As filed with the Securities and Exchange Commission on December 15, 1995
Registration No. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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CIT RV OWNER TRUST 1996-A
(Issuer with respect to the Certificates)
THE CIT GROUP SECURITIZATION CORPORATION II
(Originator of the Trust described herein)
(Exact name as specified in originator's charter)
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<S> <C> <C>
Delaware 6146 22-3328188
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
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The CIT Group Securitization Corporation II
650 CIT Drive
Livingston, New Jersey 07039
(201) 535-3514
(Address of principal executive offices)
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ERNEST D. STEIN
Executive Vice President, General Counsel & Secretary
The CIT Group Holdings, Inc.
1211 Avenue of the Americas
New York, New York 10036
(Name and address of agent for service)
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Copies to:
Paul N. Watterson, Esq. Reed D. Auerbach, Esq.
SCHULTE ROTH & ZABEL STROOCK & STROOCK & LAVAN
900 Third Avenue 7 Hanover Square
New York, New York 10022 New York, New York 10004
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Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
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. [ ]
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CALCULATION OF REGISTRATION FEE
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Proposed Proposed
maximum Amount of
Title of each class of aggregate registration
securities to be registered offering price (1) fee (1)
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Class A % Asset Backed Notes ......... $ 500,000 $175.00
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% Asset Backed Certificates ........ $ 500,000 $175.00
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Total ................................... $1,000,000 $350.00
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(1) Estimated solely for the purpose of calculating the registration fee on the
basis of the proposed maximum offering price per unit.
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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The CIT Group Securitization Corporation II
CIT RV Owner Trust 1996-A
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Cross Reference Sheet Furnished
Pursuant to Rule 501 (b) of Regulation S-K
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Caption or Location
Item and Caption in Form S-1 in Prospectus
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1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus........................... Forepart of Registration Statement
and Outside Front Cover
Page of Prospectus
2. Inside Front and Outside Back Cover Pages of Prospectus.......... Inside Front Cover Page and Outside
Back Cover Page of Prospectus
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges............................... Summary; Risk Factors;
The Contract Pool
4. Use of Proceeds.................................................. Use of Proceeds
5. Determination of Offering Price.................................. *
6. Dilution......................................................... *
7. Selling Security Holders......................................... *
8. Plan of Distribution............................................. Underwriting
9. Description of Securities to be Registered....................... Summary; Structure of the
Transaction; The Contract Pool; Pool
Factors; The Notes; The Certificates
10. Interests of Named Experts and Counsel........................... *
11. Information with Respect to the Registrant....................... The CIT Group Securitization
Corporation II, Seller
12. Disclosure of Commission Position on Indemnification for
Securities Act Liabilities..................................... *
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* Answer negative or item inapplicable.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
Subject To Completion
Dated December 15, 1995
Prospectus
$
CIT RV Owner Trust 1996-A
$ 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 Owner Trust 1996-A (the "Trust" or the "Issuer") will be formed
pursuant to a Trust Agreement, to be dated as of February 1, 1996, between The
CIT Group Securitization Corporation II (the "Company" or the "Seller") and
, as trustee (the "Owner Trustee"), and will issue Class A %
Asset Backed Notes (the "Class A Notes") in the principal amount of $
pursuant to an Indenture, to be dated as of February 1, 1996, between the Issuer
and , as trustee (the "Indenture Trustee"). The Trust will also issue
% Asset Backed Certificates (the "Certificates" and, together with the Notes,
the "Securities") in the principal amount of $ .
The assets of the Trust will primarily include a pool of simple interest retail
installment sale contracts (the "Initial Contracts") secured by the new and used
recreational vehicles financed thereby (the "Initial Financed Vehicles"),
certain monies received under the Initial Contracts on and after February 1,
1996 (the "Initial Cut-off Date"), security interests in the Initial Financed
Vehicles, the Collection Account, the Note Distribution Account, the Certificate
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
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 February 1, 1996 (the "Sale and
Servicing Agreement"), among the Seller, the Servicer, and the Trust. From time
to time on or before , 1996, additional simple interest retail
installment sale contracts (the "Subsequent Contracts" and, together with the
Initial Contracts, the "Contracts") secured by the new and used recreational
vehicles financed thereby (the "Subsequent Financed Vehicles" and, together with
the Initial Financed Vehicles, the "Financed Vehicles"), certain monies received
under the Subsequent Contracts on and after the related subsequent cut-off dates
(each, a "Subsequent Cut-off Date"), 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.
(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 16 herein.
THE SECURITIES WILL REPRESENT INTERESTS IN THE TRUST AND WILL NOT REPRESENT
INTERESTS IN OR OBLIGATIONS OF THE CIT GROUP SECURITIZATION CORPORATION II, THE
CIT GROUP/SALES FINANCING, INC. OR ANY OF THEIR RESPECTIVE AFFILIATES.
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 THES A
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) Discounts Company(1)(2)
Per Class A Note ....... % % %
Per Certificate ........ % % %
Total .................. $ $ $
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(1) Plus accrued interest at the Class A Rate and the Pass-Through Rate, as
appropriate, from , 1996.
(2) Before deduction of expenses payable by the Company estimated at $ .
The Notes and the Certificates 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 Notes and the Certificates 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 , 1996, against
payment therefor in immediately available funds.
The date of this Prospectus is February , 1996.
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(continued from preceding page)
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 Class A Notes will bear interest at the rate of % per annum.
Interest on the Notes will generally be payable on the fifteenth day of each
month (each, a "Distribution Date"), commencing 15, 1996. 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 Date for the Class A
Notes and the Certificates will be the Distribution Date.
There currently is no secondary market for the Securities and there is no
assurance that one will develop. The Underwriters expect, but are not obligated,
to make a market in the Securities. There is no assurance that any such market
will develop, or if one does develop, that it will continue or provide
sufficient liquidity.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE
SECURITIES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") on behalf of the Trust a Registration Statement on Form S-1
(together with all amendments and exhibits thereto, the "Registration
Statement"), of which this Prospectus is a part, under the Securities Act of
1933, as amended, with respect to the Securities being offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which have been omitted in accordance with the rules
and regulations of the Commission. For further information, reference is made to
the Registration Statement, including exhibits filed as part thereof, which is
available for inspection without charge at the public reference facilities of
the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, and the regional offices of the Commission at Suite 1400 Northwestern
Atrium Center, 500 West Madison Street, Chicago, Illinois 60661, and Seven World
Trade Center, New York, New York 10048. Copies of such information can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. 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 the 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. Such reports and other information
filed on behalf of the Trust will be available for inspection as set forth
above.
REPORTS TO SECURITYHOLDERS
Unless and until Definitive Certificates are issued, monthly and annual
unaudited reports containing information concerning the Contracts will be
prepared by the Servicer and sent on behalf of the Trust only to Cede & Co.
("Cede"), as nominee of DTC and registered holder of the Notes and the
Certificates. Securityholders may elect to hold their securities through any of
DTC (in the United States) 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 "--Reports to
Securityholders." Such reports will not constitute financial statements prepared
in accordance with generally accepted accounting principles.
2
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SUMMARY
This Summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus. Certain capitalized terms
used in the Summary are defined elsewhere in this Prospectus. Reference is made
to the "Index of Principal Terms" for the location herein of defined terms.
Issuer ................... CIT RV Owner Trust 1996-A (the "Trust" or the
"Issuer"), a Delaware business trust to be formed
by the Seller and the Owner Trustee pursuant to
the Trust Agreement, to be dated as of February 1,
1996.
Seller ................... The CIT Group Securitization Corporation II (the
"Company"), a wholly-owned, limited purpose
subsidiary of The CIT Group Holdings, Inc.
("CIT"). Neither CIT nor any of its
affiliates, including the Company and The CIT
Group/Sales Financing, Inc. ("CITSF"), has
guaranteed, insured or is otherwise obligated
with respect to the Securities. See "Risk
Factors--Limited Obligations".
Servicer ................. The CIT Group/Sales Financing, Inc. (in such
capacity referred to herein as the "Servicer"), a
wholly-owned subsidiary of CIT.
Indenture Trustee ........ , as trustee under the
Indenture, to be dated as of February 1, 1996
(the "Indenture Trustee").
Owner Trustee ............ , as trustee
under the Trust Agreement, to be dated as of
February 1, 1996 (the "Owner Trustee" and,
together with the Indenture Trustee, 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 Notes ................ The CIT RV Owner Trust 1996-A Class A % Asset
Backed Notes (the "Notes" or the "Class A Notes")
will represent obligations of the Trust secured by
the assets of the Trust (other than the
Certificate Distribution Account and the Cash
Collateral Account). See "The Notes--General".
The Trust will issue $ aggregate
principal amount of Class A Notes pursuant to an
Indenture, to be dated as of February 1, 1996,
between the Issuer and the Indenture Trustee (the
"Indenture"). See "The Notes--General".
The Notes will be offered for purchase in minimum
denominations of $1,000 and integral multiples of
$1,000 in excess thereof in book-entry form only.
Definitive Notes will be issued only under the
limited circumstances described herein. Persons
acquiring beneficial interests in the Notes will
hold their interests through The Depository Trust
Company ("DTC") in the United States or Cedel
Bank, societe anonyme ("Cedel") or the Euroclear
System ("Euroclear") in Europe. See "Certain
Information Regarding the Securities--Book-Entry
Registration" and "--Definitive Securities" and
Annex I hereto.
The Certificates ......... The CIT RV Owner Trust 1996-A % Asset Backed
Certificates (the "Certificates" and, together
with the Notes, the "Securities") will represent
fractional undivided interests in the Trust. See
"The Certificates--General".
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3
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The Trust will issue $ aggregate
principal amount of Certificates (the "Original
Certificate Balance") pursuant to a Trust
Agreement, to be dated as of February 1, 1996,
between the Seller and the Owner Trustee (the
"Trust Agreement"). Payments in respect of the
Certificates will be subordinated to payments on
the Notes to the limited extent described herein.
See "The Certificates--General".
The Certificates will be issued in minimum
denominations of $20,000 and integral multiples of
$1,000 in excess thereof 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 Certificate Balance (as described
herein). Persons acquiring beneficial interests in
the Certificates will hold their interests through
DTC. Definitive Certificates will be issued only
under the limited circumstances described herein.
See "Certain Information Regarding the
Securities--Book-Entry Registration" and
"--Definitive Securities".
Property of the Trust .... The property of the Trust will primarily include
(i) a pool of simple interest retail installment
sale contracts (the "Initial Contracts") secured
by the new and used recreational vehicles financed
thereby (the "Initial Financed Vehicles"), (ii)
certain monies received under the Initial
Contracts on and after February 1, 1996 (the
"Initial Cut-off Date"), (iii) security interests
in the Initial Financed Vehicles, (iv) the
Collection Account, the Note Distribution Account,
the Certificate 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), (v) the proceeds from claims under
certain insurance policies in respect of
individual Initial Financed Vehicles or the
related Obligors and (vi) certain rights under the
Sale and Servicing Agreement, to be dated as of
February 1, 1996 (the "Sale and Servicing
Agreement"), among the Seller, the Servicer and
the Trust.
From time to time on or before , 1996,
additional simple interest retail installment sale
contracts (the "Subsequent Contracts" and,
together with the Initial Contracts, the
"Contracts") secured by the new and used
recreational vehicles financed thereby (the
"Subsequent Financed Vehicles" and, together with
the Initial Financed Vehicles, the "Financed
Vehicles"), certain monies received under the
Subsequent Contracts on and after the related
Subsequent Cut-off Dates, 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-FundAccount. See "The Trust Property".
The Contracts ............ The property of the Trust will consist primarily
of installment sale contracts for recreational
vehicles originated by recreational vehicle
dealers ("Dealers") in the ordinary course of
business and acquired by CITSF or The CIT
Group/Consumer Finance, Inc. (NY) ("CITCF-NY") in
the ordinary course of its business. The Financed
Vehicles will consist of motor homes, travel
trailers and other types of recreational vehicles.
See "The Contract Pool". On or prior to the date
of issuance of the Securities (the "Closing
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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 February 1, 1996, and CITSF will sell
the Initial Contracts to the Company pursuant to a
purchase agreement, to be dated as of February 1,
1996 (the "Purchase Agreement"), and the Company
will sell the Initial Contracts to the Trust
pursuant to the Sale and Servicing Agreement.
As of the Initial Cut-off Date, the Initial
Contracts had an aggregate principal balance of
$ , a weighted average original maturity
of months and a remaining weighted average
maturity of months. The final scheduled
payment date on the Initial Contract with the last
maturity occurs in . See "The Contract
Pool".
