracts.
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(a) The purchase price for the Contracts shall be an amount equal to
$_____________. Such purchase price shall be payable in immediately available
funds on the Closing Date.
(b) The Purchaser shall be entitled to all scheduled payments of principal
and interest due after the Cut-Off Date and all Principal Prepayments received
after the Cut-Off Date. The principal balance of each Contract as of the Cut-Off
Date is determined after deduction of payments of principal due on or before the
Cut-Off Date whether or not collected. Therefore, Advance Payments received
prior to the Cut-Off Date with respect to a Due Date after the Cut-Off Date
shall not be deducted from the principal balance as of the Cut-Off Date. Such
Advance Payments shall be the property of the Purchaser. All scheduled payments
of principal and interest due on or before the Cut-Off Date, and collected on or
after the Cut-Off Date, shall belong to the Seller. The Purchaser shall hold in
trust for the Seller, and shall promptly remit to the Seller, any payments on
the Contracts received by the Purchaser that belong to the Seller 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 Pooling and Servicing
Agreement executed by all the parties thereto, (ii) the documents listed in
Section 2.02 of the Pooling 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
Certificates;
B. The representations and warranties of the Seller and the Servicer
made in the Pooling and Servicing Agreement shall be true and correct in
all material respects on the Closing Date;
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 Section 2.02 of the Pooling and Servicing Agreement
and such counsel's opinion to [Rating Agency] 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; and
D. The Purchaser shall have received the Officers' Certificate
referred to in Section 3.01(a).
SECTION 2.04. Examination of Files. The Seller will make the Contract Files
available to the Purchaser or its agent for examination at the Trustee's offices
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<PAGE>
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 Pooling and Servicing
Agreement, the Purchaser will assign all of its right, title and interest in and
to the Contracts to the Trustee for the benefit of the Certificateholders. The
Purchaser has the right to assign its interest under this Agreement as may be
required to effect the purposes of the Pooling 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 Article
III of the Pooling 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 Pooling and Servicing Agreement directly to the Trustee and
will become obligated in respect of such representations and warranties pursuant
to Section 3.02 of the Pooling 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
Article III of the Pooling and Servicing Agreement by the Seller are true and
correct in all material respects 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 Trustee, and shall inure to the benefit of the Purchaser, the Trustee 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 and
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<PAGE>
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 Trustee
shall also have the remedies provided in the Pooling 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.
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<PAGE>
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 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.
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: ____________________________________
Name:
Title:
THE CIT GROUP/SALES FINANCING, INC.,
as Seller
By: ____________________________________
Name:
Title:
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<PAGE>
EXHIBIT A
List of Contracts
<PAGE>
EXHIBIT B
[Form of Pooling and Servicing Agreement]
<PAGE>
Exhibit 10.2
Form of Subsequent Sale and Purchase Agreement
<PAGE>
SUBSEQUENT SALE AND PURCHASE AGREEMENT
This Subsequent Sale and Purchase Agreement dated as of ,
(the "Agreement"), between THE CIT GROUP SECURITIZATION CORPORATION II, as
purchaser (the "Purchaser"), and THE CIT GROUP/SALES FINANCING, INC., as seller
(the "Seller").
Reference is hereby made to the Sale and Purchase Agreement dated as of
, 199 between the parties hereto (the "Sale and Purchase Agreement")
pursuant to which the Purchaser purchased from the Seller the manufactured
housing installment sales contracts and installment loan agreements set forth on
Exhibit A thereto (the "Initial Contracts"). The Purchaser sold the Initial
Contracts to the trust established pursuant to the Pooling and Servicing
Agreement dated as of ___________,__ 199 ("Pooling and Servicing Agreement")
among the Purchaser, the Seller and ______________ , as trustee (the "Trustee"),
pursuant to which Manufactured Housing Contract [Senior/Subordinate]
Pass-Through Certificates, Series (the "Certificates"), evidencing
ownership interests in the Initial Contracts and the Subsequent Contracts (as
hereinafter defined), were issued.
Capitalized terms used herein and not otherwise defined herein shall have
the meanings ascribed to such terms in the Sale and Purchase Agreement and the
Pooling and Servicing Agreement.
