As filed with the Securities and Exchange Commission on March 11, 1999
Registration No. 333-64539
333-64539-01
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
AMENDMENT NO. 1
and
POST-EFFECTIVE AMENDEMENT NO. 2
to
FORM S-3
Under
SECURITIES ACT OF 1933
----------
THE CIT GROUP SECURITIZATION CORPORATION II
THE CIT GROUP, INC.
(Exact name of each registrant specified in its charter)
----------
Delaware 22-3328188
Delaware 13-2994534
(State or other (I.R.S. Employer
jurisdiction Identification No.)
of incorporation
or organization)
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
(973) 535-3514 (212) 536-1950
(Address of principal (Address of principal
executive offices) executive offices)
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ERNEST D. STEIN, ESQ. Copies to:
Executive Vice President, PAUL N. WATTERSON, ESQ.
General Counsel & Secretary SCHULTE ROTH & ZABEL LLP
THE CIT GROUP, INC. 900 Third Avenue
1211 Avenue of the Americas New York, New York 10022
New York, New York 10036
(212)-536-1950
(Name and address of agent for service)
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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 Maximum Maximum Amount of
Title of each class of be Offering aggregate registration
securities to be registered registered Price Per Unit offering price(1) fee(3)(4)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset-Backed
Securities.................. $550,000,000 100% $550,000,000 $152,605.00
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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 $295.00, which is the amount equal to the fee previously paid with
respect to this Registration Statement pursuant to Rule 457.
(4) Pursuant to Rule 429 under the Securities Act of 1933, this Registration
Statement contains a combined prospectus that also relates to Registration
Statement Nos. 333-36061 and 333-36061-01 previously filed by the
Registrants on Form S-3 and declared effective on October 31, 1997. The
Registrants are carrying forward $435,816,271 aggregate principal amount
of Asset-Backed Securities from Registration Statement Nos. 333-36061 and
333-36061-01 for which a filing fee of $132,065.54 was previously paid.
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
Pursuant to Rule 429 under the Securities Act of 1933, this Registration
Statement contains a combined prospectus that also relates to Registration
Statement Nos. 333-36061 and 333-36061-01 previously filed by the Registrants on
Form S-3 and declared effective on October 31, 1997. This Registration Statement
constitutes Post-Effective Amendment No. 2 to Registration Statement Nos.
333-36061 and 333-36061-01 and such Post-Effective Amendment shall hereafter
become effective concurrently with the effectiveness of this Registration
Statement and in accordance with Section 8(c) of the Securities Act of 1933.
================================================================================
<PAGE>
SUBJECT TO COMPLETION, DATED ________
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 recreation 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.
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Price to Underwriting Proceeds to the
Public(1) Discount Company(1)(2)
[Per Class A Note]......... ______% ______% ______%
Per Certificate............ ______% ______% ______%
Total...................... $ $ $
====== ====== ======
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(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 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 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.
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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>
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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, 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."
The Certificates will be issued in minimum
denominations of $20,000 and integral
multiples of $1,000 in excess thereof and
will
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S-3
<PAGE>
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be available in book-entry form only;
[provided, however, that one Certificate may
be issued in a denomination other than an
integral multiple of $1,000 such that the
Affiliated Purchaser (as defined herein) may
be issued at least 1% of the Original
Certificate Balance (as defined herein)].
Persons ("Certificate Owners") acquiring
beneficial interests in the Certificates
will hold their interests through The
Depository Trust Company ("DTC"). Definitive
Certificates will be issued only under the
limited circumstances described herein and
in the Prospectus. Unless and until
Certificates of a class are issued in
definitive form, all references herein to
distributions, notices, reports and
statements to and to actions by and effects
upon the related Certificateholders will
refer to the same actions and effects with
respect to DTC or Cede & Co. ("Cede"), as
the case may be, for the benefit of the
related Certificate Owners in accordance
with the DTC procedures. See "Certain
Information Regarding the
Securities--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 assets of the Trust
(other than the Certificate Distribution
Account [and the Cash Collateral Account]).
See "The Notes--General."
The Trust will issue $_____________
aggregate principal amount of Notes pursuant
to an Indenture, to be dated as of
____________, 199__, between the Issuer and
the Indenture Trustee (the "Indenture"). See
"The Notes--General."
The Notes will be issued in minimum
denominations of $1,000 and integral
multiples of $1,000 in excess thereof and
will be available in book-entry form only.
Definitive Notes will be issued only under
the limited circumstances described herein.
Persons ("Note Owners") acquiring beneficial
interests in the Notes will hold their
interests through DTC in the United States
or Cedel Bank, societe anonyme ("Cedel") or
the Euroclear System ("Euroclear") in
Europe. Unless and until Notes of a class
are issued in definitive form, all
references herein to distributions, notices,
reports and statements to and to actions by
and effects upon the related Noteholders
will refer to the same actions and effects
with respect to DTC or Cede, as the case may
be, for the benefit of the related Note
Owners in accordance with the DTC
procedures. See "Certain Information
Regarding the Securities--Book-Entry
Registration" and "--Definitive Securities"
in the Prospectus and Annex I hereto.
Property of the Trust........... The property of the Trust will primarily
include (i) a pool of [simple interest]
retail installment sale contracts (the
"Initial Contracts") secured by the new and
used recreation vehicles financed thereby
(the "Initial Financed Vehicles"), (ii)
certain monies received under the Initial
Contracts on and after ___________, 199__
(the "Initial Cut-off Date"), (iii) an
assignment of the security interests in the
Initial Financed
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S-4
<PAGE>
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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 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, 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
recreation vehicles originated by recreation
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 recreation
vehicles. See "The Contract Pool." On or
prior to the date of issuance of the
Securities (the "Closing Date"), CITCF-NY
will sell certain contracts that will
constitute a portion of the Initial
Contracts to CITSF pursuant to a purchase
agreement, to be dated as of ____________,
199__, and CITSF will sell the Initial
Contracts to the Company pursuant to a
purchase agreement, to be
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S-5
<PAGE>
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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 "The Contract
Pool--Pre-Funding Account; Capitalized
Interest
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S-6
<PAGE>
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Account." Monies on deposit in the
Pre-Funding Account will not be available to
cover losses on or in respect of the
Contracts.
On the Closing Date, the Pre-Funding Account
will be created with an initial deposit,
from the proceeds of the Securities, of
$____________ (the "Pre-Funded Amount"). The
"Funding Period" will be the period from the
Closing Date until the earliest to occur of
(i) the date on which the amount on deposit
in the Pre-Funding Account (exclusive of
investment earnings) is less than $100,000,
[(ii) the date on which an Event of Default
occurs under the Indenture,] (iii) the date
on which an Event of Termination occurs
under the [Sale and Servicing Agreement]
[Pooling and Servicing Agreement], (iv) the
insolvency of the Company, CITSF, CITCF-NY
or CIT, or (v) the close of business on
_________. During the Funding Period, on one
or more Subsequent Transfer Dates, the
Pre-Funded Amount will be applied to
purchase Subsequent Contracts from the
Company. The Company expects that the
Pre-Funded Amount will be reduced to less
than $100,000 by ________, although no
assurance can be given that this will in
fact occur. Any portion of the Pre-Funded
Amount remaining on deposit in the
Pre-Funding Account at the end of the
Funding Period will be payable as principal
to [Noteholders and] Certificateholders in
accordance with the Pre-Funded Percentage
(as defined herein) on the first
Distribution Date thereafter or, if the end
of the Funding Period is on a Distribution
Date, then on such date.]
[Capitalized Interest Account].. [On the Closing Date approximately $_______
of the proceeds from the sale of the
Securities will be deposited into an account
(the "Capitalized Interest Account")
maintained as an Eligible Account, initially
maintained with the [Indenture] [Owner]
Trustee and the funds on deposit therein
will be invested solely in Permitted
Investments that mature no later than one
Business Day prior to the next Distribution
Date. Amounts deposited in the Capitalized
Interest Account will be used on the
___________, _________ and _________
Distribution Dates, if applicable, to fund
the excess, if any, of (i) the product of
(x) one-twelfth the weighted average of the
Interest Rate and the Pass-Through Rate as
of the first day of the related Interest
Accrual Period and (y) the undisbursed funds
(excluding investment earnings) in the
Pre-Funding Account (as of the last day of
the related Due Period) over (ii) the amount
of any investment earnings on funds in the
Pre-Funding Account that are available to
pay interest on the Securities on each such
Distribution Date. On each Distribution Date
during the Funding Period any amount
remaining in the Capitalized Interest
Account in excess of the Required
Capitalized Interest Amount (as defined
under "The Contract Pool--Pre-Funding
Account; Capitalized Interest Account")
shall be [released to the Affiliated
Purchaser (as defined herein)] [deposited in
the Collection Account]. Any amounts
remaining in the Capitalized Interest
Account on the last day of the Funding
Period and not used for such purposes will
be deposited in the Collection Account and
will be available for distributions, as
described herein, on the first Distribution
Date thereafter or, if the
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S-7
<PAGE>
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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 "The Purchase Agreements
and The Trust Documents--Distributions" in
the Prospectus.
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S-8
<PAGE>
- --------------------------------------------------------------------------------
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 (including any Late Fees) in
the related Due Period and (ii) the Purchase
Price (as defined herein) for any Contract
repurchased by CITSF as a result of breaches
of certain representations and warranties or
purchased by the Servicer as a result of
breaches of certain covenants, any Monthly
Advances (as defined herein) and any
Non-Reimbursable Payments (as defined
herein) made by the Servicer, if such
Purchase Price, Monthly Advance or
Non-Reimbursable Payment is paid on 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 which
are allocable to principal, (ii) the
aggregate amount of all Principal
Liquidation Loss Amounts distributable to
- --------------------------------------------------------------------------------
S-9
<PAGE>
- --------------------------------------------------------------------------------
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 circumstances described
herein]. The "Principal Liquidation Loss
Amount" for any Distribution Date will equal
the amount, if any,
- --------------------------------------------------------------------------------
S-10
<PAGE>
- --------------------------------------------------------------------------------
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
Contracts," "--Auction Sale," "The
Certificates--Redemption"
- --------------------------------------------------------------------------------
S-11
<PAGE>
- --------------------------------------------------------------------------------
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 accrued
and unpaid interest thereon at the Interest
Rate. See
- --------------------------------------------------------------------------------
S-12
<PAGE>
- --------------------------------------------------------------------------------
"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 defined
herein) and (ii) the amount on deposit in
the Cash
- --------------------------------------------------------------------------------
S-13
<PAGE>
- --------------------------------------------------------------------------------
Collateral Account exclusive of interest and
earnings thereon and any investment losses
and expenses and before giving effect to any
deposit to be made to the Cash Collateral
Account on such Distribution Date. If the
Available Amount on any Distribution Date is
insufficient (after paying the Servicer
Payment and paying the interest and
principal due on the Notes), to pay the
interest and principal (including, prior to
the Cross-Over Date, any Principal
Liquidation Loss Amount) required to be
distributed on the Certificates on such
Distribution Date, the [Owner] Trustee will
withdraw (or cause to be withdrawn) from the
Cash Collateral Account an amount equal to
the lesser of the amount of such deficiency
or the Available Cash Collateral Amount. See
"Enhancement--Cash Collateral Account." If
the Available Cash Collateral Amount is
zero, holders of the Certificates will bear
the risk of loss resulting from default by
Obligors and will have to look primarily to
the value of the related Financed Vehicles
for recovery of the outstanding principal
and unpaid interest on the Defaulted
Contracts (as defined herein).
On each Distribution Date, the Servicer will
deposit Excess Collections (as defined
herein) into the Cash Collateral Account in
an amount sufficient to increase the amount
on deposit in the Cash Collateral Account to
the Required Cash Collateral Amount and to
make payments of principal or interest on
the Loan as required by the Cash Collateral
Agreement. [Excess Collections, if any, not
so required to be deposited in the Cash
Collateral Account will be paid to the
Affiliated Purchaser (as defined herein).]
"Excess Collections" for any Distribution
Date will equal the amounts collected or
deposited in respect of the Contracts in the
related Due Period and which remain in the
Collection Account on such Distribution Date
after taking into account distributions to
be made on the Securities and payments and
reimbursements to be made to the Servicer on
such Distribution Date. See "The Purchase
Agreements and The Trust
Documents--Distributions" in the Prospectus.
The "Required Cash Collateral Amount" with
respect to any Distribution Date means ____%
of the Pool Balance as of the first day of
the related Due Period, but in no event less
than $__________, subject to adjustment
based on delinquencies and losses on the
Contracts, provided that the Required Cash
Collateral Amount shall never be greater
than the outstanding balance of the
Certificates and may be reduced from time to
time if the Rating Agencies shall have given
prior written notice to the Seller, the
Servicer and the Issuer that such reduction
will not result in a downgrade or withdrawal
of the then current ratings of the Notes and
the Certificates. See "Enhancement--Cash
Collateral Account."
If, on any Distribution Date, the Available
Cash Collateral Amount (after taking into
account any deposits to and withdrawals from
the Cash Collateral Account pursuant to the
[Sale and Servicing Agreement] [Pooling and
Servicing Agreement] on such Distribution
Date) exceeds the Required Cash Collateral
Amount for the next Distribution Date, such
excess (the "Cash Collateral Account
Surplus") will, to the extent required to
make payments
- --------------------------------------------------------------------------------
S-14
<PAGE>
- --------------------------------------------------------------------------------
of principal and interest on the Loan, be
withdrawn from the Cash Collateral Account
and paid to the Cash Collateral Depositor.
[The balance, if any, of such excess will be
withdrawn from the Cash Collateral Account
and paid to the Affiliated Purchaser.] See
"Enhancement--Cash Collateral Account."
Monthly Advances................ With respect to each Contract as to which
there has been an Interest Shortfall during
the related Due Period (other than an
Interest Shortfall arising from a Contract
which has been prepaid in full or which has
been subject to a Relief Act Reduction (as
defined herein) during the related Due
Period), the Servicer shall advance funds in
the amount of such Interest Shortfall (each,
a "Monthly Advance"), but only to the extent
that the Servicer, in its good faith
judgment, expects to recover such Monthly
Advance from subsequent collections with
respect to interest on such Contract made by
or on behalf of the obligor thereunder (the
"Obligor"), or from net liquidation proceeds
or insurance proceeds with respect to such
Contract. The Servicer shall be reimbursed
for any Monthly Advance from subsequent
collections with respect to such Contract.
If the Servicer determines in its good faith
judgment that an unreimbursed Monthly
Advance shall not ultimately be recoverable
from subsequent collections, the Servicer
shall be reimbursed for such Monthly Advance
from collections on all Contracts. In
determining whether an advance is or will be
nonrecoverable, the Servicer need not take
into account that it might receive any
amounts in a deficiency judgment against an
Obligor. The Servicer will not make a
Monthly Advance in respect of (i) the
principal component of any scheduled
payment, or (ii) an Interest Shortfall
arising from a Contract which has been
prepaid in full or which has been subject to
a Relief Act Reduction during the related
Due Period. See "The Purchase Agreements and
The Trust Documents--Monthly Advances" in
the Prospectus.
"Interest Shortfall" means with respect to
any Contract and any Distribution Date, the
excess of (A) the product of (i) the sum of
(a) one-twelfth of the weighted average of
the Pass-Through Rate and the Interest Rate
and (b) on-twelfth of the Servicing Fee Rate
(as defined herein) and (ii) the outstanding
principal amount of such Contract as of the
last day of the second preceding Due Period
(or, in the case of the first Due Period
ending after the Contract was acquired by
the Trust, as of the Initial Cut-off Date or
the Subsequent Cut-off Date, as the case may
be), over (B) the amount of interest, if
any, collected on such Contract in the
related Due Period.
Non-Reimbursable Payments....... With respect to each Contract as to which
there has been an Interest Shortfall in the
related Due Period arising from either a
prepayment in full of such Contract or a
Relief Act Reduction in respect of such
Contract during such Due Period, the [Sale
and Servicing Agreement] [Pooling and
Servicing Agreement] will require the
Servicer to deposit into the Collection
Account on the Business Day immediately
preceding the following Distribution Date,
without the right of subsequent
reimbursement, an amount
- --------------------------------------------------------------------------------
S-15
<PAGE>
- --------------------------------------------------------------------------------
equal to such Interest Shortfall (a
"Non-Reimbursable Payment"). [The Servicer
will not be obligated to make any
Non-Reimbursable Payments.]
Servicing Fees.................. The Servicer shall receive a monthly fee
(the "Servicing Fee"), payable on each
Distribution Date, equal to the sum of (i)
one-twelfth of the product of [0.75]% (the
"Servicing Fee Rate") and the Pool Balance
as of the last day of the second preceding
Due Period (or, in the case of the first
Distribution Date, as of the Initial Cut-off
Date) and (ii) any investment earnings on
amounts on deposit in the Collection
Account, [the Note Distribution Account] and
the Certificate Distribution Account;
provided, however, that the Servicing Fee
Rate shall be [_____%] [a rate determined at
the time of the appointment of a successor
Servicer but not to exceed _____%] if CITSF
or an affiliate thereof is not the Servicer.
See "The Purchase Agreements and The Trust
Documents--Servicing Compensation" in the
Prospectus.
Optional Purchase
of the Contracts.............. At its option, CITSF may purchase all the
Contracts on any Distribution Date on which
the Pool Balance as of the last day of the
related Due Period is [10]% or less of the
Initial Pool Balance, at a purchase price
determined as described under "The Purchase
Agreements and The Trust
Documents--Termination" in the Prospectus.
The "Initial Pool Balance" equals the sum of
(i) the Pool Balance as of the Initial
Cut-off Date and (ii) the aggregate
principal balance of all Subsequent
Contracts added to the Trust as of their
respective Subsequent Cut-off Dates.
Auction Sale.................... Within ten days after a Distribution Date on
which the Pool Balance as of the last day of
the related Due Period is [5]% or less of
the Initial Pool Balance, the Indenture
Trustee (or, if the Notes have been paid in
full and the Indenture has been discharged
in accordance with its terms, the [Owner]
Trustee) shall solicit bids for the purchase
of the Contracts remaining in the Trust. In
the event that satisfactory bids are
received as described in "The Purchase
Agreements and The Trust
Documents--Termination" in the Prospectus,
the net sale proceeds will be distributed to
Securityholders, in the same order of
priority as collections received in respect
of the Contracts, on the second Distribution
Date succeeding such Due Period. If
satisfactory bids are not received, such
Trustee shall decline to sell the Contracts
and shall not be under any obligation to
solicit any further bids or otherwise
negotiate any further sale of the Contracts.
See "The Purchase Agreements and The Trust
Documents--Termination" in the Prospectus.
Mandatory Sale ................. [If an Insolvency Event (as defined herein)
with respect to the Affiliated Purchaser (as
defined herein) occurs, the Indenture
Trustee (or, if no Notes are outstanding,
the Owner Trustee) will promptly sell,
dispose of or otherwise liquidate the
Contracts in a commercially reasonable
manner on commercially reasonable terms,
except under certain limited circumstances.
The net proceeds from any such sale,
disposition or liquidation of the Contracts
will be treated as collections on the
Contracts and
- --------------------------------------------------------------------------------
S-16
<PAGE>
- --------------------------------------------------------------------------------
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]. 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, Inc. ("CIT"), The CIT Group Securitization
Corporation II (the "Company"), [the Affiliated Purchaser (as defined herein)]
or any Servicer (including The CIT Group/Sales Financing, Inc. ("CITSF")) or any
of their respective affiliates. [The Securities will not be insured or
guaranteed by any government agency or instrumentality, CIT or any of its
affiliates (including the Company, the Affiliated Purchaser, and CITSF), the
Underwriters (as defined herein) or any of their affiliates, or any other
Servicer or any of its affiliates.]
2. Risk of Loss. An investment in the Securities may be affected by, among
other things, a downturn in regional or local economic conditions. These
regional or local economic conditions are often volatile and historically have
affected the delinquency, loan loss and liquidation experience of pools of
installment sale contracts secured by recreation vehicles. The credit criteria
and underwriting guidelines under which CITSF originates recreation 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 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 (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. ss.101 et seq. (the "Bankruptcy Code"), it is possible that a creditor,
receiver, other party in interest or trustee in bankruptcy of CITCF-NY, CITSF or
the Company, or CITCF-NY, CITSF or the Company as debtor-in-possession, may
argue that the sale of the Contracts by CITCF-NY to CITSF, by CITSF to the
Company, or by the Company to the Trust, respectively, was a pledge of the
Contracts rather than a sale and that, accordingly, such Contracts should be
part of such assigning entity's bankruptcy estate. Such a position, if presented
to a court, even if ultimately unsuccessful, could result in a delay in or
reduction of distributions to the Securityholders. See "Certain Legal Aspects of
the Contracts--Certain Matters Relating to Insolvency" in the Prospectus.
