<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 29, 1997
Registration No. 333-36061 & 333-36061-01
================================================================================
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, INC.
(EXACT NAME OF EACH REGISTRANT SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 22-3328188
DELAWARE 6146 13-2994534
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
THE CIT GROUP SECURITIZATION CORPORATION II THE CIT GROUP, INC.
650 CIT DRIVE 1211 AVENUE OF THE AMERICAS
LIVINGSTON, NEW JERSEY 07039 NEW YORK, NEW YORK 10036
(201) 535-3514 (212) 536-1950
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
</TABLE>
------------------
ERNEST D. STEIN, ESQ.
EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL & SECRETARY
THE CIT GROUP, 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 LLP
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>
PROPOSED PROPOSED
AMOUNT TO BE MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF REGISTERED OFFERING AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED PRICE PER OFERING FEE(3)
UNIT PRICE(1)
<S> <C> <C> <C> <C>
ASSET-BACKED SECURITIES........................................ $1,400,000,000 100% $1,400,000,000 $423,892.43
LIMITED GUARANTEES OF THE CIT GROUP, INC.(2)...................
=================================================================================================================================
</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) 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).
(3) 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.
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 ________, 199_
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED ___________, 199_)
$______________ (APPROXIMATE)
CIT RV Trust 19__-_
[$______________ 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.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO THE
PUBLIC(1) DISCOUNT COMPANY(1)(2)
[Per Class A Note] ______% ____% ______%
Per Certificate ______% ____% ______%
<S> <C> <C> <C>
Total $ $ $
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(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 ____________, 199_ (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 199__-__ ____% 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 Owner (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--Book-Entry Registration"
and "--Definitive 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,
soci[_]t[_] 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 Documents--Sale and
Assignment of the Contracts" and "--Servicing
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
S-5
<PAGE>
as of ____________, 199__, and CITSF will sell the
Initial Contracts to the Company pursuant to a
purchase agreement, to be dated 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 [On the Closing Date approximately $_______ of
Account]................. 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
Owner (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 described
S-7
<PAGE>
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 Certificates--
Redemption" 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 Notes--
Redemption" 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 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
S-13
<PAGE>
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
Owner (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 Owner.] 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 Owner (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 Owner (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 Owner, 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. (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 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 Owner"), will purchase at least 1% of the
principal balance of the Certificates.] The Affiliated Owner 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 Owner 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 Owner will occur. These
steps include the formation of the Affiliated Owner as a separate, limited-
purpose corporation pursuant to a certificate of incorporation containing
certain limitations (including restrictions on the nature of the Affiliated
Owner's business and a restriction on the Affiliated Owner's ability to commence
a voluntary case or proceeding under the Bankruptcy Code or similar applicable
state
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laws ("Insolvency Laws") without the prior affirmative unanimous vote of its
directors). However, an Insolvency Event with respect to the Affiliated Owner
may occur nonetheless.
If an Insolvency Event with respect to the Affiliated Owner 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
Owner]. 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 Owner
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 Owner,] 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 Owner] [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 Owner.] 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 1993, 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
--------------------------------------------------------------------------
1993 1994 1995(3) 1996 (3) 1997(3)
---- ----- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Approximate Volume (1)..... $ $ $ $
Approximate Aggregate
Principal Balance (2):
December 31, 1993..... $
December 31, 1994..... $ $
December 31, 1995..... $ $ $
December 31, 1996..... $ $ $ $
___________, 1997..... $ $ $ $ $
</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> <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, 1996, 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 ___________,
----------------------------------------------------------------------------------------------------------
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
(NUMBER) (DOLLARS) (NUMBER) (DOLLARS) (NUMBER) (DOLLARS) (NUMBER) (DOLLARS) (NUMBER) (DOLLARS)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <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, 1996
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 _____
---------------------------------------------------------------------------------------
1993 1994 1995(3) 1996(3) 1997(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, 1996 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,
---------------------------------------------------------------------------------------------
1993 1994 1995(4) 1996(4) 1997(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 Owner 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 _________ to but excluding the
initial Distribution Date (each, an "Interest Accrual Period"). Interest on the
Certificate
S-39
<PAGE>
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 in the
Pre-Funding Account after giving effect to the purchase of all Subsequent
Contracts, including any such purchase
S-40
<PAGE>
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 Owner 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, soci[_]t[_] 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, 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.
S-41
<PAGE>
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 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.
S-42
<PAGE>
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
Owner, 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 Owner) 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 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.]
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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 Owner] 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 Owner].
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 Owner] 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 Certificateholders in retirement of the
Certificates, to the extent funds are available therefor in the Cash Collateral
Account.
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<PAGE>
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;
(b) the Servicing Fee, including any overdue Servicing Fee, will (to
the extent not previously retained by the Servicer) be paid to the
Servicer;
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(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
Owner].
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 Owner 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 Owner 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 Owner.]
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
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
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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 Notes--Redemption" and "The Purchase
Agreements and The Trust Documents--Termination" in the Prospectus.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
[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:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT PRINCIPAL AMOUNT
OF NOTES OF CERTIFICATES
---------------- ----------------
<S> <C> <C>
_______________ $ $
_______________ $ $
---------------- ----------------
Total................................... $ $
================ ================
</TABLE>
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] 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.
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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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<PAGE>
(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.
S-51
<PAGE>
INDEX OF PRINCIPAL TERMS
ABS............................................ 32
ABS Table...................................... 32
Affiliated Owner............................... 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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<PAGE>
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, 39
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
S-53
<PAGE>
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........................ 2
Subsequent Cut-off Date........................ 6
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
S-54
<PAGE>
PORSPECTUS
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 (i) one or more classes of
Certificates, (ii) one or more classes of Notes, or (iii) one or more classes of
Certificates and one or more classes of Notes, as set forth in the related
Prospectus Supplement.
Each 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 and direct loans (the "Initial Contracts") secured by the new and
used recreation 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 and direct loans (the "Subsequent Contracts"
and, together with the Initial Contracts, the "Contracts") secured by the new
and used recreation 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 21 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, 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 October 29, 1997.
-1-
<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 specified in the related Prospectus Supplement (the "Owner 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 such Owner Trustee. The Trustee or Owner Trustee for any Trust
will be referred to in this Prospectus as the "Owner Trustee." 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, if any, of a series of Securities will represent fractional
undivided interests in the related Trust and/or the residual interest in the
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 the Securities 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, 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, if any, and the Notes, if any, of any series initially will be
represented by certificates and notes registered in the name of Cede & Co.
("Cede"), 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 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.
-2-
<PAGE>
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 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 Owner Trustee for the
Certificateholders, the Indenture Trustee for the Noteholders and 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 Owner 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 statements to Securityholders.
-3-
<PAGE>
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, 1996
together with the report of KPMG Peat Marwick LLP, independent certified
public accountants; and
(b) CIT's Quarterly Report on Form 10-Q for the quarters ended March 31,
1997 and June 30, 1997;
(c) CIT's Current Reports on Form 8-K dated January 23, 1997 (as amended by
a Form 8-K/A dated February 14, 1997), February 13, 1997 April 17, 1997, July
14, 1997, July 17, 1997, September 26, 1997 and October 14, 1997; and
(d) CIT's Amendment No. 1 to the Registration Statement on Form S-2
(333-36435) filed on October 14, 1997.
All documents filed by CIT pursuant to Sections 13(a) and (c), 14, or 15(d) of
the Exchange Act after the date hereof and prior to the termination of the
offering of the securities offered hereby shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute 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, INC.
1211 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
(212) 536-1950
-4-
<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.
<TABLE>
<S> <C>
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, 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.
Owner 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
"Owner Trustee." See "The Trusts--The Trustee(s)."
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 Asset-Backed Certificates (the
"Certificates") will be issued pursuant to the related
</TABLE>
-5-
<PAGE>
<TABLE>
<S> <C>
Trust Documents. The Certificates will represent
fractional undivided interests in the related Trust
and/or the residual interest in the related Trust, and
will have the Original Certificate Balance, if any,
specified in the related Prospectus Supplement. If
specified in the related Prospectus Supplement, the
Company or one of its affiliates will own the entire
beneficial interest in the Trust. 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."
The Certificates will be issued in the minimum
denominations and integral multiples in excess thereof
specified in the related Prospectus Supplement;
provided, however, that one Certificate of each series
may be issued in a denomination other than such integral
multiple such that the applicable Affiliated Owner, if
any, specified in the related Prospectus Supplement (the
"Affiliated Owner") 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, the
Certificates will be issued in book-entry form only.
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
</TABLE>
-6-
<PAGE>
<TABLE>
<S> <C>
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. In addition,
a series may include one or more classes of Certificates
("Stripped Certificates") entitled to (i) distributions
in respect of principal with 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 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) on the terms and conditions described under
"The Purchase Agreements and the Trust
Documents--Termination," 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."
The Notes will be issued in the minimum denominations
and integral multiples in excess thereof specified in
the
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
related Prospectus Supplement; provided, however,
that one Note of each class of each series may be issued
in a denomination other than such integral multiple.
Unless otherwise specified in the related Prospectus
Supplement, the Notes will be issued 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 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. 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 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) on the terms and conditions described under
"The Purchase Agreements and the Trust Documents--
</TABLE>
-8-
<PAGE>
<TABLE>
<S> <C>
Termination," 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 and direct loans (the "Initial Contracts")
secured by the new and used recreation 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
and the Paid-Ahead Account, if any, 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. 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 Owner
Trustee, which will be used to purchase Subsequent
Contracts 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 Documents)
from time to time during the Funding Period, from monies
on deposit in the Pre-Funding Account, additional retail
installment sale contracts and direct loans (the
"Subsequent Contracts" and, together with the Initial
Contracts, the "Contracts") secured by the new and used
recreation 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
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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 on the related Closing
Date.
The Financed Vehicles consist of motor homes, travel
trailers and other types of recreation 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 recreation vehicles
originated by recreation vehicle dealers ("Dealers") and
acquired by CITSF or The CIT Group/Consumer Finance,
Inc. (NY) ("CITCF-NY") or other affiliates of CITSF, or
if specified in the related Prospectus Supplement,
originated directly by CITSF or one of its affiliates or
acquired by CITSF or one of its affiliates from
unaffiliated third parties, and direct loans. 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 under the Contract (each, an "Obligor").
The related Prospectus Supplment will contain certain
information with respect to each Contract Pool as of the
Initial Cut-off Date or such other date specified
therein, including the proportions of each type of
Financed Vehicle, the weighted average annual percentage
rate and the weighted average remaining maturity of
Contracts in the Contract Pool.
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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 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, 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 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
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specified in the related Prospectus Supplement, 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 (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 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
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Affiliated Owner, 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.
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").
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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 for distribution on the related
Distribution Date, allocate such amounts between the
Notes, the Certificates and the Servicer Payment, 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
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 (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 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): (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
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deposited in the Collection Account, (iii) any amounts
deposited in the Paid-Ahead Account, if any, during the
related Due Period, (iv) net investment earnings on the
funds in the Collection Account and the Paid-Ahead Account,
if any, and (v) any other amounts permitted to be withdrawn from
the Collection Account and the Paid-Ahead Account, if
any, by the Servicer (or to be retained by the Servicer
from collections on the Contracts) pursuant to the Trust
Documents.