Pursuant to the Pooling and Servicing Agreement, the Purchaser agreed to
purchase from the Seller and the Seller agreed to sell to the Purchaser any
Subsequent Contracts for a fixed purchase price specified in the Pooling and
Servicing Agreement for delivery on the date specified therein, which purchase
price will be funded from money on deposit in the Pre-Funding Account during the
Pre-Funding Period, evidenced by the execution and delivery of a Subsequent Sale
and Purchase Agreement. Accordingly, subject to the terms hereof, the Seller
agrees to sell, and the Purchaser agrees to purchase, the manufactured housing
installment sales contracts and installment loan agreements set forth on Exhibit
A (collectively, the "Subsequent Contracts"), having an aggregate outstanding
principal balance as of _________ __, 19__ (the "Subsequent Cut-Off Date") of
approximately $__________.
The Purchaser and the Seller wish to prescribe the terms and conditions of
the purchase by the Purchaser of the Subsequent Contracts and the servicing and
administration of the Subsequent Contracts.
In consideration of the premises and the mutual agreements hereinafter set
forth, the Purchaser and the Seller agree as follows:
<PAGE>
ARTICLE I
SALE AND CONVEYANCE OF SUBSEQUENT CONTRACTS;
CONTRACT FILES
SECTION 1.01. Sale and Conveyance of Subsequent Contracts. On ________ __,
199_ (the "Subsequent Closing Date"), subject to the terms and conditions
hereof, the Seller shall sell, transfer, assign, set over and convey to the
Purchaser, without recourse but subject to the terms of this Agreement, as of
the Subsequent Closing Date, (a) all right, title and interest of the Seller in
and to the Subsequent Contracts listed on the List of Contracts, including,
without limitation, the security interest created thereby and any related
Mortgages, all interest and principal received by the Seller on or with respect
to the Subsequent Contracts after the Subsequent Cut-Off Date (other than
principal and interest due on the Subsequent Contracts, on or before the
Subsequent Cut-Off Date) and all principal and interest received by the Seller
on or with respect to the Subsequent Contracts before the Subsequent Cut-Off
Date which was due after the Subsequent Cut-Off Date, (b) all right under any
Hazard Insurance Policies relating to the Manufactured Homes securing the
Subsequent Contracts for the benefit of the creditors of such Subsequent
Contracts, [(c) all rights under all FHA/VA Regulations pertaining to any FHA/VA
Subsequent Contracts,] (d) the proceeds from any Subsequent Contract Holders'
Errors and Omissions Protection Policy and all rights under any blanket hazard
insurance policy, to the extent they relate to the Manufactured Homes securing
the Subsequent Contracts, (e) all documents contained in the Contract Files or
the Land-Home Contract Files relating to the Subsequent Contracts, (f) all
rights to any rebated portions of Force-Placed Insurance Premiums relating to
the Manufactured Homes securing the Subsequent Contracts and (g) all proceeds in
any way derived from any of the foregoing. The parties intend that the
conveyance of the Seller's right, title and interest in and to the Subsequent
Contracts pursuant to this Agreement shall constitute an absolute sale.
SECTION 1.02. Purchase Price; Payments on the Subsequent Contracts.
(a) The purchase price for the Subsequent Contracts shall be an amount
equal to $_____________ and the Seller hereby acknowledges receipt of such
amount in respect of the sale of the Subsequent Contracts hereunder. Such
purchase price shall be payable in immediately available funds on the Subsequent
Closing Date from funds on deposit in the Pre-Funding Account.
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(b) The Purchaser shall be entitled to all scheduled payments of principal
and interest with respect to the Subsequent Contracts due after the Subsequent
Cut-Off Date and all Principal Prepayments with respect to the Subsequent
Contracts received after the Subsequent Cut-Off Date. The principal balance of
each Subsequent Contract as of the Subsequent Cut-Off Date is determined after
deduction of payments of principal due on or before the Subsequent Cut-Off Date
whether or not collected. Therefore, Advance Payments with respect to the
Subsequent Contracts received prior to the Subsequent Cut-Off Date with respect
to a Due Date after the Subsequent Cut-Off Date shall not be deducted from the
principal balance as of the Subsequent Cut-Off Date. Such Advance Payments shall
be the property of the Purchaser. All scheduled payments of principal and
interest due on or before the Subsequent Cut-Off Date, and collected on or after
the Subsequent Cut-Off Date, shall belong to the Seller. The Purchaser shall
hold in trust for the Seller, and shall promptly remit to the Seller, any
payments on the Subsequent Contracts received by the Purchaser that belong to
the Seller under the terms of this Agreement.