[The CIT GP Corporation II, a Delaware corporation and a wholly owned
subsidiary of CIT (the "Affiliated Purchaser"), will own a certificate
evidencing at least 1% of the Original Certificate Balance.] The Affiliated
Purchaser will have the same rights with regard to the Trust as all other
Certificateholders based on its percentage ownership of the Certificate Balance.
The [Trust Agreement] [Pooling and Servicing Agreement] will provide that if an
Insolvency Event (as defined herein) with respect to the Affiliated Purchaser
occurs, subject to certain conditions, the Trust will dissolve. Certain steps
will be taken in structuring the transactions contemplated hereby that are
intended to make it less likely that an Insolvency Event with respect to the
Affiliated Purchaser will occur. These steps include the formation of the
Affiliated Purchaser as a separate, limited-purpose corporation pursuant to a
certificate of incorporation containing certain limitations (including
restrictions on the nature of the Affiliated Purchaser's business and a
restriction on the Affiliated Purchaser's ability to commence a voluntary case
or proceeding under the Bankruptcy
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Code or similar applicable state laws ("Insolvency Laws") without the prior
affirmative unanimous vote of its directors). However, an Insolvency Event with
respect to the Affiliated Purchaser may occur nonetheless.
If an Insolvency Event with respect to the Affiliated Purchaser occurs,
the Indenture Trustee (or, if no Notes are outstanding, the [Owner] Trustee)
will promptly sell, dispose of or otherwise liquidate the Contracts in a
commercially reasonable manner on commercially reasonable terms, except under
certain limited circumstances. The net proceeds from any such sale, disposition
or liquidation of the Contracts will be treated as collections on the Contracts
and deposited in the Collection Account. Distributions will be made first, to
the payment of the Servicer Payment, second, to the payment of interest and
principal on the Notes and third, to the payment of interest and principal on
the Certificates. If the net proceeds from the liquidation of the Contracts
(after payment of the Servicer Payment and payment of the principal amount of
and accrued interest on the Notes) and any amounts on deposit in the Certificate
Distribution Account are not sufficient to pay the principal amount of and
accrued interest on the Certificates in full, the amount of principal returned
to the Certificateholders will be reduced and such Certificateholders will incur
a loss, [except to the extent of payments to the Certificateholders from the
Cash Collateral Account, subject to the Available Cash Collateral Amount.] [If
the net proceeds from the liquidation of the Contracts (after payment of the
Servicer Payment) and any amounts on deposit in the Note Distribution Account
are not sufficient to pay the principal amount of and accrued interest on the
Notes in full, holders of the Notes also will incur a loss.] See "The Purchase
Agreements and The Trust Documents--Insolvency Event" in the Prospectus.]
[4. The Subsequent Contracts and the Pre-Funding Account.] The conveyance
of Subsequent Contracts by CITSF during the Funding Period will be subject to
the conditions described herein under "The Contract Pool." If CITSF does not
originate contracts satisfying such criteria during the Funding Period, CITSF
will have insufficient contracts to sell to the Trust on Subsequent Transfer
Dates, thereby resulting in prepayments of principal to Noteholders and
Certificateholders as described below.
To the extent that amounts on deposit in the Pre-Funding Account have not
been fully applied to the purchase of Subsequent Contracts by the Trust by the
end of the Funding Period, Noteholders and Certificateholders will receive a
prepayment of principal in an amount equal to the Pre-Funded Percentage
allocable to the Noteholders and the Certificateholders, respectively, of the
Pre-Funded Amount remaining in the Pre-Funding Account at such time, which
prepayment will be made on the first Distribution Date following the end of the
Funding Period or, if the Funding Period ends on a Distribution Date, on such
date. The "Pre-Funded Percentage" with respect to the Notes or the Certificates
is the percentage derived from the fraction, the numerator of which is the
initial principal balance of the Notes or the Original Certificate Balance, as
the case may be, and the denominator of which is the sum of the initial
principal balance of the Notes and the Original Certificate Balance. It is
anticipated that the principal amount of Subsequent Contracts purchased by the
Trust will not be exactly equal to the amount on deposit in the Pre-Funding
Account and that therefore there will be at least a nominal amount of principal
prepaid to the Noteholders and the Certificateholders at the end of the Funding
Period.
Each Subsequent Contract must satisfy the eligibility criteria specified
herein and in the [Sale and Servicing Agreement] [Pooling and Servicing
Agreement] at the time of its sale to the Trust. The Company (the seller of any
Subsequent Contracts to the Trust) will certify that all such eligibility
criteria have been satisfied and CITSF (the seller of any Subsequent Contracts
to the Company) will certify that all conditions precedent to the sale of the
Subsequent Contracts to the Trust have been satisfied. It is a condition to the
sale of any Subsequent Contracts to the Trust that each Rating Agency, after
receiving prior notice of the proposed transfer of Subsequent Contracts to the
Trust, shall not have advised the Seller or the Trustees that the conveyance of
such Subsequent Contracts will result in a qualification, modification or
withdrawal of its then current rating of either the Notes or the Certificates.
Following the transfer of Subsequent Contracts to the Contract Pool the
aggregate characteristics of the Contracts then held in the Contract Pool may
vary from those of the Initial Contracts included therein.
The ability of the Trust to invest in Subsequent Contracts is entirely
dependent upon whether CITSF is able to originate recreation vehicle contracts
that meet the requirements for transfer on a Subsequent Transfer Date under a
Subsequent Purchase Agreement transferring Subsequent Contracts from CITSF to
the Company and under the [Sale and Servicing Agreement] [Pooling and Servicing
Agreement]. The ability of CITSF to originate such contracts may be affected by
a variety of economic and social factors. Moreover, such factors may affect the
ability of the Obligors
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thereunder to perform their obligations thereunder which may cause contracts
originated by CITSF or its affiliates to fail to meet the requirements for
transfer under the Subsequent Purchase Agreement or the [Sale and Servicing
Agreement] [Pooling and Servicing Agreement]. Economic factors include interest
rates, unemployment levels, the rate of inflation and consumer perception of
economic conditions generally. However, CITSF is unable to determine and has no
basis to predict whether or to what extent economic or social factors will
affect CITSF's ability to originate Subsequent Contracts.
[5. Prepayment from the Pre-Funding Account.] If the Pre-Funded Amount has
not been fully applied by the Trust to purchase Subsequent Contracts by the end
of the Funding Period, then the Pre-Funded Amount will be payable as principal
to Noteholders and Certificateholders in accordance with the Pre-Funded
Percentage on the first Distribution Date following the end of the Funding
Period, or, if the end of the Funding Period is on a Distribution Date, then on
such date.
In the event that amounts remain on deposit in the Pre-Funding Account at
the end of the Funding Period and are applied to the payment of principal to the
Noteholders and Certificateholders, such partial retirement of the Notes and
Certificates may shorten the average life of the Securities and may cause the
Noteholders and Certificateholders to experience a lower yield on the
Securities. In addition, any reinvestment risk resulting from such partial
retirement will be borne by the holders of such Securities.
6. Limited Assets. [The Trust will covenant to sell the Contracts (a) if
directed to do so by the Indenture Trustee in accordance with the Indenture
following an acceleration of the Notes upon an Event of Default, [and (b) upon
the occurrence of an Insolvency Event with respect to the Affiliated Purchaser].
However, there is no assurance that the market value of the Contracts will at
any time be equal to or greater than the aggregate outstanding principal balance
of the Notes and the interest accrued thereon. Therefore, upon an Event of
Default with respect to the Notes or an Insolvency Event, there can be no
assurance that sufficient funds will be available to repay Noteholders in full.
In addition, the amount of principal required to be distributed to Noteholders
under the Indenture is generally limited to amounts available to be deposited in
the Note Distribution Account. Therefore, the failure to pay principal on the
Notes may not result in the occurrence of an Event of Default until the Note
Final Scheduled Distribution Date.]
[Funds on deposit in the Cash Collateral Account which are available to
pay principal and interest on the Certificates on any Distribution Date will not
exceed the Available Cash Collateral Amount for such Distribution Date. In
addition, amounts to be deposited in the Cash Collateral Account are limited and
will be reduced as the Pool Balance is reduced. If funds in the Cash Collateral
Account are exhausted, the Trust will depend solely on payments on or with
respect to the Contracts, Monthly Advances and Non-Reimbursable Payments (as
defined herein) to make distributions to the Certificateholders.]
7. Geographic Concentration of Recreation 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. 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
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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.
9. 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.
10. Risk of Commingling. At any time that the requirements as specified
under "The Purchase Agreements and the Trust Documents--Collections" in the
Prospectus are met, the Servicer may deposit payments on or with respect to the
Contracts and proceeds of Contracts in the Collection Account monthly on the
Business Day immediately preceding the next Distribution Date (the "Deposit
Date"). Pending such a monthly deposit into the Collection Account, collections
on the Contracts may be invested by the Servicer at its own risk and for its own
benefit and will not be segregated from its own funds. If the Servicer were
unable to remit such funds or if the Servicer became insolvent, the holders of
the Securities could incur a loss with respect to collections not deposited in
the Collection Account.
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 owned by the Affiliated
Purchaser and Certificates] representing the [remainder of] the Original
Certificate Balance will be sold to third party investors that are expected to
be unaffiliated with [the Affiliated Purchaser,] the Seller, the Servicer or
their affiliates. The equity in the Trust, [together with the proceeds of the
initial sale of the Notes,] will be used by the Trust to purchase the Initial
Contracts from the Seller pursuant to the [Sale and Servicing Agreement]
[Pooling and Servicing Agreement], [to fund the deposit of the Pre-Funded Amount
and the deposit to the Capitalized Interest Amount.]
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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............................................ $
============
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 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 recreation 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
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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.
THE CONTRACT POOL
General
The Contract Pool will initially consist of _______ conventional
[fixed-rate] [simple interest] installment sale contracts secured by recreation
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 recreation 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
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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
recreation 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.]
[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 recreation 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 recreation 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
recreation 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 recreation vehicles, respectively. Approximately _____% of
the Initial Contracts, by Initial Cut-off Date Pool Principal Balance,
represented financing of recreation vehicles which were new and approximately
_____% represented financing of recreation 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 recreation 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.
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All Initial Contracts have an interest rate specified in such Contract
(the "Contract Rate") of at least _____%. As of the Initial Cut-off Date, the
Initial Contracts have remaining maturities of at least _____ months but not
more than _____ months, original maturities of at least _____ months but not
more than _____ months, and a weighted average remaining term to stated maturity
of _____ months. The weighted average original term to maturity of the Initial
Contracts was _____ months. As of the Initial Cut-off Date, the weighted average
Contract Rate of the Initial Contracts was _____%. The final scheduled payment
dates on the Initial Contracts range from _____ to _____. The average remaining
principal balance per contract, as of the Initial Cut-off Date, was $_____ and
the outstanding principal balances of the Initial Contracts, as of the Initial
Cut-off Date, ranged from $_____ to $_____.
Set forth below is a description of certain characteristics of the Initial
Contracts.
S-26
<PAGE>
Geographical Distribution of Initial Contracts (1)
<TABLE>
<CAPTION>
% of Contract
% of Contract Pool by
Number of Pool by Number Aggregate Principal Principal Balance
Initial of Initial Balance Outstanding Outstanding
Contracts As of Contracts As of As of As of
State Initial Cut-off Date Initial Cut-off Date Initial Cut-off Date Initial Cut-off Date
- ----- -------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Alabama............... % $ %
Arizona............... % %
Arkansas.............. % %
California............ % %
Colorado.............. % %
Connecticut........... % %
Delaware.............. % %
Florida............... % %
Georgia............... % %
Idaho................. % %
Illinois.............. % %
Indiana............... % %
Iowa.................. % %
Kansas................ % %
Kentucky.............. % %
Louisiana............. % %
Maine................. % %
Maryland.............. % %
Massachusetts......... % %
Michigan.............. % %
Minnesota............. % %
Mississippi........... % %
Missouri.............. % %
Montana............... % %
Nebraska.............. % %
Nevada................ % %
New Hampshire......... % %
New Jersey............ % %
New Mexico............ % %
New York.............. % %
North Carolina........ % %
Ohio.................. % %
Oklahoma.............. % %
Oregon................ % %
Pennsylvania.......... % %
South Carolina........ % %
South Dakota.......... % %
Tennessee............. % %
Texas................. % %
Utah.................. % %
Virginia.............. % %
Washington............ % %
Wisconsin............. % %
Wyoming............... % %
- -
Total................. 100% 100%
==== ====
</TABLE>
(1) In most cases, based on the mailing addresses of the Obligors as of the
Initial Cut-off Date.
S-27
<PAGE>
Range of Contract Rates
<TABLE>
<CAPTION>
% of Contract Pool
% of Contract Pool Aggregate Principal By Principal
Number of by Number of Balance Outstanding Balance Outstanding
Range of Initial Contracts As of Initial Contracts As of As of As of
Contract Rates Initial Cut-off Date Initial Cut-off Date Initial Cut-off Date Initial Cut off Date
- -------------- -------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Total............. 100.00% $ 100.00%
======= = =======
</TABLE>
Range of Remaining Maturities
<TABLE>
<CAPTION>
% of Contract Pool
% of Contract Pool Aggregate Principal By Principal
Number of by Number of Balance Outstanding Balance Outstanding
Range of Remaining Contracts As of Initial Contracts As of As of As of
Maturity in Months Initial Cut-off Date Initial Cut-off Date Initial Cut-off Date Initial Cut-off Date
- ------------------ -------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Total............. 100.00% $ 100.00%
======= = =======
</TABLE>
[Pre-Funding Account; Capitalized Interest Account]
The Pre-Funding Account will be maintained with an Eligible Institution
(as defined herein), initially the [Indenture Trustee], and the funds on deposit
therein will be invested solely in Permitted Investments (as defined herein),
that mature not later than one Business Day prior to the next succeeding
Distribution Date, until they are applied by the [Owner] Trustee during the
Funding Period, to pay to the Company the purchase price for Subsequent
Contracts. See "The Purchase Agreements and the Trust Documents--Accounts" in
the Prospectus. Monies on deposit in the Pre-Funding Account will not be
available to cover losses on or in respect of the Contracts.
On the Closing Date, the Pre-Funding Account will be created with an
initial deposit, from the proceeds of the Securities, of $_____ (the "Pre-Funded
Amount"). The "Funding Period" will be the period from the Closing Date until
the earliest to occur of (i) the date on which the amount on deposit in the
Pre-Funding Account is less than $100,000, [(ii) the date on which an Event of
Default occurs under the Indenture,] (iii) the date on which an Event of
Termination occurs under the [Sale and Servicing Agreement] [Pooling and
Servicing Agreement], (iv) the insolvency of the Company, CITSF, CITCF-NY or CIT
or (v) the close of business on _____. During the Funding Period, on one or more
Subsequent Transfer Dates, the Pre-Funded Amount will be applied to purchase
Subsequent Contracts from the Company. The Company expects that the Pre-Funded
Amount will be reduced to less than $100,000 by _____, although no assurance can
be given that this will in fact occur. Any portion of the Pre-Funded Amount
remaining on deposit in the Pre-Funding Account at the end of the Funding Period
will be payable as principal to Noteholders and Certificateholders in accordance
with the Pre-Funded Percentage on the first Distribution Date thereafter or, if
the end of the Funding Period is on a Distribution Date, then on such date.
"Permitted Investments" will include the following obligations and
securities: (i) obligations of the United States or any agency thereof, backed
by the full faith and credit of the United States; (ii) general obligations of
or obligations guaranteed by any State, and certificates of deposit, demand or
time deposits, federal funds or banker's acceptances issued by any depository
institution or trust company incorporated under the laws of the United States or
of any state and subject to supervision and examination by federal or state
banking authorities; in each case rated in the highest rating of each Rating
Agency for such obligations, or such lower rating as will not result in the
qualification, downgrading or withdrawal of the rating then assigned to either
the Notes or the Certificates by such Rating Agency; and (iii) demand or time
deposits or certificates of deposit issued by any bank, trust company, savings
bank or other savings institution, which deposits are fully insured by the FDIC.
S-28
<PAGE>
The [Sale and Servicing Agreement] [Pooling and Servicing Agreement] will
provide that the [Owner] Trustee cannot release any funds from the Pre-Funding
Account to purchase Subsequent Contract unless the following conditions, among
others specified in the [Sale and Servicing Agreement] [Pooling and Servicing
Agreement], have been satisfied: (i) the Company has certified that each such
Subsequent Contract satisfies the eligibility criteria described under
"--General"; (ii) the Servicer has delivered to the Trustees executed UCC
financing statements evidencing the sale of the Subsequent Contracts; (iii) the
Servicer certifies to the Trustees that it has reviewed each Subsequent Contract
and Contract File relating thereto, and confirmed that they each conform to the
related List of Subsequent Contracts; (iv) the Servicer has delivered Opinions
of Counsel regarding the Trustees' security interest in the Subsequent
Contracts; (v) the Servicer has certified that all of the conditions precedent
to the transfer of the Subsequent Contracts have been satisfied; (vi) the
[Owner] Trustee (and/or the Indenture Trustee) has inspected each of the
certificates, schedules, UCC financing statements, Officers' Certificates and
legal opinions, as described above, and determined that each item required to be
delivered pursuant to the [Sale and Servicing Agreement] [Pooling and Servicing
Agreement] has been so delivered; and (vii) the Rating Agencies, after receiving
prior notice of the transfer of any Subsequent Contracts to the Trust, have not
advised either the Seller or the Trustees that the conveyance of the Subsequent
Contracts would result in a qualification, modification or withdrawal of its
then current rating of either the Notes or the Certificates.
[On the Closing Date, approximately $______ of the proceeds from the sale
of the Securities will be deposited into an account (the "Capitalized Interest
Account") in the name of the [Owner] Trustee on behalf of the Securityholders.
Amounts deposited in the Capitalized Interest Account will be used on the
______, ______ and ______ Distribution Dates, if applicable, to fund the excess,
if any, of (i) the product of (x) one-twelfth of the weighted average of the
Interest Rate and the Pass-Through Rate as of the first day of the related
Interest Accrual Period and (y) the undisbursed funds (excluding investment
earnings) in the Pre-Funding Account (as of the last day of the related Due
Period) over (ii) the amount of any investment earnings on funds in the
Pre-Funding Account that are available to pay interest on the Securities on each
such Distribution Date. Any amounts remaining in the Capitalized Interest
Account on any Distribution Date during the Funding Period (after giving effect
to any withdrawals therefrom on such Distribution Date) in excess of the
Required Capitalized Interest Amount on such Distribution Date shall be
[released to the Affiliated Purchaser] [deposited in the Collection Account] on
such Distribution Date. The "Required Capitalized Interest Amount" for any
Distribution Date during the Funding Period is an amount equal to the product of
(x) the weighted average of the Interest Rate and the Pass-Through Rate as of
the first day of the related Interest Accrual Period minus ___%, (y) the
undisbursed funds (excluding investment earnings) in the Pre-Funding Account (as
of such Distribution Date, after giving effect to any purchases of Subsequent
Contracts on such Distribution Date) and (z) a fraction, the numerator of which
is equal to the maximum number of Distribution Dates remaining in the Funding
Period and the denominator of which is 12. Any amounts remaining in the
Capitalized Interest Account on the last day of the Funding Period and not used
for such purposes will be deposited in the Collection Account and will be
available for distributions, as described herein, on the first Distribution Date
thereafter or, if the end of the Funding Period is on a Distribution Date, then
on such date.]
MATURITY AND PREPAYMENT CONSIDERATIONS
[All of the Contracts are prepayable at any time without any penalty.] If
prepayments are received on the Contracts, the actual weighted average life of
the Contracts will be shorter than the scheduled weighted average life, which is
based on the assumption that payments will be made as scheduled and that no
prepayments will be made. For this purpose the term "prepayments" includes,
among other items, voluntary prepayments by Obligors, regular installment
payments made in advance of their scheduled due dates, liquidations due to
default, proceeds from physical damage, credit life and credit disability
insurance policies, if any, and purchases by CITSF or the Servicer of certain
Contracts as described herein. Weighted average life means the average amount of
time during which each dollar of principal on a Contract is outstanding. The
rate of prepayments on the Contracts may be influenced by a variety of economic,
social and other factors, including the fact that an Obligor may not sell or
transfer a Financed Vehicle without the consent of CITSF. Any reinvestment risk
resulting from the rate of prepayment of the Contracts and the distribution of
such prepayments to Securityholders will be borne entirely by the
Securityholders. In addition, early retirement of the Securities may be effected
by (i) the exercise of the option of CITSF to purchase all of the Contracts
remaining in the Trust when the aggregate principal balance of the Contracts
(the "Pool Balance") is 10% or less of the Initial Pool Balance (as defined
herein), (ii) the sale by the applicable Trustee of all of the Contracts
remaining in the
S-29
<PAGE>
Trust when the Pool Balance is 5% or less of the Initial Pool Balance [or (iii)
the occurrence of an Insolvency Event with respect to the Affiliated Purchaser.]
