As filed with the Securities and Exchange Commission on May 10, 1995
Registration No. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
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FORM S-1 AND FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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CIT RV OWNER TRUST 1995-A
(Issuer with respect to the Notes and Certificates)
THE CIT GROUP SECURITIZATION CORPORATION II
(Originator of the Trust described herein)
THE CIT GROUP HOLDINGS, INC.
(Issuer with respect to the Limited Guarantee)
(Exact name as specified in originator's charter)
<TABLE>
<S> <C> <C>
Delaware 6146 22-3328188
Delaware (Primary Standard Industrial 13-2994534
(State or other jurisdiction Classification Code Number) (I.R.S. Employer
of incorporation or Identification Number)
organization)
</TABLE>
The CIT Group Securitization Corporation II The CIT Group Holdings, Inc.
650 CIT Drive 1211 Avenue of the Americas
Livingston, New Jersey 07039 New York, New York 10036
(201) 740-5000 (212) 536-1950
(Address of principal executive offices)
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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)
Copies to:
Paul N. Watterson, Esq. Reed D. Auerbach Esq.
SCHULTE ROTH & ZABEL Stroock & Stroock & Lavan
900 Third Avenue 7 Hanover Square
New York, New York 10022 New York, New York 10004
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Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.
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, check the following box. [ ]
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
Proposed Proposed
maximum maximum
Amount offering aggregate Amount of
Title of each class of to be price per offering Registration
securities to be Registered Registered unit(1) price(1) fee(1)
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<S> <C> <C> <C> <C>
Class A __% Asset Backed Notes $500,000 100% $500,000 $173.00
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__% Asset Backed Certificates
- --------------------------------------- $500,000 100% $500,000 $173.00
Limited Guarantee of The CIT
Group Holdings, Inc. (2)
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Total $1,000,000 100% $1,000,000 $346.00
====================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee on
the basis of the proposed maximum offering price per unit.
(2) To be issued in connection with issuance of the ___% Asset Backed
Certificates.
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The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
================================================================================
<PAGE>
The CIT Group Securitization Corporation II
CIT RV Owner Trust 1995-A
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Cross Reference Sheet Furnished
Pursuant to Rule 501(b) of Regulation S-K
<TABLE>
<CAPTION>
Caption or Location
Item and Caption in Form S-1 in Prospectus
---------------------------- --------------------------
<S> <C>
1. Forepart of Registration Statement and
Outside Cover Page of Prospectus............................. Forepart of Registration
Statement and Outside Front
Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus................................................ Inside Front Cover Page and
Outside Back Cover Page of
Prospectus
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges........................... Summary; Special
Considerations; The Contract
Pool
4. Use of Proceeds.............................................. Use of Proceeds
5. Determination of Offering Price.............................. *
6. Dilution..................................................... *
7. Selling Security Holders..................................... *
8. Plan of Distribution......................................... Underwriting
9. Description of Securities to be
Registered................................................... Summary; Structure of the
Transaction; The Contract
Pool; Pool Factors; The
Notes; The Certificates
10. Interests of Named Experts and Counsel....................... *
11. Information With Respect to the
Registrant................................................... The CIT Group Securitization
Corporation II, Seller
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.................................................. *
</TABLE>
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* Answer negative or item inapplicable.
<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 May __, 1995
$
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CIT RV Owner TRUST 1995-A
$ , Class A % Asset Backed Notes
$ % Asset Backed Certificates
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THE CIT GROUP SECURITIZATION CORPORATION II
Seller
THE CIT GROUP/SALES FINANCING, INC.
Servicer
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The CIT RV Owner Trust 1995-A (the "Trust" or the "Issuer") will be formed
pursuant to a Trust Agreement, to be dated as of [June 1, 1995], between The CIT
Group Securitization Corporation II (the "Company" or the "Seller") and
__________________, as trustee (the "Owner Trustee"), and will issue Class A
___% Asset Backed Notes (the "Class A Notes") in the principal amount of
$_____________ pursuant to an Indenture, to be dated as of [June 1, 1995],
between the Issuer and _____________, as trustee (the "Indenture Trustee"). The
Trust will also issue ___% Asset Backed Certificates (the "Certificates" and,
together with the Notes, the "Securities") in the principal amount of
$____________. The Certificates will have the benefit of a limited guarantee
(the "Limited Guarantee") of The CIT Group Holdings, Inc. ("CIT") to protect
against losses that would otherwise be absorbed by the Certificateholders. To
the extent that funds on deposit in the Certificate Distribution Account are
insufficient to pay the amounts to which the Certificateholders are entitled,
CIT will be obligated to pay the Guarantee Payment (as defined herein). See "The
Purchase Agreements and The Trust Documents--Credit Enhancement" herein.
The assets of the Trust will include a pool of simple interest retail
installment sale contracts (the "Initial Contracts") secured by the new and used
recreational vehicles financed thereby (the "Initial Financed Vehicles"),
certain monies received under the Initial Contracts on and after [June 1, 1995]
(the "Initial Cut-off Date"), security interests in the Initial Financed
Vehicles, the Collection Account, the Note Distribution Account, the Certificate
Distribution Account, the Reserve Fund, the Capitalized Interest Account and the
Pre-Funding Account, in each case together with the proceeds thereof, the
proceeds from (Continued on following page)
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THE SECURITIES WILL REPRESENT INTERESTS IN THE TRUST AND WILL NOT
REPRESENT INTERESTS IN OR OBLIGATIONS OF THE CIT GROUP
SECURITIZATION CORPORATION II, THE CIT GROUP/SALES FINANCING, INC. OR ANY
OF THEIR RESPECTIVE AFFILIATES.
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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 Discounts Proceeds to the
and Commissions Company(1)(2)
<S> <C> <C> <C>
Per Class A Note % % %
Per Certificate % % %
Total $ $ $
<FN>
(1) Plus accrued interest at the Class A Rate and the Pass-Through Rate, as appropriate, from ___________, 1995.
(2) Before deducting expenses payable by the Company estimated at $______________.
</FN>
</TABLE>
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The Notes and the Certificates are offered by the several Underwriters
when, as and if issued by the Trust, delivered and accepted by the Underwriters
and subject to their right to reject orders in whole or in part. It is expected
that the Securities will be delivered in book-entry form through the facilities
of The Depository Trust Company ("DTC") on the Same Day Funds Settlement System,
and in the case of the Notes, Cedel, societe anonyme ("Cedel") and the Euroclear
System ("Euroclear") on or about June ___, 1995.
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CS FIRST BOSTON
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The date of this Prospectus is ________, 1995.
<PAGE>
claims under certain insurance policies in respect of individual Initial
Financed Vehicles or the related Obligors and certain rights under the Sale and
Servicing Agreement to be dated as of [June 1, 1995] (the "Sale and Servicing
Agreement"), among the Seller, the Servicer, and the Indenture Trustee. From
time to time on or before [September 15, 1995], additional simple interest
retail installment sale contracts (the "Subsequent Contracts" and, together with
the Initial Contracts, the "Contracts") secured by the new and used recreational
vehicles financed thereby (the "Subsequent Financed Vehicles" and, together with
the Initial Financed Vehicles, the "Financed Vehicles"), certain monies received
under the Subsequent Contracts after the related subsequent cut-off dates (each,
a "Subsequent Cut-off Date"), security interests in the Subsequent Financed
Vehicles and proceeds from claims under certain insurance policies in respect of
individual Subsequent Financed Vehicles or the related Obligors will be
purchased by the Trust from the Seller from monies on deposit in the Pre-Funding
Account.
The Notes will be secured by the assets of the Trust (other than the
Certificate Distribution Account) pursuant to the Indenture. The Class A Notes
will bear interest at the rate of ___% per annum. Interest on the Notes will
generally be payable on the fifteenth day of each month (each, a "Distribution
Date"), commencing [July 17, 1995]. Principal on the Notes will be payable on
each Distribution Date to the extent described herein. The Certificates
represent fractional undivided interests in the Trust. The Certificates will
bear interest at the rate of ___% per annum (the "Pass-Through Rate") and will
be distributed to Certificateholders on each Distribution Date. Distributions of
interest and principal on the Certificates will be subordinated in priority of
payment to payment of interest and principal on the Notes. No principal will be
paid on the Certificates until all of the Notes have been paid in full, except
for payments of the Principal Liquidation Loss Amount (as defined herein), if
any. The final scheduled Distribution Date for the Class A Notes will be the
__________ Distribution Date. The final scheduled Distribution Date for the
Certificates will be the __________ Distribution Date.
There currently is no secondary market for the Securities and there is no
assurance that one will develop. The Underwriters expect, but are not obligated,
to make a market in the Securities. There is no assurance that any such market
will develop, or if one does develop, that it will continue or provide
sufficient liquidity.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company and CIT have filed with the Securities and Exchange Commission
(the "Commission") on behalf of the Trust a Registration Statement combined on
Form S-1 and Form S-3 (together with all amendments and exhibits thereto, the
"Registration Statement"), of which this Prospectus is a part, under the
Securities Act of 1933, as amended, with respect to the Securities being offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which have been omitted in accordance
with the rules and regulations of the Commission. For further information,
reference is made to the Registration Statement, including exhibits filed as
part thereof and otherwise incorporated therein. Statements made in this
Prospectus as to the contents of any contract, agreement or other document filed
as an exhibit to the Registration Statement or incorporated by reference
therein, while complete in all material respects, do not necessarily describe
all terms or provisions of such contract, agreement or other document. For a
complete description, reference is made to each such contract, agreement or
other document filed as an exhibit to the Registration Statement or incorporated
therein. CIT is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange
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<PAGE>
Act"), and in accordance therewith, files reports and other information with the
Commission. Such reports, copies of the Registration Statement, the exhibits
thereto and other information may be inspected, without charge at the public
reference facilities of the Commission at Room 1024 Judiciary Plaza, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and the regional offices
of the Commission at 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 information can be obtained from the Public
Reference Section of the Commission at 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. at 20 Broad
Street, New York, New York 10005. The Servicer, on behalf of the Trust, will
also file or cause to be filed with the Commission such periodic reports as are
required under the Exchange Act, and the rules and regulations of the Commission
thereunder. Such reports and other information filed on behalf of the Trust will
be available for inspection as set forth above.
REPORTS TO SECURITYHOLDERS
Unless and until Definitive Certificates are issued, monthly and annual
unaudited reports containing information concerning the Contracts will be
prepared by the Servicer and sent on behalf of the Trust only to Cede & Co.
("Cede"), as nominee of DTC and registered holder of the Notes and the
Certificates. Securityholders may elect to hold their securities through any of
DTC (in the United States) or Cedel or Euroclear (in Europe). DTC will forward
such reports to Participants, Indirect Participants, Cedel Participants and
Euroclear Participants. See "Certain Information Regarding the
Securities--Book-Entry Registration" and "--Reports to Securityholders." Such
reports will not constitute financial statements prepared in accordance with
generally accepted accounting principles.
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,
1994 together with the report of KPMG Peat Marwick LLP, independent
certified public accountants, which report refers to a change in the method
of accounting for post retirement benefits other than pensions in 1993;
(b) CIT's Quarterly Report on Form 10-Q for the quarter ended March
31, 1995; and
(c) CIT's Current Reports on Form 8-K dated January 8, 1995 and April
11, 1995.
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.
-3-
<PAGE>
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>
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SUMMARY
This Summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus. Certain capitalized terms
used in the Summary are defined elsewhere in this Prospectus. Reference is made
to the "Index of Principal Terms" for the location herein of defined terms and
to the Glossary.
Issuer .................................... CIT RV Owner Trust 1995-A (the
"Trust" or the "Issuer"), a
Delaware business trust to be
formed by the Seller and the Owner
Trustee pursuant to the Trust
Agreement dated as of [June 1,
1995].
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 Securities, except
for the limited guarantee provided
by CIT in favor of the Certificate-
holders (the "Limited Guarantee").
See "Special Considerations --
Limited Obligations".
Servicer .................................. The CIT Group/Sales Financing, Inc.
(in such capacity referred to
herein as the "Servicer"), a
wholly-owned subsidiary of CIT.
Indenture Trustee ......................... __________________, as trustee
under the Indenture to be dated as
of [June 1, 1995] (the "Indenture
Trustee").
Owner Trustee ............................. ____________________, as trustee
under the Trust Agreement to be
dated as of [June 1, 1995] (the
"Owner Trustee" and, together with
the Indenture Trustee, the
"Trustees").
Special Considerations .................... Certain potential risks and other
considerations are particularly
relevant to a decision to invest in
any securities sold hereunder. See
"Special Considerations."
The Notes ................................. The CIT RV Owner Trust 1995-A Asset
Backed Notes (the "Notes") will
represent obligations of the Trust
secured by the assets of the Trust
(other than the Certificate
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<PAGE>
- --------------------------------------------------------------------------------
Distribution Account). See "The
Notes--General".
The Trust will issue $________
aggregate principal amount of Class
A ___% Asset Backed Notes (the
"Class A Notes") pursuant to an
Indenture, to be dated as of [June
1, 1995], between the Issuer and
the Indenture Trustee (the
"Indenture"). See "The Notes--
General".
The Notes will be offered for
purchase in minimum denominations
of $1,000 and integral multiples of
$1,000 thereof in book-entry form
only. Definitive Notes will be
issued only under the limited
circumstances described herein.
Persons acquiring beneficial
interests in the Notes will hold
their interests through The
Depository Trust Company ("DTC") in
the United States or Cedel, societe
anonyme ("Cedel") or the Euroclear
System ("Euroclear") in Europe.
"Certain Information Regarding
the Securities -- Book-Entry
Registration" and "-- Definitive
Securities".
The Certificates ......................... The CIT RV Owner Trust 1995-A ___%
Asset Backed Certificates (the
"Certificates" and, together with
the Notes, the "Securities") will
represent fractional undivided
interests in the Trust. See "The
Certificates--General".
The Trust will issue $________
aggregate principal amount of
Certificates (the "Original
Certificate Balance") pursuant to a
Trust Agreement, to be dated as of
[June 1, 1995], between the Seller
and the Owner Trustee (the "Trust
Agreement"). Payments in respect of
the Certificates will be
subordinated to payments on the
Notes to the limited extent
described herein. See "The
Certificates--General".
The Certificates will be issued in
minimum denominations of $20,000
and integral multiples of $1,000
thereof in book-entry form only.
Definitive Certificates will be
issued only under the limited
circumstances described herein.
See "Certain Information Regarding
the Securities--Book-Entry
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<PAGE>
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Registration" and "--Definitive
Securities".
Property of the Trust ..................... The property of the Trust will
primarily include a pool of simple
interest retail installment sale
contracts (the "Initial Contracts")
secured by the new and used
recreational vehicles financed
thereby (the "Initial Financed
Vehicles"), certain monies received
under the Initial Contracts on and
after [June 1, 1995] (the "Initial
Cut-off Date"), security interests
in the Initial Financed Vehicles,
the Collection Account, the Note
Distribution Account, the
Certificate Distribution Account,
the Reserve Fund and the Pre-
Funding Account, in each case
together with the proceeds thereof,
the proceeds from claims under
certain insurance policies in
respect of individual Initial
Financed Vehicles or the related
Obligors and certain rights under
the Sale and Servicing Agreement to
be dated as of [June 1, 1995] (the
"Sale and Servicing Agreement"),
among the Seller, the Servicer, and
the Owner Trustee.
From time to time on or before
[September 15, 1995], additional
simple interest retail installment
sale contracts (the "Subsequent
Contracts" and, together with the
Initial Contracts, the "Contracts")
secured by the new and used
recreational vehicles financed
thereby (the "Subsequent Financed
Vehicles" and, together with the
Initial Financed Vehicles, the
"Financed Vehicles"), certain
monies received under the
Subsequent Contracts after the
related Subsequent Cut-off Dates,
security interests in the
Subsequent Financed Vehicles and
proceeds from claims under certain
insurance policies in respect of
individual Subsequent Financed
Vehicles or the related Obligors
will be purchased by the Trust from
the Seller from monies on deposit
in the Pre-Funding Account. See
"The Trust Property".
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<PAGE>
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The Contracts ............................. The Trust will consist primarily of
installment sale contracts for
recreational vehicles originated by
recreational vehicle dealers
("Dealers") in the ordinary course
of business and acquired by CITSF
or the CIT Group/Consumer Finance,
Inc. (NY) ("CITCF-NY") in the
ordinary course of its business.
The Financed Vehicles consist of
motor homes, travel trailers and
other types of recreational
vehicles. See "The Contract Pool".
On or prior to the date of issuance
of the Securities (the "Closing
Date"), CITCF-NY will sell
contracts to CITSF pursuant to a
Sale and Purchase Agreement to be
dated as of [June 1, 1995], CITSF
will sell the Initial Contracts to
the Company pursuant to a Purchase
Agreement to be dated as of [June
1, 1995] (the "Purchase Agreement")
and the Company will sell the
Initial Contracts to the Trust
pursuant to the Sale and Servicing
Agreement.
As of the Initial Cut-off Date, the
Initial Contracts had an aggregate
principal balance of $__________, a
weighted average original maturity
of ____ months and a remaining
weighted average maturity of ____
months. The final scheduled payment
date on the Contract with the last
maturity occurs in _______, ____.
See "The Contract Pool".
From time to time on or prior to
[September 15, 1995], pursuant to
the Sale and Servicing Agreement,
CITSF will be obligated to sell,
and the Company will be obligated
to purchase, Subsequent Contracts
at a purchase price equal to the
aggregate principal amount thereof
as of the first day in the related
month of transfer designated by
CITSF and the Company (each, a
"Subsequent Cut-off Date").
Pursuant to the Sale and Servicing
Agreement and one or more
subsequent transfer agreements
(each, a "Subsequent Transfer
Agreement") among the Company, the
Servicer and the Owner Trustee, and
subject to the satisfaction of
certain conditions described
herein, the Company will in turn
sell the Subsequent Contracts to
the Trust at a purchase price
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<PAGE>
- --------------------------------------------------------------------------------
equal to the amount paid by the
Company to CITSF for such
Subsequent Contracts, which
purchase price shall be paid from
monies on deposit in the PreFunding
Account. The aggregate principal
balance of the Subsequent Contracts
to be conveyed to the Trust during
the Funding Period will not exceed
$____________. Subsequent Contracts
will be transferred from CITSF to
the Company and from the Company to
the Trust on the Business Day
specified by CITSF and the Company
during the month in which the
related Subsequent Cut-off Date
occurs (each, a "Subsequent
Transfer Date").
The Pre-Funding Account ................... The Pre-Funding Account will be
maintained with the Owner Trustee
and is designed solely to hold
funds to be applied by the Owner
Trustee during the Funding Period
to pay to the Company the purchase
price for Subsequent Contracts.
Monies on deposit in the Pre-
Funding Account will not be
available to cover losses on or in
respect of the Contracts.
On the Closing Date the Pre-
Funding Account will be created
with an initial deposit, from the
proceeds of the Securities, of
$____________ (the "Pre-Funded
Amount"). The "Funding Period" will
be the period from the Closing Date
until the earliest to occur of (i)
the date on which the amount on
deposit in the Pre-Funding Account
is less than $100,000, (ii) the
date on which an Event of Default
occurs under the Indenture, (iii)
the date on which a Servicer
Default occurs under the Sale and
Servicing Agreement, (iv) the
insolvency of the Company, CITSF,
CITCF-NY or CIT or (v) the close of
business on [September 15, 1995].
During the Funding Period, on one
or more Subsequent Transfer Dates,
the Pre-Funded Amount will be
applied to purchase Subsequent
Contracts from the Company. The
Company expects that the Pre-Funded
Amount will be reduced to less than
$100,000 by [September 15, 1995],
although no assurance can be given
that this will in fact occur. Any
portion of the Pre-Funded Amount
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<PAGE>
- --------------------------------------------------------------------------------
remaining on deposit in the Pre-
Funding Account at the end of the
Funding Period will be payable as
principal to Noteholders.
Capitalized Interest Account .............. On the Closing Date approximately
$__________ of the proceeds from
the sale of the Securities will be
deposited into an account (the
"Capitalized Interest Account") in
the name of the Owner Trustee on
behalf of the Securityholders.
Amounts deposited in the
Capitalized Interest Account will
be used on the July 1995, August
1995 and September 1995
Distribution Dates, if applicable,
to fund the excess, if any, of (i)
the product of (x) the weighted
average of the Class A Rate and the
Pass-Through Rate as of the first
day of the related Interest Accrual
Period and (y) the undisbursed
funds (excluding investment
earnings) in the Pre-Funding
Account (as of the last day of the
related Due Period) over (ii) the
amount of any investment earnings
on funds in the Pre-Funding Account
that are available to pay interest
on the Securities on each such
Distribution Date. Any amounts
remaining in the Capitalized
Interest Account on the last day of
the Funding Period and not used for
such purposes will be deposited in
the Note Distribution Account and
be available for distributions, as
described herein, on the first
Distribution Date thereafter or, if
the end of the Funding Period is on
a Distribution Date, then on such
date.
Distribution Dates ........................ Payments of interest and principal
on the Securities will be made on
the fifteenth day of each month or,
if any such day is not a Business
Day, on the next succeeding
Business Day (each, a "Distribution
Date"), commencing [July 17, 1995].
Payments on the Securities on each
Distribution Date will be made to
the holders of record of the
related Securities on the day
immediately preceding such
Distribution Date or, in the event
Definitive Securities have been
issued, on the last day of the
month immediately preceding the
month in
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<PAGE>
- --------------------------------------------------------------------------------
which such Distribution Date occurs
(each, a "Record Date"). To the
extent not previously paid in full
prior to such time, the outstanding
principal amount of (i) the Class A
Notes will be payable on
____________ (the "Class A Final
Scheduled Distribution Date") and
(ii) the Certificates will be
payable on ________________ (the
"Certificate Final Scheduled
Distribution Date").
A "Business Day" is any day other
than a Saturday, Sunday or any day
on which banking institutions or
trust companies in the City of New
York or ___________ are authorized
by law, regulation or executive
order to be closed.
Interest Accrual Period ................... The period for which interest is
payable on a Distribution Date on
the Securities shall be the period
from the most recent Distribution
Date on which interest has been
paid to but excluding the following
Distribution Date, or in the case
of the initial Distribution Date
from [___________, 1995] to but
excluding the initial Distribution
Date (each, an "Interest Accrual
Period").
Due Period ................................ With respect to any Distribution
Date, the "Due Period" is the
period during which principal,
interest and fees will be collected
on the Contracts for application
towards the payment of principal
and interest to the Securityholders
and the payment of fees on such
Distribution Date. The "Due Period"
will be the calendar month
immediately preceding the
Distribution Date. The first Due
Period will commence on and include
[June 1, 1995] and will end on and
include [June 30, 1995].
Determination Date ........................ The "Determination Date" is the
third Business Day prior to each
Distribution Date. On each
Determination Date, the Indenture
Trustee will determine the amount
in the Collection Account and the
Reserve Fund available for
distribution on the related
Distribution Date and shall
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allocate such amounts between the
Notes and the Certificates as
described under "The Purchase
Agreements and the Trust Documents
-- Distributions". Payments to
Securityholders shall be made on
each Distribution Date in
accordance with such allocations.
Terms of the Notes ........................ The principal terms of the Notes
will be as described below:
A. Interest Rate .................... The Class A Notes will bear
interest at the rate of ___% per
annum (the "Class A Rate").
B. Interest ......................... Interest on the outstanding
principal amount of the Notes will
accrue at the Class A Rate during
the Interest Accrual Period.
Interest will be calculated on the
basis of a 360-day year consisting
of twelve 30-day months. See "The
Notes--Payment of Interest".
C. Principal ........................ Principal of the Notes will be
payable on each Distribution Date
in an amount equal to the Principal
Distribution Amount, calculated as
described under "The
Notes--Payments of Principal", to
the extent of the Available Amount
(as defined under "The Purchase
Agreements and The Trust
Documents--Distributions" herein)
remaining after the Servicer has
been reimbursed for any outstanding
Advances and has been paid the
Servicing Fee (including any unpaid
Servicing Fee with respect to one
or more prior Due Periods)
(collectively, the "Servicer
Payment") and following the payment
of interest due on the Notes.
The unpaid principal balance of the
Notes will be payable on the Class
A Final Scheduled Distribution
Date. See "The Notes--Payments of
Principal".
D. Redemption ....................... The Notes will be subject to
mandatory redemption in part in the
event that any portion of the
Pre-Funded Amount remains on
deposit in the Pre-Funding Account
at the end of the Funding Period.
See "The Notes -- Mandatory
Redemption" and "Certain
Information Regarding the
Securities -- The Pre-Funding
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<PAGE>
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Account; Mandatory Redemption and
Prepayment of the Securities".
In the event of an Optional
Purchase or Auction Sale, as
described herein, the outstanding
Notes will be redeemed, at a
redemption price equal to the
unpaid principal amount of the
Class A Notes plus accrued interest
thereon at the Class A Rate. See
"Summary--Optional Purchase",
"--Auction Sale" and "The
Notes--Optional Redemption".
Terms of the Certificates ................. The principal terms of the
Certificates will be as described
below:
A. Pass-Through Rate ................ The Certificates will bear interest
at the rate of ___% per annum (the
"Pass-Through Rate").
B. Interest ......................... On each Distribution Date, the
Owner Trustee will distribute pro
rata to Certificateholders of
record as of the related Record
Date interest accrued during the
related Interest Accrual Period, in
an amount equal to one-twelfth of
the product of the Pass-Through
Rate and the Certificate Balance
(the "Certificate Balance" is the
Original Certificate Balance
reduced by all distributions
allocable to principal actually
made to Certificateholders) as of
the first day of the immediately
preceding Due Period (after giving
effect to distributions of
principal to be made on the
Distribution Date occurring in such
immediately preceding Due Period).
Such distributions generally will
be made to the extent of the
Available Amount after the Servicer
has been reimbursed for any
outstanding Advances and has been
paid the Servicer Payment and
interest and principal has been
paid in respect of the Notes.
Interest will be calculated on the
basis of a 360-day year consisting
of twelve 30-day months. The
rights of Certificateholders to
receive distributions of interest
will be subordinated to the rights
of Noteholders to receive interest
and principal, as described herein.
See "The Certificates--
Distributions of Interest".
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<PAGE>
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C. Principal ........................ On each Distribution Date on or
after the Distribution Date on
which the Class A Notes have been
paid in full (the "Cross-Over
Date"), principal of the
Certificates will be payable in an
amount generally equal to the
Principal Distribution Amount. Such
principal payments will be funded
to the extent of the Available
Amount remaining after the Servicer
has been reimbursed for any
outstanding Advances and has been
paid the Servicer Payment, and the
interest due on the Certificates
has been paid. The rights of
Certificateholders to receive
distributions of principal will be
subordinated to the rights of
Noteholders to receive
distributions of interest and
principal and following the payment
of distributions of interest in
respect of the Certificates and to
the extent described herein.
On each Distribution Date, prior to
the Cross-Over Date, the
Certificateholders will be entitled
to receive, pursuant to the Limited
Guarantee, the Principal
Liquidation Loss Amount for such
Distribution Date. The "Principal
Liquidation Loss Amount" for any
Distribution Date will equal the
amount, if any, by which the sum of
the aggregate outstanding principal
balance of the Notes and the
Certificate Balance (after giving
effect to all distributions of
principal on such Distribution
Date) exceeds the sum of the
aggregate principal balance of the
Contracts (the "Pool Balance") plus
the amounts remaining on deposit in
the Pre-Funding Account, if any,
at the close of business on the
last day of the related Due Period.
The Principal Liquidation Loss
Amount represents future principal
payments on the Contracts that,
because of the subordination of the
Certificates and liquidation losses
on the Contracts, will not be paid
to the Certificateholders.
D. Repayment ........................ In the event of an Optional
Purchase or Auction Sale, the
Certificates will be redeemed at a
redemption price equal to the
Certificate Balance plus accrued
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<PAGE>
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interest thereon at the Pass-
Through Rate. See "Summary--
Optional Purchase", "--Auction
Sale" and "The Certificates--
Optional Prepayment".
Mandatory Prepayment ...................... The Notes will be prepaid in part
on the Distribution Date
immediately succeeding the day on
which the Funding Period ends (or
on the Distribution Date on which
the Funding Period ends if the
Funding Period ends on a
Distribution Date) in the event
that any portion of the Pre-Funded
Amount remains on deposit in the
Pre-Funding Account after giving
effect to the acquisition by the
Seller and the sale to the Trust of
all Subsequent Contracts, including
any such acquisition and conveyance
on the date on which the Funding
Period ends (a "Mandatory
Prepayment"). The amount to be
distributed to Noteholders in
connection with any Mandatory
Prepayment will equal the remaining
Pre-Funded Amount.