SECTION 1.03. Conditions to Sale of Subsequent Contracts. The Purchaser's
obligations hereunder are subject to the following conditions:
(a) The Purchaser shall have received (i) the Pooling and Servicing
Agreement executed by all the parties thereto, (ii) the documents listed in
Section ____ of the Pooling and Servicing Agreement with respect to the
Subsequent Contracts (iii) a complete list of the Subsequent Contracts and
(iv) such other opinions and documents as the Purchaser may reasonably
require in connection with the purchase of the Subsequent Contracts
hereunder or the sale of the Certificates;
(b) The representations and warranties of (i) the Seller and the
Servicer made in the Pooling and Servicing Agreement and (ii) the Seller
made in the Sale and Purchase Agreement and this Agreement shall be true
and correct in all material respects on the Subsequent Closing Date;
(c) The Purchaser shall have received the Officers' Certificate
referred to in Section _______ of the Pooling and Servicing Agreement.
SECTION 1.04. Examination of Files. The Seller will make the Contract Files
with respect to the Subsequent Contracts available to the Purchaser or its agent
for examination at the Trustee's offices or such other location as otherwise
shall be agreed upon by the Purchaser and the Seller.
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<PAGE>
SECTION 1.05. Transfer of Subsequent Contracts. Pursuant to the Pooling and
Servicing Agreement, the Purchaser will assign all of its right, title and
interest in and to the Subsequent Contracts to the Trustee for the benefit of
the Certificateholders. The Purchaser has the right to assign its interest under
this Agreement as may be required to effect the purposes of the Pooling 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.
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<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
SECTION 2.01. Representations and Warranties of the Seller.
(a) The representations and warranties of the Seller contained in Article
III of the Pooling and Servicing Agreement with respect to the Subsequent
Contracts 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 Pooling
and Servicing Agreement directly to the Trustee and will become obligated in
respect of such representations and warranties pursuant to Section [3.02] of the
Pooling and Servicing Agreement. On the Subsequent Closing Date, the Seller
shall deliver to the Purchaser an Officers' Certificate, dated the Subsequent
Closing Date, to the effect that the representations and warranties made in
Article III of the Pooling and Servicing Agreement by the Seller with respect to
the Subsequent Contracts are true and correct in all material respects as of the
Subsequent Closing Date.
(b) It is understood and agreed that the representations and warranties
incorporated by reference in this Agreement by Section 2.01(a) hereof shall
remain operative and in full force and effect, shall survive the transfer and
conveyance of the Subsequent Contracts by the Seller to the Purchaser and by the
Purchaser to the Trustee, and shall inure to the benefit of the Purchaser, the
Trustee 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 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 2.01 to indemnify the Purchaser and the Servicer as provided in this
Section 2.01 constitutes the sole remedy of the Purchaser and the Servicer
respecting a breach of the foregoing representations and warranties. The Trustee
shall also have the remedies provided in the Pooling 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
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<PAGE>
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 2.01 shall accrue as to any Subsequent 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 Subsequent Contract.
ARTICLE III
MISCELLANEOUS PROVISIONS
SECTION 3.01. Opinion of Counsel. The Seller and the Purchaser shall
deliver to the Trustee on the Subsequent Closing Date, an opinion of counsel in
substantially the form of Exhibit B hereto.
SECTION 3.02. 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 3.03. 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 3.04. Termination. The Seller's obligations under this Agreement
shall survive the sale of the Subsequent Contracts to the Purchaser.
SECTION 3.05. 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.
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<PAGE>
SECTION 3.06. 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 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 3.07. 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 3.08. 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.
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: ____________________________________
Name:
Title:
THE CIT GROUP/SALES FINANCING, INC.,
as Seller
By: ____________________________________
Name:
Title:
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<PAGE>
EXHIBIT A
Characteristics of Subsequent Contracts
<PAGE>
EXHIBIT B
Form of Opinion of Counsel
<PAGE>
EXHIBIT B
to
Subsequent Sale and Purchase Agreement
[Date]
[Name and Address of Trustee]
Dear Sirs,
I have acted as counsel to The CIT Group/Sales Financing, Inc. ("CITSF")
and The CIT Group Securitization Corporation II, a Delaware corporation (the
"Company"), in connection with the sale of Manufactured Housing Contract
[Senior/Subordinate] Pass-Through Certificates, Series ______ representing
interests in a trust consisting of a pool of manufactured housing installment
sale contracts and installment loan agreements (collectively, the "Contracts")
and certain related property. The Company purchased certain of the Contracts
from CITSF (the "Initial Contracts") pursuant to a Sale and Purchase Agreement,
dated as of _____________ __, 199_, by and between CITSF and the Company.
Additional Contracts are being purchased by the Company from CITSF (the
"Subsequent Contracts") pursuant to the Subsequent Sale and Purchase Agreement
dated as of ________ __, 199_ (the "Subsequent Sale and Purchase Agreement").