Subordination......................................... 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.
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.
The protection afforded to the Noteholders by the
subordination feature described above will be effected
by the preferential right of 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 or any subordinated Notes.
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, 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
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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 a Payment Shortfall during the related
Due Period, the Servicer shall advance funds in the
amount of such Payment 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 on such Contract
made by or on behalf of the Obligor thereunder (but only
to the extent of expected interest collections in the
case of a Simple Interest Contract) 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 on a Simple Interest Contract, or (ii)
a Payment 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." Unless otherwise specified
in the related Prospectus Supplement, "Payment
Shortfall" means (i) with respect to any Simple Interest
Contract and any Distribution Date, the excess of (A)
the product of (1) one-twelfth of the Contract Rate of
such Contract and (2) 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 during the related Due Period, and (ii) with
respect to any
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Precomputed Contract and any Distribution
Date, the excess of (A) the scheduled payment due on
such Contract during the related Due Period over (B) the
amount collected on such Contract (including any amounts
allocated from the Paid-Ahead Account with respect to
such Due Period) during 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 a Payment Shortfall with respect to
interest 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 Payment 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.
Paid-Ahead Account.................................... Early payments by or on behalf of Obligors on
Precomputed Contracts which do not constitute scheduled
payments, full prepayments or certain partial
prepayments that result in a reduction of an Obligor's
periodic payment below the scheduled payment as of the
Initial Cut-off Date or Subsequent Cut-off Date, as the
case may be, will be deposited into the Paid-Ahead
Account until such time as the paid-ahead amount becomes
due. See "The Contract Pool" and "The Purchase
Agreements and the Trust Documents-Paid Ahead
Precomputed Contracts."
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 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
Paid-Ahead Account, if any, the Certificate Distribution
Account, if any, and the Note Distribution Account, 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
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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 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 related 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
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likelihood that the Securities will be retired following
the sale of the Contracts by a Trustee as described above
under "--Auction Sale" or "--Optional Purchase of the
Contracts." See "Ratings" herein.
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
Notes and the Certificates are possible, but would not
result in materially adverse tax consequences to
Noteholders or Certificateholders. See "Certain Federal
Income Tax Consequences" herein.
ERISA Considerations.................................. Fiduciaries of employee benefit plans subject to the
Employee Retirement Income Security Act of 1974, as
amended ("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" herein.
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
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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 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, Inc. ("CIT"), The CIT Group Securitization
Corporation II (the "Company"), any Affiliated Owner 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 Owner, and CITSF),
the Underwriters 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 and direct loans secured by recreation vehicles. The
credit criteria and underwriting guidelines under which CITSF originates
recreation vehicle installment sale contracts and direct loans 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 recreation 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, if any, 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, 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 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 were acquired by CITSF
or The CIT Group/Consumer Finance, Inc. (NY) ("CITCF-NY") from recreation
vehicle dealers ("Dealers") and name the Dealer as obligee and as secured party.
Most of the Contracts in the Contract Pool were assigned by the related Dealer
to CITSF or CITCF-NY. In each such 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.
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In addition, numerous federal and state consumer protection laws impose
requirements on sellers under retail installment sale contracts, such as the
Contracts, and the failure by the seller of goods to comply with such
requirements could give rise to liabilities of assignees for amounts due 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 with respect to each Initial Contract, and as of the related Subsequent
Cut-off Date with respect to each Subsequent Contract, 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
recreation 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 the
provisions of these laws 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. CITCF-NY, CITSF and the Company
intend that transfers of Contracts from CITCF-NY to CITSF, from CITSF to the
Company and from the Company to the related 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.((S)) 101 et seq. (the "Bankruptcy Code"), it is possible that a creditor,
receiver, other party in interest or trustee in bankruptcy of such debtor, or
such debtor as debtor-in-possession, may contend that the sales of the
Contracts by CITCF-NY to CITSF, by CITSF to the Company, or by the Company to
the related Trust, respectively, were pledges of the Contracts rather than sales
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."
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
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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 which may adversely affect the liquidity
of the Securities in the secondary market and the ability of the Certificate
Owners and Note Owners to pledge the Securities.
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 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 recreation 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. 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
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the Funding Period, or, if the end of the Funding Period is on a Distribution
Date, 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, and (b)
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,
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 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 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 a 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 Definitive 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 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, 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."
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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 or the Paid-Ahead Account, as
applicable, monthly on the Business Day immediately preceding the next
Distribution Date (the "Deposit Date"). Pending such a monthly deposit into the
Collection Account or the Paid-Ahead Account, as applicable, 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 or the Paid-Ahead 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 related Trust will not
engage in any activity other than (i) acquiring, holding and managing the
Contracts and the other assets of such Trust and proceeds therefrom, (ii)
issuing the Securities of the related series, (iii) making payments on the
Securities of the related series, (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.
Each Certificate, if any, will represent a fractional undivided interest
and/or residual interest in the related Trust. Each Note, if any, will
represent an obligation of, the related Trust.
If specified in the related Prospectus Supplement, the related Trust will
initially be capitalized with equity equal to the "Original Certificate Balance"
specified in the related Prospectus Supplement. If 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 Owner specified in the related Prospectus Supplement
(the "Affiliated Owner") 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 Owner, the Seller, the Servicer
or their affiliates. If specified in the related Prospectus Supplement, the
Company or one of its affiliates will own the entire beneficial interest in the
Trust. 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(S)
The Trustee(s) for each Trust will be specified in the related Prospectus
Supplement. The Trustee(s) will perform limited administrative functions,
including making distributions from the Certificate Distribution Account and/or
the Note Distribution Account. A Trustee's liability in connection with the
issuance and sale of the Securities is limited solely to the express obligations
of such Trustee as set forth in the Trust Documents. A Trustee may appoint a
co-trustee to act as co-trustee pursuant to a co-trustee agreement with such
Trustee.
A Trustee may resign at any time, in which event the Servicer will be
obligated to appoint a successor trustee.
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The Servicer may also remove a Trustee if such Trustee ceases to be eligible to
continue as Trustee under the related Trust Documents or if such 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 each Trustee's fees. The
Trust Documents will further provide that each Trustee will be entitled to
indemnification by the Servicer for, and will be held harmless against, any
loss, liability or expense incurred by such Trustee 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 Trust
Documents).
THE TRUST PROPERTY
Each Certificate, if any, will represent a fractional undivided interest
and/or residual interest in the related Trust. Each Note, 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, if any, 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 recreation 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 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, the Dealer is
obligated after origination to repurchase from CITSF recreation 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
recreation 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. In accordance with its customary servicing
practices and procedures, in determining whether to exercise any right of
recourse against a Dealer, CITSF considers the prior performance of the Dealer
and other business and commercial factors, including its own commercial
relationship with such Dealer. 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.
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THE CONTRACT POOL
Each pool of Contracts with respect to a Trust (a "Contract Pool") will
consist of retail installment sales contracts to finance the purchase of new and
used recreation vehicles and direct loans (collectively, the "Contracts"). The
Contracts will be originated or acquired by CITSF or its affiliates (including
CITCF-NY). 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 or
Precomputed Contracts.
"Simple Interest Contracts" provide for the allocation of each payment made
thereunder to principal and interest in accordance with the "simple interest"
method. 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 Contract 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 Simple Interest 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 such Paid-Ahead Simple Interest 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, such Paid-
Ahead Simple Interest Contract would be considered to be current. This
situation would continue 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 Contract 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.
"Precomputed Contracts" provide for amortization of the loan over a series of
fixed level payment monthly installments. Each monthly installment, including
the monthly installment representing the final payment on the Contract, consists
of an amount of interest equal to 1/12th of the related Contract Rate multiplied
by the unpaid principal balance of the Contract, and an amount of principal
equal to the remainder of the monthly payment.
If an Obligor with respect to any Precomputed Contract, in addition to making
his or her regularly scheduled payment, makes one or more additional scheduled
payments in any Due Period (such Contract being a "Paid-Ahead Precomputed
Contract"), the additional scheduled payments made in such Due Period will be
deposited into the Paid-Ahead Account and applied on subsequent Deposit Dates as
described herein under "The Purchase Agreements and the Trust Documents-Paid-
Ahead Precomputed Contracts." Because paid-ahead amounts on Paid-Ahead
Precomputed Contracts are deposited into the Paid-Ahead Account, no shortfalls
of interest or principal will result therefrom.
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.
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The Financed Vehicles will consist of motor homes, travel trailers and other
types of recreation vehicles. Motor homes are recreation 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 recreation, 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 recreation, camping or travel use.
Truck 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 recreation travel or camping use.
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. If specific information with
respect to the Contract Pool is not known at the time the related series of
Securities initially is offered, more general information will be provided in
the related Prospectus Supplement, and specific information will be set forth in
a report on a Current Report on Form 8-K to be filed with the Commission within
fifteen days after the initial issuance of such Securities. A copy of the Trust
Documents with respect to each series of Securities will be attached to the
Current Report on Form 8-K and will be available for inspection at the corporate
trust office of the Owner Trustee specified in the related Prospectus
Supplement. A schedule of the Contract Pool relating to such series will be
attached to the Trust Documents delivered to the Owner Trustee upon delivery of
the Securities.
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YIELD AND PREPAYMENT CONSIDERATIONS
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, if any, 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 Securityholders will receive monthly reports concerning the payments
received on the Contracts, the Pool Balance, the Certificate Pool Factor, if
any, the Note Pool Factor, if any, and various other items of information.
Securityholders of record (which in most cases will be Cede) during any calendar
year will be furnished information for tax reporting purposes not later than the
latest date permitted by law. Certificate Owners, if any, 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 Owner Trustee and the Indenture Trustee (if any) at the
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, 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
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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
recreation 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, INC.
CIT, a Delaware corporation, is a leading diversified finance organization
offering secured commercial and consumer financing primarily in the United
States to smaller, middle-market and larger businesses and to individuals
through a nationwide distribution network. CIT commenced operations in 1908. CIT
has developed a broad array of "franchise" strategic business units that focus
on specific industries, asset types and markets which are balanced by client,
industry and geographic diversification.
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. ("CBC Holding"), a wholly owned subsidiary of The Chase
Manhattan Corporation ("CMC"). DKB has an option, expiring December 15, 2000,
to purchase the remaining twenty percent (20%) common stock interest from CBC
Holding.
On September 26, 1997, CIT changed its name to The CIT Group, Inc. and filed a
registration statement with the Securities and Exchange Commission for an
initial public offering of 20% of its common stock. The proceeds of that
offering will be used to fund CIT's acquisition of DKB's option to purchase CBC
Holdings' 20% interest in CIT and the exercise of such option. Following
consummation of such offering, DKB will continue to hold its present investment
in CIT.
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 (as amended, 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."
THE CIT GROUP SECURITIZATION CORPORATION II, SELLER
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.