Subordination of the Certificates;
Reserve Fund ........................... The rights of the
Certificateholders to receive
distributions with respect to the
Contracts will be subordinated to
the rights of the Class A
Noteholders, to the extent
described herein. This
subordination is intended to
enhance the likelihood of timely
receipt by Class A Noteholders of
the full amount of interest and
principal required to be paid to
them, and to afford such Class A
Noteholders limited protection
against losses in respect of the
Contracts.
No distribution will be made to the
Certificateholders on any
Distribution Date in respect of (i)
interest or principal until the
full amount of interest and
principal on the Class A Notes
payable on such Distribution Date
has been distributed to the Class A
Noteholders and (ii) principal
until the Class A Notes have been
paid in full, other than
distributions in respect of the
Principal Liquidation Loss Amount.
The protection afforded to the
Class A Noteholders by the
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<PAGE>
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subordination feature described
above will be effected both by the
preferential right of the Class A
Noteholders to receive, to the
extent described herein, current
distributions from collections on
or in respect of the Contracts and
by the establishment of a
segregated trust account maintained
by the Indenture Trustee for the
benefit of the Class A Noteholders
(the "Reserve Fund").
The Reserve Fund will be created
with an initial deposit from the
proceeds of the sale of the
Securities. The initial deposit
will be in the form of cash or
Eligible Investments (as defined in
"The Purchase Agreements and The
Trust Documents" herein) maturing
on or prior to the initial
Distribution Date and having a
value of $__________ (the "Reserve
Fund Initial Deposit"). The Reserve
Fund Initial Deposit will be
maintained or augmented by Excess
Amounts which will be deposited
from time to time in the Reserve
Fund to the extent necessary to
maintain the Reserve Fund at an
amount equal to the Specified
Reserve Fund Balance. "Excess
Amounts" in respect of a
Distribution Date will be all
interest collections on or in
respect of the Contracts on deposit
in the Collection Account in
respect of such Distribution Date,
after the Servicer has been
reimbursed for any outstanding
Advances and has been paid the
Servicer Payment and after giving
effect to all distributions of
interest and principal required to
be made to the holders of the Class
A Notes and the Certificateholders
on such Distribution Date. Amounts
in the Reserve Fund on any
Distribution Date (after giving
effect to all distributions made on
such Distribution Date) in excess
of the Specified Reserve Fund
Balance for such Distribution Date
generally will be released to the
Affiliated Purchaser (as defined
herein). The "Specified Reserve
Fund Balance" with respect to any
Distribution Date will be equal to
$_______, except that in the event
that on any Distribution Date (i)
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<PAGE>
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the annualized average for the
three preceding Due Periods of the
ratio of net losses (i.e., the
balances of all Contracts which are
determined to be uncollectible in
the Due Period, less any
Liquidation Proceeds) to the Pool
Balance as of the first day of each
such Due Period exceeds ____% or
(ii) the average for the three
preceding Due Periods of the ratio
of the number of Contracts that
have been repossessed but not yet
sold or are delinquent __ days or
more to the outstanding number of
Contracts exceeds ___%, then the
Specified Reserve Fund Balance for
such Distribution Date shall be an
amount equal to the percentage of
the Pool Balance as of the first
day of such Due Period determined
by deducting from ____ percent the
following fraction, expressed as a
percentage: (x) 1 minus (y) a
fraction, the numerator of which is
the Certificate Balance and the
denominator of which is the Pool
Balance (both as of the first day
of such Due Period), but in no
event shall the Specified Reserve
Fund Balance be more than
$________, or less than $________.
On any Distribution Date on which
the aggregate balance of the
Certificates is $________ or less
after giving effect to
distributions on such Distribution
Date, the Specified Reserve Fund
Balance shall be the greater of the
amount set forth in the immediately
preceding sentence or $__________.
The Reserve Fund will be property
of the Trust. The Reserve Fund will
not provide credit enhancement for
the Certificates.
To the extent that the Available
Amount, after the Servicer has been
reimbursed for any outstanding
Advances and has been paid the
Servicer Payment, is less than the
interest and principal payable to
the Noteholders on such
Distribution Date, the Indenture
Trustee will transfer funds from
the Reserve Fund in the amount of
the deficiency to the Collection
Account and from the Collection
Account to the Note Distribution
Account.
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<PAGE>
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Guarantee Payments to
Certificateholders under
the Limited Guarantee of CIT .............. In order to mitigate the effect of
the subordination of the
Certificates and liquidation losses
and delinquencies on the Contracts,
the Certificateholders are entitled
to receive on each Distribution
Date the amount equal to the
Guarantee Payment, if any, under
the Limited Guarantee of CIT. Prior
to the Cross-Over Date and subject
to the Guarantee Payment Limit, the
"Guarantee Payment" will equal the
amount, if any, by which (a) the
sum of (i) the amount of interest
payable to the Certificateholders
for such Distribution Date, and
(ii) the Principal Liquidation Loss
Amount, if any, exceeds (b) the
Amount Available remaining for
distribution to the
Certificateholders after the
Servicer has been reimbursed for
any outstanding Advances and has
been paid the Servicer Payment and
distributions of interest and
principal have been paid to the
Noteholders on such Distribution
Date. On each Distribution Date on
or after the Cross-Over Date and
subject to the Guarantee Payment
Limit, the "Guarantee Payment" will
equal the amount, if any, by which
(a) the sum of the amount of
interest and principal payable to
the Certificateholders on such
Distribution Date exceeds (b) the
Amount Available remaining after
the Servicer has been reimbursed
for any outstanding Advances and
has been paid the Servicer Payment
and distributions of interest and
principal, if any, have been paid
to the Noteholders on such
Distribution Date.
In no event will the aggregate
amount paid under the Limited
Guarantee (including the Principal
Liquidation Loss Amount) exceed
$ (the "Guarantee Payment
Limit").
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. As
compensation for providing the
Limited Guarantee, CIT will be
entitled to receive a Guarantee
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<PAGE>
- --------------------------------------------------------------------------------
Fee (the "Guarantee Fee") on each
Distribution Date equal to 1/12 of
the product of [0.25%] and the
aggregate outstanding principal
balance of the Contracts as of the
end of the second Due Period
preceding such Distribution Date
(or, in the case of the first
Distribution Date, the Initial
Cut-off Date).
Monthly Advances .......................... With respect to each Contract as to
which there has been an Interest
Shortfall during the related Due
Period (other than an Interest
Shortfall arising from a Contract
which has been prepaid in full or
which has been subject to a Relief
Act Reduction (as defined herein)
during the related Due Period), the
Servicer shall advance funds in the
amount of such Interest Shortfall
(each, a "Monthly Advance") but
only to the extent that the
Servicer, in its good faith
judgement, expects to recover such
Monthly Advance from subsequent
collections with respect to
interest on such Contract made by
or on behalf of the Obligor
thereunder (the "Obligor"), net
liquidation proceeds or insurance
proceeds with respect to such
Contract. The Servicer shall be
reimbursed for any Monthly Advance
from subsequent collections with
respect to such Contract. If the
Servicer determines in its good
faith judgement that an
unreimbursed Monthly Advance shall
not ultimately be recoverable from
such collections, the Servicer
shall be reimbursed for such
Monthly Advance from collections on
all Contracts and withdrawals from
the Reserve Fund. The Servicer will
not advance funds in respect of the
principal component of any
scheduled payment. See "The
Purchase Agreements and The Trust
Documents--Monthly Advances".
"Interest Shortfall" means with
respect to any Contract and any
Distribution Date, the excess of
(x) the sum of (i) the product of
one-twelfth of the weighted average
of the Pass-through Rate and the
Class A Rate multiplied by the
outstanding principal amount of
such Contract as of the last
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<PAGE>
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day of the second preceding Due
Period (or, in the case of the
first Due Period, as of the Initial
Cut-off Date) calculated on the
basis of a 360-day year comprised
of twelve 30-day months and (ii)
the product of (A) the Servicing
Fee Rate, (B) the outstanding
principal amount of such Contract
as of the last day of the second
preceding Due Period (or, in the
case of the first Due Period, as of
the Initial Cut-off Date) and (C) a
fraction, the numerator of which is
the number of days in the related
Due Period and the denominator of
which is 365, over (y) the amount
of interest collected on such
Contract in the related Due Period.
Non-Reimbursable Payments ................. With respect to each Contract as to
which there has been an Interest
Shortfall in the related Due Period
arising from either a prepayment in
full of such Contract or a Relief
Act Reduction in respect of such
Contract during such Due Period,
the Sale and Servicing Agreement
will require the Servicer to
deposit into the Collection Account
on the Business Day immediately
preceding the following
Distribution Date, without the
right of subsequent reimbursement,
an amount equal to such Interest
Shortfall (a "Non-Reimbursable
Payment").
Servicing Fees ............................ The Servicer shall receive a
monthly fee (the "Servicing Fee"),
payable on each Distribution Date,
equal to the sum of (i) the product
of 1.00% per annum (the "Servicing
Fee Rate") and the Pool Balance as
of the last day of the second
preceding Due Period (or, in the
case of the first Distribution
Date, as of the Initial Cut-off
Date), based on the number of days
in such Due Period and a 365-day
year, and (ii) any investment
earnings on amounts on deposit in
the Collection Account. In
addition, the Servicer will be
entitled to collect and retain any
late, prepayment, extension and
administrative fees or similar
charges ("Late Fees") paid by the
Obligors. See "The Purchase
Agreements and The Trust
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<PAGE>
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Documents--Servicing Compensation."
Optional Purchase
of the Contracts .......................... At its option, CITSF or the Company
may purchase all the Contracts on
any Distribution Date on which the
Pool Balance is 10% or less of the
Initial Pool Balance, at a purchase
price determined as described under
"The Purchase Agreements and The
Trust Documents--Termination." The
"Initial Pool Balance" equals the
sum of (i) the Pool Balance as of
the Initial Cut-off Date and (ii)
the aggregate principal balance of
all Subsequent Contracts added to
the Trust as of their respective
subsequent Cut-off Dates.
Auction Sale .............................. Within ten days following a
Distribution Date as of which the
Pool Balance is 5% or less of the
Initial Pool Balance, the Trustee
shall solicit bids for the purchase
of the Contracts remaining in the
Trust. In the event that
satisfactory bids are received as
described in "The Purchase
Agreements and The Trust
Documents--Termination," the sale
proceeds will be distributed to
Certificateholders on the second
Distribution Date succeeding such
Record Date. If satisfactory bids
are not received, the Trustee shall
decline to sell the Contracts and
shall not be under any obligation
to solicit any further bids or
otherwise negotiate any further
sale of the Contracts. See "The
Purchase Agreements and The Trust
Documents--Termination."
Ratings ................................... It is a condition to the issuance
of the Securities that the Class A
Notes be rated ___ by Moody's
Investors Service, Inc. ("Moody's")
and ___ by Standard & Poor's
Ratings Group ("Standard & Poor's"
and together with Moody's, the
"Rating Agencies") and the
Certificates be rated __ by Moody's
and __ by Standard & Poor's. The
ratings of the Class A Notes will
be based primarily on the value
of the Initial Contracts, the Pre-
Funding Account, the terms of the
Securities and the Reserve Fund.
The ratings of the Certificates
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<PAGE>
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will be based primarily on the
Limited Guarantee provided by CIT.
The foregoing ratings do not
address the likelihood that the
Securities will be retired
following the sale of the Contracts
by the Trustee as described above
under "Auction Sale" or "Optional
Purchase by CITSF". See "Rating."
There can be no assurance that any
rating will remain in effect for
any given period of time or that a
rating will not be lowered or
withdrawn by the assigning Rating
Agency if, in its judgement,
circumstances so warrant. In the
event that the rating initially
assigned to the Securities is
subsequently lowered or withdrawn
for any reason, no person or entity
will be obligated to provide any
additional credit enhancement with
respect to such Securities. There
can be no assurance whether any
other rating agency will rate the
Class A Notes or the Certificates,
or if one does, what rating would
be assigned by any such other
rating agency. A security rating is
not a recommendation to buy, sell
or hold securities.
Certain Federal Income
Tax Considerations ..................... For Federal income tax purposes:
(1) the Notes will constitute
indebtedness; and (2) the
Certificates will constitute
interests in a trust fund that will
not be treated as an association
taxable as a corporation. Each
Noteholder, by acceptance of a
Note, will agree to treat the Notes
as indebtedness, and each
Certificateholder, by the
acceptance of a Certificate, will
agree to treat the Trust as a
partnership in which the
Certificateholders are partners for
Federal income tax purposes. See
"Certain Federal Income Tax
Consequences".
ERISA Considerations ...................... Subject to certain considerations
discussed under "ERISA
Considerations" herein, the Notes
will be eligible for purchase by
employee benefit plans that are
subject to the Employee Retirement
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<PAGE>
- --------------------------------------------------------------------------------
Income Security Act of 1974, as
amended ("ERISA").
Employee benefit plans subject to
ERISA will not be eligible to
purchase the Certificates.
Any benefit plan fiduciary con-
sidering the purchase of the
Securities should, among other
things, consult with its counsel in
determining whether all required
conditions have been satisfied. See
"ERISA Considerations."
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<PAGE>
SPECIAL CONSIDERATIONS
Prospective Securityholders should consider the following risks in
connection with the purchase of the Securities:
1. Limited Obligations. The Securities will not represent an interest
in or an obligation of The CIT Group Holdings, Inc. ("CIT"), The CIT Group
Securitization Corporation II ("the Company"), the Affiliated Purchaser (as
hereinafter defined) or any Servicer (including The CIT Group/Sales
Financing, Inc. ("CITSF")). Except for the Limited Guarantee provided by
CIT in favor of the Certificateholders, the Securities will not be insured
or guaranteed by any government agency or instrumentality, CIT or any of
its affiliates, including the Company, the Affiliated Purchaser and CITSF,
the Underwriter or any of its affiliates, or any other Servicer or any of
its affiliates.
2. Risk of Loss. An investment in the Securities 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 installment sale contracts secured by recreational
vehicles. Because the market value of recreational vehicles generally
declines with age and because of the failure of the Trustees to possess a
first perfected security interest in the Financed Vehicles in certain
states, the Servicer may not recover the entire amount owing under a
Defaulted Contract. See "Certain Legal Aspects of the Contracts." In such a
case, the Securityholders may suffer a corresponding loss. The market value
of the Financed Vehicles could be or become lower than the outstanding
principal balances of the Contracts that they secure. Sufficiently high
liquidation losses on the Contracts will have the effect of reducing, and
could eliminate (a) the protection against loss afforded to the Noteholders
by the subordination of the Certificateholders and (b) the protection
against loss afforded to the Noteholders by the amounts on deposit in the
Reserve Fund. If the amount on deposit in the Reserve Account is reduced to
zero, Holders of the Notes will bear the risk of loss resulting from
default by Obligors and will have to look primarily to the value of the
related Financed Vehicles for recovery of the outstanding principal and
unpaid interest on the Defaulted Contracts. If CIT fails to make payments
as required under the Limited Guarantee, the Certificateholders will bear
the risk of loss resulting from default by Obligors.
3. Security Interests and Certain Other Aspects of the Contracts. Each
Contract will be secured by a security interest in a Financed Vehicle.
Perfection of security interests in the Financed Vehicles and enforcement
of rights to realize upon the value of the Financed Vehicles as collateral
for the Contracts are subject to a number of state laws, including the
Uniform Commercial Code (the "UCC") as adopted in each state and, in most
states, certificate of title statutes. The steps necessary to perfect the
security interest in a Financed Vehicle vary from state to state. All
Contracts in the Contract Pool were purchased by CITSF from Dealers and
name the Dealer as obligee and as secured party. All Contracts in the
Contract Pool were assigned by the related Dealer to CITSF. In each case,
CITSF is named as the secured party on the certificate of title for the
related Financed Vehicle. Because of the expense and administrative
inconvenience involved, CITSF will not amend any certificate of title to
name the Company or either Trustee as the lienholder and the Company will
not deliver any certificate of title to either Trustee or note thereon
either Trustee's interest. Consequently, in some states, in the absence of
such an amendment to the certificate of title to reflect the successive
assignments to the Company, the Owner Trustee and the Indenture Trustee,
the security interest in the Financed Vehicle may not be effective, or such
security interest may not be perfected, and the assignment of the security
interest in the Financed Vehicle to the Owner Trustee and the Indenture
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 sale contracts, such as
the Contracts, and the failure by the 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. From time to time, CITSF has been involved in litigation under
consumer or debtor protection laws, some of which have been class actions.
Pursuant to the Sale
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<PAGE>
and Servicing 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 Financed Vehicle securing a Contract. A breach by
CITSF of any such warranty that materially adversely affects the Trust's
interest in any Contract would require CITSF to repurchase such Contract
unless such breach is cured within 90 days. If CITSF does not honor its
purchase 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 Financed Vehicle securing such
Contract. Certain other factors may limit the ability of the
Securityholders to realize upon the Financed Vehicles or may limit the
amount realized to less than the amount due. See "Certain Legal Aspects of
the Contracts."
4. Certain Matters Relating to Insolvency. CITSF and the Company
intend that each transfer of Contracts from The CIT Group/Consumer Finance,
Inc. (NY) ("CITCF-NY") to CITSF and from CITSF to the Company and from the
Company to the Trust constitutes a sale, rather than a pledge of the
Contracts to secure indebtedness. However, if CITCF-NY, 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
CITCF-NY, CITSF or the Company, or CITCF-NY, CITSF or the Company as
debtor-in-possession, may argue that the sale of the Contracts by CITCF-NY
to CITSF or 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 Securityholders. See "Certain Legal Aspects of the Contracts--Certain
Matters Relating to Insolvency."
____________, a ________ corporation and a wholly owned subsidiary of
CIT (the "Affiliated Purchaser"), will purchase 1% of the principal balance
of the Certificates. The Trust Agreement will provide that if an Insolvency
Event with respect to the Affiliated Purchaser occurs, subject to certain
conditions, the Trust will dissolve. Certain steps have been taken in
structuring the transactions contemplated hereby that are intended to make
it less likely that an Insolvency Event with respect to the Affiliated
Purchaser will occur. These steps include the formation of the Affiliated
Purchaser as a separate, limited-purpose corporation pursuant to articles
of incorporation containing certain limitations (including restrictions on
the nature of the Affiliated Purchaser's business and a restriction on the
Affiliated Purchaser's ability to commence a voluntary case or proceeding
under the United States Bankruptcy Code or similar applicable state laws
("Insolvency Laws") without the prior affirmative unanimous vote of its
directors). However, there can be no assurance that the activities or
liabilities of the Affiliated Purchaser would not result in an Insolvency
Event.
If an Insolvency Event with respect to the Affiliated Purchaser
occurs, the Indenture Trustee will promptly sell, dispose of or otherwise
liquidate the Contracts in a commercially reasonable manner on commercially
reasonable terms, except under certain limited circumstances. The proceeds
from any such sale, disposition or liquidation of the Contracts will be
treated as collections on the Contracts and deposited in the Collection
Account. If the proceeds from the liquidation of the Contracts and any
amounts on deposit in the Reserve Fund, the Note Distribution Account and
the Certificate Distribution Account are not sufficient to pay the Notes
and Certificates in full, distributions will be made first, to the payment
of interest and principal on the Notes and second, to the payment of
interest and principal on the Certificates. In such event, the amount of
principal returned to the Certificateholders will be reduced and such
Certificateholders will incur a loss, except to the extent of payments
under the Limited Guarantee. See "The Purchase Agreements and Trust
Documents--Insolvency Event".
5. Limited Liquidity. CS First Boston Corporation and
___________________, (the "Underwriters") intend to make a secondary market
in the Securities, but have no obligation to do so. There can be no
assurance that a secondary market will develop for the Securities or, if it
does develop, that it will provide the Holders of the
-25-
<PAGE>
Securities with liquidity of investment or that it will remain for the term
of the Securities.
6. The Subsequent Contracts and the Pre-Funding Account. The
conveyance of Subsequent Contracts by CITSF during the Funding Period is
subject to the conditions described herein under "The Contract Pool". If
CITSF is unable to originate Contracts satisfying such criteria during the
Funding Period, CITSF will have insufficient Contracts to sell to the Trust
on Subsequent Transfer Dates, thereby resulting in prepayments of principal
to Noteholders as described below.
To the extent that amounts on deposit in the Pre-Funding Account have
not been fully applied to the purchase of Subsequent Contracts by the Trust
by the end of the Funding Period, Noteholders will receive a prepayment of
principal in an amount equal to the Funded Amount remaining in the
Pre-Funding Account at such time, which prepayment will be made on the
first Distribution Date following the end of the Funding Period or, if the
Funding Period ends on a Distribution Date, on such date. It is anticipated
that the principal amount of Subsequent Contracts purchased by 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 Noteholders at the end of the Funding Period.
Each Subsequent Contract must satisfy the eligibility criteria
specified herein and in the Sale and Servicing Agreement at the time of its
addition. Following the transfer of Subsequent Contracts to the Contract
Pool the aggregate characteristics of the Contracts then held in the
Contract Pool may vary from those of the Initial Contracts included
therein.
The ability of the Trust to invest in Subsequent Contracts is largely
dependent upon whether CITSF is able to originate recreational vehicle
contracts that meet the requirements for transfer on a Subsequent Transfer
Date under a Subsequent Purchase Agreement transferring Subsequent
Contracts from CITSF to the Company and the Sale and Servicing Agreement.
The ability of CITSF to originate such contracts may be affected as a
result of a variety of social and economic factors. Moreover, such factors
may affect the ability of the Obligors thereunder to perform their
obligations thereunder which may cause contracts originated by CITSF or its
affiliates to fail to meet the requirements for transfer under the
Subsequent Purchase Agreement or the Sale and Servicing Agreement. Economic
factors include interest rates, unemployment levels, the rate of inflation
and consumer perception of economic conditions generally. However, CITSF is
unable to determine and has no basis to predict whether or to what extent
economic or social factors will affect the performance by such Obligors and
the availability of Subsequent Contracts.
7. Limited Assets. Although the Trust will covenant to sell the
Contracts if directed to do so by the Indenture Trustee in accordance with
the Indenture following an acceleration of the Notes upon an Event of
Default, there is no assurance that the market value of the Contracts will
at any time be equal to or greater than the aggregate outstanding principal
balance of the Notes. Therefore, upon an Event of Default with respect to
the Notes there can be no assurance that sufficient funds will be available
to repay Noteholders in full. In addition, the amount of principal required
to be distributed to Noteholders under the Indenture is generally limited
to amounts available to be deposited in the Note Distribution Account.
Therefore, the failure to pay principal on a class of the Notes may not
result in the occurrence of an Event of Default until the Final Scheduled
Distribution Date.
8. Limited Guarantee. The aggregate amount payable under the Limited
Guarantee on the Certificates will not exceed $________ (the "Guarantee
Payment Limit").
-26-
<PAGE>
STRUCTURE OF THE TRANSACTION
The Issuer, CIT RV Owner Trust 1995-A (the "Issuer" or the "Trust"), is a
business trust formed under the laws of the State of Delaware pursuant to a
Trust Agreement (as amended and supplemented from time to time, the "Trust
Agreement") to be dated as of [June 1, 1995] between the Seller and
_____________________, acting thereunder not in its individual capacity but
solely as trustee of the Trust (the "Owner Trustee"). After its formation, the
Trust will not engage in any activity other than (i) acquiring, holding and
managing the Contracts and the other assets of the Trust and proceeds therefrom,
(ii) issuing the Notes and the Certificates, (iii) making payments on the Notes
and the Certificates and (iv) engaging in other activities that are necessary,
suitable or convenient to accomplish the foregoing or are incidental thereto or
connected therewith.
The Trust will initially be capitalized with equity equal to $_________
(the "Original Certificate Balance"). Certificates with an aggregate original
principal balance of $___________ will be sold to the Affiliated Purchaser and
Certificates representing the remainder of the Original Certificate Balance will
be sold to third party investors that are expected to be unaffiliated with the
Affiliated Purchaser, the Seller, the Servicer or their affiliates. The equity
in the Trust, together with the proceeds of the initial sale of the Notes, will
be used by the Trust to purchase the Initial Contracts from the Seller pursuant
to the Sale and Servicing Agreement and to fund the deposit of the Pre-Funded
Amount and the Reserve Fund Initial Deposit.
The Trust's principal offices are in ____________________, in care of
, as Owner Trustee, at the address listed in "--The
Owner Trustee" below.
Capitalization of the Trust
The following table illustrates the capitalization of the Trust as of the
Initial Cut-off Date, as if the issuance and sale of the Notes and the
Certificates offered hereby had taken place on such date:
Class A ___% Asset Backed Notes ................. $
___% Asset Backed Certificates ..................
Total ................................ $
The Owner Trustee
______________ is the Owner Trustee under the Trust Agreement. ___________
is a _____________ banking corporation and a wholly-owned subsidiary of
_____________. The principal offices of _____________ are located at
_________________. The Owner Trustee will perform limited administrative
functions under the Trust Agreement, including making distributions from the
Certificate Distribution Account. The Owner Trustee's liability in connection
with the issuance and sale of the Certificates and the Notes is limited solely
to the express obligations of the Owner Trustee as set forth in the Trust
Agreement and the Sale and Servicing Agreement.
THE TRUST PROPERTY
The Notes will be secured by the assets of the Trust (other than the
Certificate Distribution Account). Each Certificate represents a fractional
undivided interest in the Trust. The Trust property will include, among other
things, (i) a pool (the "Contract Pool") of simple interest installment sale
contracts between Dealers in new and used recreational vehicles and Obligors,
consisting of the Initial Contracts and the Subsequent Contracts; (ii) all
monies received under the Initial Contracts on or after the Initial Cut-off Date
and the Subsequent Contracts on or after the related Subsequent Cut-off Date;
(iii) such amounts as from time to time may be held in one or more accounts
established and maintained by the Servicer pursuant to the Sale and Servicing
Agreement (including all investments in such accounts and all income from the
funds therein and all proceeds thereof) as described herein; (iv) all monies on
deposit
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<PAGE>
in the Pre-Funding Account, the Capitalized Interest Account and the Reserve
Account (as defined herein) (including all investments in such accounts and all
income from the funds therein and all proceeds thereof); (v) security interests
in the Financed Vehicles and any accessions thereto; (vi) the right to proceeds
from physical damage, credit life and disability insurance policies, if any,
covering individual Financed Vehicles or Obligors, as the case may be; (vii) the
rights of the Trust under the Sale and Servicing Agreement; and (viii) any and
all proceeds of the foregoing.
THE CONTRACT POOL
General
The Contract Pool will initially consist of ______ conventional fixed-rate
simple interest installment sale contracts secured by recreational vehicles
(collectively, the "Initial Contracts") having an aggregate unpaid principal
balance as of the Initial Cut-off Date of $____________ (the "Initial Cut-off
Date Pool Principal Balance"). For the purposes of the discussion of the
characteristics of the Initial Contracts on the Initial Cut-off Date contained
herein, the principal balance of each Initial Contract is the unpaid principal
balance as of the Initial Cut-off Date.
In addition to the Initial Contracts sold by the Company to the Trust on
the Closing Date the Trust is expected to purchase from the Company additional
conventional fixed-rate simple interest installment sale contracts secured by
recreational vehicles from time to time on or before the [September 15, 1995]
Distribution Date (collectively, the "Subsequent Contracts" and, together with
the Initial Contracts, the "Contracts"). The Subsequent Contracts to be
purchased by the Trust, if available, will be purchased by CITSF from CITCF-NY
or Dealers and sold by CITSF to the Company and by the Company to the Trust.
Accordingly, the statistical characteristics of the Contract Pool will vary as
of any Subsequent Cut-off Date upon the acquisition of such Subsequent
Contracts.
CITSF will sell the Initial Contracts to the Company pursuant to a Purchase
Agreement to be dated as of [June 1, 1995] (the "Purchase Agreement") and the
Company will sell the Initial Contracts to the Trust pursuant to the Sale and
Servicing Agreement to be dated as of [June 1, 1995] (the "Sale and Servicing
Agreement"), among the Seller, the Servicer, and the Owner Trustee. CITSF will
sell any Subsequent Contracts to the Company pursuant to a Subsequent Purchase
Agreement and the Company will sell any Subsequent Contracts to the Trust
pursuant to a Subsequent Transfer Agreement.