See "The Purchase Agreements and The Trust Documents--Termination" in the
Prospectus. [Moreover, partial retirement of the Notes and Certificates will
occur to the extent there is remaining any Pre-Funded Amount on deposit in the
Pre-Funding Account at the end of the Funding Period.]
The rate of principal payments (including prepayments) on pools of
recreation 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 recreation vehicle installment sale
contracts similar to the Contracts over an extended period of time, and its
experience with respect to recreation 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
recreation 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 recreation 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 recreation 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 recreation
vehicles contracts originated by CITSF (excluding contracts purchased in bulk)
in each year since 1992, the aggregate initial principal balance of the
contracts originated in such year, the approximate aggregate principal balance
outstanding on the contracts originated in such year as of the last day of such
year and the approximate aggregate principal balance outstanding on the
contracts originated in such year as of the end of the subsequent year.
S-30
<PAGE>
Information Regarding Principal Reduction on Recreational
Vehicle Contracts Originated by CITSF
(Dollars in Thousands)
<TABLE>
<CAPTION>
Year of Origination
----------------------------------------------------------------------
199 199 199 (3) 199 (3) 199 (3)
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Approximate Volume (1).............. $ $ $ $
Approximate Aggregate
Principal Balance (2):
December 31, 199_.......... $
December 31, 199_.......... $ $
December 31, 199_.......... $ $ $
December 31, 199_.......... $ $ $ $
___________, 199_.......... $ $ $ $ $
</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
recreation 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 recreation 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)
<TABLE>
<CAPTION>
Distribution Date 0.0% 0.5% 1.0% 1.2% 1.4%
- ----------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Initial Percent......................... 100% 100% 100% 100% 100%
Weighted Average Life (years)(2)........
</TABLE>
- ----------
(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)
<TABLE>
<CAPTION>
Distribution Date 0.0% 0.5% 1.0% 1.2% 1.4%
- ----------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Initial Percent......................... 100% 100% 100% 100% 100%
Weighted Average Life (years)(2)........
</TABLE>
- ----------
(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 recreation 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, 199_, CITSF serviced for itself and others
approximately _______ contracts (consisting primarily of recreation vehicle,
home equity, marine and manufactured housing contracts), representing an
outstanding balance of approximately $___ billion. Of this portfolio,
approximately ______ contracts (representing approximately $___ billion
outstanding balance) consisted of recreation vehicle contracts.
Servicing
The following table shows the composition of CITSF's servicing portfolio,
including recreation 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 ___________,
---------------------------------------------------------------------------------- ------------------
199 199 199 199 199
---- ---- ---- ---- ----
(Number) (Dollars) (Number) (Dollars) (Number) (Dollars) (Number) (Dollars) (Number) (Dollars)
<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 Served.. $ $ $ $
----- ====== ----- ====== ----- ====== ----- ======
</TABLE>
- ----------
RV = Recreation 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 recreation vehicle portfolio. The following table sets
forth the delinquency experience for the four years ended December 31, 199_ and
the _______ months ended __________ __, 199_ of the portfolio of recreation
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)
__ months
Year Ended December 31, ended _____
------------------------------------------------ ------------
199 199 199 (3) 199 (3) 199 (3)
---- ---- ------- ------- -------
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)....
- ----------
(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 Recreation vehicle contracts sold by CITSF in previous
securitizations which CITSF is servicing.
S-37
<PAGE>
The following table sets forth the loan loss experience for the four years
ended December 31, 199_ and on an annualized basis for the _____ months ended
_________ __, 199_, of the portfolio of recreation 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)
Year Ended December 31,
---------------------------------------------------------------
199 199 199 (4) 199 (4) 199 (4)(5)
---- ---- ------- ------- ----
Number of
Contracts.......
Principal
Balance of
Contracts
Serviced...... $ $ $ $ $
Net Losses:
Dollars(2).... $ $ $ $ $
Percentage(3)... % % % % %
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 Recreation vehicle contracts sold by CITSF in previous
securitizations which CITSF is servicing.
(5) Annualized
S-38
<PAGE>
THE CERTIFICATES
The Certificates offered hereby will be issued pursuant to the [Trust
Agreement] [Pooling and Servicing Agreement], a form of which has been filed as
an exhibit to the Registration Statement of which this Prospectus Supplement is
a part. The following summary does not purport to be complete and is subject to,
and qualified in its entirety by reference to, the [Trust Agreement] [Pooling
and Servicing Agreement].
General
The CIT RV Trust 199__-__ ___% Asset-Backed Certificates (the
"Certificates") will represent fractional undivided interests in the Trust. The
Trust will issue $__________ aggregate principal amount of Certificates pursuant
to [a Trust Agreement, to be dated as of ________, between the Seller and the
Owner Trustee (the "Trust Agreement")] [the Pooling and Servicing Agreement], a
form of which will be filed as an exhibit to the Registration Statement of which
this Prospectus Supplement forms a part. A copy of the [Trust Agreement]
[Pooling and Servicing Agreement] will be available from the Company, upon
request, to holders of the Notes or Certificates and will be filed with the
Commission following the issuance of the Notes and the Certificates. Payments in
respect of the Certificates will be subordinated to payments on the Notes to the
limited extent described herein. The following summary describes certain terms
of the Certificates and the [Trust Agreement] [Pooling and Servicing Agreement].
The summary does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, all of the provisions of the Certificates and
the [Trust Agreement] [Pooling and Servicing Agreement]. Where particular
provisions or terms used in the [Trust Agreement] [Pooling and Servicing
Agreement] are referred to, the actual provisions (including definitions of
terms) are incorporated by reference as part of such summary.
The Certificates will be offered for purchase in minimum denominations of
$20,000 and integral multiples of $1,000 in excess thereof and will be available
in book-entry form only[; provided, however, that one Certificate may be issued
in a denomination other than an integral multiple of $1,000 such that the
Affiliated Purchaser may be issued at least 1% of the Original Certificate
Balance]. The Certificates will initially be represented by a single Certificate
registered in the name of the nominee of DTC, except as provided below. The
Company has been informed by DTC that DTC's nominee will be Cede & Co. ("Cede").
No person acquiring an interest in the Certificates through the facilities of
DTC (a "Certificate Owner") will be entitled to receive a Definitive Certificate
representing such person's interest in the Certificates, except as set forth
under "Certain Information Regarding The Securities--Definitive Securities" in
the Prospectus. Unless and until Definitive Certificates are issued under the
limited circumstances described herein and in the Prospectus, all references to
actions by Certificateholders shall refer to actions taken by DTC upon
instructions from its Participants, and all references herein to distributions,
notices, reports and statements to Certificateholders shall refer to
distributions, notices, reports and statements to DTC in accordance with DTC
procedures. See "Certain Information Regarding The Securities--Definitive
Securities" in the Prospectus and Annex I hereto.
Payments of interest and principal on the Certificates with respect to
each Due Period will be made on the [fifteenth] day of each month or, if any
such day is not a Business Day, on the next succeeding Business Day (each, a
"Distribution Date"), commencing ___________. With respect to any Distribution
Date, the "Due Period" will be the calendar month preceding the month of such
Distribution Date. The first Due Period will commence on and include _________
and will end on and include _________. Payments on the Securities on each
Distribution Date will be made to the holders of record of the related
Securities on the day immediately preceding such Distribution Date or, in the
event Definitive Securities have been issued, at the close of business of the
last day of the month immediately preceding the month in which such Distribution
Date occurs (each, a "Record Date"). A "Business Day" is any day other than a
Saturday, Sunday or any day on which banking institutions or trust companies in
the states of New York, [_________] or Oklahoma are authorized or required by
law, regulation or executive order to be closed.
Distribution of Interest
The Certificates will bear interest at the rate of ____% per annum (the
"Pass-Through Rate"). The period for which interest is payable on a Distribution
Date on the Securities shall be the one-month period from the most recent
Distribution Date to but excluding the following Distribution Date, or in the
case of the initial Distribution Date from _________ to but excluding the
initial Distribution Date (each, an "Interest Accrual Period"). Interest on the
Certificate Balance will accrue during the related Interest Accrual Period at
the Pass-Through Rate. Interest accruing during the related Interest Accrual
Period (computed on the basis of a 360-day year consisting of twelve 30-day
months) will be paid to the Certificateholders of record on the related Record
Date, on each Distribution Date, to the extent of the Available Amount on such
Distribution Date (i) in an amount equal to one-twelfth of the product of the
Pass-Through Rate and the Certificate Balance, as of the preceding Distribution
Date (after giving effect to distributions of principal and interest to be made
on such Distribution Date) or (ii) in the case of the first Distribution Date,
in an amount equal to interest accruing at the Pass-Through Rate from
S-39
<PAGE>
___________ to but excluding the first Distribution Date, on the Original
Certificate Balance (the "Certificate Interest Distribution Amount"). Interest
accrued as of any Distribution Date but not paid on such Distribution Date will
be due on the next Distribution Date. [The rights of Certificateholders to
receive distributions of interest will be subordinated to the rights of the
Noteholders to receive payment in full of all amounts of interest and principal
which the Noteholders are entitled to be paid on such Distribution Date.]
[Interest to Certificateholders may be provided from payments from the Cash
Collateral Account, to the extent of the Available Cash Collateral Amount, in
the event there are not sufficient funds (after payment of the Servicer Payment
to the Servicer and interest and principal on the Notes) to make such payments
from payments made by or on behalf of the Obligors or in respect of the
Contracts, including Monthly Advances and Non-Reimbursable Payments made by the
Servicer.]
Distribution of Principal
On each Distribution Date prior to the Cross-Over Date, the
Certificateholders will not be entitled to any payments of principal, except to
the extent of the Principal Liquidation Loss Amount.
On each Distribution Date on and after the Cross-Over Date, principal of
the Certificates will be payable, subject to the remaining Available Amount [and
the Available Cash Collateral Amount], in an amount equal to the Principal
Distribution Amount for the related Due Period. Such principal payments will be
funded to the extent of the Available Amount remaining after the Servicer has
been paid the Servicer Payment, and payment of interest and principal in respect
of the Notes, if any, and interest in respect to the Certificates has been made
[or, to the extent such Available Amount is insufficient, will be funded through
a payment from the Cash Collateral Account to the extent of the Available Cash
Collateral Amount.] [The rights of Certificateholders to receive distributions
of interest and principal will be subordinated to the rights of Noteholders to
receive distributions of interest and principal to the extent described herein.]
The principal balance of the Certificates, to the extent not previously paid,
will be due on the Certificate Final Scheduled Distribution Date. The actual
date on which the aggregate outstanding principal amount of the Certificates is
paid may be earlier than the Certificate Final Scheduled Distribution Date based
on a variety of factors.
On each Distribution Date prior to the Cross-Over Date, the
Certificateholders will be entitled to receive, subject to the remaining
Available Amount [and the Available Cash Collateral Amount], the Principal
Liquidation Loss Amount for such Distribution Date. Such principal payments will
be funded to the extent of the Available Amount remaining after the Servicer has
been paid the Servicer Payment, [the principal and interest due on the Notes has
been paid and] the interest on the Certificates has been paid, [or to the extent
such remaining Available Amount is insufficient, will be funded through a
payment from the Cash Collateral Account to the extent of the Available Cash
Collateral Amount]. The "Principal Liquidation Loss Amount" for any Distribution
Date will equal the amount, if any, by which the sum of the aggregate
outstanding principal balance of the Notes and the Certificate Balance (after
giving effect to all distributions of principal on such Distribution Date)
exceeds the sum of the Pool Balance plus the amounts remaining on deposit in the
Pre-Funding Account, if any, at the close of business on the last day of the
related Due Period. The Principal Liquidation Loss Amount represents future
principal payments on the Contracts that, because of the subordination of the
Certificates and liquidation losses on the Contracts, will not be paid to the
Certificateholders. See "Enhancement--Subordination of Certificates."
Redemption
[The Certificates will be redeemed in part, on a pro rata basis, on the
Distribution Date on or immediately following the last day of the Funding Period
in the event that any portion of the Pre-Funded Amount remains on deposit
S-40
<PAGE>
in the Pre-Funding Account after giving effect to the purchase of all Subsequent
Contracts, including any such purchase on such date. The aggregate principal
amount of the Certificates to be redeemed will be an amount equal to the
Pre-Funded Percentage allocable to the Certificates of the amount then on
deposit in the Pre-Funding Account.]
In the event of an Optional Purchase or Auction Sale, the Certificates
will be redeemed at a redemption price equal to the Certificate Balance plus
accrued interest thereon at the Pass-Through Rate. An Optional Purchase of all
the Contracts by CITSF, may occur at CITSF's option, on any Distribution Date on
which the Pool Balance as of the last day of the related Due Period is [10]% or
less of the Initial Pool Balance (as defined herein). An Auction Sale will occur
at any time, and may result in the sale of the Contracts remaining in the Trust,
within ten days following a Distribution Date on which the Pool Balance as of
the last day of the related Due Period is [5]% or less of the Initial Pool
Balance. The "Initial Pool Balance" equals the sum of (i) the Pool Balance as of
the Initial Cut-off Date and (ii) the aggregate principal balance of all
Subsequent Contracts added to the Trust as of their respective Subsequent
Cut-off Dates.
[If an Insolvency Event with respect to the Affiliated Purchaser occurs,
the Indenture Trustee (or, if no Notes are outstanding, the Owner Trustee) will
promptly sell, dispose of or otherwise liquidate the Contracts in a commercially
reasonable manner on commercially reasonable terms, except under certain limited
circumstances. The net proceeds from any such sale, disposition or liquidation
of the Contracts (after payment of the Servicer Payment) will be treated as
collections on the Contracts and deposited in the Collection Account.
Distributions will be made first, to the payment of the Servicer Payment, second
to the payment of interest and principal on the Notes and third, to the payment
of interest and principal on the Certificates. If the net proceeds from the
liquidation of the Contracts (after payment of the Servicer Payment) and any
amounts on deposit in the Note Distribution Account and the Certificate
Distribution Account are not sufficient to pay the principal amount of and
accrued interest on the Notes and Certificates in full, the amount of principal
returned to the Certificateholders will be reduced and such Certificateholders
will incur a loss, except to the extent of payments, subject to the Available
Cash Collateral Amount, made to the Certificateholders from the Cash Collateral
Account.]
[THE NOTES]
General
The CIT RV Trust 199__-__ Class A ____% Asset-Backed Notes (the "Notes"
and, together with the Certificates, the "Securities") will represent
obligations of the Trust secured by the assets of the Trust (other than the
Certificate Distribution Account [and the Cash Collateral Account]). The Trust
will issue $____ aggregate principal amount of Notes pursuant to the terms of an
Indenture, to be dated as of __________ (as amended and supplemented from time
to time, the "Indenture") between the ______________________, as trustee (the
"Indenture Trustee"), a form of which will be filed as an exhibit to the
Registration Statement of which this Prospectus Supplement forms a part. A copy
of the Indenture will be available from the Company, upon request, to the
holders of the Notes or Certificates and will be filed with the Securities and
Exchange Commission (the "Commission") following the issuance of the Notes and
Certificates. The following summary describes certain terms of the Notes and the
Indenture. The summary does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all of the provisions of the Notes
and the Indenture. Where particular provisions or terms used in the Indenture
are referred to, the actual provisions (including definitions of terms) are
incorporated by reference as part of such summary.
The Notes will be issued in minimum denominations of $1,000 and integral
multiples of $1,000 in excess thereof and will be available in book-entry form
only. The Notes will initially be represented by a single Note registered in the
name of Cede, the nominee of DTC. No person acquiring an interest in the Notes
through the facilities of DTC (a "Note Owner") will be entitled to receive a
Note representing such person's interest in the Notes, except as set forth under
"Certain Information Regarding the Securities--Definitive Securities" in the
Prospectus, and such persons will hold their interests in the Notes through DTC
in the United States or Cedel Bank, societe 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,
S-41
<PAGE>
reports and statements to DTC in accordance with DTC procedures. See "Certain
Information Regarding The Securities--Definitive Securities" in the Prospectus
and Annex I hereto.
Payments of interest and principal on the Notes with respect to each Due
Period will be made on each Distribution Date, commencing __________. Payments
on the Securities on each Distribution Date will be made to the holders of
record of the related Securities on the related Record Date.
Payments of Interest
The Notes will bear interest at the rate of ____% per annum (the "Interest
Rate"). Interest accruing during the related Interest Accrual Period (computed
on the basis of a 360-day year consisting of twelve 30-day months) will be paid
to the Noteholders of record on the related Record Date, on each Distribution
Date, to the extent of the Available Amount on such Distribution Date (i) in an
amount equal to one-twelfth of the product of the Interest Rate and the
outstanding principal balance on the Notes, as of the preceding Distribution
Date (after giving effect to distributions of principal and interest to be made
on such Distribution Date) or (ii) in the case of the first Distribution Date,
in an amount equal to interest accruing at the Interest Rate from _________ to
but excluding the first Distribution Date, on the outstanding principal balance
of the Notes as of the Closing Date (the "Note Interest Distribution Amount").
Interest accrued as of any Distribution Date but not paid on such Distribution
Date will be due on the next Distribution Date.
Payments of Principal
Principal payments will be made to the Noteholders on each Distribution
Date to the extent of the remaining Available Amount in an amount equal to the
Principal Distribution Amount. The "Principal Distribution Amount" on each
Distribution Date is equal to the difference between (i) the sum of (x) the Pool
Balance on the last day of the second preceding Due Period (or, in the case of
the first Distribution Date, the Initial Cut-off Date Pool Principal Balance),
and (y) the amount on deposit in the Pre-Funding Account (exclusive of
investment earnings) on the last day of the second preceding Due Period (or, in
the case of the first Distribution Date, as of the Closing Date), less (ii) the
sum of (x) the Pool Balance on the last day of the preceding Due Period and (y)
the amount on deposit in the Pre-Funding Account (exclusive of investment
earnings) on the last day of the preceding Due Period; provided, however, that
the Principal Distribution Amount on the Note Final Scheduled Distribution Date
will equal the outstanding principal balance of the Notes as of such date and
the Principal Distribution Amount on the Certificate Final Distribution Date
will equal the Certificate Balance on such date. For the purposes of determining
the Principal Distribution Amount, the unpaid principal balance of a Defaulted
Contract or a Repurchased Contract is deemed to be zero on and after the last
day of the Due Period in which such Contract became a Defaulted Contract or a
Repurchased Contract. The Principal Distribution Amount will not exceed the
outstanding principal balance of the Notes or, after the Cross-Over Date, the
Certificate Balance. With respect to any Due Period, a "Defaulted Contract"
means any Contract (except for a Repurchased Contract) in respect of which (a)
payments exceeding $__ in the aggregate were delinquent 180 days or more as of
the last day of such Due Period or (b) the Servicer has determined that eventual
payment in full is unlikely and has repossessed and liquidated the related
Financed Vehicle within such 180-day period; provided, however, that a
Paid-Ahead Contract and a Contract which is delinquent due to the Soldiers and
Sailors' Relief Act shall not be deemed delinquent.
No principal will be paid in respect of the Notes until the Servicer
Payment has been paid and until the entire Note Interest Distribution Amount has
been paid for the related Distribution Date. The "Servicer Payment" is equal on
each Distribution Date to the sum of the reimbursement then due to the Servicer
for outstanding Monthly Advances and the Servicing Fee (including any unpaid
Servicing Fees for past Distribution Dates). The principal balance of the Notes,
to the extent not previously paid, will be due on the Note Final Scheduled
Distribution Date. The actual date on which the aggregate outstanding principal
amount of the Notes is paid may be earlier than the Note Final Scheduled
Distribution Date based on a variety of factors.