Pursuant to a Pooling and Servicing Agreement, dated as of ____ __, 199_ (the
"Pooling and Servicing Agreement"), among the Company, CITSF and
_____________________, as Trustee (the "Trustee"), the Company transferred the
Initial Contracts to the Trustee to establish a trust (the "Trust"). The Company
will also transfer, pursuant to the Pooling and Servicing Agreement, the
Subsequent Contracts to the Trust, the corpus of which will consist of each of
the Initial Contracts and the Subsequent Contracts and certain other property
transferred by the Company to the Trustee.
All capitalized terms used herein and not defined shall have the meanings
assigned to them in the Subsequent Sale and Purchase Agreement.
In rendering the following opinions, I have examined (i) the Subsequent
Sale and Purchase Agreement; (ii) the Pooling and Servicing Agreement; (iii) the
Certificate of Incorporation of each of CITSF and the Company; (iv) the By-laws
of each of CITSF and the Company; [(v) copies of certain unanimous consents
adopted by the Board of Directors of the Company authorizing the issuance and
<PAGE>
sale of the Certificates and the purchase of the Contracts; and (vi) copies of
certain unanimous written consents of the Board of Directors of CITSF]. I have
also examined such other documents and made such investigations of law as I have
considered necessary and appropriate for the purposes of the opinions expressed
herein. I have assumed the authenticity of signatures on original documents and
the conformity to the original of all documents submitted to me as certified,
conformed or photostatic copies and have relied as to all matters of fact on
certificates, representations or statements by officers of the Company or CITSF.
In making my examination of agreements, instruments and other documents and
in giving opinions herein, I have assumed that the Trustee has and had the power
and capacity to execute and deliver such agreements, instruments and other
documents and to perform all of its obligations thereunder and that such
agreements, instruments and other documents were duly authorized by all
requisite action by or on behalf of the Trustee were duly executed,
acknowledged, as necessary, and delivered by or on behalf of and are the legal,
valid and binding obligations of, and are enforceable in accordance with their
terms against, the Trustee.
Based upon, and subject to, the foregoing I am of the opinion that:
I. The Subsequent Sale and Purchase Agreement constitutes the legal, valid
and binding agreement of each of CITSF and the Company, and is enforceable
against each of CITSF and the Company in accordance with its terms; the
Subsequent Sale and Purchase Agreement is effective to transfer all of CITSF's
right, title and interest in and to the Subsequent Contracts and other property
described in Section 1.01 of the Subsequent Sale and Purchase Agreement to the
Company; the Pooling and Servicing Agreement is effective to transfer all of the
Company's right, title and interest in and to such Subsequent Contracts and
other property to the Trust subject to no prior liens or encumbrances.
II. No consent, approval, authorization or order of, registration or filing
with, or notice to any governmental authority or court is required under federal
laws or the laws of the State of _____________ for the execution, delivery and
performance by the Company of the Subsequent Sale and Purchase Agreement or the
consummation of any other transaction contemplated thereby by the Company,
except for those which have been obtained or except such as may be required
under the Securities Act of 1933, as amended or the regulations promulgated
thereunder or state securities or Blue Sky laws of any jurisdiction.
III. No consent, approval, authorization or order of, registration or
filing with, or notice to, any governmental authority or court is required under
<PAGE>
federal laws or the laws of the State of ________ for the execution, delivery
and performance by CITSF of the Subsequent Sale and Purchase Agreement or the
consummation of any other transaction contemplated thereby by CITSF except for
those which have been obtained or except such as may be required under the
Securities Act of 1933, as amended or the regulations promulgated thereunder or
state securities or Blue Sky laws of any jurisdiction.
The foregoing opinion is given on the express understanding that the
undersigned is an officer of the Company and CITSF and shall in no event incur
any personal liability in connection with the said opinion.
I am furnishing this opinion to you solely for your benefit. This opinion
is not to be used, circulated, quoted or otherwise referred to or relied on by
any other person or for any other purpose.