The obligation of the Trust to purchase the Subsequent Contracts is subject
to the following requirements: (i) such Subsequent Contracts must satisfy the
eligibility criteria described under "Representations and Warranties"; (ii) such
Subsequent Contracts were not selected by either CIT or the Seller in a manner
that it believes is adverse to the interests of the Securityholders (iii) the
weighted average APR of the Contracts including the related Subsequent Contracts
is not less than [ ]%; (iv) the weighted average remaining term of the Contracts
(including the Subsequent Receivables) as of the related Subsequent Transfer
Date is not greater than ___ months; (v) the Seller and the Trustee shall not
have been advised by either Rating Agency that the conveyance of such Subsequent
Contracts will result in a qualification, modification or withdrawal of its then
current rating of either the Notes or the Certificates; and (vi) the Trustee
shall have received certain opinions of counsel as to, among other things, the
enforceability and validity of the Subsequent Transfer Agreement relating to
such conveyance of Subsequent Contracts.
Because the Subsequent Contracts will be originated after the Initial
Contracts, following their conveyance to the Trust, the characteristics of the
Contracts, including the Subsequent Contracts, may vary from those of the
Initial Contracts.
All of the Subsequent Contracts will satisfy the following criteria: (i)
each Subsequent Contract will be originated in the United States of America;
(ii) each Subsequent Contract will have a Contract Rate greater than ___%; (iii)
each Subsequent Contract will provide for level monthly payments which provide
interest at the related
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<PAGE>
Contract Rate and, if paid in accordance with its schedule, fully amortizes the
amount financed over an original term of no greater than ___ months; (iv) as of
the related Subsequent Cut-off Date, the most recent scheduled payment of
principal and interest on each Subsequent Contract will have been made by or on
behalf of the related Obligor or will not have been delinquent more than 60
days; (v) no Subsequent Financed Vehicle will have been repossessed without
reinstatement as of the related Subsequent Cut-off Date; (vi) as of the related
Subsequent Cut-off Date no Obligor on any Contract will be the subject of a
bankruptcy proceeding; and (vii) as of the related Subsequent Cutoff Date each
Subsequent Contract will have a remaining principal balance of not less than
$_________ and not more than $__________. The Subsequent Financed Vehicles will
consist of motor homes, travel trailers and truck campers.
The Initial Contracts were purchased by CITSF from CITCF-NY or Dealers in
the ordinary course of business. The Initial Contracts were selected from
CITSF's portfolio of recreational vehicle installment sale contracts based on
several criteria, including the following: (i) each Initial Contract was
originated in the United States of America; (ii) each Initial Contract has a
Contract Rate equal to or greater than ___%; (iii) each Initial Contract
provides for level monthly payments which include interest at the related
Contract Rate and, if paid in accordance with its schedule, fully amortizes the
amount financed over an original term of no greater than ___ months; (iv) as of
the Initial Cut-off Date the most recent scheduled payment of principal and
interest on each Initial Contract was made by or on behalf of the related
Obligor or was not delinquent more than 60 days; (v) no Initial Financed Vehicle
has been repossessed without reinstatement as of the related Initial Cut-off
Date; (vi) as of the Initial Cut-off Date no Obligor on any Initial Contract was
the subject of a bankruptcy proceeding; and (vii) as of the Initial Cut-off Date
each Initial Contract has a remaining principal balance of not less than
$_________ and not more than $__________. The Initial Financed Vehicles consist
of motor homes, travel trailers and truck campers.
All of the Initial Contracts are, and all of the Subsequent Contracts will
be, Simple Interest Contracts. A "Simple Interest Contract" is a Contract as to
which interest accrues on a simple interest method (i.e., the interest portion
of each monthly payment equals the interest on the outstanding principal balance
of the related Contract for the number of days since the most recent payment
made on such Contract and the balance, if any, of such monthly payment is
applied to principal).
The Initial Contracts were originated between ___________, 19__ and
___________, 19__. All Initial Contracts are installment sale contracts secured
by recreational vehicles originated by a Dealer in the ordinary course of its
business and purchased by CITSF in the ordinary course of its business.
Approximately __% of the Initial Cut-off Date Pool Principal Balance
represented Initial Contracts secured by motor homes and approximately __% of
the Initial Cut-off Date Pool Principal Balance represented Initial Contracts
secured by travel trailers and truck campers. Approximately __% of the Initial
Contracts, by Initial Cut-off Date Pool Principal Balance, represented financing
of recreational vehicles which were new and approximately __% represented
financing of recreational vehicles which were used at the time the related
Initial Contract was originated. As of the Initial Cut-off Date, the average
outstanding principal balance of the Initial Contracts secured by motor homes,
travel trailers and truck campers was $____________, $____________ and
$____________, respectively.
Based upon information presented by Obligors in their credit applications
the Initial Contracts were originated in __ states. Approximately __% of the
Initial Contracts, by Initial Cut-off Date Pool Principal Balance, were
originated in the State of California, approximately __% were originated in the
State of ___________ and approximately __% were originated in the State of
________. Each other state accounts for less than __% of the Initial Contracts
by Initial Cut-off Date Pool Principal Balance.
All Initial Contracts have a Contract Rate of at least _____%. As of the
Initial Cut-off Date, the Initial Contracts have remaining maturities of at
least ___ months but not more than ____ months, original maturities of at least
___ months but not more
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<PAGE>
than ____ months, and a weighted average remaining term to scheduled maturity of
___ months. The average remaining principal balance per contract, as of the
Initial Cutoff Date, was $_________ and the outstanding principal balances of
the Initial Contracts, as of the Initial Cut-off Date, ranged from $__________
to $_________.
The final scheduled payment dates on the Initial Contracts range from
_____, 199_ to ______, 200_. The final scheduled payment date on the Initial
Contract with the last maturity is in ____ months and occurs in _______, 200_.
The weighted average stated remaining term to maturity on the Initial
Contacts as of the Initial Cut-off Date was ___ months and the weighted average
original term to maturity of the Initial Contracts was____ months.
Set forth below is a description of certain characteristics of the Initial
Contracts.
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<PAGE>
Geographical Distribution of Initial Contracts by State of Origination
<TABLE>
<CAPTION>
% of Contract
% of Contract Pool by
Number of Pool by Number Aggregate Principal Principal Balance
Initial of Initial Balance Outstanding Outstanding
Contracts As of Contracts As of As of As of
State Initial Cut-off Date Initial Cut-off Date Initial Cut-off Date Initial Cut-off Date
- ----- -------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Alabama......................... % $ %
Arizona.........................
Arkansas........................
California......................
Colorado........................
Connecticut.....................
Delaware........................
District of Columbia............
Florida.........................
Georgia.........................
Hawaii..........................
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%(1) $ 100.00%(1)
========= ======= =============== ======
</TABLE>
- ----------------
(1) Due to rounding, may not add to 100.00%
-31-
<PAGE>
Range of Contract Rates
<TABLE>
<CAPTION>
% of Contract Pool % of Contract Pool
Number of by Number of Aggregate Principal By Principal
Range of Initial Contracts Contracts As of Initial Contracts as of Balance Outstanding As of Balance Outstanding As of
By Contract Rates Initial Cut-off Date Initial Cut-off Date Initial Cut-off Date Initial Cut-off Date
- -------------------------- -------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
7.00%-8.00%.................. % $ %
8.01%-9.00%..................
9.01%-10.00%.................
10.01%-11.00%.................
11.01%-12.00%.................
12.01%-13.00%.................
13.01%-14.00%.................
14.01%-15.00%.................
----------- ------ -------------- ------
Total.................. 100.00% $ 100.00%(1)
=========== ====== ============== ======
</TABLE>
- ----------------
(1) Due to rounding, may not add to 100.00%
Delinquency, Loan Loss and Repossession Experience
The following Delinquency Experience and Loan Loss/Repossession Experience
tables set forth data for CITSF's recreational vehicle portfolio. The following
table sets forth the delinquency experience for the four years ended December
31, 1994 and the three months ended March 31, 1995 of the portfolio of
recreational vehicle contracts serviced by CITSF (other than contracts already
in repossession).
Delinquency Experience
(Dollars in thousands)
<TABLE>
<CAPTION>
3 months 3 months
ended ended Year Ended December 31,
March 31, March 31, --------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Number of Contracts
Serviced........................
Principal Balance of Contracts
Serviced........................ $ $ $ $ $ $ $
Number of Contracts
Delinquent(1):
30-59 Days................... $ $ $ $ $ $ $
60-89 Days...................
90 Days or More..............
-------- -------- -------- -------- -------- -------- --------
Total Contracts
Delinquent...................... $ $ $ $ $ $ $
======== ======== ======== ======== ======== ======== ========
Delinquencies as a
Percent of Principal
Balance of Contracts
Serviced(2).................... % % % % % % %
</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) Percent delinquent based on dollar amounts.
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<PAGE>
The following table sets forth the loan loss and repossession experience
for the four years ended December 31, 1994 and the three months ended March 31,
1995, of the portfolio of recreational vehicle contracts serviced by CITSF
(other than contracts already in repossession).
Loan Loss/Repossession Experience
(Dollars in thousands)
<TABLE>
<CAPTION>
3 months 3 months
ended ended Year Ended December 31,
March 31, March 31, --------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Number of Contracts(1)..............
Principal Balance
of Contracts(1)................... $ $ $ $ $ $ $
Contract Liquidations(2) ........... % % % % % % %
Net Losses:
Dollars(3)........................ $ $ $ $ $ $ $
Percentage(4)..................... % % % % % % %
</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.
Prior to 1989, CITSF originated recreational vehicle contracts under a
manual credit approval system. In 1989, CITSF strengthened its underwriting
criteria under the manual underwriting system. In 1992, CITSF introduced an
automated credit scoring system. This system was developed in part based on the
credit performance of the recreational vehicle contracts originated under the
post-1989 manual system. To date, contracts underwritten under the automated
credit scoring system have lower delinquencies at the same point in their
maturity as those contracts originated under the manual system.
[Management Discussion]
The data presented in the foregoing tables is for illustrative purposes
only. Such data related to the performance of CITSF's entire recreational
vehicle portfolio, and is not historical data regarding solely the portion of
CITSF's portfolio constituting the Contracts. In July 1994 CITSF's credit
criteria was changed to permit greater reliance on credit scores and overall
evaluation instead of using specific disqualifying criteria (e.g., a minimum of
five years of employment). In connection with this change, the minimum credit
score for approval was reduced. The interest rate charged on recreational
vehicle contracts originated since July 1994 reflects CITSF's evaluation of the
relative risk associated with an individual's application. It is expected that
the changes in CITSF's underwriting standards may result in higher delinquency
and loan loss experience than is shown in the above tables since most of the
recreational vehicle contracts included in such tables were originated using
CITSF's former underwriting guidelines. All of the Initial Contracts were
originated and all Subsequent Contracts, if any, will be originated under these
new credit criteria. Accordingly, the data presented in the foregoing tables
should not necessarily be considered as a basis for assessing the likelihood,
amount or severity of delinquency or losses on the Contracts.
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<PAGE>
MATURITY AND PREPAYMENT CONSIDERATIONS
All of the Contracts are prepayable at any time without any penalty. If
prepayments are received on the Contracts, the actual weighted average life of
the Contracts will be shorter than the scheduled weighted average life, which is
based on the assumption that payments will be made as scheduled and that no
prepayments will be made. For this purpose the term "prepayments" includes,
among other items, voluntary prepayments by Obligors, regular installment
payments made in advance of their scheduled due dates, liquidations due to
default, proceeds from physical damage, credit life and credit disability
insurance policies, if any, and purchases by CITSF or the Servicer of certain
Contracts as described herein. Weighted average life means the average amount of
time during which each dollar of principal on a Contract is outstanding. The
rate of prepayments on the Contracts may be influenced by a variety of economic,
social and other factors, including the fact that an Obligor may not sell or
transfer a Financed Vehicle without the consent of CITSF. Any reinvestment risk
resulting from the rate of prepayment of the Contracts and the distribution of
such prepayments to Securityholders will be borne entirely by the
Securityholders. In addition, early retirement of the Securities may be effected
by either (i) the exercise of the option of CITSF to purchase all of the
Contracts remaining in the Trust when the aggregate principal balance of the
Contracts (the "Pool Balance") is 10% or less of the Initial Pool Balance (as
hereinafter defined) or (ii) the sale by the Trustee of all of the Contracts
remaining in the Trust when the Pool Principal Balance is 5% or less of the
Initial Cut-off Date Pool Principal Balance. See "The Purchase Agreements and
Trust Documents--Termination."
The rate of principal payments (including prepayments) on pools of
recreational vehicle installment sale contracts may be influenced by a variety
of economic, geographic, social and other factors. In general, if prevailing
interest rates were to fall significantly below the Contract Rates on the
Contracts, the Contracts could be subject to higher prepayment rates than if
prevailing interest rates were to remain at or above the Contract Rates on the
Contracts. Conversely, if prevailing interest rates were to rise significantly,
the rate of prepayments on the Contracts would generally be expected to
decrease. No assurances can be given as to the rate of prepayments on the
Contracts in stable or changing interest rate environments.
CITSF is not aware of any publicly available industry statistics that set
forth principal prepayment experience for recreational vehicle installment sale
contracts similar to the Contracts over an extended period of time, and its
experience with respect to recreational vehicle receivables included in its
portfolio is insufficient to draw any specific conclusions with respect to the
expected prepayment rates on the Contracts.
Information Regarding Principal Reduction on Recreational
Vehicle Contracts Originated by CITSF
(Dollars in Thousands)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Year of Origination 1991 1992 1993 1994
Approximate Volume (1) $ $ $ $
Approximate Aggregate
Principal Balance (2):
December 31, 1991 $
December 31, 1992 $ $
December 31, 1993 $ $ $
December 31, 1994 $ $ $ $
</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 at the end of the
indicated year on each contract originated in a particular year.
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<PAGE>
YIELD CONSIDERATIONS
Thirty days of interest on the Contracts will be paid to the Noteholders in
an amount equal to one twelfth of the product of the Class A Rate and the
outstanding principal balance of the Notes as of the first day of the preceding
Interest Accrual Period (after giving effect to any distributions of principal
made on such preceding Interest Accrual Period) or, in the case of the first
Distribution Date, the original principal balance of the Notes. See "The
Notes-Distributions of Principal". Thirty days of interest on the Contracts will
be passed through to Certificateholders on each Distribution Date in an amount
equal to one-twelfth of the product of the Pass-Through Rate and the Certificate
Balance (the "Certificate Balance" is the Original Certificate Balance reduced
by all distributions allocable to principal actually made to Certificateholders)
as of the first day of the preceding Interest Accrual Period (after giving
effect to any distributions of principal made on such preceding Interest Accrual
Period) or, in the case of the first Distribution Date, the Original Certificate
Principal Balance. See "The Certificates -- Distributions of Principal".
Although the Contracts have different Contract Rates, each Contract's
Contract Rate exceeds the sum of the Pass-Through Rate and the Servicing Fee
Rate. Therefore, disproportionate rates of prepayments between Contracts with
higher and lower Contract Rates should not affect the yield to Securityholders
on the principal balance of the Securities outstanding.
POOL FACTORS
The "Note Pool Factor" is a seven-digit decimal which the Servicer will
compute each month indicating the remaining outstanding principal balance of the
Notes as of the Distribution Date, as a fraction of the initial outstanding
principal balance of the Notes. The Note Pool Factor will be 1.0000000 as of the
Initial Cut-off Date, and thereafter will decline to reflect reductions in the
outstanding principal balance of the Notes. A Noteholder's portion of the
aggregate outstanding principal balance of the Notes is the product of (i) the
original denomination of the Noteholder's Note and (ii) the Note Pool Factor.
The "Certificate Pool Factor" is a seven-digit decimal which the Servicer
will compute each month indicating the remaining Certificate Balance as of the
Distribution Date, as a fraction of the initial Certificate Balance. The
Certificate Pool Factor will be 1.0000000 as of the Initial Cut-off Date, and
thereafter will decline to reflect reductions in the outstanding principal
balance of the Certificates. A Certificateholder's portion of the aggregate
outstanding Certificate Balance is the product of (i) the original denomination
of the Certificateholder's Certificate and (ii) the Certificate Pool Factor.
Pursuant to the Indenture, the Noteholders will receive monthly reports
concerning the payments received on the Contracts, the Pool Balance, the Note
Pool Factor and various other items of information. Pursuant to the Trust
Agreement, the Certificateholders will receive monthly reports concerning the
payments received on the Receivables, the Pool Balance, Certificate Pool Factor
and various other items of information. Securityholders of record (which in most
cases will be Cede & Co.) during any calendar year will be furnished information
for tax reporting purposes not later than the latest date permitted by law. See
"Certain Information Regarding the Securities--Reports to Securityholders."
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<PAGE>
USE OF PROCEEDS
The Company will sell the Initial Contracts to the Trust concurrently with
the sale of the Securities and the net proceeds from the sale of the Securities
will be applied by the Trustees to the purchase of the Initial Contracts, to the
payment of certain expenses connected with pooling the Contracts and issuing the
Securities, to the deposit of the Pre-Funded Amount in the Pre-Funding Account,
to the deposit of the Reserve Fund Initial Deposit in the Reserve Fund and to
the deposit of the initial amount into the Capitalized Interest Account. Such
net proceeds less the payment of such expenses, the Pre-Funded Amount, the
Reserve Fund Initial Deposit and the initial deposit into the Capitalized
Interest Account represent the purchase price paid by the Trust to the Company
for the sale of the Initial Contracts to the Trust. Such amount will be
determined as a result of the pricing of the Securities, through the offering
described in this Prospectus. The net proceeds to be received from the sale of
the Initial Contracts will be paid to CITSF as the purchase price for the
Contracts and will be added to CITSF's general funds and will be available for
general corporate purposes, including the purchase of new recreational vehicle
installment sales contracts.
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% 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) 740-5284.
As described herein, the obligations of the Company with respect to the
Certificates are limited. The Company will have no ongoing servicing obligations
or responsibilities with respect to the Contract Pool.
CITSF is an affiliate of the Company. The Company will acquire the Contract
Pool in a privately negotiated transaction from CITSF.
Neither CIT nor any of its affiliates, including the Company and CITSF,
will be obligated with respect to the Securities, except for the Limited
Guarantee provided by CIT in favor of the Certificateholders. Accordingly, the
Company has determined that financial statements of CITSF and the Company, are
not material to the offering of the Securities.
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 recreational vehicles, manufactured housing and other consumer goods
throughout the United States. CITSF has been a lender to the recreational
vehicle 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 recreational
vehicle contracts from dealers on an individual basis, CITSF makes bulk
purchases of recreational vehicle contracts. These bulk purchases may be from
the portfolios of other lending
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institutions or finance companies, the portfolios of governmental agencies or
instrumentalities or the portfolios of other entities that purchase and hold
recreational vehicle contracts.
The Asset Service Center of CITSF services consumer credit transactions in
50 states and the District of Columbia. It provides full servicing for
recreational vehicle and manufactured housing retail installment credit
supplemented by outside collectors and field remarketers located throughout the
United States.
As of ____________, 1995, CITSF serviced for itself and others
approximately ________ contracts (consisting primarily of recreational vehicle
and manufactured housing contracts), representing an outstanding balance of
approximately $___ billion. Of this portfolio, approximately ______ contracts
(representing approximately $ ___ million outstanding balance) consisted of
recreational vehicle contracts.
Since _____________, 199_, CITSF has entered into arrangements to service,
on behalf of other owners, approximately _________ recreational vehicle
contracts (determined as of _____________, 1995) which were originated by other
institutions. CITSF's management currently intends to pursue both the bulk
purchase of recreational vehicle contracts and arrangements under which it would
service recreational vehicle contracts, on behalf of other owners, that it
neither purchased nor originated.
CITSF's general policies with regard to the origination of recreational
vehicle installment sale contracts 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
Although CITSF does, on occasion, purchase recreational vehicle installment
sale contracts in bulk from other lenders, all of the Contracts in the Contract
Pool have been originated by CITSF through the purchase of such Contracts
from Dealers.
Through its Regional Business Centers, CITSF arranges to purchase
recreational vehicle contracts from recreational vehicle 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
recreational vehicle installment loan agreements directly.] In addition, CITSF
purchases portfolios of recreational vehicle contracts from other lending
institutions or finance companies.
Contracts that CITSF purchases from dealers or originates itself (as
opposed to portfolios of contracts purchased from other lenders) are purchased
on an individually approved basis in accordance with CITSF's underwriting
guidelines.
CITSF's Underwriting Guidelines
All recreational vehicle contracts that are purchased by CITSF from dealers
are written on forms provided or approved by CITSF and are purchased on an
individually approved basis. With respect to each retail recreational vehicle
contract to be purchased from a dealer, 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 vehicle) and certain other information relating to the
contract to the applicable Regional Business Center. Personnel at the Regional
Business Center prepare an analysis of the creditworthiness of the customer and
of other aspects of the proposed transaction.
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Since 1992, each credit application is entered into an automatic
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
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 recreational vehicle.
The retail customer generally has a stable year residence, employment and
credit history, a minimum of two years in his or her present job, 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. The maximum amount CITSF will advance to such targeted customers is
(i) in the case of a new financed vehicle, 100% of the unpaid cash balance, not
to exceed 110% of the manufacturer's invoice price plus taxes, fees and
insurance and (ii) in the case of a used financed vehicle, 100% of the unpaid
cash balance, not to exceed 100% of the wholesale value as determined by the
Kelly blue book. Funding of a contract is authorized after verification of the
conditions of approval of the application and satisfactory delivery of the
related recreational vehicle.
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 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 an overall credit
profile ___________.
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 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.
Servicing
CITSF services, through its Asset Service Center, recreational vehicle,
manufactured housing, home equity, and other consumer loans. CITSF services all
of the recreational vehicle contracts it purchases or originates, whether on an
individual basis or in bulk. CITSF is actively seeking arrangements pursuant to
which it will service recreational vehicle 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
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principal and interest payments to the holders thereof, to the extent such
holders are entitled thereto. Collection procedures include repossession and
resale of recreational vehicles 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
recreational vehicle 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
recreational vehicles if the market is favorable. See "The Contract
Pool--Delinquency, Loan Loss and Repossession Experience" 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 CITSF's servicing portfolio,
including recreational vehicle and manufactured housing contracts serviced by
CITSF on the dates indicated:
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THE CIT GROUP/SALES FINANCING, INC.
<TABLE>
<CAPTION>
At December 31,
----------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
------------------ ------------------ ------------------ ------------------ ------------------
(Number) (Dollars) (Number) (Dollars) (Number) (Dollars) (Number) (Dollars) (Number) (Dollars)
(Dollars in thousands except average unpaid principal balance)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unpaid principal balance of
contracts being serviced
(dollars in thousands)
RV - Owned..................... $ $ $ $ $
RV - Serviced Retained(1)......
Total RV....................... $ $ $ $ $
Total MH....................... $ $ $ $ $
Other..........................
------ ------- ------ ------- ------ ------- ------ ------- ------ -------
Total Contracts Serviced.......... $ $ $ $ $
Average Unpaid
Balance - RV................... $ $ $ $ $
</TABLE>
- ----------------
RV = Recreational Vehicle
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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
the offices of the Commission and at the offices of the New York Stock Exchange,
Inc. See "Additional Information."
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THE NOTES
General
The CIT RV Owner Trust 1995-A Asset Backed Notes (the "Notes") will
represent obligations of the Trust secured by the assets of the Trust (other
than the Certificate Distribution Account). The Trust will issue $________
aggregate principal amount of Class A ___% Asset Backed Notes (the "Class A
Notes") pursuant to the terms of an Indenture to be dated as of [June 1, 1995]
(as amended and supplemented from time to time, the "Indenture") between the
Trust and __________________, as trustee (the "Indenture Trustee"), a form of
which has been filed as an exhibit to the Registration Statement of which this
Prospectus forms a part. A copy of the Indenture will be available from the
Company, upon request, to the holders of the Notes or Certificates and will be
filed with the Securities and Exchange Commission (the "Commission") following
the issuance of the Notes and Certificates. The following summary describes
certain terms of the Notes and the Indenture. The summary does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all of the provisions of the Notes and the Indenture. Where particular
provisions or terms used in the Indenture are referred to, the actual provisions
(including definitions of terms) are incorporated by reference as part of such
summary.
The Notes will be offered for purchase in minimum denominations of $1,000
and integral multiples of $1,000 thereof in book-entry form only. The Class A
Notes will initially be represented by a single Note registered in the name of
the nominee of The Depository Trust Company ("DTC" and, together with any
successor depository selected by the Company, the "Depository"), except as
provided below. The Company has been informed by DTC that DTC's nominee will be
Cede & Co. ("Cede"). No person acquiring an interest in the Notes through the
facilities of DTC (a "Note Owner") will be entitled to receive a Note
representing such person's interest in the Notes, except as set forth below
under "Certain Information Regarding the Securities--Definitive Securities" and
such persons will hold their interests in the Notes through DTC in the United
States or Cedel or Euroclear in Europe. Unless and until Definitive Notes are
issued under the limited circumstances described herein, all references to
actions by Noteholders shall refer to actions taken by DTC upon instructions
from its Participants, and all references herein to distributions, notices,
reports and statements to Noteholders shall refer to distributions, notices,
reports and statements to DTC in accordance with DTC procedures. See "Certain
Information Regarding the Securities--Definitive Securities" below.
Payments of interest and principal on the Notes with respect to each Due
Period will be made on the fifteenth day of each month or, if any such day is
not a Business Day, on the next succeeding Business Day (each, a "Distribution
Date"), commencing [July 17, 1995]. With respect to any Distribution Date, the
"Due Period" will be the calendar month preceding the month of such Distribution
Date. The first Due Period will commence on and include [June 1, 1995] and will
end on and include [June 30, 1995]. Payments on the Securities on each
Distribution Date will be made to the holders of record of the related
Securities on the day immediately preceding such Distribution Date or, in the
event Definitive Securities have been issued, as on the last day of the month
immediately preceding the month in which such Distribution Date occurs (each, a
"Record Date"). A "Business Day" is any day other than a Saturday, Sunday or any
day on which banking institutions or trust companies in the City of New York or
___________ are authorized by law, regulation or executive order to be closed.
Payments of Interest
The Class A Notes will bear interest at the rate of ___% per annum (the
"Class A Rate"). Interest on the outstanding principal amount of the Notes will
accrue at the Class A Rate from _____________ or from the most recent
Distribution Date on which interest has been paid to but excluding the following
Distribution Date (each, an "Interest Accrual Period"). Interest will be
calculated on the basis of a 360-
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day year consisting of twelve 30-day months. Interest payable on a Distribution
Date (the "Class A Interest Distribution Amount") will be calculated on the
basis of the outstanding principal amount of Class A Notes as of the preceding
Distribution Date, after giving effect to any distributions of principal on the
Class A Notes on such preceding Distribution Date (or, in the case of the first
Distribution Date, on the basis of the original outstanding principal amount of
the Class A Notes). Interest accrued as of any Distribution Date but not paid on
such Distribution Date will be due on the next Distribution Date, together with
interest on such amount at the Class A Rate to the extent permitted by law.
Payments of Principal
Principal payments will be made to the Noteholders on each Distribution
Date in an amount equal to the Principal Distribution Amount. The "Principal
Distribution Amount" is equal to the difference between (i) the Pool Balance on
the last day of the second preceding Due Period (or, in the case of the first
Distribution Date, the Initial Cut-off Date Pool Balance), less (ii) the Pool
Balance on the last day of the preceding Due Period; provided, however, that the
Principal Distribution Amount on the Class A Final Scheduled Distribution Date
will equal the outstanding principal balance of the Notes as of such date and
the Principal Distribution Amount on the Certificate Final Distribution Date
will equal the Certificate Balance on such date; provided, further, that for
purposes of this calculation the Pool Balance shall be adjusted to take into
account the acquisition of the Subsequent Contracts. For the purposes of
determining the Principal Distribution Amount the unpaid principal balance of a
Defaulted Contract or a Repurchased Contract is deemed to be zero on and after
the last day of the Due Period in which such Contract became a Defaulted
Contract or a Repurchased Contract. The Principal Distribution Amount will not
exceed the outstanding principal balance of the Notes or, after the Cross-Over
Date, the Certificate Balance.
No principal will be paid in respect of the Notes until the Servicer has
been reimbursed for any outstanding Advances and has been paid the Servicing Fee
(including any unpaid Servicing Fee with respect to one or more prior Due
Periods) (collectively, the "Servicer Payment") and until the entire Class A
Interest Distribution Amount has been paid for the related Distribution Date.
The principal balance of the Class A Notes, to the extent not previously paid,
will be due on the Final Scheduled Distribution Date. The actual date on which
the aggregate outstanding principal amount of the Class A Notes is paid may be
earlier than the Final Scheduled Distribution Date based on a variety of
factors.