On each Determination Date, the Servicer will determine the amount in the
Collection Account available for distribution on the related Distribution Date
and inform the Indenture Trustee, who shall allocate such amounts between the
Notes and the Certificates and make distributions to Securityholders, all as
described under "The Purchase
S-42
<PAGE>
Agreements and The Trust Documents--Distributions" in the Prospectus. The unpaid
principal balance of the Notes will be payable on the Note Final Scheduled
Distribution Date.
Redemption
[The Notes will be redeemed in part, on a pro rata basis, on the
Distribution Date on or immediately following the last day of the Funding Period
in the event that any portion of the Pre-Funded Amount remains on deposit in the
Pre-Funding Account after giving effect to the purchase of all Subsequent
Contracts, including any such purchase on such date. The aggregate principal
amount of the Notes to be redeemed will be an amount equal to the Pre-Funded
Percentage allocable to the Notes of the amount then on deposit in the
Pre-Funding Account.]
In the event of an Optional Purchase or Auction Sale, the outstanding
Notes will be redeemed in whole, but not in part, at a redemption price equal to
the unpaid principal amount of the Notes plus accrued and unpaid interest
thereon at the Interest Rate. An "Optional Purchase" of all the Contracts by
CITSF, may occur at CITSF's option, on any Distribution Date on which the Pool
Balance as of the last day of the related Due Period is [10]% or less of the
Initial Pool Balance. An "Auction Sale" may occur, and may result in the sale of
the Contracts remaining in the Trust, within ten days following any Distribution
Date on which the Pool Balance as of the last day of the related Due Period is
[5]% or less of the Initial Pool Balance.
Upon the occurrence of an Event of Default under the Indenture, the assets
of the Trust may be sold which may result in early retirement of the Notes. If
the net proceeds from the liquidation of the Contracts (after payment of the
Servicer Payment) and any amounts on deposit in the Note Distribution Account
are not sufficient to pay the principal amount of and accrued interest on the
Notes in full, holders of the Notes will incur a loss. See "The Notes-The
Indenture-Events of Default; Rights Upon Event of Default" in the Prospectus.
[Upon the occurrence of an Insolvency Event with respect to the Affiliated
Purchaser, the Trust shall be terminated and the assets of the Trust will be
sold (unless, within ninety days after such occurrence, the Owner Trustee shall
have received written instructions from (a) each of the Certificateholders
(other than the Affiliated Purchaser) and (b) each of the Noteholders, to the
effect that each such party disapproves of the liquidation of the Contracts and
termination of the Trust). Distributions will be made first, to the payment of
the Servicer Payment, second, to the payment of interest and principal on the
Notes and third, to the payment of interest and principal on the Certificates.
If the net proceeds from the liquidation of the Contracts (after payment of the
Servicer Payment) and any amounts on deposit in the Note Distribution Account
are not sufficient to pay the principal amount of and accrued interest on the
Notes in full, holders of the Notes will incur a loss.
ENHANCEMENT
[Subordination of Certificates. The rights of Certificateholders to
receive distributions of interest and principal are subordinated to the rights
of Noteholders to receive payment in full of all amounts of interest and
principal to which the Noteholders are entitled to receive on the related
Distribution Date. Consequently, no distribution will be made to the
Certificateholders on any Distribution Date in respect of (i) interest until the
full amount of interest and principal on the Notes payable on such Distribution
Date has been distributed to the Noteholders, [other than payments from the Cash
Collateral Account] and (ii) principal until the Notes have been paid in full,
other than distributions in respect of the Principal Liquidation Loss Amount.]
[Cash Collateral Account. The only credit enhancement for the Certificates
is the Cash Collateral Account. With respect to any Distribution Date, the
amount available to be withdrawn from the Cash Collateral Account as payment to
the Certificateholders will not exceed the Available Cash Collateral Amount. The
Available Cash Collateral Amount will be reduced by payments from the Cash
Collateral Account required to be made to the Cash Collateral Depositor pursuant
to the Cash Collateral Agreement and payments previously made therefrom to
Certificateholders and generally will be reduced as the Pool Balance is reduced.
At any time that the Available Cash Collateral Amount is zero, holders of
Certificates will bear the risk of all liquidation losses on the Defaulted
Contracts and may suffer a loss. The Certificate Balance will be reduced to the
extent that prior to the Cross-Over Date distributions are not made in
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<PAGE>
respect of the Principal Loss Liquidation Amount and on or after the Cross-Over
Date distributions are not made in respect of the Principal Distribution Amount.
As a result of such reductions, less interest will accrue on the Certificates
than would otherwise be the case.]
On the Closing Date, the Cash Collateral Account will be established
pursuant to the [Sale and Servicing Agreement] [Pooling and Servicing
Agreement]. The [Owner] Trustee will have the right to withdraw or cause to be
withdrawn payments from the Cash Collateral Account under certain circumstances
specified below. The Cash Collateral Account will be funded on the Closing Date
in the amount of $_________ (the "Initial Cash Collateral Amount") from the
proceeds of a loan (the "Loan") by the Cash Collateral Depositor pursuant to a
Cash Collateral Agreement among the Cash Collateral Depositor, the Trust and the
Servicer (the "Cash Collateral Agreement"). The Cash Collateral Depositor's only
recourse against the Trust for repayment of the Loan is from the Cash Collateral
Account Surplus (as defined herein), certain investment earnings on funds
deposited in the Cash Collateral Account and payments from the Cash Collateral
Account upon maturity of the Loan, in each case as set forth in the Cash
Collateral Agreement.
The Cash Collateral Account will be an Eligible Account (as defined in the
Prospectus). Funds on deposit in the Cash Collateral Account will be invested in
certain investments which satisfy the criteria established by each of the
Ratings Agencies. It is expected that such funds will be invested in debt
obligations of the Cash Collateral Depositor or its affiliates so long as such
obligations satisfy the criteria established by the Rating Agencies. The Cash
Collateral Account and any amounts therein shall be held by or on behalf of the
[Owner] Trustee in accordance with the [Sale and Servicing Agreement] [Pooling
and Servicing Agreement] and the Cash Collateral Agreement for the benefit of
the Certificateholders and the Trust, and as provided in the [Sale and Servicing
Agreement] [Pooling and Servicing Agreement] and the Cash Collateral Agreement.
The Cash Collateral Account will be terminated following the earlier to
occur of (a) the date on which the Certificates are paid in full and any funds
remaining therein have been paid to the Cash Collateral Depositor [or the
Affiliated Purchaser] or (b) the Certificate Final Scheduled Distribution Date.
On each Distribution Date, the amount available to be withdrawn from the
Cash Collateral Account for the benefit of the Certificateholders (the
"Available Cash Collateral Amount") will be equal to the lesser of (i) the
Required Cash Collateral Amount and (ii) the amount on deposit in the Cash
Collateral Account, exclusive of interest and earnings thereon and any
investment losses and expenses and before giving effect to any deposit to be
made to the Cash Collateral Account on such Distribution Date.
On each Determination Date, the Servicer will determine the amounts, if
any, required to be withdrawn from the Cash Collateral Account, up to the
Available Cash Collateral Amount, on the related Distribution Date for payment
to the Certificateholders. The [Owner] Trustee will withdraw or cause to be
withdrawn such amount from the Cash Collateral Account and will deposit or cause
to be deposited such amount into the Certificate Distribution Account on the
Business Day before the Distribution Date with respect to which such withdrawal
was made.
On each Distribution Date, the Servicer will deposit Excess Collections
into the Cash Collateral Account in an amount sufficient to increase the amount
on deposit in the Cash Collateral Account to the Required Cash Collateral Amount
and to make payments of principal and interest on the Loan as required by the
Cash Collateral Agreement. Excess Collections, if any, not so required to be
deposited in the Cash Collateral Account will be paid to [the Affiliated
Purchaser]. On each Distribution Date, the [Owner] Trustee will withdraw or
cause to be withdrawn from the Cash Collateral Account an amount equal to the
amount by which the Available Cash Collateral Amount (after taking into account
any deposits to and withdrawals from the Cash Collateral Account pursuant to the
[Sale and Servicing Agreement] [Pooling and Servicing Agreement] on such
Distribution Date) exceeds the Required Cash Collateral Amount for the next
Distribution Date (the "Cash Collateral Account Surplus") and pay such amount,
to the extent required to make payments of principal and interest on the Loan,
to the Cash Collateral Depositor. Any such amounts paid to the Cash Collateral
Depositor will not be available for distribution to Certificateholders. On each
Distribution Date, the [Owner] Trustee will withdraw from the Cash Collateral
Account and pay to [the Affiliated Purchaser] the balance, if any, of the Cash
Collateral Account Surplus.
In the event that the Certificates are outstanding on the Certificate
Final Scheduled Distribution Date (after taking into account distributions on
such date), the [Owner] Trustee will withdraw or cause to be withdrawn from the
Cash Collateral Account an amount equal to the Certificate Balance, and will
distribute such amount to the
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Certificateholders in retirement of the Certificates, to the extent funds are
available therefor in the Cash Collateral Account.
The Required Cash Collateral Amount with respect to any Distribution Date
will equal ____% of the Pool Balance as of the first day of the related Due
Period, but in no event less than $_________. If, with respect to any
Distribution Date, (a) the average of the principal balance of Contracts _____
days or more delinquent (including Contracts relating to Financed Vehicles that
have been repossessed) as a percentage of the Pool Balance for the _____
preceding Due Periods exceeds ____% or (b) the average of the principal balances
of all Contracts which became Defaulted Contracts, less any net liquidation
proceeds on Defaulted Contracts, expressed as an annualized percentage of the
average outstanding Pool Balance of the _____ preceding Due Periods exceeds
____%, then the Required Cash Collateral Amount with respect to such
Distribution Date shall be ____% of the Pool Balance as of the first day of the
related Due Period, but in no event (i) less than $_________ or (ii) greater
than $_________; provided further that the Required Cash Collateral Amount shall
never be greater than the outstanding balance of Certificates and may be reduced
from time to time if the Rating Agencies shall have given prior written notice
to the Seller, the Servicer and the Issuer that such reduction will not result
in a downgrade or withdrawal of the then current rating of the Notes and the
Certificates.
"Excess Collections" for any Distribution Date will equal the amounts
collected or deposited in respect of the Contracts in the related Due Period and
which are remaining in the Collection Account on such Distribution Date after
taking into account distributions to be made on the Securities and payments and
reimbursements made to the Servicer on such Distribution Date.]
[Reserve Fund. An account (the "Reserve Fund") will be established and
funded by [cash, one or more irrevocable letters of credit, Eligible
Investments, one or more derivative products, amounts otherwise distributable to
one or more classes of Securityholders or to the owners of any Retained Yield
(as defined herein).] [The Reserve Fund will be funded from the Available Amount
remaining on each Distribution Date after all amounts then due have been paid to
the Certificateholders, the Noteholders, if any, the Servicer and any provider
of Enhancement.] [In addition, under certain circumstances the remaining amount
of the Letter of Credit may be drawn by the Trustee or the termination payment
under a derivative product may be demanded by the Trustee, and in each case
deposited in the Reserve Fund.] Funds in the Reserve Fund will be applied,
invested and maintained in the following manner: __________. [Amounts in the
Reserve Fund will be distributed to Securityholders, or applied to reimburse the
Servicer for outstanding advances.] The Reserve Fund will be [established as
part of the Trust] [held outside the Trust] [by a collateral agent] [by the
Trustee].]
[Limited Guarantee. [Certain payments on a class of the Securities of a
series] [Certain deficiencies in principal or interest payments on the
Contracts] [Certain liquidation losses on the Contracts] will be covered by the
limited guarantee (the "Limited Guarantee"), issued by CIT. [CIT will be
obligated to make deposits to an account, make advances or purchase Defaulted
Contracts.] The Limited Guarantee is limited to ___________ and will be
separately allocated to ___________.]
[Credit Facility. [The Securities will be entitled to the benefit of [one
or more letters of credit, guarantees, limited guarantees, surety bonds or
similar credit facilities] (the "Credit Facility"). [The Credit Facility is an
amount equal to $_______]. [The Credit Facility will be held [by the Trustee]
[as part of the Trust] [by a collateral agent]. The provider of the Credit
Facility (the "Credit Facility Provider") is ______________.]
[Liquidity Facility. _____________ (the "Liquidity Facility Provider")
will provide funds to be used to purchase the Securities pursuant to purchase
agreements (the "Liquidity Facility"). The Liquidity Facility will be held
outside of the Trust by the Trustee.]
THE PURCHASE AGREEMENTS AND THE TRUST DOCUMENTS
Distributions
On each Distribution Date, the [Indenture] Trustee will withdraw the
Available Amount from the Collection Account to make the following payments (to
the extent sufficient funds are available therefor) in the following order:
(a) the aggregate amount of any unreimbursed Monthly Advances made
by the Servicer (and which are then due to be reimbursed to the Servicer)
will be paid to the Servicer;
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(b) the Servicing Fee, including any overdue Servicing Fee, will (to
the extent not previously retained by the Servicer) be paid to the
Servicer;
(c) the Note Interest Distribution Amount, including any overdue
Note Interest Distribution Amount, will be deposited into the Note
Distribution Account, for payment to the Noteholders;
(d) on and prior to the Cross-Over Date, the Principal Distribution
Amount, including any overdue Principal Distribution Amount, will be
deposited into the Note Distribution Account, for payment to the
Noteholders;
(e) the Certificate Interest Distribution Amount, including any
overdue Certificate Interest Distribution Amount, will be deposited into
the Certificate Distribution Account, for payment to the
Certificateholders;
(f) prior to the Cross-Over Date, the Principal Liquidation Loss
Amount, if any, will be deposited into the Certificate Distribution
Account, for payment to the Certificateholders;
(g) on and after the Cross-Over Date, the Principal Distribution
Amount, including any overdue Principal Distribution Amount, will be
deposited into the Certificate Distribution Account, for payment to the
Certificateholders;
(h) an amount equal to the sum of (i) the difference between the
Available Cash Collateral Amount and the Required Cash Collateral Amount,
to the extent the Available Cash Collateral Amount is less than the
Required Cash Collateral Amount and (ii) the amount necessary to make
payments of principal and interest on the Loan, to the extent required by
the [Sale and Servicing Agreement] [Pooling and Servicing Agreement] and
the Cash Collateral Agreement, will be deposited into the Cash Collateral
Account; and
(i) the balance, if any, will be distributed to [the Affiliated
Purchaser].
To the extent that the Available Amount is insufficient to satisfy the
distributions set forth in clauses (e), (f) or (g) above on any Distribution
Date, the [Owner] Trustee will withdraw or cause to be withdrawn from the Cash
Collateral Account, to the extent available, the difference between the
aggregate amounts described in clauses (e), (f) and (g) and the Available Amount
remaining after payment of the amounts described in clauses (a), (b), (c) and
(d). Any amount so withdrawn from the Cash Collateral Account by or on behalf of
the [Owner] Trustee will be deposited into the Certificate Distribution Account
for distribution to the Certificateholders.
[The Affiliated Purchaser may at any time, without consent of the
Securityholders, sell, transfer, convey or assign in any manner its rights to
receive the distributions to be made pursuant to clause (i) above provided that
(i) the Rating Agency Condition is satisfied, (ii) the Affiliated Purchaser
provides to the Trustees an opinion of counsel from independent counsel that
such action will not cause the related Trust to be classified as an association
(or publicly traded partnership) taxable as a corporation for federal income tax
purposes and (iii) such transferee or assignee agrees in writing to take
positions for federal income tax purposes consistent with the federal income tax
positions agreed to be taken by the Affiliated Purchaser.]
Servicing Compensation
The Servicer will be entitled to receive, out of collections on the
Contracts, a monthly fee (the "Servicing Fee") for each Due Period, payable on
the following Distribution Date, equal to the sum of (i) one-twelfth of the
product of [0.75]% (the "Servicing Fee Rate") and the Pool Balance as of the
last day of the second preceding Due Period (or, in the case of the first
Distribution Date, as of the Initial Cut-off Date) and (ii) any investment
earnings (net of investment expenses and losses) on amounts on deposit in the
Collection Account, the Note Distribution Account and the Certificate
Distribution Account; provided, however, that the Servicing Fee Rate shall be
[_____%] [a rate determined at the time of the appointment of a successor
Servicer but not to exceed _____%] if CITSF or an affiliate thereof is not the
Servicer.
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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 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
Certain Federal Tax Consequences with Respect to the Notes
Tax Characterization of the Notes and the Trust. Schulte Roth & Zabel has
advised the Trust that, based on the terms of the Notes and the transactions
relating to the Contracts as set forth herein, the Notes will be treated as debt
for Federal income tax purposes. However, there is no specific authority with
respect to the characterization for Federal income tax purposes of securities
having the same terms as the Notes.
Schulte Roth & Zabel is also of the opinion that, based on the applicable
provisions of the Trust Documents and related documents, for Federal income tax
purposes, (i) the Trust will not be classified as an association taxable as a
corporation and (ii) the Trust will not be treated as a publicly traded
partnership taxable as a corporation. However, there are no authorities directly
dealing with similar transactions. If the IRS were to successfully characterize
the Trust as an association taxable as a corporation for Federal income tax
purposes, the income from the Contracts (reduced by deductions, possibly
including interest on the Notes) would be subject to Federal income tax at
corporate rates, which could reduce the amounts available to make payments on
the Notes. Likewise, if the Trust were subject to state or local income or
franchise tax, the amount of cash available to make payment on the Notes could
be reduced.
If, contrary to the opinion of Schulte Roth & Zabel, the IRS successfully
asserted that the Notes were not debt for Federal income tax purposes, the Notes
might be treated as equity interests in the Trust. If so, the Trust might be
taxable as a corporation with the adverse consequences described above (and the
taxable corporation would not be able to deduct interest on the Notes). The
remainder of this discussion assumes that the Notes will be treated as debt and
that the Trust will not be taxable as a corporation.
Interest Income on the Notes. The stated interest on the Notes will be
taxable to a Noteholder as ordinary income when received or accrued in
accordance with such Noteholder's method of tax accounting. Some or all of the
Notes may be issued with "original issue discount" within the meaning of Section
1273 of the Code ("OID"). The amount of OID on the Notes will equal the
difference between the issue price and the principal amount of the Notes unless
the OID is less then a statutorily defined de minimus amount.
OID will accrue to the Noteholders over the life of the Notes, taking
account of a reasonable prepayment assumption, based on a constant yield to
maturity method, using semi-annual compounding, and properly adjusted for actual
prepayments on the Contracts. The portion of OID that accrues during the time a
Noteholder owns the Notes (i) constitutes interest includable in the
Noteholder's gross income for federal income tax purposes and (ii) is added to
the Noteholder's tax basis for purposes of determining gain or loss on the
maturity, redemption, prior sale, or other
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disposition of the Notes. Thus, the effect of OID is to increase the amount of
taxable income above the actual interest payments during the life of the Notes.
Sale or Other Disposition. If a Noteholder sells a Note, the holder will
recognize gain or loss in an amount equal to the difference between the amount
realized on the sale and the holder's adjusted tax basis in the Note. The
adjusted tax basis of a Note to a particular Noteholder will equal the holder's
cost for the Note, increased by any OID, market discount and gain previously
included by such Noteholder in income with respect to the Note and decreased by
the amount of any bond premium previously amortized and by the amount of
principal payments previously received by such Noteholder with respect to such
Note. Subject to the rules of the Code concerning market discount on the Notes,
any such gain or loss will be capital gain or loss if the Note was held as a
capital asset. Capital losses generally may be deducted to the extent the
Noteholder has capital gains for the taxable year, and non-corporate Noteholders
can deduct a limited amount of such losses in excess of available capital gains.
Foreign Holders. If interest paid (or accrued) to a Noteholder who is a
nonresident alien, foreign corporation or other non-United States person (a
"foreign person") is not effectively connected with the conduct of a trade or
business within the United States by the foreign person, the interest generally
will be considered "portfolio interest," and generally will not be subject to
United States Federal income tax and withholding tax, if the foreign person (i)
is not actually or constructively a "10 percent shareholder" of the Trust
(including a holder of 10% of the outstanding Certificates) or the Affiliated
Purchaser nor a "controlled foreign corporation" with respect to which the Trust
or the Affiliated Purchaser is a "related person" within the meaning of the Code
and (ii) provides the person otherwise required to withhold U.S. tax with an
appropriate statement, signed under penalties of perjury, certifying that the
beneficial owner of the Note is a foreign person and providing the foreign
person's name and address. If the information provided in the statement changes,
the foreign person must so inform the person otherwise required to withhold U.S.
tax within 30 days of such change. The statement generally must be provided in
the year a payment occurs or in either of the two preceding years. If a Note is
held through a securities clearing organization or certain other financial
institutions, the organization or institution may provide a signed statement to
the withholding agent. However, in that case, the signed statement must be
accompanied by a Form W-8 or substitute form provided by the foreign person that
owns the Note. If such interest is not portfolio interest, then any payment of
such interest will be subject to United States Federal withholding tax at a rate
of 30%, unless reduced or eliminated pursuant to an applicable income tax
treaty.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Note by a foreign person will be exempt from United
States Federal income and withholding tax, provided that (i) the gain is not
effectively connected with the conduct of a trade or business in the United
States by the foreign person and (ii) in the case of an individual foreign
person, the foreign individual is not present in the United States for 183 days
or more in the taxable year or does not have a tax home in the United States.