From time to time on or prior to ,
1996, pursuant to the Sale and Servicing
Agreement, CITSF will be obligated to sell, and
the Company will be obligated to purchase, subject
to the satisfaction of certain conditions
described therein, 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. Pursuant to the
Sale and Servicing Agreement and 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 described
therein, 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 specified by CITSF and the Company
during the month in which the related Subsequent
Cut-off Date occurs (each, a "Subsequent Transfer
Date").
The Pre-Funding Account .. The Pre-Funding Account will be maintained with
the Owner Trustee and is designed solely to hold
funds to be applied by the Owner Trustee during
the Funding Period to pay to the Company the
purchase price for Subsequent Contracts. Monies on
deposit in the Pre-Funding Account will not be
available to cover losses on or in respect of the
Contracts.
On the Closing Date the Pre-Funding Account will
be created with an initial deposit, from the
proceeds of the Securities, of $ (the
"Pre-Funded Amount"). The "Funding Period" will be
the period from the Closing Date until the
earliest to occur of (i) the date on which the
amount on deposit in the Pre-Funding Account is
less than $100,000, (ii) the date on which an
Event of Default occurs under the Indenture, (iii)
the date on which an Event of Termination occurs
under the Sale and Servicing Agreement, (iv) the
insolvency of the Company, CITSF, CITCF-NY or CIT
or (v) the close of business on , 1996.
During the Funding Period, on one or more Subse-
quent 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
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, 1996, 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 hereinafter defined) 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") in the name of the
Owner Trustee on behalf of the Securityholders.
Amounts deposited in the Capitalized Interest
Account will be used on the 1996,
1996 and 1996 Distribution Dates, if
applicable, to fund the excess, if any, of (i) the
product of (x) the weighted average of the Class A
Rate and the Pass-Through Rate as of the first day
of the related Interest Accrual Period and (y) the
undisbursed funds (excluding investment earnings)
in the Pre-Funding Account (as of the last day of
the related Due Period) over (ii) the amount of
any investment earnings on funds in the
Pre-Funding Account that are available to pay
interest on the Securities on each such
Distribution Date. Any amounts remaining in the
Capitalized Interest Account on the last day of
the Funding Period and not used for such purposes
will be deposited in the 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.
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 (as hereinafter defined), on the next
succeeding Business Day (each, a "Distribution
Date"), commencing 15, 1995. 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 day
immediately preceding such Distribution Date or,
in the event Definitive Securities have been
issued, at the close of business on the last 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
Class A Notes and the Certificates will be payable
on the Distribution Date occurring in 20
(the "Class A 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,
Delaware, Illinois 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 on which interest has been paid to but
excluding the following Distribution Date, or in
the case of the initial Distribution Date from
February , 1996 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 fees will be collected on the
Contracts for application towards the payment of
principal and interest to the Securityholders and
the payment of fees on such Distribution Date. The
"Due Period" will be the calendar month
immediately preceding the Distribution Date. The
first Due Period will commence on and include
February 1, 1996 and will end on and include
February 29, 1996.
Determination Date ....... The "Determination Date" is the third Business Day
prior to each Distribution Date. On each
Determination Date, the Indenture Trustee will
determine the amount in the Collection Account
available for distribution on the related
Distribution Date, allocate such amounts between
the Notes and the Certificates and make payments
to Securityholders all as described under "The
Purchase Agreements and The Trust
Documents--Distributions".
Terms of the Notes ....... The principal terms of the Notes will be as
described below:
A. Interest Rate ....... The Class A Notes will bear interest at the rate
of % per annum (the "Class A Rate").
B. Interest ............ Interest 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 Class A 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 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 (as defined
under "The Purchase Agreements and The Trust
Documents--Distributions" herein) remaining after
the Servicer has been reimbursed for any
outstanding Monthly Advances and has been paid the
Servicing Fee (including any unpaid Servicing Fee
with respect to one or more prior Due Periods)
(collectively, the "Servicer Payment") and
following the payment of interest due on the Notes
on such Distribution Date.
The unpaid principal balance of the Notes will be
payable on the Class A Final Scheduled
Distribution Date. See "The Notes--Payments of
Principal".
D. Redemption .......... The Notes will be subject to mandatory redemption
in part, on a pro rata basis, 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. 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. The
"Pre-Funded Percentage" with respect to the Notes
or the Certificates is the percentage derived from
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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
initial Certificate Balance. See "The
Notes--Redemption" and "Certain Information
Regarding the Securities".
In the event of an Optional Purchase or Auction
Sale, as described herein, the outstanding Notes
will be redeemed, at a redemption price equal to
the unpaid principal amount of the Class A Notes
plus accrued and unpaid interest thereon at the
Class A Rate. See "Summary--Optional Purchase of
the Contracts", "--Auction Sale", "The
Notes--Redemption" and "The Purchase Agreements and
The Trust Documents--Insolvency Event".
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 proceeds from
any such sale, disposition or liquidation of the
Contracts will be treated as collections on the
Contracts and deposited in the Collection
Account. If the proceeds from the liquidation of
the Contracts and any amounts on deposit in the
Note Distribution Account and the Certificate
Distribution Account are not sufficient to pay the
Notes and Certificates in full, distributions will
be made first, to the payment of interest and
principal on the Notes and second, to the payment
of interest and principal on the Certificates. In
such event, the amount of principal returned to
the Certificateholders will be reduced and such
Certificateholders will incur a loss, except to
the extent of payments 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".
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 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
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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 Distribution Date on which the
Class A Notes have been paid in full (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. Distributions
of interest on the Certificates will be funded to
the extent of the Available Amount after the
Servicer has been reimbursed for any outstanding
Monthly Advances and 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 hereinafter
defined), under the circumstances described
herein. The rights of Certificateholders to
receive distributions of interest will be
subordinated to the rights of Noteholders to
receive interest and principal, as described
herein. See "The Certificates--Distributions of
Interest".
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 reimbursed
for any outstanding Monthly Advances and 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
reimbursed for an outstanding Monthly Advances and
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, 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
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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, 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. 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. See "The
Certificates--Redemption" and "Certain Information
Regarding The Securities".
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" and "The Purchase
Agreements and The Trust Documents--Insolvency
Event".
Mandatory Prepayment ..... The Notes and the Certificates will be prepaid 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 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
amount to be distributed to Noteholders and
Certificateholders in connection with any such
prepayment will equal the Pre-Funded Percentage
allocable to the Notes and the Certificates,
respectively, of the remaining Pre-Funded Amount.
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 Class A
Noteholders, to the extent described herein. This
subordination is intended to enhance the
likelihood of timely receipt by Class A
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10
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Noteholders of the full amount of interest and
principal required to be paid to them, and to
afford such Class A Noteholders limited protection
against losses in respect of the Contracts.
No distribution will be made to the
Certificateholders on any Distribution Date in
respect of (i) interest until the full amount of
interest and principal on the Class A Notes
payable on such Distribution Date has been
distributed to the Class A Noteholders, other than
payments from the Cash Collateral Account, and
(ii) principal until the Class A Notes have been
paid in full, other than distributions in respect
of the Principal Liquidation Loss Amount.
The protection afforded to the Class A Noteholders
by the subordination feature described above will
be effected by the preferential right of the Class
A Noteholders to receive, to the extent described
herein, current distributions from collections on
or in respect of the Contracts prior to the
application of such collections to making payments
in respect of the Certificates. There is no other
protection against losses on the Contracts
afforded the Class A 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. 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 hereinafter
defined), 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
and (ii) the amount on deposit in the Cash
Collateral Account, exclusive of interest and
earnings thereon and any investment losses and
expenses and before giving effect to any deposit
to be made to the Cash Collateral Account on such
Distribution Date. If the Available Amount on any
Distribution Date is insufficient (after
reimbursing the Servicer for Monthly Advances to
the extent required by the Sale and Servicing
Agreement, 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 "The
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Purchase Agreement and The Trust Documents--Credit
Enhancement--Cash Collateral Account" and
"--Distributions." If the Available Cash
Collateral Amount is zero, holders of the
Certificates will bear the risk of loss resulting
from default by Obligors (as hereinafter defined)
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.
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 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
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 to be made to the
Servicer on such Distribution Date. See "The
Purchase Agreements and The Trust
Documents--Distributions." 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 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
"The Purchase Agreement and The Trust
Documents--Credit 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 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 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 "The
Purchase Agreement and The Trust Documents--Credit
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 judgement, expects
to recover such Monthly Advance from subsequent
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12
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collections with respect to interest on such
Contract made by or on behalf of the obligor
thereunder (the "Obligor"), net liquidation
proceeds or insurance proceeds with respect to
such Contract. The Servicer shall be reimbursed
for any Monthly Advance from subsequent
collections with respect to such Contract. If the
Servicer determines in its good faith judgement
that an unreimbursed Monthly Advance shall not
ultimately be recoverable from such collections,
the Servicer shall be reimbursed for such Monthly
Advance from collections on all Contracts. 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 judgement. The Servicer will not
advance funds in respect of the principal
component of any scheduled payment. See "The
Purchase Agreements and The Trust
Documents--Monthly Advances". "Interest Shortfall"
means with respect to any Contract and any
Distribution Date, the excess of (x) the sum of
(i) the product of one-twelfth of the weighted
average of the Pass-Through Rate and the Class A
Rate multiplied by the outstanding principal
amount of such Contract as of the last 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) calculated on the basis of a 360-day year
comprised of twelve 30-day months and (ii) the
product of (A) one-twelfth of the Servicing Fee
Rate and (B) the outstanding principal amount of
such Contract as of the last day of the second
preceding Due Period (or, in the case of the first
Due Period 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 (y) 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 will require the Servicer
to deposit into the Collection Account on the
Business Day immediately preceding the following
Distribution Date, without the right of subsequent
reimbursement, an amount equal to such Interest
Shortfall (a "Non-Reimbursable Payment").
Servicing Fees ............ The Servicer shall receive a monthly fee (the
"Servicing Fee"), payable on each Distribution
Date, equal to the sum of (i) one-twelfth of the
product of 1.00% per annum (the "Servicing Fee
Rate") and the Pool Balance as of the last day of
the second preceding Due Period (or, in the case
of the first Distribution Date, as of the Initial
Cut-off Date) and (ii) any investment earnings on
amounts on deposit in the Collection Account, the
Note Distribution Account and the Certificate
Distribution Account. In addition, the Servicer
will be entitled to collect and retain any late
fees, prepayment charges, extension fees or other
administrative fees or similar charges allowed by
applicable law with respect to the Contracts
("Late Fees"). See "The Purchase Agreements and
The Trust Documents--Servicing Compensation."
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Optional Purchase
of the Contracts ....... At its option, CITSF may purchase all the
Contracts on any Distribution Date following any
Record Date on which the Pool Balance is 10% or
less of the Initial Pool Balance, at a purchase
price determined as described under "The Purchase
Agreements and The Trust Documents--Termination."
The "Initial Pool Balance" equals the sum of (i)
the Pool Balance as of the Initial Cut-off Date
and (ii) the aggregate principal balance of all
Subsequent Contracts added to the Trust as of
their respective Subsequent Cut-off Dates.
Auction Sale .............. Within ten days after a Distribution Date
following the Record Date on which the Pool
Balance 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, "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 Record Date. 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 ................... It is a condition to the issuance of the
Securities that the Class A Notes be rated in the
highest rating category by at least one nationally
recognized rating agency (each, a "Rating
Agency") and the Certificates be rated in at least
the third highest rating category by at least one
Rating Agency. The ratings of the Class A 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 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 judgement,
circumstances so warrant. In the event that the
rating initially assigned to the Securities is
subsequently lowered or withdrawn for any reason,
no person or entity will be obligated to provide
any additional credit enhancement with respect to
such Securities. There can be no assurance whether
any other rating agency will rate the Class A
Notes or the Certificates, or if one does, what
rating would be assigned by any such other rating
agency. A security rating is not a recommendation
to buy, sell or hold securities.
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Certain Federal Income
Tax Considerations ...... For Federal income tax purposes: (1) the Notes
will constitute indebtedness; and (2) the
Certificates will constitute interests in a trust
fund that will not be treated as an association
taxable as a corporation. Each Noteholder, by
acceptance of a Note, will agree to treat the
Notes as indebtedness, and each Certificateholder,
by the acceptance of a Certificate, will agree to
treat the Trust as a partnership in which the
Certificateholders are partners for Federal income
tax purposes. See "Certain Federal Income Tax
Consequences".
ERISA Considerations ...... Subject to certain considerations discussed
under"ERISA Considerations" herein, the Notes will
be eligible for purchase by employee benefit plans
that are subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
Employee benefit plans subject to ERISA will not
be eligible to purchase the Certificates.