On each Determination Date, the Indenture Trustee will determine the amount
in the Collection Account and the Reserve Fund available for distribution on the
related Distribution Date and shall allocate such amounts between the Notes and
the Certificates as described herein under "The Purchase Agreements and the
Trust Documents -- Distributions". Payments to Securityholders shall be made on
each Distribution Date in accordance with such allocations. The unpaid principal
balance of the Notes will be payable on the related Final Scheduled Distribution
Date.
Redemption
The Notes will be redeemed in part on the Distribution Date on or
immediately following the last day of the Funding Period in the event that any
amount remains on deposit in the Pre-Funding Account after giving effect to the
purchase of all Subsequent Contracts, including any such purchase on such date
(a "Mandatory Redemption"). The aggregate principal amount of the Notes to be
redeemed will be an amount equal to the amount then on deposit in the
Pre-Funding Account.
In the event of an Optional Purchase or Auction Sale the outstanding Notes
will be redeemed in whole, but not in part, at a redemption price equal to the
unpaid principal amount of the Notes plus accrued interest thereon at the Class
A Rate. An "Optional Purchase" of all the Contracts by CITSF, may occur at
CITSF's option, on any Distribution Date on which the Pool Balance is 10% or
less of the Initial
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Pool Balance (as hereinafter defined). An "Auction Sale" may occur, and may
result in the sale of the Contracts remaining in the Trust, within ten days
following a any Distribution Date as of which the Pool Balance is 5% or less of
the Initial Pool Balance.
The Indenture
Modification of Indenture Without Noteholder Consent. The Trust and the
Indenture Trustee may, without consent of the Noteholders, enter into one or
more supplemental indentures for any of the following purposes: (i) to correct
or amplify the description of the collateral or add additional collateral; (ii)
to provide for the assumption of the Note and the Indenture obligations by a
permitted successor to the Trust; (iii) to add additional covenants for the
benefit of the related Noteholders, or to surrender any rights or power
conferred upon the Trust; (iv) to convey, transfer, assign, mortgage or pledge
any property to or with the Indenture Trustee; (v) to cure any ambiguity or
correct or supplement any provision in the Indenture or in any supplemental
indenture which may be inconsistent with any other provision of the Indenture or
in any supplemental indenture; (vi) to provide for the acceptance of the
appointment of a successor Indenture Trustee or to add to or change any of the
provisions of the Indenture as shall be necessary and permitted to facilitate
the administration by more than one trustee; (vii) to modify, eliminate or add
to the provisions of the Indenture in order to comply with the Trust Indenture
Act of 1939, as amended; and (viii) to add any provisions to, change in any
manner, or eliminate any of the provisions of, the Indenture or modify in any
manner the rights of Noteholders under such Indenture; provided that any action
specified in this clause (viii) shall not, as evidenced by an opinion of
counsel, adversely affect in any material respect the interests of any
Noteholder unless Noteholder consent is otherwise obtained as described herein.
Modification of Indenture With Noteholder Consent. With the consent of the
holders of a majority of the aggregate principal amount of the outstanding
Notes, the Trust and the Indenture Trustee may execute a supplemental indenture
to add provisions to, change in any manner or eliminate any provisions of, the
related Indenture, or modify in any manner the rights of the related
Noteholders.
Without the consent of the holder of each outstanding related Note affected
thereby, however, no supplemental indenture will: (i) change the due date of any
instalment of principal of or interest on any Note or reduce the principal
amount thereof, the interest rate specified thereon or the redemption price with
respect thereto or change any place of payment where or the coin or currency in
which any Note or any interest thereon is payable; (ii) impair the right to
institute suit for the enforcement of certain provisions of the Indenture
regarding payment; (iii) reduce the percentage of the aggregate principal amount
of the outstanding Notes the consent of the holders of which is required for any
such supplemental indenture or the consent of the holders of which is required
for any waiver of compliance with certain provisions of the Indenture or of
certain defaults thereunder and their consequences as provided for in the
Indenture; (iv) modify or alter the provisions of the Indenture regarding the
voting of Notes held by the Trust, any other obligor on the Notes, the Seller or
an affiliate of any of them; (v) reduce the percentage of the aggregate
outstanding amount of the Notes the consent of the holders of which is required
to direct the Indenture Trustee to sell or liquidate the Contracts if the
proceeds of such sale would be insufficient to pay the principal amount and
accrued but unpaid interest on the outstanding Notes; (vi) decrease the
percentage of the aggregate principal amount of the Notes required to amend the
sections of the Indenture which specify the applicable percentage of aggregate
principal amount of the Notes necessary to amend the Indenture or certain other
related agreements; or (vii) permit the creation of any lien ranking prior to or
on a parity with the lien of the Indenture with respect to any of the collateral
for the Notes or, except as otherwise permitted or contemplated in the
Indenture, terminate the lien of the Indenture on any such collateral or deprive
the holder of any Note of the security afforded by the lien of the Indenture.
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Events of Default; Rights Upon Event of Default. "Events of Default" under
the Indenture will consist of: (i) any failure to pay interest on the Notes as
and when the same becomes due and payable, which failure continues unremedied
for five days; (ii) any failure (a) to make any required payment of principal on
the Notes or (b) to observe or perform in any material respect any other
covenants or agreements in the Indenture, which failure in the case of a default
under clause (ii)(b) materially and adversely affects the rights of Noteholders,
and which failure in either case continues for 30 days after the giving of
written notice of such failure to the Seller or the Servicer, as applicable, by
the Indenture Trustee or to the Seller or the Servicer, as applicable, and the
Indenture Trustee by the holders of not less than 25% of the principal amount of
the Notes; (iii) failure to pay the unpaid principal balance of any Notes on or
prior to the Final Scheduled Distribution Date for the Notes; and (iv) certain
events of insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings and certain actions by the Trust indicating
its insolvency, reorganization pursuant to bankruptcy proceedings or inability
to pay its obligations. However, the amount of principal required to be paid to
Noteholders under the Indenture will generally be limited to amounts available
to be deposited in the Note Distribution Account. Therefore the failure to pay
principal on the Notes generally will not result in the occurrence of an Event
of Default unless the Notes have a Final Scheduled Distribution Date, and then
not until such Final Scheduled Distribution Date.
If an Event of Default should occur and be continuing with respect to the
Notes, the Indenture Trustee or holders of a majority in principal amount of
such Notes then outstanding may declare the principal of the Notes to be
immediately due and payable. Such declaration may, under certain circumstances,
be rescinded by the holders of a majority in principal amount of the Notes then
outstanding.
If the Notes are due and payable following an Event of Default with respect
thereto, the Indenture Trustee may institute proceedings to collect amounts due
or foreclose on Trust property, exercise remedies as a secured party, sell the
related Contracts or elect to have the Trust maintain possession of such
Contracts and continue to apply collections on such Contracts as if there had
been no declaration of acceleration. The Indenture Trustee, however, is
prohibited from selling the Contracts following an Event of Default, unless (i)
the holders of all the outstanding Notes consent to such sale, (ii) the proceeds
of such sale are sufficient to pay in full the principal of and the accrued
interest on such outstanding Notes at the date of such sale, or (iii) the
Indenture Trustee determines that the proceeds of the Contracts would not be
sufficient on an ongoing basis to make all payments on the Notes as such
payments would have become due if such obligations had not been declared due and
payable, and the Indenture Trustee obtains the consent of the holders of a
majority of the aggregate outstanding amount of the Notes. Following a
declaration upon an Event of Default that the Notes are immediately due and
payable, (i) Noteholders will be entitled to ratable repayment of principal on
the basis of their respective unpaid principal balances and (ii) repayment in
full of the accrued interest on and unpaid principal balances of the Notes will
be made prior to any further payment of interest on the Certificates or in
respect of the Certificate Balance (other than pursuant to the Limited
Guarantee).
Subject to the provisions of the Indenture relating to the duties of the
Indenture Trustee, if an Event of Default occurs and is continuing with respect
to the Notes, the Indenture Trustee will be under no obligation to exercise any
of the rights or powers under the Indenture at the request or direction of any
of the holders of such Notes, if the Indenture Trustee reasonably believes it
will not be adequately indemnified against the costs, expenses and liabilities
which might be incurred by it in complying with such request. Subject to the
provisions for indemnification and certain limitations contained in the
Indenture, the holders of a majority in principal amount of the outstanding
Notes will have the right to direct the time, method and place of conducting any
proceeding or any remedy available to the Indenture Trustee and the holders of a
majority in principal amount of such Notes then outstanding may, in certain
cases, waive any default with respect
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thereto, except a default in the payment of principal or interest or a default
in respect of a covenant or provision of the Indenture that cannot be modified
without the waiver or consent of all of the holders of such outstanding Notes.
No holder of a Note will have the right to institute any proceeding with
respect to the Indenture, unless (i) such holder previously has given to the
Indenture Trustee written notice of a continuing Event of Default, (ii) the
holders of not less than 25% in principal amount of the outstanding Notes have
made written request of the Indenture Trustee to institute such proceeding in
its own name as Indenture Trustee, (iii) such holder or holders have offered the
Indenture Trustee reasonable indemnity, (iv) the Indenture Trustee has for 60
days failed to institute such proceeding and (v) no direction inconsistent with
such written request has been given to the Indenture Trustee during such 60-day
period by the holders of a majority in principal amount of such outstanding
Notes.
If an Event of Default occurs and is continuing and if it is known to the
Indenture Trustee, the Indenture Trustee will mail to each Noteholder notice of
the Event of Default within 90 days after it occurs. Except in the case of a
failure to pay principal of or interest on any Note, the Indenture Trustee may
withhold the notice if and so long as it determines in good faith that
withholding the notice is in the interests of Noteholders.
In addition, the Indenture Trustee and Noteholders, by accepting the Notes,
will covenant that they will not, for a period of one year after the termination
of the Indenture, institute against the Affiliated Purchaser, the Company or the
Trust any bankruptcy, reorganization or other proceeding under any federal or
state bankruptcy or similar law.
Neither the Indenture Trustee nor the Owner Trustee in its individual
capacity, nor any holder of a Certificate including, without limitation, the
Affiliated Purchaser or the Company, nor any of their respective owners,
beneficiaries, agents, officers, directors, employees, affiliates, successors or
assigns will, in the absence of an express agreement to the contrary, be
personally liable for the payment of the principal of or interest on the Notes
or for the agreements of the Trust contained in the Indenture.
Certain Covenants. The Indenture provides that the Trust may not
consolidate with or merge into any other entity, unless (i) the entity formed by
or surviving such consolidation or merger is organized under the laws of the
United States, any state or the District of Columbia, (ii) such entity expressly
assumes the Trust's obligation to make due and punctual payments upon the Notes
and the performance or observance of every agreement and covenant of the Trust
under the Indenture, (iii) no Event of Default shall have occurred and be
continuing immediately after such merger or consolidation, (iv) the Trust has
been advised that the rating of the related Notes or Certificates then in effect
would not be reduced or withdrawn by the Rating Agencies as a result of such
merger or consolidation and (v) the Trust has received an opinion of counsel to
the effect that such consolidation or merger would have no material adverse tax
consequence to the Trust or to any Noteholder or Certificateholder.
The Trust will not, among other things, (i) except as expressly permitted
by the Indenture, the Purchase Agreements (as defined herein) or the Trust
Documents (as defined herein) for such Trust (collectively, the "Related
Documents"), sell, transfer, exchange or otherwise dispose of any of the assets
of the Trust, (ii) claim any credit on or make any deduction from the principal
and interest payable in respect of the Notes (other than amounts withheld under
the Code or applicable state law) or assert any claim against any present or
former holder of such Notes because of the payment of taxes levied or assessed
upon the Trust, (iii) dissolve or liquidate in whole or in part, (iv) permit the
validity or effectiveness of the Indenture to be impaired or permit any person
to be released from any covenants or obligations with respect to the related
Notes under such Indenture except as may be expressly permitted thereby or (v)
permit any lien, charge, excise, claim, security
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interest, mortgage or other encumbrance to be created on or extend to or
otherwise arise upon or burden the assets of the Trust or any part thereof, or
any interest therein or the proceeds thereof.
The Trust may not engage in any activity other than as specified above
under "Structure of the Transaction". The Trust will not incur, assume or
guarantee any indebtedness other than indebtedness incurred pursuant to the
Notes and the Indenture or otherwise in accordance with the Related Documents.
Annual Compliance Statement. The Trust will be required to file annually
with the Indenture Trustee a written statement as to the fulfillment of its
obligations under the Indenture.
Indenture Trustee's Annual Report. The Indenture Trustee will be required
to mail each year to all Noteholders a brief report relating to its eligibility
and qualification to continue as Indenture Trustee under the Indenture, any
amounts advanced by it under the Indenture, the amount, interest rate and
maturity date of certain indebtedness owing by the Trust to the Indenture
Trustee in its individual capacity, the property and funds physically held by
the Indenture Trustee as such and any action taken by it that materially affects
the Notes and that has not been previously reported.
Satisfaction and Discharge of Indenture. The Indenture will be discharged
with respect to the collateral securing the related Notes upon the delivery to
the Indenture Trustee for cancellation of all such Notes or, with certain
limitations, upon deposit with the Indenture Trustee of funds sufficient for the
payment in full of all of such Notes.
The Indenture Trustee. The Indenture Trustee under the Indenture will be
____________________________________. The Indenture Trustee may resign at any
time, in which event the Servicer, or its successor, will be obligated to
appoint a successor trustee. The Servicer may also remove the Indenture Trustee
if the Indenture Trustee ceases to be eligible to continue as such under the
Indenture or if the Indenture Trustee becomes insolvent. In such circumstances,
the Servicer will be obligated to appoint a successor trustee. Any resignation
or removal of the Indenture Trustee and appointment of a successor trustee does
not become effective until acceptance of the appointment by the successor
trustee.
Trust Indenture Act. The Indenture will comply with all applicable
provisions of the Trust Indenture Act of 1939, as amended.
THE CERTIFICATES
The Certificates offered hereby will be issued pursuant to the Trust
Agreement, a form of which has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The following summary does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, the Trust Agreement.
General
The CIT RV Owner Trust 1995-A Asset Backed Certificates (the "Certificates"
and, together with the Notes, the "Securities") will represent fractional
undivided interests in the Trust. The Trust will issue $ aggregate
principal amount of Certificates pursuant to a Trust Agreement, to be dated as
of [June 1, 1995], between the Company and the Owner Trustee (the "Trust
Agreement"), a form of which has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. A copy of the Trust Agreement
will be available from the Company, upon request, to holders of the Notes or
Certificates and will be filed with the Commission following the issuance of the
Notes and the Certificates. Payments in respect of the Certificates will be
subordinated to payments on the Notes to the
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limited extent described herein. The following summary describes certain terms
of the Certificates and the Trust Agreement. The summary does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all of the provisions of the Certificates and the Trust Agreement. Where
particular provisions or terms used in the Trust Agreement are referred to, the
actual provisions (including definitions of terms) are incorporated by reference
as part of such summary.
The Certificates will be offered for purchase in minimum denominations of
$20,000 and integral multiples of $1,000 thereof in book-entry form only. The
Certificates will initially be represented by a single Certificate registered in
the name of Cede, the nominee of DTC. No person acquiring an interest in the
Certificates through the facilities of DTC (a "Certificate Owner") will be
entitled to receive a Certificate representing such person's interest in the
Certificates, except as set forth below under "Certain Information Regarding the
Securities-Definitive Securities". Unless and until Definitive Certificates are
issued under the limited circumstances described herein, all references to
actions by Certificateholders shall refer to actions taken by DTC upon
instructions from its Participants, and all references herein to distributions,
notices, reports and statements to Certificateholders shall refer to
distributions, notices, reports and statements to DTC in accordance with DTC
procedures. See "Certain Information Regarding the Securities--Definitive
Securities" below.
Payments of interest and principal on the Certificates with respect to each
Due Period will be made on each Distribution Date, commencing [July 17, 1995].
Payments on the Securities on each Distribution Date will be made to the holders
of record of the related Securities on the related Record Date.
Distribution of Interest
The Certificates will bear interest at the rate of __% per annum (the
"Pass-Through Rate"). Interest on the Certificate Balance will accrue during the
related Interest Accrual Period at the Pass-Through Rate. Interest will be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
Interest payable on a Distribution Date will be calculated on the basis of the
Certificate Balance as of the preceding Distribution Date, after giving effect
to distributions of principal on the Certificates on such preceding Distribution
Date (or, in the case of the first Distribution Date, the Original Certificate
Balance). Interest accrued as of any Distribution Date but not paid on such
Distribution Date will be due on the next Distribution Date, together with
interest on such amount at the Pass-Through Rate. The rights of
Certificateholders to receive distributions of interest will be subordinated to
the rights of the Noteholders to receive payment in full of all amounts of
interest and principal which the Noteholders are entitled to be paid on such
Distribution Date.
Distribution of Principal
On each Distribution Date prior to the Cross-over Date the
Certificateholders will not be entitled to any payments of principal, except to
the extent of the Principal Liquidation Loss Amount. On each Distribution Date
after the Cross-over Date principal of the Certificates will be payable in an
amount equal to the Principal Distribution Amount for the related Due Period.
Such principal payments will be made only to the extent of the Available
Amount remaining after the Servicer has been reimbursed for any outstanding
Advances and has been paid the Servicer Payment, and payment of interest and
principal in respect of the Notes, if any, and interest in respect to the
Certificates has been made. The rights of Certificateholders to receive
distributions of interest and principal will be subordinated to the rights of
Noteholders to receive distributions of interest and principal and to the extent
described herein. The principal balance of the Certificates, to the extent not
previously paid, will be due on the Final Scheduled Distribution Date. The
actual date on which the aggregate outstanding
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principal amount of the Certificates is paid may be earlier than the Final
Scheduled Distribution Date based on a variety of factors.
On each Distribution Date, prior to the Cross-over Date, the
Certificateholders will be entitled to receive the Principal Liquidation Loss
Amount for such Distribution Date. The "Principal Liquidation Loss Amount" for
any Distribution Date will equal the amount, if any, by which the sum of the
aggregate outstanding principal balance of the Notes and the Certificate Balance
(after giving effect to all distributions of principal on such Distribution
Date) exceeds the sum of the Pool Balance plus the amounts remaining on deposit
in the Pre-Funding Account, if any, at the close of business on the last day of
the related Due Period. The Principal Liquidation Loss Amount represents future
principal payments on the Contracts that, because of the subordination of the
Certificates and liquidation losses on the Contracts, will not be paid to the
Certificateholders.
Repayment
In the event of an Optional Purchase or Auction Sale, the Certificates will
be redeemed at a redemption price equal to the Certificate Balance plus accrued
interest thereon at the Pass-Through Rate. An Optional Purchase of all the
Contracts by CITSF, may occur at CITSF's option, on any Distribution Date on
which the Pool Balance is 10% or less of the Initial Pool Balance (as
hereinafter defined). An Auction Sale will occur at any time, and may result in
the sale of the Contracts remaining in the Trust, within ten days following a
[Distribution] Date as of which the Pool Balance is 5% or less of the Initial
Cut-off Date Pool Principal Balance.
Subordination
The rights of Certificatholders to receive distributions of interest and
principal are subordinated to the rights of Noteholders to receive payment in
full of all amounts of interest and principal to which the Noteholders are
entitled to receive on the related Distribution Date. Consequently, no
distribution will be made to the Certificateholders on any Distribution Date
(except pursuant to the Limited Guarantee) in respect of (i) interest or
principal until the full amount of interest and principal on the Class A Notes
payable on such Distribution Date has been distributed to the Class A
Noteholders and (ii) principal until the Class A Notes have been paid in full,
other than distribution in respect of the Principal Liquidation Loss Amount.
CERTAIN INFORMATION REGARDING THE SECURITIES
Book-Entry Registration
Persons acquiring beneficial ownership interests in the Notes may hold
their interests through DTC in the United States or Cedel or Euroclear in Europe
and persons acquiring beneficial ownership interests in the Certificates may
hold their interests through DTC. Securities will be registered in the name of
Cede as nominee for DTC. Cedel and Euroclear will hold omnibus positions with
respect to the Notes on behalf of Cedel Participants and Euroclear Participants,
respectively, through customers' securities accounts in Cedel's and Euroclear's
name on the books of their respective depositories (collectively, the
"Depositories") which in turn will hold such positions in customers' securities
accounts in the Depositories' names on the books of 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. DTC accepts securities for deposit from its
participating organizations ("Participants") and facilitates the clearance and
settlement of securities
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transactions between Participants in such securities through electronic
book-entry changes in accounts of its Participants, thereby eliminating the need
for physical movement of certificates. Participants include securities brokers
and dealers (including the Underwriter), 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").
Security Owners who are not Participants or Indirect Participants but
desire to purchase, sell or otherwise transfer ownership of Securities may do so
only through Participants or Indirect Participants (unless and until Definitive
Securities are issued). In addition, Security Owners will receive all
distributions of principal and interest on the Securities through DTC and its
Participants. Under a book-entry format, Security Owners may experience some
delay in their receipt of payments, since such payments will be forwarded by the
Trustees to Cede, as nominee for DTC. DTC will forward such payments to its
Participants which thereafter will forward them to Indirect Participants or
Security Owners. It is anticipated that the only "Holder" or "Securityholder,"
as such terms are used herein, will be Cede, as nominee of DTC. Security Owners
will not be recognized by the Trustees as Securityholders, as such term will be
used in the Sale and Servicing Agreement, and Security Owners will only be
permitted to exercise the rights of Securityholders indirectly through DTC and
its Participants. Security Owners will not receive or be entitled to receive
Definitive Notes or Definitive Certificates representing their respective
interests in the Securities, except under the limited circumstances described
below.
Transfers between Participants will occur in accordance with DTC Rules.
Transfers between Cedel Participants and Euroclear Participants will occur in
accordance with their respective rules and operating procedures.
Because of time zone differences, credits of securities received in Cedel
or Euroclear as a result of a transaction with a Participant will be made during
subsequent securities settlement processing and dated the business day following
the DTC settlement date, such credits or any transactions in such securities
settled during such processing will be reported to the relevant Euroclear or
Cedel Participants on such business day. Cash received in Cedel or Euroclear as
result of sales of Securities by or through a Cedel Participant or Euroclear
Participant to a DTC Participant will be received with value on the DTC
settlement date but will be available in the relevant Cedel or Euroclear cash
account only as of the business day following settlement in DTC.
Cross-market transfers between persons directly holding Notes or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel
Participants or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC Rules on behalf of the relevant European international
clearing system by its Depository; however, such cross-market transactions will
require delivery of instructions to the relevant European international clearing
system by the counterpart in such system in accordance with its rules and
procedures and within its established deadline (European time). The relevant
European international clearing system will, if the transaction meets its
settlement requirements, deliver instructions to its Depository to take action
to effect final settlement on its behalf by delivering or receiving securities
in DTC, and making or receiving payment in accordance with normal procedures for
same day funds settlement applicable to DTC. Cedel Participants and Euroclear
Participants may not deliver instructions to the Depositories.
While the Securities 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 will be required to make
book-entry transfers among Participants on whose behalf it acts with respect to
the Notes and Certificates and will be required to receive and transmit
distributions of principal
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and interest on the Securities. Participants and Indirect Participants with
which Security Owners have accounts with respect to the Securities will be
similarly required to make book-entry transfers and receive and transmit such
payments on behalf of their respective Security Owners.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants, the ability of a Security Owner to pledge Notes
or Certificates to persons or entities that do not participate in the DTC
system, or otherwise take actions in respect of such Securities, may be limited
due to the lack of physical certificates for such Securities.
Cedel is incorporated under the laws of Luxembourg as a professional
depository. Cedel holds securities for its participating organizations ("Cedel
Participants") and facilitates the clearance and settlement of securities
transactions between Cedel Participants through electronic book-entry changes in
accounts of Cedel Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in Cedel in any of 28
currencies, including United States dollars. Cedel provides to its Cedel
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Cedel interfaces with domestic markets in several
countries. As a professional depository, Cedel is subject to regulation by the
Luxembourg Monetary Institute. Cedel Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trusts companies, clearing corporations and certain other
organizations. Indirect access to Cedel is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Cedel Participants, either directly or indirectly.
The Euroclear System was created in 1968 to hold securities for its
participants ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may be settled in any of 32 currencies, including United
States dollars. The Euroclear System includes various other services, including
securities lending and borrowing and interfaces with domestic markets in several
countries generally similar to the arrangements for cross-market transfers with
DTC described above. The Euroclear System is operated by the Brussels, Belgium
Office of Morgan Guaranty Trust Company of New York (the "Euroclear Operator" or
"Euroclear"), under contract with Euroclear Clearance Systems, S.C., a Belgian
cooperative corporation (the "Cooperative"). All operations are conducted by the
Euroclear Operator, and all Euroclear securities clearance accounts and
Euroclear cash accounts are accounts with the Euroclear Operators, not the
Cooperative. The Cooperative establishes policy for the Euroclear System on
behalf of the dealers and other professional financial intermediaries. Indirect
access to Euroclear is also available to other firms that clear thorough, or
maintain a custodial relationship with a Euroclear Participants, either directly
or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawals of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in Euroclear. All securities in Euroclear are held on a
fungible basis without attribution of specific certificates to specific
securities clearance
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accounts. The Euroclear Operator acts under the Terms and Conditions only on
behalf of Euroclear Participants and has no record of or relationship with
persons holding through Euroclear Participants.
Distributions with respect to Notes held through Cedel or Euroclear will be
credited to the cash accounts of Cedel Participants or Euroclear Participants in
accordance with the relevant system's rules and procedures, to the extent
received by its Depository. Such distributions will be subject to tax reporting
in accordance with relevant United States tax laws and regulations. Cedel or the
Euroclear Operator, as the case may be, will take any other action permitted to
be taken by a beneficial holder of notes under the Indenture on behalf of a
Cedel Participant or Euroclear Participant only in accordance with its relevant
rules and procedures and subject to its Depository ability to effect such
actions on its behalf through DTC.
Unless and until Definitive Securities are issued, Security Owners who are
not Participants may transfer ownership of Notes and Certificates only through
Participants by instructing such Participants to transfer such Notes and
Certificates, by book-entry transfer, through DTC for the account of the
purchasers of such Securities, which account is maintained with their respective
Participants. Under the DTC Rules and in accordance with DTC's normal
procedures, transfers of ownership of Securities will be executed through DTC
and the accounts of the respective Participants at DTC will be debited and
credited. Similarly, the respective Participants will make debits or credits, as
the case may be, on their records on behalf of the selling and purchasing
Securities Owners.
DTC has advised the Company and the Trustees that, unless and until
Definitive Securities are issued, DTC will take any action permitted to be taken
by a Securityholder under the Sale and Servicing Agreement only at the direction
of one or more Participants to whose DTC accounts the Securities are credited.
DTC may take conflicting actions with respect to other undivided interests to
the extent that such actions are taken on behalf of Participants whose holdings
include such undivided interests.
NEITHER THE TRUST, THE SELLER, THE SERVICER, CIT, THE AFFILIATED PURCHASER,
THE OWNER TRUSTEE, THE INDENTURE TRUSTEE NOR ANY OF THE UNDERWRITERS WILL HAVE
ANY RESPONSIBILITY OR OBLIGATION TO ANY PARTICIPANTS, CEDEL PARTICIPANTS OR
EUROCLEAR PARTICIPANTS OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES WITH RESPECT
TO (1) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC, CEDEL, EUROCLEAR OR ANY
PARTICIPANT (2) THE PAYMENT BY DTC, CEDEL, EUROCLEAR OR ANY PARTICIPANT OF ANY
AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL AMOUNT OF, OR
INTEREST ON, THE SECURITIES, (3) THE DELIVERY BY ANY PARTICIPANT, CEDEL
PARTICIPANT, EUROCLEAR PARTICIPANT OF ANY NOTICE TO ANY BENEFICIAL OWNER WHICH
IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE INDENTURE OR THE TRUST AGREEMENT
TO BE GIVEN TO SECURITYHOLDERS OR (4) ANY OTHER ACTION TAKEN BY DTC AS THE
SECURITYHOLDER.