If the interest, gain or income on a Note held by a foreign person is
effectively connected with the conduct of a trade or business in the United
States by the foreign person (although exempt from the withholding tax
previously discussed if the holder provides an appropriate statement), the
holder generally will be subject to United States Federal income tax on the
interest, gain or income at regular Federal income tax rates. In addition, if
the foreign person is a foreign corporation, it may be subject to a branch
profits tax equal to 30% of its "effectively connected earnings and profits"
within the meaning of the Code for the taxable year, as adjusted for certain
items, unless it qualifies for a lower rate under an applicable income tax
treaty (as modified by the branch profits tax rules).
On April 15, 1996, the IRS issued proposed Treasury Regulations that would
revise the procedures for securing an exemption from the 30% United States
Federal withholding tax (the "Proposed Regulations"). If adopted in final form,
the Proposed Regulations would apply to payments made after December 31, 1997,
and would replace current IRS Forms W-8, 1001 and 4224 with a single form which
would be called a Form W-8. The Proposed Regulations would also provide certain
alternative means for qualifying for interest withholding exemptions.
Information Reporting and Backup Withholding. The Trust will be required
to report annually to the IRS, and to each Noteholder of record, the amount of
interest paid on the Notes (and the amount of accrued OID, if any, and interest
withheld for Federal income taxes, if any) for each calendar year, except as to
exempt holders (generally, holders that are corporations, tax-exempt
organizations, qualified pension and profit-sharing trusts, individual
retirement accounts, or nonresident aliens who provide certification as to their
status as nonresidents). Accordingly, each holder (other than exempt holders who
are not subject to the reporting requirements) will be required to provide,
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under penalties of perjury, a certificate containing the holder's name, address,
correct Federal taxpayer identification number and a statement that the holder
is not subject to backup withholding. Should a non-exempt Noteholder fail to
provide the required certification, the Trust will be required to withhold 31%
of the amount otherwise payable to the holder, and remit the withheld amount to
the IRS as a credit against the holder's Federal income tax liability.
If the Proposed Regulations are adopted in final form, certain corporate
holders of Notes would be required to provide documentation to payors that
indices or certifies the holders' corporate status (and therefore its exemption
from information reporting and backup withholding).
Certain Federal Tax Consequences with Respect to the Certificates
Tax Characterization of the Trust. The Affiliated Purchaser and the
Servicer have agreed, and the Certificateholders will agree by their purchase of
Certificates, to treat the Trust as a partnership for purposes of Federal income
tax, with the assets of the partnership being the assets held by the Trust, the
partners of the partnership being the Certificateholders and the Notes being
debt of the partnership. However, the proper characterization of the arrangement
involving the Trust, the Certificates, the Notes, the Affiliated Purchaser, and
the Servicer is not clear because there is no authority on transactions closely
comparable to that contemplated herein.
If the Trust were held to be an "association" taxable as a corporation for
Federal income tax purposes, rather than a partnership, the Trust would be
subject to a corporate level income tax. Any such corporate income tax could
materially reduce or eliminate cash that would otherwise be distributable with
respect to the Certificates (and Certificateholders could be liable for any such
tax that is unpaid by the Trust). See also the discussion above under "--Certain
Federal Tax Consequences with Respect to the Notes--Tax Characterization of the
Notes and the Trust." However, in the opinion of Schulte Roth & Zabel, the Trust
will not be classified as an association taxable as a corporation because of the
nature of its income and because it will not have certain "corporate"
characteristics necessary for a business trust to be an association taxable as a
corporation.
Nonetheless, because of the lack of cases or rulings on similar
transactions, a variety of alternative characterizations are possible in
addition to the position to be taken by Certificateholders that the Certificates
represent equity interests in a partnership. For example, because the
Certificates have certain features characteristic of debt, the Certificates
might be considered debt of the Trust or of the Seller. The remainder of this
summary assumes that the Certificates represent equity interests in a
partnership that owns the Contracts.
Partnership Taxation. As a partnership, the Trust will not be subject to
federal income tax, but each Certificateholder will be required to separately
take into account such holder's allocated share of income, gains, losses,
deductions and credits of the Trust. In certain instances, however, the Trust
could have an obligation to make payments of withholding tax on behalf of a
Certificateholder. See "--Backup Withholding" and "--Tax Consequences to Foreign
Owners of Certificates." The Trust's income will consist primarily of interest
accrued on the Contracts including appropriate adjustments for market discount
(as discussed below), and any original issue discount and bond premium),
investment income from investments in the Trust Accounts and Certificate
Distribution Account and any gain upon collection or disposition of the
Contracts. The Trust's deductions will consist primarily of interest accruing
with respect to the Notes, servicing and other fees and losses or deductions
upon collection or disposition of the Contracts.
The tax items of a partnership are allocable to the partners in accordance
with the Code, Treasury regulations and the partnership agreement (here, the
Trust Agreement and Related Documents). The Trust Agreement will provide that
the Certificateholders will be allocated taxable income of the Trust for each
Interest Period equal to the sum of (i) the amount of interest that accrues on
the Certificates for such Interest Accrual Period based on the Certificate Rate;
(ii) an amount equivalent to interest that accrues during such Interest Accrual
Period on amounts previously due on the Certificates but not yet distributed;
and (iii) any Trust income attributable to discount on the Contracts that
corresponds to any excess of the principal amount of the Certificates over their
initial issue price. All remaining taxable income of the Trust will be allocated
to the Affiliated Purchaser. It is believed that this allocation will be valid
under applicable Treasury regulations, although no assurance can be given that
the IRS would not require a greater amount of income to be allocated to
Certificateholders. Moreover, under the foregoing method of allocation, holders
may be allocated income greater than the amount of interest accruing on the
Certificates based on the Pass-Through Rate or may be allocated income greater
than the amount of cash distributed to them.
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An individual taxpayer may generally deduct miscellaneous itemized
deductions (which do not include interest expenses) only to the extent they
exceed two percent of the individual's adjusted gross income. Those limitations
would apply to an individual Certificateholder's share of expenses of the Trust
(including fees paid to the Servicer) and might result in such holder having net
taxable income that exceeds the amount of cash actually distributed to such
holder over the life of the Trust. In addition, Section 68 of the Code provides
that the amount of certain itemized deductions otherwise allowable for the
taxable year of an individual whose adjusted gross income exceeds an
inflation-adjusted threshold amount specified in the Code ($176,956 for taxable
years beginning in 1996, in the case of a joint return) will be reduced by the
lesser of (i) 3% of the excess of adjusted gross income over the specified
threshold amount or (ii) 80% of the amount of itemized deduction otherwise
allowable for such taxable year.
The Trust intends to make all tax calculations relating to income and
allocations to Certificateholders on an aggregate basis. If the IRS were to
require that such calculations be made separately for each of the Contracts, the
Trust might be required to incur additional expense, but it is believed that
there would not be a material adverse effect on Certificateholders.
Market Discount. To the extent that the Contracts are purchased by the
Trust for a price that is less than the aggregate stated redemption price at
maturity of the Contracts, the Trust must account for "market discount" on the
Contracts pursuant to Section 1276 of the Code. Any market discount will be
accounted for each of the Contracts on an individual basis, and the Trust will
make an election to calculate such market discount as it economically accrues.
Any income resulting from the accrual of market discount will be allocated to
the Certificateholders as described above.
Original Issue Discount and Bond Premium. It is believed that the
Contracts were not and will not be issued with OID or at a premium, and,
therefore, the Trust should not have OID income or amortizable bond premium.
Section 708 Termination. Under Section 708 of the Code, a partnership will
be deemed to terminate for Federal income tax purposes if 50% or more of the
capital and profits interests in the partnership are sold or exchanged within a
12-month period. If such a termination occurs, the partnership will be
considered to distribute its assets to the partners, who would then be treated
as recontributing those assets to a new partnership. The Trust may not comply
with certain technical requirements that might apply when such a constructive
termination occurs. As a result, the Trust may be subject to certain tax
penalties and may incur additional expenses if it is required to comply with
those requirements. Furthermore, the Trust might not be able to comply due to
lack of data.
Disposition of Certificates. Generally, capital gain or loss will be
recognized on a sale of a Certificate in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificate sold.
A Certificateholder's tax basis in a Certificate will generally equal his cost
increased by his share of Trust income that is includable in his gross income
and decreased by any distributions received with respect to such Certificate. In
addition, both the tax basis in the Certificate and the amount realized on a
sale of a Certificate would include the holder's share of the Notes and other
liabilities of the Trust. A holder acquiring Certificates at different prices
may be required to maintain a single aggregate adjusted tax basis in such
Certificates, and, upon sale or other disposition of some of the Certificates,
allocate a pro rata portion of such aggregate tax basis to the Certificates sold
(rather than maintaining a separate tax basis in each Certificate for purposes
of computing gain or loss on a sale of that Certificate).
Any gain on the sale of a Certificate attributable to the holder's share
of unrecognized accrued market discount on the Contracts would generally be
treated as ordinary income to the holder and would give rise to special tax
reporting requirements. The Trust does not expect to have any other assets that
would give rise to such special reporting requirements. Thus, to avoid these
special reporting requirements, the Trust will elect to include any such market
discount in income as it accrues.
If a Certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed miscellaneous itemized
deductions described above) over the life of the Certificates that exceeds the
aggregate cash distributions with respect thereto, such excess will generally
give rise to a capital loss upon the retirement of the Certificates.
Allocations Between Transferor and Transferee. In general, the Trust's
taxable income and losses will be determined monthly and the tax items for a
particular calendar month will be apportioned among the Certificateholders in
proportion to the principal amount of Certificates owned by them as of the close
of the last day of such month. As a result, a holder purchasing Certificates may
be allocated tax items (which will affect the tax liability and tax basis of the
holder) attributable to periods before the actual purchase takes place.
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The use of such a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed (or is allowed only for
transfers of less than all of the partner's interest), taxable income or losses
of the Trust might be reallocated among the Certificateholders. The Affiliated
Purchaser is authorized to revise the Trust's method of allocation between
transferors and transferees to conform to a method permitted by any future
authority.
Section 754 Election. In the event that a Certificateholder sells a
Certificate at a profit (or loss), the purchasing Certificateholder will have a
higher (or lower) basis in the Certificate than the selling Certificateholder
had. The tax basis of the Trust's assets will not be adjusted to reflect that
higher (or lower) basis unless the Trust files an election under Section 754 of
the Code. In order to avoid the administrative complexities that would be
involved in keeping accurate accounting records, as well as potentially onerous
information reporting requirements, the Trust will not make such an election. As
a result, Certificateholders might be allocated a greater or lesser amount of
Trust income than would be appropriate based on their own purchase price for
Certificates.
Administrative Matters. The Servicer, on behalf of the Trust, is required
to keep or cause to be kept complete and accurate books of the Trust. Such books
will be maintained for financial reporting and tax purposes on an accrual basis
and the taxable year of the Trust will be the calendar year. The Affiliated
Purchaser will file a partnership information return (IRS Form 1065) with the
IRS for each taxable year of the Trust and will report to holders (and to the
IRS) each Certificateholder's allocable share of items of Trust income and
expense on Schedule K-1. The Trust will provide the Schedule K-1 information to
nominees that fail to provide the Trust with the information statement described
below and such nominees will be required to forward such information to the
beneficial owners of the Certificates. Generally, holders must file tax returns
that are consistent with the information returns filed by the Trust or be
subject to penalties unless the holder notifies the IRS of all such
inconsistencies.
Under Section 6031 of the Code, any person that holds Certificates as a
nominee on behalf of another person at any time during a calendar year is
required to furnish the Trust with a statement containing certain information on
the nominee, the beneficial owners and the Certificates so held. Such
information includes (i) the name, address and taxpayer identification number of
the nominee and (ii) as to each beneficial owner (x) the name, address and
taxpayer identification number of such person, (y) whether such person is a
United States person, a tax-exempt entity or a foreign government, an
international organization, or any wholly owned agency or instrumentality of
either of the foregoing and (z) certain information concerning Certificates that
were held, acquired or transferred on behalf of such person throughout the year.
In addition, brokers and financial institutions that hold Certificates through a
nominee are required to furnish directly to the Trust information as to
themselves and their ownership of Certificates. A clearing agency registered
under Section 17A of the Exchange Act that holds Certificates as a nominee is
not required to furnish any such information statement to the Trust. The
information referred to above for any calendar year must be furnished to the
Trust on or before the following January 31. Nominees, brokers and financial
institutions that fail to provide the Trust with the information described above
may be subject to penalties. The Trust will provide the Schedule K-1 information
to nominees that fail to provide the Trust with the information described above
and such nominees will be required to forward such information to the beneficial
owners of the Certificates.
The Affiliated Purchaser, as the "tax matters partner," will be
responsible for representing the Certificateholders in any dispute with the IRS
with respect to partnership items. The Code provides for administrative
examination of a partnership as if the partnership were a separate and distinct
taxpayer. Generally, the statute of limitations for partnership items does not
expire before three years after the date on which the partnership information
return is filed. Any adverse determination following an audit of the return of
the Trust by the appropriate taxing authorities could result in an adjustment of
the returns of the Certificateholders, and, under certain circumstances, a
Certificateholder may be precluded from separately litigating a proposed
adjustment to the items of the Trust. An adjustment could also result in an
audit of a Certificateholder's returns and adjustments of items not related to
the income and losses of the Trust.
Backup Withholding. Distributions made on the Certificates and proceeds
from the sale of the Certificates may be subject to a "backup" withholding tax
of 31% if, in general, the Certificateholder fails to comply with certain
identification procedures, unless the holder is an exempt recipient under
applicable provisions of the Code.
Tax Consequences to Foreign Owners of Certificates. As discussed below, an
investment in a Certificate is not suitable for any non-U.S. person which is not
eligible for a complete exemption from U.S. withholding tax on interest under a
tax treaty with the United States. Accordingly, no interest in a Certificate
should be acquired by or on behalf of any such non-U.S. person.
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No regulations, published rulings or judicial decisions exist that would
discuss the characterization for Federal withholding tax purposes with respect
to non-U.S. persons of a partnership with activities substantially the same as
the Trust. However, it is not expected that the trust would be considered to be
engaged in a trade or business in the United States for purposes of Federal
withholding taxes with respect to non-U.S. persons. If the Trust were considered
to be engaged in a trade or business in the United States for such purposes, the
income of the Trust distributable to a non-U.S. person would be subject to
Federal withholding tax at a rate of 35% for persons taxable as a corporation
and 39.6% for all other non-U.S. persons. Also, in such cases, a non-U.S. owner
of a Certificate that is a corporation may be subject to the branch profits tax.
If the Trust is notified that an owner of a Certificate is a foreign person, the
Trust may withhold as if it were engaged in a trade or business in the United
States in order to protect the Trust from possible adverse consequences of a
failure to withhold. Subsequent adoption of Treasury regulations or the issuance
of other administrative pronouncements may require the Trust to change its
withholding procedures.
Each foreign owner of a Certificate might be required to file a U.S.
individual or corporate income tax return (including in the case of a
corporation, the branch profits tax) on its share of the Trust's income. Each
foreign owner of a Certificate must obtain a taxpayer identification number from
the IRS and submit that number to the withholding agent on Form W-8 in order to
assure appropriate crediting of any taxes withheld. A foreign owner of a
Certificate generally would be entitled to file with the IRS a claim for refund
with respect to withheld taxes, taking the position that no taxes were due
because the Trust was not engaged in a U.S. trade or business. However, interest
payments made to (or accrued by) an owner of a Certificate who is a foreign
person may be considered guaranteed payments to the extent such payments are
determined without regard to the income of the Trust and for that reason or
because of the nature of the Contracts, the interest will likely not be
considered "portfolio interest." As a result, even if the Trust is not
considered to be engaged in a U.S. trade or business, foreign owners of
Certificates will likely be subject to United States Federal income tax which
must be withheld at a rate of 30 percent on their share of the Trust's income
(without reduction for interest expense), unless reduced or eliminated pursuant
to an applicable income tax treaty. If the Trust is notified that an owner of a
Certificate is a foreign person, the Trust may be required to withhold and pay
over such tax, which can exceed the amounts otherwise available for distribution
to such owner. A foreign owner would generally be entitled to file with the IRS
a refund claim for such withheld taxes, taking the position that the interest
was portfolio interest and therefore not subject to U.S. tax. However, the IRS
may disagree and no assurance can be given as to the appropriate amount of tax
liability. As a result, each potential foreign owner of a Certificate should
consult its tax advisor as to whether the tax consequences of holding an
interest in a Certificate make it an unsuitable investment. For additional
information concerning proposed regulations which would modify the procedures
that a beneficial owner of Certificate must comply with to avoid United States
withholding tax on payments to such owner, see the discussion above under
"Certain Federal Tax Consequences with Respect to the Notes--Foreign Holders."
[Original Issue Discount]
The Class __ Certificates will be issued with original issue discount for
federal income tax purposes. The Class __ Certificates may be issued at a
premium. For purposes of determining the amount and rate of accrual of original
issue discount and market discount, the Company intends to assume that there
will be prepayments on the Contracts at a rate equal to __% CPR. No
representation is made as to whether the Contracts will prepay at that rate or
any other rate. See "Yield and Prepayment Considerations" herein and "Certain
Federal Income Tax Consequences" in the Prospectus. If the holders of the Class
__ Certificates are treated as holding such Certificates at a premium, such
holders should consult their tax advisors regarding the election to amortize
bond premium and the method to be employed.
PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in the Underwriting
Agreement (the "Underwriting Agreement") among CITSF, the Company and __________
and ___________ (the "Underwriters"), the Company has agreed to sell to the
Underwriters, and the Underwriters have agreed to purchase, the respective
principal amount of the Certificates [and the Notes] offered hereby, as set
forth opposite their respective names below:
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Principal Principal
Amount Amount
of Notes of Certificates
-------- ---------------
_______________ $ $
_______________ $ $
------------ ---------------
Total................................ $ $
============ ===============
The Underwriting Agreement provides that the obligation of the
Underwriters to pay for and accept delivery of the Certificates [or Notes] is
subject to the approval of certain legal matters by their counsel and to certain
other conditions. The Underwriters are obligated to take and pay for all of the
Certificates [and Notes] if any are taken.
The Underwriters have advised the Company that they propose to offer the
Certificates [and Notes] directly to the public at the public offering price set
forth on the cover page hereof and to certain dealers at a price that represents
a concession not in excess of ____% of the principal balance of the Certificates
and [not in excess of ___% of the principal amount of the Notes]. The
Underwriters may allow, and such dealers may reallow, a concession not in excess
of ____% of the principal balance of the Certificates and [not in excess of
____% of the principal amount of the Notes] to certain other dealers. After the
initial public offering, the public offering price and concessions and discounts
to dealers may be changed by the Underwriters.
CITSF has agreed to indemnify the Underwriters against certain
liabilities, including civil liabilities under the Securities Act or to
contribute to payments which the Underwriters may be required to make in respect
thereof.
The Trust may, from time to time, invest the funds of the Trust in
Eligible Investments acquired from the Underwriters.
[The closing of the sale of the Notes is conditioned on the closing of the
sale of the Certificates, and the closing of the sale of the Certificates is
conditioned on the closing of the sale of the Notes.]
RATINGS
It is a condition to the issuance of the Securities that the Securities be
rated ____ by _________ and ____ by ________ (each, a "Rating Agency"). [The
ratings of the Notes will be based primarily on the value of the Initial
Contracts, the Pre-Funding Account, and the terms of the Securities, including
the subordination provided by the Certificates. The ratings of the Certificates
will be based primarily on the Cash Collateral Account.] The foregoing ratings
do not address the likelihood that the Securities will be retired following the
sale of the Contracts by the Trustee. A security rating is not a recommendation
to buy, sell or hold securities and may be subject to revision or withdrawal at
any time by the assigning rating agency. The security ratings of the Securities
should be evaluated independently of similar security ratings assigned to other
kinds of securities.