Any benefit plan fiduciary considering the
purchase of the Securities should, among other
things, consult with its counsel in determining
whether all required conditions have been
satisfied. See
"ERISA Considerations".
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15
<PAGE>
RISK FACTORS
Prospective Securityholders should consider the following risks in
connection with the purchase of the Securities:
1. Limited Obligations. The Securities will not represent an interest in or
an obligation of The CIT Group Holdings, Inc. ("CIT"), The CIT Group
Securitization Corporation II (the "Company"), the Affiliated Purchaser (as
hereinafter defined) or any Servicer (including The CIT Group/Sales Financing,
Inc. ("CITSF")). 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
hereinafter defined) or any of their affiliates, or any other Servicer or any of
its affiliates.
2. Risk of Loss. An investment in the Securities may be affected by, among
other things, a downturn in regional or local economic conditions. These
regional or local economic conditions are often volatile and historically have
affected the delinquency, loan loss and repossession experience of pools of
installment sale contracts secured by recreational vehicles. CITSF's portfolio
of installment sale contracts secured by recreational vehicles has grown over
the past two years, and the credit criteria and underwriting guidelines under
which CITSF originates recreational vehicle installment sale contracts were
changed in 1994. The delinquency and loan loss experience for CITSF's portfolio
will be affected by this growth and the change in credit criteria. See "The CIT
Group/Sales Financing, Inc., Servicer--Delinquency, Loan Loss and Liquidation
Experience" herein. Because the market value of recreational vehicles generally
declines with age and because of the failure of the Trustees to possess a first
perfected security interest in the Financed Vehicles in certain states, the
Servicer may not recover the entire amount owing under a Defaulted Contract (as
hereinafter defined). See "Certain Legal Aspects of the Contracts." In such a
case, the Securityholders may suffer a corresponding loss. The market value of
the Financed Vehicles could be or become lower than the outstanding principal
balances of the Contracts that they secure. Sufficiently high liquidation losses
on the Contracts will have the effect of reducing, and could eliminate (a) the
protection against loss afforded to the Noteholders by the subordination of the
Certificates and (b) the protection against loss afforded to the
Certificateholders by the Available Cash Collateral Amount (as hereinafter
defined). 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 hereinafter defined) 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, in most states,
certificate of title statutes. The steps necessary to perfect the security
interest in a Financed Vehicle vary from state to state. All Contracts in the
Contract Pool were purchased by CITSF or The CIT Group/Consumer Finance, Inc.
(NY) ("CITCF-NY") from recreational vehicle dealers ("Dealers") and name the
Dealer as obligee and as secured party. All Contracts in the Contract Pool were
assigned b y the related Dealer to CITSF or CITCF-NY. In each case, CITSF or
CITCF-NY is named as the secured party on the certificate of title for the
related Financed Vehicle. Because of the expense and administrative
inconvenience involved, CITSF will not amend any certificate of title to name
the Company or either Trustee as the lienholder and the Company will not deliver
any certificate of title to either Trustee or note thereon either Trustee's
interest. Consequently, in some states, in the absence of such an amendment to
the certificate of title to reflect the successive assignments to the Company,
the Owner Trustee and the Indenture Trustee, the security interest in the
Financed Vehicle may not be effective, or such security interest may not be
perfected, and the assignment of the security interest in the Financed Vehicle
to the Owner Trustee and the Indenture Trustee may not be effective against
other creditors or a trustee in bankruptcy.
In addition, numerous federal and state consumer protection laws impose
requirements on lenders under installment sale contracts, such as the Contracts,
and the failure by the seller of goods to comply with such requirements could
16
<PAGE>
give rise to liabilities of assignees for amounts due under such agreements and
the right to set-off against claims by such assignees. These laws would apply to
the Trust as assignee of the Contracts. From time to time, CITSF has been
involved in litigation under consumer or debtor protection laws, some of which
have been class actions. See "Risk Factors--Litigation." Pursuant to the Sale
and Servicing Agreement, 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 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 Trust's interest in any
Contract would require CITSF to repurchase such Contract unless such breach is
cured within 90 days. If CITSF does not honor its purchase obligation in respect
of a Contract and such Contract were to become defaulted, recovery of amounts
due on such Contract would be dependent on repossession and resale of the
Financed Vehicle securing such Contract. Certain other factors may limit the
ability of the Securityholders to realize upon the Financed Vehicles or may
limit the amount realized to less than the amount due. See "Certain Legal
Aspects of the Contracts".
Under California law and most state vehicle dealer licensing laws, sellers
of recreational vehicles are required to be licensed to sell vehicles at retail
sale. Numerous other federal and state consumer protection laws impose
requirements applicable to the origination and lending pursuant to 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 their provisions may affect the enforceability of the
related Contract. Neither the Trust nor the Company has obtained any license
required under any federal or state consumer or mortgage banking laws or
regulations, and the absence of such licenses may impede the enforcement of
certain rights or give rise to certain defenses in actions seeking enforcement
of such rights. In addition, with respect to used vehicles, the Federal Trade
Commission's Rule on Sale of Used Vehicles requires that all sellers of used
vehicles prepare, complete, and display a "Buyer's Guide" which explains the
warranty coverage for such vehicles. Furthermore, Federal Odometer Regulations
promulgated under the Motor Vehicle Information and Cost Savings Act require
that all sellers of used vehicles furnish a written statement signed by the
seller certifying the accuracy of the odometer reading. If a seller is not
properly licensed or if either a Buyer's Guide or Odometer Disclosure Statement
was not provided to the purchaser of a Financed Vehicle, the obligor may be able
to assert a defense against the seller of the Financed Vehicle. See "Certain
Legal Aspects of the Contracts".
4. Certain Matters Relating to Insolvency. CITSF and the Company intend
that each transfer of Contracts from CITCF-NY to CITSF and from CITSF to the
Company and from the Company to the Trust constitutes a sale, rather than a
pledge of the Contracts to secure indebtedness. However, if CITCF-NY, CITSF or
the Company were to become a debtor under Title 11 of the United States Code, 11
U.S.C. ss.101 et seq. (the "Bankruptcy Code"), it is possible that a creditor,
receiver, other party in interest or trustee in bankruptcy of CITCF-NY, CITSF or
the Company, or CITCF-NY, CITSF or the Company as debtor-in-possession, may
argue that the sale of the Contracts by CITCF-NY to CITSF or by CITSF to the
Company, or by the Company to the Trust, respectively, was a pledge of the
Contracts rather than a sale and that, accordingly, such Contracts should be
part of such entity's bankruptcy estate. Such a position, if presented to a
court, even if ultimately unsuccessful, could result in a delay in or reduction
of distributions to the Securityholders. See "Certain Legal Aspects of the
Contracts--Certain Matters Relating to Insolvency".
, an corporation and a wholly owned
subsidiary of CIT (the "Affiliated Purchaser"), will purchase at least 1% of the
principal balance of the Certificates. The Affiliated Purchaser will have the
same rights with regard to the Trust as all other Certificateholders based on
its percentage ownership of the Certificate Balance. The Trust Agreement 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 have been taken in structuring the transactions
contemplated hereby that are intended to make it less likely that an Insolvency
Event with respect to the Affiliated Purchaser will occur. These steps include
the formation of the Affiliated Purchaser as a separate, limited-purpose
corporation pursuant to articles of incorporation containing certain limitations
(including restrictions on the nature of the Affiliated Purchaser's business and
a restriction on the Affiliated Purchaser's ability to commence a voluntary case
or proceeding under the Bankruptcy Code or similar applicable state laws
17
<PAGE>
("Insolvency Laws") without the prior affirmative unanimous vote of its
directors). However, there can be no assurance that the activities or
liabilities of the Affiliated Purchaser would not result in an Insolvency Event.
If an Insolvency Event with respect to the Affiliated Purchaser occurs, the
Indenture Trustee (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 proceeds from any such sale, disposition or liquidation of
the Contracts will be treated as collections on the Contracts and deposited in
the Collection Account. If the proceeds from the liquidation of the Contracts
and any amounts on deposit in the Note Distribution Account and the Certificate
Distribution Account are not sufficient to pay the Notes and Certificates in
full, distributions will be made first, to the payment of interest and principal
on the Notes and second, to the payment of interest and principal on the
Certificates. In such event, the amount of principal returned to the
Certificateholders will be reduced and such Certificateholders will incur a
loss, except to the extent of payments 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".
5. Limited Liquidity. and (the
"Underwriters") intend to make a secondary market in the Securities, but have no
obligation to do so. There can be no assurance that a secondary market will
develop for the Securities or, if it does develop, that it will provide the
Holders of the Securities with liquidity of investment or that it will remain
for the term of the Securities.
6. The Subsequent Contracts and the Pre-Funding Account. The conveyance of
Subsequent Contracts by CITSF during the Funding Period is subject to the
conditions described herein under "The Contract Pool". If CITSF is unable to
originate Contracts satisfying such criteria during the Funding Period, CITSF
will have insufficient Contracts to sell to the Trust on Subsequent Transfer
Dates, thereby resulting in prepayments of principal to Noteholders 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 initial 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 initial 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 at the time of its addition.
Following the transfer of Subsequent Contracts to the Contract Pool the
aggregate characteristics of the Contracts then held in the Contract Pool may
vary from those of the Initial Contracts included therein.
The ability of the Trust to invest in Subsequent Contracts is largely
dependent upon whether CITSF is able to originate recreational vehicle contracts
that meet the requirements for transfer on a Subsequent Transfer Date under a
Subsequent Purchase Agreement transferring Subsequent Contracts from CITSF to
the Company and under the Sale and Servicing Agreement. The ability of CITSF to
originate such contracts may be affected by a variety of social and economic
factors. Moreover, such factors may affect the ability of the Obligors
thereunder to perform their obligations thereunder which may cause contracts
originated by CITSF or its affiliates to fail to meet the requirements for
transfer under the Subsequent Purchase Agreement or the Sale and Servicing
Agreement. Economic factors include interest rates, unemployment levels, the
rate of inflation and consumer perception of economic conditions generally.
However, CITSF is unable to determine and has no basis to predict whether or to
what extent economic or social factors will affect the performance by such
Obligors and the availability of Subsequent Contracts.
18
<PAGE>
7. Limited Assets. Although the Trust will covenant to sell the Contracts
if directed to do so by the Indenture Trustee in accordance with the Indenture
following an acceleration of the Notes upon an Event of Default, there is no
assurance that the market value of the Contracts will at any time be equal to or
greater than the aggregate outstanding principal balance of the Notes.
Therefore, upon an Event of Default with respect to the Notes there can be no
assurance that sufficient funds will be available to repay Noteholders in full.
In addition, the amount of principal required to be distributed to Noteholders
under the Indenture is generally limited to amounts available to be deposited in
the Note Distribution Account. Therefore, the failure to pay principal on the
Notes may not result in the occurrence of an Event of Default until the Class A
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
hereinafter defined) to make distributions to the Certificateholders.
8. Geographic Concentration of Recreational Vehicles. A significant
concentration of the Initial Contracts were originated in the states of
[California, Texas, Arizona, Florida, Oklahoma and Missouri]. Based on the
Initial Cut-off Date Pool Principal Balance, %, %, %, %, % and % of
the Initial Contracts were originated in [California, Texas, Arizona, Florida,
Oklahoma and Missouri], 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 [California,
Texas, Arizona, Florida, Oklahoma or Missouri] may have an adverse effect on the
ability of Obligors in such states to meet their payment obligations under the
Contracts.
9. Litigation. In June, 1995, a suit, Harvey Travis et al. v. The CIT Group
Sales Financing, Inc., et al., Civil Action No. CV-95-P-1544-S, was filed in the
United States District Court for the Northern District of Alabama, against
CITSF, its force-placed insurance carrier and another lender. Plaintiffs in this
action allege primarily that force-placed insurance coverage on manufactured
homes was placed by defendants in a manner which caused plaintiffs and other
borrowers to be charged or assessed for excessive premiums and that there was
inadequate disclosure regarding certain fees charged and commissions earned in
connection therewith. In their complaint, plaintiffs ask that a class action be
certified, with the class to be comprised of individuals against whom monetary
charges alleged to be excessive have been assessed and/or collected by CITSF
and/or the other defendants for the purchase of force-placed insurance in
connection with consumer installment transactions with CITSF and/or the other
defendants. It cannot at this time be determined whether there is any basis for
a class action. The allegations of the complaint are very general and discovery
has only recently commenced. However, based on what it knows at this time, the
management of CITSF has no reason to believe that this case will have a material
effect upon CITSF's financial condition or results of operations.