Definitive Securities
The Notes and Certificates will be issued in fully registered, certificated
form ("Definitive Notes" and "Definitive Certificates", respectively, and,
together "Definitive Securities") to Security Owners or their nominees, rather
than to DTC or its nominee, only if (i) the Servicer advises the Trustees in
writing that DTC is no longer willing or able to discharge properly its
responsibilities as Depository with respect to the Securities and the Trustees
or the Servicer is unable to locate a qualified successor, (ii) the Servicer, at
its option, elects to terminate the book-entry system through DTC or (iii) after
the occurrence of an Event of Default, Note Owners and Certificate Owners
representing in the aggregate not less than a majority of the Notes Principal
Balance or Certificate Principal Balance advise DTC through Participants in
writing that the continuation of a book-entry system through DTC (or a successor
thereto) is no longer in the best interest of such Note Owners or Certificate
Owners.
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Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Trustee is required to notify DTC of the availability
of Definitive Securities. Upon surrender by DTC of the global notes and global
certificates representing the Notes and Certificates and instructions for
re-registration, the Trustee will issue the Notes as Definitive Notes and the
Certificates as Definitive Certificates, and thereafter the Trustee will
recognize the holders of such Definitive Notes and Definitive Certificates as
Noteholders and Certificateholders, respectively under the Sale and Servicing
Agreement ("Noteholders" and "Certificateholders" respectively, and together
"Securityholders" or "Holders").
Distributions of principal of the Securities and interest on the Securities
will be made by the Trustee directly to Holders in accordance with the
procedures set forth herein and in the Sale and Servicing Agreement.
Distributions of principal and interest on each Distribution Date will be made
to Holders in whose names the Definitive Securities were registered on the
Record Date. Such distributions will be made by check mailed to the address of
such Holder as it appears on the register maintained by the Trustee or the
Security Registrar. The final payment on any Securities (whether Definitive
Securities or the Securities registered in the name of Cede representing the
Securities), however, will be made only upon presentation and surrender of such
Note or Certificate at the office or agency specified in the notice of final
distribution to Holders.
Definitive Securities will be transferable and exchangeable at the offices
of the Trustee. No service charge will be imposed for any registration of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge imposed in connection therewith.
List of Security Holders
If Definitive Certificates have been issued, the Owner Trustee will, upon
written request by three or more Certificateholders or by holders of
Certificates evidencing not less than 25% of the Certificate Balance, within
five (5) Business Days afford such Certificateholders access during business
hours to the current list of Certificateholders for purposes of communicating
with other Certificateholders with respect to their rights under the Purchase
Agreements and the Trust Documents (provided such Certificateholders (i) state
that they wish to communicate with other Certificateholders with respect to
their rights under the Purchase Agreements, the Trust Documents or under the
Certificates and (ii) provide the Trustee and the Servicer with a copy of the
proposed communication). The Purchase Agreements and Trust Documents will not
provide for the holding of any annual or other meetings of Certificateholders.
If Definitive Notes have been issued, the Indenture Trustee will, upon
written request by three or more Noteholders or by holders of Notes evidencing
not less than 25% of the aggregate principal balance of the Notes, within five
(5) Business Days afford such Noteholders access during business hours to the
current list of Noteholders for purposes of communicating with other Noteholders
with respect to their rights under the Indenture (provided such Noteholders (i)
state that they wish to communicate with other Noteholders with respect to their
rights under the Indenture and (ii) provide the Trustee and the Servicer with a
copy of the proposed communication). The Indenture will not provide for the
holding of any annual or other meetings of Noteholders.
Statements to Securityholders
On each Distribution Date, the Servicer will include with each distribution
to each Securityholder a statement, setting forth the following information for
the related Due Period:
(i) the amount of the distribution allocable to principal of the Notes
and to the Certificate Balance of the Certificates, including any overdue
principal;
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(ii) the amount of the distribution allocable to interest on or with
respect to each class of Securities, including any overdue interest;
(iii) the Pool Balance, the Note Pool Factor and the Certificate Pool
Factor as of the end of the related Due Period;
(iv) the Servicing Fee for the related Due Period, including any
overdue Servicing Fee;
(v) the amount of Monthly Advances and Non-Reimbursable Payments on
such date;
(vi) the amount, if any, withdrawn from the Reserve Fund and
distributed to Noteholders with respect to such Distribution Date;
(vii) the amount available in the Reserve Fund, after giving effect to
any deposit to or withdrawal with respect to such Distribution Date, and
such amount expressed as a percentage of the Pool Balance;
(viii) the aggregate principal balance of all Contracts which were
delinquent 30 days or more as of the last day of the related Due Period;
(ix) during the Funding Period, the amount of funds on deposit in the
Pre- Funding Account;
(x) during the Funding Period, the number and aggregate principal
balance of Subsequent Contracts;
(xi) during the Funding Period, the number and aggregate principal
balance of Subsequent Contracts purchased by the Trust on the related
Distribution Date;
(xii) the aggregate outstanding principal balance of the Notes as of
such Distribution Date after giving effect to any distributions on such
Distribution Date; and
(xiii) the Certificate Balance as of such Distribution Date (after
giving effect to any distributions on such Distribution Date).
Within a reasonable period of time after the end of each calendar year, but
not later than the latest date permitted by law, the Servicer will furnish to
each person who at any time during such calendar year shall have been a
Securityholder a statement containing the sum of the amounts described in
clauses (i) through (___) above for such calendar year for the purposes of such
Certificateholder's preparation of federal income tax returns. See "Certain
Federal Income Tax Consequences."
THE PURCHASE AGREEMENTS AND THE TRUST DOCUMENTS
The following summary describes certain terms of the Purchase Agreement and
any Subsequent Purchase Agreement (together, the "Purchase Agreements") and the
Sale and Servicing Agreement, any Subsequent Transfer Agreements and the Trust
Agreement (together, the "Trust Documents"). Forms of the Purchase Agreements
and the Trust Documents have been filed as exhibits to the Registration
Statement of which this Prospectus forms a part. This summary does not purport
to be complete and is subject to, and qualified in its entirety by reference to,
all of the provisions of the Purchase Agreements and the Trust Documents.
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Sale and Assignment of the Contracts
On or prior to the Closing Date, pursuant to a Purchase Agreement between
CITSF and the Company, CITSF will sell and assign to the Company, without
recourse, its entire interest in and to the Contracts, including its security
interests in the Financed Vehicles. On the Closing Date, the Company will sell
and assign to the Owner Trustee, without recourse, all of its right, title and
interest in and to the Contracts, including its security interests in the
Financed Vehicles. Each Contract will be identified in a schedule appearing as
an exhibit to each of the Purchase Agreement and the Sale and Servicing
Agreement (the "Schedule of Contracts") which includes, among other things, the
Contract Rate, Initial Cut-off Date Principal Balance and date of the last
scheduled payment for each Contract. The Owner Trustee will, concurrently with
the sale and assignment of the Contracts to it pursuant to the Sale and
Servicing Agreement, execute, authenticate and deliver the Notes and
Certificates to the Company in exchange for the Contracts. The Company will sell
the Notes and the Certificates to the Underwriter.
CITSF will make certain representations and warranties in the Sale and
Servicing Agreement with respect to each Contract as of the Closing Date,
including that (i) as of the Initial Cut-off Date, the most recent scheduled
payment of principal and interest was made by or on behalf of the related
Obligor or was not delinquent more than 60 days; (ii) no provision of a Contract
has been waived, altered or modified in any respect, except by instruments or
documents contained in the Contract File; (iii) each Contract is a legal, valid
and binding obligation of the related Obligor and is enforceable in accordance
with its terms (except as may be limited by laws affecting creditors' rights
generally); (iv) no right of rescission, set-off, counterclaim or defense,
including the defense of usury, has been asserted with respect to any Contract;
(v) the Obligor on each Contract is required to maintain physical damage
insurance covering the related Financed Vehicle in accordance with CITSF's
normal requirements; (vi) each Contract was originated by a Dealer and was
purchased by CITSF in the ordinary course of its business; (vii) 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 under the Purchase Agreement,
to the Owner Trustee pursuant to the Sale and Servicing Agreement or pursuant to
a transfer of the Notes and Certificates, or the ownership of the Contracts by
the Trust, unlawful; (viii) each Contract complies with all requirements of law
in all material respects; (ix) no Contract has been satisfied, subordinated in
whole or in part or rescinded, and no Financed Vehicle has been released from
the lien of the related Contract in whole or in part; (x) each Contract creates
a valid and enforceable first priority security interest in favor of CITSF or
the related Dealer in the Financed Vehicle covered thereby (which security
interest, if in favor of the related Dealer, has been assigned to CITSF), such
security interest has been assigned by CITSF to the Company and by the Company
to the Trust, and all necessary action with respect to such Contract has been
taken to perfect the security interest in the related Financed Vehicle in favor
of CITSF; (xi) all parties to each Contract had capacity to execute such
Contract; (xii) no Contract has been sold, assigned or pledged by CITSF to any
person other than the Company (or by the Company to any person other than the
Trust) and, prior to the transfer of the Contracts by CITSF to the Company and
the transfer thereof by the Company to the Trust, CITSF or the Company,
respectively, 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;
(xiii) as of the Initial Cut-off Date, there was no default, breach, violation
or event permitting acceleration under any Contract (except for payment
delinquencies permitted by clause (i) 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; (xiv) there are, to the best of CITSF's
knowledge, no liens or claims which have been filed for work, labor or materials
affecting a Financed Vehicle securing a Contract, which are or may be liens
prior or equal to the lien of the Contract; (xv) each Contract is a
fully-amortizing loan with a fixed Contract Rate and provides for level payments
over the
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term of such Contract; (xvi) each Contract contains customary and enforceable
provisions such as to render the rights and remedies of the holder thereof
adequate for realization against the collateral of the benefits of the security
(except as may be limited by creditors' rights generally); (xvii) the
description of each Contract set forth in the Schedule of Contracts is true and
correct; (xviii) no Obligor is the United States of America or any state or any
agency, department, instrumentality or political subdivision thereof; (xix) if
the Obligor is in the military (including an Obligor who is a member of the
National Guard or is in the reserves) and the Contract is subject to the
Soldiers' and Sailors' Civil Relief Act of 1940, as amended (the "Soldiers' and
Sailors' Civil Relief Act"), or the California Military Reservist Relief Act of
1991 (the "Military Reservist Relief Act"), such Obligor (each, a "Relief Act
Obligor") has not made a claim to CITSF that (A) the amount of interest on the
Contract should be limited to 6% pursuant to the Soldiers' and Sailors' Civil
Relief Act during the perionaof Guch Obligor's active duty status or (B)
payments on the Contract should be delayed pursuant to the Military Reservist
Relief Act, in either case unless a court has ordered otherwise upon application
of CITSF; (xx) there is only one original executed copy of each Contract, which,
immediately prior to the execution of the Sale and Servicing Agreement, was in
the possession of CITSF; (xxi) the Contract is "chattel paper" as defined in the
New Jersey UCC; and (xxii) the Contract satisfies the selection criteria
discussed above under "The Contract Pool--General."
Under the terms of the Sale and Servicing Agreement and subject to certain
conditions specified in the Sale and Servicing Agreement, CITSF will be
obligated to purchase for the Purchase Price (as defined below) any Contract not
later than the first Determination Date which is more than 90 days after CITSF
becomes aware or should have become aware, or of CITSF's receipt of written
notice from the Trustee or the Servicer, of a breach of any representation or
warranty of CITSF in the Sale and Servicing Agreement referred to in the
preceding paragraph that materially adversely affects the Trust's interest in
any Contract if such breach has not been cured. CITSF shall effect such purchase
by depositing the Purchase Price for such Contract in the Certificate Account on
the date specified in the Sale and Servicing Agreement. The "Purchase Price" for
any Contract will be the remaining principal amount outstanding on such Contract
on the date of purchase, 30 days' interest thereon in an amount equal to the sum
of (i) the product of one-twelfth of the weighted average of the Pass-Through
Rate and of the Class A Rate and the remaining principal amount outstanding on
the Contract and (ii) accrued and unpaid Servicing Fees thereon at the Servicing
Fee Rate to the date of such purchase. This purchase obligation constitutes the
sole remedy available to the Trust and the Securityholders for a breach of a
warranty under the Sale and Servicing Agreement with respect to the Contracts
(but not with respect to any other breach by CITSF of its obligations under the
Sale and Servicing Agreement).
To reduce administrative costs, the Owner Trustee will appoint the Servicer
as initial custodian of the Contracts. The Contracts will not be stamped or
otherwise marked to reflect the transfer of the Contracts by CITSF to the
Company and by the Company to the Trust, and will not be segregated from the
other installment sale contracts of CITSF. CITSF's accounting records and
computer systems will reflect the sale and assignment of the Contracts by CITSF
to the Company and by the Company to the Trust, and UCC financing statements
perfecting such sale and assignment will be filed. The Obligors under the
Contracts will not be notified of the transfer of the Contracts to the Company
or to the Trust. See "Certain Legal Aspects of the Contracts."
CITSF, the Company and the Trust will treat each of the transfers of the
Contracts from CITSF to the Company and from the Company to the Trust as a sale.
As a result of the sale of the Contracts by CITSF to the Company and by the
Company to the Trust, the Contracts will not be part of the assets of either
CITSF or the Company and should not be available to their respective creditors.
However, in the event of the insolvency of CITSF or the Company, it is possible
that a trustee in bankruptcy, conservator or receiver for, or a creditor of,
CITSF or the Company, as the case may be, may argue that the transaction between
CITSF and the Company or
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between the Company and the Trust, as the case may be, was a pledge of the
Contracts to secure a loan, rather than a true sale. This position, if asserted,
could prevent timely payments of amounts due on the Certificates and, if
accepted by the court, may result in delays or reductions in distributions of
principal and interest on such Securities. Because the Contracts will remain in
CITSF's possession and will not be stamped or otherwise marked to reflect the
assignment to the Trust, the Trust's interest in the Contracts could be
defeated, if a subsequent purchaser were to take physical possession of the
Contracts without knowledge of the assignment. See "Certain Legal Aspects of the
Contracts."
Accounts
The Servicer will establish and maintain with the Indenture Trustee one or
more accounts, in the name of the Indenture Trustee on behalf of the Noteholders
and Certificateholders, into which all payments made on or with respect to the
Contracts will be deposited (the "Collection Account") by the Servicer. The
Servicer will establish and maintain with the Indenture Trustee an account in
the name of the Indenture Trustee on behalf of the Noteholders, in which amounts
released from the Collection Account and the Reserve Fund for payment to the
Noteholders will be deposited and from which distributions to the Noteholders
will be made (the "Note Distribution Account"). The Servicer will establish and
maintain with the Owner Trustee an account in the name of the Owner Trustee on
behalf of the Certificateholders, in which amounts released from the Collection
Account and Guarantee Payments for payment to the Certificateholders will be
deposited and from which distributions to the Certificateholders will be made
(the "Certificate Distribution Account").
All amounts held in each of the accounts established by the Servicer shall
be invested in Eligible Investments that mature not later than the Business Day
preceding the Distribution Date next succeeding the date of investment.
"Eligible Investments" are limited to investments, specified in the Sale and
Servicing Agreement, which meet the criteria of Moody's and Standard & Poor's
from time to time as being consistent with their then-current ratings of the
Securities.
Servicing Procedures
The Servicer will make reasonable efforts to collect all payments due with
respect to the Contracts and, in a manner consistent with the Sale and Servicing
Agreement, will continue such collection procedures as it follows with respect
to comparable recreational vehicle installment sale contracts it services for
itself and others. See "Certain Legal Aspects of the Contracts." Consistent with
its normal procedures, the Servicer may, in its discretion, arrange with an
Obligor to extend or modify the payment schedule on a Contract. Notwithstanding
the foregoing, the Servicer may not extend the stated maturity of a Contract
beyond the scheduled maturity of the Contract having the latest stated maturity
as of the Initial Cut-off Date. The Servicer will follow such normal collection
practices and procedures as it deems necessary or advisable to realize upon any
Contract with respect to which it determines that eventual payment in full is
unlikely or to realize upon any Defaulted Contract. With respect to any Due
Period, a "Defaulted Contract" means any Contract (except for a Repurchased
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. The Servicer
may sell the related Financed Vehicle securing such Contract at a public or
private sale, or take any other action permitted by applicable law. See "Certain
Legal Aspects of the Contracts." The net proceeds of such realization will be
deposited in the Collection Account.
Under the Sale and Servicing Agreement, the Servicer will be required to
use its best efforts to require the Obligors to obtain and maintain theft and
physical damage insurance on the Financed Vehicles in accordance with the
policies and procedures employed by the Servicer with respect to comparable new
or used recreational vehicle receivables that it services for itself or others.
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The Sale and Servicing Agreement will require the Servicer to follow such
normal collection practices and procedures as it deems necessary or advisable.
The Sale and Servicing Agreement provides 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 Trust or the Securityholders for any
action taken or for restraining from the taking of any action in good faith
pursuant to the Sale and Servicing 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 Sale and Servicing 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 Sale and Servicing Agreement and the rights and
duties of the parties thereto and the interests of the Securityholders
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 Collection 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 ___ by
__________, policy or policies of insurance covering errors and omissions for
failure to maintain insurance as required by the Sale and Servicing 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 recreational vehicle contracts having an aggregate principal
amount of $100 million or more and which are generally regarded as servicers
acceptable to institutional investors.
A breach of certain covenants made by CITSF as Servicer in the Sale and
Servicing Agreement that materially and adversely affects the Trust's interest
in any Contract, would require the Servicer to purchase such Contract unless
such breach is cured within the period specified in the Sale and Servicing
Agreement.
Servicing Compensation
The Servicer will be entitled to receive the Servicing Fee for each Due
Period, payable on the following Distribution Date, equal to the sum of (i) the
product of 1.00% per annum (the "Servicing Fee Rate") and the Pool Balance as of
the last day of the second preceding Due Period (or, in the case of the first
Distribution Date, as of the Initial Cut-off Date), based on the number of days
in such Due Period and a 365-day year and (ii) any investment earnings on
amounts on deposit in the Collection Account. In addition, the Servicer will be
entitled to collect and retain any late fees, prepayment charges, extension fees
or other administrative fees or similar charges allowed by applicable law with
respect to the Contracts ("Late Fees"). Payments to the Servicer of such amounts
will compensate the Servicer for performing the functions of a third party
servicer of recreational vehicle receivables as an agent for the Trustee,
including collecting and posting all payments, responding to inquiries of
Obligors, investigating delinquencies, reporting federal income tax information
to Obligors, paying costs of disposition of defaults, monitoring the collateral
in cases of Obligor default and handling the foreclosure or other liquidation of
the Financed Vehicle in appropriate instances.
The Servicing Fee and Late Fees also will compensate the Servicer for
administering the Contracts, including reimbursing the Servicer for accounting
for collections, furnishing monthly and annual statements to the Trustee with
respect to distributions and generating federal income tax information. The
Servicing Fee and Late Fees also will compensate the Servicer for certain taxes,
accounting fees, outside auditor fees, data processing costs and other costs
incurred in connection with administering and servicing the Contracts.
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Collections
The Servicer will deposit all payments on or with respect to the Contracts
received from obligors and all proceeds of Contracts collected during each Due
Period into the Collection Account not later than two Business Days after
receipt. However, at any time that (i) CITSF remains the Servicer under the Sale
and Servicing Agreement and The CIT Group Holdings, Inc. (the parent of the
Servicer) has and maintains a short-term debt rating of ___ or higher by Moody's
and ______ by Standard & Poor's (the "Required Servicer Ratings"), or (ii) the
Servicer obtains a letter of credit, surety bond or insurance policy (the
"Servicer Letter of Credit") as provided in the Sale and Servicing Agreement
under which demands for payment will be made to secure timely remittance of
monthly collections to the Collection Account and, in the case of clause (ii)
above, the Trustees are provided with a letter from each Rating Agency to the
effect that the utilization of such alternative remittance schedule will not
result in a qualification, reduction or withdrawal of its then-current rating of
the Securities, the Servicer will not be required to deposit payments by
Obligors on the Contracts in the Collection Account within two Business Days of
the date of processing. In such an event, the Servicer may make such deposits on
the Business Day immediately preceding the next Distribution Date in an amount
equal to the net amount of such deposits and payments which would have been made
had the conditions of the preceding sentence not applied. In the event that the
Servicer is permitted to make remittances of collections to the Collection
Account on a monthly basis pursuant to satisfaction of the second condition
described above, the Sale and Servicing Agreement will be modified, to the
extent necessary, without the consent of any Securityholder. Pending deposit
into the Collection Account, collections may be invested by the Servicer at its
own risk and for its own benefit and will not be segregated from its own funds.
The Company, CITSF or the Servicer, as the case may be, will remit the
aggregate Purchase Price of any Contracts to be purchased from the Trust into
the Collection Account on or before the Business Day immediately preceding the
related Distribution Date.
The Servicer will not be required to deposit in the Collection Account
amounts relating to the Contracts attributable to the following: (a) amounts
received with respect to each Contract (or property acquired in respect thereof)
that has been purchased by CITSF, the Servicer or the Company pursuant to the
Sale and Servicing Agreement and that are not required to be distributed to
Securityholders, (b) net investment earnings on funds deposited in the
Collection Account, (c) amounts received as Late Fees, (d) amounts to be
reimbursed to the Servicer in respect of unrecoverable Monthly Advances, (e)
amounts received in respect of the amounts, if any, of insurance premiums added
to the principal balance of a Contract after the Initial Cut-off Date for each
such Initial Contract, or after the related Subsequent Cut-off Date for each
such Subsequent Contract, and (f) amounts received as liquidation proceeds, to
the extent the Servicer is entitled to reimbursement of liquidation expenses
related hereto.
Monthly Advances
With respect to each Contract as to which there has been an Interest
Shortfall during the related Due Period (other than an Interest Shortfall
arising from a Contract which has been prepaid in full or which has been subject
to a Relief Act Reduction during the related Due Period), the Servicer shall
advance funds in the amount of such Interest Shortfall (each, a "Monthly
Advance") but only to the extent that the Servicer, in its good faith judgement,
expects to recover such Monthly Advance from subsequent collections with respect
to interest on such Contract made by or on behalf of the Obligor thereunder (the
"Obligor"), net liquidation proceeds or insurance proceeds with respect to such
Contract. The Servicer shall be reimbursed for any Monthly Advance from
subsequent collections with respect to such Contract. If the Servicer determines
in its good faith judgement that an unreimbursed Monthly Advance shall not
ultimately be recoverable from such collections, the Servicer shall be
reimbursed for such Monthly Advance from
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collections on all Contracts and withdrawals from the Reserve Fund. The Servicer
will not advance funds in respect of the principal component of any scheduled
payment.
"Interest Shortfall" means with respect to any Contract and any
Distribution Date, the excess of (x) the sum of (i) the product of one-twelfth
of the weighted average of the Pass-through Rate and the Class A Rate multiplied
by the outstanding principal amount of such Contract as of the last day of the
second preceding Due Period (or, in the case of the first Due Period, as of the
Initial Cut-off Date) calculated on the basis of a 360-day year comprised of
twelve 30-day months and (ii) the product of (A) the Servicing Fee Rate, (B) the
outstanding principal amount of such Contracts as of the last day of the second
preceding Due Period (or, in the case of the first Due Period, as of the Initial
Cut-off Date) and (C) a fraction, the numerator of which is the number of days
in the related Due Period and the denominator of which is 365, over (y) the
amount of interest collected on such Contract in the related Due Period.
The Servicer will remit any Monthly Advance with respect to each Due Period
into the Collection Account not later than the Business Day preceding the next
following Distribution Date.
Non-Reimbursable Payment
When a payment of principal is made on or in respect of a Contract,
interest is paid on the unpaid principal balance of such Contract only to the
date of such payment. In order that Noteholders and Certificateholders will not
be adversely affected by any shortfall in interest resulting from any such
payment made prior to the end of any Due Period, the Sale and Servicing
Agreement will require the Servicer to deposit into the Collection Account on
the Business Day immediately preceding each Determination Date, without the
right of subsequent reimbursement, such amount, if any, as may be necessary to
assure that the distributions made on the related Determination Date in respect
of such Contract to the Servicer and Securityholders include an amount equal to
interest at a rate equal to the sum of the Pass-Through Rate and the Servicing
Fee Rate on the amount of such principal payment from the date of payment
through the last day of the related Due Period (the "Non-Reimbursable Payment").
Distributions
On or before the Determination Date preceding a Distribution Date, the
Servicer will make a determination and inform the Indenture Trustee and the
Owner Trustee of the following amounts with respect to the preceding Due Period:
(i) the aggregate amount of collections on the Contracts; (ii) the aggregate
amount of Monthly Advances to be remitted by the Servicer; (iii) the aggregate
Purchase Price of Contracts to be purchased by CITSF or the Servicer; (iv) the
aggregate amount to be distributed as principal and interest on the Notes on the
related Distribution Date; (v) the aggregate amount to be distributed as
principal and interest on the Certificates on the related Distribution Date;
(vi) the Servicing Fee; (vii) the Guarantee Fee; (viii) the aggregate amount of
Non-Reimbursable Payments; (ix) the amounts required to be withdrawn from the
Reserve Fund for such Distribution Date (which shall be equal to the amount, if
any, by which amounts in the Collection Account available for distribution on
such Distribution Date is less than the amounts set forth in clauses (a), (b),
(c) and (d) in the following paragraph with respect to such Distribution Date);
and (x) any Reserve Fund Shortfall to be deposited in the Reserve Fund, all as
described below.
The "Available Amount" on any Distribution Date is equal to all amounts on
deposit in the Collection Account attributable to collections or deposits made
in respect of such Contracts in the related Due Period less the following
amounts (to the extent that the Servicer has not already withheld such amounts
from collections on the Contracts) any repossession profits on defaulted
Contracts, Liquidation Expenses (as defined in the Sale and Servicing Agreement)
incurred and taxes and
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insurance advanced by the Servicer in respect of Financed Vehicles that are
reimbursable to the Servicer under the Sale and Servicing Agreement; any amounts
incorrectly deposited in the Collection Account; and net investment earnings on
the funds in the Collection Account due to the Servicer pursuant to the Sale and
Servicing Agreement and any other amounts permitted to be withdrawn from the
Collection Account by the Servicer (or to be retained by the Servicer from
collections on the Contracts) pursuant to the Sale and Servicing Agreement.
On each Distribution Date the Indenture Trustee will withdraw the Available
Amount from the Collection Account to make the following payments (to the extent
sufficient funds are available therefor) in the following order:
(a) the aggregate amount of any unreimbursed Monthly Advances made by
the Servicer (and which are then due to be reimbursed to the Servicer)
shall be paid to the Servicer;
(b) the Servicing Fee, including any overdue Servicing Fee, will (to
the extent not previously retained by the Servicer) be paid to the
Servicer;
(c) the Class A Interest Distribution Amount, including any overdue
Class A Interest Distribution Amount and, to the extent permitted by
applicable law, interest thereon at the Class A Rate, will be deposited
into the Note Distribution Account, for payment to the Noteholders;
(d) prior to the Cross-over Date, the Principal Distribution Amount,
including any overdue Principal Distribution Amount, will be deposited into
the Note Distribution Account, for payment to the Noteholders;
(e) the Certificate Interest Distribution Amount, including any
overdue Certificate Interest Distribution Amount and, to the extent
permitted by applicable law, interest thereon at the Pass-Through Rate,
will be deposited into the Certificate Distribution Account, for payment to
the Certificateholders;
(f) prior to the Cross-over Date, the Principal Liquidation Loss
Amount, if any, will be deposited into the Certificate Distribution
Account, for payment to the Certificateholders;
(g) subsequent to the Cross-over Date, the Principal Distribution
Amount, including any overdue Principal Distribution Amount;
(h) the Reserve Fund Shortfall will be deposited into the Reserve
Fund;
(i) the Guarantee Fee (as hereinafter defined) will be paid to CIT;
and
(j) the balance, if any, will be distributed to the Affiliated
Purchaser.
"Reserve Fund Shortfall" for any Distribution Date will be the difference
between the Specified Reserve Fund Balance (as defined under "Credit
Enhancement" below) and the amount on deposit in the Reserve Fund, to the extent
the amount on deposit in the Reserve Fund is less than the Specified Reserve
Fund Balance.
To the extent that the aggregate amounts set forth in clauses (a), (b), (c)
and (d) above are greater than the amount on deposit in the Collection Account
for any Distribution Date, the Indenture Trustee will withdraw from the Reserve
Fund the difference between the aggregate amounts in clauses (a), (b), (c) and
(d) above and the amount on deposit in the Collection Account. Any amount so
withdrawn from the Reserve Fund will be deposited by the Indenture Trustee into
the Note Distribution Account.