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Schulte Roth &
Zabel LLP, 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 LLP. [Certain legal matters will be
passed upon for CIT by its Executive Vice President and General Counsel, Ernest
Stein, Esq.]
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ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX
DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Notes of CIT
RV Trust 199__-__ (the "Global Securities") will be available only in book-entry
form. Investors in the Global Securities may hold such Global Securities through
any of DTC, Cedel or Euroclear. The Global Securities will be tradable as home
market instruments in both the European and U.S. domestic markets. Initial
settlement and all secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities
through Cedel and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Notes will be effected on a delivery-against payment basis
through the respective Depositories of Cedel and Euroclear (in such capacity)
and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their Participants.
Initial Settlement
All Global Securities will be held in book-entry form by DTC in the name
of Cede as nominee of DTC. Investors' interests in the Global Securities will be
represented through financial institutions acting on their behalf as direct and
indirect Participants in DTC. As a result, Cedel and Euroclear will hold
positions on behalf of their Participants through their respective Depositories,
which in turn will hold such positions in accounts as DTC Participants.
Investors electing to hold their Global Securities through DTC will follow
the settlement practices specified by the Underwriters. Investor securities
custody accounts will be credited with their holdings against payment in
same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global securities
and no "lock-up" or restricted period. Global Securities will be credited to the
securities custody accounts on the settlement date against payment in same-day
funds.
Secondary Market Trading
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to insure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled in same-day funds.
Trading between Cedel and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC Seller and Cedel or Euroclear Purchaser. When Global
Securities are to be transferred from the account of a DTC Participant to the
account of a Cedel Participant or a Euroclear Participant, the purchaser will
send instructions to Cedel or Euroclear through a Cedel Participant or Euroclear
Participant at least one business day prior to settlement. Cedel or Euroclear
will instruct the respective Depository, as the case may be, to receive the
Global Securities against payment. Payment will include interest accrued on the
Global Securities from and including the last coupon payment date to and
excluding the settlement date, on the basis of the actual number of days in such
accrual period and year assumed to consist of 360 days. For transactions
settling on the 31st of the month, payment will
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include interest accrued to and excluding the first day of the following month.
Payment will then be made by the respective Depository of the DTC Participant's
account against delivery of the Global Securities. After settlement has been
completed, the Global Securities will be credited to the respective clearing
system and by the clearing system, in accordance with its usual procedures, to
the Cedel Participant's or Euroclear Participant's account. The securities
credit will appear the next day (European time) and the cash debt will be
back-valued to, and the interest on the Global Securities will accrue from, the
value date (which would be the preceding day when settlement occurred in New
York). If settlement is not completed on the intended value date (i.e., the
trade fails), the Cedel or Euroclear cash debt will be valued instead as of the
actual settlement date.
Cedel Participants and Euroclear Participants will need to make available
to the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to preposition funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Cedel or Euroclear. Under this approach,
they may take on credit exposure to Cedel or Euroclear until the Global
Securities are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, Cedel Participants or Euroclear Participants can elect not to preposition
funds and allow that credit line to be drawn upon the finance settlement. Under
this procedure, Cedel Participants or Euroclear Participants purchasing Global
Securities would incur overdraft charges for one day, assuming they cleared the
overdraft when the Global Securities were credited to their accounts. However,
interest on the Global Securities would accrue from the value date. Therefore,
in many cases the investment income on the Global Securities earned during that
one-day period may substantially reduce or offset the amount of such overdraft
charges, although this result will depend on each Cedel Participant's or
Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective European Depository for the benefit of Cedel Participants or
Euroclear Participants. The sale proceeds will be available to the DTC seller on
the settlement date. Thus, to the DTC Participants a cross-market transaction
will settle no differently than a trade between two DTC Participants.
Trading between Cedel or Euroclear Seller and DTC Purchaser. Due to time
zone differences in their favor, Cedel Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing system, through the
respective Depository, to a DTC Participant. The seller will send instructions
to Cedel or Euroclear through a Cedel Participant or Euroclear Participant at
least one business day prior to settlement. In these cases Cedel or Euroclear
will instruct the respective Depository, as appropriate, to deliver the Global
Securities to the DTC Participant's account against payment. Payment will
include interest accrued on the Global Securities from and including the last
payment to and excluding the settlement date on the basis of the actual number
of days in such accrual period and a year assumed to consist of 360 days. For
transactions settling on the 31st of the month, payment will include interest
accrued to and excluding the first day of the following month. The payment will
then be reflected in the account of the Cedel Participant or Euroclear
Participant the following day, and receipt of the cash proceeds in the Cedel
Participant's or Euroclear Participant's account would be back-valued to the
value date (which would be the preceding day, when settlement occurred in New
York). Should the Cedel Participant or Euroclear Participant have a line of
credit with its respective clearing system and elect to be in debt in
anticipation of receipt of the sale proceeds in its account, the back-valuation
will extinguish any overdraft incurred over that one-day period. If settlement
is not completed on the intended value date (i.e., the trade fails), receipt of
the cash proceeds in the Cedel Participant's or Euroclear Participant's account
would instead be valued as of the actual settlement date.
Finally, day traders that use Cedel or Euroclear and that purchase Global
Securities from DTC Participants for delivery to Cedel Participants or Euroclear
Participants should note that these trades would automatically fail on the sale
side unless affirmative action were taken. At least three techniques should be
readily available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedel or Euroclear
accounts) in accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC
Participant no later than one day prior to settlement, which would give
the Global Securities sufficient time to be reflected in their Cedel or
Euroclear account in order to settle the sale side of the trade; or
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(c) staggering the value dates for the buy and sell sides of the
trade so that the value date for the purchase from the DTC Participant is
at least one day prior to the value date for the sale to the Cedel
Participant or Euroclear Participant.
Certain U.S. Federal Withholding Taxes and Documentation Requirements
A beneficial owner of Global Securities through Cedel or Euroclear (or
through DTC if the holder has an address outside the U.S.) will be subject to
30% U.S. withholding tax that generally applies to payments of interest
(including original issue discount) on registered debt issued by U.S. Persons,
unless (i) each clearing system, bank or other financial institution that holds
customer's securities in the ordinary course of its trade or business in the
chain of intermediaries between such beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements and
(ii) such beneficial owners take one of the following steps to obtain an
exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of Global
Securities that are non-U.S. Persons can obtain a complete exemption from the
withholding tax by filing a signed Form W-8 (Certificate of Foreign Status). If
the information shown on Form W-8 changes, a new Form W-8 must be filed within
30 days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are beneficial owners of Global
Securities residing in a country that has a tax treaty with the United States
can obtain an exemption or reduced tax rate (depending on the treaty terms) by
filing Form 1001 (Ownership, Exemption or Reduced Rate Certificate). If the
treaty provides for a reduced rate, withholding tax will be imposed at that rate
unless the filer alternatively files Form W-8. Form 1001 may be filed by the
Noteholder or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The holder of a Global
Securities or, in the case of a Form 1001 or a Form 4224 filer, his agent, files
by submitting the appropriate form to the person through whom it holds (the
clearing agency, in the case of persons holding directly on the books of the
clearing agency). Form W-8 and Form 1001 are effective for three calendar years
and Form 4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any political subdivision thereof or (iii) an estate or trust
the income of which is includable in gross income for United States tax
purposes, regardless of its source. This summary of documentation requirements
does not deal with all aspects of U.S. Federal income tax withholding that may
be relevant to foreign holders of the Global Securities. Investors are advised
to consult their own tax advisors for specific tax advice concerning their
holding and disposing of the Global Securities.
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INDEX OF PRINCIPAL TERMS
ABS...........................................................................32
ABS Table.....................................................................32
Affiliated Purchaser..........................................................19
Available Amount...............................................................9
Available Cash Collateral Amount..........................................13, 44
Bankruptcy Code...............................................................19
Business Day...............................................................8, 39
Capitalized Interest Account...............................................7, 29
Cash Collateral Account.......................................................13
Cash Collateral Account Surplus...........................................15, 44
Cash Collateral Agreement.................................................13, 44
Cash Collateral Depositor.....................................................13
Cede.......................................................................4, 39
Cedel...............................................................1, 4, 22, 41
Certificate Balance........................................................9, 34
Certificate Final Scheduled Distribution Date..................................8
Certificate Interest Distribution Amount......................................40
Certificate Owner.........................................................22, 39
Certificate Owners.............................................................4
Certificate Pool Factor.......................................................34
Certificates...............................................................1, 39
CIT........................................................................3, 19
CITCF-NY.......................................................................5
CITSF......................................................................3, 19
Closing Date...................................................................5
Code..........................................................................18
Commission....................................................................41
Company.................................................................1, 3, 19
Contract Files................................................................23
Contract Pool.................................................................24
Contract Rate.................................................................26
Contracts...............................................................2, 5, 25
Credit Facility...............................................................45
Credit Facility Provider......................................................45
Cross-Over Date...............................................................10
Dealers........................................................................5
Defaulted Contract............................................................42
Deposit Date..................................................................22
Depository....................................................................22
Determination Date.............................................................8
Distribution Date.......................................................2, 8, 39
DTC........................................................................1, 22
Due Period.................................................................8, 39
ERISA.........................................................................18
Euroclear...................................................................1, 4
Excess Collections........................................................14, 45
Financed Vehicles...........................................................2, 5
Funding Period.............................................................7, 28
Indenture..................................................................4, 41
Indenture Trustee.......................................................1, 3, 41
Initial Cash Collateral Amount............................................13, 44
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Initial Contracts.......................................................1, 4, 25
Initial Cut-off Date...........................................................1
Initial Cut-off Date...........................................................5
Initial Cut-off Date Pool Principal Balance...................................25
Initial Financed Vehicles...................................................1, 4
Initial Pool Balance..................................................16, 41, 47
Insolvency Laws...............................................................20
Interest Accrual Period....................................................8, 40
Interest Rate.............................................................12, 42
Interest Shortfall............................................................15
Issuer..................................................................1, 3, 23
Limited Guarantee.............................................................45
Liquidity Facility............................................................45
Liquidity Facility Provider...................................................45
Loan......................................................................13, 44
Monthly Advance...............................................................15
Net Losses....................................................................37
Non-Reimbursable Payment......................................................16
Note Final Scheduled Distribution Date.........................................8
Note Interest Distribution Amount.............................................42
Note Owner................................................................22, 41
Note Owners....................................................................4
Note Pool Factor..............................................................34
Notes...................................................................1, 4, 41
Obligor.......................................................................15
OID...........................................................................47
Original Certificate Balance...............................................3, 23
Owner Trustee...........................................................1, 3, 23
Paid-Ahead Contract...........................................................31
Paid-Ahead Period.............................................................31
Pass-Through Rate..............................................................2
Pass-Through Rate..........................................................9, 39
Permitted Investments.........................................................28
Pool Balance..............................................................11, 29
Pooling and Servicing Agreement...............................................23
Pre-Funded Amount..............................................................5
Pre-Funded Amount..........................................................7, 28
Pre-Funded Percentage.....................................................11, 20
Principal Distribution Amount.................................................42
Principal Liquidation Loss Amount.........................................11, 40
Prospectus.....................................................................2
Purchase Agreement.........................................................6, 25
Rating Agency.............................................................17, 53
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
Servicer Payment..........................................................10, 42
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Servicing Fee.............................................................16, 46
Servicing Fee Rate........................................................16, 46
Simple Interest Contract......................................................26
Subsequent Contracts....................................................2, 5, 25
Subsequent Cut-off Date........................................................6
Subsequent Cut-off Date........................................................2
Subsequent Financed Vehicles................................................2, 5
Subsequent Purchase Agreement..............................................6, 25
Subsequent Transfer Agreement..............................................6, 25
Trust...................................................................1, 3, 23
Trust Agreement........................................................3, 23, 39
Trustee.................................................................1, 3, 23
Trustees.......................................................................3
Underwriters..................................................................52
Underwriting Agreement........................................................52
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PROSPECTUS
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION: DATED MARCH 11, 1999
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 22
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 ___________ __, 1999.
<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.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES.
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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., Room 1024, Washington, D.C. 20549, and
the regional offices of the Commission located as follows: Chicago Regional
Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and New
York Regional Office, Seven World Trade Center, Suite 1300, 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.
PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to the Securities to be offered
hereunder will, among other things, set forth with respect to such Securities,
as appropriate: (i) a description of the series and class or classes of Notes
and the class or classes of Certificates and the respective Interest Rate to be
paid to each such class of Notes and the Pass-Through Rate or method of
determining the amount of interest, if any, to be passed through to each such
class of Certificates, (ii) the initial aggregate principal amount of each class
of Notes, the initial aggregate Certificate Balance of each class of
Certificates, Distribution Dates relating to such class or series and, if
applicable, the initial and final scheduled Distribution Dates for each series
and class; (iii) information as to the assets comprising the Trust, including
the general characteristics of the retail installment sale contracts and direct
loans included therein and, if applicable, the assignment of security interests
in the Financed Vehicles, specified credit or cash flow enhancement and all
monies on deposit in any specified cash account, the proceeds from claims under
certain insurance policies and certain rights under the Trust Documents (as
defined herein); (iv) the circumstances, if any, under which the Trust may be
subject to early termination; (v) the method used to calculate the amount of
principal, if any, to be distributed with respect to each class of Notes and
Certificates; (vi) the order of application of distributions to each of the
classes within such series, whether sequential, pro rata, or otherwise; (vii)
additional information with respect to the plan of distribution of such
Securities; (viii) the aggregate original percentage ownership interest in the
Trust to be evidenced by each class of Certificates; (ix) information as to the
nature and extent of subordination with respect to any class of Notes or
Certificates that is subordinate in right of payment to any other class of Notes
or Certificates; and (x) information as to the Seller, the Servicer, CIT, the
Owner Trustee and the Indenture Trustee.
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
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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.
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,
1997;
(b) CIT's Quarterly Report on Form 10-Q for the quarters ended March
31, 1998, June 30, 1998 and September 30, 1998; and
(c) CIT's Current Reports on Form 8-K dated January 15, 1998,
January 28, 1998, March 24, 1998, April 22, 1998, June 5, 1998, July 22,
1998, July 29, 1998, August 27, 1998, October 15, 1998, December 2, 1998
and January 28, 1999.
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
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<PAGE>
All documents subsequently filed by or on behalf of the Trust referred to
in the accompanying Prospectus Supplement with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, after the date of this
Prospectus and prior to the termination of any offering of the Securities issued
by such Trust shall be deemed to be incorporated by reference in this Prospectus
and to be a part of this Prospectus from the date of the 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 all purposes of this Prospectus to the extent that a statement contained
herein (or in the accompanying Prospectus Supplement) or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference modifies or replaces such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Owner Trustee on behalf of any Trust will provide without charge to
each person to whom this Prospectus is delivered, on the written or oral request
of such person, a copy of any or all of the documents referred to above that
have been or may be incorporated by reference in this Prospectus (not including
exhibits to the information that is incorporated by reference unless such
exhibits are specifically incorporated by reference into the information that
this Prospectus incorporates). Such requests should be directed to the corporate
trust office of the Owner Trustee specified in the accompanying Prospectus
Supplement.
----------
Until 90 days after the date of each Prospectus Supplement, all dealers
effecting transactions in the securities covered by such Prospectus Supplement,
whether or not participating in the distribution thereof, may be required to
deliver such Prospectus Supplement and this Prospectus. This is in addition to
the obligation of dealers to deliver a Prospectus and Prospectus Supplement when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
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<PAGE>
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SUMMARY
This Summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus and by reference to the
information with respect to the Securities contained in the related Prospectus
Supplement to be prepared and delivered in connection with the offering of each
series of Securities. Certain capitalized terms used in the Summary are defined
elsewhere in this Prospectus and in the related Prospectus Supplement. Reference
is made to the "Index of Principal Terms" for the location herein of defined
terms.
Issuer......................... With respect to each series of Securities, a
trust (the "Trust" or the "Issuer"), will be
formed by the Seller pursuant to either a
Pooling and Servicing Agreement among the
Seller, the Servicer and the trustee
specified in the related Prospectus
Supplement, or a Trust Agreement among the
Seller, the trustee specified in the related
Prospectus Supplement and certain other
parties as specified in the related
Prospectus Supplement.
Seller......................... The CIT Group Securitization Corporation II
(the "Company" or the "Seller"), a
wholly-owned, limited purpose subsidiary of
The CIT Group, 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 Trust Documents. The
Certificates will represent
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<PAGE>
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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 Pass-Through Rate for each class
of Certificates, or the
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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 related
Prospectus Supplement; provided, however,
that
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<PAGE>
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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--Termination," the outstanding
Notes, if any, of such
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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 Financed Vehicles, and proceeds
from claims under
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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
Supplement 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 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
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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 first day
of the related 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
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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 first
day of the related 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 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
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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 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.
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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 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.
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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.(ss.) 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
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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, 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,
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reports and statements to Securityholders shall refer to distributions, notices,
reports and statements to DTC in accordance with DTC procedures. See "Certain
Information Regarding the Securities--Definitive Securities."
11. Risk of Commingling. At any time that the requirements as specified
under "The Purchase Agreements and the Trust Documents--Collections," are met,
the Servicer may deposit payments on or with respect to the Contracts and
proceeds of Contracts into the Collection Account 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.
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A Trustee may resign at any time, in which event the Servicer will be
obligated to appoint a successor trustee. The Servicer may also remove 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
with over $26 billion of managed assets at December 31, 1998. CIT offers 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 and has developed a broad
array of "franchise" businesses that focus on specific industries, asset types
and markets, which are balanced by client, industry and geographic
diversification. CIT has its principal executive offices at 1211 Avenue of the
Americas, New York, New York 10036 and its telephone number is (212) 536-1390.
CIT operates through three business segments conducted through strategic
business units: (i) equipment financing and leasing, which is comprised of
Equipment Financing (equipment financing and leasing) and Capital Finance
(commercial aircraft and rail equipment financing and leasing), (ii) commercial
finance, which is comprised of Commercial Services (secured financing and
factoring), Business Credit (secured financing to middle-market and larger-sized
businesses) and Credit Finance (secured financing to smaller-sized and
middle-market businesses) and (iii) consumer, which is comprised of Consumer
Finance (home equity) and Sales Financing (recreation vehicle, manufactured
housing and recreational boat financing). These strategic business units offer
products and services designed to satisfy the financing needs of specific
customers, industries and markets.
On March 8, 1999, CIT announced that it would acquire Newcourt Credit
Group, Inc. ("Newcourt") in an exchange of common stock. Under the terms of the
transaction, which will be accounted for on a purchase basis, 0.92 shares of
CIT's common stock will be exchanged for each outstanding share of Newcourt
common stock. The transaction is expected to close during the third quarter of
1999, and is conditioned upon, among other things, regulatory and shareholder
approval. Newcourt is headquartered in Toronto, Canada and its stock is traded
on the New York and Toronto Stock Exchanges.
In November 1998, CIT's majority stockholder, The Dai-Ichi Kangyo Bank,
Limited ("DKB"), sold 55,000,000 shares of Class A Common Stock in a secondary
public offering (the "Secondary Offering") for which it received all the
proceeds. Prior to the sale, DKB converted all of its Class B Common Stock into
an identical number of shares of Class A Common Stock, which is now the only
class of common stock outstanding. DKB held 94.4% of the combined voting power
and 77.2% of the economic interest of all of CIT's outstanding common stock
prior to the sale. At December 31, 1998, DKB held 43.8% of the voting power and
economic interest of CIT's outstanding common stock.
In November 1997, CIT issued 36,225,000 shares of Class A Common Stock in
an initial public offering (the "IPO"). Prior to the IPO, DKB owned 80% of CIT's
issued and outstanding stock, and The Chase Manhattan Corporation ("Chase")
owned the remaining 20% common stock interest. DKB had an option expiring
December 15, 2000 to purchase the remaining 20% common stock interest from
Chase. In November 1997, CIT purchased DKB's option at its fair market value,
exercised the option to purchase the stock held by Chase and recapitalized by
converting the outstanding common stock to 157,500,000 shares of Class B Common
Stock. Twenty percent of the Class B Common Stock shares (which had five votes
per share) were converted to Class A Common Stock shares (which had one vote per
share) and, in addition to an underwriter's overallotment option, were issued in
the IPO. The issuance of Class A Common Stock pursuant to the underwriter's
overallotment resulted in an increase to stockholders' equity of $117.7 million.
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."