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THE CIT GROUP/SALES FINANCING, INC., SERVICER
GENERAL
CITSF, a Delaware corporation, 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 retail installment sales
contracts for recreation vehicles, manufactured housing, recreational boat
products and other consumer goods throughout the United States. CITSF has been
a lender to the recreation vehicle industry for more than 30 years. CITSF has 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 recreation vehicle contracts from
Dealers on an individual basis, CITSF makes bulk purchases of recreation 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
recreation 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 recreation
vehicle, home equity, recreational boat and manufactured housing retail
installment contracts. The servicing portfolio includes both loans originated or
purchased by CITSF, as well as loans originated or purchased by CITSF and
subsequently securitized with servicing retained. The servicing portfolio also
includes loans owned by third parties that are serviced by CITSF for a fee on a
"contract" basis. 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 recreation 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 recreation 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 recreation
vehicle contracts from recreation vehicle Dealers located throughout the United
States. New business development officers 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 recreation vehicle installment loan
agreements directly. In addition, CITSF purchases portfolios of recreation
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 recreation 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 recreation 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 recreation vehicle
contract to be purchased from a Dealer, CITSF's general practice is to have the
Dealer submit the customer's
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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
analyze the creditworthiness of the customer and of other aspects of the
proposed transaction.
All credit applications are entered into an application processing system.
During 1997, CITSF installed a new application processing system designed to
enhance productivity and provide greater control over the quality of credits
approved through the use of "decision rules" that alert analysts to further
investigate certain conditions. The new system also requires the proper level
of authority to approve transactions over an individual's dollar limits.
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 or the
NADA Guide book. Funding of a contract is authorized after verification of the
conditions of approval of the application and satisfactory delivery of the
related recreation 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 recreation 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 recreation vehicle,
manufactured housing, recreational boat, home equity, and other consumer loans.
CITSF services all of the recreation vehicle contracts it originates or
purchases, whether on an individual basis or in bulk (except those it has sold
to third parties on a servicing released basis). CITSF is actively seeking
arrangements pursuant to which it will service recreation 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 the 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 recreation vehicles
securing defaulted contracts and, if deemed advisable by
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CITSF, entering into workout arrangements with obligors under certain defaulted
contracts. Although decisions as to whether to repossess any recreation 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 recreation 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 recreation
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
recreation vehicle contracts originated and serviced by CITSF will exclude
contracts acquired by CITSF through portfolio purchases and contracts in
repossession.
THE CERTIFICATES
GENERAL
A series of Securities may include one or more classes of Asset-Backed
Certificates (the "Certificates") issued pursuant to the Trust Documents to be
entered into among the Seller, the Servicer, and the Owner Trustee, forms of
which have been filed as exhibits to the Registration Statement of which this
Prospectus forms a part. 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.
The Certificates will be issued in the minimum denominations and integral
multiples in excess thereof specified in the related Prospectus Supplement;
provided, however, that one Certificate of each series may be issued in a
denomination other than such integral multiple such that the applicable
Affiliated Owner 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. If specified in the related Prospectus
Supplement, the Company or one of its affiliates will own the entire beneficial
interest in the Trust. Unless otherwise specified in the related Prospectus
Supplement, the Certificates will be issued in book-entry form only. 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." If specified in the related Prospectus Supplement, one or more
classes of Certificates will be issued and sold privately.
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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 distributions, 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. 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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The Notes will be issued in the minimum denominations and integral multiples
in excess thereof specified in the related Prospectus Supplement; provided,
however, that one Note of each class of each series may be issued in a
denomination other than such integral multiple. Unless otherwise specified in
the related Prospectus Supplement, the Notes will be issued 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." If specified in the related Prospectus Supplement, one or more
classes of Notes will be issued and sold privately.
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
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part. CITSF will provide a copy of the applicable Indenture (without exhibits)
upon request to a holder of Notes issued thereunder.
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 Notes
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 which
may be inconsistent with any other provision; (vi) to provide for the acceptance
of the appointment of a successor Indenture Trustee or to add to or change any
provision as shall be necessary and permitted to facilitate the administration
by more than one trustee; (vii) to modify, eliminate or add any provision in
order to comply with the Trust Indenture Act of 1939, as amended; or (viii) to
add, change in any manner, or eliminate any provision, or modify in any manner
the rights of Noteholders; provided that any action specified in this clause
(viii) shall not, as evidenced by an opinion of counsel, adversely affect in any
material respect the interests of any Noteholder unless Noteholder consent is
otherwise obtained as described 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 Securities.
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) decrease the
percentage of the aggregate principal amount of the Notes required to amend the
sections of the Indenture which specify the applicable percentage of aggregate
principal amount of the Notes necessary to amend the Indenture or certain other
related agreements; or (vii) permit the creation of any lien ranking prior to or
on a parity with the lien of the Indenture with respect to any of the collateral
for the Notes or, except as otherwise permitted or contemplated in the
Indenture, terminate the lien of the Indenture on any such collateral or deprive
the holder of any Note of the security afforded by the lien of the Indenture.
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) except as set forth in (iv) below, any
failure 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
after the giving of written notice of such failure to the Issuer and the Seller
(or the Servicer, as applicable) by the Indenture Trustee or
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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) any default in the observance or
performance in any material respect of any other covenants or agreements in the
Indenture, which failure materially and adversely affects the rights of
Noteholders, and which failure continues unremedied for thirty days after the
giving of written notice of such failure to the Issuer and the Seller (or the
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;
(iv) any failure to pay in full the outstanding principal balance of any Notes
on or prior to the Note Final Scheduled Distribution Date; and (v) 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 for such class of
Notes.
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 the Controlling 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 such Controlling
Notes.
"Controlling Notes" means (i) if there is only one class of Notes, such class
of Notes and (ii) if there is more than one class of Notes (a) all classes of
the most senior class of Notes then outstanding voting together as a single
class until such class of Notes have been paid in full, and (b) from and after
the payment in full of such senior class of Notes then outstanding, all classes
of the next most senior class of Notes voting together as a single class until
such class of Notes have been paid in full.
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 66 2/3% of the aggregate outstanding
principal amount of the Controlling 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
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aggregate outstanding principal amount of the Controlling 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 Controlling 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 Controlling Notes have made written request of the
Indenture Trustee to institute such proceeding, (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 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 Controlling 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 Owner, 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 in its individual capacity nor the Owner Trustee
in its individual capacity, nor any holder of a Certificate including, without
limitation, the Affiliated Owner (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 or the Trust Documents
(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,
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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
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, if any, and/or the Noteholders, if any, of
the full amount of principal and interest due thereon and to decrease the
likelihood that the Certificateholders, if any, 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 the 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
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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. 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.
If and 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 the same 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 or Reserve Account. If so specified in the related Prospectus
Supplement, an account (a "Reserve Fund" or "Reserve Account") 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, or any other instrument satisfactory to the
Rating Agency or Agencies. 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 Securityholders, 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 Owner Trustee or the termination
payment under a derivative product may be demanded by the Owner 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 Securityholders, the
Servicer and any provider of Enhancement, it may be referred to as a "Spread
Account" or "Reserve 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
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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 Owner, 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
Owner, 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
Owner, 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 such Limited Guarantee will be limited in 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 a 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
Securities 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 the 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
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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 a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended. DTC accepts securities for deposit from its
participating organizations ("Participants") and facilitates the clearance and
settlement of securities transactions between Participants in such securities
through electronic book-entry changes in accounts of 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
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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 a 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.
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
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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 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 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.
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
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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 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 the Certificates 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 Trustees are 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 Trustees 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 Trustees 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 such Trustees or other person appointed
pursuant to the Trust Documents. The final payment on any 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.
Unless otherwise specified in the related Prospectus Supplement, Definitive
Securities will be transferable and exchangeable at the offices of the related
Trustees. No service charge will be imposed for any registration of transfer or
exchange, but such Trustees 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 Owner Trustee will, upon written
request by three or more Certificateholders or by holders of Certificates
evidencing not less than 25% of the Certificate Balance, within five 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
the Certificates and (ii) provide the Owner 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
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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 (if
applicable), 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 (if applicable) 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;
(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;
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(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, if any, 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 (if applicable) 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 (if applicable) and Certificateholders (if applicable) exceeds the
actual amount distributed on the related Distribution Date to Noteholders (if
applicable) and Certificateholders (if applicable), respectively;
(xxv) if applicable, the amount of surplus to be distributed to the
Affiliated Owner, 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;
(xxvi) if applicable, the balance of the Paid-Ahead Account; and
(xxvii) such other information as may be specified in the related
Prospectus Supplement.
If a 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: CIT 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 CIT, information relating to CIT 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 on its
Security, 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, 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 may
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be, and payment of reproduction and postage expenses associated with the
distribution of such reports, from the Owner 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 on each
Subsequent Transfer Date, if any, 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 the relevant 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 Owner Trustee or its designated agent will, concurrently with the
sale and assignment of the Initial Contracts to the Trust, execute, authenticate
and deliver the Securities, to the Company in exchange for the Initial
Contracts. The Company will sell all or a portion of the Securities 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 with respect
to any Contract; (vii) no Contract was originated in or is subject to the laws
of any jurisdiction whose laws would prohibit (A) the transfer of the Contract
to the Company under the Purchase Agreements, (B) the transfer of the Contract
to the Trust pursuant to the Trust Documents, or (C) 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
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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 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 of the
Contracts 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/or 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 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 recreation 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 repurchase 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
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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 (A) one-twelfth of the weighted average of the
Pass-Through Rate and the Interest Rate and (B) the remaining principal amount
outstanding (without giving effect to any reductions thereof for unrecoverable
Monthly Advances) on the Contract, and (ii) accrued 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 Owner 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."
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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 Securityholders (the
"Collection Account"), 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 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
Certificateholders, if any, 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"). If the related
Prospectus Supplement provides that the Contract Pool contains Precomputed
Contracts, 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
Securityholders, into which early payments by or on behalf of Obligors on
Precomputed Contracts which do not constitute scheduled payments, full
prepayments or certain partial prepayments that result in a reduction of an
Obligor's periodic payment below the scheduled payment as of the Initial Cut-off
Date or Subsequent Cut-off Date, as the case may be, will be deposited (the
"Paid-Ahead 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 Owner Trustee,
the Indenture Trustee and/or other depository institutions. "Eligible Account"
means any account which is (i) an account maintained with an Eligible
Institution; (ii) an account or accounts the deposits in which are fully insured
by either the Bank Insurance Fund or the Savings Association Insurance Fund of
the FDIC; (iii) a "segregated trust account" maintained with the corporate trust
department of a federal or state chartered depository institution or trust
company with trust powers and acting in its fiduciary capacity for the benefit
of a Trustee, which depository institution or trust company has capital and
surplus (or, if such depository institution or trust company is a subsidiary of
a bank holding company system, the capital and surplus of the bank holding
company) of not less than $50,000,000 and the securities of such depository
institution (or, if such depository institution is a subsidiary of a bank
holding company system and such depository institution's securities are not
rated, the securities of the bank holding company) have a credit rating from
each Rating Agency in one of its generic credit rating categories which
signifies investment grade; or (iv) an account that will not cause any Rating
Agency to downgrade or withdraw its then-current rating assigned to the
Securities 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 Securities 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, Paid-Ahead Account, if any, Certificate Distribution Account, if any,
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.
