<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 24, 1996
REGISTRATION NO. 333-07249
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
THE CIT GROUP SECURITIZATION CORPORATION II
THE CIT GROUP HOLDINGS, INC.
(Exact name of each registrant specified in its charter)
---------------------
DELAWARE 22-3328188
DELAWARE 6146 13-2994534
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of incorporation Classification Code Number) Identification No.)
or organization)
THE CIT GROUP SECURITIZATON THE CIT GROUP HOLDINGS, INC.
CORPORATION II 1211 AVENUE OF THE AMERICAS
650 CIT DRIVE NEW YORK, NEW YORK 10036
LIVINGSTON, NEW JERSEY 07039 (212) 536-1950
(201) 535-3514
(Address of principal executive (Address of principal executive
offices) offices)
---------------------
ERNEST D. STEIN, ESQ.
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL & SECRETARY
THE CIT GROUP HOLDINGS, INC.
1211 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
(212)-536-1950
(Name and address of agent for service)
Copies to:
PAUL N. WATTERSON, ESQ.
SCHULTE ROTH & ZABEL
900 THIRD AVENUE
NEW YORK, NEW YORK 10022
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]
CALCULATION OF REGISTRATION FEE
================================================================================
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
================================================================================================================================
PROPOSED PROPOSED
AMOUNT TO MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF BE OFFERING AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT OFFERING PRICE(1) FEE(2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset-Backed Securities $275,000,000 100% $275,000,000 $94,478
Limited Guarantees of The CIT Group
Holdings, Inc.(3)
====================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee on the
basis of the proposed maximum aggregate offering price, pursuant to Rule
457(c).
(2) Pursuant to Rule 457(b), the required fee paid herewith has been reduced by
$350.00, which is the amount equal to the fee previously paid with respect
to this registration statement pursuant to Rule 457.
(3) May be issued in connection with issuance of the Asset-Backed Securities of
trusts formed by The CIT Group Securitization Corporation II. No additional
consideration will be paid for the Limited Guarantee; accordingly, no
separate filing fee is being paid herewith, pursuant to Rule 457(n).
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT 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>
SUBJECT TO COMPLETION, DATED JUNE __, 1996
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED ___________, 1996)
$______________ (APPROXIMATE)
CIT RV TRUST 19__-_
[$______________ CLASS A ____% ASSET-BACKED NOTES]
$_____________ ____% ASSET-BACKED CERTIFICATES
THE CIT GROUP SECURITIZATION CORPORATION II, SELLER
THE CIT GROUP/SALES FINANCING, INC., SERVICER
The CIT RV Trust 19__-_ (the "Trust" or the "Issuer") will be formed pursuant to
a [Trust Agreement, to be dated as of _________________, between The CIT Group
Securitization Corporation II (the "Company" or the "Seller") and
____________________, as trustee (the "Owner Trustee"),] [Pooling and Servicing
Agreement, to be dated as of _______________ among The CIT Group Securitization
Corporation II (the "Company" or the "Seller"), _____________, as trustee (the
"Trustee") and The CIT Group/Sales Financing, Inc., as servicer (the
"Servicer").] [and will issue Class A ____% Asset-Backed Notes (the "Notes") in
the principal amount of $_______________ pursuant to an Indenture, to be dated
as of ______________, 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 assets 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
___________ (the "Initial Cut-off Date"), an assignment of the security
interests in the Initial Financed Vehicles, the Collection Account, the
Certificate Distribution Account, [the Note Distribution Account, the Cash
Collateral Account, the Capitalized Interest Account and the Pre-Funding
Account,] in each case, together with the proceeds thereof [(other than
investment earnings on the Cash Collateral Account),] the
(Continued on following page)
A DISCUSSION OF CERTAIN RISK FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF THE SECURITIES OFFERED HEREBY CAN BE FOUND ON PAGE S-__HEREIN AND
ON PAGE __ IN THE ACCOMPANYING PROSPECTUS.
THE SECURITIES WILL REPRESENT INTERESTS IN OR OBLIGATIONS OF 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.
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.
- -------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO THE
PUBLIC(1) DISCOUNT COMPANY(1)(2)
[Per Class A Note]............ ______% ____% ______%
Per Certificate................. ______% ____% ______%
Total........................... $_____ $____ $_____
- -------------------------------------------------------------------------------
(1) Plus accrued interest at the [Interest Rate or] the Pass-Through Rate, as
appropriate, from [date].
(2) Before deduction of expenses payable by the Company estimated at $_______.
The Securities are offered subject to receipt and acceptance by the
Underwriters, to prior sale and to the Underwriters' right to reject any order
in whole or in part and to withdraw, cancel or modify the offer without notice.
It is expected that delivery of the Securities will be made in book-entry form
through the facilities of The Depository Trust Company ("DTC"), and in the case
' '
of the Notes, Cedel Bank, societe anonyme ("Cedel") and the Euroclear System
("Euroclear") on or about ______________, against payment therefor in
immediately available funds.
The date of this Prospectus Supplement is ______________, 199__.
[NAME OF UNDERWRITERS]
<PAGE>
(continued from preceding page)
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 ___________ (the "Sale and
Servicing Agreement"), among the Seller, the Servicer, and the Trust] [Pooling
and Servicing Agreement]. [From time to time during the Funding Period,
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 on
and after the related subsequent cut-off dates (each, a "Subsequent Cut-off
Date"), an assignment of the 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 [and the Cash Collateral Account]) pursuant to
the Indenture. The 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 __________. 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 to the extent described herein. [Distributions of interest
and principal on the Certificates will be subordinated in priority of payment to
payment of interest and principal on the Notes, to the extent described herein.
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 Dates for the Notes
and the Certificates will be the ____ Distribution Date and the ____
Distribution Date, respectively.
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 UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE
SECURITIES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
________________________
This Prospectus Supplement does not contain complete information about
the offering of the Securities. Additional information is contained in the
Prospectus of the Seller dated ____________, 1996 (the "Prospectus") and
purchasers are urged to read both this Prospectus Supplement and the Prospectus
in full. Sales of the Securities may not be consummated unless the purchaser
has received both this Prospectus Supplement and the Prospectus. To the extent,
if any, that any statement in the final Prospectus Supplement is inconsistent
with statements contained in this Prospectus Supplement, the statements in the
final Prospectus Supplement shall control. Terms used and not otherwise defined
herein shall have the respective meanings ascribed to such terms in the
Prospectus.
Until ninety days after the date of this Prospectus Supplement, all
dealers effecting transactions in the Securities, whether or not participating
in this distribution, may be required to deliver a Prospectus Supplement and the
Prospectus. This is in addition to the obligation of dealers to deliver a
Prospectus Supplement and the Prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
S-2
<PAGE>
SUMMARY
This Summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus Supplement and in the
accompanying Prospectus. Certain capitalized terms used in the Summary are
defined elsewhere in this Prospectus Supplement or in the Prospectus.
Issuer CIT RV Trust 199__-__ (the "Trust" or the
"Issuer"), [a Delaware business trust to be formed
by the Seller and the Owner Trustee pursuant to
the Trust Agreement, to be dated as of
____________, 199__ (the "Trust Agreement")] [a
trust to be formed by the Seller pursuant to a
Pooling and Servicing Agreement to be dated as of
___________, 199__ (the "Pooling and Servicing
Agreement") among the Seller, the Servicer and the
Trustee].
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.] See "Risk Factors--Limited
Obligations."
Servicer The CIT Group/Sales Financing, Inc. (in such
capacity referred to herein as the "Servicer"), a
wholly-owned subsidiary of CIT. The Servicer will
be responsible for managing, administering,
servicing and making collections on the contracts
held by the Trust.
[Owner Trustee] ___________________, as trustee under the Trust
Agreement (the "Owner Trustee" [and, together with
the Indenture Trustee, the "Trustees"]).
[Indenture Trustee] ____________________, as trustee under the
Indenture, to be dated as of _________, 199__ (the
"Indenture Trustee").
[Trustee] _________________, as trustee under the Pooling and
Servicing Agreement (the "Trustee").
Risk Factors Certain potential risks and other considerations
are particularly relevant to a decision to invest
in any securities sold hereunder. See "Risk
Factors."
The Certificates The CIT RV Trust 1996__-__ ____% Asset-Backed
Certificates (the "Certificates") 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 the [Trust Agreement]
[Pooling and Servicing Agreement]. [Payments in
respect of the Certificates will be subordinated
to payments on the Notes to the limited extent
described herein and in the Prospectus.] See "The
Certificates--General."
S-3
<PAGE>
The Certificates will be issued in minimum
denominations of $20,000 and integral multiples of
$1,000 in excess thereof and will be available in
book-entry form only; [provided, however, that one
Certificate may be issued in a denomination other
than an integral multiple of $1,000 such that the
Affiliated Purchaser (as defined herein) may be
issued at least 1% of the Original Certificate
Balance (as defined herein)]. Persons
("Certificate Owners") acquiring beneficial
interests in the Certificates will hold their
interests through The Depository Trust Company
("DTC"). Definitive Certificates will be issued
only under the limited circumstances described
herein and in the Prospectus. Unless and until
Certificates of a class are issued in definitive
form, all references herein to distributions,
notices, reports and statements to and to actions
by and effects upon the related Certificateholders
will refer to the same actions and effects with
respect to DTC or Cede & Co. ("Cede"), as the case
may be, for the benefit of the related Certificate
Owners in accordance with the DTC procedures. See
"Certain Information Regarding the
Securities -- Registration" and
"-- Securities" in the Prospectus and
Annex I hereto.
The Notes The CIT RV Trust 199__-__ Class A ____% Asset-
Backed Notes (the "Notes" and, together with the
Certificates, the "Securities") will represent
obligations of the Trust secured by the assets of
the Trust (other than the Certificate Distribution
Account [and the Cash Collateral Account]). See
"The Notes--General."
The Trust will issue $_____________ aggregate
principal amount of Notes pursuant to an
Indenture, to be dated as of ____________, 199__,
between the Issuer and the Indenture Trustee (the
"Indenture"). See "The Notes--General."
The Notes will be issued in minimum denominations
of $1,000 and integral multiples of $1,000 in
excess thereof and will be available in book-entry
form only. Definitive Notes will be issued only
under the limited circumstances described herein.
Persons ("Note Owners") acquiring beneficial
interests in the Notes will hold their interests
through DTC in the United States or Cedel Bank,
societe anonyme ("Cedel") or the Euroclear System
("Euroclear") in Europe. Unless and until Notes
of a class are issued in definitive form, all
references herein to distributions, notices,
reports and statements to and to actions by and
effects upon the related Noteholders will refer to
the same actions and effects with respect to DTC
or Cede, as the case may be, for the benefit of
the related Note Owners in accordance with the DTC
procedures. See "Certain Information Regarding
the Securities-Book-Entry Registration" and
"--Definitive Securities" in the Prospectus and
Annex I hereto.
Property of the Trust The property of the Trust will primarily include
(i) 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"), (ii)
certain monies received under the Initial
Contracts on and after
S-4
<PAGE>
___________, 199__ (the "Initial Cut-off Date"),
(iii) an assignment of the security interests in
the Initial Financed Vehicles, (iv) the Collection
Account (as defined herein), the Certificate
Distribution Account, [the Note Distribution
Account (as defined herein), the Cash Collateral
Account, the Capitalized Interest Account (as
defined herein) and the Pre-Funding Account (as
defined herein), in each case together with the
proceeds thereof (other than investment earnings
on the Cash Collateral Account (as defined
herein))], (v) the proceeds from claims under
certain insurance policies in respect of
individual Initial Financed Vehicles or the
related Obligors (as defined herein) and (vi)
certain rights under the [Sale and Servicing
Agreement, to be dated as of _____________ 199__
(the "Sale and Servicing Agreement"), among the
Seller, the Servicer and the Trust] [Pooling and
Servicing Agreement].
[From time to time the Trust will be obligated to
purchase from the Seller during the Funding
Period, 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 on and after the related
Subsequent Cut-off Dates, an assignment of the
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 from monies on deposit in the Pre-Funding
Account. See "The Trust Property." The
Subsequent Contracts will have an aggregate
principal balance approximately equal to the
amount on deposit in the Pre-Funding Account (the
"Pre-Funded Amount") on the Closing Date (as
defined herein).]
CITSF will be obligated to repurchase Contracts (a
"Repurchased Contract") upon the occurrence of
certain breaches of representations and warranties
(a "Repurchase Event"). See "The Purchase
Agreements and the Trust DocumentsNSale and
Assignment of the Contracts" and "NServicing
Procedures" in the Prospectus.
The Contracts The property of 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 [and
originated directly by CITSF or one of its
affiliates in the ordinary course of its business
and purchased by CITSF or one of its affiliates
from unaffiliated third parties]. The Financed
Vehicles will 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 certain contracts that
will constitute a portion of the Initial Contracts
to CITSF pursuant to a purchase agreement, to be
dated as of ____________, 199__, and CITSF will
sell the Initial Contracts to the Company pursuant
to a purchase agreement, to be dated
S-5
<PAGE>
as of ___________, 199__ (the "Purchase
Agreement"), and the Company will sell the Initial
Contracts to the Trust pursuant to the [Sale and
Servicing Agreement] [Pooling and Servicing
Agreement]. [CITSF or the Seller or one of their
respective affiliates will retain the right to
receive a portion of the interest accruing on some
or all of the Contracts sold to the Trust. See
"the Contract Pool" and "The Purchase Agreements
and the Trust Documents--Sale and Assignment of
the Contracts" in the Prospectus.]
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 Initial Contract with the last
maturity occurs in ___________. See "The Contract
Pool." The Contracts will generally be prepayable
at any time without penalty to the purchaser of
the related Financed Vehicles or Obligor.
[From time to time during the Funding Period, CITSF
will be obligated to sell, and the Company will be
obligated to purchase, pursuant to a purchase
agreement (the "Subsequent Purchase Agreement")
subject to the satisfaction of certain conditions,
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"). A portion of such
Subsequent Contracts may be acquired by CITSF from
CITCF-NY or other affiliates of CITSF. Pursuant
to one or more subsequent transfer agreements
(each, a "Subsequent Transfer Agreement") between
the Company and the Trust, and subject to the
satisfaction of certain conditions, the Company
will in turn sell the Subsequent Contracts to the
Trust at a purchase price 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 Pre-Funding 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 (as defined herein)
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 as an
Eligible Account (as defined herein), initially
maintained with the [Indenture] [Owner] Trustee,
and the funds on deposit therein will be invested
solely in Permitted Investments (as defined
herein) that mature not later than one Business
Day prior to the next succeeding Distribution
Date, until such funds are applied by the
[Indenture] [Owner] Trustee during the Funding
Period to pay to the Company the purchase price
for Subsequent Contracts. See
S-6
<PAGE>
"The Contract Pool--Pre-Funding Account;
Capitalized Interest Account." 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
(exclusive of investment earnings) is less than
$100,000, [(ii) the date on which an Event of
Default occurs under the Indenture,] (iii) the
date on which an Event of Termination occurs under
the [Sale and Servicing Agreement] [Pooling and
Servicing Agreement], (iv) the insolvency of the
Company, CITSF, CITCF-NY or CIT, or (v) the close
of business on _________. 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 ________,
although no assurance can be given that this will
in fact occur. Any portion of the Pre-Funded
Amount remaining on deposit in the Pre-Funding
Account at the end of the Funding Period will be
payable as principal to [Noteholders and]
Certificateholders in accordance with the Pre-
Funded Percentage (as defined herein) on the first
Distribution Date thereafter or, if the end of the
Funding Period is on a Distribution Date, then on
such date.]
[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") maintained as an Eligible
Account, initially maintained with the [Indenture]
[Owner] Trustee and the funds on deposit therein
will be invested solely in Permitted Investments
that mature no later than one Business Day prior
to the next Distribution Date. Amounts deposited
in the Capitalized Interest Account will be used
on the ___________, _________ and _________
Distribution Dates, if applicable, to fund the
excess, if any, of (i) the product of (x) one-
twelfth the weighted average of the Interest 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.
On each Distribution Date during the Funding
Period any amount remaining in the Capitalized
Interest Account in excess of the Required
Capitalized Interest Amount (as defined under "The
Contract Pool--Pre-Funding Account; Capitalized
Interest Account") shall be [released to the
Affiliated Purchaser (as defined herein)]
[deposited in the Collection Account]. 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 Collection Account and will be available for
distributions, as
S-7
<PAGE>
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. Monies
on deposit in the Capitalized Interest Account
will not be available to cover losses on or in
respect of the Contracts.]
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 _________.
Payments on the Securities on each Distribution
Date will be made to the holders of record of the
related Securities at the close of business on the
Business Day immediately preceding such
Distribution Date or, in the event Definitive
Securities have been issued, at the close of
business on the last Business Day of the month
immediately preceding the month in 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 the
[Notes and] the Certificates will be payable on
the Distribution Dates occurring in _________ [and
_________ (the "Note Final Scheduled Distribution
Date") (the "Certificate Final Scheduled
Distribution Date"), respectively.]
A "Business Day" is any day other than a Saturday,
Sunday or any day on which banking institutions or
trust companies in the states of New York
[___________] or Oklahoma 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
one-month period from the most recent Distribution
Date to but excluding the following Distribution
Date, or in the case of the initial Distribution
Date from ___________ 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 other amounts 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
__________ and will end on and include
___________.
Determination Date The "Determination Date" is the third Business Day
prior to each Distribution Date. On each
Determination Date, the Servicer will determine
the Available Amount (as defined herein) for
distribution on the related Distribution Date,
allocate such amounts between [the Notes,] the
Certificates and the Servicer Payment (as defined
herein), and advise the Trustees (or the paying
agent appointed pursuant to the [Sale and
Servicing Agreement] [Pooling and Servicing
Agreement]) of the amounts of the payments to be
made to Securityholders, all as described under
S-8
<PAGE>
"The Purchase Agreements and The Trust
Documents--Distributions" in the Prospectus.
The "Available Amount" on any Distribution Date is
equal to the excess of (A) the sum of (i) all
amounts on deposit in the Collection Account
attributable to collections or deposits made in
respect of such Contracts in the related Due
Period and (ii) the Purchase Price (as defined
herein) for any Contract repurchased by CITSF as a
result of breaches of certain representations and
warranties or purchased by the Servicer as a
result of breaches of certain covenants, any
Monthly Advances (as defined herein) and Non-
Reimbursable Payments (as defined herein) made by
the Servicer, if such Purchase Price, Monthly
Advance or Non-Reimbursable Payment is paid on or
prior to the Deposit Date (as defined herein)
immediately preceding such Distribution Date, over
(B) the sum of the following amounts (to the
extent that the Servicer has not already withheld
such amounts from collections on the Contracts):
(i) any repossession profits on liquidated
Contracts, Liquidation Expenses (as defined in the
[Sale and Servicing Agreement] [Pooling and
Servicing Agreement]) incurred and taxes and
insurance advanced by the Servicer in respect of
Financed Vehicles that are reimbursable to the
Servicer under the [Sale and Servicing Agreement]
[Pooling and Servicing Agreement], (ii) any
amounts incorrectly deposited in the Collection
Account, (iii) net investment earnings on the
funds in the Collection Account, and (iv) any
other amounts permitted to be withdrawn from the
Collection Account by the Servicer (or to be
retained by the Servicer from collections on the
Contracts) pursuant to the [Sale and Servicing
Agreement] [Pooling and Servicing Agreement].
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 Interest accruing during the related Interest
Accrual Period (computed on the basis of a 360-day
year consisting of twelve 30-day months) will be
paid to the Certificateholders of record on the
related Record Date, on each Distribution Date, to
the extent of the Available Amount on such
Distribution Date (i) in an amount equal to one-
twelfth of the product of the Pass-Through Rate
and the Certificate Balance, as of the preceding
Distribution Date (after giving effect to
distributions of principal and interest to be made
on such Distribution Date) or (ii) in the case of
the first Distribution Date, in an amount equal to
interest accruing at the Pass-Through Rate from
___________ to but excluding the first
Distribution Date, on the Original Certificate
Balance. See "The Certificates-- Distribution of
Interest." The "Certificate Balance" means the
Original Certificate Balance reduced by (i) all
distributions allocable to principal actually made
to Certificateholders, including payments of any
Principal Liquidation Loss Amount (as defined
herein) and payments of any Principal Distribution
Amount made to the Certificateholders
S-9
<PAGE>
which are allocable to principal, (ii) the
aggregate amount of all Principal Liquidation Loss
Amounts distributable to Certificateholders to the
extent such amounts have not been so previously
distributed and (iii) on or after the Distribution
Date on which the Notes have been paid in full
(the "Cross-Over Date"), the aggregate amount of
all Principal Distribution Amounts (as defined
herein) distributable to Certificateholders to the
extent such amounts have not been so previously
distributed. Distributions of interest on the
Certificates will be funded to the extent of the
Available Amount after the Servicer has been paid
the Servicer Payment and interest and principal
has been paid in respect of the Notes on such
Distribution Date [or, to the extent such
Available Amount is insufficient, will be funded
through a payment from the Cash Collateral
Account, subject to the Available Cash Collateral
Amount (as defined herein), under the
circumstances described herein].
The "Servicer Payment" is equal on each
Distribution Date to the sum of the reimbursement
then due to the Servicer for outstanding Monthly
Advances and the Servicing Fee (including any
unpaid Servicing Fees for past Distribution
Dates).
The rights of Certificateholders to receive
distributions of interest will be subordinated to
the rights of Noteholders to receive distributions
of interest and principal, as described herein.
See "The Certificates--Distributions of Interest."
C. Principal On each Distribution Date on or after the Cross-
Over Date, principal of the Certificates will be
payable, subject to the remaining Available Amount
[and the Available Cash Collateral Amount], in an
amount equal to the Principal Distribution Amount
with respect to such Distribution Date. Such
principal payments will be funded to the extent of
the Available Amount remaining after the Servicer
has been paid the Servicer Payment, and the
interest due on the Certificates has been paid
[or, to the extent such Available Amount is
insufficient, will be funded through a payment
from the Cash Collateral Account, subject to the
Available Cash Collateral Amount, under the
circumstances described herein]. The rights of
Certificateholders to receive distributions of
principal (following the payment of distributions
of interest in respect of the Certificates) will
be subordinated to the rights of Noteholders to
receive distributions of interest and principal.
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. Such principal payments
will be funded to the extent of the Available
Amount remaining after the Servicer has been paid
the Servicer Payment, the principal and interest
due on the Notes has been paid and the interest on
the Certificates has been paid [or, to the extent
that such remaining Available Amount is
insufficient, will be funded through a payment
from the Cash Collateral Account, subject to the
Available Cash Collateral Amount, under the
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<PAGE>
circumstances described herein]. 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. The Certificate Balance will
be reduced to the extent that prior to the Cross-
Over Date distributions are not made in respect of
the Principal Loss Liquidation Amount and on or
after the Cross-Over Date distributions are not
made in respect of the Principal Distribution
Amount. As a result of such reductions, less
interest will accrue on the Certificates than
would otherwise be the case.
[In the event that the Certificates are outstanding
on the Certificate Final Scheduled Distribution
Date (after taking into account distributions on
such date), the [Owner] Trustee will withdraw from
the Cash Collateral Account (to the extent funds
are available therefor in the Cash Collateral
Account), and will deposit in the Certificate
Distribution Account for distribution to the
Certificateholders in retirement of the
Certificates, an amount equal to the Certificate
Balance.]
D. Redemption [The Certificates will be subject to mandatory
redemption in part, on a pro rata basis, 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 at the end of the Funding Period 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. The
aggregate principal amount of Certificates to be
redeemed on such date will be an amount equal to
the Pre-Funded Percentage allocable to the
Certificates of the amount then on deposit in the
Pre-Funding Account.] The "Pre-Funded Percentage"
with respect to the Notes or the Certificates is
the percentage derived from the fraction, the
numerator of which is the initial principal
balance of the Notes or the Original Certificate
Balance, as the case may be, and the denominator
of which is the sum of the initial principal
balance of the Notes and the Original Certificate
Balance. See "The Certificates--Redemption."
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 and unpaid interest thereon at the
Pass-Through Rate. See "Summary--Optional Purchase
of the
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<PAGE>
Contracts," "--Auction Sale," "The
CertificatesNRedemption" and "The Purchase
Agreements and The Trust Documents--Insolvency
Event."
[Terms of the Notes] The principal terms of the Notes will be as
described below:
A. Interest Rate The Notes will bear interest at the rate of _____%
per annum (the "Interest Rate").
B. Interest Interest accruing during the related Interest
Accrual Period (computed on the basis of a 360-day
year consisting of twelve 30-day months) will be
paid to the Noteholders of record on the related
Record Date, on each Distribution Date, to the
extent of the Available Amount on such
Distribution Date (i) in an amount equal to one-
twelfth of the product of the Interest Rate and
the outstanding principal balance on the Notes, as
of the preceding Distribution Date (after giving
effect to distributions of principal and interest
to be made on such Distribution Date) or (ii) in
the case of the first Distribution Date, in an
amount equal to interest accruing at the Interest
Rate from _____________ to but excluding the first
Distribution Date, on the outstanding principal
balance of the Notes as of the Closing Date. 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
remaining after the Servicer has been paid the
Servicer Payment and following the payment of
interest due on the Notes on such Distribution
Date.
The unpaid principal balance of the Notes will be
payable on the Note Final Scheduled Distribution
Date. See "The Notes--Payments of Principal."
D. Redemption [The Notes will be subject to mandatory redemption
in part, on a pro rata basis, 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 at the end
of the Funding Period 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. The aggregate
principal amount of Notes to be redeemed on such
date will be an amount equal to the Pre-Funded
Percentage allocable to the Notes of the amount
then on deposit in the Pre-Funding Account. See
"The Notes--Redemption" and "Certain Information
Regarding the Securities" in the Prospectus.]
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 Notes plus
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<PAGE>
accrued and unpaid interest thereon at the
Interest Rate. See "Summary--Optional Purchase of
the Contracts," "--Auction Sale," "The
NotesNRedemption" and "The Purchase Agreements and
The Trust Documents--Termination" in the
Prospectus.
[Subordination of
the Certificates] The rights of the Certificateholders to receive
distributions with respect to the Contracts will
be subordinated to the rights of the Noteholders,
to the extent described herein. This
subordination is intended to enhance the
likelihood of timely receipt by Noteholders of the
full amount of interest and principal required to
be paid to them, and to afford the 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 until the full amount of
interest and principal on the Notes payable on
such Distribution Date has been distributed to the
Noteholders, [other than payments from the Cash
Collateral Account,] and (ii) principal until the
Notes have been paid in full, other than
distributions in respect of the Principal
Liquidation Loss Amount.
The protection afforded to the Noteholders by the
subordination feature described above will be
effected by the preferential right of the
Noteholders to receive, to the extent described
herein, current distributions from collections on
or in respect of the Contracts prior to the
application of such collections to payments in
respect of the Certificates. [There is no other
protection against losses on the Contracts
afforded the Notes.] [The Cash Collateral Account
will not be available to provide a source of funds
to make payments of principal or interest on the
Notes.]
[Cash Collateral Account] On the Closing Date, an account (the "Cash
Collateral Account") will be established pursuant
to the [Sale and Servicing Agreement] [Pooling and
Servicing Agreement]. The [Owner] Trustee will
have the right to withdraw (or cause to be
withdrawn) payments from the Cash Collateral
Account under certain circumstances specified
below. The Cash Collateral Account will be funded
on the Closing Date in the amount of $_________
(the "Initial Cash Collateral Amount") from the
proceeds of a loan (the "Loan") to be made by one
or more financial institutions selected by the
Company (the "Cash Collateral Depositor") pursuant
to a Cash Collateral Agreement among the Cash
Collateral Depositor, the Trust and the Servicer
(the "Cash Collateral Agreement"). The Cash
Collateral Depositor's only recourse against the
Trust for repayment of the Loan is from the Cash
Collateral Account Surplus (as
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<PAGE>
defined herein), Excess Collections (as defined
herein), certain investment earnings on funds
deposited in the Cash Collateral Account and
payments from the Cash Collateral Account upon
maturity of the Loan, in each case as set forth in
the Cash Collateral Agreement. With respect to any
Distribution Date, the amount available to be
withdrawn from the Cash Collateral Account (the
"Available Cash Collateral Amount") will equal the
lesser of (i) the Required Cash Collateral Amount
(as defined herein) and (ii) the amount on deposit
in the Cash Collateral Account exclusive of
interest and earnings thereon and any investment
losses and expenses and before giving effect to
any deposit to be made to the Cash Collateral
Account on such Distribution Date. If the
Available Amount on any Distribution Date is
insufficient (after paying the Servicer Payment
and paying the interest and principal due on the
Notes), to pay the interest and principal
(including, prior to the Cross-Over Date, any
Principal Liquidation Loss Amount) required to be
distributed on the Certificates on such
Distribution Date, the [Owner] Trustee will
withdraw (or cause to be withdrawn) from the Cash
Collateral Account an amount equal to the lesser
of the amount of such deficiency or the Available
Cash Collateral Amount. See "Enhancement--Cash
Collateral Account." If the Available Cash
Collateral Amount is zero, holders of the
Certificates 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 (as
defined herein).
On each Distribution Date, the Servicer will
deposit Excess Collections (as defined herein)
into the Cash Collateral Account in an amount
sufficient to increase the amount on deposit in
the Cash Collateral Account to the Required Cash
Collateral Amount and to make payments of
principal or interest on the Loan as required by
the Cash Collateral Agreement. [Excess
Collections, if any, not so required to be
deposited in the Cash Collateral Account will be
paid to the Affiliated Purchaser (as defined
herein).] "Excess Collections" for any
Distribution Date will equal the amounts collected
or deposited in respect of the Contracts in the
related Due Period and which remain in the
Collection Account on such Distribution Date after
taking into account distributions to be made on
the Securities and payments and reimbursements to
be made to the Servicer on such Distribution Date.
See "The Purchase Agreements and The Trust
Documents--Distributions" in the Prospectus. The
"Required Cash Collateral Amount" with respect to
any Distribution Date means ____% of the Pool
Balance as of the first day of the related Due
Period, but in no event less than $__________,
subject to adjustment based on delinquencies and
losses on the Contracts, provided that the
Required Cash Collateral Amount shall never be
greater than the outstanding balance of the
Certificates and may be reduced from time to time
if the Rating Agencies shall have given prior
written notice to the Seller, the Servicer and the
Issuer that such reduction will not result in a
downgrade or withdrawal of the then current
ratings of the Notes and the Certificates. See
"Enhancement--Cash Collateral Account."
If, on any Distribution Date, the Available Cash
Collateral Amount (after taking into account any
deposits to and withdrawals from the Cash
Collateral Account pursuant to the [Sale and
Servicing Agreement] [Pooling and Servicing
Agreement] on such Distribution Date) exceeds the
Required Cash Collateral Amount for the next
Distribution Date, such excess (the "Cash
Collateral
S-14
<PAGE>
Account Surplus") will, to the extent required to
make payments of principal and interest on the
Loan, be withdrawn from the Cash Collateral
Account and paid to the Cash Collateral Depositor.
[The balance, if any, of such excess will be
withdrawn from the Cash Collateral Account and
paid to the Affiliated Purchaser.] See
"Enhancement--Cash Collateral Account."
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 judgment, 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"), or from 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 judgment
that an unreimbursed Monthly Advance shall not
ultimately be recoverable from subsequent
collections, the Servicer shall be reimbursed for
such Monthly Advance from collections on all
Contracts. In determining whether an advance is
or will be nonrecoverable, the Servicer need not
take into account that it might receive any
amounts in a deficiency judgment against an
Obligor. The Servicer will not make a Monthly
Advance in respect of (i) the principal component
of any scheduled payment, or (ii) 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. See "The Purchase Agreements and The
Trust Documents--Monthly Advances" in the
Prospectus.
"Interest Shortfall" means with respect to any
Contract and any Distribution Date, the excess of
(A) the product of (i) the sum of (a) one-twelfth
of the weighted average of the Pass-Through Rate
and the Interest Rate and (b) on-twelfth of the
Servicing Fee Rate (as defined herein) and (ii)
the outstanding principal amount of such Contract
as of the last day of the second preceding Due
Period (or, in the case of the first Due Period
ending after the Contract was acquired by the
Trust, as of the Initial Cut-off Date or the
Subsequent Cut-off Date, as the case may be), over
(B) the amount of interest, if any, 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] [Pooling and Servicing
Agreement] will require the Servicer to deposit
into the Collection Account on the Business Day
immediately preceding the following Distribution
S-15
<PAGE>
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) one-twelfth of the
product of [0.75]% (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)
and (ii) any investment earnings on amounts on
deposit in the Collection Account, [the Note
Distribution Account] and the Certificate
Distribution Account; provided, however, that the
Servicing Fee Rate shall be [_____%] [a rate
determined at the time of the appointment of a
successor Servicer but not to exceed _____%] if
CITSF or an affiliate thereof is not the Servicer.
See "The Purchase Agreements and The Trust
Documents--Servicing Compensation" in the
Prospectus.
Optional Purchase
of the Contracts At its option, CITSF may purchase all the Contracts
on any Distribution Date on which the Pool Balance
as of the last day of the related Due Period is
[10]% or less of the Initial Pool Balance, at a
purchase price determined as described under "The
Purchase Agreements and The Trust
Documents--Termination" in the Prospectus. 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 after a Distribution Date on which
the Pool Balance as of the last day of the related
Due Period is [5]% or less of the Initial Pool
Balance, the Indenture Trustee (or, if the Notes
have been paid in full and the Indenture has been
discharged in accordance with its terms, the
[Owner] 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" in the Prospectus,
the net sale proceeds will be distributed to
Securityholders, in the same order of priority as
collections received in respect of the Contracts,
on the second Distribution Date succeeding such
Due Period. If satisfactory bids are not
received, such 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" in the Prospectus.
Mandatory Sale [If an Insolvency Event (as defined herein) with
respect to the Affiliated Purchaser (as defined
herein) occurs, the Indenture Trustee (or, if no
Notes are outstanding, the Owner 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 net 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. Distributions will be made
S-16
<PAGE>
first, to the payment of the Servicer Payment,
second, to the payment of interest and principal
on the Notes and third, to the payment of interest
and principal on the Certificates. If the net
proceeds from the liquidation of the Contracts
(after payment of the Servicer Payment and payment
of the principal amount of and accrued interest on
the Notes) and any amounts on deposit in the
Certificate Distribution Account are not
sufficient to pay the principal amount of and
accrued interest on the Certificates in full, the
amount of principal returned to the
Certificateholders will be reduced and such
Certificateholders will incur a loss, [except to
the extent of payments to the Certificateholders
from the Cash Collateral Account, subject to the
Available Cash Collateral Amount]. See "The
Purchase Agreements and The Trust
Documents--Insolvency Event" in the Prospectus.]
Ratings It is a condition to the issuance of the Securities
that the Securities be rated _____ by __________
and _____ by _________ (each, a "Rating Agency").
[The ratings of the Notes will be based primarily
on the value of the Initial Contracts, the Pre-
Funding Account and the terms of the Securities,
including the subordination provided by the
Certificates.] [The ratings of the Certificates
will be based primarily on the Cash Collateral
Account.] The ratings of the Securities should be
evaluated independently from similar ratings on
other types of securities. The ratings do not
address the possibility that Securityholders may
suffer a lower than anticipated yield. The
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 of the
Contracts." See "Ratings."
` 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 judgment,
circumstances so warrant. In the event that the
rating initially assigned to any of 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 any of the Securities, 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.] Alternative characterizations of
the Trust, the Notes and the Certificates are
possible, but would not result in materially
adverse tax consequences to Noteholders or
S-17
<PAGE>
Certificateholders. See "Certain Federal Income
Tax Consequences" in the Prospectus.
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 Income
Security Act of 1974, as amended ("ERISA").]
[Employee benefit plans subject to ERISA will not
be eligible to purchase the Certificates.]
Fiduciaries of employee benefit plans subject to
ERISA, or plans subject to Section 4975 of the
Internal Revenue Code of 1986 (the "Code") should
carefully review with their legal advisors whether
the purchase or holding of the Certificates
offered hereby could give rise to a transaction
prohibited or not otherwise permissible under
ERISA or the Code. Any benefit plan fiduciary
considering the purchase of the Notes should,
among other things, consult with its counsel in
determining whether all required conditions have
been satisfied. See "ERISA Considerations."
Legal Investment The appropriate characterization of the
Certificates [and the Notes] under various legal
investment restrictions applicable to the
investment activities of certain institutions, and
thus the ability of investors subject to these
restrictions to purchase the Certificates [and the
Notes], may be subject to significant interpretive
uncertainties. All investors whose investment
authority is subject to legal restrictions should
consult their own legal advisors to determine
whether, and to what extent, the Certificates [and
the Notes] will constitute legal investments for
them.
S-18
<PAGE>
RISK FACTORS
Prospective Securityholders should consider the following risk factors
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 defined herein)] or any Servicer (including The CIT Group/Sales Financing,
Inc. ("CITSF")) or any of their respective affiliates. [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 Underwriters (as defined herein) or any of their 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 liquidation experience of pools of
installment sale contracts secured by recreational vehicles. The credit criteria
and underwriting guidelines under which CITSF originates recreational vehicle
installment sale contracts were changed in 1994. The delinquency and loan loss
experience for CITSF's portfolio will be affected adversely by this change in
credit criteria. See "The CIT Group/Sales Financing, Inc., Servicer--
Delinquency and Loan Loss Experience" herein. Since the market value of
recreational vehicles generally declines with age and since in certain states
the Trustees may not have a first perfected security interest in the Financed
Vehicles, the Servicer may not recover the entire amount owing under a Defaulted
Contract (as defined herein). See "Certain Legal Aspects of the Contracts" in
the Prospectus. In such a case, the Securityholders may suffer a corresponding
loss. The market value of the Financed Vehicles could be or could 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 Certificates [and (b) the protection
against loss afforded to the Certificateholders by the Available Cash Collateral
Amount (as defined herein)]. [If the Certificate Balance is reduced to zero,
the 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 the Available Cash Collateral Amount is reduced to
zero, holders of the Certificates will bear the risk of loss resulting from
default by Obligors (as defined herein) 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.
3. Certain Matters Relating to Insolvency. CITSF and the Company
intend that each transfer of Contracts from CITCF-NY to CITSF, 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. 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, 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 assigning 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" in the
Prospectus.
[The CIT GP Corporation II, a Delaware corporation and a wholly owned
subsidiary of CIT (the "Affiliated Purchaser"), will purchase at least 1% of the
principal balance of the Certificates.] The Affiliated Purchaser will have the
same rights with regard to the Trust as all other Certificateholders based on
its percentage ownership of the Certificate Balance. The [Trust Agreement]
[Pooling and Servicing Agreement] will provide that if an Insolvency Event (as
defined herein) with respect to the Affiliated Purchaser occurs, subject to
certain conditions, the Trust will dissolve. Certain steps will be 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 a certificate 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 Bankruptcy Code
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or similar applicable state laws ("Insolvency Laws") without the prior
affirmative unanimous vote of its directors). However, an Insolvency Event with
respect to the Affiliated Purchaser may occur nonetheless.
If an Insolvency Event with respect to the Affiliated Purchaser
occurs, the Indenture Trustee (or, if no Notes are outstanding, the [Owner]
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 net 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. Distributions will be made first, to
the payment of the Servicer Payment, second, to the payment of interest and
principal on the Notes and third, to the payment of interest and principal on
the Certificates. If the net proceeds from the liquidation of the Contracts
(after payment of the Servicer Payment and payment of the principal amount of
and accrued interest on the Notes) and any amounts on deposit in the Certificate
Distribution Account are not sufficient to pay the principal amount of and
accrued interest on the Certificates in full, the amount of principal returned
to the Certificateholders will be reduced and such Certificateholders will incur
a loss, [except to the extent of payments to the Certificateholders from the
Cash Collateral Account, subject to the Available Cash Collateral Amount.] [If
the net proceeds from the liquidation of the Contracts (after payment of the
Servicer Payment) and any amounts on deposit in the Note Distribution Account
are not sufficient to pay the principal amount of and accrued interest on the
Notes in full, holders of the Notes also will incur a loss.] See "The Purchase
Agreements and The Trust Documents--Insolvency Event" in the Prospectus.]
[4. The Subsequent Contracts and the Pre-Funding Account.] The
conveyance of Subsequent Contracts by CITSF during the Funding Period will be
subject to the conditions described herein under "The Contract Pool." If CITSF
does not 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 and
Certificateholders 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 and Certificateholders will receive a
prepayment of principal in an amount equal to the Pre-Funded Percentage
allocable to the Noteholders and the Certificateholders, respectively, of the
Pre-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. The "Pre-Funded Percentage" with respect to the Notes or the Certificates
is the percentage derived from the fraction, the numerator of which is the
initial principal balance of the Notes or the Original Certificate Balance, as
the case may be, and the denominator of which is the sum of the initial
principal balance of the Notes and the Original Certificate Balance. 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 and the Certificateholders at the end of the Funding
Period.
Each Subsequent Contract must satisfy the eligibility criteria
specified herein and in the [Sale and Servicing Agreement] [Pooling and
Servicing Agreement] at the time of its sale to the Trust. The Company (the
seller of any Subsequent Contracts to the Trust) will certify that all such
eligibility criteria have been satisfied and CITSF (the seller of any Subsequent
Contracts to the Company) will certify that all conditions precedent to the sale
of the Subsequent Contracts to the Trust have been satisfied. It is a condition
to the sale of any Subsequent Contracts to the Trust that each Rating Agency,
after receiving prior notice of the proposed transfer of Subsequent Contracts to
the Trust, shall not have advised the Seller or the Trustees 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.
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 entirely
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 under the [Sale and Servicing Agreement] [Pooling and Servicing
Agreement]. The ability of CITSF to originate such contracts may be affected by
a variety of economic and social factors. Moreover, such factors may affect the
ability of the Obligors
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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] [Pooling 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 CITSF's ability to originate Subsequent Contracts.
[5. Prepayment from the Pre-Funding Account.] If the Pre-Funded
Amount has not been fully applied by the Trust to purchase Subsequent Contracts
by the end of the Funding Period, then the Pre-Funded Amount will be payable as
principal to Noteholders and Certificateholders in accordance with the Pre-
Funded Percentage on the first Distribution Date following the end of the
Funding Period, or, if the end of the Funding Period is on a Distribution Date,
then on such date.
In the event that amounts remain on deposit in the Pre-Funding Account
at the end of the Funding Period and are applied to the payment of principal to
the Noteholders and Certificateholders, such partial retirement of the Notes and
Certificates may shorten the average life of the Securities and may cause the
Noteholders and Certificateholders to experience a lower yield on the
Securities. In addition, any reinvestment risk resulting from such partial
retirement will be borne by the holders of such Securities.
6. Limited Assets. [The Trust will covenant to sell the Contracts
(a) 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, [and
(b) upon the occurrence of an Insolvency Event with respect to the Affiliated
Purchaser]. However, 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 and the interest accrued thereon. Therefore,
upon an Event of Default with respect to the Notes or an Insolvency Event, 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 the Notes may not result in the occurrence of an Event of Default
until the Note Final Scheduled Distribution Date.]
[Funds on deposit in the Cash Collateral Account which are available
to pay principal and interest on the Certificates on any Distribution Date will
not exceed the Available Cash Collateral Amount for such Distribution Date. In
addition, amounts to be deposited in the Cash Collateral Account are limited and
will be reduced as the Pool Balance is reduced. If funds in the Cash Collateral
Account are exhausted, the Trust will depend solely on payments on or with
respect to the Contracts, Monthly Advances and Non-Reimbursable Payments (as
defined herein) to make distributions to the Certificateholders.]
7. Geographic Concentration of Recreational Vehicles. A significant
concentration of the Initial Contracts have Obligors with mailing addresses in
the states of _______, _______, _______, _______ and _______. Based on the
Initial Cut-off Date Pool Principal Balance, _____%, _____%, _____%, _____% and
_____% of the Initial Contracts have Obligors with mailing addresses in _______,
_______, _______, _______ and _______, respectively. Because of the relative
lack of geographic diversity, losses on the related Contracts may be higher than
would be the case if there were more diversification. The economies of such
states may be adversely affected to a greater degree than that of other areas of
the country by certain regional economic conditions. An economic downturn in
_______, _______, _______, _______ or _______ may have an adverse effect on the
ability of Obligors in such states to meet their payment obligations under the
Contracts.