Very truly yours,
<PAGE>
EXHIBIT 12.1
Computations of Ratios of Earnings to Fixed Charges
<PAGE>
<TABLE>
THE CIT GROUP HOLDINGS, INC. AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
<CAPTION>
Year Ended December 31,
-------------------------------------------------------
1993 1992 1991 1990 1989
------ ------ ------ ------ ------
(Dollar Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
Net income.................................... $182,308 $162,300 $150,128 $134,122 $126,156
Provision for income taxes.................... 128,489 105,311 100,032 76,995 72,722
Extraordinary item--loss on early
extinguishment of debt, net of income
tax benefit................................. -- 4,241 1,325 5,937 --
Cumulative effect of a change in accounting
for income taxes............................ -- -- -- (20,350) --
Earnings before provision for income taxes and
extraordinary item and cumulative
effect of a change in accounting for -------- -------- -------- -------- --------
income taxes ............................... 310,797 271,852 251,485 196,704 198,878
-------- -------- -------- -------- --------
Fixed Charges:
Interest and debt expenses on indebtedness . 508,006 552,017 709,373 711,645 694,280
Interest factor--one-third of rentals on
real and personal properties ............. 8,001 8,278 8,368 7,832 6,537
-------- -------- -------- -------- --------
Total fixed charges ........................ 516,007 560,295 717,741 719,477 700,817
-------- -------- -------- -------- --------
Total earnings before provisions for
income taxes, extraordinary item,
cumulative effect of a change in
accounting for income taxes, and
fixed charges .......................... $826,804 $832,147 $969,226 $916,181 $899,695
======== ======== ======== ======== ========
Ratio of Earnings to Fixed Charges ........... 1.60 1.49 1.35 1.27 1.28
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------------
(unaudited)
1994 1993
----------- -----------
<S> <C> <C>
Net income............................................................. $ 151,593 $ 137,584
Provision for income taxes............................................. 94,609 104,730
--------- ---------
Earnings before provision for income taxes.............................. 246,202 242,314
--------- ---------
Fixed Charges:
Interest and debt expense on indebtedness............................. 437,444 379,201
Interest factor--one-third of rentals on real and personal properties. 5,857 5,924
--------- ---------
Total fixed charges..................................................... 443,301 385,125
--------- ---------
Total earnings before provision for income taxes and fixed charges...... $689,503 $627,439
======== ========
Ratio of earnings to fixed charges...................................... 1.56 1.63
</TABLE>
<PAGE>
Exhibit 24.2
------------
Consent of KPMG Peat Marwick LLP
<PAGE>
Independent Auditors' Consent
-----------------------------
The Board of Directors
The CIT Group Holdings, Inc.:
We consent to the use of our reports dated January 18, 1994, relating to the
consolidated balance sheets of The CIT Group Holdings, Inc. and subsidiaries as
of December 31, 1993 and 1992, and the related consolidated statements of
income, changes in stockholders' equity, and cash flows for each of the years in
the three-year period ended December 31, 1993, and the related schedule for each
of the years in the three-year period ended December 31, 1993, incorporated by
reference in Registration Statement No. 33-85224 which includes Amendment No. 1
to combined Form S-11 and Form S-3 of The CIT Group Securitization Corporation
II and The CIT Group Holdings, Inc., which reports appear in the December 31,
1993 Annual Report on Form 10-K of The CIT Group Holdings, Inc., and to the
reference to our firm under the heading "Experts" in the Registration Statement.
Our report on the consolidated financial statements refers to a change in the
method of accounting for postretirement benefits other than pensions in 1993.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Short Hills, New Jersey
December 21, 1994
<PAGE>
<PAGE>
<PAGE>
Exhibit 25.2
Powers of Attorney of The CIT Group Holdings, Inc.
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of THE CIT GROUP HOLDINGS, INC., a Delaware corporation, which is about
to file with the Securities and Exchange Commission, Washington, D.C., under the
provisions of the Securities Act of 1933, as amended, Amendment No. 1 to
Registration Statement No. 33-85224 on Form S-11 and Form S-3 for the
registration of limited guarantees of payment on certain Manufactured Housing
Contract Pass-Through Certificates, to be issued by its wholly-owned subsidiary
The CIT Group Securitization Corporation II, under said Act of up to
$500,000,000 aggregate principal amount, or if issued at an original discount,
such greater principal amount as shall result in an aggregate initial public
offering price of up to $500,000,000, hereby constitutes and appoints ALBERT R.
GAMPER, JR., ERNEST D. STEIN, and DONALD J. RAPSON his true and lawful
attorneys-in-fact and agents, and each of them with full power to act without
the others, for him and in his name, place, and stead, in any and all
capacities, to sign such Amendment No. 1 to the Registration Statement and any
and all amendments thereto, with power where appropriate to affix the corporate
seal of said corporation thereto and to attest to said seal, and to file such
Amendment No. 1 to the Registration Statement and each such amendment, with all
exhibits thereto, and any and all other documents in connection therewith, with
the Securities and Exchange Commission, and hereby grants unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform any and all acts and things requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person and hereby ratifies and confirms all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereby.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the 23rd
day of November, 1994.