As of the Initial Cut-off Date, force-placed insurance has not been
obtained on any of the Initial Contracts and as of the Subsequent Cut-off Date,
force-placed insurance will not have been obtained on any of the Subsequent
Contracts. Historically, CITSF has force-placed insurance on a relatively small
percentage of its retail installment sales contracts relating to recreational
vehicles. The Servicer, however, may force-place insurance on the Contracts once
they are owned by the Trust as described under "The Purchase Agreements and the
Trust Documents--Physical Damage Insurance" and there can be no assurance as to
the number or principal balance of the Contracts that may become subject to
force-placed insurance. In the event that the Servicer fails to comply with the
provisions of the Sale and Servicing Agreement relating to force-placed
insurance with respect to any Contract and such failure materially and adversely
affects the Trust's interest in such Contract, the Servicer will be required to
purchase such Contract in accordance with the terms of the Sale and Servicing
Agreement.
STRUCTURE OF THE TRANSACTION
The Issuer, CIT RV Owner Trust 1996-A (the "Issuer" or the "Trust"), is a
business trust formed under the laws of the State of Delaware pursuant to a
Trust Agreement (as amended and supplemented from time to time, the "Trust
Agreement"), to be dated as of February 1, 1996 between the Seller and ,
19
<PAGE>
acting thereunder not in its individual capacity but solely as trustee of the
Trust (the "Owner Trustee"). After its formation, the Trust will not engage in
any activity other than (i) acquiring, holding and managing the Contracts and
the other assets of the Trust and proceeds therefrom, (ii) issuing the Notes and
the Certificates, (iii) making payments on the Notes and the Certificates and
(iv) engaging in other activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith.
The Trust will initially be capitalized with equity equal to
$ (the "Original Certificate Balance"). Certificates with an
aggregate original principal balance of at least $ will be
sold to the Affiliated Purchaser and Certificates representing the remainder of
the Original Certificate Balance will be sold to third party investors that are
expected to be unaffiliated with the Affiliated Purchaser, the Seller, the
Servicer or their affiliates. The equity in the Trust, together with the
proceeds of the initial sale of the Notes, will be used by the Trust to purchase
the Initial Contracts from the Seller pursuant to the Sale and Servicing
Agreement and to fund the deposit of the Pre-Funded Amount.
The Trust's principal offices are in , Delaware in care of
as Owner Trustee, at the address listed in "--The Owner
Trustee" below.
Capitalization of the Trust
The following table illustrates the capitalization of the Trust as of the
Initial Cut-off Date, as if the issuance and sale of the Notes and the
Certificates offered hereby had taken place on such date:
Class A % Asset Backed Notes ........... $
% Asset Backed Certificates ........... $
-----------
Total ..................................... $
===========
The Owner Trustee
is the Owner Trustee under the Trust Agreement.
is a Delaware banking corporation and a wholly-owned subsidiary of
. The principal offices of are located at
. The Owner Trustee will perform limited administrative functions
under the Trust Agreement, including making distributions from the Certificate
Distribution Account. The Owner Trustee's liability in connection with the
issuance and sale of the Certificates and the Notes is limited solely to the
express obligations of the Owner Trustee as set forth in the Trust Agreement and
the Sale and Servicing Agreement.
THE TRUST PROPERTY
The Notes are an obligation of the Trust and will be secured by the assets
of the Trust (other than the Certificate Distribution Account and the Cash
Collateral Account). Each Certificate represents a fractional undivided interest
in the Trust. The Trust property will include, among other things, (i) a pool
(the "Contract Pool") of simple interest retail installment sale contracts
secured by new and used recreational vehicles between Dealers and Obligors,
consisting of the Initial Contracts and the Subsequent Contracts; (ii) all
monies received under the Initial Contracts on or after the Initial Cut-off Date
and the Subsequent Contracts on or after the related Subsequent Cut-off Date;
(iii) such amounts as from time to time may be held in one or more accounts
established and maintained by the Servicer pursuant to the Sale and Servicing
Agreement (including all investments in such accounts and all income from the
funds therein and all proceeds thereof, other than investment earnings on the
Cash Collateral Account) as described herein; (iv) all monies on deposit in the
Pre-Funding Account, the Cash Collateral Account and the Capitalized Interest
Account (as defined herein) (including all investments in such accounts and all
income from the funds therein and all proceeds thereof, other than investment
earnings on the Cash Collateral Account); (v) security interests in the Financed
Vehicles and any accessions thereto; (vi) the right to proceeds from physical
damage, credit life and disability insurance policies, if any, covering
individual Financed Vehicles or Obligors, as the case may be; (vii) the rights
of the Trust under the Sale and Servicing Agreement; and (viii) any and all
proceeds of the foregoing.
20
<PAGE>
THE CONTRACT POOL
General
The Contract Pool will initially consist of conventional fixed-rate
simple interest installment sale contracts secured by recreational vehicles
(collectively, the "Initial Contracts") having an aggregate unpaid principal
balance as of the Initial Cut-off Date of $ (the "Initial Cut-off
Date Pool Principal Balance"). For the purposes of the discussion of the
characteristics of the Initial Contracts on the Initial Cut-off Date contained
herein, the principal balance of each Initial Contract is the unpaid principal
balance as of the Initial Cut-off Date.
In addition to the Initial Contracts sold by the Company to the Trust on
the Closing Date the Trust is expected to purchase from the Company additional
conventional fixed-rate simple interest installment sale contracts secured by
recreational vehicles from time to time on or before the 1996
Distribution Date (collectively, the "Subsequent Contracts" and, together with
the Initial Contracts, the "Contracts"). The Subsequent Contracts to be
purchased by the Trust, if available, will be purchased by CITSF from CITCF-NY
or Dealers and sold by CITSF to the Company and by the Company to the Trust.
Accordingly, the statistical characteristics of the Contract Pool will vary as
of any Subsequent Cut-off Date upon the acquisition of such Subsequent
Contracts.
CITSF will sell the Initial Contracts to the Company pursuant to a Purchase
Agreement to be dated as of February 1, 1996 (the "Purchase Agreement") and the
Company will sell the Initial Contracts to the Trust pursuant to the Sale and
Servicing Agreement to be dated as of February 1, 1996 (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 Subsequent Purchase Agreement
and the Company will sell any Subsequent Contracts to the Trust pursuant to a
Subsequent Transfer Agreement.
The obligation of the Trust to purchase the Subsequent Contracts is subject
to the following requirements: (i) such Subsequent Contracts must satisfy the
representations and warranties specified in the Sale and Servicing Agreement;
(ii) such Subsequent Contracts will not be selected by either CIT or the Seller
in a manner that it believes is adverse to the interests of the Securityholders;
(iii) the weighted average Contract Rate 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 of at least %; (ix) each
Subsequent Contract will provide for level monthly payments which provide
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 30 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 Contract will
be the subject of a bankruptcy proceeding; (xiii) as of the related Subsequent
Cut-off Date, each Subsequent Contract will have a remaining principal balance
of not less than $ and not more than $ ; (xiv) the
payment date on the Subsequent Contract with the latest scheduled payment date
will not be later than 20 ; (xv) no more than % of the Contracts
(including the related Subsequent Contracts) are Contracts secured by used
Financed Vehicles; and (xvi) such other requirements as the Rating Agencies
shall request. The Subsequent Financed Vehicles will consist of motor homes,
travel trailers and other types of recreational vehicles.
Because the Subsequent Contracts will be originated after the Initial
Contracts, following their conveyance to the Trust, the characteristics of the
Contracts, including the Subsequent Contracts, may vary from those of the
Initial Contracts.
21
<PAGE>
The Initial Contracts were purchased by CITSF or CITCF-NY from Dealers in
the ordinary course of business. The Initial Contracts were selected from
CITSF's portfolio of recreational vehicle installment sale contracts based on
several criteria, including the following: (i) each Initial Contract was
originated in the United States of America; (ii) each Initial Contract has a
Contract Rate equal to or greater than %; (iii) each Initial Contract provides
for level monthly payments which include interest at the related Contract Rate
and, if paid in accordance with its schedule, fully amortizes the amount
financed over an original term of no greater than months; (iv) as of the
Initial Cut-off Date the most recent scheduled payment of principal and interest
on each Initial Contract was made by or on behalf of the related Obligor or was
not delinquent more than 30 days; (v) no Initial Financed Vehicle has been
repossessed without reinstatement as of the related Initial Cut-off Date; (vi)
as of the Initial Cut-off Date no Obligor on any Initial Contract was the
subject of a bankruptcy proceeding; and (vii) as of the Initial Cut-off Date
each Initial Contract has a remaining principal balance of not less than
$ and not more than $ . The Initial Financed Vehicles
consist of motor homes, travel trailers and other types of recreational
vehicles.
All of the Initial Contracts are, and all of the Subsequent Contracts will
be, Simple Interest Contracts. A "Simple Interest Contract" is a Contract as to
which interest accrues on a simple interest method (i.e., the interest portion
of each monthly payment equals the interest on the outstanding principal balance
of the related Contract for the number of days since the most recent payment
made on such Contract and the balance, if any, of such monthly payment is
applied to principal).
The Initial Contracts were 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
1995 and 1996. All Initial Contracts are installment sale contracts
secured by recreational vehicles originated by a Dealer in the ordinary course
of its business and purchased by CITCF-NY or CITSF in the ordinary course of its
business.
Approximately %, % and % of the Initial Cut-off Date Pool Principal
Balance represented Contracts secured by motor homes, travel trailers and other
types of recreational vehicles, respectively. Approximately % of the Initial
Contracts, by Initial Cut-off Date Pool Principal Balance, represented financing
of recreational vehicles which were new and approximately % represented
financing of recreational vehicles which were used at the time the related
Initial Contract was originated. As of the Initial Cut-off Date, the average
outstanding principal balance of the Initial Contracts secured by motor homes,
travel trailers and other types of recreational vehicles was $ ,
$ and $ , respectively.
Based upon information presented by Obligors in their credit applications
the Initial Contracts were originated in states. Approximately % of the
Initial Contracts, by Initial Cut-off Date Pool Principal Balance, were
originated in the State of California, approximately % were originated in the
State of Texas, approximately % were originated in the State of Arizona,
approximately % were originated in the State of Florida, approximately %
were originated in the State of Oklahoma and approximately % were originated
in the State of Missouri. Each other state accounts for less than % of the
Initial Contracts by Initial Cut-off Date Pool Principal Balance.
All Initial Contracts have a Contract Rate of at least %. As of the
Initial Cut-off Date, the Initial Contracts have remaining maturities of at
least months but not more than months, original maturities of at least
months but not more than months, and a weighted average remaining term to
stated maturity of 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 199 to 20 . 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 $ .
The weighted average original term to maturity of the Initial Contracts was
months.
Set forth below is a description of certain characteristics of the Initial
Contracts.
22
<PAGE>
Geographical Distribution of Initial Contracts by State of Origination
<TABLE>
<CAPTION>
% of Contract
% of Contract Pool by
Number of Pool by Number Aggregate Principal Principal Balance
Initial of Initial Balance Outstanding Outstanding
Contracts As of Contracts As of As of As of
State Initial Cut-off Date Initial Cut-off Date Initial Cut-off Date Initial Cut-off Date
- ---- ---------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Alabama ..........
Arizona ..........
Arkansas .........
California .......
Colorado .........
Connecticut ......
Delaware .........
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 ............ 100.00% $ 100.00%
===== ======= =========== =======
</TABLE>
23
<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>
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 hereinafter
defined), (ii) the sale by the applicable Trustee of all of the Contracts
remaining in the 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." Moreover, partial retirement of the Notes and
Certificates will occur to the extent there is remaining any Pre-Funded Amount
on deposit in the Pre-Funding Account at the end of the Funding Period.
The rate of principal payments (including prepayments) on pools of
recreational vehicle installment sale contracts may be influenced by a variety
of economic, geographic, social and other factors. In general, if prevailing
24
<PAGE>
interest rates were to fall significantly below the Contract Rates on the
Contracts, the Contracts could be subject to higher prepayment rates than if
prevailing interest rates were to remain at or above the Contract Rates on the
Contracts. Conversely, if prevailing interest rates were to rise significantly,
the rate of prepayments on the Contracts would generally be expected to
decrease. No assurances can be given as to the rate of prepayments on the
Contracts in stable or changing interest rate environments.
CITSF is not aware of any publicly available industry statistics that set
forth principal prepayment experience for recreational vehicle installment sale
contracts similar to the Contracts over an extended period of time, and its
experience with respect to recreational vehicle receivables included in its
portfolio is insufficient to draw any specific conclusions with respect to the
expected prepayment rates on the Contracts.