8. Litigation. [In June, 1995, a suit, Harvey Travis et al. v. The
CIT Group Sales Financing, Inc., et al., Civil Action No. CV-95-P-1544-S, was
filed in the United States District Court for the Northern District of Alabama,
against CITSF, its force-placed insurance carrier and another lender. Plaintiffs
in this action allege primarily that force-placed insurance coverage on
manufactured homes was placed by defendants in a manner which caused plaintiffs
and other borrowers to be charged or assessed for excessive premiums and that
there was inadequate disclosure regarding certain fees charged and commissions
earned in connection therewith. In their complaint, plaintiffs ask that a class
action be certified, with the class to be comprised of individuals against whom
monetary charges alleged to be excessive have been assessed and/or collected by
CITSF and/or the other defendants for the purchase of force-placed
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insurance in connection with consumer installment transactions with CITSF and/or
the other defendants. It cannot at this time be determined whether there is any
basis for a class action. The allegations of the complaint are very general and
discovery has only recently commenced. However, based on what it knows at this
time, the management of CITSF has no reason to believe that this case will have
a material effect upon CITSF's financial condition or results of operations.]
As of the Initial Cut-off Date, force-placed insurance has not been
obtained on any of the Initial Contracts and as of the Subsequent Cut-off Date,
force-placed insurance will not have been obtained on any of the Subsequent
Contracts. Historically, CITSF has force-placed insurance on a relatively small
percentage of its retail installment sales contracts relating to recreational
vehicles. The Servicer, however, may force-place insurance on the Contracts
once they are owned by the Trust as described under "The Purchase Agreements and
the Trust Documents -- Physical Damage Insurance" in the Prospectus, and there
can be no assurance as to the number or principal balance of the Contracts that
may become subject to force-placed insurance. In the event that the Servicer
fails to comply with the provisions of the [Sale and Servicing Agreement]
[Pooling and Servicing Agreement] relating to force-placed insurance with
respect to any Contract and such failure materially and adversely affects the
Trust's interest in such Contract, the Servicer will be required to purchase
such Contract in accordance with the terms of the [Sale and Servicing Agreement]
[Pooling and Servicing Agreement].
9. Ratings of the Securities. It is a condition to the issuance of a
series of Securities offered pursuant to this Prospectus Supplement that the
Securities be rated ________________. The foregoing ratings do not address the
likelihood that the Securities will be retired following the sale of the
Contracts by the Trustee. 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 Rating Agency if, in its judgment, 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 that any other rating agency will rate
the 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.
10. Book Entry Registration. The Securities will be offered for
purchase in book-entry form only and will be initially 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"). 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 under "Certain Information Regarding the
Securities--Definitive Securities" in the Prospectus, and such persons will hold
their interests in the Notes through DTC in the United States or Cedel Bank,
societe -- anonyme ("Cedel") or Euroclear in Europe. No person acquiring an
interest in the Certificates through the facilities of DTC (a "Certificate
Owner") will be entitled to receive a Definitive Certificate representing such
person's interest in the Certificates, except as set forth under "Certain
Information Regarding The Securities--Definitive Securities" in the Prospectus,
and such persons will hold their interests in the Certificates through the DTC.
Unless and until Definitive Securities are issued under the limited
circumstances described herein and in the related Prospectus, all references to
actions by Securityholders shall refer to actions taken by DTC upon instructions
from its Participants (as defined herein), and all references herein to
distributions, notices, reports and statements to Securityholders shall refer to
distributions, notices, reports and statements to DTC in accordance with DTC
procedures. See "Certain Information Regarding The Securities--Definitive
Securities" in the Prospectus and Annex I hereto.
11. Risk of Commingling. The Servicer will deposit all payments on
or with respect to the Contracts 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 the requirements as specified under
"The Purchase Agreements and the Trust Documents--Collections" in the Prospectus
are met, the Servicer will not be required to deposit payments on or with
respect to the Contracts and proceeds of Contracts in the Collection Account
within two Business Days of the date of receipt. Instead, the Servicer, may
make such deposits into the Collection Account monthly on the Business Day
immediately preceding the next Distribution Date (the "Deposit Date"). Pending
such a monthly deposit into the Collection Account, collections on the Contracts
may be invested by the Servicer at its own risk and for its own benefit and will
not be segregated from its own funds. If the Servicer were unable to remit such
funds or if the Servicer
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became insolvent, the holders of the Securities could incur a loss with respect
to collections not deposited in the Collection Account.
STRUCTURE OF THE TRANSACTION
The Issuer, CIT RV 199__-__ (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 ______________ between the Seller and
___________, acting thereunder not in its individual capacity but solely as
trustee of the Trust (the "Owner Trustee")] [is a trust formed pursuant to a
Pooling and Servicing Agreement (the "Pooling and Servicing Agreement") among
the Seller, the Servicer and _____________, as trustee (the "Trustee"). Prior
to the sale and assignment of the Contracts pursuant to the [Sale and Servicing
Agreement] [Pooling and Servicing Agreement], the Trust will have no assets or
obligations. 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.
Each Certificate will represent a fractional undivided interest in,
and each Note, will represent an obligation of, the Trust.
The Trust will initially be capitalized with equity equal to $________
(the "Original Certificate Balance"). Certificates with an [aggregate original
principal balance of at least __________ 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]
[Pooling and Servicing Agreement], [to fund the deposit of the Pre-Funded Amount
and the deposit to the Capitalized Interest Amount.]
The Servicer will service the Contracts held by the Trust and will
receive fees for such services. CITSF will be appointed as custodian on behalf
of the Trust, and will hold the original installment sales contract/or
promissory note) as well as the originals or copies of documents and instruments
relating to each Contract and evidencing the security interest in the Financed
Vehicle securing each Contract (the "Contract Files").
The Trust's principal offices are in ___________. See "--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 $
======================
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THE [OWNER] TRUSTEE
[______________ is the Owner Trustee under the Trust Agreement.]
[___________ is the Trustee under the Pooling and Servicing Agreement.] The
principal offices of _____________ are located at ___________. The [Owner]
Trustee will perform limited administrative functions under the [Trust] [Pooling
and Servicing] 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] [Pooling and Servicing Agreement]. The
[Owner] Trustee may appoint a co-trustee to act as co-trustee pursuant to a co-
trustee agreement with the [Owner] Trustee.
The [Owner] Trustee may resign at any time, in which event the
Servicer will be obligated to appoint a successor trustee. The Servicer may
also remove the [Owner] Trustee if the [Owner] Trustee ceases to be eligible to
continue as [Owner] Trustee under the [Sale and Servicing Agreement][Pooling and
Servicing Agreement] or if the [Owner] Trustee becomes insolvent. In such
circumstances, the Servicer will be obligated to appoint a successor trustee.
Any resignation or removal of the [Owner] Trustee and appointment of a successor
trustee will not become effective until acceptance of the appointment by the
successor trustee.
The [Sale and Servicing Agreement][Pooling and Servicing Agreement]
will provide that the Servicer will pay the [Owner] Trustees' fees. The Trust
Documents will further provide that the [Owner] Trustee will be entitled to
indemnification by the Servicer for, and will be held harmless against, any
loss, liability or expense incurred by the [Owner] Trustee not resulting from
its own willful misfeasance, bad faith or negligence (other than by reason of a
breach of any of its representations or warranties set forth in the [Sale and
Servicing Agreement][Pooling and Servicing Agreement]).
THE TRUST PROPERTY
[The Notes are an obligation of the Trust and will be secured by the
assets of the Trust (other than the Certificate Distribution Account [and the
Cash Collateral 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] retail installment sale
contracts secured by new and used recreational vehicles between Dealers 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] [Pooling and Servicing Agreement] (including all
investments in such accounts and all income from the funds therein and all
proceeds thereof, [other than investment earnings on the Cash Collateral
Account]) as described herein; [(iv) all monies on deposit in the Pre-Funding
Account, the Cash Collateral Account and the Capitalized Interest Account (as
defined herein) (including all investments in such accounts and all income from
the funds therein and all proceeds thereof, other than investment earnings on
the Cash Collateral Account);] (v) assignments of the 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] [Pooling and Servicing
Agreement]; and (viii) any and all proceeds of the foregoing.
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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 during the Funding
Period (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 __________ (the "Purchase Agreement") and
the Company will sell the Initial Contracts to the Trust pursuant to the
[Pooling and Servicing Agreement] [Sale and Servicing Agreement] to be dated as
of ___________ (the "Sale and Servicing Agreement"), among the Seller, the
Servicer, and the Trust]. [CITSF will sell any Subsequent Contracts to the
Company pursuant to a purchase agreement (the "Subsequent Purchase Agreement")
and the Company will sell any Subsequent Contracts to the Trust pursuant to a
transfer agreement (the "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 representations and warranties specified in the [Sale and Servicing
Agreement] [Pooling and Servicing Agreement]; (ii) such Subsequent Contracts
will not be selected by either CITSF or the Seller in a manner that it believes
is adverse to the interests of the Securityholders; (iii) the weighted average
Contract Rate (as defined herein) of the Contracts (including the related
Subsequent Contracts) is not less than ____%; (iv) the weighted average
remaining term of the Contracts (including the Subsequent Contracts) as of the
related Subsequent Transfer Date is not greater than ____ months; (v) the Seller
and the Trustees shall not have been advised by any 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; (vi) the [Owner] 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; (vii) each Subsequent Contract will be originated in the United
States of America; (viii) each Subsequent Contract will have a Contract Rate
equal to or greater than ____%; (ix) each Subsequent Contract will provide 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; (x) 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 ___ days; (xi) no
Subsequent Financed Vehicle will have been repossessed without reinstatement as
of the related Subsequent Cut-off Date; (xii) as of the related Subsequent Cut-
off Date, no Obligor on any Subsequent Contract will be the subject of a
bankruptcy proceeding; (xiii) as of the related Subsequent Cut-off Date, each
Subsequent Contract will have a remaining principal balance of not less than
$_____ and not more than $_________; (xiv) the payment date on the Subsequent
Contract with the latest scheduled payment date will not be later than ________;
(xv) no more than ___% of the Contracts, based on the Subsequent Cut-off Date
Pool Principal Balance (including the related Subsequent Contracts) are
Contracts secured by used Financed Vehicles; and (xvi) such other requirements
as the Rating Agencies shall request. The Subsequent Financed Vehicles will
consist of motor homes, travel trailers and other types of recreational
vehicles. Each of the Subsequent Contracts will have been originated by CITSF
using the underwriting standards described under "The CIT Group/Sales Financing,
Inc., Servicer--CITSF's Underwriting Guidelines" in the Prospectus.]
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[Because the Subsequent Contracts may be originated after the Initial
Contracts, following the conveyance of the Subsequent Contracts to the Trust,
the characteristics of the Contracts (including the Subsequent Contracts) may
vary from those of the Initial Contracts.]
The Initial Contracts were purchased by CITSF or CITCF-NY from 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 ___ 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 other types of recreational vehicles.
[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 under the 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 first entered onto CITSF'S or CITCF-NY's
servicing system (which, typically, represents the date on which CITSF or
CITCF-NY funds the purchase of such Contracts from Dealers) between __________
and ___________. 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 CITCF-NY or CITSF in the ordinary course of its
business.
Approximately _____%, _____% and _____% of the Initial Cut-off Date
Pool Principal Balance represented Contracts secured by motor homes, travel
trailers and other types of recreational vehicles, respectively. 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 other types of recreational vehicles was
$_____, $_____ and $_____, respectively.
The Obligors under the Initial Contracts have mailing addresses in
_____ states. As of the Initial Cut-off Date, approximately _____% of the
Initial Contracts, based upon Initial Cut-off Date Pool Principal Balance, had
Obligors with mailing addresses in the State of _____, approximately _____% had
Obligors with mailing addresses in the State of _____, approximately _____% had
Obligors with mailing addresses in the State of _____ and approximately _____%
had Obligors with mailing addresses in the State of _____. Each other state
accounts for less than _____% of the Initial Contracts based upon Initial Cut-
off Date Pool Principal Balance.
All Initial Contracts have an interest rate specified in such Contract
(the "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 than _____ months, and a weighted average remaining term to stated maturity
of _____ months. The weighted average original term to maturity of the Initial
Contracts was _____ months. As of the Initial Cut-off Date, the weighted
average Contract Rate of the Initial Contracts was _____%. The final scheduled
payment dates on the Initial Contracts range from _____ to _____. The average
remaining principal balance per contract, as of the Initial Cut-off Date, was
$_____ and the outstanding principal balances of the Initial Contracts, as of
the Initial Cut-off Date, ranged from $_____ to $_____.
Set forth below is a description of certain characteristics of the
Initial Contracts.
S-26
<PAGE>
GEOGRAPHICAL DISTRIBUTION OF INITIAL CONTRACTS (1)
<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............ % %
Florida............. % %
Georgia............. % %
Idaho............... % %
Illinois............ % %
Indiana............. % %
Iowa................ % %
Kansas.............. % %
Kentucky............ % %
Louisiana........... % %
Maine............... % %
Maryland............ % %
Massachusetts....... % %
Michigan............ % %
Minnesota........... % %
Mississippi......... % %
Missouri............ % %
Montana............. % %
Nebraska............ % %
Nevada.............. % %
New Hampshire....... % %
New Jersey.......... % %
New Mexico.......... % %
New York............ % %
North Carolina...... % %
Ohio................ % %
Oklahoma............ % %
Oregon.............. % %
Pennsylvania........ % %
South Carolina...... % %
South Dakota........ % %
Tennessee........... % %
Texas............... % %
Utah................ % %
Virginia............ % %
Washington.......... % %
Wisconsin........... % %
Wyoming............. % %
- -
Total............... 100% 100%
==== ====
</TABLE>
(1) In most cases, based on the mailing addresses of the Obligors as of the
Initial Cut-off Date.
S-27
<PAGE>
RANGE OF CONTRACT RATES
<TABLE>
<CAPTION>
% of Contract Pool
% of Contract Pool Aggregate Principal By Principal
Number of by Number of Balance Outstanding Balance Outstanding
Range of Initial Contracts As of Initial Contracts As of As of As of
Contract Rates Initial Cut-off Date Initial Cut-off Date Initial Cut-off Date Initial Cut off Date
- -------------------- -------------------- ----------------------- --------------------- ---------------------
<S> <C> <C> <C> <C>
Total........... 100.00 $ $100.00%
==================== ====================
</TABLE>
RANGE OF REMAINING MATURITIES
<TABLE>
<CAPTION>
% of Contract Pool
% of Contract Pool Aggregate Principal By Principal
Number of by Number of Balance Outstanding Balance Outstanding
Range of Remaining Contracts As of Initial Contracts As of As of As of
Maturity in Months Initial Cut-off Date Initial Cut-off Date Initial Cut-off Date Initial Cut-off Date
- -------------------- -------------------- ----------------------- --------------------- ---------------------
<S> <C> <C> <C> <C>
Total........... 100.00% $ $100.00%
==================== ====================
</TABLE>
[PRE-FUNDING ACCOUNT; CAPITALIZED INTEREST ACCOUNT]
The Pre-Funding Account will be maintained with an Eligible
Institution (as defined herein), initially the [Indenture Trustee], and the
funds on deposit therein will be invested solely in Permitted Investments (as
defined herein), that mature not later than one Business Day prior to the next
succeeding Distribution Date, until they are applied by the [Owner] Trustee
during the Funding Period, to pay to the Company the purchase price for
Subsequent Contracts. See "The Purchase Agreements and the Trust Documents--
Accounts" in the Prospectus. 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 an Event of
Termination occurs under the [Sale and Servicing Agreement] [Pooling and
Servicing Agreement], (iv) the insolvency of the Company, CITSF, CITCF-NY or CIT
or (v) the close of business on _____. 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 _____, although no
assurance can be given that this will in fact occur. Any portion of the Pre-
Funded Amount remaining on deposit in the Pre-Funding Account at the end of the
Funding Period will be payable as principal to Noteholders and
Certificateholders in accordance with the Pre-Funded Percentage on the first
Distribution Date thereafter or, if the end of the Funding Period is on a
Distribution Date, then on such date.
"Permitted Investments" will include the following obligations and
securities: (i) obligations of the United States or any agency thereof, backed
by the full faith and credit of the United States; (ii) general obligations of
or obligations guaranteed by any State, and certificates of deposit, demand or
time deposits, federal funds or banker's acceptances issued by any depository
institution or trust company incorporated under the laws of the United States or
of any state and subject to supervision and examination by federal or state
banking authorities; in each case rated in the highest rating of each Rating
Agency for such obligations, or such lower rating as will not result in the
qualification, downgrading or withdrawal of the rating then assigned to either
the Notes or the Certificates by such Rating Agency; and (iii) demand or time
deposits or certificates of deposit issued by any bank, trust company, savings
bank or other savings institution, which deposits are fully insured by the FDIC.
S-28
<PAGE>
The [Sale and Servicing Agreement] [Pooling and Servicing Agreement]
will provide that the [Owner] Trustee cannot release any funds from the Pre-
Funding Account to purchase Subsequent Contract unless the following conditions,
among others specified in the [Sale and Servicing Agreement] [Pooling and
Servicing Agreement], have been satisfied: (i) the Company has certified that
each such Subsequent Contract satisfies the eligibility criteria described under
"--General"; (ii) the Servicer has delivered to the Trustees executed UCC
financing statements evidencing the sale of the Subsequent Contracts; (iii) the
Servicer certifies to the Trustees that it has reviewed each Subsequent Contract
and Contract File relating thereto, and confirmed that they each conform to the
related List of Subsequent Contracts; (iv) the Servicer has delivered Opinions
of Counsel regarding the Trustees' security interest in the Subsequent
Contracts; (v) the Servicer has certified that all of the conditions precedent
to the transfer of the Subsequent Contracts have been satisfied; (vi) the
[Owner] Trustee (and/or the Indenture Trustee) has inspected each of the
certificates, schedules, UCC financing statements, Officers' Certificates and
legal opinions, as described above, and determined that each item required to be
delivered pursuant to the [Sale and Servicing Agreement] [Pooling and Servicing
Agreement] has been so delivered; and (vii) the Rating Agencies, after receiving
prior notice of the transfer of any Subsequent Contracts to the Trust, have not
advised either the Seller or the Trustees that the conveyance of the Subsequent
Contracts would result in a qualification, modification or withdrawal of its
then current rating of either the Notes or the Certificates.
[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 ______, ______ and ______ Distribution Dates, if applicable, to fund
the excess, if any, of (i) the product of (x) one-twelfth of the weighted
average of the Interest 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 any Distribution Date during the Funding Period (after giving effect
to any withdrawals therefrom on such Distribution Date) in excess of the
Required Capitalized Interest Amount on such Distribution Date shall be
[released to the Affiliated Purchaser] [deposited in the Collection Account] on
such Distribution Date. The "Required Capitalized Interest Amount" for any
Distribution Date during the Funding Period is an amount equal to the product of
(x) the weighted average of the Interest Rate and the Pass-Through Rate as of
the first day of the related Interest Accrual Period minus ___%, (y) the
undisbursed funds (excluding investment earnings) in the Pre-Funding Account (as
of such Distribution Date, after giving effect to any purchases of Subsequent
Contracts on such Distribution Date) and (z) a fraction, the numerator of which
is equal to the maximum number of Distribution Dates remaining in the Funding
Period and the denominator of which is 12. 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 Collection Account and will 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.]
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 (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 defined
herein), (ii) the sale by the applicable Trustee of all of the Contracts
remaining in the
S-29
<PAGE>
Trust when the Pool Balance is 5% or less of the Initial Pool Balance [or (iii)
the occurrence of an Insolvency Event with respect to the Affiliated Purchaser.]
See "The Purchase Agreements and The Trust Documents--Termination" in the
Prospectus. [Moreover, partial retirement of the Notes and Certificates will
occur to the extent there is remaining any Pre-Funded Amount on deposit in the
Pre-Funding Account at the end of the Funding Period.]
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.
CERTAIN PAYMENT DATA
Certain statistical information relating to the payment behavior of
recreational vehicle installment sale contracts originated by CITSF is set forth
below. In evaluating the information contained in this table and its
relationship to the expected prepayment behavior of the Contracts, prospective
Securityholders should consider that the information set forth below reflects,
with respect to contracts originated in a given year, all principal payments
made in respect of such contracts in a given year, including regularly scheduled
payments, liquidation or insurance proceeds applied to principal of such
contracts, as well as principal prepayments made by or on behalf of the obligors
on the contracts in advance of the date on which such principal payment was
scheduled to be made. The information set forth below also reflects charge-offs
of the contracts during a given year. In addition, the Company has not performed
any statistical analysis to determine whether the contracts to which the table
relates constitute a statistically significant sample of recreational vehicle
installment sale contracts for purposes of determining expected payment
behavior. Payment rates on the contracts are influenced by a number of economic,
social and other factors. Certain of the contracts included in the table below
were originated with underwriting criteria that may differ from the Contracts.
Furthermore, no assurance can be given that the prepayment experience of the
Contracts will exhibit payment behavior similar to the behavior summarized in
the following table. In addition to the foregoing, prospective Securityholders
should consider that the table set forth below is limited to the period covered
therein and thus cannot reflect the effects, if any, of aging on the payment
behavior of recreational vehicle contracts beyond such periods. As a result,
investors should not draw any conclusions regarding the prepayment rate of the
Contracts from the information presented in the table below. Each investor must
make its own assumptions regarding the prepayment rate of the Contracts.
The following table sets forth, with respect to all of the
recreational vehicles contracts originated by CITSF (excluding contracts
purchased in bulk) in each year since 1992, the aggregate initial principal
balance of the contracts originated in such year, the approximate aggregate
principal balance outstanding on the contracts originated in such year as of the
last day of such year and the approximate aggregate principal balance
outstanding on the contracts originated in such year as of the end of the
subsequent year.
S-30
<PAGE>
INFORMATION REGARDING PRINCIPAL REDUCTION ON RECREATIONAL
VEHICLE CONTRACTS ORIGINATED BY CITSF
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Year of Origination
-------------------
1992 1993 1994(3) 1995 (3) 1996(3)
------------------- ----- -------- --------- --------
<S> <C> <C> <C> <C> <C>
Approximate Volume (1)..... $ $ $ $
Approximate Aggregate
EEEPrincipal Balance (2):
December 31, 1992....... $
December 31, 1993....... $ $
December 31, 1994....... $ $ $
December 31, 1995....... $ $ $ $
___________, 1996....... $ $ $ $ $
- -----------------
</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 or six month period on each contract originated in a
particular year.
(3) Includes contracts sold by CITSF in previous securitizations which CITSF is
servicing.
PAID-AHEAD CONTRACTS
If an Obligor, in addition to making his regularly scheduled payment, makes
one or more additional scheduled payments in any Due Period (for example,
because the Obligor intends to be on vacation the following month), the
additional scheduled payments made in such Due Period will be treated as a
principal prepayment and applied to reduce the principal balance of the related
Contract in such Due Period and, unless otherwise requested by the Obligor, the
Obligor will not be required to make any scheduled payment in respect of such
Contract (a "Paid-Ahead Contract") for the number of due dates corresponding to
the number of such additional scheduled payments (the "Paid-Ahead Period").
During the Paid-Ahead Period, interest will continue to accrue on the principal
balance of the Contract, as reduced by the application of the additional
scheduled payments made in the Due Period in which such Contract became a Paid-
Ahead Contract. The Obligor's Contract would not be considered delinquent during
the Paid-Ahead Period. An Interest Shortfall with respect to such Contract will
exist during each Due Period occurring during the Paid-Ahead Period and the
Servicer may be required to make a Monthly Advance in respect of such Interest
Shortfall, as described under "The Purchase Agreements and The Trust
Documents--Monthly Advances"; however, no Monthly Advances will be made in
respect of principal in respect of a Paid-Ahead Contract. See "Yield and
Prepayment Considerations."
When the Obligor resumes his required payments following the Paid-Ahead
Period, the payments so paid may be insufficient to cover the interest that has
accrued since the last payment by the Obligor. Notwithstanding such
insufficiency, the Obligor's Contract would be considered current. This
situation will continue until the regularly scheduled payments are once again
sufficient to cover all accrued interest and to reduce the principal balance of
the Contract. Depending on the principal balance and Contract Rate of the
related Contract, and on the number of payments that were paid-ahead, there may
be extended periods of time during which Contracts that are current are not
amortizing. During such periods, no distributions in respect of principal will
be made to the Securityholders with respect to such Contracts.
Paid-Ahead Contracts will affect the weighted average life of the
Securities. The distribution of the paid-ahead amount on the Distribution Date
following the Due Period in which such amount was received will generally
shorten the weighted average life of the Securities. However, depending on the
length of time during which a Paid-Ahead Contract is not amortizing as described
above, the weighted average life of the Securities may be extended. In addition,
to the extent the Servicer makes Monthly Advances with respect to a Paid-Ahead
Contract which subsequently goes into default, because liquidation proceeds with
respect to such Contract will be applied first to reimburse the Servicer
S-31
<PAGE>
for such Monthly Advances, the loss with respect to such Contract may be larger
than would have been the case had such Monthly Advances not been made.
As of the Initial Cut-Off Date, approximately ____% of the number of
Contracts in the Contract Pool were Paid-Ahead Contracts, with at least one
scheduled monthly payment having been paid-ahead. CITSF's portfolio of
recreational vehicle installment sale contracts has historically included
contracts which have been paid-ahead by one or more scheduled monthly payments.
There can be no assurance as to the number of Contracts which may become Paid-
Ahead Contracts or the number or the principal amount of the scheduled payments
which may be paid-ahead.
WEIGHTED AVERAGE LIFE OF THE SECURITIES
Prepayments on recreational vehicle contracts can be measured relative to a
prepayment standard or model. The model used in this Prospectus Supplement, the
Absolute Prepayment Model ("ABS"), represents an assumed rate of prepayment each
month relative to the original number of contracts in a pool of contracts. ABS
further assumes that all the Contracts are the same size and amortize at the
same rate and that each Contract in each month of its life will either be paid
as scheduled or be prepaid in full. For example, in a pool of contracts
originally containing 10,000 Contracts, a 1.0% ABS rate means that 100 Contracts
prepay each month. ABS does not purport to be a historical description of
prepayment experience or a prediction of the anticipated rate of prepayment of
any pool of contracts including the Contracts.
As the rate of payments of principal of the Notes and in respect of the
Certificate Balance will depend on the rate of payment (including prepayments)
of the principal balance of the Contracts, final payment of the Notes could
occur significantly earlier than the Note Final Scheduled Distribution Date. The
final distribution in respect of the Certificates also could occur prior to the
Certificate Final Scheduled Distribution Date. Reinvestment risk associated with
early payment of the Notes and the Certificates will be borne exclusively by the
Noteholders and the Certificateholders, respectively.
The tables captioned "Percent of Initial Note Principal Balance at Various
ABS Percentages" and "Percent of Initial Certificate Balance at Various ABS
Percentages" (the "ABS Table") have been prepared on the basis of the
characteristics of the Contracts. The ABS Table assumes that (i) the Contracts
prepay in full at the specified constant percentage of ABS monthly, with no
defaults, losses or repurchases, (ii) each scheduled monthly payment on the
Contracts is made on the last day of each month and each month has 30 days,
(iii) payments on the Notes and distributions on the Certificates are made on
each Distribution Date (and each such date is assumed to be the fifteenth day of
each applicable month), (iv) the Closing Date occurs on ______, (v) CITSF
exercises its option to purchase the Contracts as specified under "The Purchase
Agreements and The Trust Documents--Termination" in the Prospectus and (vi) all
of the Subsequent Contracts are purchased by the Trust on or prior to the second
Distribution Date. The ABS Table indicates the projected weighted average life
of the Notes and the Certificates and sets forth the percent of the initial
principal amount of the Notes and the percent of the original Certificate
Balance that is projected to be outstanding after each of the Distribution Dates
shown at various constant ABS percentages.
The ABS Table also assumes that the Contracts have been aggregated into
three hypothetical pools with all of the Contracts within each such pool having
the following characteristics and that the level scheduled monthly payment for
each of the pools (which is based on its aggregate principal balance, weighted
average APR, weighted average original term to maturity and weighted average
remaining term to maturity as of the appropriate Cut-off Date) will be such that
each pool will be fully amortized by the end of its remaining term to maturity.
S-32
<PAGE>
<TABLE>
<CAPTION>
WEIGHTED AVERAGE WEIGHTED AVERAGE
WEIGHTED ORIGINAL TERM REMAINING TERM WEIGHTED AVERAGE
AGGREGATE AVERAGE TO MATURITY TO MATURITY SEASONING
PRINCIPAL BALANCE CONTRACT RATE (MONTHS) (MONTHS) (MONTHS)
- ------------------- ------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Pool 1..$ %
Pool 2..$ %
Pool 3..$ %
</TABLE>
The actual characteristics and performance of the Contracts will
differ from the assumptions used in constructing the ABS Table. The assumptions
used are hypothetical and have been provided only to give a general sense of how
the principal cash flows might behave under varying prepayment scenarios. For
example, it is very unlikely that the Contracts will prepay at a constant level
of ABS until maturity or that all of the Contracts will prepay at the same level
of ABS. Moreover, the diverse terms of Contracts within each of the hypothetical
pools could produce slower or faster principal distributions than indicated in
the ABS Table at the various constant percentages of ABS specified, even if the
original and remaining terms to maturity of the Contracts are as assumed. Any
difference between such assumptions and actual characteristics and performance
of the Contracts or actual prepayment experience, will affect the percentages of
initial balances outstanding over time and weighted average lives of the Notes
and the Certificates.
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE AT VARIOUS ABS PERCENTAGES (1)
DISTRIBUTION DATE 0.0% 0.5% 1.0% 1.2% 1.4%
- ----------------- ---- ---- ---- ---- ----
Initial Percent 100% 100% 100% 100% 100%
Weighted Average Life (years)(2)
_____________
(1) Assumes the exercise by CITSF of its option to purchase all of the
Contracts on the Distribution Date on which the Pool Balance as of the last
day of the related Due Period is [10]% or less of the Initial Pool Balance.
(2) The weighted average life of a Class A Note is determined by (i)
multiplying the amount of each principal payment of the Note by the number
of years from the date of the issuance of the Note to the related
Distribution Date, (ii) adding the results and (iii) dividing the sum by
the related initial principal amount of the Note.
THE ABS TABLE HAS BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ABOVE
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF THE
CONTRACTS WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND PERFORMANCE
THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
PERCENT OF INITIAL CERTIFICATE BALANCE AT VARIOUS ABS PERCENTAGES(1)
DISTRIBUTION DATE 0.0% 0.5% 1.0% 1.2% 1.4%
- ----------------- ---- ---- ---- ---- ----
Initial Percent 100% 100% 100% 100% 100%
Weighted Average Life (years)(2)
________________
(1) Assumes the exercise by CITSF of its option to purchase all of the
Contracts on the Distribution Date on which the Pool Balance as of the last
day of the related Due Period is [10]% or less of the Initial Pool Balance.
(2) The weighted average life of a Certificate is determined by (i) multiplying
in the amount of each principal payment on the Certificate by the number of
years from the date of the issuance of the Certificate to the related
Distribution Date, (ii) adding the results and (iii) dividing the sum by
the related initial principal balance of the Certificate.
S-33
<PAGE>
THE ABS TABLE HAS BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ABOVE
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF THE
CONTRACTS WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND PERFORMANCE
THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
YIELD AND PREPAYMENT CONSIDERATIONS
[Thirty days of interest on the Contracts will be paid to the Noteholders
on each Distribution Date to the extent of the remaining Available Amount, in an
amount equal to one-twelfth of the product of the Interest Rate and the
outstanding principal balance of the Notes as of the preceding Distribution Date
(after giving effect to any distributions of principal to be made on such
Distribution Date) or, in the case of the first Distribution Date, the
outstanding principal balance of the Notes as of the Initial Cut-off Date. See
"The Notes--Distributions of Principal."] Thirty days of interest on the
Contracts will be passed through to Certificateholders on each Distribution Date
to the extent of the remaining Available Amount [and the Available Cash
Collateral Amount,] in an amount equal to one-twelfth of the product of the
Pass-Through Rate and the Certificate Balance as of the preceding Distribution
Date (after giving effect to distributions of principal on the Certificates and
other reductions in the Certificate Balance to be made on such Distribution
Date) or, in the case of the first Distribution Date, the Original Certificate
Balance. The "Certificate Balance" means the Original Certificate Balance
reduced by (i) all distributions allocable to principal actually made to
Certificateholders, including payments of any Principal Liquidation Loss Amount
and payments of any Principal Distribution Amount made to the Certificateholders
which are allocable to principal, (ii) the aggregate amount of all Principal
Liquidation Loss Amounts distributable to Certificateholders to the extent such
amounts have not been so previously distributed and (iii) on or after the Cross-
Over Date, the aggregate amount of all Principal Distribution Amounts
distributable to Certificateholders to the extent such amounts have not been so
previously distributed. See "The Certificates--Distributions of Principal."
Interest Shortfalls, to the extent not covered by Monthly Advances, Non-
Reimbursable Payments and amounts on deposit in the Collection Account will
adversely affect the yield on the Securities.
The Certificate Balance will be reduced to the extent that prior to the
Cross-Over Date distributions are not made in respect of the Principal Loss
Liquidation Amount and on or after the Cross-Over Date distributions are not
made in respect of the Principal Distribution Amount. As a result of such
reductions, less interest will accrue on the Certificates than would otherwise
be the case.
Generally, the excess of the amount of interest at the Contract Rate over
the amount of interest payable under such Contract and allocable to pay such
Contract's share of interest on the Securities and the Servicing Fee would be
available to cover losses on Defaulted Contracts. Because Monthly Advances and
Non-Reimbursable Payments are calculated at rates that are less than the
Contract Rate, in the event of such a payment, there will be less interest
available to cover losses on Defaulted Contracts. A similar result occurs when
CITSF purchases a Contract at the Purchase Price (as defined herein).
POOL FACTORS
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 Original 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.
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.
S-34
<PAGE>
On each Distribution Date or Payment Date, as the case may be, the related
Certificateholders [and 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] [Pooling
and Servicing Agreement], the Certificateholders will receive monthly reports
concerning the payments received on the Contracts, 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. Certificate Owners [and Note Owners] may receive such
reports, upon written request, together with a certification that they are
Certificate Owners [or Note Owners, as the case may be,] and payment of any
expenses associated with the distribution of such reports, from the Trustee [and
the Indenture Trustee] at the following addresses ______. See "Certain
Information Regarding the Securities--Statements to Securityholders" in the
Prospectus.
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 Trust 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,] [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 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 Supplement. 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 and the payment of the purchase price to CITCF-NY
for those Initial Contracts acquired by CITSF from CITCF-NY.
THE CIT GROUP/SALES FINANCING, INC., SERVICER
GENERAL
As of December 31, 1995, CITSF serviced for itself and others approximately
154,721 contracts (consisting primarily of recreational vehicle, home equity,
marine and manufactured housing contracts), representing an outstanding balance
of approximately $3.7 billion. Of this portfolio, approximately 52,126 contracts
(representing approximately $1.1 billion outstanding balance) consisted of
recreational vehicle contracts. CITSF entered into an agreement in 1996 to
service additional manufactured housing contracts for an unaffiliated third
party, which increased substantially the total number of contracts serviced by
CITSF.
SERVICING
The following table shows the composition of CITSF's servicing portfolio,
including recreational vehicle contracts serviced by CITSF on the dates
indicated:
S-35
<PAGE>
THE CIT GROUP/SALES FINANCING, INC.
CONTRACTS BEING SERVICED BY PRODUCT LINE
<TABLE>
<CAPTION>
AT DECEMBER 31, AT_______.
------------------------------------------------------------------------------------------------------------
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
(NUMBER) (DOLLARS) (NUMBER) (DOLLARS) (NUMBER) (DOLLARS) (NUMBER) (DOLLARS) (NUMBER) (DOLLARS)
(DOLLARS IN THOUSANDS)
<S> <C>
RV - Owned................ $ $ $ $ $
RV - Bulk Purchases.......
RV - Servicing Retained (1)
Total RV..................
Total MH..................
Home Equity...............
Other...................... _____ ____ ____ ____ ____ ____ ____ ____ ____ ____
Total Contracts Serviced... _____ $___ ____ $___ ____ $___ ____ $___ ____ $___
</TABLE>
========================
RV = Recreational Vehicle
MH = Manufactured Housing
(1) Represents contracts sold by CITSF in previous securitizations which CITSF
is servicing.
DELINQUENCY AND LOAN LOSS EXPERIENCE
The following Delinquency Experience and Loan Loss 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, 1995
and the _______ months ended __________ __, 199_ of the portfolio of
recreational vehicle contracts originated and serviced by CITSF, excluding
contracts acquired by CITSF through portfolio purchases and contracts in
repossession.
S-36
<PAGE>
DELINQUENCY EXPERIENCE
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
__ MONTHS
YEAR ENDED DECEMBER 31, ENDED _____
1992 1993 1994(3) 1995(3) 1996(3)
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
Number of Contracts.......
Principal Balance of
Contracts Serviced..... $ $ $ $ $
Principal Balance of
Delinquent Contracts(1):
30-59 Days............. $ $ $ $ $
60-89 Days.............
90 Days or More........ _____ ____ ____ ____ ____
Total Principal Balance
of Delinquent Contracts $ $ $ $ $
===== ===== ===== ===== ========
Delinquencies as a
Percent of Principal
Balances(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) Based on dollar percent delinquent.
(3) Includes Recreational Vehicle contracts sold by CITSF in previous
securitizations which CITSF is servicing.
The following table sets forth the loan loss experience for the four years
ended December 31, 1995 and on an annualized basis for the _____ months ended
_________ __, 199_, of the portfolio of recreational vehicle contracts
originated and serviced by CITSF, excluding contracts acquired by CITSF through
portfolio purchases. "Net Losses" are equal to the aggregate balance of all
contracts which are determined to be uncollectible in the period less any
recoveries and liquidation proceeds on contracts charged-off in the period or
any prior periods. Net Losses include expenses associated with outside
collection agencies. Other expenses associated with collection, repossession,
and disposition of the vehicle are excluded. These other expenses are not
material to the data presented.
LOAN LOSS EXPERIENCE
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------
1992 1993 1994(4) 1995(4) 1996(4)(5)
----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C>
Number of Contracts..............
Principal Balance of
Contracts Serviced.......... $ $ $ $ $
Net Losses:
Dollars(2).................. $ $ $ $ $
Percentage(3)............... % % % % %
</TABLE>
S-37
<PAGE>
Notes:
- --------------------
(1) As of period end and excludes contracts in repossession.
(2) The calculation of net loss includes all expenses of repossession and
liquidation.
(3) As a percentage of the principal balance of contracts as of period end.
(4) Includes Recreational Vehicle contracts sold by CITSF in previous
securitizations which CITSF is servicing.
(5) Annualized
The data presented in the foregoing tables is for illustrative purposes only.
Such data relates to the performance of CITSF's entire portfolio of installment
sale contracts secured by recreational vehicles and is not historical data
regarding solely the portion of CITSF's portfolio constituting the Contracts.
Most of CITSF's portfolio of installment sale contracts secured by recreational
vehicles was originated under CITSF's old underwriting guidelines. However, in
August 1994 CITSF adopted a risk-adjusted pricing policy and changed its credit
criteria and underwriting guidelines as described under "The CIT Group/Sales
Financing, Inc., Servicer--CITSF's Underwriting Guidelines" in the Prospectus.
In connection with this change, the minimum credit score for approval of a new
credit was reduced, in order to permit credit to be extended to less
creditworthy borrowers than under the credit criteria previously in effect. The
interest rates charged on recreational vehicle contracts originated since August
1994 reflect CITSF's evaluation of the relative risk associated with an
individual's application. It is expected that, in addition to the effects of
seasoning, the changes in CITSF's underwriting standards will 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 or most of the
Initial Contracts were originated and most Subsequent Contracts, if any, will be
originated under these new credit criteria adopted by CITSF in August 1994.
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, and no assurance can be given that the
delinquency and loan loss experience presented in the preceding tables will be
indicative of the experience on the Contracts.
S-38
<PAGE>
THE CERTIFICATES
The Certificates offered hereby will be issued pursuant to the [Trust
Agreement] [Pooling and Servicing Agreement], a form of which has been filed as
an exhibit to the Registration Statement of which this Prospectus Supplement 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] [Pooling
and Servicing Agreement].
GENERAL
The CIT RV Trust 199__-__ ___% Asset-Backed Certificates (the "Certificates")
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 ________, between the Seller and the Owner Trustee
(the "Trust Agreement")] [the Pooling and Servicing Agreement], a form of which
will be filed as an exhibit to the Registration Statement of which this
Prospectus Supplement forms a part. A copy of the [Trust Agreement] [Pooling and
Servicing 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 limited
extent described herein. The following summary describes certain terms of the
Certificates and the [Trust Agreement] [Pooling and Servicing 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] [Pooling and Servicing Agreement]. Where particular provisions
or terms used in the [Trust Agreement] [Pooling and Servicing 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 in excess thereof and will be available
in book-entry form only[; provided, however, that one Certificate may be issued
in a denomination other than an integral multiple of $1,000 such that the
Affiliated Purchaser may be issued at least 1% of the Original Certificate
Balance]. The Certificates will initially be represented by a single Certificate
registered in the name of the nominee of DTC, 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 Certificates through the facilities of
DTC (a "Certificate Owner") will be entitled to receive a Definitive Certificate
representing such person's interest in the Certificates, except as set forth
under "Certain Information Regarding The Securities--Definitive Securities" in
the Prospectus. Unless and until Definitive Certificates are issued under the
limited circumstances described herein and in the Prospectus, 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" in the Prospectus and Annex I hereto.
Payments of interest and principal on the Certificates 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 ___________. 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 _________
and will end on and include _________. 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, at the close of business of 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 states of New York, [_________] or Oklahoma are authorized or required by
law, regulation or executive order to be closed.
DISTRIBUTION OF INTEREST
The Certificates will bear interest at the rate of ____% per annum (the "Pass-
Through Rate"). The period for which interest is payable on a Distribution Date
on the Securities shall be the one-month period from the most recent
Distribution Date to but excluding the following Distribution Date, or in the
case of the initial Distribution Date from
S-39
<PAGE>
_________ to but excluding the initial Distribution Date (each, an "Interest
Accrual Period"). Interest on the Certificate Balance will accrue during the
related Interest Accrual Period at the Pass-Through Rate. Interest accruing
during the related Interest Accrual Period (computed on the basis of a 360-day
year consisting of twelve 30-day months) will be paid to the Certificateholders
of record on the related Record Date, on each Distribution Date, to the extent
of the Available Amount on such Distribution Date (i) in an amount equal to one-
twelfth of the product of the Pass-Through Rate and the Certificate Balance, as
of the preceding Distribution Date (after giving effect to distributions of
principal and interest to be made on such Distribution Date) or (ii) in the case
of the first Distribution Date, in an amount equal to interest accruing at the
Pass-Through Rate from ___________ to but excluding the first Distribution Date,
on the Original Certificate Balance (the "Certificate Interest Distribution
Amount"). Interest accrued as of any Distribution Date but not paid on such
Distribution Date will be due on the next Distribution Date. [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.] [Interest to Certificateholders may be provided from
payments from the Cash Collateral Account, to the extent of the Available Cash
Collateral Amount, in the event there are not sufficient funds (after payment of
the Servicer Payment to the Servicer and interest and principal on the Notes) to
make such payments from payments made by or on behalf of the Obligors or in
respect of the Contracts, including Monthly Advances and Non-Reimbursable
Payments made by the Servicer.]
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 on and after the Cross-Over Date, principal of the
Certificates will be payable, subject to the remaining Available Amount [and the
Available Cash Collateral Amount], in an amount equal to the Principal
Distribution Amount for the related Due Period. Such principal payments will be
funded to the extent of the Available Amount remaining after the Servicer 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
[or, to the extent such Available Amount is insufficient, will be funded through
a payment from the Cash Collateral Account to the extent of the Available Cash
Collateral Amount.] [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 to the extent described herein.]