/s/ ALBERT R. GAMPER, JR.
-----------------------------------
Albert R. Gamper, Jr.
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of THE CIT GROUP HOLDINGS, INC., a Delaware corporation, which is about
to file with the Securities and Exchange Commission, Washington, D.C., under the
provisions of the Securities Act of 1933, as amended, Amendment No. 1 to
Registration Statement No. 33-85224 on Form S-11 and Form S-3 for the
registration of limited guarantees of payment on certain Manufactured Housing
Contract Pass-Through Certificates, to be issued by its wholly-owned subsidiary
The CIT Group Securitization Corporation II, under said Act of up to
$500,000,000 aggregate principal amount, or if issued at an original discount,
such greater principal amount as shall result in an aggregate initial public
offering price of up to $500,000,000, hereby constitutes and appoints ALBERT R.
GAMPER, JR., ERNEST D. STEIN, and DONALD J. RAPSON his true and lawful
attorneys-in-fact and agents, and each of them with full power to act without
the others, for him and in his name, place, and stead, in any and all
capacities, to sign such Amendment No. 1 to the Registration Statement and any
and all amendments thereto, with power where appropriate to affix the corporate
seal of said corporation thereto and to attest to said seal, and to file such
Amendment No. 1 to the Registration Statement and each such amendment, with all
exhibits thereto, and any and all other documents in connection therewith, with
the Securities and Exchange Commission, and hereby grants unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform any and all acts and things requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person and hereby ratifies and confirms all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereby.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the 23rd
day of November, 1994.
/s/ HISAO KOBAYASHI
-----------------------------------
Hisao Kobayashi
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of THE CIT GROUP HOLDINGS, INC., a Delaware corporation, which is about
to file with the Securities and Exchange Commission, Washington, D.C., under the
provisions of the Securities Act of 1933, as amended, Amendment No. 1 to
Registration Statement No. 33-85224 on Form S-11 and Form S-3 for the
registration of limited guarantees of payment on certain Manufactured Housing
Contract Pass-Through Certificates, to be issued by its wholly-owned subsidiary
The CIT Group Securitization Corporation II, under said Act of up to
$500,000,000 aggregate principal amount, or if issued at an original discount,
such greater principal amount as shall result in an aggregate initial public
offering price of up to $500,000,000, hereby constitutes and appoints ALBERT R.
GAMPER, JR., ERNEST D. STEIN, and DONALD J. RAPSON his true and lawful
attorneys-in-fact and agents, and each of them with full power to act without
the others, for him and in his name, place, and stead, in any and all
capacities, to sign such Amendment No. 1 to the Registration Statement and any
and all amendments thereto, with power where appropriate to affix the corporate
seal of said corporation thereto and to attest to said seal, and to file such
Amendment No. 1 to the Registration Statement and each such amendment, with all
exhibits thereto, and any and all other documents in connection therewith, with
the Securities and Exchange Commission, and hereby grants unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform any and all acts and things requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person and hereby ratifies and confirms all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereby.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the 23rd
day of November, 1994.
/s/ MICHIO MURATA
-----------------------------------
Michio Murata
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of THE CIT GROUP HOLDINGS, INC., a Delaware corporation, which is about
to file with the Securities and Exchange Commission, Washington, D.C., under the
provisions of the Securities Act of 1933, as amended, Amendment No. 1 to
Registration Statement No. 33-85224 on Form S-11 and Form S-3 for the
registration of limited guarantees of payment on certain Manufactured Housing
Contract Pass-Through Certificates, to be issued by its wholly-owned subsidiary
The CIT Group Securitization Corporation II, under said Act of up to
$500,000,000 aggregate principal amount, or if issued at an original discount,
such greater principal amount as shall result in an aggregate initial public
offering price of up to $500,000,000, hereby constitutes and appoints ALBERT R.
GAMPER, JR., ERNEST D. STEIN, and DONALD J. RAPSON his true and lawful
attorneys-in-fact and agents, and each of them with full power to act without
the others, for him and in his name, place, and stead, in any and all
capacities, to sign such Amendment No. 1 to the Registration Statement and any
and all amendments thereto, with power where appropriate to affix the corporate
seal of said corporation thereto and to attest to said seal, and to file such
Amendment No. 1 to the Registration Statement and each such amendment, with all
exhibits thereto, and any and all other documents in connection therewith, with
the Securities and Exchange Commission, and hereby grants unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform any and all acts and things requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person and hereby ratifies and confirms all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereby.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the 23rd
day of November, 1994.