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SERVICING PROCEDURES
The Servicer will make reasonable efforts, consistent with the customary
servicing practices and procedures employed by the Servicer with respect to
Contracts owned or serviced by it, to collect all payments 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 recreation vehicle installment sale contracts that it
services for itself and others. See "Certain Legal Aspects of the Contracts."
The Servicer may sell the related Financed Vehicle securing a defaulted 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.
Unless otherwise specified in the related Prospectus Supplement, the Servicer
shall keep in force throughout the term of the Trust Documents (i) 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 recreation vehicle contracts having an aggregate principal amount
of $100,000,000 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, will
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
obligate the Servicer not to, except as permitted by the Trust Documents and in
accordance with the terms of such Contract and applicable law, (i) release the
Financed Vehicle securing such Contract from the security interest granted by
such Contract , (ii) impair the rights of the Trust in such Contract or take any
action inconsistent with the Trust's ownership of such Contract, (iii) increase
the number of payments under such 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 such Contract, and (iv)
fail to comply with the provisions of any insurance policy covering such
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 practices and procedures, the Servicer
may, in its discretion, arrange with an Obligor to defer, reschedule, extend or
modify the payment schedule of 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 latest Final Scheduled Distribution Date of any
Security 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 sales 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.
PAID-AHEAD PRECOMPUTED CONTRACTS
Early payments by or on behalf of Obligors on Paid-Ahead Precomputed Contracts
which do not constitute scheduled payments, full prepayments, or certain partial
prepayments that result in a reduction of the Obligor's
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periodic payment below the scheduled payment as of the Initial Cut-off Date or
Subsequent Cut-off Date, as the case may be, will be deposited into the Paid-
Ahead Account until such time as the paid-ahead payment becomes due. Until such
time as payments are transferred from the Paid-Ahead Account to the Collection
Account, they will not constitute collected interest or collected principal and
will not be available for distribution to the Securityholders. Unless otherwise
specified in the related Prospectus Supplement, paid-ahead amounts with respect
to Paid-Ahead Precomputed Contracts may be retained by the Servicer until the
applicable Deposit Date so long as the requirements for monthly deposits as
described under "-Collections" are met.
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 Paid-Ahead Account, if any, the Note Distribution
Account, if any, and the Certificate Distribution Account, 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. Payments to the Servicer of such
amounts will compensate the Servicer for performing the functions of a third
party servicer of recreation 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 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 Owner Trustee with respect to
distributions and generating federal income tax information. The Servicing Fee
also will compensate the Servicer for accounting fees, outside auditor fees and
data processing 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 or the Paid-Ahead
Account, as applicable, 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 or the Paid-Ahead Account, as applicable, 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 a short-term debt rating of at least
P-1 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 or the Paid-Ahead Account, as applicable,
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 and the Paid-Ahead Account, as applicable, 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 and the Paid-Ahead
Account, if any, 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
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and the Paid-Ahead Account, if any, 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 or the Paid-Ahead
Account, as applicable, 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 Paid-Ahead Account, if any, the Note Distribution
Account, if any, and the Certificate Distribution Account, if any, (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 a Payment Shortfall during the
related Due Period, the Servicer shall advance funds in the amount of such
Payment 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 on such Contract made by or on behalf of the obligor
thereunder (the "Obligor") (but only to the extent of expected interest
collections in the case of a Simple Interest Contract), 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 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 on a Simple Interest
Contract, or (ii) a Payment 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, "Payment
Shortfall" means (i) with respect to any Simple Interest Contract and any
Distribution Date, the excess of (A) the product of (1) one-twelfth of the
Contract Rate of such Contract and (2) 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
during the related Due Period and (ii) with respect to any Precomputed Contract
and any Distribution Date, the excess of (A) the scheduled payment due on such
Contract during the related Due Period, over (B) the amount collected on such
Contract (including any amounts allocated from the Paid-Ahead Account with
respect to such Due Period) during 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
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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 a Payment Shortfall with respect to
interest 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 Payment 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 each Determination 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 (if any); (iii) the aggregate Purchase Price of Contracts to be
purchased by CITSF or the Servicer (if any); (iv) if applicable, the aggregate
amount to be distributed as principal and interest on the Notes on the related
Distribution Date; (v) if applicable, 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) the amount which is payable to the
provider of the Enhancement (if any) or the Affiliated Owner (if any); (x) the
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 (if any).
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): (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) any amounts
deposited in the Paid-Ahead Account, if any, during the related Due Period, (iv)
net investment earnings on the funds in the Collection Account and the Paid-
Ahead Account, if any; and (v) any other amounts permitted to be withdrawn from
the Collection Account and the Paid-Ahead Account, if any, 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 Owner Trustee or the Indenture Trustee, as
applicable, to the Certificateholders, if any, 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 the Securityholders.
The timing, calculation, allocation, order, source, priorities of and
requirements for all distributions to each class of Certificateholders, if any,
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
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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 Owner (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 Owner 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 the Owner 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 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
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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 practices and procedures, shall use its best efforts to require that
each Obligor shall have obtained and shall maintain physical damage insurance
covering the Financed 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. Unless otherwise specified in the related
Prospectus Supplement, the Servicer may, but will not be obligated to, enforce
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 recreation vehicles financed by
installment sale contracts that it services for itself or others. Unless
otherwise specified in the related Prospectus Supplement, if an Obligor fails to
maintain such insurance, the Servicer will not be obligated to obtain such
physical damage insurance and advance such premiums for such insurance on behalf
of such Obligor. If the Servicer obtains such physical damage insurance and
advances such premiums for such insurance on behalf of such Obligor, such
insurance policy will name the Servicer as an additional insured and loss payee
and will be issued by an insurer having a rating of "A" or better by A.M. Best
(such insurance being referred to herein as "Force-Placed Insurance"). Such
Force-Placed Insurance and any commissions or finance charges collected by the
Servicer in connection therewith shall be, to the extent permitted by law, in an
amount in accordance with customary servicing practices and procedures, but in
no event 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 practices and 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 practices and procedures. In accordance with such customary
servicing practices and procedures, the Servicer may periodically readjust such
levels, suspend Force-Placed Insurance or arrange other methods of protection of
the Financed 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 Securityholders.
The Servicer may make advances ("Insurance Advances") to an Obligor to finance
insurance premiums related to the Financed Vehicle. Any such Insurance Advances
may be secured by the related Financed Vehicle.
Any portion of the principal balance of a Contract attributable to Insurance
Advances or premiums for Force-Placed Insurance acquired after the Initial Cut-
off Date, or the Subsequent Cut-off Date, as the case may be, will not be owned
by the Trust, and 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 Insurance
Advances or Force-Placed Insurance premiums added to the Contracts after the
Initial Cut-off Date or 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 Insurance
Advances or Force-Placed
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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 made Insurance
Advances or obtained Force-Placed Insurance makes scheduled payments under the
Contract, but fails to make scheduled payments of such Insurance Advances or
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 Insurance Advances or 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 Noteholders holding not less than 25% of the aggregate
outstanding principal amount of the Controlling Notes issued by such Trust (or,
if no Notes of such series are outstanding, the Certificateholders holding not
less than 25% of the outstanding Certificate Balance of 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 Owner 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 of such series are outstanding, the
holders of related Certificates evidencing not less than a majority of the
Certificate Balance of such Trust), 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 Owner Trustee); provided,
however, that neither the Indenture Trustee (or, if no Notes of the series are
outstanding,
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the Owner Trustee) nor any successor servicer will assume any obligation of
CITSF to repurchase Contracts for breaches of representations or warranties, and
the Indenture Trustee (or, if no Notes of the series are outstanding, the Owner
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 the
Owner 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 Owner 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 Controlling 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 of 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 Securityholders (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 Securities; (iv) to add to the covenants, restrictions or
obligations of the Company, the Servicer or the Owner 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;
(vi) to add, change or amend any provision to maintain the related Trust as an
entity not subject to Federal income tax; or (vii) to add, change or eliminate
any other provisions, provided that an amendment pursuant to this clause (vii)
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 or the Securityholders. 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 not less than a majority in
principal amount of such then outstanding Notes and the holders of such
Certificates evidencing not less than 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
(vii) shall be taken only upon satisfaction of the Rating Agency Condition.
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TERMINATION
Unless otherwise specified in the related Prospectus Supplement, the
obligations of the Servicer, the Company, the Affiliated Owner, 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.
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 recreation 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, if any, and the Certificate Balance,
if any, 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
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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 Owner, 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
recreation 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 Owner
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 Owner 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 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 recreation vehicles by Obligors. The Contracts also constitute
personal property security agreements and include grants of security interests
in the related recreation vehicles under the UCC. Perfection rules relating to
security interests in recreation
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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 recreation vehicle is located. In states which
have adopted the Uniform Motor Vehicle Certificate of Title and Anti-Theft Act,
security interests in recreation 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 recreation vehicles is
perfected by filing pursuant to the provisions of the UCC. In most states, a
security interest in a recreation 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 Owner 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 will take all actions necessary under the laws of
the state in which the related recreation vehicles are located at the time of
origination of the Contract to perfect their respective security interests in
such recreation 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 recreation 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, 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
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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 recreation 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 recreation
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 sales contract to surrender possession of the
certificate of title. In the case of vehicles registered in states providing
for perfection of a 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 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 recreation
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
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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 recreation 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 recreation 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 JUDGEMENTS AND EXCESS PROCEEDS
The proceeds of resale of the Financed Vehicles generally will be applied
first to the expenses of resale and repossession and then to the satisfaction of
the related indebtedness. While some states impose prohibitions or limitations
on deficiency judgments if the net proceeds from resale do not cover the full
amount of the indebtedness, a deficiency judgment can be sought in California
and 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
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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 recreation 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 such debtor, or such debtor as debtor-in-possession, may contend
that the sales of the Contracts by CITCF-NY to CITSF, by 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
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.
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 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.
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
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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
recreation 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 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 recreation vehicle, and, as part of the rehabilitation plan,
reduce the amount of the secured indebtedness to the market value of the
recreation 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
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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.
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 LLP, 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 LLP will, upon issuance of a series
of Securities, deliver its opinion 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 LLP expects to advise the Trust that the
Notes will be classified as debt for federal income tax purposes.
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In addition, Schulte Roth & Zabel LLP will render its opinion that it has
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 Securities.
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.
CERTAIN STATE TAX CONSEQUENCES
The activities to be undertaken by the Servicer in servicing and collecting
the Contracts will take place in Oklahoma. The State of Oklahoma imposes a
state income tax on individuals, nonresident aliens (with respect to Oklahoma
taxable income), corporations, certain foreign corporations, and trusts and
estates with Oklahoma taxable income. No ruling on any of the issues discussed
below will be sought from the Oklahoma Tax Commission.