The principal balance of the Certificates, to the extent not previously paid,
will be due on the Certificate Final Scheduled Distribution Date. The actual
date on which the aggregate outstanding principal amount of the Certificates is
paid may be earlier than the Certificate 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, subject to the remaining Available Amount [and the
Available Cash Collateral Amount], the Principal Liquidation Loss Amount for
such Distribution Date. Such principal payments will be funded to the extent of
the Available Amount remaining after the Servicer has been paid the Servicer
Payment, [the principal and interest due on the Notes has been paid and] the
interest on the Certificates has been paid, [or to the extent such remaining
Available Amount is insufficient, will be funded through a payment from the Cash
Collateral Account to the extent of the Available Cash Collateral Amount]. 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. See
"Enhancement Subordination of Certificates."
REDEMPTION
[The Certificates will be redeemed in part, on a pro rata basis, on the
Distribution Date on or immediately following the last day of the Funding Period
in the event that any portion of the Pre-Funded Amount remains on deposit
S-40
<PAGE>
in the Pre-Funding Account after giving effect to the purchase of all Subsequent
Contracts, including any such purchase on such date. The aggregate principal
amount of the Certificates to be redeemed will be an amount equal to the Pre-
Funded Percentage allocable to the Certificates of the amount then on deposit in
the Pre-Funding Account.]
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 as of the last day of the related Due Period is [10]% or
less of the Initial Pool Balance (as defined herein). 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 on which the Pool Balance
as of the last day of the related Due Period is [5]% or less of the Initial Pool
Balance. 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.
[If an Insolvency Event with respect to the Affiliated Purchaser occurs, the
Indenture Trustee (or, if no Notes are outstanding, the Owner 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 net proceeds from any such sale, disposition or liquidation
of the Contracts (after payment of the Servicer Payment) will be treated as
collections on the Contracts and deposited in the Collection Account.
Distributions will be made first, to the payment of the Servicer Payment, second
to the payment of interest and principal on the Notes and third, to the payment
of interest and principal on the Certificates. If the net proceeds from the
liquidation of the Contracts (after payment of the Servicer Payment) and any
amounts on deposit in the Note Distribution Account and the Certificate
Distribution Account are not sufficient to pay the principal amount of and
accrued interest on the Notes and Certificates in full, the amount of principal
returned to the Certificateholders will be reduced and such Certificateholders
will incur a loss, except to the extent of payments, subject to the Available
Cash Collateral Amount, made to the Certificateholders from the Cash Collateral
Account.]
[THE NOTES]
GENERAL
The CIT RV Trust 199__-__ Class A ____% Asset-Backed Notes (the "Notes" and,
together with the Certificates, the "Securities") will represent obligations of
the Trust secured by the assets of the Trust (other than the Certificate
Distribution Account [and the Cash Collateral Account]). The Trust will issue
$____ aggregate principal amount of Notes pursuant to the terms of an Indenture,
to be dated as of __________ (as amended and supplemented from time to time, the
"Indenture") between the ______________________, as trustee (the "Indenture
Trustee"), a form of which will be filed as an exhibit to the Registration
Statement of which this Prospectus Supplement 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 issued in minimum denominations of $1,000 and integral
multiples of $1,000 in excess thereof and will be available in book-entry form
only. The Notes will initially be represented by a single Note registered in the
name of Cede, the nominee of DTC. 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 under
"Certain Information Regarding the Securities Definitive Securities" in the
Prospectus, and such persons will hold their interests in the Notes through DTC
in the United States or Cedel Bank, society anonyme ("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,
S-41
<PAGE>
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" in the Prospectus
and Annex I hereto.
Payments of interest and principal on the Notes with respect to each Due
Period will be made on each Distribution Date, commencing __________. 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.
PAYMENTS OF INTEREST
The Notes will bear interest at the rate of ____% per annum (the "Interest
Rate"). Interest accruing during the related Interest Accrual Period (computed
on the basis of a 360-day year consisting of twelve 30-day months) will be paid
to the Noteholders of record on the related Record Date, on each Distribution
Date, to the extent of the Available Amount on such Distribution Date (i) in an
amount equal to one-twelfth of the product of the Interest Rate and the
outstanding principal balance on the Notes, as of the preceding Distribution
Date (after giving effect to distributions of principal and interest to be made
on such Distribution Date) or (ii) in the case of the first Distribution Date,
in an amount equal to interest accruing at the Interest Rate from _________ to
but excluding the first Distribution Date, on the outstanding principal balance
of the Notes as of the Closing Date (the "Note Interest Distribution Amount").
Interest accrued as of any Distribution Date but not paid on such Distribution
Date will be due on the next Distribution Date.
PAYMENTS OF PRINCIPAL
Principal payments will be made to the Noteholders on each Distribution Date
to the extent of the remaining Available Amount in an amount equal to the
Principal Distribution Amount. The "Principal Distribution Amount" on each
Distribution Date is equal to the difference between (i) the sum of (x) 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 Principal Balance),
and (y) the amount on deposit in the Pre-Funding Account (exclusive of
investment earnings) on the last day of the second preceding Due Period (or, in
the case of the first Distribution Date, as of the Closing Date), less (ii) the
sum of (x) the Pool Balance on the last day of the preceding Due Period and (y)
the amount on deposit in the Pre-Funding Account (exclusive of investment
earnings) on the last day of the preceding Due Period; provided, however, that
the Principal Distribution Amount on the Note 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. 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. With respect to any Due Period, a "Defaulted Contract"
means any Contract (except for a Repurchased Contract) in respect of which (a)
payments exceeding $__ in the aggregate were delinquent 180 days or more as of
the last day of such Due Period or (b) the Servicer has determined that eventual
payment in full is unlikely and has repossessed and liquidated the related
Financed Vehicle within such 180-day period; provided, however, that a Paid-
Ahead Contract and a Contract which is delinquent due to the Soldiers and
Sailors' Relief Act shall not be deemed delinquent.
No principal will be paid in respect of the Notes until the Servicer Payment
has been paid and until the entire Note Interest Distribution Amount has been
paid for the related Distribution Date. The "Servicer Payment" is equal on each
Distribution Date to the sum of the reimbursement then due to the Servicer for
outstanding Monthly Advances and the Servicing Fee (including any unpaid
Servicing Fees for past Distribution Dates). The principal balance of the
Notes, to the extent not previously paid, will be due on the Note Final
Scheduled Distribution Date. The actual date on which the aggregate outstanding
principal amount of the Notes is paid may be earlier than the Note Final
Scheduled Distribution Date based on a variety of factors.
On each Determination Date, the Servicer will determine the amount in the
Collection Account available for distribution on the related Distribution Date
and inform the Indenture Trustee, who shall allocate such amounts between the
Notes and the Certificates and make distributions to Securityholders, all as
described under "The Purchase
S-42
<PAGE>
Agreements and The Trust Documents--Distributions" in the Prospectus. The unpaid
principal balance of the Notes will be payable on the Note Final Scheduled
Distribution Date.
REDEMPTION
[The Notes will be redeemed in part, on a pro rata basis, on the Distribution
Date on or immediately following the last day of the Funding Period in the event
that any portion of the Pre-Funded 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. The aggregate principal amount of the
Notes to be redeemed will be an amount equal to the Pre-Funded Percentage
allocable to the Notes of 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 and unpaid interest thereon at
the Interest 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 as
of the last day of the related Due Period is [10]% or less of the Initial Pool
Balance. An "Auction Sale" may occur, and may result in the sale of the
Contracts remaining in the Trust, within ten days following any Distribution
Date on which the Pool Balance as of the last day of the related Due Period is
[5]% or less of the Initial Pool Balance.
Upon the occurrence of an Event of Default under the Indenture, the assets of
the Trust may be sold which may result in early retirement of the Notes. If the
net proceeds from the liquidation of the Contracts (after payment of the
Servicer Payment) and any amounts on deposit in the Note Distribution Account
are not sufficient to pay the principal amount of and accrued interest on the
Notes in full, holders of the Notes will incur a loss. See "The Notes-The
Indenture-Events of Default; Rights Upon Event of Default" in the Prospectus.
[Upon the occurrence of an Insolvency Event with respect to the Affiliated
Purchaser, the Trust shall be terminated and the assets of the Trust will be
sold (unless, within ninety days after such occurrence, the Owner Trustee shall
have received written instructions from (a) each of the Certificateholders
(other than the Affiliated Purchaser) and (b) each of the Noteholders, to the
effect that each such party disapproves of the liquidation of the Contracts and
termination of the Trust). Distributions will be made first, to the payment of
the Servicer Payment, second, to the payment of interest and principal on the
Notes and third, to the payment of interest and principal on the Certificates.
If the net proceeds from the liquidation of the Contracts (after payment of the
Servicer Payment) and any amounts on deposit in the Note Distribution Account
are not sufficient to pay the principal amount of and accrued interest on the
Notes in full, holders of the Notes will incur a loss.
ENHANCEMENT
[Subordination of Certificates. The rights of Certificateholders 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 in respect of (i) interest until the full amount of
interest and principal on the Notes payable on such Distribution Date has been
distributed to the Noteholders, [other than payments from the Cash Collateral
Account] and (ii) principal until the Notes have been paid in full, other than
distributions in respect of the Principal Liquidation Loss Amount.]
[Cash Collateral Account. The only credit enhancement for the Certificates
is the Cash Collateral Account. With respect to any Distribution Date, the
amount available to be withdrawn from the Cash Collateral Account as payment to
the Certificateholders will not exceed the Available Cash Collateral Amount. The
Available Cash Collateral Amount will be reduced by payments from the Cash
Collateral Account required to be made to the Cash Collateral Depositor pursuant
to the Cash Collateral Agreement and payments previously made therefrom to
Certificateholders and generally will be reduced as the Pool Balance is reduced.
At any time that the Available Cash Collateral Amount is zero, holders of
Certificates will bear the risk of all liquidation losses on the Defaulted
Contracts and may suffer a loss. The Certificate Balance will be reduced to the
extent that prior to the Cross-Over Date distributions are not made in
S-43
<PAGE>
respect of the Principal Loss Liquidation Amount and on or after the Cross-Over
Date distributions are not made in respect of the Principal Distribution Amount.
As a result of such reductions, less interest will accrue on the Certificates
than would otherwise be the case.]
On the Closing Date, the Cash Collateral Account will be established pursuant
to the [Sale and Servicing Agreement] [Pooling and Servicing Agreement]. The
[Owner] Trustee will have the right to withdraw or cause to be withdrawn
payments from the Cash Collateral Account under certain circumstances specified
below. The Cash Collateral Account will be funded on the Closing Date in the
amount of $_________ (the "Initial Cash Collateral Amount") from the proceeds of
a loan (the "Loan") by the Cash Collateral Depositor pursuant to a Cash
Collateral Agreement among the Cash Collateral Depositor, the Trust and the
Servicer (the "Cash Collateral Agreement"). The Cash Collateral Depositor's
only recourse against the Trust for repayment of the Loan is from the Cash
Collateral Account Surplus (as defined herein), certain investment earnings on
funds deposited in the Cash Collateral Account and payments from the Cash
Collateral Account upon maturity of the Loan, in each case as set forth in the
Cash Collateral Agreement.
The Cash Collateral Account will be an Eligible Account (as defined in the
Prospectus). Funds on deposit in the Cash Collateral Account will be invested
in certain investments which satisfy the criteria established by each of the
Ratings Agencies. It is expected that such funds will be invested in debt
obligations of the Cash Collateral Depositor or its affiliates so long as such
obligations satisfy the criteria established by the Rating Agencies. The Cash
Collateral Account and any amounts therein shall be held by or on behalf of the
[Owner] Trustee in accordance with the [Sale and Servicing Agreement] [Pooling
and Servicing Agreement] and the Cash Collateral Agreement for the benefit of
the Certificateholders and the Trust, and as provided in the [Sale and Servicing
Agreement] [Pooling and Servicing Agreement] and the Cash Collateral Agreement.
The Cash Collateral Account will be terminated following the earlier to occur
of (a) the date on which the Certificates are paid in full and any funds
remaining therein have been paid to the Cash Collateral Depositor [or the
Affiliated Purchaser] or (b) the Certificate Final Scheduled Distribution Date.
On each Distribution Date, the amount available to be withdrawn from the Cash
Collateral Account for the benefit of the Certificateholders (the "Available
Cash Collateral Amount") will be equal to the lesser of (i) the Required Cash
Collateral Amount and (ii) the amount on deposit in the Cash Collateral
Account, exclusive of interest and earnings thereon and any investment losses
and expenses and before giving effect to any deposit to be made to the Cash
Collateral Account on such Distribution Date.
On each Determination Date, the Servicer will determine the amounts, if any,
required to be withdrawn from the Cash Collateral Account, up to the Available
Cash Collateral Amount, on the related Distribution Date for payment to the
Certificateholders. The [Owner] Trustee will withdraw or cause to be withdrawn
such amount from the Cash Collateral Account and will deposit or cause to be
deposited such amount into the Certificate Distribution Account on the Business
Day before the Distribution Date with respect to which such withdrawal was made.
On each Distribution Date, the Servicer will deposit Excess Collections into
the Cash Collateral Account in an amount sufficient to increase the amount on
deposit in the Cash Collateral Account to the Required Cash Collateral Amount
and to make payments of principal and interest on the Loan as required by the
Cash Collateral Agreement. Excess Collections, if any, not so required to be
deposited in the Cash Collateral Account will be paid to [the Affiliated
Purchaser]. On each Distribution Date, the [Owner] Trustee will withdraw or
cause to be withdrawn from the Cash Collateral Account an amount equal to the
amount by which the Available Cash Collateral Amount (after taking into account
any deposits to and withdrawals from the Cash Collateral Account pursuant to the
[Sale and Servicing Agreement] [Pooling and Servicing Agreement] on such
Distribution Date) exceeds the Required Cash Collateral Amount for the next
Distribution Date (the "Cash Collateral Account Surplus") and pay such amount,
to the extent required to make payments of principal and interest on the Loan,
to the Cash Collateral Depositor. Any such amounts paid to the Cash Collateral
Depositor will not be available for distribution to Certificateholders. On each
Distribution Date, the [Owner] Trustee will withdraw from the Cash Collateral
Account and pay to [the Affiliated Purchaser] the balance, if any, of the Cash
Collateral Account Surplus.
In the event that the Certificates are outstanding on the Certificate Final
Scheduled Distribution Date (after taking into account distributions on such
date), the [Owner] Trustee will withdraw or cause to be withdrawn from the Cash
Collateral Account an amount equal to the Certificate Balance, and will
distribute such amount to the
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Certificateholders in retirement of the Certificates, to the extent funds are
available therefor in the Cash Collateral Account.
The Required Cash Collateral Amount with respect to any Distribution Date will
equal ____% of the Pool Balance as of the first day of the related Due Period,
but in no event less than $_________. If, with respect to any Distribution
Date, (a) the average of the principal balance of Contracts _____ days or more
delinquent (including Contracts relating to Financed Vehicles that have been
repossessed) as a percentage of the Pool Balance for the _____ preceding Due
Periods exceeds ____% or (b) the average of the principal balances of all
Contracts which became Defaulted Contracts, less any net liquidation proceeds on
Defaulted Contracts, expressed as an annualized percentage of the average
outstanding Pool Balance of the _____ preceding Due Periods exceeds ____%, then
the Required Cash Collateral Amount with respect to such Distribution Date shall
be ____% of the Pool Balance as of the first day of the related Due Period, but
in no event (i) less than $_________ or (ii) greater than $_________; provided
further that the Required Cash Collateral Amount shall never be greater than the
outstanding balance of Certificates and may be reduced from time to time if the
Rating Agencies shall have given prior written notice to the Seller, the
Servicer and the Issuer that such reduction will not result in a downgrade or
withdrawal of the then current rating of the Notes and the Certificates.
"Excess Collections" for any Distribution Date will equal the amounts
collected or deposited in respect of the Contracts in the related Due Period and
which are remaining in the Collection Account on such Distribution Date after
taking into account distributions to be made on the Securities and payments and
reimbursements made to the Servicer on such Distribution Date.]
[Reserve Fund. An account (the "Reserve Fund") will be established and funded
by [cash, one or more irrevocable letters of credit, Eligible Investments, one
or more derivative products, amounts otherwise distributable to one or more
classes of Securityholders or to the owners of any Retained Yield (as defined
herein).] [The Reserve Fund will be funded from the Available Amount remaining
on each Distribution Date after all amounts then due have been paid to the
Certificateholders, the Noteholders, if any, the Servicer and any provider of
Enhancement.] [In addition, under certain circumstances the remaining amount of
the Letter of Credit may be drawn by the Trustee or the termination payment
under a derivative product may be demanded by the Trustee, and in each case
deposited in the Reserve Fund.] Funds in the Reserve Fund will be applied,
invested and maintained in the following manner: __________. [Amounts in the
Reserve Fund will be distributed to Securityholders, or applied to reimburse the
Servicer for outstanding advances.] The Reserve Fund will be [established as
part of the Trust] [held outside the Trust] [by a collateral agent] [by the
Trustee].]
[Limited Guarantee. [Certain payments on a class of the Securities of a
series] [Certain deficiencies in principal or interest payments on the
Contracts] [Certain liquidation losses on the Contracts] will be covered by the
limited guarantee (the "Limited Guarantee"), issued by CIT. [CIT will be
obligated to make deposits to an account, make advances or purchase Defaulted
Contracts.] The Limited Guarantee is limited to ___________ and will be
separately allocated to ___________.]
[Credit Facility. [The Securities will be entitled to the benefit of [one or
more letters of credit, guarantees, limited guarantees, surety bonds or similar
credit facilities] (the "Credit Facility"). [The Credit Facility is an amount
equal to $_______]. [The Credit Facility will be held [by the Trustee] [as part
of the Trust] [by a collateral agent]. The provider of the Credit Facility (the
"Credit Facility Provider") is ___________.]
[Liquidity Facility. _____________ (the "Liquidity Facility Provider") will
provide funds to be used to purchase the Securities pursuant to purchase
agreements (the "Liquidity Facility"). The Liquidity Facility will be held
outside of the Trust by the Trustee.]
THE PURCHASE AGREEMENTS AND THE TRUST DOCUMENTS
DISTRIBUTIONS
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) will
be paid to the Servicer;
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(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 Note Interest Distribution Amount, including any overdue Note
Interest Distribution Amount, will be deposited into the Note Distribution
Account, for payment to the Noteholders;
(d) on and 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, 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) on and after the Cross-Over Date, the Principal Distribution
Amount, including any overdue Principal Distribution Amount, will be
deposited into the Certificate Distribution Account, for payment to the
Certificateholders;
(h) an amount equal to the sum of (i) the difference between the
Available Cash Collateral Amount and the Required Cash Collateral Amount,
to the extent the Available Cash Collateral Amount is less than the
Required Cash Collateral Amount and (ii) the amount necessary to make
payments of principal and interest on the Loan, to the extent required by
the [Sale and Servicing Agreement] [Pooling and Servicing Agreement] and
the Cash Collateral Agreement, will be deposited into the Cash Collateral
Account; and
(i) the balance, if any, will be distributed to [the Affiliated
Purchaser].
To the extent that the Available Amount is insufficient to satisfy the
distributions set forth in clauses (e), (f) or (g) above on any Distribution
Date, the [Owner] Trustee will withdraw or cause to be withdrawn from the Cash
Collateral Account, to the extent available, the difference between the
aggregate amounts described in clauses (e), (f) and (g) and the Available Amount
remaining after payment of the amounts described in clauses (a), (b), (c) and
(d). Any amount so withdrawn from the Cash Collateral Account by or on behalf of
the [Owner] Trustee will be deposited into the Certificate Distribution Account
for distribution to the Certificateholders.
[The Affiliated Purchaser may at any time, without consent of the
Securityholders, sell, transfer, convey or assign in any manner its rights to
receive the distributions to be made pursuant to clause (i) above provided that
(i) the Rating Agency Condition is satisfied, (ii) the Affiliated Purchaser
provides to the Trustees an opinion of counsel from independent counsel that
such action will not cause the related Trust to be classified as an association
(or publicly traded partnership) taxable as a corporation for federal income tax
purposes and (iii) such transferee or assignee agrees in writing to take
positions for federal income tax purposes consistent with the federal income tax
positions agreed to be taken by the Affiliated Purchaser.]
SERVICING COMPENSATION
The Servicer will be entitled to receive, out of collections on the
Contracts, a monthly fee (the "Servicing Fee") for each Due Period, payable on
the following Distribution Date, equal to the sum of (i) one-twelfth of the
product of [0.75]% (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) and (ii) any investment
earnings (net of investment expenses and losses) on amounts on deposit in the
Collection Account, the Note Distribution Account and the Certificate
Distribution Account; provided, however, that the Servicing Fee Rate shall be
[_____%] [a rate determined at the time of the appointment of a successor
Servicer but not to exceed _____%] if CITSF or an affiliate thereof is not the
Servicer.
TERMINATION
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In order to avoid excessive administrative expenses, CITSF will be
permitted at its option to purchase from the Trust, on any Distribution Date on
which the Pool Balance as of the last day of the related Due Period is [10]% or
less of the Initial Pool Balance, all remaining related 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). Exercise of such right will effect early retirement
of the Securities. Unless otherwise specified in the related Prospectus
Supplement, 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. See "The Purchase Agreements and The Trust Documents Termination" in
the Prospectus.
Within ten days after the first Distribution Date on which the Pool Balance
as of the last day of the related Due Period is [5]% or less of the Initial Pool
Balance, the Indenture Trustee (or, if the Notes have been paid in full and the
Indenture has been discharged in accordance with its terms, the Owner 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 Due Period. Any purchaser of the Contracts must agree to the
continuation of CITSF as Servicer on terms substantially similar to those in the
Trust Documents. Any such sale will effect early retirement of the Securities.
See "The Certificates Redemption," "The NotesNRedemption" and "The Purchase
Agreements and The Trust Documents Termination" in the Prospectus.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
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 Documents 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.
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).
On April 15, 1996, the IRS issued proposed Treasury Regulations that would
revise the procedures for securing an exemption from the 30% United States
Federal withholding tax (the "Proposed Regulations"). If adopted in final form,
the Proposed Regulations would apply to payments made after December 31, 1997,
and would replace current IRS Forms W-8, 1001 and 4224 with a single form which
would be called a Form W-8. The Proposed Regulations would also provide certain
alternative means for qualifying for interest withholding exemptions.
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 non-exempt 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.
If the Proposed Regulations are adopted in final form, certain corporate
holders of Notes would be required to provide documentation to payors that
indices or certifies the holders' corporate status (and therefore its exemption
from information reporting and backup withholding).
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. In certain instances, however, the Trust
could have an obligation to make payments of withholding tax on behalf of a
Certificateholder. See "--Backup Withholding" and "--Tax Consequences to Foreign
Owners of Certificates." 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 Accrual Period based on the Certificate Rate;
(ii) an amount equivalent to interest that accrues during such Interest Accrual
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 Pass-Through Rate or may be allocated income greater
than the amount of cash distributed to them.
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 ($176,956 for taxable years
beginning in 1996, 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 adjusted 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 be treated
as ordinary income to the holder and would give rise to special tax reporting
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-1. The Trust will provide the Schedule K-1 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 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.
Tax Consequences to Foreign Owners of Certificates. As discussed below, an
investment in a Certificate is not suitable for any non-U.S. person which is not
eligible for a complete exemption from U.S. withholding tax on interest under a
tax treaty with the United States. Accordingly, no interest in a Certificate
should be acquired by or on behalf of any such non-U.S. person.
No regulations, published rulings or judicial decisions exist that would
discuss the characterization for Federal withholding tax purposes with respect
to non-U.S. persons of a partnership with activities substantially the same as
the Trust. However, it is not expected that the trust would be considered to be
engaged in a trade or business in the United States for purposes of Federal
withholding taxes with respect to non-U.S. persons. If the Trust were considered
to be engaged in a trade or business in the United States for such purposes, the
income of the Trust distributable to a non-U.S. person would be subject to
Federal withholding tax at a rate of 35% for persons taxable as a corporation
and 39.6% for all other non-U.S. persons. Also, in such cases, a non-U.S. owner
of a Certificate that is a corporation may be subject to the branch profits tax.
If the Trust is notified that an owner of a Certificate is a foreign person, the
Trust may withhold as if it were engaged in a trade or business in the United
States in order to protect the Trust from possible adverse consequences of a
failure to withhold. Subsequent adoption of Treasury regulations or the issuance
of other administrative pronouncements may require the Trust to change its
withholding procedures.
Each foreign owner of a Certificate might be required to file a U.S.
individual or corporate income tax return (including in the case of a
corporation, the branch profits tax) on its share of the Trust's income. Each
foreign owner of a Certificate must obtain a taxpayer identification number from
the IRS and submit that number to the withholding agent on Form W-8 in order to
assure appropriate crediting of any taxes withheld. A foreign owner of a
Certificate generally would be entitled to file with the IRS a claim for refund
with respect to withheld taxes, taking the position that no taxes were due
because the Trust was not engaged in a U.S. trade or business. However, interest
payments made to (or accrued by) an owner of a Certificate who is a foreign
person may be considered guaranteed payments to the extent such payments are
determined without regard to the income of the Trust and for that reason or
because of the nature of the Contracts, the interest will likely not be
considered "portfolio interest." As a result, even if the Trust is not
considered to be engaged in a U.S. trade or business, foreign owners of
Certificates will likely be subject to United States Federal income tax which
must be withheld at a rate of 30 percent on their share of the Trust's income
(without reduction for interest expense), unless reduced or eliminated pursuant
to an applicable income tax treaty. If the Trust is notified that an owner of a
Certificate is a foreign person, the Trust may be required to withhold and pay
over such tax, which can exceed the amounts otherwise available for distribution
to such owner. A foreign owner would generally be entitled to file with the IRS
a refund claim for such withheld taxes, taking the position that the interest
was portfolio interest and therefore not subject to U.S. tax. However, the IRS
may disagree and no assurance can be given as to the appropriate amount of tax
liability. As a result, each potential foreign owner of a Certificate should
consult its tax advisor as to whether the tax consequences of holding an
interest in a Certificate make it an unsuitable investment. For additional
information concerning proposed regulations which would modify the procedures
that a beneficial owner of Certificate must comply with to avoid United States
withholding tax on payments to such owner, see the discussion above under
"Certain Federal Tax Consequences with Respect to the Notes--Foreign Holders."
[ORIGINAL ISSUE DISCOUNT]
The Class __ Certificates will be issued with original issue discount for
federal income tax purposes. The Class __ Certificates may be issued at a
premium. For purposes of determining the amount and rate of accrual of original
issue discount and market discount, the Company intends to assume that there
will be prepayments on the Contracts at a rate equal to __% CPR. No
representation is made as to whether the Contracts will prepay at that rate or
any other rate. See "Yield and Prepayment Considerations" herein and "Certain
Federal Income Tax Consequences" in the Prospectus. If the holders of the Class
__ Certificates are treated as holding such Certificates at a premium, such
holders should consult their tax advisors regarding the election to amortize
bond premium and the method to be employed.
PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in the Underwriting Agreement
(the "Underwriting Agreement") among CITSF, the Company and __________ 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 Certificates [and the Notes] offered hereby, as set
forth opposite their respective names below:
PRINCIPAL AMOUNT PRINCIPAL AMOUNT
OF NOTES OF CERTIFICATES
--------------- -----------------
________ $ $
________ $______________ $_______________
Total........................ $ $
============== ===============
The Underwriting Agreement provides that the obligation of the
Underwriters to pay for and accept delivery of the Certificates [or Notes] is
subject to the approval of certain legal matters by their counsel and to certain
other conditions. The Underwriters are obligated to take and pay for all of the
Certificates [and Notes] if any are taken.
The Underwriters have advised the Company that they propose to offer
the Certificates [and Notes] directly to the public at the public offering price
set forth on the cover page hereof and to certain dealers at a price that
represents a concession not in excess of ____% of the principal balance of the
Certificates and [not in excess of ___% of the principal amount of the Notes].
The Underwriters may allow, and such dealers may reallow, a concession not in
excess of ____% of the principal balance of the Certificates and [not in excess
of ____% of the principal amount of the Notes]
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to certain other dealers. After the initial public offering, the public offering
price and concessions and discounts to dealers may be changed by the
Underwriters.
CITSF has agreed to indemnify the Underwriters against certain
liabilities, including civil liabilities under the Securities Act or to
contribute to payments which the Underwriters may be required to make in respect
thereof.
The Trust may, from time to time, invest the funds of the Trust in
Eligible Investments acquired from the Underwriters.
[The closing of the sale of the Notes is conditioned on the closing of
the sale of the Certificates, and the closing of the sale of the Certificates is
conditioned on the closing of the sale of the Notes.]
RATINGS
It is a condition to the issuance of the Securities that the
Securities be rated ____ by _________ and ____ by ________ (each, a "Rating
Agency"). [The ratings of the Notes will be based primarily on the value of the
Initial Contracts, the Pre-Funding Account, and the terms of the Securities,
including the subordination provided by the Certificates. The ratings of the
Certificates will be based primarily on the Cash Collateral Account.] 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 Securities 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, for the Trust by Richards, Layton & Finger,
Wilmington, Delaware, and for the Underwriters by _____________________. The
material federal income tax consequences of the Securities will be passed upon
for the Company by Schulte Roth & Zabel. [Certain legal matters will be passed
upon for CIT by its Executive Vice President and General Counsel, Ernest Stein,
Esq.]
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ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX
DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Notes of
CIT RV Trust 199__-__ (the "Global Securities") will be available only in book-
entry form. Investors in the Global Securities may hold such Global Securities
through any of DTC, Cedel or Euroclear. The Global Securities will be tradable
as home market instruments in both the European and U.S. domestic markets.
Initial settlement and all secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities
through Cedel and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Notes will be effected on a delivery-against payment basis
through the respective Depositories of Cedel and Euroclear (in such capacity)
and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be
subject to U.S. withholding taxes unless such holders meet certain requirements
and deliver appropriate U.S. tax documents to the securities clearing
organizations or their Participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the
name of Cede as nominee of DTC. Investors' interests in the Global Securities
will be represented through financial institutions acting on their behalf as
direct and indirect Participants in DTC. As a result, Cedel and Euroclear will
hold positions on behalf of their Participants through their respective
Depositories, which in turn will hold such positions in accounts as DTC
Participants.
Investors electing to hold their Global Securities through DTC will
follow the settlement practices specified by the Underwriters. Investor
securities custody accounts will be credited with their holdings against payment
in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global securities
and no "lock-up" or restricted period. Global Securities will be credited to the
securities custody accounts on the settlement date against payment in same-day
funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important
to establish at the time of the trade where both the purchaser's and seller's
accounts are located to insure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled in same-day funds.
Trading between Cedel and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC Seller and Cedel or Euroclear Purchaser. When
Global Securities are to be transferred from the account of a DTC Participant to
the account of a Cedel Participant or a Euroclear Participant, the purchaser
will send instructions to Cedel or Euroclear through a Cedel Participant or
Euroclear Participant at least one business day prior to settlement. Cedel or
Euroclear will instruct the respective Depository, as the case may be, to
receive the Global Securities against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon payment date
to and excluding the settlement date, on the basis of the actual number of days
in such accrual period and year assumed to consist of 360 days. For transactions
settling on the 31st of the month, payment will
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include interest accrued to and excluding the first day of the following month.
Payment will then be made by the respective Depository of the DTC Participant's
account against delivery of the Global Securities. After settlement has been
completed, the Global Securities will be credited to the respective clearing
system and by the clearing system, in accordance with its usual procedures, to
the Cedel Participant's or Euroclear Participant's account. The securities
credit will appear the next day (European time) and the cash debt will be back-
valued to, and the interest on the Global Securities will accrue from, the value
date (which would be the preceding day when settlement occurred in New York). If
settlement is not completed on the intended value date (i.e., the trade fails),
the Cedel or Euroclear cash debt will be valued instead as of the actual
settlement date.
Cedel Participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to preposition
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Cedel or Euroclear. Under this
approach, they may take on credit exposure to Cedel or Euroclear until the
Global Securities are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit
to them, Cedel Participants or Euroclear Participants can elect not to
preposition funds and allow that credit line to be drawn upon the finance
settlement. Under this procedure, Cedel Participants or Euroclear Participants
purchasing Global Securities would incur overdraft charges for one day, assuming
they cleared the overdraft when the Global Securities were credited to their
accounts. However, interest on the Global Securities would accrue from the value
date. Therefore, in many cases the investment income on the Global Securities
earned during that one-day period may substantially reduce or offset the amount
of such overdraft charges, although this result will depend on each Cedel
Participant's or Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours,
DTC Participants can employ their usual procedures for sending Global Securities
to the respective European Depository for the benefit of Cedel Participants or
Euroclear Participants. The sale proceeds will be available to the DTC seller on
the settlement date. Thus, to the DTC Participants a cross-market transaction
will settle no differently than a trade between two DTC Participants.
Trading between Cedel or Euroclear Seller and DTC Purchaser. Due to
time zone differences in their favor, Cedel Participants and Euroclear
Participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing system,
through the respective Depository, to a DTC Participant. The seller will send
instructions to Cedel or Euroclear through a Cedel Participant or Euroclear
Participant at least one business day prior to settlement. In these cases Cedel
or Euroclear will instruct the respective Depository, as appropriate, to deliver
the Global Securities to the DTC Participant's account against payment. Payment
will include interest accrued on the Global Securities from and including the
last payment to and excluding the settlement date on the basis of the actual
number of days in such accrual period and a year assumed to consist of 360 days.
For transactions settling on the 31st of the month, payment will include
interest accrued to and excluding the first day of the following month. The
payment will then be reflected in the account of the Cedel Participant or
Euroclear Participant the following day, and receipt of the cash proceeds in the
Cedel Participant's or Euroclear Participant's account would be back-valued to
the value date (which would be the preceding day, when settlement occurred in
New York). Should the Cedel Participant or Euroclear Participant have a line of
credit with its respective clearing system and elect to be in debt in
anticipation of receipt of the sale proceeds in its account, the back-valuation
will extinguish any overdraft incurred over that one-day period. If settlement
is not completed on the intended value date (i.e., the trade fails), receipt of
the cash proceeds in the Cedel Participant's or Euroclear Participant's account
would instead be valued as of the actual settlement date.
Finally, day traders that use Cedel or Euroclear and that purchase
Global Securities from DTC Participants for delivery to Cedel Participants or
Euroclear Participants should note that these trades would automatically fail on
the sale side unless affirmative action were taken. At least three techniques
should be readily available to eliminate this potential problem:
(a)borrowing through Cedel or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedel or Euroclear
accounts) in accordance with the clearing system's customary procedures;
(b)borrowing the Global Securities in the U.S. from a DTC Participant
no later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their Cedel or Euroclear
account in order to settle the sale side of the trade; or
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(c)staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC Participant is at
least one day prior to the value date for the sale to the Cedel Participant
or Euroclear Participant.
CERTAIN U.S. FEDERAL WITHHOLDING TAXES AND DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities through Cedel or Euroclear (or
through DTC if the holder has an address outside the U.S.) will be subject to
30% U.S. withholding tax that generally applies to payments of interest
(including original issue discount) on registered debt issued by U.S. Persons,
unless (i) each clearing system, bank or other financial institution that holds
customer's securities in the ordinary course of its trade or business in the
chain of intermediaries between such beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements and
(ii) such beneficial owners take one of the following steps to obtain an
exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of Global
Securities that are non-U.S. Persons can obtain a complete exemption from the
withholding tax by filing a signed Form W-8 (Certificate of Foreign Status). If
the information shown on Form W-8 changes, a new Form W-8 must be filed within
30 days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
Exemption or reduced rate for non-U.S. Persons resident in treaty countries
(Form 1001). Non-U.S. Persons that are beneficial owners of Global Securities
residing in a country that has a tax treaty with the United States can obtain an
exemption or reduced tax rate (depending on the treaty terms) by filing Form
1001 (Ownership, Exemption or Reduced Rate Certificate). If the treaty provides
for a reduced rate, withholding tax will be imposed at that rate unless the
filer alternatively files Form W-8. Form 1001 may be filed by the Noteholder or
his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The holder of a Global
Securities or, in the case of a Form 1001 or a Form 4224 filer, his agent, files
by submitting the appropriate form to the person through whom it holds (the
clearing agency, in the case of persons holding directly on the books of the
clearing agency). Form W-8 and Form 1001 are effective for three calendar years
and Form 4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any political subdivision thereof or (iii) an estate or trust
the income of which is includable in gross income for United States tax
purposes, regardless of its source. This summary of documentation requirements
does not deal with all aspects of U.S. Federal income tax withholding that may
be relevant to foreign holders of the Global Securities. Investors are advised
to consult their own tax advisors for specific tax advice concerning their
holding and disposing of the Global Securities.
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INDEX OF PRINCIPAL TERMS
ABS............................................ 32
ABS Table...................................... 32
Affiliated Purchaser........................... 19
Available Amount............................... 9
Available Cash Collateral Amount............... 13, 44
Bankruptcy Code................................ 19
Business Day................................... 8, 39
Capitalized Interest Account................... 7, 29
Cash Collateral Account........................ 13
Cash Collateral Account Surplus................ 15, 44
Cash Collateral Agreement...................... 13, 44
Cash Collateral Depositor...................... 13
Cede........................................... 4, 39
Cedel.......................................... 1, 4, 22, 41
Certificate Balance............................ 9, 34
Certificate Final Scheduled Distribution Date.. 8
Certificate Interest Distribution Amount....... 40
Certificate Owner.............................. 22, 39
Certificate Owners............................. 4
Certificate Pool Factor........................ 34
Certificates................................... 1, 39
CIT............................................ 3, 19
CITCF-NY....................................... 5
CITSF.......................................... 3, 19
Closing Date................................... 5
Code........................................... 18
Commission..................................... 41
Company........................................ 1, 3, 19
Contract Files................................. 23
Contract Pool.................................. 24
Contract Rate.................................. 26
Contracts...................................... 2, 5, 25
Credit Facility................................ 45
Credit Facility Provider....................... 45
Cross-Over Date................................ 10
Dealers........................................ 5
Defaulted Contract............................. 42
Deposit Date................................... 22
Depository..................................... 22
Determination Date............................. 8
Distribution Date.............................. 2, 8, 39
DTC............................................ 1, 22
Due Period..................................... 8, 39
ERISA.......................................... 18
Euroclear...................................... 1, 4
Excess Collections............................. 14, 45
Financed Vehicles.............................. 2, 5
Funding Period................................. 7, 28
Indenture...................................... 4, 41
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Indenture Trustee.............................. 1, 3, 41
Initial Cash Collateral Amount................. 13, 44
Initial Contracts.............................. 1, 4, 25
Initial Cut-off Date........................... 1
Initial Cut-off Date........................... 5
Initial Cut-off Date Pool Principal Balance.... 25
Initial Financed Vehicles...................... 1, 4
Initial Pool Balance........................... 16, 41, 47
Insolvency Laws................................ 20
Interest Accrual Period........................ 8, 40
Interest Rate.................................. 12, 42
Interest Shortfall............................. 15
Issuer......................................... 1, 3, 23
Limited Guarantee.............................. 45
Liquidity Facility............................. 45
Liquidity Facility Provider.................... 45
Loan........................................... 13, 44
Monthly Advance................................ 15
Net Losses..................................... 37
Non-Reimbursable Payment....................... 16
Note Final Scheduled Distribution Date......... 8
Note Interest Distribution Amount.............. 42
Note Owner..................................... 22, 41
Note Owners.................................... 4
Note Pool Factor............................... 34
Notes.......................................... 1, 4, 41
Obligor........................................ 15
Original Certificate Balance................... 3, 23
Owner Trustee.................................. 1, 3, 23
Paid-Ahead Contract............................ 31
Paid-Ahead Period.............................. 31
Pass-Through Rate.............................. 9, 39
Pass-Through Rate.............................. 2
Permitted Investments.......................... 28
Pool Balance................................... 11, 29
Pooling and Servicing Agreement................ 23
Pre-Funded Amount.............................. 7, 28
Pre-Funded Amount.............................. 5
Pre-Funded Percentage.......................... 11, 20
Principal Distribution Amount.................. 42
Principal Liquidation Loss Amount.............. 11, 40
Prospectus..................................... 2
Purchase Agreement............................. 6, 25
Rating Agency.................................. 17, 48
Record Date.................................... 8, 39
Repurchase Event............................... 5
Repurchased Contract........................... 5
Required Capitalized Interest Amount........... 29
Required Cash Collateral Amount................ 14
Reserve Fund................................... 45
Sale and Servicing Agreement................... 2, 5
Securities..................................... 1, 4, 41
Seller......................................... 1
Servicer....................................... 1, 3
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Servicer Payment............................... 10, 42
Servicing Fee.................................. 16, 46
Servicing Fee Rate............................. 16, 46
Simple Interest Contract....................... 26
Subsequent Contracts........................... 2, 5, 25
Subsequent Cut-off Date........................ 6
Subsequent Cut-off Date........................ 2
Subsequent Financed Vehicles................... 2, 5
Subsequent Purchase Agreement.................. 6, 25
Subsequent Transfer Agreement.................. 6, 25
Trust.......................................... 1, 3, 23
Trust Agreement................................ 3, 23, 39
Trustee........................................ 1, 3, 23
Trustees....................................... 3
Underwriters................................... 47
Underwriting Agreement......................... 47
x 6
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PROSPECTUS DATED JULY 24, 1996
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.
CIT RV TRUSTS
ASSET-BACKED NOTES
ASSET-BACKED CERTIFICATES
THE CIT GROUP SECURITIZATION CORPORATION II, SELLER
THE CIT GROUP/SALES FINANCING, INC., SERVICER
The Asset-Backed Certificates (the "Certificates") and the Asset-Backed
Notes (the "Notes" and, collectively with the Certificates, the
"Securities") described herein may be sold from time to time in one or more
series, in amounts, at prices and on the terms to be determined at the time
of sale and to be set forth in a supplement to this Prospectus (a
"Prospectus Supplement"). Each series of Securities will include either
one or more classes of Certificates or, if Notes are issued as part of a
series, one or more classes of Notes and one or more classes of
Certificates, as set forth in the related Prospectus Supplement.
The Certificates and the Notes, if any, of any series of Securities will be
issued by a trust (a "Trust") to be formed with respect to such series by
The CIT Group Securitization Corporation II (the "Company" or the
"Seller").
The assets of each Trust will primarily include a pool of 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 the Initial Cut-off Date specified in the related Prospectus
Supplement (the "Initial Cut-off Date"), an assignment of the security
interests in the Initial Financed Vehicles, the proceeds from claims under
certain insurance policies in respect of individual Initial Financed
Vehicles or the related Obligors and certain other property, as more fully
described herein and in the related Prospectus Supplement. In addition, if
so specified in the related Prospectus Supplement, the assets of each Trust
will include specified credit or cash flow enhancement and monies on
deposit in one or more trust accounts, which may include a Pre-Funding
Account which would be used to purchase from time to time additional 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 on and after the
related subsequent cut-off dates (each, a "Subsequent Cut-off Date"), an
assignment of the 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, to the
extent specified in the related Prospectus Supplement.
(Continued on following page)
A DISCUSSION OF CERTAIN RISK FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE PURCHASERS OF THE SECURITIES OFFERED HEREBY CAN BE FOUND ON
PAGE 18 HEREIN AND IN THE RELATED PROSPECTUS SUPPLEMENT.
THE SECURITIES WILL REPRESENT INTERESTS IN OR OBLIGATIONS OF A TRUST AND
WILL NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF THE CIT GROUP
SECURITIZATION CORPORATION II, THE CIT GROUP/SALES FINANCING, INC., THE CIT
GROUP HOLDINGS, INC. OR ANY OF THEIR RESPECTIVE AFFILIATES (EXCEPT TO THE
LIMITED EXTENT, IF ANY, DESCRIBED HEREIN AND IN THE RELATED PROSPECTUS
SUPPLEMENT).
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.
Retain this Prospectus for future reference. This Prospectus may not be
used to consummate sales of securities offered hereby unless accompanied by
a Prospectus Supplement.
The date of this Prospectus is July 24, 1996.