/s/ JOSEPH A. POLLICINO
-----------------------------------
Joseph A. Pollicino
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of THE CIT GROUP HOLDINGS, INC., a Delaware corporation, which is about
to file with the Securities and Exchange Commission, Washington, D.C., under the
provisions of the Securities Act of 1933, as amended, Amendment No. 1 to
Registration Statement No. 33-85224 on Form S-11 and Form S-3 for the
registration of limited guarantees of payment on certain Manufactured Housing
Contract Pass-Through Certificates, to be issued by its wholly-owned subsidiary
The CIT Group Securitization Corporation II, under said Act of up to
$500,000,000 aggregate principal amount, or if issued at an original discount,
such greater principal amount as shall result in an aggregate initial public
offering price of up to $500,000,000, hereby constitutes and appoints ALBERT R.
GAMPER, JR., ERNEST D. STEIN, and DONALD J. RAPSON his true and lawful
attorneys-in-fact and agents, and each of them with full power to act without
the others, for him and in his name, place, and stead, in any and all
capacities, to sign such Amendment No. 1 to the Registration Statement and any
and all amendments thereto, with power where appropriate to affix the corporate
seal of said corporation thereto and to attest to said seal, and to file such
Amendment No. 1 to the Registration Statement and each such amendment, with all
exhibits thereto, and any and all other documents in connection therewith, with
the Securities and Exchange Commission, and hereby grants unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform any and all acts and things requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person and hereby ratifies and confirms all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereby.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the 23rd
day of November, 1994.
/s/ PAUL N. ROTH
-----------------------------------
Paul N. Roth
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of THE CIT GROUP HOLDINGS, INC., a Delaware corporation, which is about
to file with the Securities and Exchange Commission, Washington, D.C., under the
provisions of the Securities Act of 1933, as amended, Amendment No. 1 to
Registration Statement No. 33-85224 on Form S-11 and Form S-3 for the
registration of limited guarantees of payment on certain Manufactured Housing
Contract Pass-Through Certificates, to be issued by its wholly-owned subsidiary
The CIT Group Securitization Corporation II, under said Act of up to
$500,000,000 aggregate principal amount, or if issued at an original discount,
such greater principal amount as shall result in an aggregate initial public
offering price of up to $500,000,000, hereby constitutes and appoints ALBERT R.
GAMPER, JR., ERNEST D. STEIN, and DONALD J. RAPSON his true and lawful
attorneys-in-fact and agents, and each of them with full power to act without
the others, for him and in his name, place, and stead, in any and all
capacities, to sign such Amendment No. 1 to the Registration Statement and any
and all amendments thereto, with power where appropriate to affix the corporate
seal of said corporation thereto and to attest to said seal, and to file such
Amendment No. 1 to the Registration Statement and each such amendment, with all
exhibits thereto, and any and all other documents in connection therewith, with
the Securities and Exchange Commission, and hereby grants unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform any and all acts and things requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person and hereby ratifies and confirms all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereby.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the 23rd
day of November, 1994.
/s/ HIDEO KITAHARA
-----------------------------------
Hideo Kitahara
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of THE CIT GROUP HOLDINGS, INC., a Delaware corporation, which is about
to file with the Securities and Exchange Commission, Washington, D.C., under the
provisions of the Securities Act of 1933, as amended, Amendment No. 1 to
Registration Statement No. 33-85224 on Form S-11 and Form S-3 for the
registration of limited guarantees of payment on certain Manufactured Housing
Contract Pass-Through Certificates, to be issued by its wholly-owned subsidiary
The CIT Group Securitization Corporation II, under said Act of up to
$500,000,000 aggregate principal amount, or if issued at an original discount,
such greater principal amount as shall result in an aggregate initial public
offering price of up to $500,000,000, hereby constitutes and appoints ALBERT R.
GAMPER, JR., ERNEST D. STEIN, and DONALD J. RAPSON his true and lawful
attorneys-in-fact and agents, and each of them with full power to act without
the others, for him and in his name, place, and stead, in any and all
capacities, to sign such Amendment No. 1 to the Registration Statement and any
and all amendments thereto, with power where appropriate to affix the corporate
seal of said corporation thereto and to attest to said seal, and to file such
Amendment No. 1 to the Registration Statement and each such amendment, with all
exhibits thereto, and any and all other documents in connection therewith, with
the Securities and Exchange Commission, and hereby grants unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform any and all acts and things requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person and hereby ratifies and confirms all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereby.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the 23rd
day of November, 1994.