Because of the variation in each state's or locality's tax laws, it is
impossible to predict tax consequences to Securityholders in all of the other
state and local taxing jurisdictions. Securityholders are urged to consult
their own tax advisors with respect to state and local tax consequences arising
out of the purchase, ownership and disposition of Securities.
TAX CONSEQUENCES WITH RESPECT TO THE NOTES
Crowe and Dunlevy, P.C., Oklahoma tax counsel to the Sellers ("Oklahoma Tax
Counsel") will advise the Trust that, assuming the Notes will be treated as debt
for federal income tax purposes, the Notes will be treated as debt for Oklahoma
income tax purposes, and the Noteholders not otherwise subject to taxation in
Oklahoma should not become subject to taxation in Oklahoma solely because of a
holder's ownership of Notes. However, a Noteholder already subject to
Oklahoma's income tax could be required to pay additional Oklahoma tax as a
result of the holder's ownership or disposition of Notes.
TAX CONSEQUENCES WITH RESPECT TO THE CERTIFICATES ISSUED BY A TRUST TREATED AS A
PARTNERSHIP
Oklahoma Tax Counsel will advise the Trust that if the arrangement created by
the Trust Agreement is treated as a partnership (not taxable as a corporation)
for U.S. federal income tax purposes, the same treatment should also apply for
Oklahoma income tax purposes; under current law, Certificateholders that are
nonresidents of Oklahoma and are not otherwise subject to Oklahoma income tax
should not be subject to Oklahoma income tax on the income
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from the Trust because it is unlikely that the Trust has established a
nonunitary business or commercial situs in Oklahoma. In any event,
classification of the arrangement as a "partnership" would not cause a
Certificateholder not otherwise subject to taxation in Oklahoma to pay Oklahoma
income tax on income beyond that derived from the 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.
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.
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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 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 LLP, New York, New York. The material federal income tax consequences of
the Securities will be passed upon for the Company by Schulte Roth & Zabel LLP.
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 D. 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 consolidated balance sheets of CIT as of December 31, 1996 and 1995 and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for each of the years in the three-year period ended December 31,
1996 in CIT's Amendment No. 1 to the Registration Statement on Form S-2 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.
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INDEX OF PRINCIPAL TERMS
Affiliated Owner............................... 6, 25
Asset Service Center........................... 31
Available Amount............................... 14, 55
Bankruptcy Code................................ 65
Benefit Plan................................... 69
Business Day................................... 13, 34
Capitalized Interest Account................... 12
Cash Collateral Account........................ 40
CBC Holding.................................... 30
Cede........................................... 2, 6, 33
Cedel.......................................... 2, 7, 8, 24
Cedel Participants............................. 43
Certificate Balance............................ 6
Certificate Distribution Account............... 51
Certificate Final Scheduled Distribution Date.. 13
Certificate Owner.............................. 24
Certificate Owners............................. 6
Certificate Pool Factor........................ 29
Certificateholders............................. 45
Certificates................................... 1, 5, 33
CIT............................................ 2, 5, 21
CITCF-NY....................................... 10, 21
CITSF.......................................... 5, 21
Closing Date................................... 10
CMC............................................ 30
Code........................................... 19, 67
Collection Account............................. 51
Commission..................................... 3
Company........................................ 1, 5, 21
Contract Files................................. 25
Contract Pool.................................. 9, 26, 27
Contract Rate.................................. 27
Contracts...................................... 1, 9, 27
Controlling Notes.............................. 37
Cooperative.................................... 44
Credit Facility................................ 41
Credit Facility Provider....................... 41
Dealers........................................ 10, 21
Defaulted Contracts............................ 47
Definitive Certificates........................ 45
Definitive Notes............................... 45
Definitive Securities.......................... 45
Deposit Date................................... 25
Depositories................................... 42
Depository..................................... 24
Determination Date............................. 14
Distribution Date.............................. 13, 34
DKB............................................ 30
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DTC............................................ 2, 6, 24
DTC Rules...................................... 43
Due Period..................................... 14
Eligible Account............................... 51
Eligible Institution........................... 51
Eligible Investments........................... 51
Enhancement.................................... 40
ERISA.......................................... 19
Euroclear...................................... 2, 7, 8
Euroclear Operator............................. 44
Euroclear Participants......................... 43
Event of Termination........................... 58
Events of Default.............................. 36
Financed Vehicles.............................. 1, 9
Force-Placed Insurance......................... 57
FTC Rule....................................... 65
Funding Period................................. 7, 11, 12
Holder......................................... 42
Holders........................................ 45
Indenture...................................... 2, 7, 34
Indenture Trustee.............................. 2, 5
Indirect Participants.......................... 42
Initial Contracts.............................. 1
Initial Cut-off Date........................... 1, 9
Initial Financed Vehicles...................... 1, 9
Initial Pool Balance........................... 18, 60
Insolvency Laws................................ 65
Insurance Advances............................. 57
Interest Accrual Period........................ 13
Interest Rate.................................. 8
IRS............................................ 67
Issuer......................................... 5
Late Fees...................................... 14, 55
Limited Guarantee.............................. 41
Liquidated Contracts........................... 47
Liquidity Facility............................. 41
Liquidity Facility Provider.................... 41
List of Contracts.............................. 48
MHC............................................ 30
Military Reservist Relief Act.................. 49
Monthly Advance................................ 16, 54
Non-Reimbursable Payment....................... 17, 55
Note Distribution Account...................... 51
Note Final Scheduled Distribution Date......... 13
Note Owner..................................... 24, 35
Note Owners.................................... 7, 8
Note Pool Factor............................... 29
Noteholders.................................... 45
Notes.......................................... 1, 7, 34
Obligor........................................ 10, 54
Oklahoma Tax Counsel........................... 68
Original Certificate Balance................... 25
Owner Trustee.................................. 2, 5
Paid-Ahead Account............................. 51
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Paid-Ahead Period.............................. 27
Paid-Ahead Precomputed Contract................ 27
Paid-Ahead Simple Interest Contract............ 27
Participants................................... 42
Pass-Through Rate.............................. 6, 34
Payment Shortfall.............................. 16, 54
Permitted Investments.......................... 11
Pool Balance................................... 18
Pooling and Servicing Agreement................ 1
Precomputed Contracts.......................... 27
Pre-Funded Amount.............................. 11
Pre-Funded Percentage.......................... 23
Pre-Funding Account............................ 7
Principal Liquidation Loss Amount.............. 37, 40
Prospectus Supplement.......................... 1
PTCE........................................... 69
Purchase Agreement............................. 10
Purchase Agreements............................ 48
Purchase Price................................. 50
Rating Agency.................................. 18, 70
Rating Agency Condition........................ 36
Record Date.................................... 13, 34
Registration Statement......................... 3
Related Documents.............................. 38
Repurchase Event............................... 10
Repurchased Contract........................... 10, 49
Required Capitalized Interest Amount........... 12
Required Servicer Ratings...................... 53
Reserve Account................................ 40
Reserve Fund................................... 40
Retained Yield................................. 50
Sale and Servicing Agreement................... 2
Securities..................................... 1, 7, 34
Security Owner................................. 35
Securityholder................................. 42
Securityholders................................ 45
Seller......................................... 5
Servicer....................................... 1, 5
Servicer Letter of Credit...................... 53
Servicer Payment............................... 14
Servicing Fee.................................. 17, 53
Servicing Fee Rate............................. 17, 53
Simple Interest Contracts...................... 27
Soldiers' and Sailors' Civil Relief Act........ 49
Spread Account................................. 40
Stockholders Agreement......................... 30
Stripped Certificates.......................... 7
Stripped Notes................................. 8
Subsequent Contracts........................... 1, 9
Subsequent Cut-off Date........................ 1, 11
Subsequent Financed Vehicles................... 1, 9
Subsequent Purchase Agreement.................. 11
Subsequent Transfer Agreement.................. 11
Subsequent Transfer Date....................... 11
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Terms and Conditions........................... 44
Trust.......................................... 1, 5
Trust Agreement................................ 1
Trust Documents................................ 48
Trustee........................................ 1
Trustees....................................... 5
UCC............................................ 21
Underwriters................................... 69
Underwriting Agreement......................... 69
Yield Supplement Account....................... 40
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No dealer, salesperson or other person has been authorized to give any
information or to make any representation not contained in this Prospectus
Supplement and the accompanying Prospectus and, if given or made, such
information or representation must not be relied upon as having been authorized
by the Company, CITSF or any Underwriter. This Prospectus Supplement and the
accompanying Prospectus do not constitute an offer to sell or a solicitation of
an offer to buy any of the securities offered hereby in any jurisdiction to any
person to whom it is unlawful to make such offer or solicitation. Neither the
delivery of this Prospectus Supplement or the accompanying Prospectus nor any
sale made hereunder shall, under any circumstances, create any implication that
the information herein is correct as of any time subsequent to the date hereof
or that there has been no change in the affairs of the Company since such date.
$___________
Approximate)
CIT RV
TRUST 199__-__
$__________ __%
Asset-Backed Notes
$________ ___% ASSET-BACKED
CERTIFICATES
The CIT Group
SECURITIZATION
CORPORATION II,
Seller
The CIT Group/Sales
FINANCING, INC.,
Servicer
[Underwriters]
Prospectus
DATED OCTOBER 29, 1997
______________
TABLE OF CONTENTS
Prospectus Supplement
Page
----
Summary............................................... S-3
Risk Factors.......................................... S-19
Structure of the Transaction.......................... S-23
The Trust Property.................................... S-24
The Contract Pool..................................... S-25
Maturity and Prepayment Considerations................ S-29
Yield and Prepayment Considerations................... S-34
Pool Factors.......................................... S-34
Use of Proceeds....................................... S-35
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-47
Ratings............................................... S-48
Legal Matters......................................... S-48
Annex I............................................... S-49
Index of Principal Terms.............................. S-52
PROSPECTUS
Available Information................................. 3
Reports to Securityholders............................ 3
Documents Incorporated by Reference................... 4
Summary............................................... 5
Risk Factors.......................................... 21
The Trusts............................................ 25
The Trust Property.................................... 26
The Contract Pool..................................... 27
Yield and Prepayment Considerations................... 29
Pool Factors.......................................... 29
Use of Proceeds....................................... 29
The CIT Group, Inc.................................... 30
The CIT Group Securitization Corporation II, Seller... 30
The CIT Group/Sales Financing, Inc., Servicer......... 31
The Certificates...................................... 33
The Notes............................................. 34
Enhancement........................................... 39
Certain Information Regarding the Securities.......... 42
The Purchase Agreements and the Trust Documents....... 48
Certain Legal Aspects of the Contracts................ 61
Certain Federal Income Tax Consequences............... 67
Certain State Tax Consequences........................ 68
ERISA Considerations.................................. 69
Plan of Distribution.................................. 69
Financial Information................................. 70
Ratings............................................... 70
Legal Matters......................................... 70
Experts............................................... 70
Index of Principal Terms.............................. 71
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.