<PAGE>
(continued from preceding page)
Each Trust will be formed pursuant to either (i) a Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement") to be entered into among
the Seller, The CIT Group/Sales Financing, Inc. (the "Servicer") and the
Trustee specified in the related Prospectus Supplement (the "Trustee") or
(ii) a Trust Agreement (the "Trust Agreement") to be entered into among the
Seller, the Trustee and certain other parties as specified in the related
Prospectus Supplement. If the Trust is formed pursuant to a Trust
Agreement, a Sale and Servicing Agreement (the "Sale and Servicing
Agreement") will be entered into among the Seller, the Servicer and the
Trustee. The Pooling and Servicing Agreement or the Trust Agreement and
the Sale and Servicing Agreement are collectively referred to herein as the
"Trust Documents." The Notes, if any, of a series of Securities will be
issued and secured pursuant to an Indenture (the "Indenture") between the
Trust and the Indenture Trustee specified in the related Prospectus
Supplement (the "Indenture Trustee").
The Certificates will represent fractional undivided interests in the
related Trust. Except as otherwise provided in the related Prospectus
Supplement, each class of Securities of any series will represent the right
to receive a specified amount of payments of principal and interest on the
related Contracts, in the amounts, at the rates, on the dates and in the
manner described herein and in the related Prospectus Supplement. The
right of each class of Securities to receive payments may be senior or
subordinate to the rights of one or more of the other classes of such
series. A series may include two or more classes of Certificates or Notes
which differ as to the timing and priority of payment, interest rate or
amount of distributions in respect of principal or interest or both. A
series may include one or more classes of Certificates or Notes entitled to
distributions in respect of principal, with disproportionate, nominal or no
interest distributions, or to distributions of interest, with
disproportionate, nominal or no distributions in respect of principal.
Distributions on Certificates of any series will be subordinated in
priority to payments due on the related Notes, if any, to the extent
described herein and in the related Prospectus Supplement.
The rate of distributions in respect of principal on Certificates and
payment in respect of principal on Notes, if any, of any class will depend
on the priority of payment of such class and the rate and timing of
payments (including prepayments, liquidations and repurchases of Contracts)
on the related Contracts.
If specified in the related Prospectus Supplement, a financial guaranty
insurance policy, letter of credit, surety bond, limited guarantee by The
CIT Group Holdings, Inc. ("CIT"), reserve fund, or other form of credit
enhancement, or any combination thereof, may be provided with respect to a
Trust or any class of Securities.
Unless otherwise provided in the related Prospectus Supplement, the
Certificates and the Notes, if any, of any series initially will be
represented by certificates and notes registered in the name of Cede & Co.,
the nominee of The Depository Trust Company ("DTC"). The interests of
beneficial owners of the Securities will be represented by book entries on
the records of the participating members of DTC and, in the case of the
Notes, Cedel Bank, societe anonyme ("Cedel") and the Euroclear System
("Euroclear"). Definitive Securities will be available only under limited
circumstances to the extent described herein and in the related Prospectus
Supplement.
There currently is no secondary market for the Securities and there is no
assurance that one will develop. The Underwriters (as defined herein)
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 UNDERWRITERS MAY OVER-ALLOT
OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE
SECURITIES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") on behalf of each Trust a Registration Statement (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 offered pursuant to this
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<PAGE>
Prospectus. 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, which is available for inspection
without charge at the public reference facilities of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and the regional offices of the
Commission at Suite 1400 Northwestern Atrium Center, 500 West Madison
Street, Chicago, Illinois 60661, and Seven World Trade Center, 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. Both registrants also file electronically.
The Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that
file electronically with the Commission. The address of the Commission's
Web site is http://www.sec.gov. Statements made in this Prospectus as to
the contents of any contract, agreement or other document filed as an
exhibit to the Registration Statement, 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. The Servicer, on behalf of
each Trust, will also file or cause to be filed with the Commission such
periodic reports as are required under The Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission thereunder.
However, in accordance with the Exchange Act and the rules and regulations
of the Commission thereunder, the Company expects that each Trust's
obligation to file such reports will be terminated following the end of the
year in which such Trust is formed. Such reports and other information
filed on behalf of each Trust will be available for inspection as set forth
above.
REPORTS TO SECURITYHOLDERS
Unless otherwise provided in the related Prospectus Supplement, unless and
until Definitive Securities are issued, monthly and annual unaudited
reports containing information concerning each Trust will be prepared by
the Servicer and sent on behalf of each Trust only to the Trustee for the
Certificateholders, the Indenture Trustee for the Noteholders and 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) and, in the case of Noteholders, 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
"--Statements to Securityholders." Certificateholders and Noteholders are
collectively referred to herein as the "Securityholders." Certificate
Owners or Note Owners may receive such reports, upon written request,
together with a certification that they are Certificate Owners or Note
Owners and payment of reproduction and postage expenses associated with the
distribution of such reports, from the Trustee, with respect to Certificate
Owners, or the Indenture Trustee, with respect to Note Owners, at the
addresses specified in the related Prospectus Supplement. Such reports
will not constitute financial statements prepared in accordance with
generally accepted accounting principles. Neither the Seller, the Servicer
nor CIT intends to send any of its financial reports to Securityholders.
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,
1995 together with the report of KPMG Peat Marwick LLP, independent
certified public accountants;
(b) CIT's Quarterly Report on Form 10-Q for the quarter ended March
31, 1996; and
(c) CIT's Current Reports on Form 8-K dated April 11, 1996, April
12, 1996 and July 16, 1996.
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.
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<PAGE>
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute part of this Prospectus.
CIT WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS PROSPECTUS IS
DELIVERED, UPON REQUEST, A COPY OF ANY OR ALL OF THE FOREGOING DOCUMENTS
DESCRIBED ABOVE WHICH HAVE BEEN OR MAY BE INCORPORATED BY REFERENCE IN THIS
PROSPECTUS OTHER THAN EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE
SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS). SUCH REQUEST
SHOULD BE DIRECTED TO:
CORPORATE SECRETARY
THE CIT GROUP HOLDINGS, INC.
1211 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
(212) 536-1950
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<PAGE>
SUMMARY
This Summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus and by reference to the
information with respect to the Securities contained in the related
Prospectus Supplement to be prepared and delivered in connection with the
offering of each series of Securities. Certain capitalized terms used in
the Summary are defined elsewhere in this Prospectus and in the related
Prospectus Supplement. Reference is made to the "Index of Principal Terms"
for the location herein of defined terms.
Issuer With respect to each series of Securities, a
trust (the "Trust" or the "Issuer"), will be
formed by the Seller pursuant to either a
Pooling and Servicing Agreement among the
Seller, the Servicer and the Trustee
specified in the related Prospectus
Supplement, or a Trust Agreement among the
Seller, the Trustee specified in the related
Prospectus Supplement and certain other
parties as specified in the related
Prospectus Supplement.
Seller The CIT Group Securitization Corporation II
(the "Company" or the "Seller"), a wholly-
owned, limited purpose subsidiary of The CIT
Group Holdings, Inc. ("CIT"). Except if and
to the extent specified in the related
Prospectus Supplement, 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. See "Risk Factors--Limited
Obligations."
Servicer The CIT Group/Sales Financing, Inc. (in such
capacity referred to herein as the
"Servicer"), a wholly-owned subsidiary of
CIT. The Servicer will be responsible for
managing, administering, servicing and
making collections on the Contracts held by
each Trust.
Trustee The Trustee pursuant to a Pooling and
Servicing Agreement or the Owner Trustee
pursuant to a Trust Agreement, in each case
as specified in the related Prospectus
Supplement. The Trustee or Owner Trustee
for any Trust will be referred to in this
Prospectus as the "Trustee" or the "Owner
Trustee," although the Prospectus Supplement
relating to an owner trust that issues Notes
will refer to the Trustee as the "Owner
Trustee" in order to distinguish the Owner
Trustee and the Indenture Trustee for such
Series. See "The Trusts--The Trustee."
Indenture Trustee With respect to any series of Securities
including one or more classes of Notes, the
Indenture Trustee specified in the related
Prospectus Supplement (the "Indenture
Trustee"). The Owner Trustee and the
Indenture Trustee for a series are referred
to herein collectively as the "Trustees."
Risk Factors Certain potential risks and other
considerations are particularly relevant to
a decision to invest in any securities sold
hereunder. See "Risk Factors."
The Certificates Each series of Securities will include one or
more classes of Asset-Backed Certificates
which will be issued pursuant to the related
Trust Documents. The Certificates (the
"Certificates") will
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<PAGE>
represent fractional undivided interests in
the related Trust, and will have the
Original Certificate Balance specified in
the related Prospectus Supplement. See "The
Certificates--General."
Payments in respect of the Certificates will
be subordinated to payments on the Notes of
the same series to the extent described in
the related Prospectus Supplement. See "The
Certificates-- General."
Unless otherwise specified in the related
Prospectus Supplement, the Certificates will
be issued in minimum denominations of
$20,000 and integral multiples of $1,000 in
excess thereof in book-entry form only;
provided, however, that one Certificate of
each series may be issued in a denomination
other than an integral multiple of $1,000
such that the applicable Affiliated
Purchaser, if any, specified in the related
Prospectus Supplement (the "Affiliated
Purchaser") may be issued at least 1% of the
Original Certificate Balance. Unless
otherwise specified in the related
Prospectus Supplement, persons ("Certificate
Owners") acquiring beneficial interests in
the Certificates will hold their interests
through The Depository Trust Company
("DTC"). Definitive Certificates will be
issued only under the limited circumstances
described herein or in the related
Prospectus Supplement. Unless and until
Certificates of a class are issued in
definitive form, all references herein to
distributions, notices, reports and
statements to and to actions by and effects
upon the related Certificateholders will
refer to the same actions and effects with
respect to DTC or Cede & Co. ("Cede"), as
the case may be, for the benefit of the
related Certificate Owners in accordance
with the DTC procedures. See "Certain
Information Regarding the Securities--Book-
Entry Registration" and "--Definitive
Securities."
Unless otherwise specified in the related
Prospectus Supplement, each class of
Certificates will have a stated Certificate
Balance (as defined in the related
Prospectus Supplement) and will accrue
interest on such Certificate Balance at a
specified rate (with respect to each class
of Certificates, the "Pass-Through Rate").
Each class of Certificates may have a
different Pass-Through Rate, which may be a
fixed, variable or adjustable Pass-Through
Rate, or any combination of the foregoing.
The related Prospectus Supplement will
specify the Pass-Through Rate for each class
of Certificates, or the initial Pass-Through
Rate and the method for determining
subsequent changes to the Pass-Through Rate.
A series may include two or more classes of
Certificates which differ as to timing of
distributions, sequential order, priority of
payment, seniority, allocation of losses,
Pass-Through Rate or amount of distributions
in respect of principal or interest, or as
to which distributions in respect of
principal or interest on any class may or
may not be made upon the occurrence of
specified events or on the basis of
collections from designated portions of the
Contract Pool (as defined herein). In
addition, a series may include one or more
classes of Certificates ("Stripped
Certificates") entitled to (i) distributions
in respect of principal with
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<PAGE>
disproportionate, nominal or no interest
distributions, or (ii) interest
distributions, with disproportionate,
nominal or no distributions in respect of
principal.
If CITSF exercises its option to purchase
the Contracts of a Trust or if the Contracts
are sold by the Trustee on the terms and
conditions described under "The Purchase
Agreements and the Trust Documents--
Termination and --Insolvency Event,"
Certificate Owners may receive an amount in
respect of the Certificates as specified in
the related Prospectus Supplement. In
addition, if the related Prospectus
Supplement provides that the property of a
Trust will include a Pre-Funding Account (as
such term is defined in the related
Prospectus Supplement, the "Pre-Funding
Account"), Certificate Owners may receive a
distribution in respect of principal on or
immediately following the end of the funding
period specified in the related Prospectus
Supplement (the "Funding Period") in an
amount and manner specified in the related
Prospectus Supplement.
The Notes Each series of Asset-Backed Notes (the "Notes"
and, together with the Certificates, the
"Securities") will represent obligations of
a Trust secured by assets of such Trust
(other than the accounts or other property
specified in the related Prospectus
Supplement). See "The Notes--General."
The Notes will be issued pursuant to an
Indenture between the Issuer and the
Indenture Trustee (the "Indenture"). See
"The Notes--General."
Unless otherwise specified in the related
Prospectus Supplement, the Notes will be
issued in minimum denominations of $1,000
and integral multiples of $1,000 in excess
thereof and will be available in book-entry
form only. Unless otherwise specified in
the related Prospectus Supplement, persons
("Note Owners") acquiring beneficial
interests in the Notes will hold their
interests through DTC in the United States
or Cedel Bank, societe anonyme ("Cedel") or
the Euroclear System ("Euroclear") in
Europe, and Definitive Notes will be issued
only under the limited circumstances
described herein or in the related
Prospectus Supplement. Unless and until
Notes of a class are issued in definitive
form, all references herein to
distributions, notices, reports and
statements to and to actions by and effects
upon the related Noteholders will refer to
the same actions and effects with respect to
DTC or Cede, as the case may be, for the
benefit of the related Note Owners in
accordance with the DTC procedures. See
"Certain Information Regarding the
Securities--Book-Entry Registration" and
"--Definitive Securities."
Unless otherwise specified in the related
Prospectus Supplement, each class of Notes
will have a stated principal amount and will
bear interest at a specified rate or rates
(with respect to each class of Notes, the
"Interest Rate"). Each class of Notes may
have a different Interest Rate, which may be
a fixed, variable or adjustable Interest
Rate, or any combination of the foregoing.
The
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<PAGE>
related Prospectus Supplement will specify
the Interest Rate and the method for
determining subsequent changes to the
Interest Rate.
A series may include two or more classes of
Notes which differ as to the timing and
priority of payment, seniority, allocations
of loss, Interest Rate or amount of payments
of principal or interest, or as to which
payments of principal may or may not be made
upon the occurrence of specified events or
on the basis of collections from designated
portions of the Contract Pool (as defined
herein). In addition, a series may include
one or more classes of Notes ("Stripped
Notes") entitled to (i) principal payments
with disproportionate, nominal or no
interest payments or (ii) interest payments
with disproportionate, nominal or no
principal payments.
If CITSF exercises its option to purchase
the Contracts of a Trust or if the Contracts
are sold by the Trustee on the terms and
conditions described under "The Purchase
Agreements and the Trust Documents--
Termination and -- Insolvency Event," the
outstanding Notes, if any, of such series
will be redeemed as set forth in the related
Prospectus Supplement. In addition, if the
related Prospectus Supplement provides that
the property of a Trust will include a Pre-
Funding Account, all or certain classes of
the outstanding Notes, if any, of such
series will be subject to partial redemption
on or immediately following the end of the
Funding Period in an amount and manner
specified in the related Prospectus
Supplement.
Property of a Trust The property of a Trust will primarily include
(i) a pool (the "Contract Pool") of retail
installment sale contracts (the "Initial
Contracts") secured by the new and used
recreational vehicles financed thereby (the
"Initial Financed Vehicles"), (ii) certain
monies received under the Initial Contracts
on and after the Initial Cut-off Date
specified in the related Prospectus
Supplement (the "Initial Cut-off Date"),
(iii) an assignment of the security
interests in the Initial Financed Vehicles,
(iv) the Collection Account (as defined
herein), including all investments therein,
all income from the investment of funds
therein and all proceeds thereof, certain
other accounts and the proceeds thereof and
certain other rights under the Trust
Documents specified in the related
Prospectus Supplement, and (v) the proceeds
from claims under certain insurance policies
in respect of individual Initial Financed
Vehicles or the related Obligors (as defined
herein). In addition, if so specified in
the related Prospectus Supplement, the
property of a Trust will include specified
credit or cash flow enhancement and monies
on deposit in a Pre-Funding Account to be
established with the Indenture Trustee or
the Trustee, which will be used to purchase
Subsequent Contracts (as defined herein)
from the Seller from time to time during the
Funding Period, as well as any Subsequent
Contracts so purchased. See "The Trust
Property."
If and to the extent provided in the related
Prospectus Supplement, a Trust will be
obligated to purchase from the Seller
(subject to the satisfaction of certain
conditions described in the applicable Trust
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<PAGE>
Documents) from time to time during the
Funding Period, from monies on deposit in
the Pre-Funding Account, additional 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 on and after the related
Subsequent Cut-off Dates (specified in the
related Prospectus Supplement), an
assignment of the 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. It is
expected that the Subsequent Contracts will
have an aggregate principal balance
approximately equal to the Pre-Funded Amount
(as defined herein) on the related Closing
Date (as defined herein).
The Financed Vehicles consist of motor
homes, travel trailers and other types of
recreational vehicles. See "The Contract
Pool."
CITSF will be obligated to repurchase
Contracts (a "Repurchased Contract") upon
the occurrence of certain breaches of
representations and warranties (a
"Repurchase Event"). See "The Purchase
Agreements and the Trust Documents--Sale and
Assignment of the Contracts" and "--
Servicing Procedures."
The Contracts The property of a 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") or other affiliates
of CITSF in the ordinary course of its
business, or if specified in the related
Prospectus Supplement, originated directly
by CITSF or one of its affiliates in the
ordinary course of business or purchased by
CITSF or one of its affiliates from
unaffiliated third parties. On or prior to
the date of issuance of a series of the
Securities (the "Closing Date"), CITCF-NY
will sell certain contracts that will
constitute a portion of the Initial
Contracts to CITSF pursuant to a purchase
agreement, and CITSF will sell the Initial
Contracts to the Company pursuant to a
purchase agreement (the "Purchase
Agreement"), and the Company will sell the
Initial Contracts to a Trust pursuant to the
Trust Documents. If and to the extent
specified in the related Prospectus
Supplement, CITSF or the Seller or one of
their respective affiliates may retain the
right to receive a portion of the interest
accruing on some or all of the Contracts
sold to a Trust. See "The Purchase
Agreements and the Trust Documents--Sale and
Assignment of the Contracts."
The Contracts will generally be prepayable at
any time without penalty to the purchaser of
the related Financed Vehicles or other
person or persons who are obligated to make
payments thereunder (each, an "Obligor").
Certain information with respect to each
Contract Pool as of the Initial Cut-off Date
or such other date specified in the related
Prospectus Supplement, including the
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proportions of each type of Financed Vehicle
financed, the weighted average annual
percentage rate, the weighted average
remaining maturity, and information on any
Contracts which bear interest other than at
a simple interest basis, will be set forth
in the related Prospectus Supplement.
If and to the extent specified in the related
Prospectus Supplement, from time to time
during the Funding Period, CITSF will be
obligated to sell, and the Company will be
obligated to purchase, pursuant to a
purchase agreement (the "Subsequent Purchase
Agreement") subject to the satisfaction of
certain conditions described therein,
Subsequent Contracts at a purchase price
which, unless otherwise specified in the
related Prospectus Supplement, will be equal
to the aggregate principal amounts thereof
as of the first day in the related month of
transfer designated by CITSF and the Company
(each, a "Subsequent Cut-off Date"). A
portion of such Subsequent Contracts may be
acquired by CITSF from CITCF-NY or other
affiliates of CITSF. Pursuant to one or more
subsequent transfer agreements (each, a
"Subsequent Transfer Agreement") between the
Company and the related Trust, and subject
to the satisfaction of certain conditions
described therein, the Company will in turn
sell the Subsequent Contracts to such Trust
at a purchase price 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 Pre-
Funding Account. Subsequent Contracts will
be transferred from CITSF to the Company and
from the Company to such Trust on the
Business Day (as defined herein) 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 If the Prospectus Supplement for a series of
the Securities specifies that a portion of
the proceeds of the offering will be
deposited in a Pre-Funding Account, the Pre-
Funding Account will be maintained as an
Eligible Account (as defined herein), which
account may be maintained with the Owner
Trustee or the Indenture Trustee, and the
funds on deposit therein will be invested
solely in Permitted Investments (as defined
herein or in the related Prospectus
Supplement), that mature not later than one
Business Day prior to the next succeeding
Distribution Date, until such funds are
applied during the Funding Period to pay to
the Company the purchase price for
Subsequent Contracts. See "The Purchase
Agreements and the Trust Documents--
Accounts." 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, in the
amount, if any, specified in the related
Prospectus Supplement (the "Pre-Funded
Amount"). The Pre-Funded Amount will not
exceed one-third of the sum of the Original
Certificate Balance and the initial
principal amount of the Notes. Unless
otherwise specified in the related
Prospectus Supplement, the "Funding Period"
will be the period from the Closing Date
until the earliest to occur of
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(i) the date on which the amount on deposit
in the Pre-Funding Account (exclusive of
investment earnings) is less than $100,000,
(ii) the date on which an Event of Default
occurs under the Indenture (if any), (iii)
the date on which an Event of Termination
occurs under the Trust Documents, (iv) the
insolvency of the Company, CITSF, CITCF-NY
or CIT, or (v) the close of business on the
date specified in the related Prospectus
Supplement (which date will occur in the
third calendar month after the month in
which the Closing Date occurred). 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. Unless otherwise specified
in the related Prospectus Supplement, the
Company expects that the Pre-Funded Amount
will be reduced to less than $100,000 by the
end of the Funding Period, although no
assurance can be given that this will in
fact occur. Unless otherwise specified in
the related Prospectus Supplement, any
portion of the Pre-Funded Amount remaining
on deposit in the Pre-Funding Account at the
end of the Funding Period will be payable as
principal to Noteholders and
Certificateholders in accordance with the
Pre-Funded Percentage (as defined herein) on
the first Distribution Date thereafter or,
if the end of the Funding Period is on a
Distribution Date, then on such date.
Capitalized Interest Account If the Prospectus Supplement for a series of
the Securities specifies that a portion of
the proceeds of the offering will be
deposited in a Capitalized Interest Account,
on the Closing Date a portion of the
proceeds from the sale of the Securities (in
an amount specified in the related
Prospectus Supplement) will be deposited
into an account (the "Capitalized Interest
Account") maintained as an Eligible Account,
which account may be maintained with the
Owner Trustee or the Indenture Trustee, and
the funds on deposit therein will be
invested solely in Permitted Investments
that mature no later than one Business Day
prior to the next Distribution Date.
Amounts deposited in the Capitalized
Interest Account will be used on each
Distribution Date to pay interest on the
Securities, in the amount or in accordance
with the formula specified in the related
Prospectus Supplement. Monies on deposit in
the Capitalized Interest Account will not be
available to cover losses on or in respect
of the Contracts.
On each Distribution Date any amount remaining
in the Capitalized Interest Account in
excess of the Required Capitalized Interest
Amount (as defined in the related Prospectus
Supplement) shall be released to the
Affiliated Purchaser, if any, or other
person specified in the related Prospectus
Supplement. Unless otherwise specified in
the related Prospectus Supplement, 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 Collection
Account and will be available for
distributions, as described herein or in the
related Prospectus Supplement, on the first
Distribution Date thereafter or, if the end
of the Funding Period is on a Distribution
Date, then on such date.
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<PAGE>
Distribution Dates Unless otherwise specified in the related
Prospectus Supplement, 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 on the date
specified in the related Prospectus
Supplement. Unless otherwise specified in
the related Prospectus Supplement, payments
on the Securities on each Distribution Date
will be made to the holders of record of the
related Securities at the close of business
on the Business Day immediately preceding
such Distribution Date or, in the event
Definitive Securities have been issued, at
the close of business on the last Business
Day of the month immediately preceding the
month in 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 the Notes and the
Certificates will be payable on the
Distribution Date occurring in the month or
months specified in the related Prospectus
Supplement (the "Note Final Scheduled
Distribution Date" and 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
states of New York, Oklahoma and such other
states (if any) specified in the related
Prospectus Supplement are authorized by law,
regulation or executive order to be closed.
Interest Accrual Period Unless otherwise specified in the related
Prospectus Supplement, the period for which
interest is payable on a Distribution Date
on the Securities shall be the one-month
period from the most recent Distribution
Date to but excluding the following
Distribution Date, or in the case of the
initial Distribution Date from the date
specified in the related Prospectus
Supplement 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 other amounts 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.
Unless otherwise specified in the related
Prospectus Supplement, the "Due Period" will
be the calendar month immediately preceding
the Distribution Date.
Determination Date Unless otherwise specified in the related
Prospectus Supplement, the "Determination
Date" is the third Business Day prior to
each Distribution Date. On each
Determination Date, the Servicer will
determine the Available Amount (as defined
herein) for distribution on the related
Distribution Date, allocate such amounts
between the Notes, the Certificates and the
Servicer Payment (as defined herein), and
advise the Trustees (or the paying agent
appointed pursuant to the Trust Documents)
of the amounts of the payments to be made to
Securityholders, all as described under "The
Purchase Agreements and the Trust
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Documents--Distributions." The "Servicer
Payment" is equal on each Distribution Date
to the sum of the reimbursement then due to
the Servicer for outstanding Monthly
Advances and the Servicing Fee (as defined
herein) (including any unpaid Servicing Fees
for past Distribution Dates).
Unless otherwise specified in the related
Prospectus Supplement, the "Available
Amount" with respect to each Trust on any
Distribution Date is equal to the excess of
(A) the sum of (i) all amounts on deposit in
the Collection Account attributable to
collections or deposits made in respect of
such Contracts (including 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")) in the related
Due Period, and (ii) the Purchase Price (as
defined herein) for any Contract repurchased
by CITSF as a result of breaches of certain
representations and warranties or purchased
by the Servicer as a result of breaches of
certain covenants and any Monthly Advances
(as defined herein) and any Non-Reimbursable
Payments (as defined herein) made by the
Servicer, if such Purchase Price, Monthly
Advance or Non-Reimbursable Payment is paid
on the Deposit Date (as defined herein)
immediately preceding such Distribution
Date, over (B) the sum of the following
amounts (to the extent that the Servicer has
not already withheld such amounts from
collections on the Contracts): (i) any
repossession profits on liquidated
Contracts, Liquidation Expenses (as defined
in the Trust Documents) incurred and taxes
and insurance advanced by the Servicer in
respect of Financed Vehicles that are
reimbursable to the Servicer under the Trust
Documents, (ii) any amounts incorrectly
deposited in the Collection Account, (iii)
net investment earnings on the funds in the
Collection Account, and (iv) any other
amounts permitted to be withdrawn from the
Collection Account by the Servicer (or to be
retained by the Servicer from collections on
the Contracts) pursuant to the Trust
Documents.
Subordination of
the Certificates The rights of the Certificateholders to
receive distributions with respect to the
Contracts will be subordinated to the rights
of the Noteholders of the same series, to
the extent described in the related
Prospectus Supplement. This subordination
is intended to enhance the likelihood of
timely receipt by Noteholders of the full
amount of interest and principal required to
be paid to them, and to afford the
Noteholders limited protection against
losses in respect of the Contracts.
The protection afforded to the Noteholders by
the subordination feature described above
will be effected by the preferential right
of the Noteholders to receive, to the extent
described in the related Prospectus
Supplement, current distributions from
collections on or in respect of the
Contracts prior to the application of such
collections to payments in respect of the
Certificates.
If and to the extent specified in the related
Prospectus Supplement, one or more classes
of Notes of a series may be subordinated to
the rights of one or more other classes of
Notes of the same series.
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<PAGE>
Enhancement If and to the extent specified in the related
Prospectus Supplement with respect to a
Trust, the enhancement applicable to a class
of Securities may include any one or more of
the following: a financial guaranty
insurance policy, a letter of credit, a CIT
Limited Guarantee (as defined herein), a
reserve fund, a third party guarantee, a
cash collateral account, a derivative
product, a credit facility, a liquidity
facility, another form of credit
enhancement, or any combination thereof.
The enhancement with respect to any class of
Securities may be structured to provide
protection against delinquencies and/or
losses on the Contracts, against changes in
interest rates, or other risks, or to
supplement the interest rate on specified
Contracts, in each case to the extent and
under the conditions specified in the
related Prospectus Supplement. Unless
otherwise specified in the related
Prospectus Supplement, any form of
enhancement will have certain limitations
and exclusions from coverage thereunder,
which will be described in the related
Prospectus Supplement. Further information
regarding any provider of credit
enhancement, including financial information
when material, will be included (or
incorporated by reference) in the related
Prospectus Supplement. See "The
Certificates--Enhancement."
Monthly Advances Unless otherwise specified in the related
Prospectus Supplement, with respect to each
Contract as to which there has been an
Interest Shortfall (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 judgment,
expects to recover such Monthly Advance from
subsequent collections with respect to
interest payments on such Contract made by
or on behalf of the Obligor thereunder or
from 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 judgment that
an unreimbursed Monthly Advance shall not
ultimately be recoverable from subsequent
collections, the Servicer shall be
reimbursed for such Monthly Advance from
collections on all Contracts. In determining
whether an advance is or will be
nonrecoverable, the Servicer need not take
into account that it might receive any
amounts in a deficiency judgment against an
Obligor. Unless otherwise specified in the
related Prospectus Supplement, the Servicer
will not make a Monthly Advance in respect
of (i) the principal component of any
scheduled payment, or (ii) 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. See "The Purchase Agreements and the
Trust Documents--Monthly Advances." Unless
otherwise specified in the related
Prospectus Supplement, "Interest Shortfall"
means with respect to any Contract and any
Distribution Date, the excess of (A) the
product of (i) the sum of (a) one-twelfth of
the weighted average of the Pass-Through
Rate and the Interest Rate and (b) one-
twelfth of the Servicing Fee Rate (as
defined herein) and (ii) the outstanding
principal amount of such Contract as of the
last day of the second
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<PAGE>
preceding Due Period (or, in the case of the
first Due Period ending after the Contract
was acquired by the related Trust, as of the
Initial Cut-off Date or the Subsequent Cut-
off Date, as the case may be), over (B) the
amount of interest, if any, collected on
such Contract in the related Due Period.
Non-Reimbursable Payments If and to the extent specified in the related
Prospectus Supplement, 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 Trust Documents may 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"). If the related Prospectus
Supplement does not specify that the
Servicer will make Non-Reimbursable
Payments, the Servicer will not be obligated
to make such payments with respect to the
Trust.
Servicing Fees Unless otherwise specified in the related
Prospectus Supplement, with respect to each
series of Securities, the Servicer shall
receive a monthly fee (the "Servicing Fee"),
payable on each Distribution Date, equal to
the sum of (i) one-twelfth of the product of
the percentage specified in the related
Prospectus Supplement as the "Servicing Fee
Rate" and the Pool Balance (as defined
herein) 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) and (ii) any investment
earnings on amounts on deposit in the
Collection Account, the Certificate
Distribution Account (as defined herein) and
the Note Distribution Account (as defined
herein), if any; provided, however, that the
Servicing Fee Rate applicable to a Trust may
be increased to a rate (or maximum rate)
specified in the related Prospectus
Supplement if CITSF or an affiliate thereof
is not the Servicer. See "The Purchase
Agreements and the Trust Documents--
Servicing Compensation."
Optional Purchase
of the Contracts Unless otherwise specified in the related
Prospectus Supplement, with respect to each
series of Securities, at its option, CITSF
may purchase all the Contracts in the
related Trust on any Distribution Date on
which the aggregate principal balance of the
Contracts (the "Pool Balance") as of the
last day of the related Due Period is equal
to or less than a percentage specified in
the related Prospectus Supplement of the
Initial Pool Balance, at a purchase price
determined as described under "The Purchase
Agreements and the Trust
Documents--Termination." Unless otherwise
specified in the related Prospectus
Supplement, 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 related
Trust as of their respective Subsequent Cut-
off Dates.
Auction Sale Unless otherwise specified in the related
Prospectus Supplement, with respect to each
series of Securities, within ten days after
the first Distribution Date on which the
Pool Balance as of the last day of the
related Due Period is equal to or less than
a percentage specified in the related
Prospectus Supplement of the Initial Pool
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<PAGE>
Balance, the Indenture Trustee (or, if the
series did not include Notes or the Notes
have been paid in full and the Indenture has
been discharged in accordance with its
terms, the Owner Trustee) shall solicit bids
for the purchase of the Contracts remaining
in the related Trust. In the event that
satisfactory bids are received as described
in "The Purchase Agreements and the Trust
Documents--Termination," the net sale
proceeds will be distributed to
Securityholders, in the same order of
priority as collections received in respect
of the Contracts, on the second Distribution
Date succeeding such Due Period. If
satisfactory bids are not received, such
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 As a condition of issuance, the Securities of
each series offered pursuant to this
Prospectus will be rated in one of the four
highest rating categories by at least one
nationally recognized statistical rating
organization specified in the Prospectus
Supplement (each, a "Rating Agency"). The
ratings of the Securities should be
evaluated independently from similar ratings
on other types of securities. The ratings
do not address the possibility that
Securityholders may suffer a lower than
anticipated yield. The 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 of the Contracts." See "Ratings."
` 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 judgment, circumstances so warrant.
In the event that the rating initially
assigned to any of 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 any of the
Securities, 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 If the related Prospectus Supplement states
that a Trust is structured as an owner
trust, in the opinion of Counsel to the
Seller, 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. Alternative
characterizations of the Trust, the Notes
and the Certificates are possible, but would
not result in materially adverse tax
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<PAGE>
consequences to Noteholders or
Certificateholders. See "Certain Federal
Income Tax Consequences."
ERISA Considerations Fiduciaries of employee benefit plans subject
to ERISA, or plans subject to Section 4975
of the Internal Revenue Code of 1986 (the
"Code") should carefully review with their
legal advisors whether the purchase or
holding of the Certificates offered hereby
could give rise to a transaction prohibited
or not otherwise permissible under ERISA or
the Code. See "ERISA Considerations."
The related Prospectus Supplement will
provide further information with respect to
the eligibility of a class of Certificates
for purchase by employee benefit plans. See
"ERISA Considerations" herein and in the
related Prospectus Supplement.
Subject to certain considerations discussed
under "ERISA Considerations" herein and in
the related Prospectus Supplement, and
unless otherwise specified in the related
Prospectus Supplement, the Notes will be
eligible for purchase by employee benefit
plans that are subject to the Employee
Retirement Income Security Act of 1974, as
amended ("ERISA").
Legal Investment The appropriate characterization of the
Certificates and the Notes under various
legal investment restrictions applicable to
the investment activities of certain
institutions, and thus the ability of
investors subject to these restrictions to
purchase the Certificates and the Notes, may
be subject to significant interpretive
uncertainties. All investors whose
investment authority is subject to legal
restrictions should consult their own legal
advisors to determine whether, and to what
extent, the Certificates and the Notes will
constitute legal investments for them.
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RISK FACTORS
Prospective Securityholders should consider the following risk factors
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"), any Affiliated
Purchaser (as hereinafter defined) specified in the related Prospectus
Supplement, or any Servicer (including The CIT Group/Sales Financing, Inc.
("CITSF")) or any of their respective affiliates. Unless and to the extent
otherwise specified in the related Prospectus Supplement, the Securities
will not be insured or guaranteed by any government agency or
instrumentality, CIT or any of its affiliates (including the Company, any
Affiliated Purchaser, and CITSF), the Underwriters (as hereinafter defined)
or any of their 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 liquidation
experience of pools of installment sale contracts secured by recreational
vehicles. The credit criteria and underwriting guidelines under which CITSF
originates recreational vehicle installment sale contracts were changed in
1994. The delinquency and loan loss experience for CITSF's portfolio will
be affected adversely by this change in credit criteria. See "The CIT
Group/Sales Financing, Inc., Servicer--Delinquency and Loan Loss
Experience" herein and in the related Prospectus Supplement. Since the
market value of recreational vehicles generally declines with age and since
in certain states the Trustees may not have a first perfected security
interest in the Financed Vehicles, 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 could 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 Certificates or by
the Enhancement, if any, applicable to the Notes and (b) the protection
against loss afforded to the Certificateholders by the Enhancement (as
specified in the related Prospectus Supplement), if any. If the amount
available under the Enhancement (as defined herein), if any, is reduced to
zero, holders of the Certificates 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 the Certificate Balance (as
defined herein) is reduced to zero, the 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.
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
certificate of title statutes. The steps necessary to perfect a security
interest in a Financed Vehicle vary from state to state. Unless otherwise
specified in the related Prospectus Supplement, all Contracts in the
Contract Pool (as defined herein) were purchased by CITSF or The CIT
Group/Consumer Finance, Inc. (NY) ("CITCF-NY") from recreational vehicle
dealers ("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 or CITCF-NY. In each case, CITSF or CITCF-NY is named as the secured
party on the certificate of title for the related Financed Vehicle. Due to
the expense and administrative inconvenience involved, CITSF will not amend
any certificate of title to name the Company or any Trustee as the
lienholder and the Company will not deliver any certificate of title to
such Trustee or note thereon such Trustee's interest. Consequently, in
some states, in the absence of such an amendment to the certificate of
title to reflect the successive assignments by CITCF-NY to CITSF, by CITSF
to the Company, and by the Company to the Trust, 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 Trust may not be effective against other creditors of the
related Obligor or a trustee in bankruptcy.
In addition, numerous federal and state consumer protection laws
impose requirements on sellers under installment sale contracts, such as
the Contracts, and the failure by the seller of goods to comply with such
requirements
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<PAGE>
could give rise to liabilities of assignees for amounts due or paid under
such agreements and the right to set-off against claims by such assignees.
These laws would apply to a 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. The Trust is
subject to the risk of similar litigation. With respect to each series of
Securities, pursuant to the Trust Documents, CITSF will represent and
warrant as of the Initial Cut-off Date (as defined herein) with respect to
each Initial Contract (as defined herein), and as of the related Subsequent
Cut-off Date (as defined herein) with respect to each Subsequent Contract
(as defined herein), that each Contract complies with all requirements of
law and CITSF 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
and adversely affects the related Trust's interest in any Contract would
require CITSF to repurchase such Contract unless such breach is cured. If
CITSF does not honor its purchase obligation in respect of a Contract and
the Obligor for such Contract were to default, recovery of amounts due on
such Contract would be primarily 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."
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
assignment of retail installment sale 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 may affect the
enforceability of the related Contract. A Trust and the Company may not
have obtained the licenses required under any federal or state consumer
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 of such rights which may prevent a Trust from
collecting amounts due under the Contracts. 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 which defense may
prevent a Trust from collecting amounts due under the affected Contracts.
See "Certain Legal Aspects of the Contracts."
Any shortfall in payments on or in respect of Contracts, or any
liability of a Trust to Obligors, as a result of noncompliance with the
laws summarized above and under "Certain Legal Aspects of the Contracts"
could result in losses to the Securityholders.
4. Certain Matters Relating to Insolvency. CITSF and the Company
intend that each transfer of Contracts from CITCF-NY to CITSF, from CITSF
to the Company and from the Company to the related Trust constitutes a
sale, rather than a pledge of the Contracts to secure indebtedness.
However, if CITCF-NY, CITSF or the Company were to become a debtor under
Title 11 of the United States Code, 11 U.S.C.(S) 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, by CITSF to the Company, or by
the Company to the related Trust, respectively, was a pledge of the
Contracts rather than a sale and that, accordingly, such Contracts should
be part of such assigning 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."
If and to the extent specified in the related Prospectus Supplement,
the Affiliated Purchaser, if any, specified in the related Prospectus
Supplement, will own a Certificate evidencing the portion of the Original
Certificate Balance specified in the related Prospectus Supplement. Such
Affiliated Purchaser will have the same rights with regard to the related
Trust as all other Certificateholders based on its percentage ownership of
the Certificate Balance. Unless otherwise specified in the related
Prospectus
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<PAGE>
Supplement, each Trust Document will provide that if an Insolvency Event
(as defined herein) with respect to the Affiliated Purchaser occurs,
subject to certain conditions, the related Trust will dissolve. Certain
steps will be 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 will include
the formation of the Affiliated Purchaser as a separate, limited-purpose
corporation pursuant to a certificate 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 Bankruptcy
Code or similar applicable state laws ("Insolvency Laws") without the prior
affirmative unanimous vote of its directors). However, an Insolvency Event
with respect to the Affiliated Purchaser may occur nonetheless.
Unless otherwise specified in the related Prospectus Supplement, if an
Insolvency Event with respect to the Affiliated Purchaser occurs, the
Indenture Trustee (or, if no Notes are outstanding, the Owner Trustee) will
promptly sell, dispose of or otherwise liquidate the related Contracts in a
commercially reasonable manner on commercially reasonable terms, except
under certain limited circumstances. The net 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. Distributions
will be made first, to the payment of the Servicer Payment, second, to the
payment of interest and principal on the Notes and third, to the payment of
interest and principal on the Certificates. If the net proceeds from the
liquidation of the Contracts (after payment of the Servicer Payment and
payment of the principal amount of and accrued interest on the Notes of a
series) and any amounts on deposit in the Certificate Distribution Account
are not sufficient to pay the principal amount of and accrued interest on
the Certificates of a series in full, the amount of principal returned to
the Certificateholders will be reduced and such Certificateholders will
incur a loss, except to the extent of payments to the Certificateholders
from the Enhancement, if any. If the net proceeds from the liquidation of
the Contracts (after payment of the Servicer Payment) and any amounts on
deposit in the Note Distribution Account are not sufficient to pay the
principal amount of and accrued interest on the Notes in full, holders of
the Notes also will incur a loss, except to the extent of payments to the
Noteholders from the Enhancement, if any, applicable to the Notes. See
"The Purchase Agreements and the Trust Documents--Insolvency Event."
5. Limited Liquidity. There is currently no market for the
Securities of any series. Although the Company expects that the
underwriters of any particular series will make a secondary market for such
Securities, they will have no obligation to do so. There can be no
assurance that a secondary market will develop for the Securities of any
series or, if it does develop, that it will provide any of the
Securityholders with liquidity of investment or that it will continue for
the term of any series of Securities. Unless otherwise specified in the
related Prospectus Supplement, the Securities will be issued in book-entry,
rather than physical, form and, as a result, the liquidity of the
Securities in the secondary market and the ability of the Certificate
Owners and Note Owners to pledge the Securities may be adversely affected.
6. The Subsequent Contracts and the Pre-Funding Account. If and to
the extent specified in the related Prospectus Supplement, the conveyance
of Subsequent Contracts by CITSF during the Funding Period will be subject
to the conditions described in the related Prospectus Supplement under "The
Contract Pool." If CITSF does not originate contracts satisfying such
criteria during the Funding Period, CITSF will have insufficient contracts
to sell to the related Trust on Subsequent Transfer Dates, thereby
resulting in prepayments of principal to Noteholders and Certificateholders
as described below.
Unless otherwise specified in the related Prospectus Supplement, 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 related Trust
by the end of the Funding Period, Noteholders and Certificateholders will
receive a prepayment of principal in an amount equal to the Pre-Funded
Percentage allocable to the Noteholders and the Certificateholders,
respectively, of the Pre-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. Unless otherwise specified in the related
Prospectus Supplement, the "Pre-Funded Percentage" with respect to the
Notes or the Certificates is the percentage derived from the fraction, the
numerator of which is the initial principal balance of the Notes or the
Original Certificate Balance, as the case may be, and the denominator of
which is the sum of the initial principal balance of the Notes and the
Original Certificate Balance. 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
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Account and that therefore there will be at least a nominal amount of
principal prepaid to the Noteholders and the Certificateholders at the end
of the Funding Period.
Each Subsequent Contract must satisfy the eligibility criteria
specified in the related Prospectus Supplement and the Trust Documents at
the time of its sale to the Trust. Unless otherwise specified in the
related Prospectus Supplement, the Company (the seller of any Subsequent
Contracts to the related Trust) will certify that all such eligibility
criteria have been satisfied and CITSF (the seller of any Subsequent
Contracts to the Company) will certify that all conditions precedent to the
sale of the Subsequent Contracts to the Trust have been satisfied. Unless
otherwise specified in the related Prospectus Supplement, it is a condition
to the sale of any Subsequent Contracts to the Trust that each Rating
Agency, after receiving prior notice of the proposed transfer of Subsequent
Contracts to the Trust, shall not have advised the Seller or the Trustees
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. 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 a Trust to invest in Subsequent Contracts is entirely
dependent upon whether CITSF is able to originate recreational vehicle
contracts that meet the requirements for transfer on a Subsequent Transfer
Date under the Trust Documents. The ability of CITSF to originate such
contracts may be affected by a variety of economic and social 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 Trust Documents. 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 CITSF's ability to originate Subsequent Contracts.
7. Prepayment from the Pre-Funding Account. If and to the extent
specified in the related Prospectus Supplement, if the Pre-Funded Amount
has not been fully applied by the related Trust to purchase Subsequent
Contracts by the end of the Funding Period, then the Pre-Funded Amount will
be payable as principal to Noteholders and Certificateholders in accordance
with the Pre-Funded Percentage on the first Distribution Date following the
end of the Funding Period, or, if the end of the Funding Period is on a
Distribution Date, then on such date.