Certain Payment Data
Certain statistical information relating to the payment behavior of
recreational vehicle installment sale contracts originated by CITSF is set forth
below. In evaluating the information contained in this table and its
relationship to the expected prepayment behavior of the Contracts, prospective
Securityholders should consider that the information set forth below reflects,
with respect to contracts originated in a given year, all principal payments
made in respect of such contracts in a given year, including regularly scheduled
payments, liquidation or insurance proceeds applied to principal of such
contracts, as well as principal prepayments made by or on behalf of the obligors
on the contracts in advance of the date on which such principal payment was
scheduled to be made. The information set forth below also reflects charge-offs
of the contracts during a given year. ln addition, the Company has not performed
any statistical analysis to determine whether the contracts to which the table
relates constitute a statistically significant sample of recreational vehicle
installment sale contracts for purposes of determining expected payment
behavior. Payment rates on the contracts are influenced by a number of economic,
social and other factors. Certain of the contracts included in the table below
were originated with underwriting criteria that may differ from the Contracts.
Furthermore, no assurance can be given that the prepayment experience of the
Contracts will exhibit payment behavior similar to the behavior summarized in
the following table. In addition to the foregoing, prospective Securityholders
should consider that the table set forth below is limited to the period covered
therein and thus cannot reflect the effects, if any, of aging on the payment
behavior of recreational vehicle contracts beyond such periods. As a result,
investors should not draw any conclusions regarding the prepayment rate of the
Contracts from the information presented in the table below. Each investor must
make its own assumptions regarding the prepayment rate of the Contracts.
The following table sets forth, with respect to all of the recreational
vehicles contracts originated by CITSF (excluding contracts purchased in bulk)
in each year since 1991, 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.
Information Regarding Principal Reduction on Recreational
Vehicle Contracts Originated by CITSF
(Dollars in Thousands)
Year of Origination
----------------------------------------------------
1991 1992 1993(3) 1994(4) 1995(5)
---- ---- ---- ---- ----
Approximate Volume (1) ... $332,700 $374,800 $405,900 $294,500
Approximate Aggregate
Principal Balance (2):
December 31, 1991 ... $282,600
December 31, 1992 ... $198,800 $322,700
December 31, 1993 ... $134,300 $233,700 $354,400
December 31, 1994 ... $ 84,100 $165,200 $274,000 $260,700
June 30, 1995 ....... $ 71,300 $142,900 $242,200 $236,600
- ----------
(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 Recreational Vehicle contracts sold by CITSF in January 1994 in
connection with another securitization which CITSF is servicing.
(4) Includes Recreational Vehicle contracts sold by CITSF in June 1995 in
connection with another securitization which CITSF is servicing.
(5) Includes Recreational Vehicle Contracts sold by CITSF in August 1995 in
connection with another securitization which CITSF is serving.
25
<PAGE>
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
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 for
such Monthly Advances, the loss with respect to such Contract may be larger than
would have been the case had such Monthly Advances not been made.
As of the Initial Cut-Off Date, approximately % of the number of Contracts
in the Contract Pool were Paid-Ahead Contracts, with at least one scheduled
monthly payment having been paid-ahead. CITSF's portfolio of recreational
vehicle installment sale contracts has historically included contracts which
have been paid-ahead by one or more scheduled monthly payments. There can be no
assurance as to the number of Contracts which may become Paid-Ahead Contracts or
the number or the principal amount of the scheduled payments which may be
paid-ahead.
Weighted Average Life of the Securities
Prepayments on recreational vehicle contracts can be measured relative to a
prepayment standard or model. The model used in this Prospectus, 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 Class A Final Scheduled Distribution Date.
The final distribution in respect of the Certificates also could occur prior to
26
<PAGE>
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 , 1996, (v) CITSF
exercises its option to purchase the Contracts as specified under "The Purchase
Agreements and The Trust Documents--Termination" and (vi) all of the Subsequent
Contracts are purchased by the Trust prior to the first 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 variousconstant
ABS percentages.
The ABS Table also assumes that the Contracts have been aggregated into two
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.
<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 ........ $
</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.
27
<PAGE>
Percent of Initial Note Principal Balance at Various ABS Percentages (1)
Distribution Date 0.0% 0.5% 1.0% 1.2% 1.4%
- ----------------- ---- ---- ---- ---- ----
Initial Percent ....................... 100% 100% 100% 100% 100%
Weighted Average Life (years)(2) ......
- ----------
(1) Assumes the exercise by CITSF of its option to purchase all of the Contracts
on the Distribution Date following the Record Date on which the Pool Balance
is 10% or less of the Initial Pool Balance.
(2) The weighted average life of a Class A Note is determined by (i) multiplying
the amount of each principal payment of the Note by the number of years from
the date of the issuance of the Note to the related Distribution Date, (ii)
adding the results and (iii) dividing the sum by the related initial
principal amount of the Note.
The ABS Table has been prepared based on the assumptions described above
(including the assumptions regarding the characteristics and performance of the
Contracts which will differ from the actual characteristics and performance
thereof) and should be read in conjunction therewith.
Percent of Initial Certificate Balance at Various ABS Percentages(1)
Distribution Date 0.0% 0.5% 1.0% 1.2% 1.4%
- ----------------- ---- ---- ---- ---- ----
Initial Percent ....................... 100% 100% 100% 100% 100%
Weighted Average Life (years)(2) ......
- ----------
(1) Assumes the exercise by CITSF of its option to purchase all of the Contracts
on the Distribution Date following the Record Date on which the Pool Balance
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.
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.
28
<PAGE>
YIELD 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 Class A 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 hereinafter defined).
POOL FACTORS
The "Note Pool Factor" is a seven-digit decimal which the Servicer will
compute each month indicating the remaining outstanding principal balance of the
Notes as of the Distribution Date, as a fraction of the initial outstanding
principal balance of the Notes. The Note Pool Factor will be 1.0000000 as of the
Initial Cut-off Date, and thereafter will decline to reflect reductions in the
outstanding principal balance of the Notes. A Noteholder's portion of the
aggregate outstanding principal balance of the Notes is the product of (i) the
original denomination of the Noteholder's Note and (ii) the Note Pool Factor.
The "Certificate Pool Factor" is a seven-digit decimal which the Servicer
will compute each month indicating the remaining Certificate Balance as of the
Distribution Date, as a fraction of the initial Certificate Balance. The
Certificate Pool Factor will be 1.0000000 as of the Initial Cut-off Date, and
thereafter will decline to reflect reductions in the outstanding principal
balance of the Certificates. A Certificateholder's portion of the aggregate
outstanding Certificate Balance is the product of (i) the original denomination
of the Certificateholder's Certificate and (ii) the Certificate Pool Factor.
Pursuant to the Indenture, the Noteholders will receive monthly reports
concerning the payments received on the Contracts, the Pool Balance, the Note
Pool Factor and various other items of information. Pursuant to the Trust
Agreement, the Certificateholders will receive monthly reports concerning the
payments received on the 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. See
"Certain Information Regarding the Securities--Statements to Securityholders."
29
<PAGE>
USE OF PROCEEDS
The Company will sell the Initial Contracts to the Trust concurrently with
the sale of the Securities and the net proceeds from the sale of the Securities
will be applied by the Trustees to the purchase of the Initial Contracts, to the
payment of certain expenses connected with pooling the Contracts and issuing the
Securities, to the deposit of the Pre-Funded Amount in the Pre-Funding Account,
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. The net proceeds
to be received from the sale of the Initial Contracts will be paid to CITSF as
the purchase price for the Contracts and will be added to CITSF's general funds
and will be available for general corporate purposes, including the purchase of
new recreational vehicle installment sales contracts and the payment of the
purchase price to CITCF-NY for those Initial Contracts acquired by CITSF from
CITCF-NY.
THE CIT GROUP SECURITIZATION CORPORATION II, SELLER
The CIT Group Securitization Corporation II (the "Company") was
incorporated in the State of Delaware on June 24, 1994, and is a wholly-owned,
limited purpose finance subsidiary of The CIT Group Holdings, Inc., a Delaware
corporation ("CIT"), which is a successor to a company founded in St. Louis,
Missouri, in February 1908. CIT is 60% owned by The Dai-Ichi Kangyo Bank, Ltd.
and 40% by MHC Holdings (Delaware) Inc., a subsidiary of Chemical Banking
Corporation. The Company maintains its principal office at 650 CIT Drive,
Livingston, New Jersey 07039. Its telephone number is (201) 535-3514.
As described herein, the obligations of the Company with respect to the
Securities are limited. The Company will have no ongoing servicing obligations
or responsibilities with respect to the Contract Pool.
CITSF is an affiliate of the Company. The Company will acquire the Contract
Pool in a privately negotiated transaction from CITSF.
Neither CIT nor any of its affiliates, including the Company and CITSF,
will be obligated with respect to the Securities. Accordingly, the Company has
determined that financial statements of CITSF and the Company, are not material
to the offering of the Securities.
THE CIT GROUP/SALES FINANCING, INC., SERVICER
General
The CIT Group/Sales Financing, Inc., a Delaware corporation ("CITSF"), is a
wholly-owned subsidiary of CIT. It has its principal executive office at 650 CIT
Drive, Livingston, New Jersey 07039, and its telephone number is (201) 740-5000.
CITSF originates, purchases, sells and services conditional sales contracts
for recreational vehicles, manufactured housing and other consumer goods
throughout the United States. CITSF has been a lender to the recreational
vehicle industry for more than 30 years. CITSF has Regional Business Centers in
five cities and a centralized asset service facility (the "Asset Service
Center") in Oklahoma City, Oklahoma. Working through dealers and manufacturers,
CITSF offers retail installment credit. In addition to purchasing recreational
vehicle contracts from dealers on an individual basis, CITSF makes bulk
purchases of recreational vehicle contracts. These bulk purchases may be from
the portfolios of other lending institutions or finance companies, the
portfolios of governmental agencies or instrumentalities or the portfolios of
other entities that purchase and hold recreational vehicle contracts.
The Asset Service Center of CITSF services consumer credit transactions in
50 states and the District of Columbia. It provides full servicing for
recreational vehicle, marine products and manufactured housing retail
installment credit supplemented by outside collectors and field remarketers
located throughout the United States.
As of , 1995, CITSF serviced for itself and others
approximately contracts (consisting primarily of recreational
vehicle and manufactured housing contracts), representing an outstanding balance
of approximately $ billion. Of this portfolio, approximately
contracts (representing approximately $ billion
outstanding balance) consisted of recreational vehicle contracts.
30
<PAGE>
CITSF's general policies with regard to the origination of recreational
vehicle installment sale contracts are described below under "Contract
Origination" and "CITSF's Underwriting Guidelines". See "Servicing" below for a
description of certain of CITSF's servicing policies.
Contract Origination
Although CITSF does, on occasion, purchase recreational vehicle installment
sale contracts in bulk from other lenders, all of the Contracts in the Contract
Pool have been originated by CITSF or CITCF-NY through the purchase of such
Contracts from Dealers.
Through its Regional Business Centers, CITSF arranges to purchase
recreational vehicle contracts from recreational vehicle dealers located
throughout the United States. Regional Business Center personnel contact the
dealers located in their territories and explain CITSF's available financing
plans, terms, prevailing rates and credit and financing policies. If the dealer
wishes to use CITSF's available customer financing, the dealer must make an
application for dealer approval. Upon satisfactory results of CITSF's
investigation of the dealers creditworthiness and general business reputation,
CITSF and the dealer execute a dealer agreement. CITSF also originates
recreational vehicle installment loan agreements directly. In addition, CITSF
purchases portfolios of recreational vehicle contracts from other lending
institutions or finance companies.
Contracts that CITSF purchases from Dealers or originates itself (as
opposed to portfolios of contracts purchased from other lenders) are purchased
on an individually approved basis in accordance with CITSF's underwriting
guidelines.
CITSF's Underwriting Guidelines
All recreational vehicle contracts that are purchased by CITSF from dealers
are written on forms provided or approved by CITSF and are purchased on an
individually approved basis. With respect to each retail recreational vehicle
contract to be purchased from a Dealer, CITSF's general practice is to have the
dealer submit the customer's credit application, manufacturer's invoice (if the
contract is for a new vehicle) and certain other information relating to the
contract to the applicable Regional Business Center. Personnel at the Regional
Business Center prepare an analysis of the creditworthiness of the customer and
of other aspects of the proposed transaction.
All credit applications are entered into an automatic application
processing system. CITSF's underwriting guidelines require, and have required, a
credit officer at a Regional Business Center with the appropriate level of
credit authority to examine each applicant's credit history, residence history,
employment history and debt-to-income payment ratio. Although, with respect to
these criteria, CITSF has, and has had, certain minimum requirements, as
described below, CITSF's management does not believe that these minimum
requirements are themselves generally sufficient to warrant credit approval of
an applicant. Thus, there were and are no requirements on the basis of which, if
they are met, credit is routinely approved 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. Funding of a contract is authorized after verification of the
conditions of approval of the application and satisfactory delivery of the
related recreational vehicle.