<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...................$ 424,242.43
Attorney's fees and expenses........... 300,000.00
Accounting fees and expenses........... 100,000.00
Blue sky fees and expenses............. 40,000.00
Rating agency fees..................... 365,000.00
Trustee's fees and expenses............ 20,000.00
Printing expenses...................... 130,000.00
Miscellaneous fees and expenses........ 20,000.00
Total...............................$1,399,242.43
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 attorneysO
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 attorneysO 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 attorneysO 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 to the full extent permitted by Delaware law.
<PAGE>
Article X of the By-laws of CIT and Article VIII of the By-laws of the
Company provide, in effect, that, in addition to any rights afforded to an
officer, director or employee of such Registrant by contract or operation of
law, such Registrant may indemnify any person who is or was a director, officer,
employee, or agent of such Registrant, or of any other corporation which he
served at the request of such Registrant, 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 such
Registrant 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 such Registrant 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 such Registrant
or such other corporation, and, in connection with any criminal action
proceeding, had no reasonable cause to believe his conduct was unlawful.
Such Articles further provide that any person who is or was a director,
officer, employee, or agent of each Registrant or any director or indirect
wholly-owned subsidiary of each Registrant 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 $90,000,000. 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,
incorporated by reference herein to Exhibit 3.2 to Registration
Statement 333-07249
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
4.6 Form of Pooling and Servicing Agreement, incorporated by reference
herein to Exhibit 4.1 to Registration Statement 33-72878
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 LLP with respect to tax matters
8.2* Opinion of Crowe & Dunlevy, P.C. 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 LLP (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
23.4* Consent of Crowe & Dunlevy, P.C.
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, Inc.
99.1* Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of Harris Trust and Savings Bank
____________
*Filed herewith.
**Previously filed.
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.
The undersigned Registrants hereby undertake to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Act.
II-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 October 29, 1997.
THE CIT GROUP SECURITIZATION CORPORATION II
By: /s/ JAMES J. EGAN, JR.
---------------------------
Name: James J. Egan, Jr.
Title: President
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- ---------------------------------------- ------------------------------------------- -----------------------
<S> <C> <C>
/s/ James J. Egan, Jr. President and Director October 29, 1997
- ---------------------------------------- (principal executive officer)
James J. Egan, Jr.
Richard W. Bauerband* Executive Vice President and Director October 29, 1997
- ----------------------------------------
Joseph J. Caroll* Director October 29, 1977
- ----------------------------------------
Frank Garcia* Vice President October 29, 1997
- ---------------------------------------- (principal financial and accounting
officer)
*By: /s/ James J. Egan, Jr. October 29, 1997
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 October 29, 1997.
THE CIT GROUP, 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
*By /s/ ERNEST D. STEIN October 29,
1997 -------------------
Yoshiro Aoki* Ernest D. Stein
- ------------- Attorney-in-fact
Director
Joseph A. Pollicino*
- --------------------
Director
Paul N. Roth*
- -------------
Director
II-5
<PAGE>
Peter J. Tobin*
- ---------------
Director
Keiji Torii*
- ------------
Director
Yukiharu Uno*
- -------------
Director
Tohru Tonoike*
- --------------
Director
/s/ JOSEPH M. LEONE
- -------------------
Joseph M. Leone October 29, 1997
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>
[LETTERHEAD OF SCHULTE ROTH & ZABEL, LLP]
EXHIBIT 5.1
October 29, 1997
The CIT Group Securitization Corporation II
650 CIT Drive
Livingston, New Jersey 07039
The CIT Group, 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 (333-36061) (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
Securities by The CIT Group, Inc. ("CIT"), 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
<PAGE>
The CIT Group Securitization Corporation II
The CIT Group, Inc.
October 29, 1997
Page 2
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.
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.
We are attorneys admitted to practice in the State of New York and the
opinion set forth below is limited to the laws of the State of New York and the
Delaware General Corporation Law. Paul N. Roth, a member of this firm, is a
director of CIT.
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 CIT 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 CIT,
<PAGE>
The CIT Group Securitization Corporation II
The CIT Group, Inc.
October 29, 1997
Page 3
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 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 LLP
<PAGE>
EXHIBIT 5.2
[Letterhead of Richards, Layton & Finger]
October 29, 1997
The CIT Group Securitization Corporation II
650 CIT Drive
Livingston, New Jersey 07039
The CIT Group, Inc.
1211 Avenue of the Americas
New York, New York 10036
Dear Sirs:
We have acted as special Delaware counsel to CIT RV Trust, a Delaware
business 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 Securities by The CIT Group, Inc. ("CIT"), 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 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.
<PAGE>
The CIT Group Securitization Corporation II
The CIT Group, Inc.
October 29, 1997
Page 2
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 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 persons 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 CIT; 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 interests 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>
The CIT Group Securitization Corporation II
The CIT Group, Inc.
October 29, 1997
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
<PAGE>
[LETTERHEAD OF SCHULTE ROTH & ZABEL LLP]
EXHIBIT 8.1
October 29, 1997
The CIT Group Securitization Corporation II
650 CIT Drive
Livingston, New Jersey 07039
The CIT Group, 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 (333-36061) (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 Securities by The CIT
Group, Inc. ("CIT"), 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, Inc.
October 29, 1997
Page 2
We are attorneys admitted to practice in the State of New York and the
opinion set forth below is limited to the laws of the State of New York and the
Delaware General Corporation Law. Paul N. Roth, a member of this firm, is a
director of CIT.
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 LLP
<PAGE>
[LETTERHEAD OF CROWE & DUNLEVY]
EXHIBIT 8.2
October 29, 1997
The CIT Group/Sales Financing, Inc.
650 CIT Drive
Livingston, New Jersey 07039
The CIT Group, Inc.
1211 Avenue of the Americas
New York, New York 10036
RE: CIT RV TRUST
Ladies and Gentlemen:
For the purpose of the sale of Asset-Backed Notes and Asset-Backed
Certificates issued by the CIT RV Trust (the "Trust"), we have acted as Oklahoma
tax counsel for you and the Trust regarding the anticipated Oklahoma income tax
characterization of the Trust.
This letter is pursuant to your request that we advise you regarding
the likely characterization under Oklahoma income tax law of the Trust. We
understand the Trust will purchase RV notes and/or chattel paper from a CIT
"special purpose corporation," The CIT Group Securitization Corporation II,
after purchase by the special purpose corporation from The CIT Group/Sales
Financing, Inc.
In furnishing this opinion, we have examined copies of the following
documents:
(i) the Form of Trust Agreement filed as Exhibit 4.2 to
Registration Statement 33-65057;
(ii) the Form of Sale and Servicing Agreement filed as Exhibit
4.3 to Registration Statement 33-65057;
<PAGE>
The CIT Group/Sales Financing, Inc.
October 29, 1997
Page 2
(iii) the Form of Pooling and Servicing Agreement filed as
Exhibit 4.1 to Registration Statement 33-72878;
(iv) the Form of Purchase Agreement filed as Exhibit 10.1 to
Registration Statement 33-65057;
(v) the Form of Subsequent Purchase Agreement filed as Exhibit
10.2 to Registration Statement 33-65057;
(vi) the Form of Underwriting Agreement filed as Exhibit 1.1 to
Registration Statement 33-65057; and
(vii) the Form of Indenture filed as Exhibit 4.1 to Registration
Statement 33-65057.
I. ASSUMPTIONS AND OPINION
-----------------------
In rendering the opinions expressed herein, we have made the following
assumptions, the accuracy of which we have not verified:
1. The Trust has been properly characterized as a nonpublicly traded
Partnership for federal income tax purposes.
2. Any Notes issued by the Trust have been properly characterized as
debt for federal income tax purposes.
Based upon the foregoing and in reliance thereon, and upon
consideration of applicable Oklahoma income tax laws, and subject to the
qualifications and limitations described below, we are of the following
opinions:
1. The Trust will be characterized as a nonpublicly traded
Partnership for purposes of Oklahoma income tax laws, and the nonpublicly traded
Partnership will not be taxed as an entity, but rather, the profits, income,
losses, and deductions of the Trust will, for income tax purposes, flow through
the Trust to the partner level. 68 Okla. Stat. (S) 2353(3) (1996 Supp.);
Oklahoma Tax Commission Rule (S) 710:50-3-35.
2. The Notes will be characterized as debt for Oklahoma income tax
purposes. 68 Okla. Stat. (S) 2353(3) (1996 Supp.); Oklahoma Tax Commission Rule
(S) 710:50-3-35. Noteholders not otherwise subject to taxation in Oklahoma
should not become subject to taxation in Oklahoma because of the holder's
ownership of Notes. However, a Noteholder already subject to Oklahoma's income
tax could be required to pay additional Oklahoma income tax as a result of the
holder's ownership or disposition of Notes.
<PAGE>
The CIT Group/Sales Financing, Inc.
October 29, 1997
Page 3
II. ADDITIONAL DISCUSSION
---------------------
For the purpose of this additional discussion, we have made the
following assumptions, the accuracy of which we have not verified:
1. The Trust is organized as a business trust under the laws of
Delaware. The activities of the Trust occurring within the State of Oklahoma
consist solely of the maintenance of the original notes and/or chattel paper and
of the related contract files and documents with a custodian within the State of
Oklahoma and of the activities described in Paragraph 4 below.
2. Less than ten percent (10%) of the notes and/or chattel paper
acquired by the Trust will originate in Oklahoma.
3. The Trust will acquire the notes and/or chattel paper in a series
of transactions occurring outside of Oklahoma.
4. The only activities which the Servicer, as Servicer of the Trust,
will conduct in Oklahoma is the servicing of the loans evidenced by the notes
and chattel paper including without limitation: (i) the maintenance of custody
of the notes and/or chattel paper; (ii) the maintenance of the administrative
records concerning payments and outstanding balances on the notes and/or chattel
paper; (iii) the receipt of the payments on the notes and/or chattel paper; (iv)
the deposit of the payments received on the notes and/or chattel paper in an
Oklahoma financial institution for purposes of collection; (v) the collection
activities relating to the notes and/or chattel paper; and (vi) the repossession
and sale of the collateral therefor.
As a nonpublicly traded Partnership for Oklahoma and federal income
tax purposes, the Oklahoma distributive share of the partnership income, gains,
losses or deductions of the partnership to be reported by the partners shall be
the same portion of that reported for federal income tax purposes, as the
Oklahoma income, gain, losses or deductions determined under (S)(S) 2358 and
2362 of Title 68 of the Oklahoma Statutes for said partnership, bears to the
federal income, gains, losses or deductions. 68 Okla. Stat. (S) 2363 (1991).
The Oklahoma taxable income of a nonresident includes the distributive share of
the Oklahoma part of partnership income, gains, losses or deductions. 68 Okla.