In the event that amounts remain on deposit in the Pre-Funding Account
at the end of the Funding Period and are applied to the payment of
principal to the Noteholders and Certificateholders, such partial
retirement of the Notes and Certificates may shorten the average life of
the Securities and may cause the Noteholders and Certificateholders to
experience a lower yield on the Securities. In addition, any reinvestment
risk resulting from such partial retirement will be borne by the holders of
such Securities.
8. Limited Assets. Unless otherwise specified in the related
Prospectus Supplement, each Trust will covenant to sell the Contracts (a)
if directed to do so by the related Indenture Trustee in accordance with
the related Indenture following an acceleration of a series of Notes upon
an Event of Default, (b) upon the occurrence of an Insolvency Event with
respect to any Affiliated Purchaser, and (c) in other circumstances
specified in the related Prospectus Supplement. However, there is no
assurance that the market value of the related Contracts will at any time
be equal to or greater than the aggregate outstanding principal balance of
such Notes. Therefore, upon an Event of Default with respect to such Notes
or an Insolvency Event, 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 the Notes
may not result in the occurrence of an Event of Default until the Note
Final Scheduled Distribution Date. Furthermore, upon a sale by the Trust
of the Contracts, the net proceeds from such sale remaining after payment
of all amounts due to the Servicer and the Noteholders may not be
sufficient to pay the Certificate Balance and interest accrued thereon.
If and to the extent specified in the related Prospectus Supplement,
one or more Enhancements will be available to pay principal and/or interest
on the Notes and/or the Certificates on any Distribution Date. However,
unless otherwise specified in the related Prospectus Supplement, the amount
of any Enhancement will be limited and will be
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reduced as the Pool Balance is reduced. If the amounts available under the
applicable Enhancement are exhausted, a Trust will depend solely on
payments on or with respect to the Contracts, Monthly Advances and Non-
Reimbursable Payments (as hereinafter defined) to make distributions to the
Securityholders.
9. Ratings of the Securities. It is a condition to the issuance of a
series of Securities offered pursuant to this Prospectus that the
Securities be rated in one of the four highest rating categories by at
least one Rating Agency. The ratings do not address the likelihood that
the Securities will be retired following the sale of the Contracts by the
Trustee as described under "The Purchase Agreement and the Trust
Documents--Termination." 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 Rating Agency if, in its judgment,
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
that any other rating agency will rate the 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.
10. Book Entry Registration. Unless otherwise specified in the
related Prospectus Supplement, the Securities will be offered for purchase
in book-entry form only and will be initially 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"). 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 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
Bank, societe anonyme ("Cedel") or Euroclear in Europe. No person
acquiring an interest in the Certificates through the facilities of DTC (a
"Certificate Owner") will be entitled to receive a Definitive Certificate
representing such person's interest in the Certificates, except as set
forth under "Certain Information Regarding The Securities--Definitive
Securities," and such persons will hold their interests in the Certificates
through the DTC. Unless and until Definitive Securities are issued under
the limited circumstances described herein and in the related Prospectus
Supplement, all references to actions by Securityholders shall refer to
actions taken by DTC upon instructions from its Participants (as defined
herein), and all references herein to distributions, notices, reports and
statements to Securityholders shall refer to distributions, notices,
reports and statements to DTC in accordance with DTC procedures. See
"Certain Information Regarding The Securities-- Definitive Securities."
11. Risk of Commingling. At any time that the requirements as
specified under "The Purchase Agreements and the Trust Documents--
Collections," are met, the Servicer may deposit payments on or with respect
to the Contracts and proceeds of Contracts into the Collection Account
monthly on the Business Day immediately preceding the next Distribution
Date (the "Deposit Date"). Pending such a monthly deposit into the
Collection Account, collections on the Contracts may be invested by the
Servicer at its own risk and for its own benefit and will not be segregated
from its own funds. If the Servicer were unable to remit such funds or if
the Servicer became insolvent, the holders of the Securities could incur a
loss with respect to collections not deposited in the Collection
Account.
THE TRUSTS
With respect to each series of Securities, the Seller will establish a
Trust pursuant to the related Trust Documents. Prior to the sale and
assignment of the related Contracts pursuant to the related Trust
Documents, the Trust will have no assets or obligations. 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 Certificates and the Notes,
if any, (iii) making payments on the Certificates and the Notes, if any,
(iv) entering into agreements and transactions in connection with the
Enhancement, if any, for the related series of Securities, and (v) engaging
in other activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith.
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Each Certificate will represent a fractional undivided interest in,
and each Note, if any, will represent an obligation of, the related Trust.
Each Trust will initially be capitalized with equity equal to the
"Original Certificate Balance" specified in the related Prospectus
Supplement. Unless otherwise specified in the related Prospectus
Supplement, Certificates with an aggregate original principal balance of at
least the amount specified in the related Prospectus Supplement will be
owned by the Affiliated Purchaser specified in the related Prospectus
Supplement (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 a
Trust, together with the proceeds of the initial sale of the Notes, if any,
will be used by the Trust to purchase the Initial Contracts from the Seller
pursuant to the Trust Documents and, if specified in the related Prospectus
Supplement, to fund the deposit of the Pre-Funded Amount and the deposit to
the Capitalized Interest Account and for such other purposes as are
specified in the related Prospectus Supplement.
The Servicer will service the Contracts held by each Trust and will
receive fees for such services. See "The Purchase Agreement and the Trust
Documents--Servicing Compensation." Unless otherwise specified in the
related Prospectus Supplement, CITSF will be appointed as custodian on
behalf of each Trust, and will hold the original installment sales contract
(or promissory note) as well as copies of documents and instruments
relating to each Contract and evidencing the security interest in the
Financed Vehicle securing each Contract (the "Contract Files").
THE TRUSTEE
The Trustee for each Trust will be specified in the related Prospectus
Supplement. The Trustee will perform limited administrative functions,
including making distributions from the Certificate Distribution Account.
The Trustee's liability in connection with the issuance and sale of the
Securities is limited solely to the express obligations of the Trustee as
set forth in the Trust Documents. The Trustee may appoint a co-trustee to
act as co-trustee pursuant to a co-trustee agreement with the Trustee.
A Trustee may resign at any time, in which event the Servicer will be
obligated to appoint a successor trustee. The Servicer may also remove the
Trustee if the Trustee ceases to be eligible to continue as Trustee under
the related Trust Documents or if the Trustee becomes insolvent. In such
circumstances, the Servicer will be obligated to appoint a successor
trustee. Any resignation or removal of a Trustee and appointment of a
successor trustee will be subject to any conditions or approvals specified
in the related Prospectus Supplement and will not become effective until
acceptance of the appointment by the successor trustee.
Unless otherwise specified in the related Prospectus Supplement, the
Trust Documents will provide that the Servicer will pay the Trustees' fees.
The Trust Documents will further provide that the Trustees will be entitled
to indemnification by the Servicer for, and will be held harmless against,
any loss, liability or expense incurred by the Trustees not resulting from
its own willful misfeasance, bad faith or negligence (other than by reason
of a breach of any of its representations or warranties set forth in the
Trust Documents).
THE TRUST PROPERTY
Each Certificate will represent a fractional undivided interest in the
related Trust. Each series of the Notes, if any, will be an obligation of
the related Trust and will be secured by assets of the Trust (other
than the Certificate Distribution Account and other accounts or property
specified in the related Prospectus Supplement). The property of each
Trust will include, among other things, (i) a pool (the "Contract Pool") of
retail installment sale contracts secured by new and used recreational
vehicles between Dealers and Obligors, consisting of the Initial Contracts
and the Subsequent Contracts (if any); (ii) all monies received under the
Initial Contracts on or after the Initial Cut-off Date and the Subsequent
Contracts (if any) 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 Trust Documents
(including all investments in such accounts and all income from the funds
therein and all proceeds thereof, other than investment earnings on any
account so specified in the related Prospectus Supplement) as described
herein; (iv) if specified in the related Prospectus Supplement, specified
credit or cash flow enhancement and all monies on deposit in
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the Pre-Funding Account, the Capitalized Interest Account and any other
account specified in the related Prospectus Supplement (including, unless
otherwise specified in the related Prospectus Supplement, all investments
in such accounts and all income from the funds therein and all proceeds
thereof, other than investment earnings on any account so specified in the
related Prospectus Supplement); (v) assignments of the 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 Trust Documents; and
(viii) any and all proceeds of the foregoing.
Pursuant to agreements between CITSF and many of the Dealers, each
Dealer is obligated after origination to repurchase from CITSF recreational
vehicle contracts which do not meet certain representations and warranties
made by such Dealer. Such representations and warranties relate primarily
to the origination of the contracts and the perfection of the security
interests in the related recreational vehicles, and do not typically relate
to the creditworthiness of the related Obligors or the collectability of
such Contracts. Unless otherwise specified in the related Prospectus
Supplement, any Dealer agreement with respect to the Contracts will not be
assigned by CITSF to the Company or by the Company to the Trust. However,
unless otherwise specified in the related Prospectus Supplement, the Trust
Documents will authorize CITSF to transfer a Contract to a Dealer upon a
repurchase by a Dealer pursuant to a Dealer agreement and will require that
any recovery of amounts with respect to a Contract by CITSF pursuant to
Dealer repurchase obligations be deposited in the Collection Account for
the related Trust in satisfaction of CITSF's repurchase obligations under
the Trust Documents to the extent, if any, that CITSF has not already
satisfied that obligation. The assignments by the Dealers of Contracts to
CITSF do not generally provide for recourse to the Dealer for unpaid
amounts in the event of a default by an Obligor, other than in connection
with the breach of the Dealer's representations and warranties.
THE CONTRACT POOL
Each pool of Contracts with respect to a Trust (a "Contract Pool")
will consist of retail installment sales contracts (collectively, the
"Contracts") to finance the purchase of new and used recreational vehicles.
The Contracts will be originated or purchased by CITSF or its affiliates
(including CITCF-NY) in the ordinary course of business. Except as
otherwise specified in the related Prospectus Supplement, the Contracts
will (i) be fully amortizing, (ii) bear interest at a fixed or variable
rate (the "Contract Rate"), and (iii) be simple interest Contracts.
For simple interest Contracts, the principal balance of the Contract
is amortized over a series of equal monthly payments. Each monthly
interest payment is calculated by multiplying the outstanding principal
balance of the loan by the stated interest rate. Such product is then
multiplied by a fraction, the numerator of which is the number of days
elapsed since the preceding payment of interest was made and the
denominator of which is either 365 or 360, depending on applicable state
law. Payments received on a simple interest Contract are applied first to
interest accrued to the date payment is received and second to reduce the
unpaid principal balance of the Contract. Accordingly, if an Obligor makes
a payment on the Contract less than 30 days after the previous payment, the
interest collected for the period since the preceding payment was made will
be less than 30 days' interest, and the amount of principal repaid in such
month will be correspondingly greater. Conversely, if an Obligor makes a
payment on the Contract more than 30 days after the previous payment, the
interest collected for the period since the preceding payment was made will
be greater than 30 days' interest, and the amount of principal repaid in
the month will be correspondingly reduced. As a result, based on the
payment characteristics of a particular Obligor, the principal due on the
final due date of a simple interest Contract may vary from the principal
payment that would be made if payments for such Contract were always made
on their due dates.
If an Obligor pays more than one installment on a simple interest
Contract at a time, the regular installment will be treated as described
above. However, the entire amount of the additional installment or
installments will be treated as a principal payment and applied to reduce
the principal balance of the related Contract. The Obligor will not be
required to make any payments on such a Contract (a "Paid-Ahead Contract"),
for the number of due dates (the Paid-Ahead Period") for which it has
paid in advance the full installment. However, during the Paid-Ahead
Period interest will continue to accrue on the principal balance of the
Contract, as reduced by the application of the early installment. As a
result, when the Paid-Ahead Period ends and the Obligor pays the next
required installment, such payment may be insufficient to cover the
interest that has accrued since the last payment by the Obligor.
Notwithstanding such insufficiency, the Contract would be considered to be
current. This situation would continue
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until the monthly installments are once again sufficient to cover all
accrued interest and to reduce the principal balance of the Contract.
Depending on the principal balance and interest rate of the related
Contract and on the number of installments paid in advance of their due
dates, there may be extended periods of time during which simple interest
Contracts that are not amortizing are considered current.
Unless otherwise specified in the related Prospectus Supplement, each
Contract provides that an Obligor may prepay its Contract, in whole or in
part, at any time, without a prepayment premium.
The Financed Vehicles will consist of motor homes, travel trailers and
other types of recreational vehicles. Motor homes are recreational camping
and travel vehicles built on or as an integral part of a self-propelled
motor vehicle chassis. A motor home may provide kitchen, sleeping and
bathroom facilities, is equipped with the ability to carry fresh water and
sewage and may be one of the following types:
Motor Home: The living unit has been constructed on a bare,
specially designed motor vehicle chassis.
Van Camper: A panel-type truck to which the manufacturer
typically adds any two of the following conveniences: sleeping,
kitchen and toilet facilities. The manufacturer also typically
adds electrical hookup, water storage, water hookup and top
extension to provide more headroom.
Mini Motor Home: This unit is built on an automotive
manufactured van frame with an attached cab section typically
having a gross vehicle weight rating of 6,500 pounds or more,
with an overall height of less than eight feet. The manufacturer
completes the body section containing the living area and
attaches it to the cab section.
Compact Motor Home: This unit is built on an automotive
manufactured cab and chassis typically having a gross vehicle
weight rating of less than 6,500 pounds. It may provide any or
all of the features of the larger units.
Travel trailers are trailers designed to be towed by a motorized
vehicle (e.g., automobile, van or pickup truck) and are of a size and
weight that does not require a special highway movement permit. A travel
trailer is designed to provide temporary living quarters for recreational,
camping or travel use, does not require permanent on-site hookup and may be
one of the following types:
Conventional Travel Trailer: This unit ranges typically
from 12 feet to 35 feet in length, and is towed by means of a
bumper or frame hitch attached to the towing vehicle.
Park Trailer: These units are designed for seasonal or
temporary living. When set up, the unit may be connected to
utilities necessary for operation of installed fixtures and
appliances. The unit is built on a single chassis mounted on
wheels. Park trailers are no more than 40 feet in overall body
length and no more than 12 feet in overall body width when in the
traveling mode. The unit is designed for set-up by persons
without special skills using only hand tools.
Fifth-Wheel Travel Trailer: This unit can be equipped in the
same way as the conventional travel trailer, but is constructed
with a raised forward section that allows a bi-level floor plan.
This style is designed to be towed by a vehicle equipped with a
device known as a fifth-wheel hitch.
Folding Camping Trailer: This is a portable unit mounted on
wheels and constructed with collapsible partial sidewalls which
fold for towing by another vehicle and unfold at the campsite to
provide temporary living quarters for recreational, camping or
travel use.
Slide-In Camper: This is a portable unit designed to be
loaded onto and unloaded from the bed of a pickup truck,
constructed to provide temporary living quarters for recreational
travel or camping use.
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Certain detailed information regarding the Contract Pool as of
the Initial Cut-off Date or such other date specified therein for each
Trust will be set forth in the related Prospectus Supplement.
YIELD AND PREPAYMENT CONSIDERATIONS
Unless otherwise specified in the related Prospectus Supplement, the
Contracts will be simple interest retail installment sales contracts and
promissory notes. Payments on simple interest obligations are applied
first to interest accrued through the payment date, and the remainder is
applied to reduce the unpaid principal balance. Accordingly, if an Obligor
pays an installment before its due date, the portion of the payment
allocable to interest for the period will be less than if the payment had
been made on the due date, the portion of the payment applied to reduce the
principal balance will be correspondingly greater, and the principal
balance will be amortized more rapidly than scheduled. Conversely, if an
Obligor pays an installment after its due date, the portion of payment
allocable to interest will be greater than if the payment had been made on
the due date, the portion of the payment applied to reduce the principal
balance will be correspondingly less, and the principal balance will be
amortized more slowly than scheduled, in which case a larger portion of the
principal balance may be due on the final scheduled payment date.
Unless otherwise specified in the related Prospectus Supplement, each
Contract provides that it is prepayable, without premium, by the Obligor at
any time. Prepayments (or, for this purpose, equivalent payments to a
Trust) also may result from liquidations due to default, receipt of
proceeds from insurance policies, repurchases by CITSF due to breach of a
representation or warranty or breach of a covenant in the Trust Documents,
or as a result of CITSF exercising its option to purchase the Contract
Pool. See "The Purchase Agreements and the Trust Documents." The rate of
prepayments on the Contracts may be influenced by a variety of economic,
social and other factors. No assurance can be given that prepayments on
the Contracts will conform to any estimated or actual historical
experience, and no prediction can be made as to the actual prepayment rates
which will be experienced on the Contracts. Certificateholders and
Noteholders will bear all reinvestment risk resulting from the timing of
payments of principal on the Certificates or the Notes, as the case may be.
POOL FACTORS
Unless otherwise specified in the related Prospectus Supplement, the
"Certificate Pool Factor" for each class of Certificates 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
Original 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.
Unless otherwise specified in the related Prospectus Supplement, the
"Note Pool Factor" for each class of Notes, if any, 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.
With respect to each Trust and pursuant to the related Trust
Documents, unless otherwise specified in the related Prospectus Supplement,
on each Distribution Date, the Certificateholders and Noteholders, if any,
will receive monthly reports concerning the payments received on the
Contracts, the Pool Balance, the Certificate Pool Factor, the Note Pool
Factor, if any, 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. Certificate Owners and Note Owners, if any,
may receive such reports, upon written request, together with a
certification that they are Certificate Owners or Note Owners, as the case
may be, and payment of any expenses associated with the distribution of
such reports, from the Trustee and the Indenture Trustee (if any) at the
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addresses specified in the related Prospectus Supplement. See "Certain
Information Regarding the Securities--Statements to Securityholders."
USE OF PROCEEDS
Unless otherwise specified in the related Prospectus Supplement, the
Company will sell the Initial Contracts to a Trust concurrently with the
sale of the Securities and the net proceeds from the sale of the Securities
will be applied by such Trust 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, if any, to the deposit of the initial amount into the
Capitalized Interest Account, if any, and to the deposit of the initial
amount, if any, into a Reserve Fund (as defined herein), if any. Such net
proceeds less the payment of such expenses, the Pre-Funded Amount, if any,
and the initial deposit into the Capitalized Interest Account, if any, and
the Reserve Fund, if any, represent the purchase price paid by a Trust to
the Company for the sale of the Initial Contracts to such Trust. Such
amount will be determined as a result of the pricing of the Securities,
through the offering described in the related Prospectus Supplement. The
net proceeds to be received by the Company from the sale of the Initial
Contracts to a Trust will be paid by the Company 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 and the payment of the
purchase price to CITCF-NY for any Contracts acquired by CITSF from CITCF-
NY.
THE CIT GROUP HOLDINGS, INC.
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 a lesser extent to consumers. 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 of
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 which offer commercial and consumer financing, and factoring products
and services to clients. The Corporation had 2,738 employees at December
31, 1995, up from 2,689 employees at December 31, 1994.
The Dai-Ichi Kangyo Bank, Limited ("DKB") owns eighty percent (80%) of
the issued and outstanding shares of common stock of CIT. DKB purchased a
sixty percent (60%) common stock interest in CIT from Manufacturers Hanover
Corporation ("MHC") at year-end 1989 and acquired an additional twenty
percent (20%) common stock interest in CIT on December 15, 1995 from CBC
Holding (Delaware) Inc. (formerly known as MHC Holdings (Delaware) Inc.)
("CBC Holding"). DKB has a five-year option, expiring December 15, 2000,
to purchase the remaining twenty percent (20%) common stock interest from
CBC Holding.
CBC Holding became a direct, wholly owned subsidiary of Chemical
Banking Corporation ("CBC") after the merger between MHC and CBC on
December 31, 1991. On March 31, 1996, CBC was merged into The Chase
Manhattan Corporation ("CMC"), and CMC became the sole stockholder of CBC
Holding.
In accordance with a stockholders agreement among DKB, CMC, as direct
successor to CBC and indirect successor to MHC, and CIT, dated as of
December 29, 1989, as amended by an Amendment to Stockholders' Agreement,
dated December 15, 1995 (the "Stockholders Agreement"), one nominee of the
Board of Directors is designated by CMC. The Stockholders Agreement also
contains restrictions with respect to the transfer of the 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 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 CIT. The Company maintains
its principal office at 650 CIT Drive, Livingston, New Jersey 07039. Its
telephone number is (201) 535-3514.
As described herein, the obligations of the Company with respect to
the Securities are limited. The Company will make no representations or
warranties with respect to the Contracts and 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.
Unless otherwise specified in the related Prospectus Supplement,
neither CIT nor any of its affiliates, including the Company and CITSF,
will be obligated with respect to the Securities. 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, marine products
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 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, home equity, marine products and
manufactured housing retail installment contracts. The Asset Service
Center is supplemented by outside collectors and field remarketers located
throughout the United States.
CITSF's general policies with regard to the origination of
recreational vehicle installment sale contracts are described under
"--Contract Origination" and "--CITSF's Underwriting Guidelines." See
"--Servicing" for a description of certain of CITSF's servicing policies.
CONTRACT ORIGINATION
Although CITSF does purchase recreational vehicle installment sale
contracts in bulk from other lenders, unless otherwise specified in the
related Prospectus Supplement, all of the Contracts in the Contract Pool
have been originated by CITSF or CITCF-NY 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
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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.
If CITSF believes that an obligor on a recreational vehicle contract
(including one of the Contracts) is likely to refinance the contract as a result
of interest rate changes or other reasons, CITSF may in its discretion attempt
to retain such obligor as a customer by soliciting the obligor to refinance the
contract with CITSF.
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.
All credit applications are entered into an 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 without review by a credit officer. 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.
The retail customer generally has had a stable 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 10% and an
overall favorable credit profile. Approval of retail customers that do not
meet the above-described retail customer profile is 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 considered in determining
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 110% 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.
In August 1994, CITSF's credit criteria were changed to permit greater
reliance on credit scores and overall evaluation instead of using specific
disqualifying criteria (e.g., a minimum of two years of employment). The
interest rate charged on each recreational vehicle contract originated
since August 1994 reflects CITSF's evaluation of the relative risk
associated with an individual's application.
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
Through its Asset Service Center, CITSF services recreational vehicle,
manufactured housing, home equity, and other consumer loans. CITSF services
all of the recreational vehicle contracts it originates or purchases,
whether on
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an individual basis or in bulk. CITSF is actively seeking arrangements
pursuant to which it will service recreational vehicle contracts held by
other entities, including contracts which were not purchased by CITSF or
sold to such other entities by CITSF. Generally, such servicing
responsibilities are, and would be, also carried out through CITSF's Asset
Service Center. Servicing responsibilities include collecting principal and
interest payments, taxes, insurance premiums, where applicable, and other
payments from obligors and, where such contracts have been sold, remitting
principal and interest payments to the holders thereof, to the extent such
holders are entitled thereto. Collection procedures include repossession
and resale of 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. The Asset
Service Center has developed a nationwide auction network to facilitate
resale efforts on such repossessions.
DELINQUENCY AND LOAN LOSS EXPERIENCE
Each Prospectus Supplement will include information on CITSF's loss
and delinquency experience with respect to its servicing portfolio of
recreational vehicle contracts. However, there can be no assurance that
such experience will be indicative of the performance of the Contracts
included in a particular Contract Pool. Unless otherwise specified in the
related Prospectus Supplement, the tables setting forth the delinquency
experience for the portfolio of recreational vehicle contracts originated
and serviced by CITSF will exclude contracts acquired by CITSF through
portfolio purchases and contracts in repossession.
THE CERTIFICATES
With respect to each Trust, one or more classes of Certificates of a
given series will be issued pursuant to the Trust Documents (as defined
herein) to be entered into among the Seller, the Servicer, and the Trustee,
forms of which have been filed as exhibits to the Registration Statement of
which this Prospectus forms a part.
GENERAL
A series of Securities may include one or more classes of Asset-Backed
Certificates (the "Certificates") issued pursuant to the Trust Documents.
Payments in respect of the Certificates will be subordinated to payments on
the Notes, if any, to the extent described in the related Prospectus
Supplement. The following summary describes certain terms of the
Certificates and the Trust Documents. 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 Documents, and
the following summary will be supplemented in whole or in part by the
related Prospectus Supplement. Where this summary refers to particular
provisions or terms used in the Trust Documents, the actual provisions
(including definitions of terms) are incorporated by reference as part of
such summary.
Unless otherwise specified in the related Prospectus Supplement, the
Certificates will be offered for purchase in minimum denominations of
$20,000 and integral multiples of $1,000 in excess thereof and will be
available in book-entry form only; provided, however, that one Certificate
of each series may be issued in a denomination other than an integral
multiple of $1,000 such that the applicable Affiliated Purchaser specified
in the related Prospectus Supplement, if any, may be issued at least the
portion of the Original Certificate Balance specified in the related
Prospectus Supplement. Unless otherwise specified in the related Prospectus
Supplement, each class of the Certificates will initially be represented by
a single Certificate registered in the name of the nominee of DTC, except
as provided below. Unless otherwise specified in the related Prospectus
Supplement, DTC's nominee will be Cede & Co. ("Cede"). 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 under
"Certain Information Regarding The Securities--Definitive Securities."
Unless and until Definitive Certificates are issued under the limited
circumstances described in the related Prospectus Supplement and 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."
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DISTRIBUTION OF PRINCIPAL AND INTEREST ON THE CERTIFICATES
The Certificates will bear interest at the rate specified in the
related Prospectus Supplement (the "Pass-Through Rate"). The timing and
priority of distributions, seniority, allocations of loss, Pass-Through
Rate and amount of or method of determining distributions with respect to
principal and interest (or, where applicable, with respect to principal
only or interest only) on the Certificates of any series will be described
in the related Prospectus Supplement. Distributions of interest on the
Certificates will be made on the dates specified in the related Prospectus
Supplement (each, a "Distribution Date") and, unless otherwise specified in
the related Prospectus Supplement, will be made prior to distributions with
respect to principal. A series may include one or more classes of Stripped
Certificates entitled to (i) distributions in respect of principal with
disproportionate, nominal or no interest distribution, or (ii) interest
distributions, with disproportionate, nominal or no distributions in
respect of principal. Each class of Certificates may have a different
Pass-Through Rate, which may be a fixed, variable or adjustable Pass-
Through Rate (and which may be zero for certain classes of Stripped
Certificates), or any combination of the foregoing. The related Prospectus
Supplement will specify the Pass-Through Rate for each class of
Certificates, or the initial Pass-Through Rate and the method for
determining the Pass-Through Rate. Unless otherwise specified in the
related Prospectus Supplement, interest on the Certificates will be
calculated on the basis of a 360-day year consisting of twelve 30-day
months. Unless otherwise specified in the related Prospectus Supplement,
distributions in respect of the Certificates will be subordinate to
payments in respect of the Notes, if any, as more fully described in the
related Prospectus Supplement. Distributions in respect of principal of
any class of Certificates will be made on a pro rata basis among all of the
Certificateholders of such class.
In the case of a series of Certificates which includes two or more
classes of Certificates, the timing, sequential order, priority of payment
or amount of distributions in respect of principal, and any schedule or
formula or other provisions applicable to the determination thereof, of
each such class shall be as set forth in the related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement,
payments of interest and principal on the Certificates 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
on the date specified in the related Prospectus Supplement. Unless
otherwise specified in the related Prospectus Supplement, with respect to
any Distribution Date, the Due Period will be the calendar month preceding
the month of such Distribution Date. Unless otherwise specified in the
related Prospectus Supplement, payments on the Certificates on each
Distribution Date will be made to the holders of record of the related
Certificates on the day immediately preceding such Distribution Date or, in
the event Definitive Certificates have been issued, at the close of
business of 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 states of New York, Oklahoma and
such other states (if any) specified in the related Prospectus Supplement
are authorized or required by law, regulation or executive order to be
closed.
THE NOTES
GENERAL
A series of Securities may include one or more classes of Asset-Backed
Notes (the "Notes" and, together with the Certificates, the "Securities")
issued pursuant to an Indenture (as amended and supplemented from time to
time, the "Indenture") between a Trust and an Indenture Trustee specified
in the related Prospectus Supplement (the "Indenture Trustee"), a form of
which has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part. Unless otherwise specified in the related
Prospectus Supplement, no Notes will be issued as part of any series. The
following 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, and the following summary will be supplemented in
whole or in part by the related Prospectus Supplement. Where this summary
refers to particular provisions or terms used in the Indenture, the actual
provisions (including definitions of terms) are incorporated by reference
as part of such summary.
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Unless otherwise specified in the related Prospectus Supplement, the
Notes will be offered for purchase in minimum denominations of $1,000 and
integral multiples of $1,000 in excess thereof in book-entry form only.
Unless otherwise specified in the related Prospectus Supplement, each class
of Notes will initially be represented by a single Note registered in the
name of Cede, the nominee of DTC, except as provided below. No person
acquiring an interest in the Notes through the facilities of DTC (a "Note
Owner" and, together with a Certificate Owner, a "Security Owner") will be
entitled to receive a Note representing such person's interest in the
Notes, except as set forth 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 in the related Prospectus Supplement and
herein, all references to actions by Noteholders shall refer to actions
taken by DTC upon instructions from its Participants, and all references in
the related Prospectus Supplement and 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."
PAYMENT OF PRINCIPAL AND INTEREST ON THE NOTES
The timing and priority of payment, seniority, allocations of loss,
Interest Rate and amount of or method of determining payments of principal
and interest on each class of Notes will be described in the related
Prospectus Supplement. The right of holders of any class of Notes to
receive payments of principal and interest may be senior or subordinate to
the rights of holders of any class or classes of Notes of such series, or
any class of Certificates, as described in the related Prospectus
Supplement. Unless otherwise provided in the related Prospectus
Supplement, payments of interest on the Notes will be made prior to
payments of principal thereon. A series may include one or more classes of
Stripped Notes entitled to (i) principal payments with disproportionate,
nominal or no interest payment, or (ii) interest payments with
disproportionate, nominal or no principal payments. Each class of Notes
may have a different Interest Rate, which may be a fixed, variable or
adjustable Interest Rate (and which may be zero for certain classes of
Stripped Notes), or any combination of the foregoing. The related
Prospectus Supplement will specify the Interest Rate for each class of
Notes, or the initial Interest Rate and the method for determining the
Interest Rate. One or more classes of Notes of a series may be redeemable
under the circumstances specified herein and in the related Prospectus
Supplement.
Unless otherwise specified in the related Prospectus Supplement,
payments in respect of interest to Noteholders of all classes within a
series will have the same priority. Under certain circumstances, the
amount available for such payments could be less than the aggregate amount
of interest payable on the Notes on any of the dates specified for payments
in the related Prospectus Supplement, in which case each class of
Noteholders will receive its ratable share (based upon the aggregate amount
of interest due to such class of Noteholders) of the aggregate amount then
available to be distributed in respect of interest on the Notes. In the
case of a series of Securities which includes two or more classes of Notes,
the sequential order and priority of payment in respect of principal and
interest, and any schedule or formula or other provisions applicable to the
determination thereof, of each such class will be set forth in the related
Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement,
payments of interest and principal on the Notes will be made on each
Distribution Date, commencing on the date specified in the related
Prospectus Supplement. Unless otherwise specified in the related
Prospectus Supplement, with respect to any Distribution Date, the Due
Period will be the calendar month preceding the month of such Distribution
Date. Unless otherwise specified in the related Prospectus Supplement,
payments on the Notes on each Distribution Date will be made to the holders
of record of the related Notes on the related Record Date.
THE INDENTURE
A form of Indenture has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. CITSF will provide a copy
of the applicable Indenture (without exhibits) upon request to a holder of
Notes issued thereunder.
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Modification of Indenture without Noteholder Consent. With respect to
each Trust, the Issuer and the related 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 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; or (viii) to add
any provisions to, change in any manner, or eliminate any of the provisions
of, the Indenture, or modify in any manner the rights of Noteholders under
such Indenture; provided that any action specified in this clause (viii)
subject to other conditions set forth in the Indenture, 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 in the Indenture. Any action specified in
clause (viii) shall be taken only upon satisfaction of the Rating Agency
Condition.
"Rating Agency Condition" with respect to any action means, the
condition that the Rating Agency or Agencies specified in the related
Prospectus Supplement shall have notified the Seller, the Servicer and the
Issuer in writing that such action will not result in the downgrade or
withdrawal of the then current ratings of the Notes or the Certificates.
Modification of Indenture with Noteholder Consent. With respect to
each Trust, with the consent of the holders of not less than a majority of
the aggregate outstanding principal amount of the Notes, and with prior
notice to the Rating Agencies, the Issuer and the Indenture Trustee may
execute a supplemental indenture to add provisions to, change in any manner
or eliminate any provisions of, the 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 may: (i) change the
due date of any installment of principal of or interest on any Note or
reduce the principal amount thereof, the interest rate specified thereon or
the redemption price with respect thereto or change any place of payment
where or the coin or currency in which any Note or any interest thereon is
payable; (ii) impair the right to institute suit for the enforcement of
certain provisions of the Indenture regarding payment; (iii) reduce the
percentage of the aggregate principal amount of the outstanding Notes the
consent of the holders of which is required for any such supplemental
indenture or the consent of the holders of which is required for any waiver
of compliance with certain provisions of the Indenture or of certain
defaults thereunder and their consequences as provided for in the
Indenture; (iv) modify or alter the provisions of the Indenture regarding
the voting of Notes held by the related 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)Edecrease 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.
Events of Default; Rights Upon Event of Default. With respect to each
Trust, unless otherwise specified in the related Prospectus Supplement,
"Events of Default" under the Indenture will consist of: (i) any failure to
pay interest on any Note as and when the same becomes due and payable,
which failure continues unremedied for five days; (ii) any failure (a) to
make any installment of the principal of any Note as and when the same
becomes due and payable which failure continues unremedied for thirty days
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 thirty days after the giving
of written notice of such failure to the Issuer and the Seller (or the
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Servicer, as applicable), by the Indenture Trustee or to the Issuer and the
Seller (or the Servicer, as applicable), and the Indenture Trustee by the
holders of not less than 25% of the aggregate outstanding principal amount
of the Notes; (iii) failure to pay in full the outstanding principal
balance of any Notes on or prior to the Note Final Scheduled Distribution
Date; and (iv) certain events of insolvency, readjustment of debt,
marshaling 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, unless
otherwise specified in the related Prospectus Supplement, 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, unless otherwise specified in the related
Prospectus Supplement, the failure to pay principal on a class of Notes
generally will not result in the occurrence of an Event of Default until
the Note Final Scheduled Distribution Date.
Unless otherwise specified in the related Prospectus Supplement, if an
Event of Default should occur and be continuing with respect to the Notes
of any series, the related Indenture Trustee or holders of not less than a
majority in aggregate outstanding principal amount of such Notes 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 not less than a majority of the aggregate outstanding principal amount
of the Notes.
Unless otherwise specified in the related Prospectus Supplement, if
the Notes of any series are due and payable following an Event of Default
with respect thereto, the related Indenture Trustee may institute
proceedings to collect amounts due or foreclose on Trust property, exercise
remedies as a secured party under the related Contracts, 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. Unless otherwise specified in the related
Prospectus Supplement, the Indenture Trustee, however, is prohibited from
selling the related Contracts following an Event of Default, unless (i) the
holders of all the outstanding related 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 related 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 not less than a majority of the aggregate
outstanding principal amount of the Notes. Unless otherwise specified in
the related Prospectus Supplement, 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 payments of the Principal
Liquidation Loss Amount (as defined in the related Prospectus Supplement)
and other payments from the Enhancement (if any) applicable to the
Certificates).
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 a series of 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 not less than a majority in aggregate outstanding principal
amount of the Notes will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the
Indenture Trustee and the holders of not less than a majority in aggregate
outstanding principal amount of such Notes may, in certain cases, waive any
past default with respect thereto, except a default (i) in the payment of
principal of or interest on any of the Notes or (ii) in respect of a
covenant or provision of the Indenture that cannot be modified or amended
without the consent of the Holder of each Note.
No holder of a Note of any series will have the right to institute any
proceeding with respect to the related 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
aggregate outstanding principal amount of the 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
sixty days after its receipt of such notice, request and offer of indemnity
failed to institute
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such proceeding, and (v) no direction inconsistent with such written
request has been given to the Indenture Trustee during such sixty-day
period by the holders of not less than a majority in aggregate outstanding
principal amount of such 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 ninety 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, each Indenture Trustee and the related Noteholders, by
accepting the related Notes, will covenant that they will not, for a period
of one year and one day after the termination of the Indenture, institute
against the Affiliated Purchaser, if any, the Company or the related 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 (if any) 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 related Notes or for the agreements of the
related Trust contained in the Indenture.
Certain Covenants. Unless otherwise specified in the related
Prospectus Supplement, each Indenture will provide that the related Trust
may not consolidate with or merge with or 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
timely 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, (v) any action as is necessary to maintain the lien and
security interest created by the Indenture shall have been taken, and (vi)
the Trust has received an opinion of counsel to the effect that such
consolidation or merger will have no material adverse tax consequences to
the Trust or to any related Noteholder or Certificateholder.
Unless otherwise specified in the related Prospectus Supplement, each
Trust will covenant that it 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) (collectively, the
"Related Documents"), sell, convey, 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 or interest payable in respect of the related
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 related Indenture to be impaired or permit the lien of
the Indenture to be amended, hypothecated, subordinated, terminated or
discharged, or permit any person to be released from any covenants or
obligations with respect to the related Notes under such Indenture except
as may be expressly permitted thereby or (v) permit any lien, charge,
excise, claim, security interest, mortgage or other encumbrance (other than
the lien of the Indenture) 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.
No Trust will incur, assume or guarantee any indebtedness other than
indebtedness incurred pursuant to the related Notes and the related
Indenture or otherwise in accordance with the Related Documents.
Annual Compliance Statement. Each Trust will be required to file
annually with the related 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 related Noteholders a brief report
relating to its eligibility and qualification to continue as Indenture
Trustee under the related 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
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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. An Indenture will be
discharged with respect to the assets of the Trust securing the related
Notes upon the delivery to the related 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 for a series of Notes
will be specified in the related Prospectus Supplement. 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 will not become
effective until acceptance of the appointment by the successor trustee and
will be subject to any conditions or approvals, if any, specified in the
related Prospectus Supplement.
The Trust Documents will provide that the Servicer will pay the
Indenture Trustee's fees. The Trust Documents will further provide that the
Indenture Trustee will be entitled to indemnification by the Servicer for,
and will be held harmless against, any cost, loss, liability, claim, damage
or expense incurred by the Indenture Trustee in connection with the
acceptance or performance of the trusts and duties contained in the
Indenture in accordance with the terms and conditions therein, not
resulting from its own willful misfeasance, bad faith or gross negligence
(other than by reason of a breach of any of its representations or
warranties set forth in the Indenture).
Trust Indenture Act. Each Indenture will comply with all applicable
provisions of the Trust Indenture Act of 1939, as amended.
ENHANCEMENT
General. The Prospectus Supplement will specify whether there is
Enhancement for any class of the Securities of a series and, if so, the
material terms of such Enhancement. Any Enhancement may be intended (i) to
enhance the likelihood of receipt by the Certificateholders and/or the
Noteholders, if any, of the full amount of principal and interest due
thereon and to decrease the likelihood that the Certificateholders and/or
the Noteholders, if any, will experience losses, or (ii) to provide
protection against changes in interest rates or against other risks, or
(iii) to supplement the interest rate on Contracts, in each case to the
extent and under the conditions specified in the related Prospectus
Supplement. Unless otherwise specified in the related Prospectus
Supplement, any Enhancement for a class of Securities will not provide
protection against all risks of loss and will not guarantee repayment of
the entire principal and interest thereon. If losses occur which exceed
the amount covered by any Enhancement or which are not covered by any
Enhancement, Securityholders will bear their allocable share of such
losses. In addition, if a form of Enhancement covers more than one class
of Securities of a series, Securityholders of any such class will be
subject to the risk that such Enhancement will be exhausted by the claims
of Securityholders of other classes.
Subordination of Certificates. Unless otherwise specified in the
related Prospectus Supplement, the rights of Certificateholders 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 which the Noteholders are entitled to receive on the related
Distribution Date. Consequently, unless otherwise specified in the related
Prospectus Supplement, no distribution will be made to the
Certificateholders on any Distribution Date in respect of (i) interest
until the full amount of interest and principal on the Notes payable on
such Distribution Date has been distributed to the Noteholders, other than
payments from the applicable Enhancement, if any, and (ii) principal until
the Notes have been paid in full, other than distributions in respect of
the Principal Liquidation Loss Amount to the extent, if any, set forth in
the related Prospectus Supplement.
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To the extent specified in the related Prospectus Supplement, the
rights of one or more classes of Notes of a series to receive distributions
of interest and principal may be subordinated to the rights of one or more
other classes of Notes of a series to receive payment in full of all
amounts of interest and principal which are payable thereon on each
Distribution Date.
Other Enhancement. The amounts and types of credit or cash flow
enhancement arrangements (each, an "Enhancement"), if any, with respect to
each class of Securities will be set forth in the related Prospectus
Supplement. If and to the extent provided in the related Prospectus
Supplement, Enhancement may be in the form of a financial guaranty
insurance policy, letter of credit, CIT Limited Guarantee, reserve fund,
third party guarantee, cash collateral account, derivative product, credit
facility, yield supplement agreement, overcollateralization, guaranteed
investment contract, guaranteed rate agreement, other agreements with
respect to third party payments or other support, or other form of credit
or cash flow enhancement, or any combination thereof, as may be described
in the related Prospectus Supplement. If specified in the related
Prospectus Supplement, Enhancement for a class of Securities of a series
may cover one or more other classes of Securities in such series. Further
information regarding providers of Enhancement, including financial
information when material, will be included in the related Prospectus
Supplement.
Reserve Fund. If so provided in the related Prospectus Supplement, an
account (a "Reserve Fund") may be established and funded by any combination
of cash, one or more irrevocable letters of credit, Eligible Investments,
one or more derivative products, amounts otherwise distributable to one or
more classes of Securityholders or to the owners of any Retained Yield (as
defined herein), or any other instrument satisfactory to any Rating Agency.
A Reserve Fund may be funded from the Available Amount remaining on each
Distribution Date after all amounts then due have been paid to the
Certificateholders, the Noteholders, if any, the Servicer, and any provider
of Enhancement. In addition, with respect to any series of Securities as
to which Enhancement includes a letter of credit or a derivative product,
if so specified in the related Prospectus Supplement, under certain
circumstances the remaining amount of the letter of credit may be drawn by
the Trustee or the termination payment under a derivative product may be
demanded by the Trustee, and in each case deposited in a Reserve Fund.
Funds in a Reserve Fund will be applied, invested and maintained in the
manner and under the conditions specified in such Prospectus Supplement.
Amounts in a Reserve Fund may be distributed to Securityholders, applied to
reimburse the Servicer for outstanding advances, or may be used for other
purposes, in the manner and to the extent specified in the related
Prospectus Supplement. In the event that a Reserve Fund is funded through
the application of the Available Amount remaining on each Distribution Date
after all amounts then due have been paid to the Certificateholders, the
Noteholders, if any, the Servicer and any provider of Enhancement, it may
be referred to as a "Spread Account." In the event that a Reserve Fund is
applied to supplement the monthly interest payments on certain Contracts in
the Contract Pool, it may be referred to as a "Yield Supplement Account."
In the event that the Reserve Fund is funded through the proceeds of a loan
to the Trust by a third party lender, it may be referred to as a "Cash
Collateral Account." The related Prospectus Supplement will specify
whether any Reserve Fund will be established as part of the Trust or held
outside the Trust by a collateral agent or similar third party (who may be
a Trustee acting in a different capacity). The related Prospectus
Supplement will describe the required levels of funding of a Reserve Fund,
the circumstances under which a Reserve Fund may be applied to make
distributions on a class of Securities, and the circumstances in which
funds in a Reserve Fund may be released to persons other than
Securityholders. A Trust may contain more than one Reserve Fund, each of
which may apply only to a specified class of Securities or to specified
Contracts.