The retail customer generally has 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 to be considered in determining whether to accept or reject an
application. The maximum amount CITSF will advance to such targeted customers is
(i) in the case of a new financed vehicle, 100% of the unpaid cash balance, not
to exceed 110% of the manufacturer's invoice price plus taxes, fees and
insurance and (ii) in the case of a used financed vehicle, 100% of the unpaid
cash balance, not to exceed 110% of the wholesale value as determined by the
Kelly blue book. Funding of a contract is authorized after verification of the
conditions of approval of the application and satisfactory delivery of the
related recreational vehicle.
31
<PAGE>
In August 1994 CITSF's credit criteria were changed to permit greater
reliance on credit scores and overall evaluation instead of using specific
disqualifying criteria (e.g., a minimum of two years of employment). The
interest rate charged on each recreational vehicle contract originated since
August 1994 reflects CITSF's evaluation of the relative risk associated with an
individual's application. It is expected that the changes in CITSF's
underwriting standards may result in higher delinquency and loan loss experience
than is shown in the tables in this Prospectus since most of the recreational
vehicle contracts included in such tables were originated using CITSF's former
underwriting guidelines. Most of the Initial Contracts were originated and all
Subsequent Contracts, if any, will be originated under these new credit
criteria. Accordingly, the data presented in the tables in this Prospectus
regarding the portfolio of recreational vehicle contracts serviced by CITSF
should not necessarily be considered as a basis for assessing the likelihood
amount or severity of delinquencies or losses on the Contracts.
The credit review and approval practices of each Regional Business Center
are subject to internal reviews and internal audits that, through sampling,
examine the nature of the verification of credit histories, residence histories,
employment histories, debt ratios of the applicants and evaluate the credit
risks associated with the contracts purchased through such regional office by
rating the obligors on such contracts according to their credit histories,
employment histories, debt ratios and housing ratios.
Servicing
CITSF services, through its Asset Service Center, recreational vehicle,
manufactured housing, home equity, and other consumer loans. CITSF services all
of the recreational vehicle contracts it purchases or originates, whether on an
individual basis or in bulk. CITSF is actively seeking arrangements pursuant to
which it will service recreational vehicle contracts held by other entities.
Such contracts would not be purchased by CITSF or sold to such other entities by
CITSF. Generally, such servicing responsibilities are, and would be, also
carried out through CITSF's Asset Service Center. Servicing responsibilities
include collecting principal and interest payments, taxes, insurance premiums,
where applicable, and other payments from obligors and, where such contract have
been sold, remitting principal and interest payments to the holders thereof, to
the extent such holders are entitled thereto. Collection procedures include
repossession and resale of recreational vehicles securing defaulted contracts
and, if deemed advisable by CITSF, entering into workout arrangements with
obligors under certain defaulted contracts. Although decisions as to whether to
repossess any recreational vehicle are made on an individual basis, CITSF's
general policy is to institute repossession procedures promptly after Asset
Service Center personnel determine that it is unlikely that a defaulted contract
will be brought current, and thereafter to diligently pursue the resale of such
recreational vehicles if the market is favorable. Recently, the Asset Service
Center has developed a nationwide auction network to facilitate resale efforts
on such repossessions.
32
<PAGE>
The following table shows the composition of CITSF's servicing portfolio,
including recreational vehicle contracts serviced by CITSF on the dates
indicated:
THE CIT GROUP/SALES FINANCING, INC.
Contracts Being Serviced By Product Line
<TABLE>
<CAPTION>
At December 31,
----------------------------------------------------------------------------------------------------
1991 1992 1993 1994 1996
---- ---- ---- ---- ----
(Number) (Dollars) (Number) (Dollars) (Number) (Dollars) (Number) (Dollars) (Number) (Dollars)
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
RV - Owned ................... 33,820 $729,056 38,926 $845,982 43,530 $961,382 39,454 $847,142
RV - Bulk Purchases .......... 5,828 116,545 4,383 84,344 3,331 60,386 3,522 50,882
RV - Servicing Retained (1) .. 0 0 0 0 0 0 4,827 118,267
Total RV ..................... 39,648 845,601 43,309 930,326 46,861 1,021,768 47,803 1,016,291
Total MH ..................... 31,811 509,400 49,640 805,345 47,898 809,670 39,599 878,152
Home Equity .................. 0 0 0 0 3,545 131,322 13,545 570,772
Other ........................ 6,942 101,022 1,126 19,485 1,572 41,944 1,310 74,823
------ ---------- ------ ---------- ------ ---------- ------- ---------- ------- ----------
Total Contracts
Serviced ................... 78,401 $1,456,023 94,075 $1,755,156 99,876 $2,004,704 102,257 $2,540,038 $
====== ========== ====== ========== ====== ========== ======= ========== ======= ==========
</TABLE>
- ----------
RV = Recreational Vehicle
MH = Manufactured Housing
(1) Represents Contracts securitized with servicing retained.
Delinquency, Loan Loss and Liquidation Experience
The following Delinquency Experience and Loan Loss/Liquidation Experience
tables set forth data for CITSF's recreational vehicle portfolio. The following
table sets forth the delinquency experience for the five years ended December
31, 1995, of the portfolio of recreational vehicle contracts originated and
serviced by CITSF, excluding contracts acquired by CITSF through portfolio
purchases and contracts in repossession.
Delinquency Experience
(Dollars in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------
1991 1992 1993 1994(3) 1995(3)
---- ---- ---- ------- -------
<S> <C> <C> <C> <C> <C>
Number of Contracts ................ 33,820 38,926 43,530 44,281
Principal Balance of
Contracts Serviced ................ $729,056 $845,982 $961,382 $965,409 $
Principal Balance of
Delinquent Contracts (1):
30-59 Days ...................... $ 4,363 $ 4,412 $ 6,478 $ 4,986 $
60-89 Days ...................... 1,304 1,378 2,211 1,959
90 Days or More ................. 3,406 4,140 3,383 2,785
-------- -------- -------- -------- --------
Total Principal Balance
of Delinquent Contracts ........... $ 9,073 $ 9,930 $ 12,072 $ 9,730 $
======== ======== ======== ======== ========
Delinquencies as a
Percent of Principal
Balances (2) ...................... 1.24% 1.17% 1.26% 1.01% %
</TABLE>
- ----------
(1) The period of delinquency is based on the number of days payments are
contractually past due (assuming 30-day months). Consequently, a contract
due on the first day of a month is not 30 days delinquent until the first
day of the next month.
(2) Based on dollar percent delinquent.
(3) Includes Recreational Vehicle contracts sold by CITSF in January 1994 in
connection with another securitization which CITSF is servicing.
(4) Includes Recreational Vehicle contracts sold by CITSF in January 1994, June
1995 and August 1995, respectively, in connection with two other
securitizations which CITSF is servicing.
33
<PAGE>
The following table sets forth the loan loss and repossession experience
for the five years ended December 31, 1995, of the portfolio of recreational
vehicle contracts originated and serviced by CITSF, excluding contracts acquired
by CITSF through portfolio purchases.
Loan Loss/Liquidation Experience
(Dollars in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------
1991 1992 1993 1994(5) 1995(6)
---- ---- ---- ------- -------
<S> <C> <C> <C> <C> <C>
Number of Contracts (1) ............ 33,820 38,926 43,530 44,281
Principal Balance of
Contracts Serviced (1) ........... $729,056 $845,982 $961,382 $965,409
Net Losses:
Dollars(2) ....................... $ 3,942 $ 4,040 $ 3,917 $ 4,887 $
Percentage (3) ................... 0.54% 0.48% 0.41% 0.51% %(4)
</TABLE>
- ----------
(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) This ratio has been annualized, and may not reflect the actual loan loss
experience for the year.
(5) Includes Recreational Vehicle contracts sold by CITSF in January 1994 in
connection with another securitization which CITSF is servicing.
(6) Includes Recreational Vehicle contracts sold by CITSF in January 1994, June
1995 and August 1995, respectively, in connection with two other
securitizations which CITSF is servicing.
The data presented in the foregoing tables is for illustrative purposes
only. CITSF's portfolio of installment sale contracts secured by recreational
vehicles has experienced rapid growth over the past two years. The delinquency
and loss percentages will be affected by the rapid growth, size and relative
lack of seasoning of CITSF's portfolio, as well as general and regional economic
conditions. In addition, such data relates to the performance of CITSF's entire
portfolio of installment sale contracts secured by recreational vehicles, and is
not historical data regarding solely the portion of CITSF's portfolio
constituting the Contracts. Most of CITSF's portfolio of installment sale
contracts secured by recreational vehicles was originated under CITSF's old
underwriting guidelines. However, in July 1994 CITSF adopted a risk-adjusted
pricing policy and changed its credit criteria and underwriting guidelines as
described under "--CITSF's Underwriting Guidelines" above. In connection with
this change, the minimum credit score for approval of a new credit was reduced,
in order to permit credit to be extended to less creditworthy borrowers than
under the credit criteria previously in effect. The interest rates charged on
recreational vehicle contracts originated since July 1994 reflect CITSF's
evaluation of the relative risk associated with an individual's application. It
is expected that, in addition to the effects of seasoning, the changes in
CITSF's underwriting standards will result in higher delinquency and loan loss
experience than is shown in the above tables since most of the recreational
vehicle contracts included in such tables were originated using CITSF's former
underwriting guidelines. All of the Initial Contracts were originated and all
Subsequent Contracts, if any, will be originated under these new credit criteria
adopted by CITSF in July 1994. Accordingly, the data presented in the foregoing
tables should not necessarily be considered as a basis for assessing the
likelihood, amount or severity of delinquency or losses on the Contracts, and no
assurance can be given that the delinquency and loan loss experience presented
in the preceding tables will be indicative of the experience on the Contracts.
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THE NOTES
General
The CIT RV Owner Trust 1996-A Class A % Asset Backed Notes (the
"Notes" or the "Class A Notes") 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 Class A Notes pursuant to the terms of an Indenture, to be dated as of
February 1, 1996 (as amended and supplemented from time to time, the
"Indenture") between the Trust and , as trustee (the
"Indenture Trustee"), a form of which will be filed as an exhibit to the
Registration Statement of which this Prospectus forms a part. A copy of the
Indenture will be available from the Company, upon request, to the holders of
the Notes or Certificates and will be filed with the Securities and Exchange
Commission (the "Commission") following the issuance of the Notes and
Certificates. The following summary describes certain terms of the Notes and the
Indenture. The summary does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all of the provisions of the Notes
and the Indenture. Where particular provisions or terms used in the Indenture
are referred to, the actual provisions (including definitions of terms) are
incorporated by reference as part of such summary.
The Notes will be offered for purchase in minimum denominations of $1,000
and integral multiples of $1,000 in excess thereof in book-entry form only. The
Class A Notes will initially be represented by a single Note registered in the
name of the nominee of The Depository Trust Company ("DTC" and, together with
any successor depository selected by the Company, the "Depository"), except as
provided below. The Company has been informed by DTC that DTC's nominee will be
Cede & Co. ("Cede"). No person acquiring an interest in the Notes through the
facilities of DTC (a "Note Owner") will be entitled to receive a Note
representing such person's interest in the Notes, except as set forth below
under "Certain Information Regarding the Securities--Definitive Securities" and
such persons will hold their interests in the Notes through DTC in the United
States or Cedel 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, reports and statements to DTC in accordance with DTC
procedures. See "Certain Information Regarding The Securities--Definitive
Securities" below.
Payments of interest and principal on the Notes with respect to each Due
Period will be made on the fifteenth day of each month or, if any such day is
not a Business Day, on the next succeeding Business Day (each, a "Distribution
Date"), commencing 15, 1995. With respect to any Distribution Date, the
"Due Period will be the calendar month preceding the month of such Distribution
Date. The first Due Period will commence on and include February 1, 1996 and
will end on and include February 29, 1996. 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, Delaware, Illinois or Oklahoma are authorized or
required by law, regulation or executive order to be closed.
Payments of Interest
The Class A Notes will bear interest at the rate of % per annum (the
"Class A Rate"). 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 on which interest has been paid to but excluding the following
Distribution Date, or in the case of the initial Distribution Date from February
, 1996 to but excluding the initial Distribution Date (each, an "Interest
Accrual Period"). 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 Class A 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 from to but
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excluding the first Distribution Date, on the outstanding principal balance of
the Notes as of the Closing Date (the "Class A 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" 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 Class A
Final Scheduled Distribution Date will equal the outstanding principal balance
of the Notes as of such date and the Principal Distribution Amount on the
Certificate Final Distribution Date will equal the Certificate Balance on such
date. For the purposes of determining the Principal Distribution Amount, the
unpaid principal balance of a Defaulted Contract or a Repurchased Contract is
deemed to be zero on and after the last day of the Due Period in which such
Contract became a Defaulted Contract or a Repurchased Contract. The Principal
Distribution Amount will not exceed the outstanding principal balance of the
Notes or, after the Cross-Over Date, the Certificate Balance.