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To the extent that the amount on deposit in the Reserve Fund (after giving
effect to any distributions therefrom on such Distribution Date) exceeds the
Specified Reserve Fund Balance for any Distribution Date, the Indenture Trustee
will withdraw the difference between the amount on deposit in the Reserve Fund
and the Specified Reserve Fund Balance. Any amount so withdrawn from the Reserve
Fund by the Indenture Trustee will be distributed to the Affiliated Purchaser.
Credit Enhancement
Reserve Fund. Pursuant to the Sale and Servicing Agreement, the Seller will
establish the Reserve Fund with the Indenture Trustee. The Reserve Fund will be
funded by an initial deposit from the proceeds of the sale of the Securities, in
the form of cash or Eligible Investments maturing on or prior to the Initial
Distribution Date on the Closing Date, and having a value of $___________ (the
"Reserve Fund Initial Deposit"). The Reserve Fund Initial Deposit will be
augmented by Excess Amounts which will be deposited from time to time in the
Reserve Fund to the extent necessary to maintain the Reserve Fund at an amount
equal to the Specified Reserve Fund Balance. "Excess Amounts" in respect of a
Distribution Date will be all interest collections on or in respect of the
Contracts on deposit in the Certificate Account in respect of such Distribution
Date, after the Servicer has been reimbursed for any outstanding Advances and
has been paid the Servicing Fee (including any unpaid Servicing Fees with
respect to one or more prior Due Periods) and after giving effect to all
distributions of interest and principal required to be made to the holders of
the Class A Notes and the Certificateholders on such Distribution Date. Amounts
in the Reserve Fund on any Distribution Date (after giving effect to all
distributions made on such Distribution Date) in excess of the Specified Reserve
Fund Balance for such Distribution Date generally will be released to the
Affiliated Purchaser.
The "Specified Reserve Fund Balance" with respect to any Distribution Date
will be equal to $_______, except that in the event that on any Distribution
Date (i) the annualized average for the three preceding Due Periods of the ratio
of net losses (i.e., the balances of all Contracts which are determined to be
uncollectible in the Due Period, less any Liquidation Proceeds) to the Pool
Balance as of the first day of each such Due Period exceeds ____% or (ii) the
average for the three preceding Due Periods of the ratio of the number of
Contracts that have been repossessed but not yet sold or are delinquent __ days
or more to the outstanding number of Contracts exceeds ___%, then the Specified
Reserve Fund Balance for such Distribution Date shall be an amount equal to the
percentage of the Pool Balance as of the first day of such Due Period determined
by deducting from ____ percent the following fraction, expressed as a
percentage: (x) 1 minus (y) a fraction, the numerator of which is the
Certificate Balance and the denominator of which is the Pool Balance (both as of
the first day of such Due Period), but in no event shall the Specified Reserve
Fund Balance be more than $________, or less than $________. On any Distribution
Date on which the aggregate balance of the Certificates is $________ or less
after giving effect to distributions on such Distribution Date, the Specified
Reserve Fund Balance shall be the greater of the amount set forth in the
immediately preceding sentence or $__________.
The Reserve Fund will be property of the Trust.
Subordination of Certificates. The rights of the Certificateholders to
receive distributions with respect to the Contracts will be subordinated to the
rights of the Class A Noteholders, to the limited extent described herein. This
subordination is intended to enhance the likelihood of timely receipt by Class A
Noteholders of the full amount of interest and principal required to be paid to
them, and to afford such Class A Noteholders limited protection against losses
in respect of the Contracts.
No distribution will be made to the Certificateholders on any Distribution
Date in respect of (i) interest or principal until the full amount of interest
and
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principal on the Class A Notes payable on such Distribution Date has been
distributed to the Class A Noteholders and (ii) principal until the Class A
Notes have been paid in full, other than distributions in respect of the
Principal Liquidation Loss Amount.
The protection afforded to the Class A Noteholders by the subordination
feature described above will be effected both by the preferential right of the
Class A Noteholders to receive, to the extent described herein, current
distributions from collections on or in respect of the Contracts and by the
establishment of the Reserve Fund for the benefit of the Class A Noteholders.
See "--Reserve Fund" above.
Limited Guarantee. In order to mitigate the effect of the subordination of
the Certificates and liquidation losses on the Contracts, CIT will provide a
guarantee (the "Limited Guarantee") against losses that would otherwise be
absorbed by the Certificates. Each payment required to be made under the Limited
Guarantee is referred to as a "Guarantee Payment". Prior to the Cross-Over Date
and subject to the Guarantee Payment Limit, the "Guarantee Payment" will equal
the amount, if any, by which (a) the sum of (i) the amount of interest payable
to the Certificateholders for such Distribution Date, and (ii) the Principal
Liquidation Loss Amount, if any, exceeds (b) the Amount Available remaining for
distribution to the Certificateholders after the Servicer has been reimbursed
for any outstanding Advances and has been paid the Servicer Payment and
distributions of interest and principal have been paid to the Noteholders on
such Distribution Date. On each Distribution Date on or after the Cross-Over
Date and subject to the Guarantee Payment Limit, the "Guarantee Payment" will
equal the amount, if any, by which (a) the sum of the amount of interest and
principal payable to the Certificateholders on such Distribution Date exceeds
(b) the Amount Available remaining after the Servicer has been reimbursed for
any outstanding Advances and has been paid the Servicer Payment.
In no event will the aggregate amount paid under the Limited Guarantee
(including the Principal Liquidation Loss Amount) exceed $
(the "Guarantee Payment Limit").
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 Noteholders.
The Sale and Servicing Agreement will specify the circumstances under which
distributions that would otherwise be paid to the Affiliated Purchaser will
instead be paid to CIT to reimburse it for Guarantee Payments and interest
thereon.
As compensation for providing the Limited Guarantee, CIT will be entitled
to receive a Guarantee Fee on each Distribution Date equal to 1/12 of the
product of [0.25%] and the aggregate outstanding principal balance of the
Contracts as of the end of the second Due Period preceding such Distribution
Date (or, in the case of the first Distribution Date, the Initial Cut-off Date)
(the "Guarantee Fee").
Net Deposits
As an administrative convenience, the Servicer will under certain
circumstances be permitted to make deposits of collections, Monthly Advances,
Non-Reimbursable Payments and the aggregate Purchase Price of Contracts
purchased by it for, or with respect to, a Distribution Date net of
distributions to be made to the Servicer with respect to such Distribution Date
(including, without limitation, Servicing Fee, reimbursement of nonrecoverable
Monthly Advances and amounts to be deducted in the definition of "Available
Amount" set forth under "Distributions" above). The Servicer, however, will
account to the Indenture Trustee, the Owner Trustee and to the Securityholders
as if all such deposits and distributions were made on an aggregate basis for
each type of payment or deposit.
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Statements to Trustees and Trust
Prior to each Distribution Date, the Servicer will provide to the Indenture
Trustee and the Owner Trustee as of the close of business on the last day of the
preceding Due Period a statement setting forth substantially the same
information as is required to be provided in the periodic reports provided to
Securityholders described above under "Certain Information Regarding the
Securities--Reports to Securityholders".
Evidence as to Compliance
The Sale and Servicing Agreement will require the Servicer to deliver to
the Trustees a monthly report prior to each Distribution Date, setting forth
certain information regarding the Contract Pool and the Securities. Each such
report to the Trustees 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
Sale and Servicing Agreement. The Sale and Servicing Agreement will require that
on or before April 1 of each year, the Servicer will deliver to the Trustees 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 Trustees such reasonably pertinent
underlying data as can be generated by the Servicer's existing data processing
system without undue modification or expense.
Certain Matters Regarding the Servicer
The Sale and Servicing Agreement will provide that the Servicer may not
resign from its obligations and duties as Servicer thereunder, except upon
determination that the Servicer's performance of such duties is no longer
permissible under applicable law. Such resignation will not become effective
until the Indenture Trustee or a successor Servicer has assumed the Servicer's
servicing obligations and duties under the Sale and Servicing Agreement.
The Sale and Servicing Agreement will further provide that neither the
Servicer nor any of its directors, officers, employees and agents shall be under
any liability to the Trustee, the Trust or the Noteholders or Certificateholders
for taking any action or for refraining from taking any action pursuant to the
Sale and Servicing Agreement, or for errors in judgment; provided, however, that
neither the Servicer nor any such person will be protected against any liability
that would otherwise be imposed by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties or by reason of reckless disregard
of obligations and duties thereunder. In addition, the Sale and Servicing
Agreement will provide that the Servicer is under no obligation to appear in,
prosecute or defend any legal action that is not incidental to the Servicer's
servicing responsibilities under the Sale and Servicing Agreement and that, in
its opinion, may cause it to incur any expense or liability. The Servicer may,
however, undertake any reasonable action that it may deem necessary or desirable
in respect of the Sale and Servicing Agreement and the rights and duties of the
parties thereto and the interests of the Noteholders and Certificateholders
thereunder.
Any corporation or other entity into which the Servicer may be merged or
consolidated, or any corporation or other entity resulting from any merger,
conversion or consolidation to which the Servicer is a party, or any corporation
or other entity succeeding to the business of the Servicer, which corporation or
other entity assumes the obligations of the Servicer, will be the successor of
the Servicer under the Sale and Servicing Agreement.
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Servicer Default
A "Servicer Default" under the Sale and Servicing Agreement will consist of
(i) any failure by the Servicer to deliver to the Indenture Trustee for deposit
in any of the Trust Accounts or the Certificate Distribution Account any
required payment or to direct the Indenture Trustee to make any required
distributions therefrom, which failure continues unremedied for five (5)
Business Days after the written notice from the Indenture Trustee or the Owner
Trustee is received by the Servicer or after discovery by the Servicer; (ii) any
failure by the Servicer duly to observe or perform in any material respect any
other of its covenants or agreements in the Sale and Servicing Agreement that
materially and adversely affects the rights of the Noteholders or
Certificateholders which continues unremedied for 60 days after the giving of
written notice of such failure or breach (1) to the Servicer by the Indenture
Trustee or the Owner Trustee or (2) to the Servicer, the Indenture Trustee and
the Owner Trustee by holders of Notes or Certificates, as applicable, evidencing
not less than 25% in aggregate principal amount of the outstanding Notes or
Certificates (or such longer period, not in excess of 120 days, as may be
reasonably necessary to remedy such default; provided that such default is
capable of remedy within 120 days or less and the Servicer delivers an officer's
certificate to the Owner Trustee and the Indenture Trustee to such effect and to
the effect that the Servicer has commenced, or will promptly commence, and
diligently pursue all reasonable efforts to remedy such default); (iii) any
assignment or delegation 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 or delegation; (iv) certain events of insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings regarding the Servicer; or (v) the Servicer no longer qualifies as
an Eligible Servicer (as defined in the Sale and Servicing Agreement).
Rights Upon Servicer Default
As long as a Servicer Default under the Sale and Servicing Agreement
remains unremedied, the Indenture Trustee may, and at the written direction of
the holders of Notes evidencing not less than a majority in principal amount of
such then outstanding Notes, shall, unless prohibited by applicable law,
terminate all of the rights and obligations of the Servicer under the Sale and
Servicing Agreement and in and to the Contracts, and the proceeds thereof,
whereupon (subject to applicable law) the Indenture Trustee or a successor
Servicer under the Sale and Servicing Agreement will succeed to all the
responsibilities, duties and liabilities of the Servicer under the Sale and
Servicing Agreement and will be entitled to similar compensation arrangements;
provided, however, that neither the Indenture Trustee nor any successor servicer
will assume any obligation of CITSF to purchase Contracts for breaches of
representations or warranties, and the Indenture Trustee or the successor
Servicer will not be liable for any acts or omissions of the Servicer occurring
prior to a transfer of the Servicer's servicing and related functions or for any
breach by the Servicer of any of its obligations contained in the Sale and
Servicing Agreement. 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 purchase certain Contracts for breaches of
representations or warranties under the Sale and Servicing Agreement. In the
event that the Indenture 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 Indenture Trustee is obligated to act in such capacity, unless
the Indenture Trustee is prohibited by law from so acting. The Indenture Trustee
and such successor may agree upon the servicing compensation to be paid, which
in no event may be greater than the compensation to CITSF as Servicer under the
Sale and Servicing Agreement.
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Waiver of Past Defaults
The holders of Notes evidencing at least a majority in principal amount of
the then outstanding Notes (or the holders of the Certificates evidencing not
less than a majority of the Certificate Balance, in the case of any Servicer
Default which does not adversely affect the Indenture Trustee or the
Noteholders) may, on behalf of all such Noteholders and Certificateholders,
waive any default by the Servicer in the performance of its obligations under
the Sale and Servicing Agreement and its consequences, except a Servicer Default
in making any required deposits to or payments from any of the trust accounts in
accordance with the Sale and Servicing Agreement. No such waiver will impair
such Noteholders' or Certificateholders' right with respect to subsequent
defaults.
Amendment
Each of the Purchase Agreements and the Trust Documents may be amended by
the parties thereto, without prior notice to or the consent of the related
Noteholders or Certificateholders (i) to cure any ambiguity, (ii) correct or
supplement any provision therein which may be inconsistent with any other
provision therein, (iii) to add or amend any provision as required by Moody's or
Standard & Poor's to maintain or improve the rating of the Certificates, (iv) to
add to the covenants, restrictions or obligations of the Company, the Servicer,
the Owner Trustee or the Indenture Trustee, or (v) make any other provisions
with respect to matters or questions arising under such Agreement which are not
inconsistent with the provisions of such agreement; provided that, in the case
of an amendment pursuant to clause (v), such action will not, in the opinion of
counsel (which may be internal counsel to the Company or the Servicer),
adversely affect in any material respect the interests of any Noteholder or
Certificateholder. Each such agreement may also be amended by the parties
thereto, with the consent of the holders of at least a majority in principal
amount of such then outstanding Notes and the holders of such Certificates
evidencing at least a majority of the Certificate Balance for the purpose of
adding any provisions to or changing in any manner the rights of such
Noteholders or Certificateholders; except, that no such amendment, may (i)
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on Contracts or distributions that are
required to be made on any Note or Certificate, any Interest Rate, any
Pass-Through Rate or the Specified Reserve Account Balance or (ii) reduce the
aforesaid percentage required of Noteholders and Certificateholders to consent
to any such amendment without the consent of all of the Noteholders or
Certificateholders, as the case may be.
Insolvency Event
If any of certain events of insolvency, readjustment of debt, marshalling
of assets and liabilities, or similar proceedings with respect to such person
indicating its insolvency or inability to pay its obligations (each, an
"Insolvency Event") occurs with respect to the Affiliated Purchaser, the
Contracts shall be liquidated and the Trust will be terminated 90 days after the
date of such Insolvency Event, unless, before the end of such 90-day period, the
Owner Trustee shall have received written instructions from (i) each of the
Certificateholders (other than the Affiliated Purchaser), and (ii) each of the
Noteholders to the effect that each such party disapproves of the liquidation of
such Contracts and termination of such Trust. Promptly after the occurrence of
any Insolvency Event with respect to the Affiliated Purchaser, notice thereof is
required to be given to the Noteholders and Certificateholders; except that any
failure to give such required notice will not prevent or delay termination of
the Trust. Upon termination of the Trust, the Owner Trustee shall direct the
Indenture Trustee promptly to sell the assets of such Trust (other than the
Certificate Distribution Account) in a commercially reasonable manner and on
commercially reasonable terms. The proceeds from any such sale, disposition or
liquidation of the Contracts will be treated as collections on the Contracts and
deposited in the related Collection Account. If the proceeds from the
liquidation of the Contracts and any amounts on
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deposit in the Reserve Account, the Note Distribution Account and the
Certificate Distribution Account are not sufficient to pay the Notes and
Certificates in full, the amount of principal returned to the Certificateholders
will be reduced and the Certificateholders will incur a loss. See "Special
Considerations--Certain Legal Aspects".
Affiliated Purchaser Liability
Under the Trust Agreement, the Affiliated Purchaser will agree to be liable
directly to an injured party for the entire amount of any losses, claims,
damages or liabilities (other than those incurred by a Noteholder or a
Certificateholder in the capacity of an investor) arising out of or based on the
arrangement created by such Trust Agreement as though such arrangement created a
partnership under the Delaware Revised Uniform Limited Partnership Act of which
the Affiliated Purchaser were a general partner.
Termination
The obligations of the Servicer, the Company, the Affiliated Purchaser, the
Owner Trustee and the Indenture Trustee pursuant to the Purchase Agreements and
the Trust Documents will terminate with respect upon the earliest to occur of
(i) the maturity or other liquidation of the last Contract and the disposition
of any amounts received upon liquidation of any property remaining in the Trust,
(ii) the payment to Securityholders of all amounts required to be paid to them
pursuant to the Purchase Agreements and the Trust Agreement and (iii) the
occurrence of either event described below.
In order to avoid excessive administrative expenses, the Company or the
Servicer will be permitted at its option to purchase from the Trust, on any
Distribution Date following a Record Date as of which the Pool Balance is 10% or
less of the Initial Pool Balance, all remaining Contracts at a price equal to
the aggregate Purchase Price for the Contracts (including Defaulted Contracts),
plus the appraised value of any other property held by the Trust (less
liquidation expenses). In the event that both the Company and the Servicer, or
any successor to the Servicer, elect to purchase the Contracts, the party first
notifying the Trustee (based on the Trustee's receipt of such notice) shall be
permitted to purchase the Contracts. Exercise of such right will effect early
retirement of the Securities. The "Initial Pool Balance" equals the sum of (i)
the Pool Balance as of the Initial Cut-off Date and (ii) the aggregate principal
balance of all Subsequent Contracts added to the Trust as of their respective
Subsequent Cut-off Dates.
Within ten days following a [Distribution] Date as of which the Pool
Balance is 5% or less of the Initial Cut-off Date Pool Principal Balance, the
Trustee shall solicit bids for the purchase of the Contracts remaining in the
Trust. In the event that satisfactory bids are received as described below, the
sale proceeds will be distributed to Securityholders on the second Distribution
Date succeeding such Record Date. Any purchaser of the Contracts must agree to
the continuation of CITSF as Servicer on terms substantially similar to those in
the Sale and Servicing Agreement. Any such sale will effect early retirement of
the Securities.
The Owner Trustee must receive at least two bids from prospective
purchasers that are considered at the time to be competitive participants in the
market for recreational vehicle retail installment sale contracts. The highest
bid may not be less than the fair market value of such Contracts and must equal
the sum of (i) the greater of (a) the aggregate Purchase Price for the Contracts
(including Defaulted Contracts), plus the appraised value of any other property
held by the Trust (less liquidation expenses) or (b) an amount that when added
to amounts on deposit in the Collection Account available for distribution to
Securityholders for such second succeeding Determination Date would result in
proceeds sufficient to distribute the amount of monthly principal and interest
for such Distribution Date and any unpaid principal and interest with respect to
one or more prior Distribution Dates, and (ii) the sum of (a) an amount
sufficient to reimburse the Servicer for any
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unreimbursed Monthly Advances for which it is entitled to reimbursement and (b)
the Servicing Fee payable on such final Distribution Date, including any unpaid
Servicing Fees with respect to one or more prior Due Periods. The Trustee may
consult with financial advisors, including any Underwriter, to determine if the
fair market value of such Contracts has been offered. Upon the receipt of such
bids, the Trustee shall sell and assign such Contracts to the highest bidder and
the Securities shall be retired on such Distribution Date. If any of the
foregoing conditions are not met, the Trustee shall decline to consummate such
sale and shall not be under any obligation to solicit any further bids or
otherwise negotiate any further sale of Contracts remaining in the Trust. In
such event, however, the Trustee may from time to time solicit bids in the
future for the purchase of such Contracts upon the same terms described above.
The Trustee will give written notice of termination to each Securityholder
of record. The final distribution to each Securityholder will be made only upon
surrender and cancellation of such holder's Securities at any office or agency
of the Trustee specified in the notice of termination. Any funds remaining in
the Trust, after the Trustee has taken certain measures to locate a
Securityholder and such measures have failed, will be distributed to the
Servicer for deposit into an escrow account. Thereafter, Securityholders shall
look only to such escrow account.
CERTAIN LEGAL ASPECTS OF THE CONTRACTS
The following discussion contains summaries of certain legal aspects of
recreational vehicle contracts, which are general in nature. Because such legal
aspects are governed by applicable state law (which laws may differ
substantially), 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 is situated. The summaries are qualified in their
entirety by reference to the applicable federal and state laws governing the
Contracts.
General
As a result of the assignment of the Contracts to the Owner Trustee, the
Trust will succeed collectively to 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 Financed Vehicle to secure repayment of such loan. Certain aspects of both
features of the Contracts are described more fully below.
The Contracts are "chattel paper" as defined in the Uniform Commercial Code
(the "UCC") as in effect in the various states of origination of the Contracts.
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 Sale and Servicing
Agreement, the Servicer will retain possession of the Contracts as custodian for
the Owner Trustee, and will make an appropriate filing of a UCC-1 financing
statement in New Jersey to perfect the sale of the Contracts by the Company to
the Owner Trustee. The Contracts will not be stamped to reflect their assignment
from CITSF to the Company or from the Company to the Owner Trustee.
Under the Sale and Servicing Agreement, the Servicer will be obligated from
time to time to take such actions as are necessary to continue the perfection of
the Trust's interest in the Contracts and the proceeds thereof. CITSF will
warrant in the Sale and Servicing Agreement, with respect to each Contract,
that, as of the Closing Date for each Initial Contract, and as of the related
Subsequent Transfer Date for each Subsequent Contract, the Contract has not been
sold, transferred, assigned or pledged by CITSF to any person other than the
Company, that immediately prior to the transfer and assignment of the Contracts
to the Company, CITSF has good and marketable title thereto, free and clear of
all liens, encumbrances, security interests and rights of others and,
immediately upon the transfer thereof, the
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Company will have good and marketable title to the Contract, free and clear of
all liens, encumbrances, security interests and rights of others, and that the
transfer has been perfected under applicable law. In the event of an uncured
breach of any such warranty that materially adversely affects the interest of
the Trust in a Contract transferred by the Company to the Trust, the only
recourse of the Certificateholders, the Owner Trustee, or the Trust would be to
require CITSF to purchase such Contract.
Pursuant to the Sale and Servicing Agreement, the Servicer will have
custody of the Contracts sold to the Trust. The Contracts and related
certificates of title will not be physically marked or segregated to indicate
that such Contracts have been sold to the Trust. If, through inadvertence or
otherwise, another party purchases (including the taking of a security interest
in) the Contracts for new value in the ordinary course of its business, without
actual knowledge of the Trust's interest, and takes possession of the Contracts,
such purchaser would acquire an interest in the Contracts superior to the
interest of the Trust.
Security Interests in the Financed Vehicles
General. Installment sale contracts such as the Contracts evidence the
credit sale of recreational vehicles by dealers to obligors; the contracts also
constitute personal property security agreements and include grants of security
interests in the related recreational vehicles under the UCC. In most states
(including California), perfection rules relating to security interests in
recreational vehicles are generally governed under state certificate of title
statutes (Alabama, Connecticut, Georgia, Maine, Massachusetts, Minnesota,
Mississippi, New Hampshire, New York, Rhode Island and Vermont have adopted the
Uniform Motor Vehicle Certificate of Title and Anti-Theft Act) or by the vehicle
registration laws of the state in which each recreational vehicle is located. In
states which have adopted the Uniform Motor Vehicle Certificate of Title and
Anti-Theft Act, security interests in recreational vehicles may be perfected
either by notation of the secured party's lien on the certificate of title title
or by delivery of the certificate of title and payment of a fee to the
statemotor vehicle authority, depending on particular state law. In states that
do not have a certificate of title statute or that make no provision for
notation of a security interest on a certificate of title, perfection is usually
accomplised by filing pursuant to the provisions of the UCC. In most states,
including California, a security interest in a recreational vehicle is perfected
by notation of the secured party's lien on the vehicle's certificate of title.
Each Contract prohibits the sale or transfer of the related Financed Vehicle
without the consent of CITSF.
Perfection of Sale. Pursuant to the Purchase Agreement, CITSF will sell and
assign its interests in the Contracts, including the security interests in the
Financed Vehicles granted thereunder, to the Company and, pursuant to the Sale
and Servicing Agreement, the Company will sell and assign its interest in the
Contracts, including the security interests in the Financed Vehicles granted
thereunder, to the Owner Trustee. UCC financing statements to perfect the sale
of (i) CITSF's interests in the Contracts and the Financed Vehicles to the
Company and (ii) the Company's interests in the Contracts and the Financed
Vehicles to the Owner Trustee, will be filed.
Perfection of CITSF's Security Interest in the Financed Vehicles. The
certificates of title relating to the Financed Vehicles name CITSF as the
secured party. In those instances where no certificate of title is applicable
under state law, a UCC-1 financing statement has been filed. CITSF takes all
actions necessary under the laws of the state in which the related recreational
vehicles are located to perfect its security interest in such recreational
vehicles, including, where applicable, having a notation of its lien recorded on
the related certificate of title or delivering the required documents and fees,
and obtaining possession of the certificate of title (if possible). In the event
CITSF fails, due to clerical errors, to effect such notation or delivery, or
files the security interest under the wrong law (for example, under the UCC
rather than under a motor vehicle title
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law), the Securityholders may not have a first priority security interest in the
Financed Vehicle securing a Contract. In the Sale and Servicing Agreement, CITSF
has represented as of the Closing Date that each Contract creates a valid and
enforceable first priority security interest in favor of CITSF or the related
Dealer in the Financed Vehicle covered thereby (which security interest, if in
favor of the related Dealer, has been assigned to CITSF) and such security
interest has been assigned by CITSF to the Company, and all necessary action
with respect to such Contract has been taken to perfect the security interest in
the related Financed Vehicle in favor of CITSF. A breach by CITSF of such
warranty that materially adversely affects the Trust's interest in any Contract
would require CITSF to purchase such Contract unless such breach is cured within
90 days.
Perfection of Trust's Security Interest in Financed Vehicles. In each case,
except where applicable laws require the filing of a UCC-1 financing statement,
the certificate of title names CITSF as the secured party. However, because of
the administrative burden and expense, neither CITSF, the Company nor the Trust
will amend any certificate of title to identify the Trust as the new secured
party on the certificate of title relating to the Financed Vehicles. However,
the Servicer will continue to hold any certificates of title relating to the
Financed Vehicles in its possession as custodian for the Trust pursuant to the
Sale and Servicing Agreement. See "The Purchase Agreements and the Trust
Documents--Sale and Assignment of the Contracts." Accordingly, CITSF will
continue to be named as the secured party on the certificates of title relating
to the Financed Vehicles.
(i) California. A security interest in a motor vehicle registered in the
State of California (in which the greatest number of Financed Vehicles are
currently registered) may be perfected only by depositing with the Department of
Motor Vehicles a properly endorsed certificate of title for the vehicle showing
the secured party as "legal owner" thereon or if the vehicle has not been
previously registered, an application in usual form for an original registration
together with an application for registration of the secured party as "legal
owner." However, under the California Vehicle Code, a transferee of a security
interest in a motor vehicle is not required to reapply to the Department of
Motor Vehicles for a transfer of registration when the interest of the
transferee arises from the transfer of a security agreement by the "legal
owner." Accordingly, under California law, an assignment such as that under each
of the Purchase Agreement and the Sale and Servicing Agreement is an effective
conveyance of CITSF's and the Company's perfected security interest, as the case
may be, without such reregistration, and under the Purchase Agreement the
Company will succeed to CITSF's, and under the Sale and Servicing Agreement the
Trust will succeed to the Company's, rights as secured party.
(ii) Other States. In most states, assignments such as those under the
Purchase Agreement and the Sale and Servicing Agreement are an effective
conveyance of a security interest without amendment of any lien noted on a
vehicle's certificate of title, and the assignee succeeds thereby to the
assignor's rights as secured party. Because of the administrative burden and
expense, none of CITSF, the Company or the Trust will amend any certificate of
title to identify the Trust as the new secured party on the certificate of title
relating to the Financed Vehicles. Although re-registration of the recreational
vehicle in such states is not necessary to convey a perfected security interest
in the Financed Vehicles to the Trust, because the Trust will not be listed as
the secured party on the certificates of title to the Financed Vehicles, its
security interest could be defeated through fraud or negligence. In the absence
of fraud, forgery or administrative error, the notation of CITSF's lien on the
certificates of title will be sufficient in most states to protect the Trust
against the rights of subsequent purchasers of a Financed Vehicle or subsequent
creditors who take a security interest in a Financed Vehicle. However, with
respect to Financed Vehicles in states in which the Trust failed to obtain a
first perfected security interest because it is not identified as the secured
party on the certificate of title, its security interest would be subordinate
to, among others, subsequent purchasers of such Financed Vehicles and holders of
first perfected security interests therein.