The Seller or the Affiliated Purchaser, if any, may at any time,
without consent of the Securityholders, sell, transfer, convey or assign in
any manner its rights to and interests in distributions from the Reserve
Fund provided that (i) the Rating Agency Condition is satisfied , (ii) the
Seller or the Affiliated Purchaser, as the case may be, provides to the
Trustees an opinion from independent counsel that such action will not
cause the related Trust to be classified as an association (or publicly
traded partnership) taxable as a corporation for federal income tax
purposes, and (iii) such transferee or assignee agrees in writing to take
positions for federal income tax purposes consistent with the federal
income tax positions agreed to be taken by the Seller or the Affiliated
Purchaser, as the case may be.
Limited Guarantee. If specified in the related Prospectus Supplement,
certain payments on a class of the Securities of a series, certain
deficiencies in principal or interest payments on the Contracts, or certain
liquidation losses on the Contracts, may be covered by a limited guarantee
or other similar instrument (the "Limited Guarantee"), limited in scope and
amount, issued by CIT. If not so specified, the Securityholders will have
no recourse to CIT for any amounts due on the Securities. If so specified,
CIT may be obligated to take one or more of the following actions in the
event the Company fails to do so: make deposits to an account, make
advances, or purchase defaulted Contracts. Any
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such Limited Guarantee will be limited in an amount and a portion of the
coverage of any such Limited Guarantee may be separately allocated to
certain events. The scope, amount and, if applicable, the allocation of any
Limited Guarantee will be described in the related Prospectus Supplement.
Credit Facility. With respect to a series of Securities, one or more
classes may be entitled to the benefit of one or more letters of credit,
guarantees, limited guarantees, surety bonds or similar credit facilities
(each, a "Credit Facility"). Each such Credit Facility may be in an amount
greater than, equal to or less than the Certificate Balance of the
Certificates of each class (or the principal balance of the Notes of each
class) entitled to the benefits thereof, and may be subject to reduction or
be limited as to duration, all as described in the related Prospectus
Supplement. To the extent specified in the related Prospectus Supplement,
amounts realized under a Credit Facility supporting any class of Securities
may be used for the same purposes as amounts on deposit in a Reserve Fund.
A Credit Facility may be held by a Trustee as part of the related Trust or
may be held by a collateral agent or other third party (who may be the
Trustee acting in a different capacity). The related Prospectus Supplement
will contain a description of the material terms of any Credit Facility and
any arrangement pursuant to which the Credit Facility is held outside of
the Trust and will state whether the Trust, the Seller, the Servicer or a
third party will pay the fees of the provider of the Credit Facility (the
"Credit Facility Provider"). Such Prospectus Supplement will also contain
certain information concerning the Credit Facility Provider, which
information will have been provided to the Seller by the Credit Facility
Provider for use in such Prospectus Supplement. CIT, CITSF or an affiliate
thereof may be a Credit Facility Provider.
If specified in the related Prospectus Supplement, a Credit Facility,
rather than guaranteeing distributions of particular amounts to the holders
of Certificates of particular classes, may, instead, guarantee certain
collections on the related Contract Pool. These guaranteed collections may
be attributable to all or a portion of amounts due on Contracts in
liquidation, all or a portion of the scheduled monthly payments due on the
Contracts or other amounts. The extent to which any such collections are
guaranteed under a Credit Facility which functions in this manner will be
described in the related Prospectus Supplement.
Liquidity Facility. With respect to a series of Securities, one or
more classes may be entitled to the benefit of one or more purchase
agreements or other liquidity facilities (each, a "Liquidity Facility"),
pursuant to which the provider of such Liquidity Facility (the "Liquidity
Facility Provider") will provide funds to be used to purchase some or all
of such Securities. Unless otherwise specified in the related Prospectus
Supplement, a Liquidity Facility will be held outside of the Trust by a
third party (which may be a Trustee acting in another capacity). The
related Prospectus Supplement will contain a description of the material
terms of any such Liquidity Facility and any arrangement pursuant to which
it is held outside of the Trust, and will contain certain information
concerning the Liquidity Facility Provider, which information will have
been provided to the Seller by the Liquidity Facility Provider for use in
such Prospectus Supplement. CIT, CITSF or an affiliate thereof may be a
Liquidity Facility Provider. If specified in the related Prospectus
Supplement, a Reserve Fund or Credit Facility may also serve as a Liquidity
Facility.
Replacement. If specified in the related Prospectus Supplement, the
Seller may replace the Enhancement for any class of Securities with another
form of Enhancement without the consent of Securityholders, provided the
Rating Agency Condition is satisfied.
CERTAIN INFORMATION REGARDING THE SECURITIES
BOOK-ENTRY REGISTRATION
Unless otherwise specified in the related Prospectus Supplement,
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. Unless otherwise
specified in the related Prospectus Supplement, 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
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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 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, banks, 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 will receive payments after the related Distribution Date because
such payments will be forwarded by the Trustees on the Distribution Date 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 Trust Documents.
Security Owners will only be permitted to exercise the rights of
Securityholders or to communicate with other Securityholders indirectly
through DTC and its Participants which in turn will exercise their rights
through DTC. Security Owners will not have access to the list of Security
Owners of a series, which may impede the ability of Security Owners to
communicate with each other. 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 and such other circumstances, if any,
as may be specified in the related Prospectus Supplement.
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.
Due to 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 Participant 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 or indirectly holding
Notes 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 counterparty 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 directly to the Depositories.
With respect to any series of Securities, 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 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.
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Since 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.
Issuance of the Securities in book-entry form may reduce the liquidity of
such Securities in the secondary market since certain potential investors
may be unwilling to purchase Securities for which they cannot obtain
physical certificates.
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, trust
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 Participant, 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
Operator, 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 through, or maintain a custodial relationship with, a
Euroclear Participant, 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
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's 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
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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 that, unless and until Definitive
Securities are issued, DTC will take any action permitted to be taken by a
Securityholder under the Trust Documents only at the direction of one or
more Participants to whose DTC accounts the Securities are credited.
Additionally, DTC has advised the Company that it will take such actions
with respect to specified percentages of a class of the Securities only at
the direction of Participants whose holdings include principal amounts of
the Securities that satisfy such percentages. DTC may take conflicting
actions with respect to other principal amounts of the Securities to the
extent that such actions are taken on behalf of Participants whose holdings
include such principal amounts of the Securities.
NEITHER THE TRUST, THE SELLER, THE SERVICER, CIT, ANY 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 SECURITY
OWNERS 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 SECURITY OWNER IN
RESPECT OF THE PRINCIPAL AMOUNT OF, OR INTEREST ON, THE SECURITIES, (3) THE
DELIVERY BY ANY PARTICIPANT, CEDEL PARTICIPANT OR EUROCLEAR PARTICIPANT OF
ANY NOTICE TO ANY SECURITY OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE
TERMS OF THE INDENTURE OR THE TRUST DOCUMENTS TO BE GIVEN TO
SECURITYHOLDERS OR (4) ANY OTHER ACTION TAKEN BY DTC AS THE SECURITYHOLDER.
DEFINITIVE SECURITIES
With respect to any series of Securities, unless otherwise specified
in the related Prospectus Supplement, 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 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 or an Event of Termination, Note Owners or
Certificate Owners or representing in the aggregate not less than a
majority of the outstanding principal balance of the Notes of a series or
the Certificate Balance of a series 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.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the related 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 of a
series and instructions for re-registration, the Trustee will issue the
Notes of a series as Definitive Notes and the Certificates of a series as
Definitive Certificates, and thereafter the Trustees will recognize the
holders of such Definitive Notes and Definitive Certificates as Noteholders
and Certificateholders, respectively, under the Trust Documents
("Noteholders" and "Certificateholders" respectively, and together
"Securityholders" or "Holders").
Unless otherwise specified in the related Prospectus Supplement,
distributions of principal of the Securities and interest on the Securities
thereafter will be made by the related Trustee directly to Holders in
accordance with the procedures set forth herein and in the Trust Documents.
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 other person appointed pursuant to the Trust Documents. 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.
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Unless otherwise specified in the related Prospectus Supplement,
Definitive Securities will be transferable and exchangeable at the offices
of the related 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 SECURITYHOLDERS
Unless otherwise specified in the related Prospectus Supplement, if
Definitive Certificates have been issued, the related 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 Business Days after receipt of such request, afford such
Certificateholders access during normal 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.
Unless otherwise specified in the related Prospectus Supplement, if
Definitive Notes have been issued, the Indenture Trustee will, upon written
request by three or more Noteholders within five Business Days after
receipt of such request, 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 Indenture 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 prepare and provide to
the Trustees a statement, to be delivered on the Distribution Date to each
Securityholder. Unless otherwise specified in the related Prospectus
Supplement, the statement will set forth at least the following information
for the related Due Period:
(i) the amount of collections on the Contracts during the
immediately preceding Due Period;
(ii) the Available Amount for payment of all amounts
distributable in respect of the Securities and the Servicer
Payment;
(iii) the amount of the distribution allocable to principal of
the Notes (if applicable) and to the Certificate Balance of the
Certificates, including any overdue principal;
(iv) the amount of the distribution allocable to interest on or
with respect to each class of Securities, including any overdue
interest;
(v) the Pool Balance, the Note Pool Factor (if applicable) and
the Certificate Pool Factor as of the end of the related Due Period;
(vi) the Servicer Payment for such Distribution Date;
(vii) the amount of Monthly Advances and Non-Reimbursable
Payments, if any, on such date;
(viii) the amount, if any, withdrawn from any Enhancement (if
applicable) and distributed to the Securityholders with respect to
such Distribution Date;
(ix) the amount available under any Enhancement (if applicable),
after giving effect to any deposit to or withdrawal from the
Enhancement with respect to such Distribution Date, and such amount
expressed as a percentage of the Pool Balance;
(x) the aggregate principal balance of all Contracts which were
delinquent 30, 60 and 90 days or more as of the last day of the
related Due Period;
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(xi) the amount of investment earnings, net of losses and
investment expenses, on amounts on deposit in the Collection Account;
(xii) during the Funding Period, if any, the amount of funds on
deposit in the Pre-Funding Account;
(xiii) during the Funding Period, if any, the number and
aggregate principal balance of Subsequent Contracts;
(xiv) during the Funding Period, if any, the number and aggregate
principal balance of Subsequent Contracts purchased by the Trust since
the preceding Distribution Date;
(xv) during the Funding Period, if any, the amount, if any,
withdrawn from the Capitalized Interest Account, if any, to make
payments of interest on the Securities;
(xvi) during the Funding Period, if any, the amount remaining on
deposit in the Capitalized Interest Account, if any;
(xvii) during the Funding Period, if any, the amount of
investment earnings, net of losses and investment expenses, on amounts
on deposit in the Pre-Funding Account;
(xviii) during the Funding Period, if any, the amount of
investment earnings, net of losses and investment expenses, on amounts
on deposit in the Capitalized Interest Account, if any;
(xix) on the Distribution Date immediately following the end of
the Funding Period (or if the Funding Period ends on a Distribution
Date on such Distribution Date), if any, the aggregate principal
amount and percentage of each of the Notes, if any, and Certificates
which are being redeemed;
(xx) the aggregate principal balance of all Contracts which
became either "Defaulted Contracts" or "Liquidated Contracts" (as
defined in the related Prospectus Supplement) during the related Due
Period (if the related Prospectus Supplement includes definitions of
such term or terms);
(xxi) the number and aggregate principal amount of Contracts
which were prepaid, in part or in whole, during the related Due
Period;
(xxii) the aggregate outstanding principal balance of the Notes
(if applicable) as of such Distribution Date (after giving effect to
any distributions thereon and reductions thereto on such Distribution
Date);
(xxiii) the Certificate Balance as of such Distribution Date
(after giving effect to any distributions on such Distribution Date);
(xxiv) the amount, if any, by which the amount due to be
distributed to Noteholders and Certificateholders exceeds the actual
amount distributed on the related Distribution Date to Noteholders (if
applicable) and Certificateholders, respectively;
(xxv) if applicable, the amount of surplus to be distributed to
the Affiliated Purchaser, if any, after all payments have been made in
respect of the Securities, the Servicer Payment has been paid and all
deposits to any Reserve Fund and payments to a Credit Facility
Provider have been made; and
(xxvi) such other information as may be specified in the related
Prospectus Supplement.
If the Limited Guarantee is issued by CIT with respect to a series of
Securities, the monthly and annual reports will include a statement to the
following effect: The CIT Group Holdings, Inc. is subject to the requirements of
the Securities Exchange Act of 1934, as amended, and, in accordance therewith,
files reports and other information with the Securities and Exchange Commission.
As a result of the limited guarantee by The CIT Group Holdings, Inc.,
information relating to The CIT Group Holdings, Inc. which is material will be
available through such reports and other information.
Within a reasonable period of time after the end of each calendar
year, but not later than the latest date permitted by law (where applicable
law specifies such date), the Servicer will mail to each person who at any
time during such calendar year shall have been a Securityholder, and
received any payment thereon, a statement containing the relevant amounts
described above for such calendar year for the purposes of such
Securityholder's preparation of federal income tax returns. See "Certain
Federal Income Tax Consequences."
Unless and until Definitive Certificates or Definitive Notes are
issued, such reports with respect to a series of Securities will be sent on
behalf of the related Trust to the Trustees and Cede & Co., as registered
holder of the Certificates and the Notes and the nominee of DTC.
Certificate Owners and Note Owners may receive copies of such reports upon
written request, together with a certification that they are Certificate
Owners or Note Owners, as the case
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may be, and payment of reproduction and postage expenses associated with
the distribution of such reports, from the Trustee or the Indenture
Trustee, as applicable. See "--Statements to Securityholders" and "--Book-
Entry Registration" above.
THE PURCHASE AGREEMENTS AND THE TRUST DOCUMENTS
Unless otherwise specified in the related Prospectus Supplement, 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 or the Pooling and Servicing Agreement (collectively, 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. CITSF will provide a copy of such
agreements (without exhibits) upon request to a holder of Securities
described therein. 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, and the
following summary will be supplemented in whole or in part by the related
Prospectus Supplement. Where this summary refers to particular provisions
or terms used in the Purchase Agreements or Trust Documents, the actual
provisions (including definitions of terms) are incorporated by reference
as part of such summary.
SALE AND ASSIGNMENT OF THE CONTRACTS
On or prior to the Closing Date for a series of Securities and each
Subsequent Transfer Date, pursuant to the Purchase Agreement or a
Subsequent Purchase Agreement, as the case may be, between CITSF and the
Company, CITSF will sell and assign to the Company, without recourse, its
entire interest in and to the Initial Contracts and Subsequent Contracts,
respectively, including its security interests in the related Financed
Vehicles. On the Closing Date and each Subsequent Transfer Date, the
Company will sell and assign to the Trust, without recourse, all of
its right, title and interest in and to such Contracts, including its
security interests in the Financed Vehicles. Unless otherwise specified in
the related Prospectus Supplement, certain of the Contracts will be
purchased by CITSF from CITCF-NY before they are sold to the Company. Each
Contract will be identified in a schedule appearing as an exhibit to each
of the Purchase Agreement and the Trust Documents (the "List 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 Trustee or its designated agent will, concurrently with the sale and
assignment of the Initial Contracts to the Trust, execute, authenticate and
deliver the Certificates and the Notes, if any, to the Company in exchange
for the Initial Contracts. The Company will sell the Certificates and the
Notes, if any, to the Underwriters.
CITSF will make certain representations and warranties in the Trust
Documents with respect to each Initial Contract as of the Closing Date,
including, unless otherwise specified in the related Prospectus Supplement,
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 thirty 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 Contract is or will
be subject to any right of rescission, set-off, counterclaim or defense,
including the defense of usury, and, to the knowledge of CITSF, no such
right 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
or, if the related Financed Vehicle is not so covered by an Obligor's
insurance, it is covered by a blanket insurance policy maintained by CITSF
or the Servicer; (vi) neither CITSF nor the Servicer has obtained Force-
Placed Insurance (as defined herein) with respect to any Contract; (vii) no
Contract was originated in or is subject to the laws of any jurisdiction
whose laws would prohibit the transfer of the Contract to the Company under
the Purchase Agreement, to the Trust pursuant to the Trust Documents or
pursuant to a transfer of the Notes and Certificates, or the ownership of
the Contracts by the Trust; (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 security interest 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, CITCF-NY or
the related Dealer in the Financed Vehicle covered thereby (which security
interest, if in favor of the related Dealer or CITCF-NY, has been assigned
to CITSF), such security interest has been assigned by
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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 or CITCF-NY;
(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 lien, 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 and the Trust, respectively; (xiii) as of the
Initial Cut-off Date, there was no default, breach, violation or event
permitting acceleration under any Contract and, 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
(except for payment delinquencies permitted by clause (i) above), and CITSF
has not waived any of the foregoing (except for payment delinquencies
permitted by clause (i) above); (xiv) there are 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 to or equal or
coordinate with the security interest of the Contract; (xv) each Contract
is a fully-amortizing loan with interest at the stated Contract Rate and
provides for level payments over the 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 List of Contracts is true and correct as of its
date; (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
period of such 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 Trust Documents, was in
the possession of CITSF; (xxi) the Contract is "chattel paper" as defined
in the New Jersey UCC; (xxii) the Contract satisfies the selection criteria
set forth in the related Prospectus Supplement; (xxiii) all of the right,
title and interest of CITSF, the Company and, if applicable, CITCF-NY in
the Contract has been validly sold, transferred and assigned to the Trust
and all filings necessary to evidence such sale, transfer and conveyance
have been made in all appropriate jurisdictions; and (xxiv) no adverse
selection procedure was utilized in selecting the Contracts for sale by
CITSF to the Company.
Unless otherwise specified in the related Prospectus Supplement, the
Trust Documents will require CITSF to make on each Subsequent Transfer Date
the same representations and warranties with respect to each individual
Subsequent Contract as it is required to make with respect to each Initial
Contract sold to the Trust except that each such representation and
warranty shall be made as of the Subsequent Cut-off Date relating to such
Subsequent Contract. In addition, no Subsequent Contract will be sold to
the Trust on a Subsequent Transfer Date unless such Subsequent Contract
satisfies the criteria described in the related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, the
Subsequent Financed Vehicles will consist of motor homes, travel trailers
and other types of recreational vehicles.
Unless otherwise specified in the related Prospectus Supplement, under
the terms of the Trust Documents and subject to certain conditions
specified in the Trust Documents, CITSF will be obligated to purchase from
the Trust for the Purchase Price (as defined below) any Contract (a
"Repurchased Contract") not later than ninety days after CITSF becomes
aware, or eighty-five days after CITSF's receipt of written notice from a
Trustee or the Servicer, of a breach of any representation or warranty by
CITSF in the Trust Documents that materially and adversely affects the
Trust's interest in such Contract if such breach has not been cured. CITSF
shall effect such repurchase from the Trust by depositing the Purchase
Price for such Contract in the Collection Account on the Deposit Date
immediately following the determination that such Purchase Price is owed.
Unless otherwise specified in the related Prospectus Supplement, the
"Purchase Price" for any Contract will be the remaining principal amount
outstanding on such Contract on the date of repurchase, plus thirty 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
Interest Rate and the remaining principal amount outstanding (without
giving effect to any reductions thereof for unrecoverable Monthly Advances)
on the Contract, and (ii) accrued
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and unpaid Servicing Fees thereon at the Servicing Fee Rate to the date of
such repurchase. Upon such repurchase, the Trust shall transfer all right,
title and interest in the Contract to CITSF, free and clear of the lien of
the applicable Trust Documents. Unless otherwise specified in the related
Prospectus Supplement, this repurchase obligation constitutes the sole
remedy available to the Trust and the Securityholders for a breach of a
representation and warranty under the Trust Documents with respect to the
Contracts (but not with respect to any other breach by CITSF of its
obligations under the Trust Documents).
Unless otherwise specified in the related Prospectus Supplement,
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 should 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 assert that the transaction between CITSF and the Company or 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 receipt by the Trust of payments of amounts
due on the Contracts and, if accepted by a court, may result in delays or
reductions in distributions of principal and interest on the Securities.
Since the Contracts will remain in CITSF's possession and will not be
stamped or otherwise marked to reflect the sale and 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 sale and assignment. See "Certain Legal Aspects of
the Contracts."
If specified in the related Prospectus Supplement, the terms of the
sale of some or all of the Contracts from CITSF or the Seller or both to
the related Trust may provide for the retention by CITSF or the Seller or
both, as the case may be, of the right to receive a portion of the interest
accruing thereon (the "Retained Yield").
CUSTODY OF CONTRACT FILES
Unless otherwise specified in the related Prospectus Supplement, to
reduce administrative costs, each Trust will appoint CITSF as initial
custodian of the Contracts. Prior to the appointment of any custodian
other than CITSF, the Trust and such proposed successor custodian specified
in the related Prospectus Supplement shall enter into a custodian agreement
pursuant to which such successor custodian will agree to hold the Contract
Files on behalf of the related Trust. Any such custodian agreement may be
terminated by the Trust on thirty days' notice to such successor custodian.
Unless otherwise specified in the related Prospectus Supplement, to
facilitate servicing and reduce administrative costs, the documents will
not be physically segregated from other similar documents which are in
CITSF's possession. UCC financing statements will be filed in New Jersey
and Oklahoma reflecting the sale and assignment of the Contracts to the
Trustee, and CITSF's accounting records and computer systems will also
reflect such sale and assignment. 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. The Obligors under the
Contracts will not be notified of the transfer of the Contracts to the
Company or to the Trust. If, through inadvertence or otherwise, any of the
Contracts were sold to another party (or a security interest therein were
granted to another party) that purchased (or took such security interest
in) any of such Contracts in the ordinary course of its business and took
possession of such Contracts, the purchaser (or secured party) would
acquire an interest in the Contracts superior to the interest of the
related Trust if the purchaser (or secured party) acquired (or took a
security interest in) the Contracts for new value and without actual
knowledge of such Trust's interest. See "Certain Legal Aspects of the
Contracts."
ACCOUNTS
For each Trust, the Servicer will establish and maintain with a
Trustee one or more accounts, in the name of such Trustee on behalf of the
Certificateholders and Noteholders, if any, into which all payments made
(after the Initial Cut-off Date or the Subsequent Cut-off Date, as
applicable) on or with respect to the Contracts in the related Contract
Pool will be deposited (the "Collection Account") by the Servicer. See "--
Collections." The Servicer will establish and maintain with a Trustee (or
its designated agent) an account in the name of such Trustee on behalf of
the
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Certificateholders, into which amounts released from the Collection Account
and any Enhancement for payment to the Certificateholders will be deposited
and from which distributions to the Certificateholders will be made (the
"Certificate Distribution Account"). The Servicer will establish and
maintain with the Indenture Trustee (or its designated agent) an account in
the name of the Indenture Trustee on behalf of the Noteholders, if any,
into which amounts released from the Collection Account and from any
Enhancement for payment to the Noteholders will be deposited and from which
distributions to the Noteholders will be made (the "Note Distribution
Account").
Amounts held in the Certificate Distribution Account and in such other
accounts as may be specified in the related Prospectus Supplement will not
be available to make payments of amounts due on the Notes, if any, and will
not be pledged to the Indenture Trustee as collateral security for the
Notes.
Each Account will be an Eligible Account maintained with the Trustee,
the Indenture Trustee and/or other depository institutions. "Eligible
Account" means any account which is (i) an account maintained with an
Eligible Institution (as defined below); (ii) an account or accounts the
deposits in which are fully insured by either the Bank Insurance Fund or
the Savings Association Insurance Fund of the FDIC; (iii) a "segregated
trust account" maintained with the corporate trust department of a federal
or state chartered depository institution or trust company with trust
powers and acting in its fiduciary capacity for the benefit of a Trustee,
which depository institution or trust company has capital and surplus (or,
if such depository institution or trust company is a subsidiary of a bank
holding company system, the capital and surplus of the bank holding
company) of not less than $50,000,000 and the securities of such depository
institution (or, if such depository institution is a subsidiary of a bank
holding company system and such depository institution's securities are not
rated, the securities of the bank holding company) have a credit rating
from each Rating Agency in one of its generic credit rating categories
which signifies investment grade; or (iv) an account that will not cause
any Rating Agency to downgrade or withdraw its then-current rating assigned
to the Securities of such series, as confirmed in writing by each Rating
Agency. "Eligible Institution" means any depository institution organized
under the laws of the United States or any state, the deposits of which are
insured to the full extent permitted by law by the Bank Insurance Fund
(currently administered by the Federal Deposit Insurance Corporation),
whose short-term deposits have been rated in one of the two highest rating
categories or such other rating category as will not adversely affect the
ratings assigned to the Certificates and/or Notes, if any, of such series.
Unless otherwise specified in the related Prospectus Supplement, all
amounts held in each of the accounts established by the Servicer on behalf
of a Trust 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 applicable Trust Documents, which meet the criteria of
each Rating Agency from time to time as being consistent with their then-
current ratings of the Securities. Investment earnings on amounts on
deposit in the Collection Account, Certificate Distribution Account, Note
Distribution Account, if any, and any cash collateral account will not be
available to make payments on the Securities, unless otherwise specified in
the related Prospectus Supplement.
SERVICING PROCEDURES
The Servicer will make reasonable efforts, consistent with the
customary servicing procedures employed by the Servicer with respect to
Contracts owned or serviced by it, to collect all payments due with respect
to the Contracts and, in a manner consistent with the Trust Documents, will
continue such normal collection practices and procedures as it follows with
respect to comparable recreational vehicle installment sale contracts that
it services for itself and others. See "Certain Legal Aspects of the
Contracts." 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. 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 proceeds of such realization (net of
expenses) will be deposited in the Collection Account.
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Unless otherwise specified in the related Prospectus Supplement, the
Servicer shall keep in force throughout the term of the Trust Documents (i)
at such time as the long-term debt of its parent is rated less than "A" by
Standard & Poor's Ratings Group (if it is a Rating Agency for the series of
Securities) or less than "A3" by Moody's Investors Service, Inc. (if it is
a Rating Agency for the series of Securities), a policy or policies of
insurance covering errors and omissions for failure to maintain insurance
as required by the Trust Documents and (ii) a fidelity bond. Such policy or
policies and such fidelity bond shall have such deductibles, and be in such
form and amount as is generally customary among persons which service a
portfolio of recreational vehicle contracts having an aggregate principal
amount of $100 million or more and which are generally regarded as
servicers acceptable to institutional investors.
PURCHASE BY THE SERVICER
A breach of certain covenants made by the Servicer in the Trust
Documents that materially and adversely affects the Trust's interest in any
Contract, would require the Servicer to purchase such Contract for the
Purchase Price, unless such breach is cured within the period specified in
the Trust Documents. Unless otherwise specified in the related Prospectus
Supplement, such covenants will include covenants by the Servicer not to
(i) release the Financed Vehicle securing each Contract from the security
interest granted by the Contract except as contemplated by the Trust
Documents and in accordance with the terms of the Contract and applicable
law, (ii) impair the rights of the Trust in the Contracts or take any
action inconsistent with the Trust's ownership of the Contracts except as
expressly provided in the Trust Documents, (iii) increase the number of
payments under a Contract, nor increase the principal amount of such
Contract which is used to finance the purchase price of the related
Financed Vehicles, nor extend or forgive payments on a Contract, except as
expressly provided in the Trust Documents, and (iv) fail to comply with the
provisions of any insurance policy covering a Contract, if the failure to
comply would impair the protection or benefit to be afforded by such
insurance policy.
MODIFICATION OF CONTRACTS
Consistent with its customary servicing procedures, the Servicer may,
in its discretion, arrange with an Obligor to defer, reschedule, extend or
modify the payment schedule on a Contract or otherwise to modify the terms
of a Contract provided that (i) the maturity of such Contract would not
extend beyond the 180th day prior to the Note Final Scheduled Distribution
Date (if applicable) and (ii) the deferral, rescheduling, extension or
other modification of the terms of the Contract would not constitute a
cancellation of such Contract and the creation of a new installment sale
contract.
REMOVAL OF CONTRACTS
Except as otherwise specified herein or in the related Prospectus
Supplement, neither the Seller nor the Servicer will have the right to
remove any Contracts from the Contract Pool after the Closing Date. In
certain circumstances CITSF or the Servicer may have the obligation to
repurchase, or CITSF may have the option to purchase, a Contract from the
Trust, but all such repurchases or purchases will be made at the Purchase
Price.
SERVICING COMPENSATION
With respect to each series of the Securities, the Servicer will be
entitled to receive, out of collections on the Contracts, a monthly fee
(the "Servicing Fee") for each Due Period, payable on the following
Distribution Date, equal, unless otherwise specified in the related
Prospectus Supplement, to the sum of (i) one-twelfth of the product of the
percentage specified in the related Prospectus Supplement (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) and (ii) any investment earnings (net of investment
expenses and losses) on amounts on deposit in the Collection Account, the
Note Distribution Account, if any, and the Certificate Distribution
Account; provided, however, that the Servicing Fee Rate applicable to a
Trust may be increased to a rate (or maximum rate) specified in the related
Prospectus Supplement if CITSF or an affiliate thereof is not the Servicer.
Payments to the Servicer of such amounts will compensate the Servicer for
performing the functions of a third party servicer of recreational vehicle
contracts as an agent for the Trust, including collecting and posting all
payments, responding to inquiries of Obligors, investigating delinquencies,
reporting federal income tax information to Obligors, monitoring the
collateral in cases of Obligor default and handling the foreclosure or
other liquidation of the Financed Vehicle in appropriate instances (subject
to
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reimbursement of its expenses incurred in connection with such foreclosure,
liquidation or other realization on the Contracts).
The Servicing Fee 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 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.
COLLECTIONS
With respect to each series of the Securities, the Servicer will
deposit all payments on or with respect to the Contracts and all proceeds
of Contracts collected during each Due Period into the Collection Account
not later than two Business Days after receipt. Notwithstanding the
foregoing, unless otherwise specified in the related Prospectus Supplement,
the Servicer may make such deposits into the Collection Account monthly on
the Deposit Date following the last day of each Due Period, provided that
(i) the Servicer or the direct or indirect parent of the Servicer has and
maintains a short-term debt rating of at least A-1 by Standard & Poor's
Ratings Group (if it is a Rating Agency for the series of Securities), and
either a short-term debt rating of P-1 or a long-term debt rating of at
least A2 by Moody's Investors Service, Inc. (if it is a Rating Agency for
the series of Securities) (the "Required Servicer Ratings"), or (ii) the
Servicer obtains a letter of credit, surety bond or insurance policy (the
"Servicer Letter of Credit") as will be provided for in the related Trust
Documents, under which demands for payment may 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. As of the date of
this Prospectus, CITSF, as Servicer, will be permitted to remit collections
to the Collection Account on a monthly basis by virtue of clause (i) above.
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 clause (ii) above, the Trust Documents will be modified, to
the extent necessary, without the consent of any Securityholder. Pending
such a monthly deposit into the Collection Account, collections on the
Contracts may be invested by the Servicer at its own risk and for its own
benefit and will not be segregated from its own funds. See "Risk Factors--
Risk of Commingling."
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 next succeeding Deposit Date.
Unless otherwise specified in the related Prospectus Supplement, 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) which has been purchased by CITSF or the Servicer pursuant to the
Trust Documents, (b) net investment earnings on funds deposited in the
Collection Account, the Note Distribution Account, if any, and the
Certificate Distribution Account, (c) amounts to be reimbursed to the
Servicer in respect of nonrecoverable Monthly Advances, (d) 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, (e) amounts received as liquidation
proceeds, to the extent the Servicer is entitled to reimbursement of
liquidation expenses related thereto, and (f) repossession profits on
liquidated Contracts.
MONTHLY ADVANCES
Unless otherwise specified in the related Prospectus Supplement, with
respect to each Contract as to which there has been an Interest Shortfall
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 judgment, expects to
recover such Monthly Advance from subsequent collections with respect to
interest payments on such Contract made by or on behalf of the obligor
thereunder (the "Obligor"), or from 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 judgment that an
unreimbursed Monthly Advance shall not ultimately be recoverable from such
collections, the Servicer shall be reimbursed for such
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Monthly Advance from collections on all Contracts. In determining whether
an advance is or will be nonrecoverable, the Servicer need not take into
account that it might receive any amounts in a deficiency judgment. Unless
otherwise specified in the related Prospectus Supplement, the Servicer will
not make a Monthly Advance in respect of (i) the principal component of any
scheduled payment or (ii) 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.
Unless otherwise specified in the related Prospectus Supplement,
"Interest Shortfall" means with respect to any Contract and any
Distribution Date, the excess of (A) the product of (i) the sum of (a) one-
twelfth of the weighted average of the Pass-Through Rate and the Interest
Rate and (b) one-twelfth of the Servicing Fee Rate and (ii) the outstanding
principal amount of such Contract as of the last day of the second
preceding Due Period (or, in the case of the first Due Period ending after
the Contract was acquired by the related Trust, as of the Initial Cut-off
Date or the Subsequent Cut-off Date, as the case may be) over (B) the
amount of interest, if any, collected on such Contract in the related Due
Period.
Unless otherwise specified in the related Prospectus Supplement, the
Servicer will remit any Monthly Advance with respect to each Due Period
into the Collection Account not later than the Deposit Date following the
Due Period.
NON-REIMBURSABLE PAYMENT
When a payment of principal is made on or in respect of a simple-
interest Contract, interest is paid on the unpaid principal balance of such
Contract only to the date of such payment. If and to the extent specified
in the related Prospectus Supplement, 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 Trust
Documents 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"). If the related
Prospectus Supplement does not specify that the Servicer will make
Non-Reimbursable Payments, the Servicer will not be obligated to make such
payments with respect to the Trust.
DISTRIBUTIONS
With respect to each Trust, on or before the Determination Date
preceding a Distribution Date, the Servicer will make a determination and
inform the Trustees 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) if applicable, 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 aggregate amount of Non-Reimbursable Payments (if any); (viii)
the amounts required to be withdrawn from the Enhancement (if any) for such
Distribution Date, (ix) any amount which is payable to the provider of the
Enhancement (if any) or the Affiliated Purchaser (if any); (x) any amounts
to be deposited into the accounts established pursuant to the Trust
Documents; and (xi) the aggregate amount of unreimbursed Monthly Advances
to be reimbursed to the Servicer.
Unless otherwise specified in the related Prospectus Supplement, the
"Available Amount" with respect to each Trust, on any Distribution Date is
equal to the excess of (A) the sum of (i) all amounts on deposit in the
Collection Account attributable to collections or deposits made in respect
of such Contracts (including 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")) during the Due Period
preceding the Distribution Date, and (ii) the Purchase Price for any
Contract repurchased by CITSF as a result of breaches of certain
representations and warranties or purchased by the Servicer as a result of
breaches of certain covenants and any Monthly Advances and any Non-
Reimbursable Payments made by the Servicer, if such Purchase Price, Monthly
Advance or Non-Reimbursable Payment is paid on the Deposit Date
immediately preceding such Distribution Date, over (B) the sum of the
following amounts (to the extent that the Servicer has not already withheld
such amounts from collections on the Contracts): any repossession profits
on liquidated Contracts, Liquidation Expenses (as defined in the Trust
Documents) incurred and taxes and insurance advanced by the Servicer in
respect of Financed Vehicles that are reimbursable to the Servicer under
the Trust Documents; any amounts incorrectly deposited in the Collection
Account; net investment earnings on the funds in the Collection Account;
and any other amounts permitted to be withdrawn from
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the Collection Account by the Servicer (or to be retained by the Servicer
from collections on the Contracts) pursuant to the Trust Documents.
With respect to each Trust, beginning on the Distribution Date
specified in the related Prospectus Supplement, distributions of principal
and interest (or, where applicable, of principal or interest only) on each
class of Securities entitled thereto will be made by the Trustee or the
Indenture Trustee, as applicable, to the Certificateholders and the
Noteholders, if any, from the Available Amount. Unless otherwise
specified in the related Prospectus Supplement, the Servicing Fee and any
additional servicing compensation will be paid from the Available Amount
prior to distributions to Certificateholders and Noteholders, if any. The
timing, calculation, allocation, order, source, priorities of and
requirements for all distributions to each class of Certificateholders and
all payments to each class of Noteholders, if any, will be set forth in the
related Prospectus Supplement.
NET DEPOSITS
Unless otherwise specified in the related Prospectus Supplement, as an
administrative convenience, the Servicer will be permitted to make deposits
of collections, Monthly Advances, Non-Reimbursable Payments and the
aggregate Purchase Price of Contracts for, or with respect to, a Due Period
net of distributions to be made to the Servicer with respect to such Due
Period (including, without limitation, the Servicing Fee, reimbursement of
nonrecoverable 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 Trustees and to the
Securityholders as if all such deposits and distributions were made on an
aggregate basis for each type of payment or deposit.
STATEMENTS TO TRUSTEES AND TRUST
Unless otherwise specified in the related Prospectus Supplement, on or
before each Determination Date, the Servicer will provide to the Trustees,
any paying agent and the Affiliated Purchaser (if any) 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--Statements to
Securityholders." Each such report 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 Trust Documents (or, if such default has
occurred, describing each such default).
Unless otherwise specified in the related Prospectus Supplement, the
Trust Documents will require that on or before March 31 of each year, the
Servicer will deliver to the Trustee a report of independent public
accountants which opines on, at a minimum, the servicing entity's
compliance with the minimum servicing standards set forth in the Uniform
Single Attestation Program for Mortgage Bankers (in accordance with the
1995 revisions made thereto). The Trust Documents will require that such
examination and report of independent public accountants be prepared in
accordance with the requirements set forth in the Uniform Single
Attestation Program for Mortgage Bankers (in accordance with the 1995
revisions made thereto).
The Servicer, on request of the Trustees, will furnish to the Trustees
such reasonably pertinent underlying data on the Contracts as can be
generated by the Servicer's existing data processing system without undue
modification or expense.
CERTAIN MATTERS REGARDING THE SERVICER
Unless otherwise specified in the related Prospectus Supplement, the
Trust Documents will provide that the Servicer may not resign from its
obligations and duties as Servicer thereunder, except upon a determination
that the Servicer's performance of such duties is no longer permissible
under applicable law. Such resignation will not become effective until a
Trustee or a successor Servicer has assumed the Servicer's servicing
obligations and duties under the Trust Documents.
Unless otherwise specified in the related Prospectus Supplement, the
Trust Documents will further provide that neither the Servicer nor the
Company nor any of their shareholders, affiliates, directors, officers,
employees and agents shall be under any liability to the Trustees, the
Trust or the Securityholders for taking any action or for refraining
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from taking any action pursuant to the Trust Documents or for errors in
judgment; provided, however, that neither the Servicer nor any such person
will be protected against any liability which otherwise would be imposed by
reason of willful misfeasance, bad faith or negligence in the performance
of duties or by reason or reckless disregard of obligations and duties
thereunder. In addition, unless otherwise specified in the related
Prospectus Supplement, the Trust Documents will provide that the Servicer
is under no obligation to appear in, prosecute or defend any legal action
which arises under the Trust Documents 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 Trust Documents and the rights and duties of the parties thereto and
the interests of the Securityholders thereunder. In the event that the
Servicer or the Company, in its discretion, undertakes any action which it
deems necessary or desirable in connection with its rights and duties under
the Trust Documents or the interests of the Securityholders thereunder, 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.
Unless otherwise specified in the related Prospectus Supplement, 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 Trust Documents.
The Servicer may sell, transfer, assign or convey its rights as
Servicer to any entity qualified to act as servicer under the Trust
Documents, upon written notice to the Trustees and the Rating Agencies,
without the consent of the Securityholders, provided that the Rating Agency
Condition is satisfied.
PHYSICAL DAMAGE INSURANCE
Unless otherwise specified in the related Prospectus Supplement, the
Trust Documents will provide that the Servicer, in accordance with its
customary servicing procedures, shall use its best efforts to require that
each Obligor shall have obtained and shall maintain physical damage
insurance covering the Financed Vehicle, provided that such insurance shall
be in an amount no greater than the outstanding principal balance of the
related Contract or, if such insurance covers the interest of the related
Obligor in the Financed Vehicle, no greater than the greater of the
outstanding principal balance of the related Contract and the value of the
Financed Vehicle, or such lesser amount permitted by applicable law. The
Servicer shall enforce its rights under the Contracts to require the
Obligors to maintain physical damage insurance, in accordance with the
Servicer's customary practices and procedures with respect to comparable
new or used recreational vehicles financed by installment sale contracts
that it services for itself or others. If an Obligor fails to maintain
such insurance, the Servicer shall obtain such physical damage insurance
and advance such premiums for such insurance on the behalf of such Obligor,
as required under the terms of the applicable Contract and the Trust
Documents, each insurance policy naming the Servicer as an additional
insured and loss payee and issued by an insurer having a rating of "A" or
better by A.M. Best (such insurance being referred to herein as "Force-
Placed Insurance"). Such Force-Placed Insurance and any commissions or
finance charges collected by the Servicer in connection therewith shall be,
to the extent permitted by law, in an amount in accordance with customary
servicing procedures, but in no event in an amount greater than the
outstanding principal balance of the related Contract or, if such insurance
also covers the interest of the related Obligor in the Financed Vehicle, no
greater than the greater of the outstanding principal balance of the
related Contract and the value of the Financed Vehicle, or such lesser
amount permitted by applicable law. The Servicer shall be required to
disclose to the related Obligor all information with respect to such Force-
Placed Insurance, commissions and finance charges as required by applicable
law.
The Servicer does not, under its customary servicing procedures, obtain
Force-Placed Insurance when the principal balance of the related Contract
falls below the level or levels periodically established in accordance with
such customary servicing procedures. In accordance with such customary
servicing procedures, the Servicer may periodically readjust such levels,
suspend Force-Placed Insurance or arrange other methods of protection of
the Financed Vehicles that it deems necessary or advisable, provided that
the Servicer determines that such actions do not materially and adversely
affect the interests of the Certificateholders or the Noteholders.
Any portion of the principal balance of a Contract attributable to
premiums for Force-Placed Insurance acquired after the Initial Cut-off
Date, or the related Subsequent Cut-off Date, will not be owned by the
Trust, and
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amounts allocable thereto will not be available for distribution in respect
of the Securities. Unless otherwise designated by the Obligor, the Servicer
will not allocate payments by the Obligor to pay Force-Placed Insurance
premiums added to the Contracts after the Initial Cut-off Date or a
Subsequent Cut-off Date, as the case may be, if any amount of principal or
interest is due but unpaid on the Contracts. The Servicer shall not deposit
payments posted with respect to such Force-Placed Insurance in the
Collection Account and shall instead promptly pay such amounts to an
account of the Servicer maintained for that purpose. In the event that an
Obligor under a Contract with respect to which the Servicer has advanced
funds to obtain Force-Placed Insurance makes scheduled payments under the
Contract, but fails to make scheduled payments of such Force-Placed
Insurance as due, and the Servicer has determined that eventual payment of
such amount is unlikely, the Servicer may, but shall not be required to,
take any action available to it, including determining that the related
Contract is a defaulted Contract; provided, however, that any net
liquidation proceeds with respect to such Contract shall be applied first
to the accrued and unpaid interest at the Contract Rate, then to the
principal amount outstanding, and the remainder, if any, to repayment of
any such Force-Placed Insurance premiums added to the Initial Contracts
after the Initial Cut-off Date or to any Subsequent Contracts after the
related Subsequent Cut-off Date.
Unless otherwise specified in the related Prospectus Supplement, the
Trust Documents will permit the Servicer or any affiliate of the Servicer,
to the extent permitted by law, to (i) enter into agreements with one or
more insurers or other persons pursuant to which the Servicer or such
affiliate will earn commissions and fees in connection with any insurance
policy purchased by an Obligor including, without limitation, any physical
damage insurance policy (whether or not such physical damage insurance
policy is force-placed pursuant to the provisions of any Contract), or any
other insurance policy whatsoever, and (ii) in connection with the
foregoing, to solicit, or permit and assist any insurer or any agent
thereof to solicit (including, without limitation, providing such insurer
or agent a list of Obligors including name, address or other information)
any Obligor.