Stat. (S) 2362(4) (1996 Supp.). However, income from intangible personal
property of a nonresident of Oklahoma is generally excluded from Oklahoma
taxable income except to the extent that such income is from property employed
in an Oklahoma trade or business or from property that has acquired a nonunitary
business or commercial situs in Oklahoma. 68 Okla. Stat. (S)(S) 2358(A)(4)(b),
2362(6) (1996 Supp.). We believe it is unlikely that the Oklahoma Tax
Commission would attempt to classify the income of the Trust as Oklahoma source
income or as arising from an Oklahoma trade or business. Accordingly, a
nonresident of Oklahoma should not incur Oklahoma taxable income solely as a
result of an ownership interest in the Trust. However, we are not aware of any
authority or pronouncement of the Oklahoma Tax Commission or the Oklahoma courts
addressing this issue on comparable facts and no absolute assurance can be given
in this regard.
<PAGE>
The CIT Group/Sales Financing, Inc.
October 29, 1997
Page 4
III. QUALIFICATIONS AND LIMITATIONS
------------------------------
In preparing this letter, we have reviewed Oklahoma Statutes, Oklahoma
court decisions and Oklahoma administrative rules and decisions, generally
available to the public as of the date of this letter. We have no obligation to
update or supplement this opinion to reflect any facts or circumstances that may
hereafter come to our attention or any changes in the law that may hereafter
occur which place a different interpretation on the law other than that which
has been applied herein, including interpretations of the law whether by way of
Oklahoma statutory enactments or amendments, judicial decisions or
administrative actions.
This opinion has been rendered solely for the benefit of you and the
Trust for use in the Trust's offering of the Asset-Backed Notes and the Asset-
Backed Certificates and may not be used, circulated, quoted, relied upon or
otherwise referred to for any other purpose without our prior written consent;
provided, however, that this opinion may be delivered to your regulators,
- -------- -------
accountants, attorneys and other professional advisers and may be used in
connection with any legal or regulatory proceeding relating to the subject
matter of this opinion and the disclosure statement entitled "Certain State Tax
Consequences" included in the prospectus which forms a part of the Registration
Statement on Form S-3 (333-36061). The undersigned shall not be responsible,
liable or obligated to any third party who may obtain access to this letter.
Very truly yours,
CROWE & DUNLEVY
A Professional Corporation
By:/s/ James H. Holloman, Jr.
--------------------------------
James H. Holloman, Jr.
<PAGE>
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
The CIT Group, Inc.:
We consent to the use of our report dated January 17, 1997, except as to note 21
which is as of February 21, 1997 and note 22 which is as of September 26, 1997,
relating to the consolidated balance sheets of The CIT Group, Inc. and
subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of income, changes in stockholders' equity, and cash flows for each
of the years in the three-year period ended December 31, 1996, incorporated by
reference in this Registration Statement on Form S-3 of The CIT Group
Securitization Corporation II and The CIT Group, Inc., which report appears in
Amendment No. 1 to the Registration Statement on Form S-2 of the CIT Group,
Inc., and to the reference to our firm under the heading "Experts" in the
Registration Statement of Form S-3.
KPMG Peat Marwick LLP
Short Hills, New Jersey
October 29, 1997
<PAGE>
EXHIBIT 23.4
[LETTERHEAD OF CROWE & DUNLEVY]
October 29, 1997
The CIT Group/Sales Financing, Inc.
650 CIT Drive
Livingston, New Jersey 07039
The CIT Group, Inc.
1211 Avenue of the Americas
New York, New York 10036
RE: CIT RV TRUST
Ladies and Gentlemen:
We hereby confirm that the statements set forth in the Registration
Statement on Form S-3 (333-36061) under the heading "Certain State Tax
Consequences" accurately describe the material Oklahoma income tax consequences
to holders of the securities, as limited by the discussion in our opinion letter
dated October 29, 1997.
We hereby consent to the use of this opinion as an exhibit to such
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,
CROWE & DUNLEVY,
A Professional Corporation
By:/s/James H. Holloman, Jr.
------------------------------------
James H. Holloman, Jr.
<PAGE>
EXHIBIT 24.2
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of THE CIT GROUP, INC., a Delaware corporation (the "Corporation"),
which is about to file with the Securities and Exchange Commission, Washington,
D.C., under the provisions of the Securities Act of 1933, as amended, a
Registration Statement on Form S-3, for the registration of the Corporation's
guarantee of certain notes and certificates issued by The CIT Group
Securitization Corporation II, a wholly-owned subsidiary of the Corporation,
under said Act, which notes and certificates may be issued in an aggregate
principal amount of up to $1,400,000,000, or if issued at an original discount,
such greater principal amount as shall result in an aggregate initial public
offering price of up to $1,400,000,000 (all in United States dollars or an
equivalent amount in another currency or composite currency), hereby constitutes
and appoints ALBERT R. GAMPER, JR., ERNEST D. STEIN, and DONALD J. RAPSON his
true and lawful attorneys-in-fact and agents, and each of them with full power
to act without the others, for him and in his name, place, and stead, in any and
all capacities, to sign such Registration Statement and any and all amendments
thereof, with power where appropriate to affix the corporate seal of said
Corporation thereto and to attest to said seal, and to file such Registration
Statement and each such amendment, with all exhibits thereto, and any and all
other documents in connection therewith, with the Securities and Exchange
Commission, and hereby grants unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform any and all acts and things
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person and hereby ratifies and
confirms all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereby.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the
28 day of October, 1997.
/s/ Yoshiro Aoki__________
--------------------------
Yoshiro Aoki
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of THE CIT GROUP, INC., a Delaware corporation (the "Corporation"),
which is about to file with the Securities and Exchange Commission, Washington,
D.C., under the provisions of the Securities Act of 1933, as amended, a
Registration Statement on Form S-3, for the registration of the Corporation's
guarantee of certain notes and certificates issued by The CIT Group
Securitization Corporation II, a wholly-owned subsidiary of the Corporation,
under said Act, which notes and certificates may be issued in an aggregate
principal amount of up to $1,400,000,000, or if issued at an original discount,
such greater principal amount as shall result in an aggregate initial public
offering price of up to $1,400,000,000 (all in United States dollars or an
equivalent amount in another currency or composite currency), hereby constitutes
and appoints ALBERT R. GAMPER, JR., ERNEST D. STEIN, and DONALD J. RAPSON his
true and lawful attorneys-in-fact and agents, and each of them with full power
to act without the others, for him and in his name, place, and stead, in any and
all capacities, to sign such Registration Statement and any and all amendments
thereof, with power where appropriate to affix the corporate seal of said
Corporation thereto and to attest to said seal, and to file such Registration
Statement and each such amendment, with all exhibits thereto, and any and all
other documents in connection therewith, with the Securities and Exchange
Commission, and hereby grants unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform any and all acts and things
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person and hereby ratifies and
confirms all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereby.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the
28 day of October, 1997.
/s/ Albert R. Gamper, Jr._____
------------------------------
Albert R. Gamper, Jr.
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of THE CIT GROUP, INC., a Delaware corporation (the "Corporation"),
which is about to file with the Securities and Exchange Commission, Washington,
D.C., under the provisions of the Securities Act of 1933, as amended, a
Registration Statement on Form S-3, for the registration of the Corporation's
guarantee of certain notes and certificates issued by The CIT Group
Securitization Corporation II, a wholly-owned subsidiary of the Corporation,
under said Act, which notes and certificates may be issued in an aggregate
principal amount of up to $1,400,000,000, or if issued at an original discount,
such greater principal amount as shall result in an aggregate initial public
offering price of up to $1,400,000,000 (all in United States dollars or an
equivalent amount in another currency or composite currency), hereby constitutes
and appoints ALBERT R. GAMPER, JR., ERNEST D. STEIN, and DONALD J. RAPSON his
true and lawful attorneys-in-fact and agents, and each of them with full power
to act without the others, for him and in his name, place, and stead, in any and
all capacities, to sign such Registration Statement and any and all amendments
thereof, with power where appropriate to affix the corporate seal of said
Corporation thereto and to attest to said seal, and to file such Registration
Statement and each such amendment, with all exhibits thereto, and any and all
other documents in connection therewith, with the Securities and Exchange
Commission, and hereby grants unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform any and all acts and things
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person and hereby ratifies and
confirms all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereby.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the
28 day of October, 1997.
/s/ Takasuke Kaneko_______
--------------------------
Takasuke Kaneko
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of THE CIT GROUP, INC., a Delaware corporation (the "Corporation"),
which is about to file with the Securities and Exchange Commission, Washington,
D.C., under the provisions of the Securities Act of 1933, as amended, a
Registration Statement on Form S-3, for the registration of the Corporation's
guarantee of certain notes and certificates issued by The CIT Group
Securitization Corporation II, a wholly-owned subsidiary of the Corporation,
under said Act, which notes and certificates may be issued in an aggregate
principal amount of up to $1,400,000,000, or if issued at an original discount,
such greater principal amount as shall result in an aggregate initial public
offering price of up to $1,400,000,000 (all in United States dollars or an
equivalent amount in another currency or composite currency), hereby constitutes
and appoints ALBERT R. GAMPER, JR., ERNEST D. STEIN, and DONALD J. RAPSON his
true and lawful attorneys-in-fact and agents, and each of them with full power
to act without the others, for him and in his name, place, and stead, in any and
all capacities, to sign such Registration Statement and any and all amendments
thereof, with power where appropriate to affix the corporate seal of said
Corporation thereto and to attest to said seal, and to file such Registration
Statement and each such amendment, with all exhibits thereto, and any and all
other documents in connection therewith, with the Securities and Exchange
Commission, and hereby grants unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform any and all acts and things
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person and hereby ratifies and
confirms all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereby.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the
28 day of October, 1997.
/s/ Hisao Kobayashi________
---------------------------
Hisao Kobayashi
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of THE CIT GROUP, INC., a Delaware corporation (the "Corporation"),
which is about to file with the Securities and Exchange Commission, Washington,
D.C., under the provisions of the Securities Act of 1933, as amended, a
Registration Statement on Form S-3, for the registration of the Corporation's
guarantee of certain notes and certificates issued by The CIT Group
Securitization Corporation II, a wholly-owned subsidiary of the Corporation,
under said Act, which notes and certificates may be issued in an aggregate
principal amount of up to $1,400,000,000, or if issued at an original discount,
such greater principal amount as shall result in an aggregate initial public
offering price of up to $1,400,000,000 (all in United States dollars or an
equivalent amount in another currency or composite currency), hereby constitutes
and appoints ALBERT R. GAMPER, JR., ERNEST D. STEIN, and DONALD J. RAPSON his
true and lawful attorneys-in-fact and agents, and each of them with full power
to act without the others, for him and in his name, place, and stead, in any and
all capacities, to sign such Registration Statement and any and all amendments
thereof, with power where appropriate to affix the corporate seal of said
Corporation thereto and to attest to said seal, and to file such Registration
Statement and each such amendment, with all exhibits thereto, and any and all
other documents in connection therewith, with the Securities and Exchange
Commission, and hereby grants unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform any and all acts and things
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person and hereby ratifies and
confirms all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereby.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the
28 day of October, 1997.