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Continuity of Perfection. Under the laws of most states, a perfected
security interest in a recreational vehicle continues for four months after the
vehicle is moved to a new state from the one in which it is initially registered
and thereafter until the owner re-registers such recreational vehicle in the new
state. A majority of states require surrender of a certificate of title to
re-register a vehicle. In those states (including California) that require a
secured party to hold possession of the certificate of title to maintain
perfection of the security interest, the secured party would learn of the
re-registration through the request from the obligor under the related
installment sale contract to surrender possession of the certificate of title.
In the case of vehicles registered in states providing for the notation of a
lien on the certificate of title but not possession by the secured party, the
secured party would receive notice of surrender from the state of
re-registration if the security interest is noted on the certificate of title.
Thus, the secured party would have the opportunity to re-perfect its security
interest in the vehicles in the state of relocation. However, these procedural
safeguards will not protect the secured party if through fraud, forgery or
administrative error, the debtor somehow procures a new certificate of title
that does not list the secured party's lien. Additionally, in states that do not
require a certificate of title for registration of a vehicle, re-registration
could defeat perfection.
In the ordinary course of servicing the Contracts, CITSF will take steps to
effect re-perfection upon receipt of notice of re-registration or information
from the obligor as to relocation. Similarly, when an obligor sells a Financed
Vehicle, CITSF 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 Contract before release of
the lien. Under the Sale and Servicing Agreement, the Servicer will be obligated
to take appropriate steps, at its own expense, to maintain perfection of a
security interest in the Financed Vehicles.
CITSF, as Servicer, will continue to hold certificates of title relating to
the Financed Vehicles in its possession as custodian for the Trust pursuant to
the Sale and Servicing Agreement. In the Sale and Servicing Agreement, CITSF, as
Servicer, will covenant that it will not release the Financed Vehicle securing
any Contract from the security interest granted therein except as contemplated
by the Sale and Servicing Agreement. CITSF, as Servicer, will also covenant that
it shall not impair the rights of the Trust in the Contacts or take any action
inconsistent with the Trust's ownership of the Contracts, except as permitted by
the Sale and Servicing Agreement. A breach of either such covenant that
materially and adversely affects the Trust's interest in any Contract, would
require the Servicer to purchase such Contract unless such breach is cured
within the period specified in the Sale and Servicing Agreement.
Priority of Certain Liens Arising by Operation of Law. Under the laws of
California and of most states, liens for repairs performed on a recreational
vehicle and liens for unpaid taxes take priority over even a first perfected
security interest in such vehicle. The Internal Revenue Code of 1986, as
amended, also grants priority to certain federal tax liens over the lien of a
secured party. The laws of certain states and federal law permit the
confiscation of motor vehicles by governmental authorities under certain
circumstances if used in unlawful activities, which may result in the loss of a
secured party's perfected security interest in a confiscated recreational
vehicle. CITSF will represent and warrant in the Sale and Servicing Agreement
that, 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
Financed Vehicle securing a Contract, which are or may be liens prior or equal
to the lien of the Contract. However, liens for repairs or taxes could arise at
any time during the term of a Contract. No notice will be given to the Owner
Trustee or Securityholders in the event such a lien or confiscation arises and
any such lien or confiscation arising after the date of initial issuance of the
Securities would not give rise to CITSF's purchase obligation under the Sale and
Servicing Agreement.
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Repossession
In the event of defualt by an obligor, the holder of the related
installment sale contract has all the remedies of a secured party under the UCC,
except where specifically limited by other state laws. The UCC remedies of a
secured party include the right to repossession by self-help means, unless such
means would constitute a breach of the peace. Self-help repossession is the
method employed by the Servicer in most cases and is accomplished simply by
taking possession of the related recreational vehicle. In cases where the
obligor objects or raises a defense to repossession, or if otherwise required by
applicable state law, a court order must be obtained from the appropriate state
court, and the vehicle must then be recovered in accordance with that order. In
some jurisdictions (not including California), the secured party is required to
notify the debtor of the default and the intent to repossess the collateral and
be given a time period within which to cure the default prior to repossession.
In most states (including California), under certain circumstances after the
vehicle has been repossessed, the obligor may reinstate the related contract by
paying the delinquent installments and other amounts due.
Notice of Sale; Redemption Rights
The UCC and other state laws require the secured party to provide the
obligor with reasonable notice of the date, time and place of any public sale
and/or the date after which any private sale of the collateral may be held. The
obligor has the right to redeem the collateral prior to actual sale by paying
the secured party the unpaid principal balance of the obligation, accrued
interest thereon plus reasonable expenses for repossessing, holding and
preparing the collateral for disposition and arranging for its sale, plus, in
some jurisdictions, reasonable attorneys' fees or in some states, by payment of
delinquent installments or the unpaid principal balance of the related
obligation.
Deficiency Judgments and Excess Proceeds
The proceeds of resale of the Financed Vehicles generally will be applied
first to the expenses of resale and repossession and then to the satisfaction of
the related indebtedness. While some states impose prohibitions or limitations
on deficiency judgments if the net proceeds from resale do not cover the full
amount of the indebtedness, a deficiency judgment can be sought in California
and most other states. In addition to the notice requirement, the UCC requires
that every aspect of the sale or other disposition, including the method,
manner, time, place and terms, be "commercially reasonable." Most courts
(including courts in California) have held that when a sale is not "commercially
reasonable," the secured party loses its right to a deficiency judgment. In
addition, the UCC permits the debtor or other interested party to recover for
any loss caused by noncompliance with the provisions of the UCC. Also, prior to
a sale, the UCC permits the debtor or other interested person to restrain the
secured party from disposing of the collateral if it is established that the
secured party is not proceeding in accordance with the "default" provisions
under the UCC. However, the deficiency judgment would be a personal judgment
against the obligor for the shortfall, and a defaulting obligor may have very
little capital or sources of income available following repossession. Therefore,
in many cases, it may not be useful to seek a deficiency judgment or, if one is
obtained, it may be settled at a significant discount or be uncollectible.
Occasionally, after resale of a recreational vehicle and payment of all
expenses and indebtedness, there is a surplus of funds. In that case, the UCC
requires the creditor to remit the surplus to any holder of a subordinate lien
with respect to such vehicle or, if no such lienholder exists, to the former
owner of the vehicle.
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Certain Matters Relating to Insolvency
CITSF and the Company intend that the transfer of Contracts from CITSF to
the Company and from the Company to the 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 Securityholders.
Although other courts have held otherwise, 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, under Article 9 of the UCC, "accounts" (as defined
in the UCC) sold by a debtor would remain property of the debtor's bankruptcy
estate, whether or not the sale of the accounts was perfected under the UCC. UCC
Article 9 applies to the sale of "chattel paper" (as defined in the UCC) as well
as the sale of "accounts" and, although the Contracts constitute chattel paper
under the UCC rather than accounts, perfection of a security interest in both
chattel paper and accounts may be accomplished under the UCC by the filing of a
UCC-1 financing statement. If, following a bankruptcy of CITSF or of he Company,
a court were to follow the reasoning of the Tenth Circuit reflected in the case
described above, then the Contracts would be included in the bankruptcy estate
of CITSF or the Company, as the case may be, and delays in payments of
collections on or in respect of the Contracts, or loss of principal and interest
in respect of the Certificates, could occur.
The Company has taken steps in structuring the transactions described
herein that are intended to make it unlikely that the voluntary or involuntary
application for relief by CITSF under the Bankruptcy Code or similar applicable
state laws (collectively, "Insolvency Laws") will result in consolidation of the
assets and liabilities of the Company with those of CIT. These steps include the
creation of the Company as a wholly owned, limited purpose subsidiary of CIT
pursuant to a certificate of incorporation containing certain limitations
(including restrictions on the nature of the Company's business).
Consumer Protection Laws
Numerous federal and state consumer protection laws and related regulations
impose substantial requirements upon creditors and servicers involved in
consumer finance. These laws include the Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Federal Trade Commission Act, the Fair Credit Billing Act,
the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the
Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B and Z, the
Soldiers' and Sailors' Civil Relief Act, the Military Reservist Relief Act,
state adaptations of the National Consumer Act and of the Uniform Consumer
Credit Code and state motor vehicle retail installment sales acts, retail
installment sales acts and other similar laws. Also, the laws of California and
of certain other states impose finance charge ceilings and other restrictions on
consumer transactions and require contract disclosures in addition to those
required under federal law. These requirements impose specific statutory
liabilities upon creditors who fail to comply with their provisions. In some
cases, this liability could affect the ability of an assignee such as the Owner
Trustee to enforce consumer finance contracts such as the Contracts.
The so-called "Holder-in-Due-Course Rule" of the Federal Trade Commission
(the "FTC Rule"), has the effect of subjecting any assignee of the seller in a
consumer
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credit transaction to all claims and defenses which the obligor in the
transaction could assert against the seller of the goods. Liability under the
FTC Rule is limited to the amounts paid by the obligor under the contract, and
the holder of the contract may also be unable to collect any balance remaining
due thereunder from the obligor. The FTC Rule is generally duplicated by the
Uniform Consumer Credit Code, other state statutes or the common law in certain
states. Most of the Contracts will be subject to the requirements of the FTC
Rule. Accordingly, the Owner Trustee, as holder of the Contracts, will be
subject to any claims or defenses that the purchaser of the related Financed
Vehicle may assert against the seller of the Financed Vehicle. Such claims are
limited to a maximum liability equal to the amounts paid by the obligor under
the related Contracts.
Under California law and most state vehicle dealer licensing laws, sellers
of recreational vehicles are required to be licensed to sell vehicles at retail
sale. 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. In addition, with respect to
used vehicles, the Federal Trade Commission's Rule on Sale of Used Vehicles
requires that all sellers of used vehicles prepare, complete, and display a
"Buyer's Guide" which explains the warranty coverage for such vehicles.
Furthermore, Federal Odometer Regulations promulgated under the Motor Vehicle
Information and Cost Savings Act require that all sellers of used vehicles
furnish a written statement signed by the seller certifying the accuracy of the
odometer reading. If a seller is not properly licensed or if either a Buyer's
Guide or Odometer Disclosure Statement was not provided to the purchaser of a
Financed Vehicle, the obligor may be able to assert a defense against the seller
of the Financed Vehicle.
Courts have applied general equitable principles to secured parties
pursuing repossession or litigation involving deficiency balances. These
equitable principles may have the effect of relieving an obligor from some or
all of the legal consequences of a default.
In several cases, consumers have asserted that the self-help remedies of
secured parties under the UCC and related laws violate the due process
protections of the Fourteenth Amendment to the Constitution of the United States
of America. Courts have generally either upheld the notice provisions of the UCC
and related laws as reasonable or have found that the creditor's repossession
and resale do not involve sufficient state action to afford constitutional
protection to consumers.
CITSF will represent and warrant under the Sale and Servicing Agreement
that each Contract complies with all requirements of law in all material
respects. A breach of such representation and warranty which materially
adversely affects the interests of the Trust in any Contract will create an
obligation of CITSF to purchase such Contract. See "The Purchase Agreements and
Trust Documents--Sale and Assignment of the Contracts."
Other Limitations
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a creditor to
realize upon collateral or enforce a deficiency judgment. For example, in a
Chapter 13 proceeding under the federal bankruptcy law, a court may prevent a
creditor from repossessing a recreational vehicle, and, as part of the
rehabilitation plan, reduce
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the amount of the secured indebtedness to the market value of the recreational
vehicle at the time of bankruptcy (as determined by the court), leaving the
party providing financing as a general unsecured creditor for the remainder of
the indebtedness. A bankruptcy court may also reduce the monthly payments due
under the related contract or change the rate of interest and time of repayment
of the indebtedness.
Under the terms of the Soldiers' and Sailors' Civil Relief Act, an obligor
who enters the 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 obligor's 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. In addition, pursuant to the Military
Reservist Relief Act, under certain circumstances, California residents called
into active duty with the reserves can delay payments on retail installment sale
contracts, including the Contracts, for a period, not to exceed 180 days,
beginning with the order to active duty and ending 30 days after release. It is
possible that the foregoing could have an effect on the ability of the Servicer
to collect full amounts of interest on certain of the Contracts. In addition,
the Relief Acts impose limitations which would impair the ability of the
Servicer to repossess 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 related
Financed Vehicle in a timely fashion.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Set forth below is a summary of certain Federal income tax consequences of
the purchase, ownership and disposition of the Securities, applicable to initial
purchasers of the Securities. Schulte Roth & Zabel, counsel for the Trust is of
the opinion that the discussion hereunder fully and fairly discloses all
material Federal tax risks associated with the purchase, ownership and
disposition of the Securities.
This summary does not deal with all aspects of Federal income taxation
applicable to all categories of holders of the Securities, some of which may be
subject to special rules or special treatment under the Federal income tax laws.
For example, it does not discuss the specific tax treatment of Securityholders
that are insurance companies, banks and certain other financial institutions,
regulated investment companies, individual retirement accounts, tax-exempt
organizations or dealers in securities. Furthermore, this summary is based upon
present provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), the regulations promulgated thereunder, and judicial or ruling
authority, all of which are subject to change, which change may be retroactive.
Moreover, there are no cases or Internal Revenue Service ("IRS") rulings on
similar transactions involving a trust that issues debt and equity interests
with terms similar to those of the Notes and the Certificates. As a result, the
IRS may disagree with all or part of the discussion below.
Prospective investors are advised to consult their own tax advisors with
regard to the Federal income tax consequences of the purchase, ownership and
disposition of the Securities, as well as the tax consequences arising under the
laws of any state, foreign country or other jurisdiction. The Trust has been
provided with an opinion of Schulte Roth & Zabel regarding certain of the
Federal income tax matters discussed below. An opinion of counsel, however, is
not binding on the IRS, and no ruling on any of the issues discussed below will
be sought from the IRS.
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Certain Federal Tax Consequences with Respect to the Notes
Tax Characterization of the Notes and the Trust. Schulte Roth & Zabel has
advised the Trust that, based on the terms of the Notes and the transactions
relating to the Contracts as set forth herein, the Notes will be treated as debt
for Federal income tax purposes. However, there is no specific authority with
respect to the characterization for Federal income tax purposes of securities
having the same terms as the Notes.
Schulte Roth & Zabel is also of the opinion that, based on the applicable
provisions of the Trust Agreement and related documents, for Federal income tax
purposes, (i) the Trust will not be classified as an association taxable as a
corporation and (ii) the Trust will not be treated as a publicly traded
partnership taxable as a corporation. However, there are no authorities directly
dealing with similar transactions. If the IRS were to successfully characterize
the Trust as an association taxable as a corporation for Federal income tax
purposes, the income from the Contracts (reduced by deductions, possibly
including interest on the Notes) would be subject to Federal income tax at
corporate rates, which could reduce the amounts available to make payments on
the Notes. Likewise, if the Trust were subject to state or local income or
franchise tax, the amount of cash available to make payment on the Notes could
be reduced.
If, contrary to the opinion of Schulte Roth & Zabel, the IRS successfully
asserted that the Notes were not debt for Federal income tax purposes, the Notes
might be treated as equity interests in the Trust. If so, the Trust might be
taxable as a corporation with the adverse consequences described above (and the
taxable corporation would not be able to deduct interest on the Notes). The
remainder of this discussion assumes that the Notes will be treated as debt and
that the Trust will not be taxable as a corporation.
Interest Income on the Notes. The stated interest on the Notes will be
taxable to a Noteholder as ordinary income when received or accrued in
accordance with such Noteholder's method of tax accounting. Some or all of the
Notes may be issued with "original issue discount" within the meaning of Section
1273 of the Code ("OID"). The amount of OID on the Notes will equal the
difference between the issue price and the principal amount of the Notes unless
the OID is less then a statutorily defined de minimus amount.
OID will accrue to the Noteholders over the life of the Notes, taking
account of a reasonable prepayment assumption, based on a constant yield to
maturity method, using semi-annual compounding, and properly adjusted for actual
prepayments on the Contracts. The portion of OID that accrues during the time a
Noteholder owns the Notes (i) constitutes interest includable in the
Noteholder's gross income for federal income tax purposes and (ii) is added to
the Noteholder's tax basis for purposes of determining gain or loss on the
maturity, redemption, prior sale, or other disposition of the Notes. Thus, the
effect of OID is to increase the amount of taxable income above the actual
interest payments during the life of the Notes.
Sale or Other Disposition. If a Noteholder sells a Note, the holder will
recognize gain or loss in an amount equal to the difference between the amount
realized on the sale and the holder's adjusted tax basis in the Note. The
adjusted tax basis of a Note to a particular Noteholder will equal the holder's
cost for the Note, increased by any OID, market discount and gain previously
included by such Noteholder in income with respect to the Note and decreased by
the amount of any bond premium previously amortized and by the amount of
principal payments previously received by such Noteholder with respect to such
Note. Subject to the rules of the Code concerning market discount on the Notes,
any such gain or loss will be capital gain or loss if the Note was held as a
capital asset. Capital losses generally may be deducted to the extent the
Noteholder has capital gains for the taxable year, and non-corporate Noteholders
can deduct a limited amount of such losses in excess of available capital gains.
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Foreign Holders. If interest paid (or accrued) to a Noteholder who is a
nonresident alien, foreign corporation or other non-United States person (a
"foreign person") is not effectively connected with the conduct of a trade or
business within the United States by the foreign person, the interest generally
will be considered "portfolio interest," and generally will not be subject to
United States Federal income tax and withholding tax, if the foreign person (i)
is not actually or constructively a "10 percent shareholder" of the Trust
(including a holder of 10% of the outstanding Certificates) or the Affiliated
Purchaser nor a "controlled foreign corporation" with respect to which the Trust
or the Affiliated Purchaser is a "related person" within the meaning of the Code
and (ii) provides the person otherwise required to withhold U.S. tax with an
appropriate statement, signed under penalties of perjury, certifying that the
beneficial owner of the Note is a foreign person and providing the foreign
person's name and address. If the information provided in the statement changes,
the foreign person must so inform the person otherwise required to withhold U.S.
tax within 30 days of such change. The statement generally must be provided in
the year a payment occurs or in either of the two preceding years. If a Note is
held through a securities clearing organization or certain other financial
institutions, the organization or institution may provide a signed statement to
the withholding agent. However, in that case, the signed statement must be
accompanied by a Form W-8 or substitute form provided by the foreign person that
owns the Note. If such interest is not portfolio interest, then any payment of
such interest will be subject to United States Federal withholding tax at a rate
of 30%, unless reduced or eliminated pursuant to an applicable income tax
treaty.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Note by a foreign person will be exempt from United
States Federal income and withholding tax, provided that (i) the gain is not
effectively connected with the conduct of a trade or business in the United
States by the foreign person and (ii) in the case of an individual foreign
person, the foreign individual is not present in the United States for 183 days
or more in the taxable year or does not have a tax home in the United States.
If the interest, gain or income on a Note held by a foreign person is
effectively connected with the conduct of a trade or business in the United
States by the foreign person (although exempt from the withholding tax
previously discussed if the holder provides an appropriate statement), the
holder generally will be subject to United States Federal income tax on the
interest, gain or income at regular Federal income tax rates. In addition, if
the foreign person is a foreign corporation, it may be subject to a branch
profits tax equal to 30% of its "effectively connected earnings and profits"
within the meaning of the Code for the taxable year, as adjusted for certain
items, unless it qualifies for a lower rate under an applicable income tax
treaty (as modified by the branch profits tax rules).
Information Reporting and Backup Withholding. The Trust will be required to
report annually to the IRS, and to each Noteholder of record, the amount of
interest paid on the Notes (and the amount of accrued OID, if any, and interest
withheld for Federal income taxes, if any) for each calendar year, except as to
exempt holders (generally, holders that are corporations, tax-exempt
organizations, qualified pension and profit-sharing trusts, individual
retirement accounts, or nonresident aliens who provide certification as to their
status as nonresidents). Accordingly, each holder (other than exempt holders who
are not subject to the reporting requirements) will be required to provide,
under penalties of perjury, a certificate containing the holder's name, address,
correct Federal taxpayer identification number and a statement that the holder
is not subject to backup withholding. Should a nonexempt Noteholder fail to
provide the required certification, the Trust will be required to withhold 31%
of the amount otherwise payable to the holder, and remit the withheld amount to
the IRS as a credit against the holder's Federal income tax liability.
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Certain Federal Tax Consequences with Respect to the Certificates
Tax Characterization of the Trust. The Affiliated Purchaser and the
Servicer have agreed, and the Certificateholders will agree by their purchase of
Certificates, to treat the Trust as a partnership for purposes of Federal income
tax, with the assets of the partnership being the assets held by the Trust, the
partners of the partnership being the Certificateholders and the Notes being
debt of the partnership. However, the proper characterization of the arrangement
involving the Trust, the Certificates, the Notes, the Affiliated Purchaser, and
the Servicer is not clear because there is no authority on transactions closely
comparable to that contemplated herein.
If the Trust were held to be an "association" taxable as a corporation for
Federal income tax purposes, rather than a partnership, the Trust would be
subject to a corporate level income tax. Any such corporate income tax could
materially reduce or eliminate cash that would otherwise be distributable with
respect to the Certificates (and Certificateholders could be liable for any such
tax that is unpaid by the Trust). See also the discussion above under "--Certain
Federal Tax Consequences with Respect to the Notes--Tax Characterization of the
Notes and the Trust." However, in the opinion of Schulte Roth & Zabel, the Trust
will not be classified as an association taxable as a corporation because of the
nature of its income and because it will not have certain "corporate"
characteristics necessary for a business trust to be an association taxable as a
corporation.
Nonetheless, because of the lack of cases or rulings on similar
transactions, a variety of alternative characterizations are possible in
addition to the position to be taken by Certificateholders that the Certificates
represent equity interests in a partnership. For example, because the
Certificates have certain features characteristic of debt, the Certificates
might be considered debt of the Trust or of the Seller. The remainder of this
summary assumes that the Certificates represent equity interests in a
partnership that owns the Contracts.
Partnership Taxation. As a partnership, the Trust will not be subject to
Federal income tax, but each Certificateholder will be required to separately
take into account such holder's allocated share of income, gains, losses,
deductions and credits of the Trust. The Trust's income will consist primarily
of interest accrued on the Contracts including appropriate adjustments for
market discount (as discussed below), and any original issue discount and bond
premium), investment income from investments in the Trust Accounts and
Certificate Distribution Account and any gain upon collection or disposition of
the Contracts. The Trust's deductions will consist primarily of interest
accruing with respect to the Notes, servicing and other fees and losses or
deductions upon collection or disposition of the Contracts.
The tax items of a partnership are allocable to the partners in accordance
with the Code, Treasury regulations and the partnership agreement (here, the
Trust Agreement and Related Documents). The Trust Agreement will provide that
the Certificateholders will be allocated taxable income of the Trust for each
Interest Period equal to the sum of (i) the amount of interest that accrues on
the Certificates for such Interest Period based on the Certificate Rate; (ii) an
amount equivalent to interest that accrues during such Interest Period on
amounts previously due on the Certificates but not yet distributed; and (iii)
any Trust income attributable to discount on the Contracts that corresponds to
any excess of the principal amount of the Certificates over their initial issue
price. All remaining taxable income of the Trust will be allocated to the
Affiliated Purchaser. It is believed that this allocation will be valid under
applicable Treasury regulations, although no assurance can be given that the IRS
would not require a greater amount of income to be allocated to
Certificateholders. Moreover, under the foregoing method of allocation, holders
may be allocated income greater than the amount of interest accruing on the
Certificates based on the Certificate Rate or may be allocated income greater
than the amount of cash distributed to them.
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An individual taxpayer may generally deduct miscellaneous itemized
deductions (which do not include interest expenses) only to the extent they
exceed two percent of the individual's adjusted gross income. Those limitations
would apply to an individual Certificateholder's share of expenses of the Trust
(including fees paid to the Servicer) and might result in such holder having net
taxable income that exceeds the amount of cash actually distributed to such
holder over the life of the Trust. In addition, Section 68 of the Code provides
that the amount of certain itemized deductions otherwise allowable for the
taxable year of an individual whose adjusted gross income exceeds an
inflation-adjusted threshold amount specified in the Code ($114,700 for taxable
years beginning in 1995, 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 deduction otherwise
allowable for such taxable year.
The Trust intends to make all tax calculations relating to income and
allocations to Certificateholders on an aggregate basis. If the IRS were to
require that such calculations be made separately for each of the Contracts, the
Trust might be required to incur additional expense, but it is believed that
there would not be a material adverse effect on Certificateholders.
Market Discount. To the extent that the Contracts are purchased by the
Trust for a price that is less than the aggregate stated redemption price at
maturity of the Contracts, the Trust must account for "market discount" on the
Contracts pursuant to Section 1276 of the Code. Any market discount will be
accounted for each of the Contracts on an individual basis, and the Trust will
make an election to calculate such market discount as it economically accrues.
Any income resulting from the accrual of market discount will be allocated to
the Certificateholders as described above.
Original Issue Discount and Bond Premium. It is believed that the Contracts
were not and will not be issued with OID or at a premium, and, therefore, the
Trust should not have OID income or amortizable bond premium.
Section 708 Termination. Under Section 708 of the Code, a partnership will
be deemed to terminate for Federal income tax purposes if 50% or more of the
capital and profits interests in the partnership are sold or exchanged within a
12-month period. If such a termination occurs, the partnership will be
considered to distribute its assets to the partners, who would then be treated
as recontributing those assets to a new partnership. The Trust may not comply
with certain technical requirements that might apply when such a constructive
termination occurs. As a result, the Trust may be subject to certain tax
penalties and may incur additional expenses if it is required to comply with
those requirements. Furthermore, the Trust might not be able to comply due to
lack of data.
Disposition of Certificates. Generally, capital gain or loss will be
recognized on a sale of a Certificate in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificate sold.
A Certificateholder's tax basis in a Certificate will generally equal his cost
increased by his share of Trust income that is includable in his gross income
and decreased by any distributions received with respect to such Certificate. In
addition, both the tax basis in the Certificate and the amount realized on a
sale of a Certificate would include the holder's share of the Notes and other
liabilities of the Trust. A holder acquiring Certificates at different prices
may be required to maintain a single aggregate adjsuted tax basis in such
Certificates and, upon sale or other disposition of some of the Certificates,
allocate a pro rata portion of such aggregate tax basis to the Certificates sold
(rather than maintaining a separate tax basis in each Certificate for purposes
of computing gain or loss on a sale of that Certificate).
Any gain on the sale of a Certificate attributable to the holder's share of
unrecognized accrued market discount on the Contracts would generally he treated
as ordinary income to the holder and would give rise to special tax reporting
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requirements. The Trust does not expect to have any other assets that would give
rise to such special reporting requirements. Thus, to avoid these special
reporting requirements, the Trust will elect to include any such market discount
in income as it accrues.
If a Certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed miscellaneous itemized
deductions described above) over the life of the Certificates that exceeds the
aggregate cash distributions with respect thereto, such excess will generally
give rise to a capital loss upon the retirement of the Certificates.
Allocations Between Transferor and Transferee. In general, the Trust's
taxable income and losses will be determined monthly and the tax items for a
particular calendar month will be apportioned among the Certificateholders in
proportion to the principal amount of Certificates owned by them as of the close
of the last day of such month. As a result, a holder purchasing Certificates may
be allocated tax items (which will affect the tax liability and tax basis of the
holder) attributable to periods before the actual purchase takes place.
The use of such a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed (or is allowed only for
transfers of less than all of the partner's interest), taxable income or losses
of the Trust might be reallocated among the Certificateholders. The Affiliated
Purchaser is authorized to revise the Trust's method of allocation between
transferors and transferees to conform to a method permitted by any future
authority.
Section 754 Election. In the event that a Certificateholder sells a
Certificate at a profit (or loss), the purchasing Certificateholder will have a
higher (or lower) basis in the Certificate than the selling Certificateholder
had. The tax basis of the Trust's assets will not be adjusted to reflect that
higher (or lower) basis unless the Trust files an election under Section 754 of
the Code. In order to avoid the administrative complexities that would be
involved in keeping accurate accounting records, as well as potentially onerous
information reporting requirements, the Trust will not make such an election. As
a result, Certificateholders might be allocated a greater or lesser amount of
Trust income than would be appropriate based on their own purchase price for
Certificates.