/s/ PETER J. TOBIN
-----------------------------------
Peter J. Tobin
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of THE CIT GROUP HOLDINGS, INC., a Delaware corporation, which is about
to file with the Securities and Exchange Commission, Washington, D.C., under the
provisions of the Securities Act of 1933, as amended, Amendment No. 1 to
Registration Statement No. 33-85224 on Form S-11 and Form S-3 for the
registration of limited guarantees of payment on certain Manufactured Housing
Contract Pass-Through Certificates, to be issued by its wholly-owned subsidiary
The CIT Group Securitization Corporation II, under said Act of up to
$500,000,000 aggregate principal amount, or if issued at an original discount,
such greater principal amount as shall result in an aggregate initial public
offering price of up to $500,000,000, hereby constitutes and appoints ALBERT R.
GAMPER, JR., ERNEST D. STEIN, and DONALD J. RAPSON his true and lawful
attorneys-in-fact and agents, and each of them with full power to act without
the others, for him and in his name, place, and stead, in any and all
capacities, to sign such Amendment No. 1 to the Registration Statement and any
and all amendments thereto, with power where appropriate to affix the corporate
seal of said corporation thereto and to attest to said seal, and to file such
Amendment No. 1 to the Registration Statement and each such amendment, with all
exhibits thereto, and any and all other documents in connection therewith, with
the Securities and Exchange Commission, and hereby grants unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform any and all acts and things requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person and hereby ratifies and confirms all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereby.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the 23rd
day of November, 1994.
/s/ TOSHIJI TOKIWA
-----------------------------------
Toshiji Tokiwa
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of THE CIT GROUP HOLDINGS, INC., a Delaware corporation, which is about
to file with the Securities and Exchange Commission, Washington, D.C., under the
provisions of the Securities Act of 1933, as amended, Amendment No. 1 to
Registration Statement No. 33-85224 on Form S-11 and Form S-3 for the
registration of limited guarantees of payment on certain Manufactured Housing
Contract Pass-Through Certificates, to be issued by its wholly-owned subsidiary
The CIT Group Securitization Corporation II, under said Act of up to
$500,000,000 aggregate principal amount, or if issued at an original discount,
such greater principal amount as shall result in an aggregate initial public
offering price of up to $500,000,000, hereby constitutes and appoints ALBERT R.
GAMPER, JR., ERNEST D. STEIN, and DONALD J. RAPSON his true and lawful
attorneys-in-fact and agents, and each of them with full power to act without
the others, for him and in his name, place, and stead, in any and all
capacities, to sign such Amendment No. 1 to the Registration Statement and any
and all amendments thereto, with power where appropriate to affix the corporate
seal of said corporation thereto and to attest to said seal, and to file such
Amendment No. 1 to the Registration Statement and each such amendment, with all
exhibits thereto, and any and all other documents in connection therewith, with
the Securities and Exchange Commission, and hereby grants unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform any and all acts and things requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person and hereby ratifies and confirms all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereby.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the 23rd
day of November, 1994.
/s/ KEIJI TORII
-----------------------------------
Keiji Torii
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of THE CIT GROUP HOLDINGS, INC., a Delaware corporation, which is about
to file with the Securities and Exchange Commission, Washington, D.C., under the
provisions of the Securities Act of 1933, as amended, Amendment No. 1 to
Registration Statement No. 33-85224 on Form S-11 and Form S-3 for the
registration of limited guarantees of payment on certain Manufactured Housing
Contract Pass-Through Certificates, to be issued by its wholly-owned subsidiary
The CIT Group Securitization Corporation II, under said Act of up to
$500,000,000 aggregate principal amount, or if issued at an original discount,
such greater principal amount as shall result in an aggregate initial public
offering price of up to $500,000,000, hereby constitutes and appoints ALBERT R.
GAMPER, JR., ERNEST D. STEIN, and DONALD J. RAPSON his true and lawful
attorneys-in-fact and agents, and each of them with full power to act without
the others, for him and in his name, place, and stead, in any and all
capacities, to sign such Amendment No. 1 to the Registration Statement and any
and all amendments thereto, with power where appropriate to affix the corporate
seal of said corporation thereto and to attest to said seal, and to file such
Amendment No. 1 to the Registration Statement and each such amendment, with all
exhibits thereto, and any and all other documents in connection therewith, with
the Securities and Exchange Commission, and hereby grants unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform any and all acts and things requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person and hereby ratifies and confirms all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereby.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the 23rd
day of November, 1994.
/s/ WILLIAM H. TURNER
-----------------------------------
William H. Turner
<PAGE>