No principal will be paid in respect of the Notes until the Servicer has
been reimbursed for any outstanding Monthly Advances and has been paid the
Servicing Fee (including any unpaid Servicing Fee with respect to one or more
prior Due Periods) (collectively, the "Servicer Payment") and until the entire
Class A Interest Distribution Amount has been paid for the related Distribution
Date. The principal balance of the Class A Notes, to the extent not previously
paid, will be due on the Class A Final Scheduled Distribution Date. The actual
date on which the aggregate outstanding principal amount of the Class A Notes is
paid may be earlier than the Class A 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 herein under "The Purchase Agreements and The Trust
Documents--Distributions". The unpaid principal balance of the Notes will be
payable on the Class A 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 Class A Rate. An "Optional Purchase" of all the Contracts by CITSF, may
occur at CITSF's option, on any Distribution Date following any Record Date on
which the Pool Balance is 10% or less of the Initial Pool Balance (as
hereinafter defined). An "Auction Sale" may occur, and may result in the sale of
the Contracts remaining in the Trust, within ten days following any Distribution
Date following any Record Date on which the Pool Balance is 5% or less of the
Initial Pool Balance.
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 90 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). Upon the occurrence of such an event, the outstanding
Notes will be redeemed in whole, but not in part, at a redemption price equal to
the unpaid principal amount of the Notes plus accrued interest thereon at the
Class A Rate.
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The Indenture
Modification of Indenture without Noteholder Consent. The Trust and the
Indenture Trustee may, without consent of the Noteholders, enter into one or
more supplemental indentures for any of the following purposes: (i) to correct
or amplify the description of the collateral or add additional collateral; (ii)
to provide for the assumption of the Note and the Indenture obligations by a
permitted successor to the Trust; (iii) to add additional covenants for the
benefit of the related Noteholders, or to surrender any rights or power
conferred upon the Trust; (iv) to convey, transfer, assign, mortgage or pledge
any property to or with the Indenture Trustee; (v) to cure any ambiguity or
correct or supplement any provision in the Indenture or any supplemental
indenture which may be inconsistent with any other provision of the Indenture or
in any supplemental indenture; (vi) to provide for the acceptance of the
appointment of a successor Indenture Trustee or to add to or change any of the
provisions of the Indenture as shall be necessary and permitted to facilitate
the administration by more than one trustee; (vii) to modify, eliminate or add
to the provisions of the Indenture in order to comply with the Trust Indenture
Act of 1939, as amended; and (viii) to add any provisions to, change in any
manner, or eliminate any of the provisions of, the Indenture or modify in any
manner the rights of Noteholders under such Indenture; provided that any action
specified in this clause (viii) subject to other conditions set forth in the
Indenture, shall not, as evidenced by an opinion of counsel, adversely affect in
any material respect the interests of any Noteholder unless Noteholder consent
is otherwise obtained as described herein.
Modification of Indenture with Noteholder Consent. With the consent of the
holders of a majority of the aggregate principal amount of the outstanding
Notes, and with prior notice to the Rating Agencies, the Trust and the Indenture
Trustee may execute a supplemental indenture to add provisions to, change in any
manner or eliminate any provisions of, the Indenture, or modify in any manner
the rights of the related Noteholders.
Without the consent of the holder of each outstanding Note affected
thereby, however, no supplemental indenture will: (i) change the due date of any
instalment of principal of or interest on any Note or reduce the principal
amount thereof, the interest rate specified thereon or the redemption price with
respect thereto or change any place of payment where or the coin or currency in
which any Note or any interest thereon is payable; (ii) impair the right to
institute suit for the enforcement of certain provisions of the Indenture
regarding payment; (iii) reduce the percentage of the aggregate principal amount
of the outstanding Notes the consent of the holders of which is required for any
such supplemental indenture or the consent of the holders of which is required
for any waiver of compliance with certain provisions of the Indenture or of
certain defaults thereunder and their consequences as provided for in the
Indenture; (iv) modify or alter the provisions of the Indenture regarding the
voting of Notes held by the Trust, any other obligor on the Notes, the Seller or
an affiliate of any of them; (v) reduce the percentage of the aggregate
outstanding amount of the Notes the consent of the holders of which is required
to direct the Indenture Trustee to sell or liquidate the Contracts if the
proceeds of such sale would be insufficient to pay the principal amount and
accrued but unpaid interest on the outstanding Notes; (vi) decrease the
percentage of the aggregate principal amount of the Notes required to amend the
sections of the Indenture which specify the applicable percentage of aggregate
principal amount of the Notes necessary to amend the Indenture or certain other
related agreements; or (vii) permit the creation of any lien ranking prior to or
on a parity with the lien of the Indenture with respect to any of the collateral
for the Notes or, except as otherwise permitted or contemplated in the
Indenture, terminate the lien of the Indenture on any such collateral or deprive
the holder of any Note of the security afforded by the lien of the Indenture.
Events of Default; Rights Upon Event of Default. "Events of Default" under
the Indenture will consist of: (i) any failure to pay interest on the Notes as
and when the same becomes due and payable, which failure continues unremedied
for five days; (ii) any failure (a) to make any required payment of principal on
the Notes which failure continues unremedied for thirty (30) days or (b) to
observe or perform in any material respect any other covenants or agreements in
the Indenture, which failure in the case of a default under clause (ii)(b)
materially and adversely affects the rights of Noteholders, and which failure in
either case continues for 30 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 principal amount of the Notes; (iii) failure to pay the unpaid principal
balance of any Notes on or prior to the Class A Final Scheduled Distribution
Date; and (iv) certain events of insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceedings and certain actions by the
Trust indicating its insolvency, reorganization pursuant to bankruptcy
proceedings or inability to pay its obligations. However, the amount of
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principal required to be paid to Noteholders under the Indenture will generally
be limited to amounts available to be deposited in the Note Distribution
Account. Therefore the failure to pay principal on the Notes generally will not
result in the occurrence of an Event of Default until the Class A Final
Scheduled Distribution Date.
If an Event of Default should occur and be continuing with respect to the
Notes, the Indenture Trustee or holders of a majority in principal amount of
such Notes then outstanding may declare the principal of the Notes to be
immediately due and payable. Such declaration may, under certain circumstances,
be rescinded by the holders of a majority of the principal amount of the Notes
then outstanding.
If the Notes are due and payable following an Event of Default with respect
thereto, the Indenture Trustee may institute proceedings to collect amounts due
or foreclose on Trust property, exercise remedies as a secured party, sell the
related Contracts or elect to have the Trust maintain possession of such
Contracts and continue to apply collections on such Contracts as if there had
been no declaration of acceleration. The Indenture Trustee, however, is
prohibited from selling the Contracts following an Event of Default, unless (i)
the holders of all the outstanding Notes consent to such sale, (ii) the proceeds
of such sale are sufficient to pay in full the principal of and the accrued
interest on such outstanding Notes at the date of such sale, or (iii) the
Indenture Trustee determines that the proceeds of the Contracts would not be
sufficient on an ongoing basis to make all payments on the Notes as such
payments would have become due if such obligations had not been declared due and
payable, and the Indenture Trustee obtains the consent of the holders of a
majority of the aggregate outstanding amount of the Notes. Following a
declaration upon an Event of Default that the Notes are immediately due and
payable, (i) Noteholders will be entitled to ratable repayment of principal on
the basis of their respective unpaid principal balances and (ii) repayment in
full of the accrued interest on and unpaid principal balances of the Notes will
be made prior to any further payment of interest on the Certificates or in
respect of the Certificate Balance (other than payments of the Principal
Liquidation Loss Amount and other payments from the Cash Collateral Account).
Subject to the provisions of the Indenture relating to the duties of the
Indenture Trustee, if an Event of Default occurs and is continuing with respect
to the Notes, the Indenture Trustee will be under no obligation to exercise any
of the rights or powers under the Indenture at the request or direction of any
of the holders of such Notes, if the Indenture Trustee reasonably believes it
will not be adequately indemnified against the costs, expenses and liabilities
which might be incurred by it in complying with such request. Subject to the
provisions for indemnification and certain limitations contained in the
Indenture, the holders of a majority in principal amount of the outstanding
Notes will have the right to direct the time, method and place of conducting any
proceeding or any remedy available to the Indenture Trustee and the holders of a
majority in principal amount of such Notes then outstanding may, in certain
cases, waive any default with respect thereto, except a default in the payment
of principal or interest or a default in respect of a covenant or provision of
the Indenture that cannot be modified without the waiver or consent of all of
the holders of such outstanding Notes.
No holder of a Note will have the right to institute any proceeding with
respect to the Indenture, unless (i) such holder previously has given to the
Indenture Trustee written notice of a continuing Event of Default, (ii) the
holders of not less than 25% in principal amount of the outstanding Notes have
made written request of the Indenture Trustee to institute such proceeding in
its own name as Indenture Trustee, (iii) such holder or holders have offered the
Indenture Trustee reasonable indemnity, (iv) the Indenture Trustee has for 60
days failed to institute such proceeding and (v) no direction inconsistent with
such written request has been given to the Indenture Trustee during such 60-day
period by the holders of a majority in principal amount of such outstanding
Notes.
If an Event of Default occurs and is continuing and if it is known to the
Indenture Trustee, the Indenture Trustee will mail to each Noteholder notice of
the Event of Default within 90 days after it occurs. Except in the case of a
failure to pay principal of or interest on any Note, the Indenture Trustee may
withhold the notice if and so long as it determines in good faith that
withholding the notice is in the interests of Noteholders.
In addition, the Indenture Trustee and Noteholders, by accepting the Notes,
will covenant that they will not, for a period of one year after the termination
of the Indenture, institute against the Affiliated Purchaser, the Company or the
Trust any bankruptcy, reorganization or other proceeding under any federal or
state bankruptcy or similar law.
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Neither the Indenture Trustee nor the Owner Trustee in its individual
capacity, nor the Cash Collateral Depositor, nor any holder of a Certificate
including, without limitation, the Affiliated Purchaser or the Company, nor any
of their respective owners, beneficiaries, agents, officers, directors,
employees, affiliates, successors or assigns will, in the absence of an express
agreement to the contrary, be personally liable for the payment of the principal
of or interest on the Notes or for the agreements of the Trust contained in the
Indenture.
Certain Covenants. The Indenture provides that the Trust may not
consolidate with or merge into any other entity, unless (i) the entity formed by
or surviving such consolidation or merger is organized under the laws of the
United States, any state or the District of Columbia, (ii) such entity expressly
assumes the Trust's obligation to make due and punctual payments upon the Notes
and the performance or observance of every agreement and covenant of the Trust
under the Indenture, (iii) no Event of Default shall have occurred and be
continuing immediately after such merger or consolidation, (iv) the Trust has
been advised that the rating of the related Notes or Certificates then in effect
would not be reduced or withdrawn by the Rating Agencies as a result of such
merger or consolidation, (v) any action as is necessary to maintain the lien and
security interest created by the Indenture shall have been taken and (vi) the
Trust has received an opinion of counsel to the effect that such consolidation
or merger would have no material adverse tax consequence to the Trust or to any
Noteholder or Certificateholder.
The Trust will not, among other things, (i) except as expressly permitted
by the Indenture, the Purchase Agreements (as defined herein) or the Trust
Documents (as defined herein) for such Trust (collectively, the "Related
Documents"), sell, transfer, exchange or otherwise dispose of any of the assets
of the Trust, (ii) claim any credit on or make any deduction from the principal
and interest payable in respect of the Notes (other than amounts withheld under
the Code or applicable state law) or assert any claim against any present or
former holder of such Notes because of the payment of taxes levied or assessed
upon the Trust, (iii) dissolve or liquidate in whole or in part, (iv) permit the
validity or effectiveness of the Indenture to be impaired or permit 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.
The Trust will not incur, assume or guarantee any indebtedness other than
indebtedness incurred pursuant to the Notes and the Indenture or otherwise in
accordance with the Related Documents.
Annual Compliance Statement. The Trust will be required to file annually
with the Indenture Trustee a written statement as to the fulfillment of its
obligations under the Indenture.