Unless CIT has issued a Limited Guarantee with respect to any Series of
Securities, CIT will have no obligations or liabilities with respect to any
Series of Securities.
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 (973) 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.
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Unless otherwise specified in the related Prospectus Supplement, neither
CIT nor any of its affiliates, including the Company and CITSF, will be
obligated with respect to the Securities. Accordingly, the Company has
determined that financial statements of CITSF and the Company are not material
to the offering of the Securities.
THE CIT GROUP/SALES FINANCING, INC., SERVICER
General
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 (973) 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 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. In addition, CITSF purchases portfolios of
recreation vehicle contracts from other lending institutions or finance
companies.
Contracts that CITSF purchases from Dealers (as opposed to portfolios of
contracts purchased from other lenders) are purchased on an individually
approved basis in accordance with CITSF's underwriting guidelines.
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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 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.
All credit applications are entered into an application processing system.
All applications are reviewed to determine the creditworthiness of the customer
and to evaluate certain other aspects of the proposed transaction. 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 approve an applicant's
credit history, residence history, employment history and debt-to-income payment
ratio before credit is extended. 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) generally in the case of a new financed vehicle, 100% of the unpaid cash
balance, not to exceed 110% of the manufacturer's invoice price (on an exception
basis, discretionary credit approval may permit advances up to 130% of
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 the Dealer warrants 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.
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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 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
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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.
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.
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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.
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
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schedule or formula or other provisions applicable to the determination thereof,
of each such class will be set forth in the related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, payments
of interest and principal on the Notes will be made on each Distribution Date,
commencing on the date specified in the related Prospectus Supplement. Unless
otherwise specified in the related Prospectus Supplement, with respect to any
Distribution Date, the Due Period will be the calendar month preceding the month
of such Distribution Date. Unless otherwise specified in the related Prospectus
Supplement, payments on the Notes on each Distribution Date will be made to the
holders of record of the related Notes on the related Record Date.
The Indenture
A form of Indenture has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. CITSF will provide a copy of
the applicable Indenture (without exhibits) upon request to a holder of Notes
issued thereunder.
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
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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 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 Controlling 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 Controlling 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
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Default that the Notes are immediately due and payable, (i) Noteholders will be
entitled to ratable repayment of principal on the basis of their respective
unpaid principal balances, and (ii) repayment in full of the accrued interest on
and unpaid principal balances of the Notes will be made prior to any further
payment of interest on the Certificates or in respect of the Certificate Balance
(other than payments of the "Principal Liquidation Loss Amount" (as defined in
the related Prospectus Supplement) and other payments from the Enhancement (if
any) applicable to the Certificates).
Subject to the provisions of the Indenture relating to the duties of the
Indenture Trustee, if an Event of Default occurs and is continuing with respect
to a series of Notes, the Indenture Trustee will be under no obligation to
exercise any of the rights or powers under the Indenture at the request or
direction of any of the holders of such Notes, if the Indenture Trustee
reasonably believes it will not be adequately indemnified against the costs,
expenses and liabilities which might be incurred by it in complying with such
request. Subject to the provisions for indemnification and certain limitations
contained in the Indenture, the holders of not less than a majority in aggregate
outstanding principal amount of the 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
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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, 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.
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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 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
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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 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.
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The extent to which any such collections are guaranteed under a Credit Facility
which functions in this manner will be described in the related Prospectus
Supplement.
Liquidity Facility. With respect to a series of Securities, one or more
classes may be entitled to the benefit of one or more purchase agreements or
other liquidity facilities (each, a "Liquidity Facility"), pursuant to which the
provider of such Liquidity Facility (the "Liquidity Facility Provider") will
provide funds to be used to purchase some or all of such Securities. Unless
otherwise specified in the related Prospectus Supplement, a Liquidity Facility
will be held outside of the Trust by a third party (which may be a Trustee
acting in another capacity). The related Prospectus Supplement will contain a
description of the material terms of any such Liquidity Facility and any
arrangement pursuant to which it is held outside of the Trust, and will contain
certain information concerning the Liquidity Facility Provider, which
information will have been provided to the Seller by the Liquidity Facility
Provider for use in such Prospectus Supplement. CIT, CITSF or an affiliate
thereof may be a Liquidity Facility Provider. If specified in the related
Prospectus Supplement, a Reserve Fund or Credit Facility may also serve as a
Liquidity Facility.
Replacement. If specified in the related Prospectus Supplement, the Seller
may replace the Enhancement for any class of Securities with another form of
Enhancement without the consent of Securityholders, provided the Rating Agency
Condition is satisfied.
CERTAIN INFORMATION REGARDING THE SECURITIES
Book-Entry Registration
Unless otherwise specified in the related Prospectus Supplement, persons
acquiring beneficial ownership interests in the Notes may hold their interests
through DTC in the United States or Cedel or Euroclear in Europe and persons
acquiring beneficial ownership interests in the Certificates may hold their
interests through DTC. Unless otherwise specified in the related Prospectus
Supplement, Securities will be registered in the name of Cede as nominee for
DTC. Cedel and Euroclear will hold omnibus positions with respect to the Notes
on behalf of Cedel Participants and Euroclear Participants, respectively,
through customers' securities accounts in Cedel's and Euroclear's name on the
books of their respective depositories (collectively, the "Depositories") which
in turn will hold such positions in customers' securities accounts in the
Depositories' names on the books of DTC.
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and 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
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indirectly through DTC and its Participants which in turn will exercise their
rights through DTC. Security Owners will not have access to the list of Security
Owners of a series, which may impede the ability of Security Owners to
communicate with each other. Security Owners will not receive or be entitled to
receive Definitive Notes or Definitive Certificates representing their
respective interests in the Securities, except under the limited circumstances
described below and such other circumstances, if any, as may be specified in the
related Prospectus Supplement.
Transfers between Participants will occur in accordance with DTC Rules.
Transfers between Cedel Participants and Euroclear Participants will occur in
accordance with their respective rules and operating procedures.
Due to time zone differences, credits of securities received in Cedel or
Euroclear as a result of a transaction with a Participant will be made during
subsequent securities settlement processing and dated the business day following
the DTC settlement date. Such credits or any transactions in such securities
settled during such processing will be reported to the relevant Euroclear or
Cedel Participant on such business day. Cash received in Cedel or Euroclear as 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,
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brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Cedel Participant, either directly or indirectly.
The Euroclear System was created in 1968 to hold securities for its
participants ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may be settled in any of 32 currencies, including United
States dollars. The Euroclear System includes various other services, including
securities lending and borrowing and interfaces with domestic markets in several
countries generally similar to the arrangements for cross-market transfers with
DTC described above. The Euroclear System is operated by the Brussels, Belgium
Office of Morgan Guaranty Trust Company of New York (the "Euroclear Operator" or
"Euroclear"), under contract with Euroclear Clearance Systems, S.C., a Belgian
cooperative corporation (the "Cooperative"). All operations are conducted by the
Euroclear Operator, and all Euroclear securities clearance accounts and
Euroclear cash accounts are accounts with the Euroclear Operator, not the
Cooperative. The Cooperative establishes policy for the Euroclear System on
behalf of 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.
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NEITHER THE TRUST, THE SELLER, THE SERVICER, CIT, ANY AFFILIATED
PURCHASER, THE OWNER TRUSTEE, THE INDENTURE TRUSTEE, NOR ANY OF THE UNDERWRITERS
WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY PARTICIPANTS, CEDEL
PARTICIPANTS OR EUROCLEAR PARTICIPANTS OR SECURITY OWNERS WITH RESPECT TO (1)
THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC, CEDEL, EUROCLEAR OR ANY
PARTICIPANT, (2) THE PAYMENT BY DTC, CEDEL, EUROCLEAR OR ANY PARTICIPANT OF ANY
AMOUNT DUE TO ANY SECURITY OWNER IN RESPECT OF THE PRINCIPAL AMOUNT OF, OR
INTEREST ON, THE SECURITIES, (3) THE DELIVERY BY ANY PARTICIPANT, CEDEL
PARTICIPANT OR EUROCLEAR PARTICIPANT OF ANY NOTICE TO ANY SECURITY OWNER WHICH
IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE INDENTURE OR THE TRUST DOCUMENTS
TO BE GIVEN TO SECURITYHOLDERS OR (4) ANY OTHER ACTION TAKEN BY DTC AS THE
SECURITYHOLDER.
Definitive Securities
With respect to any series of Securities, unless otherwise specified in
the related Prospectus Supplement, the Notes and Certificates will be issued in
fully registered, certificated form ("Definitive Notes" and "Definitive
Certificates," respectively, and, together "Definitive Securities") to Security
Owners or their nominees, rather than to DTC or its nominee, only if (i) the
Servicer advises the Trustees in writing that DTC is no longer willing or able
to discharge properly its responsibilities as Depository with respect to the
Securities and the Servicer is unable to locate a qualified successor, (ii) the
Servicer, at its option, elects to terminate the book-entry system through DTC
or (iii) after the occurrence of an Event of Default or an Event of Termination,
Note Owners or Certificate Owners 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
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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
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;
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(xiii) during the Funding Period, if any, the number and aggregate
principal balance of Subsequent Contracts;
(xiv) during the Funding Period, if any, the number and aggregate
principal balance of Subsequent Contracts purchased by the Trust since the
preceding Distribution Date;
(xv) during the Funding Period, if any, the amount, if any,
withdrawn from the Capitalized Interest Account, if any, to make payments
of interest on the Securities;
(xvi) during the Funding Period, if any, the amount remaining on
deposit in the Capitalized Interest Account, if any;
(xvii) during the Funding Period, if any, the amount of investment
earnings, net of losses and investment expenses, on amounts on deposit in
the Pre-Funding Account;
(xviii) during the Funding Period, if any, the amount of investment
earnings, net of losses and investment expenses, on amounts on deposit in
the Capitalized Interest Account, if any;
(xix) on the Distribution Date immediately following the end of the
Funding Period (or if the Funding Period ends on a Distribution Date on
such Distribution Date), if any, the aggregate principal amount and
percentage of each of the Notes, if any, and Certificates, 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.
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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
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
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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 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
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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 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
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the Contracts by CITSF to the Company and by the Company to the Trust, and will
not be segregated from the other installment sale contracts of CITSF. The
Obligors under the Contracts will not be notified of the transfer of the
Contracts to the Company or to the Trust. If, through inadvertence or otherwise,
any of the Contracts were sold to another party (or a security interest therein
were granted to another party) that purchased (or took such security interest
in) any of such Contracts in the ordinary course of its business and took
possession of such Contracts, the purchaser (or secured party) would acquire an
interest in the Contracts superior to the interest of the related Trust if the
purchaser (or secured party) acquired (or took a security interest in) the
Contracts for new value and without actual knowledge of such Trust's interest.
See "Certain Legal Aspects of the Contracts."
Accounts
For each Trust, the Servicer will establish and maintain with a Trustee
one or more accounts, in the name of such Trustee on behalf of the
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"
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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.
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, (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, and (v) fail to obtain and maintain any license, permit
or other approval required by any federal or state law in order for the Trust to
own any Contract or to exercise the rights under any Contract or the Trust
Documents.
Optional Repurchases
Unless otherwise specified in the related Prospectus Supplement, the
Servicer will have the right and the option, but not the obligation, to purchase
for its own account any Contract which becomes delinquent, in whole or in part,
as to four consecutive monthly installments or any Contract as to which
enforcement proceedings have been brought by the Servicer. The purchase price
for any such Contract is equal to the Purchase Price thereof, which purchase
price shall be delivered to the Owner Trustee.
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
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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 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 first day of the related 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
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debt rating of at least A-1 by Standard & Poor's (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 (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 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 first day of the related 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
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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 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.
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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 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. 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.
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,
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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 of reckless
disregard of obligations and duties thereunder. In addition, unless otherwise
specified in the related Prospectus Supplement, the Trust Documents will provide
that the Servicer is under no obligation to appear in, prosecute or defend any
legal action which arises under the Trust Documents and that, in its opinion,
may cause it to incur any expense or liability. The Servicer may, however,
undertake any reasonable action that it may deem necessary or desirable in
respect of the Trust Documents and the rights and duties of the parties thereto
and the interests of the Securityholders thereunder. In the event that the
Servicer or the Company, in its discretion, undertakes any action which it deems
necessary or desirable in connection with its rights and duties under the Trust
Documents or the interests of the Securityholders thereunder, the legal expenses
and costs of such action and any liability resulting therefrom will be expenses,
costs and liabilities of the Trust, and the Servicer and the Company will be
entitled to be reimbursed therefor out of the Collection Account.
Unless otherwise specified in the related Prospectus Supplement, any
corporation or other entity into which the Servicer may be merged or
consolidated, or any corporation or other entity resulting from any merger,
conversion or consolidation to which the Servicer is a party, or any corporation
or other entity succeeding to the business of the Servicer, which corporation or
other entity assumes the obligations of the Servicer, will be the successor of
the Servicer under the Trust Documents.
The Servicer may sell, transfer, assign or convey its rights as Servicer
to any entity qualified to act as servicer under the Trust Documents, upon
written notice to the Trustees and the Rating Agencies, without the consent of
the Securityholders, provided that the Rating Agency Condition is satisfied.
Physical Damage Insurance
Unless otherwise specified in the related Prospectus Supplement, the Trust
Documents will provide that the Servicer, in accordance with its customary
servicing 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
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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 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).
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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 Controlling 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, 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,
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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.
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
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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 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
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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 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,
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in the absence of such an amendment or execution, the assignment to the Trust of
a security interest in Financed Vehicles may not be perfected, such assignment
of the security interest to the Trust may not be effective against creditors or
a trustee in bankruptcy of CITSF or CITCF-NY, which continue to be specified as
lienholder on any certificates of title or as secured party of any UCC filing.
(i) California. A security interest in a motor vehicle registered in the
State of California (in which the greatest number of Financed Vehicles are
currently registered) may be perfected only by depositing with the Department of
Motor Vehicles a properly endorsed certificate of title for the vehicle showing
the secured party as "legal owner" thereon or if the vehicle has not been
previously registered, an application in usual form for an original registration
together with an application for registration of the secured party as "legal
owner." However, under the California Vehicle Code, a transferee of a security
interest in a motor vehicle is not required to reapply to the Department of
Motor Vehicles for a transfer of registration when the interest of the
transferee arises from the transfer of a security agreement by the "legal owner"
to secure payment or performance of an obligation. Accordingly, under California
law, an assignment such as that under each of the Purchase Agreement and the
Trust Documents is an effective conveyance of CITSF's and the Company's
perfected security interest, as the case may be, without such re-registration,
and under the Purchase Agreement the Company will succeed to CITSF's, and under
the Trust Documents the Trust will succeed to the Company's, rights as secured
party.
(ii) Other States. In most states, assignments such as those under the
Purchase Agreement and the Trust Documents are an effective conveyance of a
security interest without amendment of any lien noted on a vehicle's certificate
of title, and the assignee succeeds thereby to the assignor's rights as secured
party. However, in some states the Trust's security interest will be unperfected
because the Trust will not be noted as the secured party on the certificates of
title to the Financed Vehicles, and therefore the Trust's security interest
would be subordinate to, among others, subsequent purchasers of such Financed
Vehicles and holders of prior perfected security interests therein. However, in
the absence of fraud, forgery or administrative error, the notation of CITSF's
or CITCF-NY's lien on the certificates of title will be sufficient in most
states to protect the Trust against the rights of subsequent purchasers of a
Financed Vehicle, judgment creditors or other creditors who take a security
interest in a Financed Vehicle.
Continuity of Perfection. Under the laws of most states, a perfected
security interest in a 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
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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 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
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judgments. In addition to the notice requirement, the UCC requires that every
aspect of the sale or other disposition, including the method, manner, time,
place and terms, be "commercially reasonable." Some courts have held that when a
sale is not "commercially reasonable," the secured party loses its right to a
deficiency judgment and courts in some other states have held that when a sale
is not "commercially reasonable" there is a rebuttable presumption that there is
no deficiency. In addition, the UCC permits the debtor or other interested party
to recover for any loss caused by noncompliance with the provisions of the UCC.
Also, prior to a sale, the UCC permits the debtor or other interested person to
restrain the secured party from disposing of the collateral if it is established
that the secured party is not proceeding in accordance with the "default"
provisions under the UCC. A deficiency judgment is a judgment against the
obligor or guarantor for the shortfall; however, a defaulting obligor or
guarantor may have very little capital or sources of income available following
repossession. Therefore, in many cases, it may not be useful to seek a
deficiency judgment or, if one is obtained, it may be settled at a significant
discount or be uncollectible.
Occasionally, after resale of a 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
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sales acts, state retail installment sales acts and other similar laws. Also,
the laws of California and of certain other states impose finance charge
ceilings and other restrictions on consumer transactions and require contract
disclosures in addition to those required under federal law. These requirements
impose specific statutory liabilities upon creditors which fail to comply with
their provisions. In some cases, this liability could affect the ability of an
assignee such as the Trust to enforce consumer finance contracts such as the
Contracts.
The so-called "Holder-in-Due-Course Rule" of the Federal Trade Commission
(the "FTC Rule") has the effect of subjecting any assignee of the seller in a
consumer credit transaction to all claims and defenses which the obligor in the
transaction could assert against the seller of the goods. Liability under the
FTC Rule is limited to the amounts paid by the obligor under the contract, and
the holder of the contract may also be unable to collect any balance remaining
due thereunder from the obligor. The FTC Rule is generally duplicated by the
Uniform Consumer Credit Code, other state statutes or the common law in certain
states. Most of the Contracts will be subject to the requirements of the FTC
Rule. Accordingly, the Trust, as holder of the Contracts, will be subject to any
claims or defenses that the purchaser of the related Financed Vehicle may assert
against the seller of the Financed Vehicle. Such claims are limited to a maximum
liability equal to the amounts paid by the Obligor under the related Contracts.
Under California law and most state vehicle dealer licensing laws, sellers
of 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
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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 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.
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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.
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.
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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 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; PTCE 95-60 regarding
investments by insurance company general accounts; PTCE 84-14, regarding
transactions effected by "qualified professional asset managers"; and PTCE 96-23
regarding transactions effected by certain "in-house" 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.
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In each Underwriting Agreement, the several Underwriters will agree,
subject to the terms and conditions set forth therein, to purchase all the
Securities described therein which are offered hereby and by the related
Prospectus Supplement if any of such Securities are purchased. In the event of a
default by any such underwriter, each Underwriting Agreement will provide that,
in certain circumstances, purchase commitments of the nondefaulting Underwriters
may be increased, or the Underwriting Agreement may be terminated.
Each Prospectus Supplement will either (i) set forth the price at which
each class of Securities being offered thereby will be offered to the public and
any concessions that may be offered to certain dealers participating in the
offering of such Securities or (ii) specify that the related Securities are to
be resold by the Underwriters in negotiated transactions at varying prices to be
determined at the time of such sale. After the initial public offering of any
Securities, the public offering price and such concessions may be changed.
Each Underwriting Agreement will provide that CITSF and/or the Company
will indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act.
A Trustee may, from time to time, invest the funds of the Trust in
Eligible Investments acquired from the Underwriters.
FINANCIAL INFORMATION
The Company has determined that its financial statements are not material
to the offering made hereby.
Each Trust will be formed to own the related Contracts and the other Trust
assets and to issue the related Securities. Each Trust will have had no assets
or obligations prior to the issuance of the Securities and will not engage 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.