/s/ Joseph A. Pollicino_______
------------------------------
Joseph A. Pollicino
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of THE CIT GROUP, INC., a Delaware corporation (the "Corporation"),
which is about to file with the Securities and Exchange Commission, Washington,
D.C., under the provisions of the Securities Act of 1933, as amended, a
Registration Statement on Form S-3, for the registration of the Corporation's
guarantee of certain notes and certificates issued by The CIT Group
Securitization Corporation II, a wholly-owned subsidiary of the Corporation,
under said Act, which notes and certificates may be issued in an aggregate
principal amount of up to $1,400,000,000, or if issued at an original discount,
such greater principal amount as shall result in an aggregate initial public
offering price of up to $1,400,000,000 (all in United States dollars or an
equivalent amount in another currency or composite currency), hereby constitutes
and appoints ALBERT R. GAMPER, JR., ERNEST D. STEIN, and DONALD J. RAPSON his
true and lawful attorneys-in-fact and agents, and each of them with full power
to act without the others, for him and in his name, place, and stead, in any and
all capacities, to sign such Registration Statement and any and all amendments
thereof, with power where appropriate to affix the corporate seal of said
Corporation thereto and to attest to said seal, and to file such Registration
Statement and each such amendment, with all exhibits thereto, and any and all
other documents in connection therewith, with the Securities and Exchange
Commission, and hereby grants unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform any and all acts and things
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person and hereby ratifies and
confirms all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereby.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the
28 day of October, 1997.
/s/ Paul N. Roth____________
----------------------------
Paul N. Roth
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of THE CIT GROUP, INC., a Delaware corporation (the "Corporation"),
which is about to file with the Securities and Exchange Commission, Washington,
D.C., under the provisions of the Securities Act of 1933, as amended, a
Registration Statement on Form S-3, for the registration of the Corporation's
guarantee of certain notes and certificates issued by The CIT Group
Securitization Corporation II, a wholly-owned subsidiary of the Corporation,
under said Act, which notes and certificates may be issued in an aggregate
principal amount of up to $1,400,000,000, or if issued at an original discount,
such greater principal amount as shall result in an aggregate initial public
offering price of up to $1,400,000,000 (all in United States dollars or an
equivalent amount in another currency or composite currency), hereby constitutes
and appoints ALBERT R. GAMPER, JR., ERNEST D. STEIN, and DONALD J. RAPSON his
true and lawful attorneys-in-fact and agents, and each of them with full power
to act without the others, for him and in his name, place, and stead, in any and
all capacities, to sign such Registration Statement and any and all amendments
thereof, with power where appropriate to affix the corporate seal of said
Corporation thereto and to attest to said seal, and to file such Registration
Statement and each such amendment, with all exhibits thereto, and any and all
other documents in connection therewith, with the Securities and Exchange
Commission, and hereby grants unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform any and all acts and things
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person and hereby ratifies and
confirms all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereby.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the
28 day of October, 1997.
/s/ Peter J. Tobin___________
-----------------------------
Peter J. Tobin
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of THE CIT GROUP, INC., a Delaware corporation (the "Corporation"),
which is about to file with the Securities and Exchange Commission, Washington,
D.C., under the provisions of the Securities Act of 1933, as amended, a
Registration Statement on Form S-3, for the registration of the Corporation's
guarantee of certain notes and certificates issued by The CIT Group
Securitization Corporation II, a wholly-owned subsidiary of the Corporation,
under said Act, which notes and certificates may be issued in an aggregate
principal amount of up to $1,400,000,000, or if issued at an original discount,
such greater principal amount as shall result in an aggregate initial public
offering price of up to $1,400,000,000 (all in United States dollars or an
equivalent amount in another currency or composite currency), hereby constitutes
and appoints ALBERT R. GAMPER, JR., ERNEST D. STEIN, and DONALD J. RAPSON his
true and lawful attorneys-in-fact and agents, and each of them with full power
to act without the others, for him and in his name, place, and stead, in any and
all capacities, to sign such Registration Statement and any and all amendments
thereof, with power where appropriate to affix the corporate seal of said
Corporation thereto and to attest to said seal, and to file such Registration
Statement and each such amendment, with all exhibits thereto, and any and all
other documents in connection therewith, with the Securities and Exchange
Commission, and hereby grants unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform any and all acts and things
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person and hereby ratifies and
confirms all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereby.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the
28 day of October, 1997.
/s/ Tohru Tonoike__________
---------------------------
Tohru Tonoike
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of THE CIT GROUP, INC., a Delaware corporation (the "Corporation"),
which is about to file with the Securities and Exchange Commission, Washington,
D.C., under the provisions of the Securities Act of 1933, as amended, a
Registration Statement on Form S-3, for the registration of the Corporation's
guarantee of certain notes and certificates issued by The CIT Group
Securitization Corporation II, a wholly-owned subsidiary of the Corporation,
under said Act, which notes and certificates may be issued in an aggregate
principal amount of up to $1,400,000,000, or if issued at an original discount,
such greater principal amount as shall result in an aggregate initial public
offering price of up to $1,400,000,000 (all in United States dollars or an
equivalent amount in another currency or composite currency), hereby constitutes
and appoints ALBERT R. GAMPER, JR., ERNEST D. STEIN, and DONALD J. RAPSON his
true and lawful attorneys-in-fact and agents, and each of them with full power
to act without the others, for him and in his name, place, and stead, in any and
all capacities, to sign such Registration Statement and any and all amendments
thereof, with power where appropriate to affix the corporate seal of said
Corporation thereto and to attest to said seal, and to file such Registration
Statement and each such amendment, with all exhibits thereto, and any and all
other documents in connection therewith, with the Securities and Exchange
Commission, and hereby grants unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform any and all acts and things
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person and hereby ratifies and
confirms all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereby.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the
28 day of October, 1997.
/s/ Keiji Torii_______________
------------------------------
Keiji Torii
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or
officer of THE CIT GROUP, INC., a Delaware corporation (the "Corporation"),
which is about to file with the Securities and Exchange Commission, Washington,
D.C., under the provisions of the Securities Act of 1933, as amended, a
Registration Statement on Form S-3, for the registration of the Corporation's
guarantee of certain notes and certificates issued by The CIT Group
Securitization Corporation II, a wholly-owned subsidiary of the Corporation,
under said Act, which notes and certificates may be issued in an aggregate
principal amount of up to $1,400,000,000, or if issued at an original discount,
such greater principal amount as shall result in an aggregate initial public
offering price of up to $1,400,000,000 (all in United States dollars or an
equivalent amount in another currency or composite currency), hereby constitutes
and appoints ALBERT R. GAMPER, JR., ERNEST D. STEIN, and DONALD J. RAPSON his
true and lawful attorneys-in-fact and agents, and each of them with full power
to act without the others, for him and in his name, place, and stead, in any and
all capacities, to sign such Registration Statement and any and all amendments
thereof, with power where appropriate to affix the corporate seal of said
Corporation thereto and to attest to said seal, and to file such Registration
Statement and each such amendment, with all exhibits thereto, and any and all
other documents in connection therewith, with the Securities and Exchange
Commission, and hereby grants unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform any and all acts and things
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person and hereby ratifies and
confirms all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereby.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the
28 day of October, 1997.
/s/ Yukiharu Uno___________
---------------------------
Yukiharu Uno
<PAGE>
EXHIBIT 99.1
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) _______________
HARRIS TRUST AND SAVINGS BANK
(Name of Trustee)
Illinois 36-1194448
(I.R.S. Employer
(State of Incorporation) Identification No.)
111 West Monroe Street, Chicago, Illinois 60603
(Address of principal executive offices)
Jeffrey L. Kinney, Harris Trust and Savings Bank,
111 West Monroe Street, Chicago, Illinois, 60603
312-461-6030
(Name, address and telephone number for agent for service)
THE CIT GROUP SECURITIZATION CORPORATION II.
(Name of Obligor)
Delaware 22-3328188
(I.R.S. Employer
(State of Incorporation) Identification No.)
650 CIT Drive
Livingston, New Jersey 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 as 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 Commercial Federal Corporation, File
No. 333-20711, 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 27th day of October 1997.
Harris Trust and Savings Bank
By: /s/ Jeffrey L.Kinney
---------------------
Jeffrey L. Kinney
Assistant Vice President
EXHIBIT A
The consents of the Trustee required by Section 321(b) of the Act.
Harris Trust and Savings 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/ Jeffrey L. Kinney
----------------------
Jeffrey L. Kinney
Assistant Vice President
2
<PAGE>
EXHIBIT B
Attached is a true and correct copy of the statement of condition of Harris
Trust and Savings Bank as of June 30, 1997, 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 June 30, 1997, 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
Cash and balances due from depository institutions:
<S> <C> <C>
Non-interest bearing balances and currency and coin..................... $ 1,707,824
Interest bearing balances............................................... $ 628,916
Securities:....................................................................
a. Held-to-maturity securities $ 0
b. Available-for-sale securities $ 3,766,727
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 IBF's:
Federal funds sold...................................................... $ 275,425
Securities purchased under agreements to resell......................... $ 0
Loans and lease financing receivables:
Loans and leases, net of unearned income................................ $ 8,346,198
LESS: Allowance for loan and lease losses.............................. $ 110,230
-----------
Loans and leases, net of unearned income, allowance, and reserve
(item 4.a minus 4.b).................................................... $ 8,235,968
Assets held in trading accounts................................................ $ 164,281
Premises and fixed assets (including capitalized leases)....................... $ 199,292
Other real estate owned........................................................ $ 524
Investments in unconsolidated subsidiaries and associated companies............ $ 69
Customer's liability to this bank on acceptances outstanding................... $ 46,107
Intangible assets.............................................................. $ 287,575
Other assets................................................................... $ 670,230
-------------------------
TOTAL ASSETS $15,982,938
=========================
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
Deposits:
<S> <C> <C>
In domestic offices.......................................................... $ 9,243,162
Non-interest bearing.................................................... $ 3,411,145
Interest bearing........................................................ $ 5,832,017
In foreign offices, Edge and Agreement subsidiaries, and IBF's............... $ 1,738,871
Non-interest bearing.................................................... $ 34,386
Interest bearing........................................................ $ 1,704,485
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.& securites sold under agreements to repurchase...... $ 2,985,911
Trading Liabilities 62,083
Other borrowed money:..........................................................
a. With remaining maturity of one year or less $ 244,781
b. With remaining maturity of more than one year $ 0
Bank's liability on acceptances executed and outstanding $ 46,107
Subordinated notes and debentures.............................................. $ 325,000
Other liabilities.............................................................. $ 119,695
TOTAL LIABILITIES $14,765,610
=========================
EQUITY CAPITAL
Common stock................................................................... $ 100,000
Surplus........................................................................ $ 600,715
a. Undivided profits and capital reserves..................................... $ 534,395
b. Net unrealized holding gains (losses) on available-for-sale securities ($17,782)
TOTAL EQUITY CAPITAL $ 1,217,328
Total liabilities, limited-life preferred stock, and equity capital............ $15,982,938
=========================
</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
7/30/97
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,
RICHARD JAFFEE
Directors.
4