EVENT OF TERMINATION
Unless otherwise specified in the related Prospectus Supplement, an
"Event of Termination" under the Trust Documents will consist of (i) any
failure by the Servicer to make any deposit into an account required to be
made under the Trust Documents which failure continues unremedied for five
(5) Business Days after the Servicer becomes aware that such deposit was
required; (ii) any failure by the Servicer duly to observe or perform in
any material respect any other of its covenants or agreements in the Trust
Documents (other than those described in clause (i)) which materially and
adversely affects the rights of the Securityholders and which continues
unremedied for 60 days after the giving of written notice of such failure;
(iii) any assignment or delegation by the Servicer of its duties or rights
under the Trust Documents, except as specifically permitted under the Trust
Documents, or any attempt to make such an assignment or delegation; (iv)
certain events of insolvency, readjustment of debt, marshaling of assets
and liabilities or similar proceedings regarding the Servicer; or (v) any
disqualification of the Servicer as an Eligible Servicer (as defined in the
Trust Documents). "Notice" as used herein means notice to the Servicer by
the Trustees or the Company, or to the Company, the Servicer and the
Trustees by the Certificateholders holding not less than 25% of the
outstanding Certificate Balance of such Trust, and by the Noteholders, if
any, holding not less than 25% of the aggregate outstanding principal
amount of the Notes issued by such Trust.
RIGHTS UPON EVENT OF TERMINATION
Unless otherwise specified in the related Prospectus Supplement, as
long as an Event of Termination under the Trust Documents remains
unremedied, the Indenture Trustee (or, if no Notes of the series are
outstanding, the Trustee) may, and at the written direction of the holders
of related Notes evidencing not less than a majority of the aggregate
outstanding principal amount of the Notes issued by such Trust (or, if no
Notes are outstanding, the holders of related Certificates evidencing not
less than a majority of the Certificate Balance of such series), will,
unless prohibited by applicable law, terminate all (but no less than all)
of the rights and obligations of the Servicer with respect to a Trust under
the Trust Documents and in and to the Contracts, and the proceeds thereof,
whereupon (subject to applicable law) all authority and power of the
Servicer under the Trust Documents, whether with respect to the Contracts,
the Contract Files or otherwise, will pass to and be vested in the
Indenture Trustee (or, if no Notes of the series are outstanding, such
authority will pass to and be vested in the Trustee); provided, however,
that neither the Indenture Trustee (or, if no Notes of the series are
outstanding, the Trustee) nor any successor servicer will assume any
obligation of CITSF to
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repurchase Contracts for breaches of representations or warranties, and the
Indenture Trustee (or, if no Notes of the series are outstanding, the
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 Trust Documents. Notwithstanding such
termination, the Servicer will be entitled to payment of certain amounts
payable to it for services rendered prior to such termination. No such
termination will affect in any manner CITSF's obligation to repurchase
certain Contracts for breaches of representations or warranties under the
Trust Documents. In the event that a 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 which meets the requirements for an Eligible Servicer under the
Trust Documents. Pending such appointment, such Trustee is obligated to act
in such capacity, unless it is prohibited by law from so acting. The
Indenture Trustee (or, if no Notes of the series are outstanding, the
Trustee) and such successor may agree upon the servicing compensation to be
paid, which in no event, without written consent of not less than 66 2/3%
in principal amount of the related Securityholders, may be greater than the
compensation to CITSF as Servicer under the Trust Documents.
WAIVER OF PAST DEFAULTS
With respect to any series of Securities, unless otherwise specified
in the related Prospectus Supplement, the holders of Notes evidencing not
less than a majority of the aggregate outstanding principal amount of the
Notes (or the holders of the Certificates evidencing not less than a
majority of the Certificate Balance of such series, in the case that all
the Notes have been paid in full and the Indenture has been discharged in
accordance with its terms) may, on behalf of all such Noteholders and
Certificateholders, waive any default by the Servicer in the performance of
its obligations under the Trust Documents and its consequences, except an
Event of Termination in making any required deposits to or payments from
any of the accounts in accordance with the Trust Documents. No such waiver
will impair such Noteholders' or Certificateholders' right with respect to
subsequent defaults.
AMENDMENT
Unless otherwise specified in the related Prospectus Supplement, the
Trust Documents may be amended by the parties thereto and, in the event
that such amendment affects the Indenture Trustee, the Indenture Trustee,
without prior notice to or the consent of the related Noteholders or
Certificateholders (i) to correct manifest error or cure any ambiguity;
(ii) to correct or supplement any provision therein which may be
inconsistent with any other provision therein; (iii) to add or amend any
provision as requested by the Rating Agencies to maintain or improve the
rating of the Certificates or Notes, if any; (iv) to add to the covenants,
restrictions or obligations of the Company, the Servicer or the Trustee or
to provide for the delivery of or substitution for an Enhancement or a
Servicer Letter of Credit; (v) to evidence and provide for the acceptance
of the appointment of a successor trustee with respect to the property
owned by the related Trust and add to or change any provisions as shall be
necessary to facilitate the administration of the trusts under the Trust
Documents by more than one trustee; or (vi) to add, change or eliminate any
other provisions, provided that an amendment pursuant to clause (vi) 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 the Trust, the Certificateholders or the Noteholders, if any.
Unless otherwise specified in the related Prospectus Supplement, the Trust
Documents 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 of such series for the purpose of
adding any provisions to or changing in any manner or eliminating any
provisions of the Trust Documents, or of modifying in any manner the rights
of such Noteholders or Certificateholders, respectively; except, that no
such amendment, may except as described above, increase or reduce in any
manner the amount of, or accelerate or delay the timing of, distributions
that are required to be made on any related Note or Certificate, the
related Pass-Through Rate or the Interest Rate. Any action specified in
clauses (v) and (vi) shall be taken only upon satisfaction of the Rating
Agency Condition.
INSOLVENCY EVENT
Unless otherwise specified in the related Prospectus Supplement, if
the related Prospectus Supplement specifies a holder of a Certificate as
the "Affiliated Purchaser" and any of certain events of insolvency,
readjustment of debt, marshaling of assets and liabilities, or similar
proceedings with respect to such person indicating its insolvency or
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inability to pay its obligations (each, an "Insolvency Event") occurs with
respect to the Affiliated Purchaser specified in the related Prospectus
Supplement, the related Contract Pool shall be liquidated and the related
Trust will be terminated, unless, within 90 days after the date of such
Insolvency Event, the Owner Trustee shall have received written
instructions from (i) each of the Certificateholders (other than the
Affiliated Purchaser, if any), and (ii) each of the Noteholders, if any, 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, if any,
notice thereof is required to be given to the Noteholders, if any, 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, the Note Distribution Account, if any, or any cash collateral
account) in a commercially reasonable manner and on commercially reasonable
terms. The net 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 net proceeds from the liquidation
of the Contracts (after payment of the Servicer Payment and payment of the
principal amount of and accrued interest on the Notes of a series), and any
amounts on deposit in the Certificate Distribution Account are not
sufficient to pay the principal amount of and accrued interest on the
Certificates of a series in full, the amount of principal returned to the
Certificateholders will be reduced (to the extent that the Enhancement, if
any, is not sufficient to prevent such reduction) and the
Certificateholders will incur a loss. If the net proceeds from the
liquidation of the Contracts (after payment of the Servicer Payment) and
any amounts on deposit in the Note Distribution Account are not sufficient
to pay the principal amount of and accrued interest on the Notes in full,
holders of the Notes also will incur a loss, except to the extent of
payments to the Noteholders from the Enhancement, if any, applicable to the
Notes.
AFFILIATED PURCHASER LIABILITY
Unless otherwise specified in the related Prospectus Supplement, under
the Trust Documents, the Affiliated Purchaser, if any, specified in the
related Prospectus Supplement, will agree to be liable directly to an
injured party for the entire amount of any losses, claims, damages,
liabilities or expenses (other than those incurred by (i) a
Certificateholder or Noteholder, if any, in the capacity of an investor and
(ii) the Trust under any agreement relating to the Enhancement, if any) of
the Trust to the extent that the Affiliated Purchaser would be liable if
the Trust were a partnership under the Delaware Revised Uniform Limited
Partnership Act in which the Affiliated Purchaser were a general partner.
TERMINATION
Unless otherwise specified in the related Prospectus Supplement, the
obligations of the Servicer, the Company, the Affiliated Purchaser, if any,
and the Trustees pursuant to the Trust Documents for a series of the
Securities will terminate upon the earliest to occur of (i) the maturity or
other liquidation of the last related Contract and the disposition of any
amounts received upon liquidation of any property remaining in the related
Trust, (ii) the payment to Securityholders of the series of all amounts
required to be paid to them pursuant to the Trust Documents, (iii) the
occurrence of either event described below, and (iv) as otherwise required
by law, as described in the Trust Documents.
Unless otherwise specified in the related Prospectus Supplement, with
respect to each series of Securities, in order to avoid excessive
administrative expenses, CITSF will be permitted at its option to purchase
from the Trust, on any Distribution Date on which the Pool Balance as of
the last day of the related Due Period is less than or equal to a
percentage specified in the related Prospectus Supplement of the Initial
Pool Balance, all remaining related 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). CITSF will give notice to the Trustees and the
Depository of the exercise of such option no later than the Determination
Date succeeding such Due Period and will deposit the amount required to
purchase such Contracts on the Deposit Date succeeding such Due Period.
Exercise of such right will effect early retirement of the Securities.
Unless otherwise specified in the related Prospectus Supplement, 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.
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Unless otherwise specified in the related Prospectus Supplement,
within ten days after the first Distribution Date on which the Pool Balance
as of the last day of the related Due Period is less than or equal to a
percentage specified in the related Prospectus Supplement of the Initial
Pool Balance, the Indenture Trustee (or, if the Notes have been paid in
full and the Indenture has been discharged in accordance with its terms,
the Owner 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 Due Period. Any purchaser
of the Contracts must agree to the continuation of CITSF as Servicer on
terms substantially similar to those in the Trust Documents. Any such sale
will effect early retirement of the Securities.
Unless otherwise specified in the related Prospectus Supplement, such
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
Distribution Date would result in proceeds sufficient to distribute to
Securityholders the amounts of interest due to Securityholders for such
Distribution Date and any unpaid interest payable to the Securityholders
with respect to one or more prior Distribution Dates and the outstanding
principal amount of the Notes and the Certificate Balance, and (ii) the sum
of (a) an amount sufficient to reimburse the Servicer for any 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. Such Trustee
may consult with financial advisors, including any Underwriter, to
determine if a bid is equal to or greater than the fair market value of
such Contracts. Upon the receipt of such bids, such 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, such Trustee shall decline to consummate such sale and shall not
be under any obligation to solicit any further bids or otherwise negotiate
any further sale of Contracts remaining in the Trust. In such event,
however, such Trustee may from time to time solicit bids in the future for
the purchase of such Contracts upon the same terms described above.
Unless otherwise specified in the related Prospectus Supplement, such
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 such Trustee specified for such purpose. Any funds remaining
in the Trust, after such Trustee has taken certain measures to locate a
Securityholder and such measures have failed, will be distributed to the
Affiliated Purchaser, if any, or as specified in the related Prospectus
Supplement.
CERTAIN LEGAL ASPECTS OF THE CONTRACTS
The following discussion contains summaries of certain legal aspects
of recreational vehicle contracts, which are general in nature. Since 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 Trust, each
Trust will succeed collectively to the rights (including the right to
receive payment on the Contracts), and will assume the obligations, of
CITSF under the related 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 Trust Documents, the Servicer will retain possession of the Contracts
as custodian for the Trustee, and will make an appropriate filing of a UCC
financing statement in New Jersey to perfect the sale of the Contracts by
the Company to the Trustee. The Contracts and the related certificates of
title will not be stamped to reflect their assignment from CITCF-NY to
CITSF, from CITSF to the
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Company or from the Company to the Trust. The Contract Files will not be
physically segregated from the contract files for contracts owned by CITSF.
If, through inadvertence or otherwise, another party in good faith
purchases (or takes 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 or
secured party may acquire an interest in the Contracts superior to the
interest of the Trust.
Under the Trust Documents, 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 Trust Documents, with respect to each Contract, as of the
Closing Date for each Initial Contract, and as of the related Subsequent
Transfer Date, for each Subsequent Contract, if any, that the Contract has
not been sold, assigned or pledged by CITSF to any person other than the
Company, that immediately prior to the transfer and assignment of the
Contract to the Company, CITSF had good and marketable title thereto, free
and clear of any encumbrance, equity, loan, pledge, charge, claim or
security interest and, immediately upon the transfer thereof, the Company
will have good and marketable title to the Contract, free and clear of any
encumbrance, equity, loan, pledge, charge, claim or security interest 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 Trustees, or the
Trust would be to require CITSF to repurchase such Contract.
SECURITY INTERESTS IN THE FINANCED VEHICLES
General. The Contracts are installment sale contracts that evidence
the credit sale of recreational vehicles by Obligors. The Contracts also
constitute personal property security agreements and include grants of
security interests in the related recreational vehicles under the UCC.
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 or by delivery of the certificate of title and payment
of a fee to the state motor vehicle authority, depending on the particular
state law. In states in which perfection of a security interest in a
particular motor vehicle is not governed by a certificate of title statute,
perfection is usually accomplished by filing pursuant to the provisions of
the UCC. Notwithstanding the foregoing, in certain states, folding camping
trailers and/or slide-in campers are not subject to state titling and
vehicle registration laws and a security interest in such recreational
vehicles is perfected by filing pursuant to the provisions of the UCC. In
most states, 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 Trust Documents, the Company will sell and assign its
interest in the Contracts, including the security interests in the Financed
Vehicles granted thereunder, to the Trustee. UCC financing statements will
be filed to perfect the sale of (i) CITSF's interests in the Contracts to
the Company and (ii) the Company's interests in the Contracts to the Trust.
Perfection of CITSF's or CITCF-NY's Security Interest in the Financed
Vehicles. CITSF and CITCF-NY take all actions necessary under the laws of
the state in which the related recreational vehicles are located at the
time of origination of the Contract to perfect their respective security
interests in such recreational vehicles, including, where applicable,
having a notation of their respective liens recorded on the related
certificate of title or delivering the required documents and fees,
obtaining possession of the certificate of title (if possible), or, where
applicable, by perfecting its security interest in the related recreational
vehicles under the UCC. In the event CITSF (or CITCF-NY) fails, due to
clerical errors, to effect such notation or delivery, or perfects the
security interest under an inapplicable statute (for example, under the UCC
rather than under a motor vehicle title law), the Trust may not have a
first priority security interest in the Financed Vehicle securing a
Contract. In the Trust Documents, 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 CITCF-NY) or the related Dealer in
the Financed Vehicle covered thereby (which security interest, if in favor
of the related Dealer (or CITCF-NY), has been assigned to CITSF) and such
security interest has been assigned by CITSF to the Company,
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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 (or CITCF-NY). 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.
Possible Loss of Perfection or Priority of Trust's Security Interest
in Financed Vehicles or Proceeds Thereof. The certificate of title names
CITSF (or CITCF-NY) as the secured party. Because of the administrative
burden and expense, neither CITCF-NY, CITSF, the Company nor the Trust will
amend any certificate of title to note the lien of the Trust as the new
secured party on the certificate of title relating to the Financed Vehicles
nor will any such entity execute and file any transfer instruments
(including, among other instruments, UCC-3 assignments). In some states,
in the absence of such an amendment or execution, the assignment to the
Trust of a security interest in Financed Vehicles may not be perfected,
such assignment of the security interest to the Trust may not be effective
against creditors or a trustee in bankruptcy of CITSF or CITCF(NY), which
continue to be specified as lienholder on any certificates of title or as
secured party of any UCC filing.
(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" to secure payment or
performance of an obligation. Accordingly, under California law, an
assignment such as that under each of the Purchase Agreement and the Trust
Documents is an effective conveyance of CITSF's and the Company's perfected
security interest, as the case may be, without such re-registration, and
under the Purchase Agreement the Company will succeed to CITSF's, and under
the Trust Documents 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 Trust Documents 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. However, in some states the Trust's security
interest will be unperfected because the Trust will not be noted as the
secured party on the certificates of title to the Financed Vehicles, and
therefore the Trust's security interest would be subordinate to, among
others, subsequent purchasers of such Financed Vehicles and holders of
prior perfected security interests therein. However, in the absence of
fraud, forgery or administrative error, the notation of CITSF's or CITCF-
NY'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, judgment creditors or other creditors who take a security interest
in a Financed Vehicle.
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 state in which a financing
statement was properly filed initially to perfect the security interest or
in which the certificate of title was issued) 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 obtain a new
certificate of title for the vehicle. In those states (including
California) that call for return of the certificate of title to the holder
of the first security interest noted thereon, 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 perfection of a motor vehicle lien by notation of the lien on
the certificate of title without possession of the certificate of title by
the secured party, the secured party would receive notice of surrender from
the state of re-registration if the security interest were noted on the
certificate of title. Thus, the secured party would have the opportunity to
re-perfect its security interest in the vehicle in the state to which the
vehicle is moved. 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 note 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
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thereon and accordingly will have an opportunity to require satisfaction of
the related Contract before release of the lien. Under the Trust Documents,
the Servicer will be obligated to take appropriate steps, at its own
expense, to maintain perfection of a security interest in the Financed
Vehicles.
In most states, CITSF, as Servicer, will hold certificates of title
relating to the Financed Vehicles in its possession as custodian for the
Trust pursuant to the Trust Documents. In some states, the certificate of
title is held by the Obligor, but only after it is endorsed by the state
motor vehicle department with a notation of CITSF's lien. In the Trust
Documents, CITSF, as Servicer, will covenant that it will not release its
security interest in the Financed Vehicle securing any Contract except as
contemplated by the Trust Documents. CITSF, as Servicer, will also covenant
that it will 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 Trust Documents. 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 Trust Documents.
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 certain 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 Trust Documents that, as of the Closing Date, there were 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 Trustees 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 an
obligation of CITSF to purchase the Contract under the Trust Documents.
REPOSSESSION
In the event of default 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 the debtor must 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
In the event of default by the Obligor, some jurisdictions (not
including California) require that the Obligor be notified of the default
and be given a time period within which to cure the default prior to
repossession. Generally, this right of cure may only be exercised on a
limited number of occasions during the term of the related Contract.
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 (i) 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 (ii) in some states, the delinquent installments or the unpaid
principal balance of the related obligation.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
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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 certain other states that do not
prohibit or limit such judgments. 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." Some courts have held that when a sale is not "commercially
reasonable," the secured party loses its right to a deficiency judgment and
courts in some other states have held that when a sale is not "commercially
reasonable" there is a rebuttable presumption that there is no deficiency.
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. A deficiency judgment is a
judgment against the obligor or guarantor for the shortfall; however, a
defaulting obligor or guarantor 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.
CERTAIN MATTERS RELATING TO INSOLVENCY
CITSF, CITCF-NY and the Company intend that the transfers of Contracts
from CITCF-NY to CITSF, from CITSF to the Company and from the Company to
the Trust constitute sales, rather than pledges 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. -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
contend that the sales of the Contracts by CITCF-NY to CITSF, CITSF to the
Company, or by the Company to the Trust, respectively, were pledges of the
Contracts rather than sales 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 CITCF-NY, CITSF or of
the Company, a court were to follow the reasoning of the Tenth Circuit
reflected in the case described above, then the Contracts may be included
in the bankruptcy estate of CITCF-NY, 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 Securities,
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 or against CIT under the Bankruptcy
Code or similar applicable state laws (collectively, "Insolvency Laws")
would 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 a requirement
that the Company have at least one "independent director" and restrictions
on the nature of the Company's business). Additionally, the Company's
certificate of incorporation prohibits merger, consolidation and the sale
of all or substantially all of its assets in certain circumstances or the
commencement of a voluntary case or proceeding under any insolvency law,
without the prior affirmative unanimous vote of its directors including any
independent director. Notwithstanding the foregoing, in the event that (i)
a court concluded that the assets and liabilities of the Company should be
consolidated with those of CIT (or one of its affiliates) in the event of
the application of applicable insolvency laws to CIT (or one of its
affiliates) or following the bankruptcy or insolvency of CIT (or one of its
affiliates) the
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security interest in the Contracts granted by the Company to the Trust
should be avoided; (ii) a filing were made under any insolvency law by or
against the Company, or (iii) an attempt were made to litigate any of the
foregoing issues, delays in payments on the Securities and possible
reductions in the amount of such payments could occur.
The Affiliated Purchaser, if any, specified in the related Prospectus
Supplement, will own at least the portion of the Original Certificate
Balance specified in the related Prospectus Supplement. The Affiliated
Purchaser will have the same rights with regard to the Trust as all other
Certificateholders based on its percentage ownership of the Certificate
Balance. The Trust Documents will provide that if an Insolvency Event with
respect to the Affiliated Purchaser occurs, subject to certain conditions,
the Trust will dissolve. Certain steps will be 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 a certificate 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.
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, state motor
vehicle retail installment sales acts, state 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 which fail to comply with their provisions. In some cases,
this liability could affect the ability of an assignee such as the Trust 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 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 Trust, 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
assignment of retail installment sale 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 provisions of these
laws may affect the enforceability of the related Contract. The Trust and
the Company may not have obtained all licenses required under any federal
or state consumer laws or regulations, and the absence of such licenses may
impede the enforcement of certain rights or give rise to certain defenses
in enforcement actions. 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
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Financed Vehicle, the obligor may be able to assert a defense against the
seller of the Financed Vehicle, which defense may prevent the Trust from
collecting amounts due under the Contract .
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 and be used as a defense to
repayment of the obligation.
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 Trust Documents that each
Contract complies with all requirements of law in all material respects. A
breach of such representation and warranty that 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 the 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 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 a Financed Vehicle subject to 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 caused by
the inability to realize upon the related Financed Vehicle in a timely
fashion.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Set forth below and in the related Prospectus Supplement for each
series of the Securities 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. 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 and in the related Prospectus Supplement.
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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. Each Trust will be provided with an opinion of Schulte Roth
& Zabel, counsel for the Seller, regarding certain of the Federal income
tax matters discussed below and in the related Prospectus Supplement. 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. For
purposes of the following summary, references to the Trust, the Notes, the
Certificates and related terms, parties and documents will be deemed to
refer, unless otherwise specified herein, to each Trust and the Notes,
Certificates and related terms, parties and documents applicable to such
Trust.
The federal income tax consequences to Certificateholders will vary
depending on whether the Trust is intended to be treated as a partnership
under the Code or is intended to be given an alternative characterization
for Federal income tax purposes. The related Prospectus Supplement for
each series of Certificates will specify whether the Trust is intended to
be treated as a partnership for Federal income tax purposes and, if not,
how the Trust is intended to be treated.
SCOPE OF THE TAX OPINIONS
It is expected that Schulte Roth & Zabel will, upon issuance of a
series of Notes and/or Certificates, deliver its opinions that the
applicable Trust will not be classified as an association (or publicly
traded partnership) taxable as a corporation for Federal income tax
purposes. Further, with respect to each series of Notes, Schulte Roth &
Zabel expects to advise the Trust that the Notes will be classified as debt
for federal income tax purposes.
In addition, Schulte Roth & Zabel will render its opinion that it
has or reviewed the statements herein and in the related Prospectus
Supplement under the heading "Certain Federal Income Tax Consequences," and
is of the opinion that such statements are correct in all material
respects. Such statements are intended as an explanatory discussion for the
possible effects of the classification of the Trust as a partnership, as a
grantor trust or other classification, as the case may be, for Federal
income tax purposes on investors generally and of related tax matters
affecting investors generally, but do not purport to furnish information in
the level of detail or with the attention to the investor's specific tax
circumstances that would be provided by an investor's own tax adviser.
Accordingly, each investor is advised to consult its own tax advisers with
regard to the tax consequences to it of investing in the Notes and/or
Certificates.
OTHER TAX CONSEQUENCES
No advice has been received as to local income, franchise, personal
property, or other taxation in any state or locality, or as to the tax
effect of ownership of 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.
ALTERNATIVE TAX TREATMENT
In the event that, as a result of a change in applicable laws or
regulations or the interpretation thereof, the Federal income tax
characteristics of the Notes or the Certificates are not anticipated to be
as described above, the related Prospectus Supplement will include a
discussion of the anticipated Federal income tax treatment of the Notes or
Certificates.
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.
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THE CERTIFICATES
An interest in 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 (other than an insurance
company purchasing the Certificates for its general accounts). By its
acceptance of a Certificate or its acquisition of an interest in a
Certificate through a Participant or DTC, each Certificateholder or
Certificate Owner 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 Notes 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.
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
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."
PLAN OF DISTRIBUTION
On the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement") with respect to each Trust, the Seller will
agree to sell to each of the underwriters (the "Underwriters") named
therein and in the related Prospectus Supplement, and each of such
Underwriters will severally agree to purchase from the Seller, the
principal amount of each class of Securities of the related series set
forth therein and in the related Prospectus Supplement.
In each Underwriting Agreement, the several Underwriters will agree,
subject to the terms and conditions set forth therein, to purchase all the
Securities described therein which are offered hereby and by the related
Prospectus Supplement if any of such Securities are purchased. In the event
of a default by any such underwriter, each Underwriting Agreement will
provide that, in certain circumstances, purchase commitments of the
nondefaulting Underwriters may be increased, or the Underwriting Agreement
may be terminated.
Each Prospectus Supplement will either (i) set forth the price at
which each class of Securities being offered thereby will be offered to the
public and any concessions that may be offered to certain dealers
participating in the offering of such Securities or (ii) specify that the
related Securities are to be resold by the Underwriters in negotiated
transactions at varying prices to be determined at the time of such sale.
After the initial public offering of any Securities, the public offering
price and such concessions may be changed.
Each Underwriting Agreement will provide that CITSF and/or the Company
will indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act.
A Trustee may, from time to time, invest the funds of the Trust in
Eligible Investments acquired from the Underwriters.
FINANCIAL INFORMATION
The Company has determined that its financial statements are not
material to the offering made hereby.
Each Trust will be formed to own the related Contracts and the other
Trust assets and to issue the related Securities. Each Trust will have had
no assets or obligations prior to the issuance of the Securities and will
not engage
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in any activities other than those described herein and in the related
Prospectus Supplement. Accordingly, no financial statements with respect to
each Trust are included in this Prospectus or in the related Prospectus
Supplement.
RATINGS
It is a condition to the issuance of any class of Securities offered
pursuant to this Prospectus that the Securities be rated in one of the four
highest rating categories by at least one nationally recognized statistical
rating organization rating such series of Securities (each, a "Rating
Agency"). The foregoing ratings do not address the likelihood that the
Securities will be retired following the sale of the Contracts by the
Trust. 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 Securities 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. The material federal income tax
consequences of the Securities will be passed upon for the Company by
Schulte Roth & Zabel. Certain legal matters will be passed upon for CITSF,
CITCF-NY and the Company by Norman H. Rosen, Esq., Senior Vice President
and General Counsel. If the Enhancement for a class of Securities includes
a CIT Limited Guarantee, certain legal matters will be passed upon for CIT
by its Executive Vice President and General Counsel, Ernest Stein, Esq. If
a Trust is formed pursuant to the laws of the State of Delaware, certain
legal matters will be passed upon for the Trust by its special Delaware
counsel named in the related Prospectus Supplement.
EXPERTS
The financial statements listed under the heading "Exhibits, Financial
Statement Schedule and Reports on Form 8-K" in CIT's 1995 Annual Report on
Form 10-K have been incorporated by reference herein in reliance upon the
report of KPMG Peat Marwick LLP, independent certified public accountants,
also incorporated by reference herein, and upon the authority of said firm
as experts in accounting and auditing. The report of KPMG Peat Marwick LLP
refers to a change in the method of accounting for postretirement benefits
other than pensions in 1993.
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INDEX OF PRINCIPAL TERMS
Affiliated Purchaser........................... 6, 23
Asset Service Center........................... 28
Auction Sale................................... 16
Available Amount............................... 13, 51
Bankruptcy Code................................ 19, 60
Benefit Plan................................... 64
Business Day................................... 12, 31
Capitalized Interest Account................... 11
CBC............................................ 27
CBC Holding.................................... 27
Cede........................................... 3, 6, 30
Cedel.......................................... 2, 7, 22
Cedel Participants............................. 40
Certificate Balance............................ 6
Certificate Distribution Account............... 47
Certificate Final Scheduled Distribution Date.. 12
Certificate Owner.............................. 22, 30
Certificate Owners............................. 6
Certificate Pool Factor........................ 26
Certificateholders............................. 41
Certificates................................... 1, 5, 30
CIT............................................ 2, 5, 18
CITCF-NY....................................... 9, 18
CITSF.......................................... 5, 18, 28
Closing Date................................... 9
CMC............................................ 27
Code........................................... 17, 63
Collection Account............................. 47
Commission..................................... 2
Company........................................ 1, 5, 18, 28
Contract Files................................. 23
Contract Pool.................................. 8, 23, 24
Contract Rate.................................. 24
Contracts...................................... 1, 9, 24
Cooperative.................................... 40
Credit Facility................................ 38
Credit Facility Provider....................... 38
Dealers........................................ 9, 18
Definitive Certificates........................ 41
Definitive Notes............................... 41
Definitive Securities.......................... 41
Deposit Date................................... 22, 49
Depositories................................... 39
Depository..................................... 22
Determination Date............................. 12
Distribution Date.............................. 12, 31
DKB............................................ 27
DTC............................................ 2, 22
DTC Rules...................................... 40
Due Period..................................... 12
Eligible Account............................... 47
Eligible Institution........................... 47
Eligible Investments........................... 47
Enhancement.................................... 37
ERISA.......................................... 17, 64
Euroclear...................................... 2, 7, 40
Euroclear Operator............................. 40
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Euroclear Participants......................... 40
Event of Termination........................... 53
Events of Default.............................. 34
Financed Vehicles.............................. 1, 9
Force-Placed Insurance......................... 53
FTC Rule....................................... 61
Funding Period................................. 7, 10
Holders........................................ 41
Indenture...................................... 2, 7, 31
Indenture Trustee.............................. 2, 5, 31
Indirect Participants.......................... 39
Initial Contracts.............................. 1, 8
Initial Cut-off Date........................... 1, 8
Initial Financed Vehicles...................... 1, 8
Initial Pool Balance........................... 15, 56
Insolvency Event............................... 55
Insolvency Laws................................ 20, 61
Interest Accrual Period........................ 12
Interest Rate.................................. 7
Interest Shortfall............................. 14, 50
IRS............................................ 63
Issuer......................................... 5
Late Fees...................................... 13, 51
Limited Guarantee.............................. 38
Liquidity Facility............................. 38
Liquidity Facility Provider.................... 38
List of Contracts.............................. 44
MHC............................................ 27
Military Reservist Relief Act.................. 45
Monthly Advance................................ 14, 50
Non-Reimbursable Payment....................... 15, 50
Note Distribution Account...................... 47
Note Final Scheduled Distribution Date......... 12
Note Owner..................................... 22, 32
Note Owners.................................... 7
Note Pool Factor............................... 26
Noteholders.................................... 41
Notes.......................................... 1, 7, 31
Notice......................................... 53
Obligor........................................ 9, 50
Optional Purchase.............................. 15
Original Certificate Balance................... 6, 23
Owner Trustee.................................. 5
Paid-Ahead Contract............................ 24
Paid-Ahead Period.............................. 24
Participants................................... 39
Pass-Through Rate.............................. 6, 31
Permitted Investments.......................... 10
Pool Balance................................... 15
Pooling and Servicing Agreement................ 2
Pre-Funded Amount.............................. 10
Pre-Funded Percentage.......................... 20
Pre-Funding Account............................ 7
Principal Liquidation Loss Amount.............. 34
Prospectus Supplement.......................... 1
PTCE........................................... 64
Purchase Agreement............................. 9
Purchase Agreements............................ 44
Purchase Price................................. 46
Rating Agency.................................. 16
Record Date.................................... 12, 31
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Registration Statement......................... 2
Related Documents.............................. 35
Relief Act Obligor............................. 45
Repurchase Event............................... 9
Repurchased Contract........................... 9, 46
Required Capitalized Interest Amount........... 11
Required Servicer Ratings...................... 49
Reserve Fund................................... 37
Retained Yield................................. 46
Sale and Servicing Agreement................... 2
Securities..................................... 1, 7, 31
Security Owner................................. 32
Securityholders................................ 3, 41
Seller......................................... 1, 5
Servicer....................................... 2, 5
Servicer Letter of Credit...................... 49
Servicer Payment............................... 13
Servicing Fee.................................. 15, 49
Servicing Fee Rate............................. 15, 49
Soldiers' and Sailors' Civil Relief Act........ 45
Spread Account................................. 37
Stockholders Agreement......................... 27
Stripped Certificates.......................... 6
Stripped Notes................................. 8
Subsequent Contracts........................... 1, 9
Subsequent Cut-off Date........................ 1, 10
Subsequent Financed Vehicles................... 1, 9
Subsequent Purchase Agreement.................. 10
Subsequent Transfer Agreement.................. 10
Subsequent Transfer Date....................... 10
Terms and Conditions........................... 40
Trust.......................................... 1, 5
Trust Agreement................................ 2
Trust Documents................................ 2, 44
Trustee........................................ 2, 5
Trustees....................................... 5
UCC............................................ 18, 57
Underwriters................................... 64
Underwriting Agreement......................... 64
Yield Supplement Account....................... 37
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No dealer, salesperson or other person $___________
has been authorized to give any (APPROXIMATE)
information or to make any
representation not contained in this CIT RV
Prospectus Supplement and the TRUST 199__-__
accompanying Prospectus and, if given
or made, such information or
representation must not be relied upon $__________ NOTE __%
as having been authorized by the ASSET-BACKED NOTES
Company, CITSF or any Underwriter.
This Prospectus Supplement and the
accompanying Prospectus do not $________ ___% ASSET-BACKED
constitute an offer to sell or a CERTIFICATES
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 THE CIT GROUP
solicitation. Neither the delivery of SECURITIZATION
this Prospectus Supplement or the CORPORATION II,
accompanying Prospectus nor any sale SELLER
made hereunder shall, under any
circumstances, create any implication
that the information herein is correct
as of any time subsequent to the date THE CIT GROUP/SALES
hereof or that there has been no FINANCING, INC.,
change in the affairs of the Company SERVICER
since such date.
______________
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
Summary....................... S-3
Risk Factors.................. S-19
Structure of the Transaction.. S-23 [UNDERWRITERS]
The Trust Property............ S-24
The Contract Pool............. S-25
Maturity and Prepayment
Considerations................ S-29
Yield and Prepayment
Considerations................ S-34 PROSPECTUS
Pool Factors.................. S-34
Use of Proceeds............... S-35 DATED July 24, 1996
The CIT Group/Sales Financing,
Inc., Servicer................ S-35
The Certificates.............. S-39
The Notes..................... S-41
Enhancement................... S-43
The Purchase Agreements and
the Trust Documents........... S-45
Certain Federal Income
Tax Consequences.............. S-47
Plan of Distribution.......... S-52
Ratings....................... S-53
Legal Matters................. S-53
Annex I....................... S-54
Index of Principal Terms...... S-57
PROSPECTUS
Available Information................... 2
Reports to Securityholders.............. 3
Documents Incorporated by Reference..... 3
Summary................................. 5
Risk Factors............................ 18
The Trusts.............................. 22
The Trust Property...................... 23
The Contract Pool....................... 24
Yield and Prepayment Considerations..... 26
Pool Factors............................ 26
Use of Proceeds......................... 27
The CIT Group Holdings, Inc............. 27
The CIT Group Securitization
Corporation II, Seller................. 28
The CIT Group/Sales Financing, Inc.,
Servicer............................... 28
The Certificates........................ 30
The Notes............................... 31
Enhancement............................. 36
Certain Information Regarding the
Securities............................. 38
The Purchase Agreements and the Trust
Documents.............................. 44
Certain Legal Aspects of the Contracts.. 57
Certain Federal Income Tax Consequences. 63
ERISA Considerations.................... 64
Plan of Distribution.................... 64
Financial Information................... 65
Ratings................................. 65
Legal Matters........................... 65
Experts................................. 65
Index of Principal Terms................ 66
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. 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.................... $ 94,828
Attorney's fees and expenses............ 140,000
Accounting fees and expenses............ 50,000
Blue sky fees and expenses.............. 15,000
Rating agency fees...................... 145,000
Trustee's fees and expenses............. 10,000
Printing expenses....................... 75,000
Miscellaneous fees and expenses......... 10,000
Total................................ 539,828
ITEM 15.INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Subsection (a) of Section 145 of the General Corporation Law of Delaware
empowers a corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employee, or
agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise,
against expenses (including attorneys' fees), judgments, fines, and amounts
paid in settlement actually and reasonably incurred by him in connection
with such action, suit, or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that
such person acted in any of the capacities set forth above, against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation except that no
indemnification may be made in respect of any claim, issue, or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in
which such action or suit was brought shall determine that despite the
adjudication of liability, but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper.
Section 145 further provides that to the extent a director, officer,
employee, or agent of a corporation has been successful in the defense of
any action, suit, or proceeding referred to in subsections (a) and (b) or
in the defense of any claim, issue, or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith; that indemnification
provided for by Section 145 shall not be deemed exclusive of any other
rights to which the indemnified party may be entitled; and empowers the
corporation to purchase and maintain insurance on behalf of any person
acting in any of the capacities set forth in the second preceding paragraph
against any liability asserted against him or incurred by him in any such
capacity or arising out of his status as such whether or not the
corporation would have the power to indemnify him against such liabilities
under Section 145.
The Registrants' By-Laws provide for indemnification of directors and
officers of each Registrant the Company to the full extent permitted by
Delaware law.
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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 director 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 16.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
a. EXHIBITS:
1.1 Form of Underwriting Agreement, incorporated by reference herein to
Exhibit 1.1 to Registration Statement 33-65057
3.1 Certificate of Incorporation, as amended, of The CIT Group
Securitization Corporation II, incorporated by reference herein to
Exhibit 3.1 to Registration Statement 33-65057
3.2* By-laws, as amended, of The CIT Group Securitization Corporation II
4.1 Form of Indenture between the Trust and the Indenture Trustee,
incorporated by reference herein to Exhibit 4.1 to Registration
Statement 33-65057
4.2 Form of Trust Agreement between the Company and the Owner Trustee,
incorporated by reference herein to Exhibit 4.2 to Registration
Statement 33-65057
4.3 Form of Sale and Servicing Agreement among the Company, CITSF and
the Trust, incorporated by reference herein to Exhibit 4.3 to
Registration Statement 33-65057
4.5 Form of Limited Guarantee, incorporated by reference herein to
Exhibit 4.4 to Registration Statement 33-59209
5.1* Opinion of Schulte Roth & Zabel with respect to legality
5.2* Opinion of Richards, Layton & Finger with respect to legality
8.1* Opinion of Schulte Roth & Zabel with respect to tax matters
10.1 Form of Purchase Agreement, incorporated by reference herein to
Exhibit 10.1 to Registration Statement 33-65057
10.2 Form of Subsequent Purchase Agreement, incorporated by reference
herein to Exhibit 10.2 to Registration Statement 33-65057
23.1* Consent of Schulte Roth & Zabel (included as part of Exhibit 5.1)
23.2* Consent of Richards, Layton & Finger (included as part of
Exhibit 5.2)
23.3 Consent of KPMG Peat Marwick LLP
24.1 Powers of Attorney of The CIT Group Securitization
Corporation II (included on page II-4)
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 Mellon Bank, N.A.
25.2* Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of Harris Trust and Savings Bank
25.3* Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of the Bank of New York
____________
* Filed herewith.
II-2
<PAGE>
b. FINANCIAL STATEMENT SCHEDULES:
Not applicable.
ITEM 17. UNDERTAKINGS.
The Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Act");
(ii) To reflect in the prospectus any fact or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose 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 shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrants undertake that, for purposes of
determining any liability under the Act, each filing of the Registrants'
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 bona fide offering thereof.
The undersigned Registrants hereby agree to provide to the underwriter
at the closing specified in the underwriting agreement, certificates in
such denominations and registered in such names as required by the
underwriter to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the 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 the payment
by the Registrants of expenses incurred or paid by a director, officer or
controlling person of the Registrants in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrants will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
<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 No. 1 to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the Town of
Livingston, State of New Jersey, on July 24, 1996.
THE CIT GROUP SECURITIZATION CORPORATION II
By: /s/ JAMES J. EGAN, JR.
----------------------
Name: James J. Egan, Jr.
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the 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 July 24, 1996
- --------------------------- (principal executive officer)
James J. Egan, Jr.
* Executive Vice President and July 24, 1996
- --------------------------- Director
Richard W. Bauerband
* Director July 24, 1996
- ---------------------------
Joseph J. Carroll
* Vice President July 24, 1996
- --------------------------- (principal financial and accounting
Frank Garcia officer)
*By: /s/ JAMES J. EGAN, JR. July 24, 1996
-------------------------
James J. Egan, Jr.
Attorney-in-fact
</TABLE>
Original powers of attorney authorizing Norman H. Rosen, James J. Egan,
Jr. and Richard W. Bauerband 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 Securitization Corporation II and
available for examination pursuant to Item 302(b) of Regulation S-T.
II-4
<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 No. 1 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 July 24, 1996.
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
Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated:
Signature and Title Date
------------------- ----
Albert R. Gamper, Jr.*
- -------------------------------
President, Chief Executive Officer,
and Director (Principal executive
officer)
Hisao Kobayashi*
- -------------------------------
Director
Takasuke Kaneko*
- -------------------------------
Director
Kenji Nakamura*
- -------------------------------
Director
Joseph A. Pollicino*
- -------------------------------
Director
Paul N. Roth*
- -------------------------------
Director
*By /s/ ERNEST D. STEIN July 24, 1996
--------------------
Ernest D. Stein
Attorney-in-fact
II-5
<PAGE>
Peter J. Tobin*
- -------------------------------
Director
Keiji Torii*
- -------------------------------
Director
Yukihara Uno*
- -------------------------------
Director
Yasuo Tsunemi*
- -------------------------------
Director
/s/ JOSEPH M. LEONE
- -------------------------------
Joseph M. Leone July 24, 1996
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-6
<PAGE>
Exhibit 3.2
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 the proposed
<PAGE>
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
-2-
<PAGE>
of the taking of the corporate action without a meeting by less than unanimous
written consent shall be given to those stockholders who have not consented in
writing.
Section 7. List of Stockholders Entitled to Vote. The officer of
--------- -------------------------------------
the Corporation who has charge of the stock ledger of the Corporation shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder of the Corporation who is
present.
Section 8. Stock Ledger. The stock ledger of the Corporation shall
--------- ------------
be the only evidence as to who are the stockholders entitled to examine the
stock ledger, the list required by Section 7 of this Article II or the books of
the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
ARTICLE III
DIRECTORS
---------
Section 1. Number, Election and Removal of Directors. The Board of
--------- -----------------------------------------
Directors shall consist of not less than one nor more than fifteen members, the
exact number of which shall initially be fixed by the Incorporator and
thereafter from time to time by the Board of Directors. The Board of Directors
shall at all times include at least one Director (the "Independent Director")
who is not a director, officer, 5% stockholder, employee or former employee of
the Corporation's direct or indirect parent or its subsidiaries. Except as
provided in Section 2 of this Article, directors shall be elected by a plurality
of the votes cast at Annual Meetings of Stockholders, and each director so
elected shall hold office until the next Annual Meeting and until his successor
is duly elected and qualified, or until his earlier resignation or removal. Any
director may resign at any time upon notice to the Corporation. Directors need
not be stockholders. At any time, Directors may be removed and their successors
chosen by the unanimous written consent of the holders of the outstanding stock
of the Corporation entitled to vote on the election of Directors.
-3-
<PAGE>
Section 2. Vacancies. Subject to Section 1 of this Article,
--------- ---------
vacancies and newly created directorships resulting from any increase in the
authorized number of directors may be filled by a majority of the directors then
in office, though less than a quorum, or by a sole remaining director, and the
directors so chosen shall hold office until the next annual election and until
their successors are duly elected and qualified, or until their earlier
resignation or removal.
Section 3. Duties and Powers. The business of the Corporation shall
--------- -----------------
be managed by or under the direction of the Board of Directors which may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute or by the Certificate of Incorporation or by these
By-Laws directed or required to be exercised or done by the stockholders. The
directors of the Corporation shall act independently and in the interests of the
Corporation and in a manner consistent with 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
-4-
<PAGE>
the writing or writings are filed with the minutes of proceedings of the Board
of Directors or committee.
Section 7. Meetings by Means of Conference Telephone. Unless
--------- -----------------------------------------
otherwise provided by the Certificate of Incorporation or these By-Laws, members
of the Board of Directors of the Corporation, or any committee designated by the
Board of Directors, may participate in a meeting of the Board of Directors or
such committee by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this Section 7 shall
constitute presence in person at such meeting.