Administrative Matters. The Servicer, on behalf of the Trust, is required
to keep or cause to be kept complete and accurate books of the Trust. Such books
will be maintained for financial reporting and tax purposes on an accrual basis
and the taxable year of the Trust will be the calendar year. The Affiliated
Purchaser will file a partnership information return (IRS Form 1065) with the
IRS for each taxable year of the Trust and will report to holders (and to the
IRS) each Certificateholder's allocable share of items of Trust income and
expense on Schedule K-l. The Trust will provide the Schedule K-l information to
nominees that fail to provide the Trust with the information statement described
below and such nominees will be required to forward such information to the
beneficial owners of the Certificates. Generally, holders must file tax returns
that are consistent with the information returns filed by the Trust or be
subject to penalties unless the holder notifies the IRS of all such
inconsistencies.
Under Section 6031 of the Code, any person that holds Certificates as a
nominee on behalf of another person at any time during a calendar year is
required to furnish the Trust with a statement containing certain information on
the nominee, the beneficial owners and the Certificates so held. Such
information includes (i) the name, address and taxpayer identification number of
the nominee and (ii) as to each beneficial owner (x) the name, address and
taxpayer identification number of such person, (y) whether such person is a
United States person, a tax-exempt entity or a foreign government, an
international organization, or any wholly owned agency or instrumentality of
either of the foregoing and (z) certain information concerning Certificates that
were held, acquired or transferred on behalf of such person
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<PAGE>
throughout the year. In addition, brokers and financial institutions that hold
Certificates through a nominee are required to furnish directly to the Trust
information as to themselves and their ownership of Certificates. A clearing
agency registered under Section 17A of the Exchange Act that holds Certificates
as a nominee is not required to furnish any such information statement to the
Trust. The information referred to above for any calendar year must be furnished
to the Trust on or before the following January 31. Nominees, brokers and
financial institutions that fail to provide the Trust with the information
described above may be subject to penalties. The Trust will provide the Schedule
K-1 information to nominees that fail to provide the Trust with the information
described above and such nominees will be required to forward such information
to the beneficial owners of the Certificates.
The Affiliated Purchaser, as the "tax matters partner," will be responsible
for representing the Certificateholders in any dispute with the IRS with respect
to partnership items. The Code provides for administrative examination of a
partnership as if the partnership were a separate and distinct taxpayer.
Generally, the statute of limitations for partnership items does not expire
before three years after the date on which the partnership information return is
filed. Any adverse determination following an audit of the return of the Trust
by the appropriate taxing authorities could result in an adjustment of the
returns of the Certificateholders, and, under certain circumstances, a
Certificateholder may be precluded from separately litigating a proposed
adjustment to the items of the Trust. An adjustment could also result in an
audit of a Certificateholder's returns and adjustments of items not related to
the income and losses of the Trust.
Backup Withholding. Distributions made on the Certificates and proceeds
from the sale of the Certificates may be subject to a "backup" withholding tax
of 31% if, in general, the Certificateholder fails to comply with certain
identification procedures, unless the holder is an exempt recipient under
applicable provisions of the Code.
Other Tax Consequences
No advice has been received as to local income, franchise, personal
property, or other taxation an any state or locality, or as to the tax effect of
ownership of the Securities in any state or locality. Securityholders 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 the Securities.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and Section 4975 of the Code prohibit a pension, profit
sharing or other employee benefit plan, as well as individual retirement
accounts and certain types of Keogh Plans (each a "Benefit Plan"), from engaging
in certain transactions with persons that are "parties in interest" under ERISA
or "disqualified persons" under the Code with respect to such Benefit Plan. A
violation of these "prohibited transaction" rules may generate excise tax and
other liabilities under ERISA and the Code for such persons.
The Notes
The acquisition or holding of Notes by or on behalf of a Benefit Plan could
be considered to give rise to a prohibited transaction if the Seller, the Trust
or any of their respective affiliates is or becomes a party in interest or a
disqualified person with respect to such Benefit Plan. Certain exemptions from
the prohibited transaction rules could be applicable to the purchase and holding
of Notes by a Benefit Plan depending on the type and circumstances of the plan
fiduciary making the decision to acquire such Notes. Included among these
exemptions are: Prohibited
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Transaction Class Exemption ("PTCE") 90-1, regarding investments by insurance
company pooled separate accounts; PTCE 91-38 regarding investments by bank
collective investment funds; and PTCE 84-14, regarding transactions effected by
"qualified professional asset managers."
The Certificates
The Certificates may not be acquired by (a) an employee benefit plan (as
defined in Section 3(3) of ERISA) that is subject to the provisions of Title I
of ERISA, (b) a plan described in Section 4975(e)(1) of the Code, or (c) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity. By its acceptance of a Certificate, each
Certificateholder will be deemed to have represented and warranted that it is
not subject to the foregoing limitation.
A plan fiduciary considering the purchase of the Securities should consult
its tax and/or legal advisors regarding whether the assets of the Trust would be
considered plan assets, the possibility of exemptive relief from the prohibited
transaction rules and other issues and their potential consequences.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
(the "Underwriting Agreement") among CIT, CITSF, the Company and CS First Boston
Corporation and _________________________ (the "Underwriters"), the Company has
agreed to sell to the Underwriters, and the Underwriters have agreed to
purchase, the respective principal amount of the Notes and Certificates offered
hereby, as set forth opposite their respective names below:
Principal Amount Principal Amount
of Certificates of Notes
CS First Boston Corporation $ $
________________________. $ $
============== ==============
Total $ $
============== ==============
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 Notes or Certificates if any
are purchased.
The Company has been advised by the Underwriters that the Underwriters
propose initially to offer the Notes and Certificates to the public at the
prices set forth on the cover page of this Prospectus, and to certain dealers at
such prices less a concession not in excess of _____% of the Note denominations
and not in excess of ____% of the Certificate denominations. The Underwriters
may allow and such dealers may reallow a concession not in excess of ____% of
the Note denominations and not in excess of ____% of the Certificate
denominations to certain other dealers. After the initial public offering, the
public offering price and such concessions may be changed.
The Securities have no established trading market. The Underwriters have
advised the Company that they intend to act as market makers for the Securities.
However, the Underwriters are not obligated to do so and may discontinue any
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Securities.
CIT and CITSF have jointly and severally agreed to indemnify the
Underwriters against certain liabilities, including civil liabilities under the
Securities Act
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<PAGE>
of 1933, as amended, or other applicable securities laws, or to contribute to
payments which the Underwriter may be required to make in respect thereof.
FINANCIAL INFORMATION
The Company has determined that its financial statements are not material
to the offering made hereby.
The Trust has been formed to own the Contracts and the other Trust assets
and to issue the Notes and Certificates. The Trust had no assets or obligations
prior to the issuance of the Notes and Certificates and will not engage in any
activities other than those described herein. Accordingly, no financial
statements with respect to the Trust are included in this Prospectus.
RATINGS
It is a condition to the issuance of the Securities that the Class A Notes
be rated ___ by Moody's and ___ by Standard & Poor's and the Certificates be
rated ___ by Moody's and ___ by Standard & Poor's. The ratings of the Class A
Notes will be based primarily on the value of the Initial Contracts, the
Pre-Funding Account, the terms of the Securities and the Reserve Fund. The
ratings of the Certificates will be based primarily on the Limited Guarantee
provided by CIT. The foregoing ratings do not address the likelihood that the
Securities will be retired following the sale of the Contracts by the Trustee. 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 ratings of the Notes and Certificates should be evaluated
independently of similar security ratings assigned to other kinds of securities.
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Schulte Roth &
Zabel, New York, New York, and for the Underwriters by Stroock & Stroock &
Lavan, New York, New York. The material federal income tax consequences of the
Certificates will be passed upon for the Company by Schulte Roth & Zabel.
EXPERTS
The financial statements listed under the heading "Exhibits, Financial
Statement Schedule and Reports on Form 8-K" in the Corporation's 1994 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, 1994 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 PRINCIPAL TERMS
Affiliated Purchaser....................................................
Asset Service Center....................................................
Auction Sale............................................................
Bankruptcy Code.........................................................
Business Day............................................................
Cede....................................................................
Certificate Distribution Account........................................
Certificate Final Scheduled Distribution Date...........................
Certificate Interest Distribution Amount................................
Certificate Owner.......................................................
Certificate Pool Balance................................................
Certificate Pool Factor.................................................
Certificate Principal Distribution Amount...............................
Certificates............................................................
CIT.....................................................................
CITSF...................................................................
Class A Final Scheduled Distribution Date...............................
Class A Interest Distribution Amount....................................
Class A Notes...........................................................
Class A Principal Distribution Amount...................................
Class A Rate............................................................
Closing Date............................................................
Code....................................................................
Collection Account......................................................
Company.................................................................
Contracts...............................................................
Dealers.................................................................
Definitive Certificates.................................................
Definitive Notes........................................................
Definitive Securities...................................................
Depository..............................................................
Determination Date......................................................
Distribution Date.......................................................
DTC.....................................................................
DTC Rules...............................................................
Due Period..............................................................
Eligible Investments....................................................
ERISA...................................................................
Events of Default.......................................................
Excess Amount...........................................................
Final Scheduled Distribution Date.......................................
Financed Vehicles.......................................................
FTC Rule................................................................
Funding Period..........................................................
Guarantee Payment.......................................................
Holder Securityholder...................................................
Indenture...............................................................
Indenture Trustee.......................................................
Indirect Participants...................................................
Initial Contracts.......................................................
Initial Cut-off Date....................................................
Initial Cut-off Date Pool Principal Balance.............................
Initial Financed Vehicles...............................................
Insolvency Event........................................................
Insolvency Laws.........................................................
Interest Accrual Period.................................................
Interest Shortfall......................................................
IRS.....................................................................
Issuer..................................................................
Late Fees...............................................................
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Limited Guarantee.......................................................
Mandatory Prepayment....................................................
Military Reservist Relief Act...........................................
Monthly Advance.........................................................
Moody's.................................................................
Non-Reimbursable Payment................................................
Note Owner..............................................................
Note Distribution Account...............................................
Note Pool Factor........................................................
Note Pool Balance.......................................................
Notes...................................................................
Obligor.................................................................
OID.....................................................................
Optional Purchase.......................................................
Owner Trustee...........................................................
Participants............................................................
Pass-Through Rate.......................................................
Pool Balance............................................................
Pre-Funded Amount.......................................................
prepayments.............................................................
Purchase Agreement......................................................
Purchase Price..........................................................
Rating Agencies.........................................................
Rating Event............................................................
Record Date.............................................................
Related Documents.......................................................
Relief Act Obligor......................................................
Required Servicer Ratings...............................................
Reserve Fund............................................................
Reserve Fund Initial Deposit............................................
Reserve Fund Shortfall..................................................
Sale and Servicing Agreement............................................
Schedule of Contracts...................................................
Securities..............................................................
Servicer................................................................
Servicer Default........................................................
Servicer Letter of Credit...............................................
Servicer Payment........................................................
Servicing Fee Rate......................................................
Servicing Fee...........................................................
Simple Interest Contract................................................
Soldiers' and Sailors' Civil Relief Act.................................
Specified Reserve Fund Balance..........................................
Standard & Poor's.......................................................
Subsequent Contracts....................................................
Subsequent Cut-off Date.................................................
Subsequent Financed Vehicles............................................
Subsequent Transfer Agreement...........................................
Subsequent Transfer Date................................................
Trust...................................................................
Trust Agreement.........................................................
UCC.....................................................................
Underwriters............................................................
Underwriting Agreement..................................................
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<PAGE>
GLOSSARY
There follows abbreviated definitions of certain capitalized terms used in
this Prospectus. Reference is also made to the Index of Defined Terms. The
Purchase Agreements and Trust Documents may contain a more complete definition
of certain of the terms defined herein and reference should be made to the
Purchase Agreements and Trust Documents for a more complete definition of all
such terms.
"Affiliated Purchaser" means ___________________.
"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.
"Business Day" means any day other than a Saturday, Sunday or any day on
which banking institutions or trust companies in the city of New York or
___________ are authorized by law, regulation or executive order to be closed.
"Certificates" means the __% Asset Backed Certificates issued by the Trust
pursuant to the Trust Agreement.
"CIT" means The CIT Group Holdings, Inc.
"CITSF" means The CIT Group/Sales Financing, Inc.
"Class A Notes" means the Class A ___% Asset Backed Notes issued by the
Trust pursuant to the Trust Agreement.
"Class A Rate" means ___% per annum.
"Closing Date" means ________, 1995.
"Code" means the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder.
"Company" means The CIT Group Securitization Corporation II.
"Contract Pool" means the pool of recreational vehicle installment sale
contracts transferred by the Company to the Trust.
"Contracts" means the recreational vehicle installment sale contracts which
constitute the corpus of the Trust.
"Distribution Date" means the fifteenth day of each month or, if any such
day is not a Business Day, on the next succeeding Business Day, commencing [July
17, 1995].
"Due Period", (other than the first Due Period) means the period commencing
with the first day of the month (or, if the last day of such month is not a
Business Day, the day following the first preceding Business Day) in the month
preceding the month in which such Distribution Date occurs and will end on the
last day of the month. The first Due Period will commence on and include [June
1, 1995] and will end on and include [June 30, 1995].
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Financed Vehicles" means recreational vehicles which secure a Contract.
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<PAGE>
"Indenture" means the Indenture, to be dated as of [June 1, 1995], between
the Issuer and the Indenture Trustee
"Indenture Trustee" means ______________________.
"Initial Cut-off Date" means ______________, 1995.
"Interest Accrual Period" means, with respect to any Distribution Date, the
period for which interest payable on such Distribution Date on the Securities
accrues, which shall be the period from the most recent Distribution Date on
which interest has been paid to but excluding the following Distribution Date,
or in the case of the initial Distribution Date, from the Closing Date to but
excluding the initial Distribution Date.
"Issuer" means the CIT RV Owner Trust 1995-A created by the Trust
Agreement.
"Monthly Advance" means an advance made by the Servicer in respect of a
Contract on any Distribution Date pursuant to the Sale and Servicing Agreement.
"Moody's" means Moody's Investors Service, Inc.
"Obligor" means each person who is indebted under a Contract or who has
acquired a recreational vehicle subject to a Contract.
"Owner Trustee" means _________________.
"Pass-Through Rate" means ___% per annum.
"Pool Balance" means the aggregate principal balance of the Contracts.
"Purchase Agreement" means the Purchase Agreement to be dated as of [June
1, 1995], between CITSF and the Company.
"Servicer" means CITSF in its capacity as servicer under the Sale and
Servicing Agreement, and any permitted successor thereto under the Sale and
Servicing Agreement.
"Servicing Fee" means the amount payable to the Servicer as compensation
for acting as Servicer.
"Standard & Poor's" means Standard & Poor's Corporation.
"Trust" means the CIT RV Owner Trust 1995-A created by the Trust Agreement.
"Trust Agreement" means the Trust Agreement, to be dated as of [June 1,
1995], between the Seller and the Owner Trustee
"UCC" means the Uniform Commercial Code.
"Underwriters" means _______________ and ____________________.
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<PAGE>
================================================================================
No dealer, salesperson or other individual has been authorized to give any
information or to make any representations other than those contained in this
Prospectus and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company, the Servicer or the
Underwriter. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation.
-------------------
TABLE OF CONTENTS
Page
----
Available Information....................................
Reports to Securityholders...............................
Documents Incorporated by Reference......................
Summary..................................................
Special Considerations...................................
Structure of the Transaction.............................
The Trust Property.......................................
The Contract Pool........................................
Maturity and Prepayment Considerations...................
Yield Considerations.....................................
Pool Factors.............................................
Use of Proceeds..........................................
The CIT Group Securitization Corporation II, Seller......
The CIT Group/Sales Financing, Inc., Servicer............
The Notes................................................
The Certificates.........................................
Certain Information Regarding the Securities.............
The Purchase Agreements and the Trust Documents..........
Certain Legal Aspects of the Contracts...................
Certain Federal Income Tax Consequences..................
ERISA Considerations.....................................
Underwriting.............................................
Financial Information....................................
Ratings..................................................
Legal Matters............................................
Index of Principal Terms.................................
Glossary.................................................
----------------
Until ______________________, 1995, all dealers effecting transactions in
the Securities, whether or not participating in this distribution, may be
required to deliver a Prospectus. This is in addition to the obligation of
dealers to deliver a Prospectus when acting as underwriters and with respect to
their unsold allotments or subscriptions.
================================================================================
================================================================================
CIT RV
Owner Trust 1995-A
$
---------------------
Class A _____% Asset Backed Notes
_____% Asset Backed Certificates
THE CIT GROUP SECURITIZATION
CORPORATION II
Seller
THE CIT GROUP/SALES
FINANCING, INC.
Servicer
----------------
PROSPECTUS
----------------
CS First Boston
-------------------------
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. 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.
SEC registration fee............................................. $
Attorney's fees and expenses..................................... *
Accounting fees and expenses..................................... *
Blue sky fees and expenses....................................... *
Rating agency fees............................................... *
Trustee's fees and expenses...................................... *
Printing expenses................................................ *
Miscellaneous fees and expenses.................................. *
-----
Total......................................................... $ *
=====
- ------------------
* To be completed by amendment.
Item 14. 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)
II-1
<PAGE>
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
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 15. Recent Sales of Unregistered Securities
During June 1994, The CIT Group Securitization 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.
II-2
<PAGE>
Principal Amount Placement
Series Issue Date of Certificates Agent
- ------ ---------- ---------------- ----------
1994-1 July 14, 1994 $42,033,000 (Class A) Goldman Sachs & Co.
(Approximate)
Item 16. Exhibits and Financial Statement Schedules.
a. Exhibits:
1.1* Form of Underwriting Agreement
3.1 Certificate of Incorporation, as amended, of The CIT
Group Securitization Corporation II
3.2 Bylaws of The CIT Group Securitization Corporation II
4.1* Form of Indenture between the Trust and the Indenture
Trustee
4.2* Form of Trust Agreement between the Company and the
Owner Trustee
4.3* Form of Sale and Servicing Agreement between the
Company, CITSF and the Owner Trustee
5.1* Opinion of Schulte Roth & Zabel with respect to
legality
8.1* Opinion of Schulte Roth & Zabel with respect to tax
matters
10.1* Form of Purchase Agreement
10.2* Form of Subsequent Purchase Agreement
23.1* Consent of Schulte Roth & Zabel
23.2 Consent of KPMG Peat Marwick LLP
24.1 Powers of Attorney of The CIT Group Securitization
Corporation II (included on page II-5)
24.2 Powers of Attorney of The CIT Group Holdings, Inc.
25.1* Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of the Indenture Trustee
(bound separately)
- -------------------
* To be filed by amendment.
b. Financial Statement Schedules:
Not applicable.
Item 17. Undertakings.
The undersigned Registrants hereby undertake as follows:
(a) To provide to the Underwriter at the closing date specified in the
Underwriting Agreement certificates in such denominations and registered in
such names as required by the Underwriter to provide prompt delivery to
each purchaser.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") 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 Act and is therefore
unenforceable. In the event that a claim for indemnification against such
liabilities (other than payment by the Registrants of expenses incurred or
paid by a director, officer or controlling person of such Registrants in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling
II-3
<PAGE>
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such issue.
(c) 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 Registrants pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(d) For purposes of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time will be deemed to
be the initial bona fide offering thereof.
(e) 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.
(f) The undersigned Registrants hereby undertake to file an
application for the purpose of determining the eligibility of the trustee
to act under subsection (a) of Section 310 of the Trust Indenture Act in
accordance with the rules and regulations prescribed by the Commission
under Section 305(b)(2) of the Act.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Town of Livingston, State of New
Jersey, on May 10, 1995.
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>
/S/ JAMES J. EGAN, JR.
- ------------------------- President and Director May 10, 1995
James J. Egan, Jr.
/S/ JOSEPH M. LEONE Executive Vice President and Director May 10, 1995
- ------------------------
Joseph M. Leone
/S/ EDWARD A. FARLEY Vice President and Director May 10, 1995
- -------------------------
Edward A. Farley
/S/ ROBIN H. GORDON
- ------------------------- Vice President, Treasurer and Controller May 10, 1995
Robin H. Gordon (principal financial and accounting officer)
</TABLE>
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-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-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 May
10, 1995.
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:
<TABLE>
<CAPTION>
Signature and Title Date
------------------- ----
<S> <C> <C>
*
------------------------------------------------
Albert R. Gamper, Jr.
President, Chief Executive Officer, and Director
(principal executive officer)
*
------------------------------------------------
Hisao Kobayashi
Director
* *By /S/ ERNEST D. STEIN
------------------------------------------------ -------------------------- May 10, 1995
Michio Murata Ernest D. Stein
Director Attorney-in-fact
*
------------------------------------------------
Joseph A. Pollicino
Director
*
------------------------------------------------
Paul N. Roth
Director
*
------------------------------------------------
Hideo Kitahara
Director
</TABLE>
II-6
<PAGE>
Signature and Title Date
------------------- ----
*
------------------------------------------------
Peter J. Tobin
Director
*
------------------------------------------------
Toshiji Tokiwa
Director
*
------------------------------------------------
Keiji Torii
Director
*
------------------------------------------------
William H. Turner
Director
/S/ JOSEPH J. CARROLL
------------------------------------------------ May 10, 1995
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-7
Exhibit 3(i).1
Certificate of Incorporation, as amended, 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
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.
<PAGE>
(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
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
2
<PAGE>
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
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.
3
<PAGE>
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
4
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
THE CIT GROUP SECURITIZATION CORPORATION II
-----------------------
THE CIT GROUP SECURITIZATION CORPORATION II, a corporation
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, by the
unanimous written consent of its members, filed with the minutes of the
board, adopted a resolution proposing and declaring advisable the certain
amendments to the Certificate of Incorporation of said corporation. The
resolutions setting forth the proposed amendments are as follows:
RESOLVED, that the Certificate of Incorporation of The CIT Group
Securitization Corporation II be amended by changing the ELEVENTH Article
thereof so that, as amended, said Article shall be and shall read in its
entirety as follows:
"ELEVENTH: The Corporation will not issue any securities (other than
common 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 (an "NRSO"), which securities are then rated
by such nationally recognized statistical rating organization."
5
<PAGE>
RESOLVED, that the Certificate of Incorporation of The CIT Group
Securitization Corporation II be amended and changing the TWELFTH Article
thereof so that, as amended, said Article shall read in its entirety and
shall be as follows:
"TWELFTH: In the event Moody's Investor's Service, Inc.'s
(hereinafter referred to as "Moody's") rating of the long-term debt
of The CIT Group Holding's, Inc. falls below A-2, one additional
Independent Director shall be elected to the Board of Directors of the
Corporation."
RESOLVED, that the Certificate of Incorporation of The CIT Group
Securitization Corporation II be amended by adding in its entirety the
following Article THIRTEENTH and shall read in its entirety and shall be as
follows:
"THIRTEENTH: 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 Articles THIRD, FIFTH,
EIGHTH, NINTH, TENTH, ELEVENTH or TWELFTH 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. The Corporation shall provide notice to each NRSO of any
amendment to any of Articles THIRD, FIFTH, EIGHTH, NINTH, TENTH,
ELEVENTH or TWELFTH within a reasonable period of time after the
adoption of such amendment."
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, the sole shareholder of said corporation, did consent in lieu of
an annual meeting, to the Amendment to the Certificate of Incorporation
adopted by the Board of Directors, in accordance with the applicable
provisions of Section 228 of the General Corporation Law of the State of
Delaware.
THIRD: That the aforesaid Amendment was duly adopted in accordance
with the applicable provisions of Sections 141(f), 228 and 242 of the
General Corporation Law of the State of Delaware.
6
<PAGE>
IN WITNESS WHEREOF said THE CIT GROUP SECURITIZATION CORPORATION II has
caused this Certificate to be signed by Joesph Leone, its Executive Vice
President, and attested by Norman H. Rosen, its Secretary, this 15th day of
February, 1995.
THE CIT GROUP SECURITIZATION CORPORATION II
By /s/ JOSEPH M. LEONE
---------------------
Joseph M. Leone
Executive Vice President
ATTEST:
By /s/ NORMAN H. ROSEN
---------------------
Norman H. Rosen
Secretary
7
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
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
1
<PAGE>
the proposed meeting. Written notice of a Special Meeting stating the place,
date and hour of the meeting and the purpose 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
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.
2
<PAGE>
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
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
3
<PAGE>
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
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
4
<PAGE>
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
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
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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 direct
or 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
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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
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
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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
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
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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
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
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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
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
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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
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
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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.
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
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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 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,
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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 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
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
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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,
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.
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ARTICLE IX
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.
16
Exhibit 23.2
Independent Auditor's Consent
The Board of Directors
The CIT Group Holdings, Inc.:
We consent to the use of our report dated January 17, 1995, relating to the
consolidated balance sheets of The CIT Group Holdings, Inc. and subsidiaries as
of December 31, 1994 and 1993, and the related consolidated statements of
income, changes in stockholders'equity, and cash flows for each of the years in
the three-year peiod ended December 31, 1994, incorporated by reference in this
Registration Statement on combined Form S-1 and Form S-3 of The CIT Group
Securitization Corporation II and The CIT Group Holdings, Inc., which report
appears in the December 31, 1994 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
May 10, 1995
Exhibit 24.2
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, a Registration Statement
combined on Form S-1 and Form S-3 for the registration of limited guarantees of
payment on certain Recreational Vehicle Contract Pass-Through Certificates, to
be issued by its wholly-owned subsidiary The CIT Group Securitization
Corporation II, under said Act of up to $175,000,000 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 $175,000,000,
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 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 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 5th
day of May, 1995.
/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, a Registration Statement
combined on Form S-1 and Form S-3 for the registration of limited guarantees of
payment on certain Recreational Vehicle Contract Pass-Through Certificates, to
be issued by its wholly-owned subsidiary The CIT Group Securitization
Corporation II, under said Act of up to $175,000,000 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 $175,000,000,
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 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 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 5th
day of May, 1995.
/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, a Registration Statement
combined on Form S-1 and Form S-3 for the registration of limited guarantees of
payment on certain Recreational Vehicle Contract Pass-Through Certificates, to
be issued by its wholly-owned subsidiary The CIT Group Securitization
Corporation II, under said Act of up to $175,000,000 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 $175,000,000,
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 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 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 5th
day of May, 1995.
/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, a Registration Statement
combined on Form S-1 and Form S-3 for the registration of limited guarantees of
payment on certain Recreational Vehicle Contract Pass-Through Certificates, to
be issued by its wholly-owned subsidiary The CIT Group Securitization
Corporation II, under said Act of up to $175,000,000 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 $175,000,000,
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 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 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 5th
day of May, 1995.
/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, a Registration Statement
combined on Form S-1 and Form S-3 for the registration of limited guarantees of
payment on certain Recreational Vehicle Contract Pass-Through Certificates, to
be issued by its wholly-owned subsidiary The CIT Group Securitization
Corporation II, under said Act of up to $175,000,000 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 $175,000,000,
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 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 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 5th
day of May, 1995.
/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, a Registration Statement
combined on Form S-1 and Form S-3 for the registration of limited guarantees of
payment on certain Recreational Vehicle Contract Pass-Through Certificates, to
be issued by its wholly-owned subsidiary The CIT Group Securitization
Corporation II, under said Act of up to $175,000,000 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 $175,000,000,
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 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 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 5th
day of May, 1995.
/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, a Registration Statement
combined on Form S-1 and Form S-3 for the registration of limited guarantees of
payment on certain Recreational Vehicle Contract Pass-Through Certificates, to
be issued by its wholly-owned subsidiary The CIT Group Securitization
Corporation II, under said Act of up to $175,000,000 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 $175,000,000,
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 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 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 5th
day of May, 1995.
/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, a Registration Statement
combined on Form S-1 and Form S-3 for the registration of limited guarantees of
payment on certain Recreational Vehicle Contract Pass-Through Certificates, to
be issued by its wholly-owned subsidiary The CIT Group Securitization
Corporation II, under said Act of up to $175,000,000 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 $175,000,000,
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 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 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 5th
day of May, 1995.
/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, a Registration Statement
combined on Form S-1 and Form S-3 for the registration of limited guarantees of
payment on certain Recreational Vehicle Contract Pass-Through Certificates, to
be issued by its wholly-owned subsidiary The CIT Group Securitization
Corporation II, under said Act of up to $175,000,000 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 $175,000,000,
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 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 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 5th
day of May, 1995.
/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, a Registration Statement
combined on Form S-1 and Form S-3 for the registration of limited guarantees of
payment on certain Recreational Vehicle Contract Pass-Through Certificates, to
be issued by its wholly-owned subsidiary The CIT Group Securitization
Corporation II, under said Act of up to $175,000,000 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 $175,000,000,
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 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 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 5th
day of May, 1995.
/s/ WILLIAM H. TURNER
----------------------
William H. Turner