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EXPERTS
The consolidated balance sheets of CIT as of December 31, 1997 and 1996
and the related consolidated statements of income, changes in stockholders'
equity and cash flows and for each of the years in the three-year period ended
December 31, 1997 have been incorporated by reference herein and in the
Registration Statement in reliance upon the report of KPMG 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...........................................................7, 26
Asset Service Center..........................................................32
Available Amount..........................................................15, 56
Bankruptcy Code...........................................................23, 66
Benefit Plan..................................................................70
Business Day..............................................................14, 35
Capitalized Interest Account..................................................13
Cash Collateral Account.......................................................42
Cede....................................................................2, 7, 34
Cedel...................................................................2, 9, 25
Cedel Participants............................................................44
Certificate Distribution Account..............................................52
Certificate Final Scheduled Distribution Date.................................14
Certificate Owner.........................................................25, 35
Certificate Owners.............................................................7
Certificate Pool Factor.......................................................30
Certificateholders............................................................46
Certificates............................................................1, 6, 34
CIT.....................................................................2, 6, 22
CITCF-NY..................................................................11, 22
CITSF......................................................................6, 22
Closing Date..................................................................11
Code......................................................................20, 68
Collection Account............................................................52
Commission.....................................................................3
Company.................................................................1, 6, 22
Contract Files................................................................26
Contract Pool.........................................................10, 27, 28
Contract Rate.................................................................28
Contracts..............................................................1, 10, 28
Controlling Notes.............................................................38
Cooperative...................................................................45
Credit Facility...............................................................42
Credit Facility Provider......................................................42
Dealers...................................................................11, 22
Defaulted Contracts...........................................................48
Definitive Certificates.......................................................46
Definitive Notes..............................................................46
Definitive Securities.........................................................46
Deposit Date..................................................................26
Depositories..................................................................43
Depository....................................................................25
Determination Date............................................................15
Distribution Date.........................................................14, 35
DKB...........................................................................31
DTC.....................................................................2, 7, 25
DTC Rules.....................................................................44
Due Period....................................................................15
Eligible Account..............................................................52
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Eligible Institution..........................................................52
Eligible Investments..........................................................52
Enhancement...................................................................41
ERISA.....................................................................20, 70
Euroclear...............................................................2, 9, 45
Euroclear Operator............................................................45
Euroclear Participants........................................................45
Event of Termination..........................................................59
Events of Default.............................................................38
Financed Vehicles..........................................................1, 10
Force-Placed Insurance........................................................58
FTC Rule......................................................................67
Funding Period.............................................................8, 13
Holder........................................................................43
Holders.......................................................................46
Indenture...............................................................2, 8, 36
Indenture Trustee.......................................................2, 6, 36
Indirect Participants.........................................................43
Initial Contracts..........................................................1, 10
Initial Cut-off Date.......................................................1, 10
Initial Financed Vehicles..................................................1, 10
Initial Pool Balance......................................................19, 61
Insolvency Laws...............................................................66
Insurance Advances............................................................59
Interest Accrual Period.......................................................14
Interest Rate..................................................................9
IRS...........................................................................68
Issuer.........................................................................6
Late Fees.................................................................15, 56
Limited Guarantee.............................................................42
Liquidated Contracts..........................................................48
Liquidity Facility............................................................43
Liquidity Facility Provider...................................................43
List of Contracts.............................................................49
Military Reservist Relief Act.................................................50
Monthly Advance...........................................................17, 55
Non-Reimbursable Payment..................................................18, 56
Note Distribution Account.....................................................52
Note Final Scheduled Distribution Date........................................14
Note Owner................................................................25, 36
Note Owners....................................................................9
Note Pool Factor..............................................................30
Noteholders...................................................................46
Notes...................................................................1, 8, 36
Obligor...................................................................11, 55
Oklahoma Tax Counsel..........................................................69
Original Certificate Balance..................................................26
Owner Trustee...............................................................2, 6
Paid-Ahead Account............................................................52
Paid-Ahead Period.............................................................28
Paid-Ahead Precomputed Contract...............................................28
Paid-Ahead Simple Interest Contract...........................................28
Participants..................................................................43
Pass-Through Rate..........................................................7, 35
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Payment Shortfall.........................................................17, 55
Pool Balance..................................................................19
Pooling and Servicing Agreement................................................2
Precomputed Contracts.........................................................28
Pre-Funded Amount.............................................................12
Pre-Funded Percentage.........................................................24
Pre-Funding Account............................................................8
Principal Liquidation Loss Amount.............................................39
Prospectus Supplement..........................................................1
PTCE..........................................................................70
Purchase Agreement............................................................11
Purchase Agreements...........................................................49
Purchase Price................................................................51
Rating Agency.............................................................19, 71
Rating Agency Condition.......................................................37
Record Date...............................................................14, 35
Registration Statement.........................................................3
Related Documents.............................................................40
Repurchase Event..............................................................11
Repurchased Contract......................................................11, 51
Required Servicer Ratings.....................................................55
Reserve Account...........................................................41, 42
Reserve Fund..................................................................41
Retained Yield................................................................51
Sale and Servicing Agreement...................................................2
Securities..............................................................1, 8, 36
Security Owner................................................................36
Securityholder................................................................43
Securityholders............................................................4, 46
Seller......................................................................1, 6
Servicer....................................................................2, 6
Servicer Letter of Credit.....................................................55
Servicer Payment..............................................................15
Servicing Fee.............................................................18, 54
Servicing Fee Rate........................................................18, 54
Simple Interest Contracts.....................................................28
Soldiers' and Sailors' Civil Relief Act.......................................50
Spread Account................................................................42
Stripped Certificates..........................................................8
Stripped Notes.................................................................9
Subsequent Contracts.......................................................1, 10
Subsequent Cut-off Date....................................................1, 12
Subsequent Financed Vehicles...............................................1, 10
Subsequent Purchase Agreement.................................................12
Subsequent Transfer Agreement.................................................12
Subsequent Transfer Date......................................................12
Terms and Conditions..........................................................45
Trust.......................................................................1, 6
Trust Agreement................................................................2
Trust Documents...............................................................49
Trustee........................................................................2
Trustees.......................................................................6
UCC.......................................................................22, 62
Underwriters..................................................................70
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Underwriting Agreement........................................................70
Yield Supplement Account......................................................42
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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.
----------
Table of Contents
Prospectus Supplement
Page
----
Summary.....................................................................S-3
Risk Factors................................................................S-19
Structure of the Transaction................................................S-22
The Trust Property..........................................................S-23
The Contract Pool...........................................................S-24
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-52
Ratings.....................................................................S-53
Legal Matters...............................................................S-53
Annex I.....................................................................S-54
Index of Principal Terms....................................................S-57
Prospectus
Available Information........................................................ 3
Prospectus Supplement........................................................ 3
Reports to Securityholders................................................... 3
Documents Incorporated by Reference.......................................... 4
Summary...................................................................... 6
Risk Factors................................................................. 22
The Trusts................................................................... 26
The Trust Property........................................................... 27
The Contract Pool............................................................ 28
Yield and Prepayment Considerations.......................................... 30
Pool Factors................................................................. 30
Use of Proceeds.............................................................. 30
The CIT Group, Inc........................................................... 31
The CIT Group Securitization Corporation II, Seller.......................... 31
The CIT Group/Sales Financing, Inc., Servicer................................ 32
The Certificates............................................................. 34
The Notes.................................................................... 36
Enhancement.................................................................. 41
Certain Information Regarding the Securities................................. 43
The Purchase Agreements and the Trust Documents.............................. 49
Certain Legal Aspects of the Contracts....................................... 62
Certain Federal Income Tax Consequences...................................... 68
Certain State Tax Consequences............................................... 69
ERISA Considerations......................................................... 70
Plan of Distribution......................................................... 70
Financial Information........................................................ 71
Ratings...................................................................... 71
Legal Matters................................................................ 71
Experts...................................................................... 72
Index of Principal Terms..................................................... 73
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.
$___________
(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 _________
<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............................... $ 152,900.00
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 ................................ 400,000.00
Trustee's fees and expenses ....................... 20,000.00
Printing expenses ................................. 130,000.00
Miscellaneous fees and expenses ................... 20,000.00
-------------
Total.......................................... $1,162,900.00
=============
Item 15. Indemnification of Directors and Officers.
Subsection (a) of Section 145 of the General Corporation Law of Delaware
empowers a corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee, or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit, or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation except that no indemnification may be made in
respect of any claim, issue, or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine that despite the adjudication of liability, but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
Section 145 further provides that to the extent a director, officer,
employee, or agent of a corporation has been successful in the defense of any
action, suit, or proceeding referred to in subsections (a) and (b) or in the
defense of any claim, issue, or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith; that indemnification provided for by Section 145 shall not
be deemed exclusive of any other rights to which the indemnified party may be
entitled; and empowers the corporation to purchase and maintain insurance on
behalf of any person acting in any of the capacities set forth in the second
preceding paragraph against any liability asserted against him or incurred by
him in any such capacity or arising out of his status as such whether or not the
corporation would have the power to indemnify him against such liabilities under
Section 145.
The Registrants' By-Laws provide for indemnification of directors and
officers of each Registrant 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 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.
24.3** Certified Board Resolutions of The CIT Group, Inc.
- ------------
* Previously filed.
** Filed herewith.
II-2
<PAGE>
b. Financial Statement Schedules:
Not applicable.
Item 17. Undertakings.
The Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended (the "Act");
(ii) To reflect in the prospectus any fact or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrants undertake that, for purposes of determining
any liability under the Act, each filing of the Registrants' annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934, as amended, 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 Trust Indenture 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
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Town of Livingston, State of New Jersey, on March 11,
1999.
THE CIT GROUP SECURITIZATION CORPORATION II
By: /s/ JAMES J. EGAN, JR.
---------------------------------------
Name: James J. Egan, Jr.
Title: President
POWER OF ATTORNEY
Each person whose signature to this Registration Statement appears below
hereby constitutes and appoints Norman H. Rosen, James J. Egan, Jr. and Richard
W. Bauerband, or any of them (with the full power of each of them to act alone),
as his true and lawful attorney-in-fact and agent, with full power of
substitution, to sign on his behalf individually and in the capacity stated
below and to perform any acts necessary to be done in order to file all
amendments and post-effective amendments to this Registration Statement, and any
and all instruments or documents filed as part of or in connection with this
Registration Statement or the amendments thereto, and each of the undersigned
does hereby ratify and confirm all that said attorney-in-fact and agent, or his
substitutes, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ JAMES J. EGAN, JR. President and Director March 11, 1999
- --------------------------- (principal executive
JAMES J. EGAN, JR. officer)
/s/ RICHARD W. BAUERBAND Executive Vice President March 11, 1999
- --------------------------- and Director
RICHARD W. BAUERBAND
JOSEPH J. CARROLL* Director
- ---------------------------
JOSEPH J. CARROLL
/s/ FRANK GARCIA Vice President March 11, 1999
- --------------------------- (principal financial
FRANK GARCIA and accounting
officer)
*By /s/ JAMES J. EGAN, JR. March 11, 1999
-------------------------
JAMES J. EGAN, JR.
Attorney-in-fact
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 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 March 11, 1999.
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
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)
Daniel P. Amos*
- -------------------------------
Director
Yoshiro Aoki*
- -------------------------------
Director
Takasuke Kaneko*
- -------------------------------
Director
Hisao Kobayashi*
- -------------------------------
Director
Joseph A. Pollicino*
- -------------------------------
Director
II-5
<PAGE>
Paul N. Roth*
- -------------------------------
Director
Peter J. Tobin*
- -------------------------------
Director
Tohru Tonoike*
- -------------------------------
Director
Alan F. White*
- -------------------------------
Director
- -------------------------------
Anthea Disney-Director
/s/ JOSEPH M. LEONE
- -------------------------------
Joseph M. Leone March 11, 1999
Executive Vice President
and Chief Financial Officer
(principal financial
and accounting officer)
*By /s/ ERNEST D. STEIN March 11, 1999
---------------------
Ernest D. Stein
Attorney-in-fact
II-6
Exhibit 23.3
Independent Auditor's Consent
The Board of Directors
The CIT Group, Inc.:
We consent to the use of our report dated January 28, 1998 relating to the
consolidated balance sheets of The CIT Group, Inc. and subsidiaries as of
December 31, 1997 and 1996, 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, 1997, incorporated by reference in
Amendment No. 1 and post effective amendment No. 2 to the Registration Statement
Nos. 333-64539 and 333-64539-01 on Form S-3 of The CIT Group Securitization
Corporation II and The CIT Group, Inc. which report appears in the December 31,
1997 Annual Report on Form 10-K of The CIT Group, Inc. and to the reference to
our firm under the heading "Experts" in the Registration Statement.
KPMG LLP
Short Hills, New Jersey
March 4, 1999
Exhibit 24.3
THE CIT GROUP, INC.
Certified Resolutions
I, Anne Beroza, hereby certify that I am the Assistant Secretary and the
official custodian of certain records including the Certificate of
Incorporation, By-Laws, and minutes of the meetings of the Board of Directors of
The CIT Group, Inc. (the "Corporation"), a Delaware corporation, and that the
following are true, accurate, and compared extracts from the minutes of the
meetings of the Board of Directors of the Corporation held on September 23,
1998, and that the same have not been revoked, annulled or amended in any manner
whatsoever:
"WHEREAS, the Board of Directors at its meeting on October 16, 1997 by
resolution authorized and approved the filing of a $1.4 billion registration
statement on Form S-3 and the issuance of a limited guarantee with respect to
the registration and sale of certain asset-backed certificates representing
obligations of certain trusts backed by assets of such trusts which would
include recreational vehicle installment sale contracts secured by the new and
used recreational vehicles financed thereby;
WHEREAS, the Corporation desires to increase the amount of debt securities
authorized pursuant to these resolutions;
NOW, THEREFORE, BE IT:
RESOLVED, that the resolutions of the Corporation approved at the
meeting of the Board of Directors on October 16, 1997 relating to the
Corporation's limited guarantee of certain recreational vehicle asset-backed
certificates are hereby amended to authorize the issuance of up to $2.4 billion
of debt securities in addition to the amounts of debt securities registered and
unsold under the Corporation's recreational vehicle registration statement, an
increase of $1 billion over the $1.4 billion authorized in the original
resolutions approved by the Board of Directors on October 16, 1997;
RESOLVED FURTHER, that in all other respects the resolutions
approved at the meeting of the Board of Directors on October 16, 1997 are
ratified and reaffirmed;
RESOLVED FURTHER, that the proper officers of the Corporation are,
and each of them hereby is, empowered to approve or authorize, as the case may
be, such further action and the preparation, execution, and delivery of all of
the foregoing instruments and any further instruments and documents, and that
the proper officers of the Corporation and its counsel are hereby authorized to
take all such further action and to execute and deliver all such further
instruments and documents, in the name and on behalf of the Corporation and
under its corporate seal or otherwise, and to pay all such expenses and other
taxes, as in their judgment shall be necessary, proper, or advisable in order to
fully carry out the intent and accomplish the purposes of the foregoing
resolutions and each of them; and
<PAGE>
RESOLVED FURTHER, that all actions heretofore or hereafter taken by
any officer or officers of the Corporation within the terms of the foregoing
resolutions are hereby ratified and confirmed as the act and deed of the
Corporation."
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal
of The CIT Group, Inc. this 11th day of March, 1999.
SEAL
/s/ Anne Beroza
Anne Beroza
Assistant Secretary
<PAGE>
THE CIT GROUP, INC.
Certified Resolutions
I, Anne Beroza, hereby certify that I am the Assistant Secretary and the
official custodian of certain records including the Certificate of
Incorporation, By-Laws, and minutes of the meetings of the Board of Directors of
The CIT Group, Inc. (the "Corporation"), a Delaware corporation, and that the
following are true, accurate, and compared extracts from the minutes of the
meetings of the Board of Directors of the Corporation held on October 16, 1997,
and that the same have not been revoked, annulled or amended in any manner
whatsoever:
"WHEREAS, The CIT Group, Inc. (the "Corporation") has considered certain
matters in connection with proposed public offerings by its wholly-owned
subsidiary, The CIT Group Securitization Corporation II (the "Subsidiary") of
recreational vehicle contract asset-backed notes (the "Notes") and asset-backed
certificates (the "Certificates") representing obligations of certain trusts
backed by assets of such trusts which would include recreational vehicle
installment sale contracts secured by the new and used recreational vehicles
financed thereby;
WHEREAS, the Subsidiary deems it advisable and in the best interest of the
Subsidiary to be in a position to issue such Notes and Certificates and to
create such trusts and in connection therewith is preparing to file a
registration statement on Form S-3 (the "Registration Statement") with the
Securities and Exchange Commission (the "Commission") registering the Notes and
Certificates for offer and sale by the Subsidiary under the Securities Act of
1933, as amended (the "Securities Act");
WHEREAS, the Corporation deems it advisable and in the best interest of
the Corporation to be in a position to guarantee certain payments on the Notes
and Certificates and to be in a position to offer and sell the limited guarantee
of the Corporation of certain payments on the Notes and Certificates in the
public markets from time to time;
WHEREAS, in connection with the potential offer and sale of the limited
guarantee of the Corporation of certain payments on the Notes and the
Certificates in the public markets, the Corporation desires to authorize Albert
R. Gamper, Jr., Ernest D. Stein, and Donald J. Rapson, and each of them to sign,
on behalf of the Corporation and certain of its directors and officers, the
Registration Statement on Form S-3, and any amendments thereto, for the
registration with the Commission of the offer and sale of such limited guarantee
under the Securities Act by the Corporation, under such terms and conditions to
be determined by any Executive Vice President, Senior Vice President or Vice
President of the Corporation (each, an "Authorized Officer"), which terms and
conditions may be amended from time to time;
<PAGE>
NOW, THEREFORE, BE IT:
RESOLVED, that the Corporation is authorized to guarantee, in
accordance with the terms and conditions specified in these resolutions,
certain payments on the Notes and Certificates, which Notes and
Certificates may be issued by the Subsidiary by means of a public offering
of up to $1,400,000,000 (all in United States dollars) aggregate principal
amount, or if issued at an original issue discount, such greater principal
amount as shall result in an aggregate initial public offering price of up
to $1,400,000,000, to be made (i) directly to purchasers, (ii) through
agents designated, from time to time, by the Subsidiary, (iii) through
underwriters or a group of underwriters represented by one or more
particular underwriter(s), or (iv) to dealers, from and after the date the
Registration Statement, as amended, is declared effective by the
Commission on a continuing basis (such issuance of the limited guarantee
of certain payments on the Notes and Certificates being hereinafter
sometimes referred to in these resolutions as the "Limited Guarantee")
under such terms and conditions, which may be amended from time to time,
as an Authorized Officer shall determine;
RESOLVED FURTHER, that the proper officers of the Corporation be and
each of them hereby is, authorized to proceed with the preparation of the
Registration Statement for the registration of the Limited Guarantee under
the Securities Act and any further amendments thereto (including any
post-effective amendments and any prospectuses or prospectus supplements
thereto) under such terms and conditions, which may be amended from time
to time, as an Authorized Officer shall determine, and to proceed with
such offering at such time, if at all, within such period as an Authorized
Officer shall deem appropriate;
RESOLVED FURTHER, that Albert R. Gamper, Jr., Ernest D. Stein and
Donald J. Rapson be, and each of them with full power to act with or
without the others is, authorized to sign the Registration Statement
covering the registration of the Limited Guarantee and any and all
amendments (including any post-effective amendments) to the Registration
Statement, on behalf of and as true and lawful attorney-in-fact or
attorneys-in-fact for the Chief Executive Officer and/or the Chief
Financial Officer and/or the Chief Accounting Officer and/or other
officers of the Corporation, including, without limitation, the Chairman
and/or the Vice Chairman and/or the President and/or each Senior Executive
Vice President and/or each Executive Vice President and/or each Senior
Vice President and/or each Vice President and/or the Treasurer and/or the
Secretary and/or each Assistant Secretary (in attestation of the corporate
seal of the Corporation or otherwise);
RESOLVED FURTHER, that it may be desirable and in the best interest
of the Corporation that the Limited Guarantee be from time to time
qualified or
<PAGE>
registered for sale in various states; that the Chairman, the Vice
Chairman, the President, or any Vice President and the Secretary or any
Assistant Secretary hereby are authorized to determine the states in which
appropriate action shall be taken to qualify or register for sale all or
such part of the Limited Guarantee as said officers may deem advisable in
order to comply with the applicable laws of any such states, and in
connection therewith to execute and file all requisite papers and
documents, including without limitation, applications, reports, surety
bonds, irrevocable consents and appointments of attorneys for service of
process; and the execution by such officers of any such paper or document
or the doing by them of any act in connection with the foregoing matters
shall conclusively establish their authority therefore from the
Corporation and the approval and ratification by the Corporation of the
papers and documents so executed and the action so taken;
RESOLVED FURTHER, that Ernest D. Stein be and he hereby is
designated and appointed as the person duly authorized to receive all
notices, orders, communications and other documents from the Commission
with respect to the Registration Statement, or any amendment thereto, with
all the powers consequent to such designation and appointment under the
Rules and Regulations of the Commission and that for purposes of the
Registration Statement (and any amendments thereto), Joseph M. Leone be,
and he hereby is, designated and appointed as the Principal Financial and
Accounting Officer of the Corporation; and
RESOLVED FURTHER, that all actions heretofore or hereafter taken by
any officer or officers of the Corporation within the terms of the
foregoing resolutions are hereby ratified and confirmed as the act and
deed of the Corporation."
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of
The CIT Group, Inc. this 11th day of March, 1999.
SEAL
/s/ Anne Beroza
--------------------------
Anne Beroza
Assistant Secretary