Section 8. Committees. The Board of Directors may, by resolution
--------- ----------
passed by a majority of the entire Board of Directors, designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of any such committee. In the absence or disqualification
of a member of a committee, and in the absence of a designation by the Board of
Directors of an alternate member to replace the absent or disqualified member,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any absent or disqualified member. Any committee, to the extent allowed by law
and provided in the resolution establishing such committee, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation. Each committee shall
keep regular minutes and report to the Board of Directors when required.
Section 9. Compensation. The directors may be paid their expenses,
--------- ------------
if any, of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director. No such payment shall preclude any director from serving
the Corporation in any other capacity and receiving compensation therefore.
Members of special or standing committees may be allowed like compensation for
attending committee meetings.
Section 10. Interested Directors. No contract or transaction between
---------- --------------------
the Corporation and one or more of its directors or officers, or between the
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
-5-
<PAGE>
is present at or participates in the meeting of the Board of Directors or
committee thereof which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose if (i) the material
facts as to his or their relationship or interest and as to the contract or
transaction are disclosed or are known to the Board of Directors or the
committee, and the Board of Directors or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or (ii) the material facts as to his or their relationship or interest
and as to the contract or transaction are disclosed or are known to the
shareholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the shareholders; or (iii) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved or ratified, by the Board of Directors, a committee thereof
or the shareholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of Directors or
of a committee which authorizes the contract or transaction.
Section 11. Voluntary Bankruptcy, Insolvency or Other Similar
---------- -------------------------------------------------
Proceeding. No amendment, modification or waiver of the Corporate Separateness
- ----------
Agreement dated as of July 1, 1994 and no voluntary bankruptcy, insolvency or
other similar proceeding may be filed, instituted, approved or take place on
behalf of the Corporation without in each case the prior unanimous vote of the
full Board of Directors (including the Independent Director, or if there is more
than one, all of the Independent Directors) that specifically approves and
authorizes such action.
ARTICLE IV
OFFICERS
--------
Section 1. General. The officers of the Corporation shall be chosen
--------- -------
by the Board of Directors and shall be a President, a Vice President, a
Secretary and a Treasurer. The Board of Directors, in its discretion, may also
choose a Chairman of the Board of Directors (who must be a director) and one or
more Assistant Vice-Presidents, Assistant Secretaries, Assistant Treasurers and
other officers. The Corporation shall at all times have at least one executive
officer (the "Independent Officer") who is not a director, officer or employee
of the 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
-6-
<PAGE>
these By-Laws. The officers of the Corporation need not be stockholders of the
Corporation nor, except in the case of the Chairman of the Board of Directors,
need such officers be directors of the Corporation. The officers of the
Corporation shall act independently and in the interests of the Corporation and
in a manner consistent with the purposes stated herein or in the Articles of
Incorporation of the Corporation.
Section 2. Election. The Board of Directors at its first meeting
--------- --------
held after each Annual Meeting of Stockholders shall elect the officers of the
Corporation who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board of Directors; and all officers of the Corporation shall hold office until
their successors are chosen and qualified, or until their earlier resignation or
removal. Any officer elected by the Board of Directors may be removed at any
time by the affirmative vote of a majority of the Board of Directors. Any
vacancy occurring in any office of the Corporation shall be filled by the Board
of Directors. The salaries of all officers of the Corporation shall be fixed by
the Board of Directors.
Section 3. Voting Securities Owned by the Corporation. Powers of
---------- ------------------------------------------
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the President or any Vice-President and any
such officer may, in the name of and on behalf of the Corporation, take all such
action as any such officer may deem advisable to vote in person or by proxy at
any meeting of security holders of any corporation in which the Corporation may
own securities and at any such meeting shall possess and may exercise any and
all rights and power incident to the ownership of such securities and which, as
the owner thereof, the Corporation might have exercised and possessed if
present. The Board of Directors may, by resolution, from time to time confer
like powers upon any other person or persons.
Section 4. Chairman of the Board of Directors. The Chairman of the
--------- ----------------------------------
Board of Directors, if there be one, shall preside at all meetings of the
stockholders and of the Board of Directors. He shall be the Chief Executive
Officer of the Corporation, and except where by law the signature of the
President is required, the Chairman of the Board of Directors shall possess the
same power as the President to sign all contracts, certificates and other
instruments of the 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
-7-
<PAGE>
powers as from time to time may be assigned to him by these By-Laws or by the
Board of Directors.
Section 5. President. The President shall, subject to the control
--------- ---------
of the Board of Directors and, if there be one, the Chairman of the Board of
Directors, have general supervision of the business of the Corporation and shall
see that all orders and resolutions of the Board of Directors are carried into
effect. He shall execute all bonds, mortgages, contracts and other instruments
of the Corporation requiring a seal, under the seal of the Corporation, except
where required or permitted by law to be otherwise signed and executed and
except that the other officers of the Corporation may sign and execute documents
when so authorized by these By-Laws, the Board of Directors or the President.
In the absence or disability of the Chairman of the Board of Directors, the
President shall be the Chief Executive Officer of the Corporation. The
President shall also perform such other duties and may exercise such other
powers as from time to time may be assigned to him by these By-Laws or by the
Board of Directors.
Section 6. Vice-Presidents. At the request of the President or in
--------- ---------------
his absence or in the event of his inability or refusal to act (and if there be
no Chairman of the Board of Directors), the Vice-President or the Vice-
Presidents if there is more than one (in the order designated by the Board of
Directors) shall perform the duties of the President, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
President. Each Vice-President shall perform such other duties and have such
other powers as the Board of Directors from time to time may prescribe. If
there be no Chairman of the Board of Directors and no Vice-President, the Board
of Directors shall designate the officer of the Corporation who, in the absence
of the President or in the event of the inability or refusal of the President to
act, shall perform the duties of the President, and when so acting, shall have
all the powers of and be subject to all the restrictions upon the President.
Section 7. Secretary. The Secretary shall attend all meetings of
--------- ---------
the Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for the standing committees when
required. The Secretary shall give, or cause to be given, notice of all
meetings of the stockholders and 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
-8-
<PAGE>
Directors or the President may choose another officer to cause such notice to be
given. The Secretary shall have custody of the seal of the Corporation and the
Secretary or any Assistant Secretary, if there be one, shall have authority to
affix the same to any instrument requiring it and when so affixed, it may be
attested by the signature of the Secretary or by the signature of any such
Assistant Secretary. The Board of Directors may give general authority to any
other officer to affix the seal of the Corporation and to attest the affixing by
his signature. The Secretary shall see that all books, reports, statements,
certificates and other documents and records required by law to be kept or filed
are properly kept or filed, as the case may be.
Section 8. Treasurer. The Treasurer shall have the custody of the
--------- ---------
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as Treasurer and of the financial condition of the
Corporation. If required by the Board of Directors, the Treasurer shall give
the Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the Corporation.
Section 9. Assistant Secretaries. Except as may be otherwise
--------- ---------------------
provided in these By-Laws, Assistant Secretaries, if there be any, shall perform
such duties and have such powers as from time to time may be assigned to them by
the Board of Directors, the President, any Vice-President, if there be one, or
the Secretary, and in the absence of the Secretary or in the event of his
disability or refusal to act, shall perform the duties of the Secretary, and
when so 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
-9-
<PAGE>
the duties of the Treasurer, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the Treasurer. If required by the
Board of Directors, an Assistant Treasurer shall give the Corporation a bond in
such sum and with such surety or sureties as shall be satisfactory to the Board
of Directors for the faithful performance of the duties of his office and for
the restoration to the Corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control belonging
to the Corporation.
Section 11. Other Officers. Such other officers as the Board of
---------- --------------
Directors may choose shall perform such duties and have such powers as from time
to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and powers.
ARTICLE V
STOCK
-----
Section 1. Form of Certificates. Every holder of stock in the
--------- --------------------
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation (i) by the Chairman of the Board of Directors, the President or a
Vice-President and (ii) by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the Corporation, certifying the number of
shares owned by him in the Corporation.
Section 2. Signatures. Where a certificate is countersigned by (i)
--------- ----------
a transfer agent other than the Corporation or its employee, or (ii) a registrar
other than the Corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such 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
-10-
<PAGE>
and as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate, or his legal representative, to advertise
the same in such manner as the Board of Directors shall require and/or to give
the Corporation a bond in such sum as it may direct as indemnity against any
claim that may be made against the Corporation with respect to the certificate
alleged to have been lost, stolen or destroyed.
Section 4. Transfers. Stock of the Corporation shall be
--------- ---------
transferable in the manner prescribed by law and in these By-Laws. Transfers of
stock shall be made on the books of the Corporation only by the person named in
the certificate or by his attorney lawfully constituted in writing and upon the
surrender of the certificate therefor, which shall be cancelled before a new
certificate shall be issued.
Section 5. Record Date. In order that the Corporation may determine
--------- -----------
the stockholders entitled to notice of or to vote at any meeting of stockholders
of any adjournment thereof, or entitled to express consent to corporate action
in writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action, the Board of Directors may fix in advance, a
record date, which shall not be more than sixty days nor less than ten days
before the date of such meeting, nor more than sixty days prior to any other
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
Section 6. Beneficial Owners. The Corporation shall be entitled to
--------- -----------------
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
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-
-11-
<PAGE>
Laws, to be given to any director, member of a committee or stockholder, such
notice may be given by mail, addressed to such director, member of a committee
or stockholder, at his address as it appears on the records of the Corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Written notice
may also be given personally or by telegram, telex or cable.
Section 2. Waivers of Notice. Whenever any notice is required by
--------- -----------------
law, the Certificate of Incorporation or these By-Laws, to be given to any
director, member of a committee or stockholder, a waiver thereof in writing,
signed, by the person or persons entitled to said notice, whether before or
after the time stated therein, shall be deemed equivalent thereto.
ARTICLE VII
GENERAL PROVISIONS
------------------
Section 1. Dividends. Dividends upon the capital stock of the
--------- ---------
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, and may be paid in cash, in property, or in shares of the capital
stock. Before payment of any dividend, there may be set aside out of any funds
of the Corporation available for dividends such sum or sums as the Board of
Directors from time to time, in its absolute discretion, deems proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for any proper
purpose, and the Board of Directors may modify or abolish any such reserve.
Section 2. Disbursements. All checks or demands for money and notes
--------- -------------
of the Corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time designate.
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.
-12-
<PAGE>
Section 5. Separate Books and Records; Separate Accounts. The
--------- ---------------------------------------------
Corporation shall (i) keep correct and complete books and records of account on
an unconsolidated basis, (ii) ensure that its funds and other assets are not
deposited in the same account as, or commingled with, those of its parent or any
subsidiary or affiliate of its parent, and (iii) maintain separate financial
statements, corporate records and books of account from those of its parent or
any subsidiary or affiliate of its parent.
Section 6. No Advances or Guarantees. The Corporation shall not (i)
--------- -------------------------
make any advances to, or guarantees on behalf of, its parent or any subsidiary
or affiliate thereof, or (ii) receive from its parent or any subsidiary or
affiliate thereof any advance or guarantee on the Corporation's behalf.
ARTICLE VIII
INDEMNIFICATION
---------------
Section 1. Power to Indemnify in Actions, Suits or Proceedings Other
--------- ---------------------------------------------------------
Than Those by or in the Right of the Corporation. Subject to Section 3 of this
- ------------------------------------------------
Article VIII, the Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
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
- -------------------------------
-13-
<PAGE>
Section 3 of this Article VIII, the Corporation shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation; except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of his
duty to the Corporation unless and only to the extent that the Court of Chancery
or the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnify for such expenses which the Court of Chancery or such other court
shall deem proper.
Section 3. Authorization of Indemnification. Any indemnification
--------- --------------------------------
under this Article VIII (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
Section 1 or Section 2 of this Article VIII, as the case may be. Such
determination shall be made (i) by the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to such action, suit or
proceeding, or (ii) if such quorum is not obtainable, or, even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or (iii) by the stockholders. To the extent, however, that a
director, officer, employee or agent of the Corporation has been successful on
the merits or otherwise in defense of any action, suit or proceeding described
above, or in defense of any 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
-14-
<PAGE>
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. Notwithstanding 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 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
-15-
<PAGE>
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.
-16-
<PAGE>
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.
-17-
<PAGE>
CONSENT OF STOCKHOLDER
----------------------
The undersigned, being the sole stockholder of The CIT Group
Securitization Corporation II, a Delaware corporation (the "Corporation"),
hereby consents in writing pursuant to the provisions of Section 228 of the
Delaware General Corporation Law, to the following resolutions:
WHEREAS, the sole stockholder of the Corporation deems it to be in the
best interests of the stockholder and the Corporation to amend its by-
laws:
NOW, THEREFORE, BE IT:
RESOLVED, that the Corporation's by-laws shall be amended as follows:
ARTICLE III, Section 1 of the by-laws shall be replaced in its entirety
by the following amended Article III, Section 1:
"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 be fixed 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", or if there is more than one, all of the
Independent Directors) who is not a director, officer or
employee of any direct or ultimate parent of the Corporation or
of any direct or indirect subsidiary of such parent.
Notwithstanding the foregoing, the Independent Director may be a
director, officer or employee of any direct or indirect
subsidiary of the ultimate parent of the Corporation, provided
that each such corporation is formed with purposes limited to
those similar to the purposes of the Corporation. 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 earliest 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.";
<PAGE>
and be it further
RESOLVED, that the directors and officers of the Corporation be, and each
of them hereby is, authorized, empowered and directed, in the name of the
Corporation, to execute and deliver any and all documents and take any action
which they may deem necessary or appropriate to implement the terms of the
foregoing resolution and to consummate any transactions contemplated thereby,
the execution and delivery of any such instruments and documents and the taking
of any such action to be conclusive evidence of the authority therefor.
THE CIT GROUP HOLDINGS, INC.
By: /s/ Ernest D. Stein
-----------------------------
Ernest D. Stein
Executive Vice President
Dated: February 1, 1996
<PAGE>
CONSENT OF STOCKHOLDER
----------------------
The undersigned, being the sole Stockholder of The CIT Group
Securitization Corporation II, a Delaware corporation (the "Corporation"),
hereby consents in writing pursuant to the provisions of Section 228 of the
Delaware General Corporation Law, to the following resolutions:
WHEREAS, the sole stockholder of the Corporation deems it to be in the
best interests of the stockholder and the Corporation to amend its by-
laws;
NOW, THEREFORE, BE IT:
RESOLVED, that the Corporation's by-laws shall be amended as follows:
Article IV, Section 1 of the by-laws shall be replaced in its entirety
by the following amended Article IV, Section 1:
"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. 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 Certificate of Incorporation of the
Corporation."; and
FURTHER RESOLVED, that the directors and officers of the Corporation
be, and each of them hereby is, authorized,
<PAGE>
empowered and directed, in the name of the Corporation, to execute and
deliver any and all documents and take any action which they may deem
necessary or appropriate to implement the terms of the forgoing
resolution and to consummate any transactions contemplated thereby,
the execution and delivery of any such instruments and documents and
the taking of any such action to be conclusive evidence of the
authority therefor.
THE CIT GROUP HOLDINGS, INC.
By: /s/ Ernest D. Stein
_________________________________________
Ernest D. Stein
Executive Vice President
Dated: July 18, 1996
<PAGE>
EXHIBIT 5.1
[Letterhead of Schulte Roth & Zabel]
July 23, 1996
The CIT Group Securitization Corporation II
650 CIT Drive
Livingston, New Jersey 07039
The CIT Group Holdings, Inc.
1211 Avenue of the Americas
New York, New York 10036
Dear Sirs:
We have acted as special counsel to you (the "Corporations") in
connection with the Registration Statement on Form S-3 (333-07249) (the
"Registration Statement"), filed with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), relating to the asset-backed certificates (the "Certificates"), the
asset-backed notes (the "Notes" and, collectively with the Certificates, the
"Securities") and the limited guarantees (the "Guarantees") of certain of the
Certificates by the CIT Group Holdings, Inc. ("Holdings"), each described in the
prospectus and prospectus supplement which form a part of the Registration
Statement (the "Prospectus" and the "Prospectus Supplement," respectively). Each
series of Certificates will be issued pursuant to a trust agreement (the "Trust
Agreement") substantially in the form filed as Exhibit 4.2 to the Registration
Statement, pursuant to which The CIT Group Securitization Corporation II ("CIT
II") will originate the CIT RV Trust (the "Trust"). Each series of Notes will be
issued pursuant to an indenture (the "Indenture") substantially in the form
filed as Exhibit 4.1 to the Registration Statement. Certain rights of the
holders of the Securities will be governed by a sale and servicing agreement
(the "Sale and Servicing Agreement") substantially in the form filed as Exhibit
4.3 to the Registration Statement.
In connection with this opinion, we have examined signed copies of the
Registration Statement and originals or copies, certified or otherwise
identified to our satisfaction, of such records of the Corporations and such
agreements, certificates of public officials, certificates of officers or
representatives of the Corporations and others, and such other documents,
certificates and corporate or other records as we have deemed necessary or
appropriate as a basis for this opinion.
<PAGE>
The CIT Group Securitization Corporation II
The CIT Group Holdings, Inc.
July 23, 1996
Page 2
As to all matters of fact, we have relied upon and assumed the
accuracy of statements and representations of officers and other representatives
of the Corporations and others.
In our examination, we have assumed the genuineness of all signatures,
the legal capacity of natural persons signing or delivering any instrument, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such latter documents.
We have also assumed, with respect to the Trust Agreement, the
Indenture, the Guarantees and the Sale and Servicing Agreement (collectively,
the "Basic Documents"), that: (a) each of the Basic Documents will be duly
executed and delivered by each of the parties thereto prior to the issuance of
any of the Securities thereunder; (b) at the time of such execution, each such
party, other than the Corporations, will be duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization and will
have all requisite power and authority to execute, deliver and perform its
obligations under each of the Basic Documents; (c) the execution and delivery of
the Basic Documents and performance of such obligations will have been duly
authorized by all necessary actions on the part of each such party, other than
the Corporations; (d) the Basic Documents will be the legal, valid and binding
obligation of each such party, other than the Corporations, and will be
enforceable against each such party, other than the Corporations, in accordance
with its terms; and (e) during the period from the date hereof until the date of
such execution and delivery, there will be no change in (i) any relevant
authorization, law or regulation, or interpretation thereof, (ii) the terms and
conditions of the Basic Documents or (iii) any set of facts or circumstances
relating to the Basic Documents.
Based upon the foregoing, we are of the opinion that: (a) assuming
the due execution of the Basic Documents, each in substantially the form
presented to us, upon the issuance, authentication and delivery of the Notes in
accordance with the terms of the Sale and Servicing Agreement and the Indenture
against payment therefor as contemplated by the Prospectus and the Prospectus
Supplement, the Notes will constitute valid and binding obligations of the
Trust, each enforceable in accordance with its terms; and (b) the Guarantees
have been duly authorized and, when duly executed by Holdings and issued and
delivered in accordance with the terms of the Sale and Servicing Agreement as
contemplated by the Prospectus and the Prospectus Supplement, will be valid and
binding obligations of Holdings, enforceable in accordance with their terms,
subject as to enforcement of remedies with respect to (a) and (b) above to
applicable bankruptcy, reorganization, fraudulent conveyance, insolvency,
moratorium or other laws affecting creditors' rights generally from time to time
in
<PAGE>
The CIT Group Securitization Corporation II
The CIT Group Holdings, Inc.
July 23, 1996
Page 3
effect and to general principles of equity, and will be entitled to the benefits
of the Basic Documents.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm appearing under the
heading "Legal Matters" in the Prospectus. In giving such consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act or the General Rules and Regulations of
the Commission thereunder.
Very truly yours,
/s/ Schulte Roth & Zabel
<PAGE>
Exhibit 5.2
[Letterhead of RICHARDS, LAYTON & FINGER]
July 22, 1996
CIT RV Trust
c/o The Bank of New York (Delaware)
White Clay Center, Route 273
Newark, DE 19711
Dear Sirs:
We have acted as special Delaware counsel to CIT RV Trust (the "Trust") in
connection with the Registration Statement on Form S-3 (the "Registration
Statement"), filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), registering the asset backed certificates (the "Certificates"), the asset
backed notes (the "Notes" and, collectively with the Certificates, the
"Securities") and the limited guarantees (the "Guarantees") of certain of the
Certificates by The CIT Group Holdings, Inc. ("Holdings"), each described in the
prospectus and the prospectus supplement which form a part of the Registration
Statement (the "Prospectus" and the "Prospectus Supplement"). Each series of
Certificates and the related Guarantees will be issued pursuant to a trust
agreement (the "Trust Agreement") substantially in the form filed as Exhibit 4.2
to the Registration Statement, pursuant to which The CIT Group Securitization
Corporation II ("CIT II") will originate the Trust. Each series of Notes will
be issued pursuant to an indenture (the "Indenture") substantially in the form
filed as Exhibit 4.1 to the Registration Statement. Certain rights of the
holders of the Securities will be governed by a sale and servicing agreement
(the "Sale and Servicing Agreement") substantially in the form filed as Exhibit
4.3 to the Registration Statement.
In connection with this opinion, we have examined signed copies of the
Registration Statement and the exhibits thereto. We have not reviewed any
documents other
<PAGE>
CIT RV Trust
July 22, 1996
Page 2
than the foregoing documents for purposes of rendering our opinions as expressed
herein, and we have assumed that there exists no provision of any such other
document that bears upon or is inconsistent with our opinions as expressed
herein. We have conducted no independent factual investigation of our own but
have relied solely upon the foregoing documents, the statements and information
set forth therein and the additional matters recited or assumed herein, all of
which we have assumed to be true, complete and accurate in all material
respects.
In our examination, we have assumed the genuineness of all signatures, the
legal capacity of natural person signing or delivering any instrument, the
authenticity of all documents submitted to us as original, the conformity to
original documents of all documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such latter documents.
We have also assumed, with respect to the Trust Agreement, the Indenture, the
Sale and Servicing Agreement and the Guarantees (collectively, the "Basic
Documents"), that: (a) each of the Basic Documents will be duly executed and
delivered by each of the parties thereto prior to the issuance of any of the
Securities thereunder; (b) at the time of such execution, each such party will
be duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and will have all requisite power and authority
to execute, deliver and perform its obligations under each of the Basic
Documents; (c) the execution and delivery of the Basic Documents and performance
of such obligations will have been duly authorized by all necessary actions on
the part of each such party; (d) at the time of such execution, the Basic
Documents will be the legal, valid and binding obligation of each such party,
and will be enforceable against each such party in accordance with their terms;
(e) the Guarantees will be duly executed and delivered by Holdings; and (f)
during the period from the date hereof until the date of such execution and
delivery, there will be no change in (i) any relevant authorization, law or
regulation, or interpretation thereof, (ii) the terms and conditions of the
Basic Documents, or (iii) any set of facts or circumstances relating to the
Basic Documents.
Based upon the foregoing, we are of the opinion that assuming the due
execution of the Basic Documents, each in substantially the form presented to
us, upon the issuance, authentication and delivery of the Certificates in
accordance with the provisions of the Sale and Servicing Agreement and the Trust
Agreement against payment therefor, the Certificates will be legally issued,
fully paid and, subject to Section 2.7 of the Trust Agreement, nonassessable
Certificates representing undivided interest in the Trust, and will be entitled
to the benefits of the Trust Agreement.
We have not participated in the preparation of any offering materials with
respect to the Notes or the Certificates and assume no responsibility for their
contents.
<PAGE>
CIT RV Trust
July 22, 1996
Page 3
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm appearing under the
heading "Legal Matters" in the Prospectus. In giving such consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act or the General Rules and Regulations of
the Commission thereunder.
Very truly yours,
/s/ Richards, Layton & Finger
CDK/DKD/sek
<PAGE>
EXHIBIT 8.1
[Letterhead of Schulte Roth & Zabel]
July 23, 1996
The CIT Group Securitization Corporation II
650 CIT Drive
Livingston, New Jersey 07039
The CIT Group Holdings, Inc.
1211 Avenue of the Americas
New York, New York 10036
Dear Sirs:
We have acted as special counsel to you in connection with the Registration
Statement on Form S-3 (333-07249) (the "Registration Statement"), filed with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Securities Act"), relating to the asset-backed
certificates (the "Certificates"), the asset-backed notes (the "Notes" and,
collectively with the Certificates, the "Securities") and the limited guarantees
(the "Guarantees") of certain of the Certificates by The CIT Group Holdings,
Inc. ("Holdings"), each described in the prospectus and prospectus supplement
which form a part of the Registration Statement (the "Prospectus" and the
"Prospectus Supplement"). Each series of Certificates will be issued pursuant
to a trust agreement (the "Trust Agreement") substantially in the form filed as
Exhibit 4.2 to the Registration Statement, pursuant to which The CIT Group
Securitization Corporation II will originate the CIT RV Trust (the "Trust").
Each series of Notes will be issued pursuant to an indenture (the "Indenture")
substantially in the form filed as Exhibit 4.1 to the Registration Statement.
Certain rights of the holders of the Securities will be governed by a sale and
servicing agreement (the "Sale and Servicing Agreement") substantially in the
form filed as Exhibit 4.3 to the Registration Statement.
<PAGE>
The CIT Group Securitization Corporation II
The CIT Group Holdings, Inc.
July 23, 1996
Page 2
We hereby confirm that the statements set forth in the Prospectus and the
Prospectus Supplement under the heading "Certain Federal Income Tax
Consequences" accurately describe the material Federal income tax consequences
to holders of the Securities.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Securities Act or the General Rules and Regulations of the Commission
thereunder.
Very truly yours,
/s/ Schulte Roth & Zabel
<PAGE>
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM T-1
-----------------------
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS
TRUSTEE
-----------------------
Check if an application to determine eligibility of
a Trustee pursuant to Section 305(b)(2) [_]
MELLON BANK, N.A.
(Name of Trustee)
25-0659306 U.S.
(I.R.S. Employer Identification No.) (Jurisdiction of incorporation)
One Mellon Bank Center
Pittsburgh, PA 15258-0001
(Address of Principal Executive Office)
Elaine D. Renn
Vice President
MELLON BANK, N.A.
ONE MELLON BANK CENTER
PITTSBURGH, PENNSYLVANIA 15258-0001
(412) 234-4694
(Name, Address and Telephone Number of Agent for Service)
-----------------------
THE CIT GROUP HOLDINGS, INC.
-----------------------------------
(Name of Obligor)
DELAWARE
(State or Other Jurisdiction of Incorporation or Organization)
13-2994534
(I.R.S. Employer Identification No.)
1211 AVENUE OF THE AMERICAS, NEW YORK, NY 10036
(Address of Principal Executive Offices)
DEBT SECURITIES
(Title of Indenture Securities)
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE-
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT
IS SUBJECT.
Comptroller of the Currency Washington, D.C.
Federal Reserve Bank of Cleveland Cleveland, Ohio
Federal Deposit Insurance Corporation Washington, D.C.
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
The trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE
TRUSTEE, DESCRIBE EACH SUCH AFFILIATION.
The obligor is not an affiliate of the trustee.
ITEMS 3-15 ARE NOT APPLICABLE SINCE THE OBLIGOR IS NOT IN DEFAULT ON SECURITIES
ISSUED UNDER INDENTURES UNDER WHICH THE APPLICANT IS TRUSTEE.
16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS STATEMENT
OF ELIGIBILITY.
Exhibit 1 - Copy of articles of association of the trustee as
now in effect, filed as Exhibit 1 to trustee's
statement of eligibility and qualification,
Registration No. 33-46990, and incorporated herein
by reference.
Exhibit 2 - Copy of certificate of the authority of the trustee
to commence business, copy of certificate of
consolidation with the Union Trust Company of
Pittsburgh and copy of certificate approving merger
of Mellon National Bank and Trust Company into
Mellon Bank, N.A. filed as Exhibit T1A(b) to
trustee's statement of eligibility and
qualification, Registration No. 33-13020, and
incorporated herein by reference.
Exhibit 3 - Copy of certificate as to authority of the trustee
to exercise corporate trust powers, filed as
Exhibit T1A(c) to trustee's statement of
eligibility and qualification, Registration No. 33-
13020, and incorporated herein by reference.
Exhibit 4 - Copy of existing by-laws of the trustee, filed as
Exhibit 4 to trustee's statement of eligibility and
qualification, Registration No. 33-46990, and
incorporated herein by reference.
Exhibit 5 - Copy of each indenture referred to in Item 4, if
the obligor is in default. Not Applicable.
Exhibit 6 - Consent of the trustee required by Section 321(b)
of the Act, filed as Exhibit T1D to trustee's
statement of eligibility and qualification,
Registration No. 33-13020, and incorporated herein
by reference.
Exhibit 7 - Copy of the latest report of condition of the
trustee transmitted electronically pursuant to law
or the requirements of its supervising or examining
authority.
1
<PAGE>
SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE TRUST INDENTURE ACT OF 1939, THE
TRUSTEE, MELLON BANK, N.A., A NATIONAL BANKING ASSOCIATION ORGANIZED AND
EXISTING UNDER THE LAWS OF THE UNITED STATES OF AMERICA, HAS DULY CAUSED THIS
STATEMENT OF ELIGIBILITY TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, ALL IN THE CITY OF PITTSBURGH, AND COMMONWEALTH OF
PENNSYLVANIA, ON THE 22ND DAY OF JULY 1996.
MELLON BANK, N.A.
TRUSTEE
/s/ Elaine D. Renn
By: ____________________________________
Elaine D. Renn
Vice President
2
<PAGE>
I, Michael K. Hughey, Senior Vice President and Corporate Controller of the
above-named bank, do hereby declare that this Report of Condition is true and
correct to the best of my knowledge and belief.
Michael K. Hughey
May 6, 1996
We, the undersigned directors, attest to the correctness of this Statement
of Resources and Liabilities. We declare that it has been examined by us, and
to the best of our knowledge and belief has been prepared in conformance with
the instructions and is true and correct.
FRANK V. CAHOUET
W. KEITH SMITH
CHARLES A. CORRY
3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 7
REPORT OF CONDITION
CONSOLIDATING DOMESTIC AND FOREIGN SUBSIDIARIES OF
MELLON BANK, N.A.
FOR MARCH 31, 1996
IN THE COMMONWEALTH OF PENNSYLVANIA, AT THE CLOSE OF BUSINESS ON MARCH 31, 1996; TRANSMITTED ELECTRONICALLY IN RESPONSE TO
CALL MADE BY COMPTROLLER OF THE CURRENCY, UNDER TITLE 12, UNITED STATES CODE, SECTION 161.
CHARTER NO. 6301 NORTHEASTERN DISTRICT
STATEMENT OF RESOURCES AND LIABILITIES
(in thousands)
<S> <C>
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin................................................. $ 2,551,023
Interest-bearing balances.......................................................................... 1,238,899
Securities:
Hold-to-maturity securities........................................................................ 2,439,004
Available-for-sale securities...................................................................... 3,099,006
Federal funds sold and securities purchased under agreements
to resell in domestic offices of the bank and of its
Edge and Agreement subsidiaries, and in IBFs:
Federal funds sold................................................................................. 702,797
Securities purchased under agreements to resell.................................................... 30,000
Loans and lease financing receivables:
Loans and leases, net of unearned income.......................................... $ 22,883,119
LESS: Allowance for loan and lease losses........................................ 307,557
Loans and leases, net of unearned income, allowance, and reserve................................... 22,575,562
Assets held in trading accounts......................................................................... 267,077
Premises and fixed assets (including capitalized leases)................................................ 471,772
Other real estate owned................................................................................. 61,625
Customers' liability to this bank on acceptances outstanding............................................ 245,337
Intangible assets....................................................................................... 1,092,534
Other assets............................................................................................ 1,476,962
Total Assets.......................................................................... 36,251,598
LIABILITIES
Deposits:
In domestic offices................................................................................ 22,173,508
Noninterest-bearing.......................................................... 6,940,994
Interest-bearing............................................................. 15,232,514
In foreign offices, Edge and Agreement subsidiaries, and IBFs:..................................... 3,670,489
Noninterest-bearing.......................................................... 21,548
Interest-bearing............................................................. 3,648,941
Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of its
Edge and Agreement subsidiaries, and in IBFs:
Federal funds purchased............................................................................ 2,113,635
Securities sold under agreements to repurchase..................................................... 1,256,071
Demand notes issued to the U.S. Treasury................................................................ 319,803
Trading liabilities..................................................................................... 247,310
Other borrowed money:
With remaining maturity of one year or less........................................................ 1,560,260
With remaining maturity of more than one year...................................................... 164,882
Mortgage indebtedness and obligations under capitalized leases.......................................... 2,898
Bank's liability on acceptances executed and outstanding................................................ 245,337
Subordinated notes and debentures....................................................................... 698,251
Other liabilities....................................................................................... 802,115
Total Liabilities..................................................................... 33,245,559
EQUITY CAPITAL
Common stock............................................................................................ 167,285
Surplus (exclude all surplus related to preferred stock)................................................ 831,676
Undivided profits and capital reserves.................................................................. 2,028,643
Net unrealized holding gains (losses) on available-for-sale securities.................................. (23,949)
Cumulative foreign currency translation adjustments..................................................... (6,616)
Total Equity Capital.................................................................. 2,997,039
Total Liabilities, Limited-Life Preferred Stock, and Equity Capital................... 36,251,598
</TABLE>
4
<PAGE>
EXHIBIT 25.2
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
Statement of Eligibility
Under the Trust Indenture Act of 1939
of a Corporation Designated to Act as
Trustee
Check if an Application to Determine
Eligibility of a Trustee Pursuant to Section
305(b)(2) _______________
HARRIS TRUST AND SAVINGS BANK
(Name of Trustee)
Illinois 36-1194448
(State of Incorporation) (I.R.S. Employer Identification No.)
111 West Monroe Street, Chicago, Illinois 60603
(Address of principal executive offices)
Keith R. Richardson, Harris Trust and Savings Bank,
111 West Monroe Street, Chicago, Illinois 60603
312-461-2647
(Name, address and telephone number for agent for service)
The CIT Group Securitization Corporation II
(Name of obligor)
Delaware 22-3328188
(State of Incorporation) (I.R.S. Employer Identification No.)
The CIT Group Securitization Corporation II
650 CIT Drive
Livingston, N.J. 07039
(Address of principal executive offices)
Asset Backed Securities
(Title of indenture securities)
<PAGE>
1. GENERAL INFORMATION. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
Commissioner of Banks and Trust Companies, State of Illinois,
Springfield, Illinois; Chicago Clearing House Association, 164 West
Jackson Boulevard, Chicago, Illinois; Federal Deposit Insurance
Corporation, Washington, D.C.; The Board of Governors of the Federal
Reserve System, Washington D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Harris Trust and Savings Bank is authorized to exercise corporate
trust powers.
2. AFFILIATIONS WITH OBLIGOR. If the Obligor is an affiliate of the Trustee,
describe each such affiliation.
The Obligor is not an affiliate of the Trustee.
3. thru 15.
NO RESPONSE NECESSARY
16. LIST OF EXHIBITS.
1. A copy of the articles of association of the Trustee is now in effect
which includes the authority of the trustee to commence business and to
exercise corporate trust powers.
A copy of the Certificate of Merger dated April 1, 1972 between Harris
Trust and Savings Bank, HTS Bank and Harris Bankcorp, Inc. which
constitutes the articles of association of the Trustee as now in effect
and includes the authority of the Trustee to commence business and to
exercise corporate trust powers was filed in connection with the
Registration Statement of Louisville Gas and Electric Company, File No.
2-44295, and is incorporated herein by reference.
2. A copy of the existing by-laws of the Trustee.
A copy of the existing by-laws of the Trustee was filed in connection
with the Registration Statement of Hillenbrand Industries, Inc., File
No. 33-44086, and is incorporated herein by reference.
3. The consents of the Trustee required by Section 321(b) of the Act.
(included as Exhibit A on page 2 of this statement)
4. A copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or examining
authority.
(included as Exhibit B on Page 3 of this statement)
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
HARRIS TRUST AND SAVINGS BANK, a corporation organized and existing under the
laws of the State of Illinois, has duly caused this statement of eligibility to
be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of Chicago, and State of Illinois, on the 23rd day of July, 1996.
HARRIS TRUST AND SAVINGS BANK
By: /s/ Keith R. Richardson
-----------------------------------
Keith R. Richardson
Trust Officer
EXHIBIT A
The consents of the trustee required by Section 321(b) of the Act.
Harris Trust and Saving Bank, as the Trustee herein named, hereby consents that
reports of examinations of said trustee by Federal and State authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefor.
HARRIS TRUST AND SAVINGS BANK
By: /s/ Keith R. Richardson
---------------------------------
Keith R. Richardson
Trust Officer
<PAGE>
EXHIBIT B
Attached is a true and correct copy of the statement of condition of Harris
Trust and Savings Bank as of March 31, 1996, as published in accordance with a
call made by the State Banking Authority and by the Federal Reserve Bank of the
Seventh Reserve District.
[LOGO] HARRIS BANK
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60603
of Chicago, Illinois, And Foreign and Domestic Subsidiaries, at the close of
business on March 31, 1996, a state banking institution organized and operating
under the banking laws of this State and a member of the Federal Reserve System.
Published in accordance with a call made by the Commissioner of Banks and Trust
Companies of the State of Illinois and by the Federal Reserve Bank of this
District.
Bank's Transit Number 71000288
<TABLE>
<CAPTION>
THOUSANDS
ASSETS OF DOLLARS
<S> <C>
Cash and balances due from depository institutions:
Non-interest bearing balances and currency and $971,800
coin..............................
Interest bearing
balances....................................................... $508,198
Securities...................................................................
a. Held-to-maturity securities $0
b. Available-for-sale securities $2,925,091
Federal funds sold and securities purchased under agreement to resell in
domestic offices of the bank and of its Edge and Agreement
subsidiaries, and in IBF's:
Federal funds $304,450
sold...........................................................
Securities purchased under agreements to $0
resell...................................
Loans and lease financing receivables:
Loans and leases, net of unearned $7,653,290
income...........................................
LESS: Allowance for loan and lease $97,833
losses........................................ -------------------
Loans and leases, net of unearned income, allowance, and reserve
(item 4.a minus $7,555,457
4.b)...........................................................
Assets held in trading accounts.............................................. $107,161
Premises and fixed assets (including capitalized leases).................... $139,122
Other real estate owned...................................................... $203
Investments in unconsolidated subsidiaries and associated companies.......... $200
Customer's liability to this bank on acceptances outstanding................. $71,355
Intangible assets............................................................ $18,251
Other assets................................................................. $474,460
----------------------
TOTAL ASSETS $13,075,748
======================
</TABLE>
3
<PAGE>
LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
Deposits:
In domestic offices................................................... $4,830,361
Non-interest $2,390,307
bearing..............................................
Interest $2,440,054
bearing.........................................................
In foreign offices, Edge and Agreement subsidiaries, and IBF's........ $2,990,031
Non-interest $71,451
bearing..............................................
Interest $2,918,580
bearing..................................................
Federal funds purchased and securities sold under agreements to repurchase in domestic
offices of the bank and of its Edge and Agreement subsidiaries, and in IBF's:
Federal funds purchased.......................................................... $882,146
Securities sold under agreements to repurchase................................... $2,020,913
Trading Liabilities $66,711
Other borrowed money:..................................................................
a. With remaining maturity of one year or less $897,852
b. With remaining maturity of more than one year $11.520
Bank's liability on acceptances executed and outstanding $71,355
Subordinated notes and debenutres...................................................... $295,000
Other liabilities...................................................................... $186,774
--------------------------
TOTAL LIABILITIES $12,252,663
==========================
</TABLE>
<TABLE>
<CAPTION>
EQUITY CAPITAL
<S> <C>
Common stock........................................................................... $100,000
Surplus................................................................................ $275,000
a. Undivided profits and capital reserves.............................................. $470,392
b. Net unrealized holding gains (losses) on available-for-sale securities ($22,307)
--------------------------
TOTAL EQUITY CAPITAL $823,085
==========================
Total liabilities, limited-life preferred stock, and equity capital.................... $13,075,748
==========================
</TABLE>
I, Steve Neudecker, Vice President of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the Board of Governors of the Federal Reserve System and
is true to the best of my knowledge and belief.
STEVE NEUDECKER
4/30/96
We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and, to the best of our
knowledge and belief, has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and the
Commissioner of Banks and Trust Companies of the State of Illinois and is true
and correct.
EDWARD W. LYMAN,
ALAN G. McNALLY,
MARIBETH S. RAHE
Directors.
<PAGE>
Exhibit 25.3
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
THE CIT GROUP SECURITIZATION CORPORATION II
THE CIT GROUP HOLDINGS, INC.
(Exact name of obligor as specified in its charter)
Delaware 22-3328188
Delaware 13-2994534
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
THE CIT GROUP SECURITIZATION CORPORATION II
650 CIT Drive
Livingston, New Jersey 07039
THE CIT GROUP HOLDINGS, INC.
1211 Avenue of the Americas
New York, New York 10036
(Address of principal executive offices) (Zip code)
______________________
Asset-Backed Securities
Limited Guarantees of The CIT Group Holdings, Inc.
(Title of the indenture securities)
===============================================================================
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such affilia-
tion.
None. (See Note on page 3.)
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-
29 under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of the
Commission's Rules of Practice.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the Trustee
of all facts on which to base a responsive answer to Item 2, the answer to said
Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an amendment
to this Form T-1.
- 3 -
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 23rd day of July, 1996.
THE BANK OF NEW YORK
By:/s/ Paul J. Schmalzel
----------------------------
Name: Paul J. Schmalzel
Title: Assistant Treasurer
-4-
<PAGE>
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business
March 31, 1996, published in accordance with a call made by the
Federal Reserve Bank of this District pursuant to the provisions
of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 2,461,550
Interest-bearing balances .......... 835,563
Securities:
Held-to-maturity securities ........ 802,064
Available-for-sale securities ...... 2,051,263
Federal funds sold in domestic of-
fices of the bank:
Federal funds sold ................... 3,885,475
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................27,820,159
LESS: Allowance for loan and
lease losses ..............509,817
LESS: Allocated transfer risk
reserve......................1,000
Loans and leases, net of unearned
income, allowance, and reserve 27,309,342
Assets held in trading accounts ...... 837,118
Premises and fixed assets (including
capitalized leases) ................ 614,567
Other real estate owned .............. 51,631
Investments in unconsolidated
subsidiaries and associated
companies .......................... 225,158
Customers' liability to this bank on
acceptances outstanding ............ 800,375
Intangible assets .................... 436,668
Other assets ......................... 1,247,908
Total assets ......................... $41,558,682
LIABILITIES
Deposits:
In domestic offices ................ $18,851,327
Noninterest-bearing .......7,102,645
Interest-bearing .........11,748,682
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 10,965,604
Noninterest-bearing ..........37,855
<PAGE>
Interest-bearing .........10,927,749
Federal funds purchased and secu-
rities sold under agreements to re-
purchase in domestic offices of
the bank and of its Edge and
Agreement subsidiaries, and in
IBFs:
Federal funds purchased ............ 1,224,886
Securities sold under agreements
to repurchase .................... 29,728
Demand notes issued to the U.S.
Treasury ........................... 118,870
Trading liabilities .................. 673,944
Other borrowed money:
With original maturity of one year
or less .......................... 2,713,248
With original maturity of more than
one year ......................... 20,780
Bank's liability on acceptances exe-
cuted and outstanding .............. 803,292
Subordinated notes and debentures .... 1,022,860
Other liabilities .................... 1,590,564
Total liabilities .................... 38,015,103
EQUITY CAPITAL
Common stock ........................ 942,284
Surplus ............................. 525,666
Undivided profits and capital
reserves .......................... 2,078,197
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ 3,197
Cumulative foreign currency transla-
tion adjustments .................. ( 5,765)
Total equity capital ................ 3,543,579
Total liabilities and equity
capital ........................... $41,558,682
I, Robert E. Keilman, Senior Vice President and Comptroller of
the above-named bank do hereby declare that this Report of
Condition has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and
is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this
Report of Condition and declare that it has been examined by us and
to the best of our knowledge and belief has been prepared in
conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true and correct.
J. Carter Bacot
Thomas A. Renyi Directors
Alan R. Griffith