Indenture Trustee's Annual Report. The Indenture Trustee will be required
to mail each year to all Noteholders a brief report relating to its eligibility
and qualification to continue as Indenture Trustee under the Indenture, any
amounts advanced by it under the Indenture, the amount, interest rate and
maturity date of certain indebtedness owing by the Trust to the Indenture
Trustee in its individual capacity, the property and funds physically held by
the Indenture Trustee as such and any action taken by it that materially affects
the Notes and that has not been previously reported.
Satisfaction and Discharge of Indenture. The Indenture will be discharged
with respect to the collateral securing the related Notes upon the delivery to
the Indenture Trustee for cancellation of all such Notes or, with certain
limitations, upon deposit with the Indenture Trustee of funds sufficient for the
payment in full of all of such Notes.
The Indenture Trustee. The Indenture Trustee under the Indenture will be
Harris Trust and Savings Bank. The Indenture Trustee may resign at any time, in
which event the Servicer, or its successor, will be obligated to appoint a
successor trustee. The Servicer may also remove the Indenture Trustee if the
Indenture Trustee ceases to be eligible to continue as such under the Indenture
or if the Indenture Trustee becomes insolvent. In such circumstances, the
Servicer will be obligated to appoint a successor trustee. Any resignation or
removal of the Indenture Trustee and appointment of a successor trustee does not
become effective until acceptance of the appointment by the successor trustee.
Trust Indenture Act. The Indenture will comply with all applicable
provisions of the Trust Indenture Act of 1939, as amended.
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THE CERTIFICATES
The Certificates offered hereby will be issued pursuant to the Trust
Agreement, a form of which has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The following summary does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, the Trust Agreement.
General
The CIT RV Owner Trust 1996-A % Asset Backed Certificates (the
"Certificates" and, together with the Notes, the "Securities") will represent
fractional undivided interests in the Trust. The Trust will issue $
aggregate principal amount of Certificates pursuant to a Trust Agreement, to be
dated as of February 1, 1996, between the Seller and the Owner Trustee (the
"Trust Agreement"), a form of which will be filed as an exhibit to the
Registration Statement of which this Prospectus forms a part. A copy of the
Trust Agreement will be available from the Company, upon request, to holders of
the Notes or Certificates and will be filed with the Commission following the
issuance of the Notes and the Certificates. Payments in respect of the
Certificates will be subordinated to payments on the Notes to the limited extent
described herein. The following summary describes certain terms of the
Certificates and the Trust Agreement. The summary does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all of the provisions of the Certificates and the Trust Agreement. Where
particular provisions or terms used in the Trust Agreement are referred to, the
actual provisions (including definitions of terms) are incorporated by reference
as part of such summary.
The Certificates will be offered for purchase in minimum denominations of
$20,000 and integral multiples of $1,000 in excess thereof 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 Certificate Balance. The Certificates will
initially be represented by a single Certificate registered in the name of Cede,
the nominee of DTC. No person acquiring an interest in the Certificates through
the facilities of DTC (a "Certificate Owner") will be entitled to receive a
Definitive Certificate representing such person's interest in the Certificates,
except as set forth below under "Certain Information Regarding The
Securities--Definitive Securities". Unless and until Definitive Certificates are
issued under the limited circumstances described herein, all references to
actions by Certificateholders shall refer to actions taken by DTC upon
instructions from its Participants, and all references herein to distributions,
notices, reports and statements to Certificateholders shall refer to
distributions, notices, reports and statements to DTC in accordance with DTC
procedures. See "Certain Information Regarding The Securities--Definitive
Securities" below.
Payments of interest and principal on the Certificates with respect to each
Due Period will be made on each Distribution Date, commencing 15, 1996.
Payments on the Securities on each Distribution Date will be made to the holders
of record of the related Securities on the related Record Date.
Distribution of Interest
The Certificates will bear interest at the rate of % per annum (the
"Pass-Through Rate"). Interest on the Certificate Balance will accrue during the
related Interest Accrual Period at the Pass-Through Rate. Interest 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 from
to but excluding the first Distribution Date, on the Original
Certificate Balance (the "Certificate Interest Distribution Amount"). Interest
accrued as of any Distribution Date but not paid on such Distribution Date will
be due on the next Distribution Date. The rights of Certificateholders to
receive distributions of interest will be subordinated to the rights of the
Noteholders to receive payment in full of all amounts of interest and principal
which the Noteholders are entitled to be paid on such Distribution Date.
Interest to Certificateholders may be provided from payments from the Cash
Collateral Account, to the extent of the Available Cash Collateral Amount, in
the event there are not sufficient funds (after reimbursement to the Servicer
for reimbursable Monthly Advances, and payment of the Servicer Payment to the
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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 reimbursed for any outstanding Monthly Advances and has been paid the
Servicer Payment, and payment of interest and principal in respect of the Notes,
if any, and interest in respect to the Certificates has been made 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 and 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 reimbursed for any outstanding Monthly Advances and 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
"--Subordination" below.
Redemption
The Certificates will be redeemed in part, on a pro rata basis, on the
Distribution Date on or immediately following the last day of the Funding Period
in the event that any portion of the Pre-Funded Amount remains on deposit in the
Pre-Funding Account after giving effect to the purchase of all Subsequent
Contracts, including any such purchase 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
following any Record Date on which the Pool Balance is 10% or less of the
Initial Pool Balance (as hereinafter defined). An Auction Sale will occur at any
time, and may result in the sale of the Contracts remaining in the Trust, within
ten days following a Distribution Date following the Record Date on which the
Pool Balance is 5% or less of the Initial Pool Balance.
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 proceeds from any such sale, disposition or liquidation of
the Contracts will be treated as collections on the Contracts and deposited in
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the Collection Account. If the proceeds from the liquidation of the Contracts
and any amounts on deposit in the Note Distribution Account and the Certificate
Distribution Account are not sufficient to pay the Notes and Certificates in
full, distributions will be made first, to the payment of interest and principal
on the Notes and second, to the payment of interest and principal on the
Certificates. In such event, the amount of principal returned to the
Certificateholders will be reduced and such Certificateholders will incur a
loss, except to the extent of payments, subject to the Available Cash Collateral
Amount, made to the Certificateholders from the Cash Collateral Account.
Credit 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 Class A Notes payable on such Distribution Date
has been distributed to the Class A Noteholders, other than payments from the
Cash Collateral Account, and (ii) principal until the Class A 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 (as
hereinafter defined) pursuant to the Cash Collateral Agreement (as hereinafter
defined) and payments previously made therefrom to Certificateholders and
generally will be reduced as the Pool Balance is reduced. See "The Purchase
Agreements and The Trust Documents--Credit Enhancement--Cash Collateral
Account." At any time that the Available Cash Collateral Amount is zero, holders
of Certificates will bear the risk of all liquidation losses on the Defaulted
Contracts and may suffer a loss. The Certificate Balance will be reduced to the
extent that prior to the Cross-Over Date distributions are not made in respect
of the Principal Loss Liquidation Amount and on or after the Cross-Over Date
distributions are not made in respect of the Principal Distribution Amount. As a
result of such reductions, less interest will accrue on the Certificates than
would otherwise be the case.
CERTAIN INFORMATION REGARDING THE SECURITIES
Book-Entry Registration
Persons acquiring beneficial ownership interests in the Securities may hold
their interests through DTC in the United States or, in the case of the Notes,
Cedel or Euroclear in Europe and persons acquiring beneficial ownership
interests in the Certificates may hold their interests through DTC. Securities
will be registered in the name of Cede as nominee for DTC. Cedel and Euroclear
will hold omnibus positions with respect to the Notes on behalf of Cedel
Participants and Euroclear Participants, respectively, through customers'
securities accounts in Cedel's and Euroclear's name on the books of their
respective depositories (collectively, the "Depositories") which in turn will
hold such positions in customers' securities accounts in the Depositories' names
on the books of DTC. For additional information regarding clearance and
settlement procedures see Annex I hereto.
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934. DTC accepts securities for deposit from its
participating organizations ("Participants") and facilitates the clearance and
settlement of securities transactions between Participants in such securities
through electronic book-entry changes in accounts of its Participants, thereby
eliminating the need for physical movement of certificates. Participants include
securities brokers and dealers (including the Underwriters), banks and trust
companies and clearing corporations and may include certain other organizations.
Indirect access to the DTC system is also available to others such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly ("Indirect
Participants").
Security Owners who are not Participants or Indirect Participants but
desire to purchase, sell or otherwise transfer ownership of Securities may do so
only through Participants or Indirect Participants (unless and until Definitive
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Securities are issued). In addition, Security Owners will receive all
distributions of principal and interest on the Securities through DTC and its
Participants. Under a book-entry format, Security Owners may experience some
delay in their receipt of payments, since such payments will be forwarded by the
Trustees to Cede, as nominee for DTC. DTC will forward such payments to its
Participants which thereafter will forward them to Indirect Participants or
Security Owners. It is anticipated that the only "Holder" or "Securityholder,"
as such terms are used herein, will be Cede, as nominee of DTC. Security Owners
will not be recognized by the Trustees as Securityholders, as such term will be
used, in the Sale and Servicing Agreement, and Security Owners will only be
permitted to exercise the rights of Securityholders indirectly through DTC and
its Participants. Security Owners will not receive or be entitled to receive
Definitive Notes or Definitive Certificates representing their respective
interests in the Securities, except under the limited circumstances described
below.
Transfers between Participants will occur in accordance with DTC Rules.
Transfers between Cedel Participants and Euroclear Participants will occur in
accordance with their respective rules and operating procedures.
Because of time zone differences, credits of securities received in Cedel
or Euroclear as a result of a transaction with a Participant will be made during
subsequent securities settlement processing and dated the business day following
the DTC settlement date, such credits or any transactions in such securities
settled during such processing will be reported to the relevant Euroclear or
Cedel Participants on such business day. Cash received in Cedel or Euroclear as
result of sales of Securities by or through a Cedel Participant or Euroclear
Participant to a DTC Participant will be received with value on the DTC
settlement date but will be available in the relevant Cedel or Euroclear cash
account only as of the business day following settlement in DTC.
Cross-market transfers between persons directly 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 counterpart in such system in accordance with its rules and
procedures and within its established deadline (European time). The relevant
European international clearing system will, if the transaction meets its
settlement requirements, deliver instructions to its Depository to take action
to effect final settlement on its behalf by delivering or receiving securities
in DTC, and making or receiving payment in accordance with normal procedures for
same day funds settlement applicable to DTC. Cedel Participants and Euroclear
Participants may not deliver instructions to the Depositories.
While the Securities are outstanding (except under the circumstances
described below), under the rules, regulations and procedures creating and
affecting DTC and its operations (the "DTC Rules"), DTC will be required to make
book-entry transfers among Participants on whose behalf it acts with respect to
the Notes and Certificates and will be required to receive and transmit
distributions of principal and interest on the Securities. Participants and
Indirect Participants with which Security Owners have accounts with respect to
the Securities will be similarly required to make book-entry transfers and
receive and transmit such payments on behalf of their respective Security
Owners.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants, the ability of a Security Owner to pledge Notes
or Certificates to persons or entities that do not participate in the DTC
system, or otherwise take actions in respect of such Securities, may be limited
due to the lack of physical certificates for such Securities.
Cedel is incorporated under the laws of Luxembourg as a professional
depository. Cedel holds securities for its participating organizations ("Cedel
Participants") and facilitates the clearance and settlement of securities
transactions between Cedel Participants through electronic book-entry changes in
accounts of Cedel Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in Cedel in any of 28
currencies, including United States dollars. Cedel provides to its Cedel
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Cedel interfaces with domestic markets in several
countries. As a professional depository, Cedel is subject to regulation by the
Luxembourg Monetary Institute. Cedel Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Indirect access to Cedel is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Cedel Participant, either directly or indirectly.
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The Euroclear System was created in 1968 to hold securities for its
participants ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may be settled in any of 32 currencies, including United
States dollars. The Euroclear System includes various other services, including
securities lending and borrowing and interfaces with domestic markets in several
countries generally similar to the arrangements for cross-market transfers with
DTC described above. The Euroclear System is operated by the Brussels, Belgium
Office of Morgan Guaranty Trust Company of New York (the "Euroclear Operator" or
"Euroclear"), under contract with Euroclear Clearance Systems, S.C., a Belgian
cooperative corporation (the "Cooperative"). All operations are conducted by the
Euroclear Operator, and all Euroclear securities clearance accounts and
Euroclear cash accounts are accounts with the Euroclear Operators, not the
Cooperative. The Cooperative establishes policy for the Euroclear System on
behalf of the dealers and other professional financial intermediaries. Indirect
access to Euroclear is also available to other firms that clear thorough, or
maintain a custodial relationship with a Euroclear 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 and the Trustees that, unless and until
Definitive Securities are issued, DTC will take any action permitted to be taken
by a Securityholder under the Sale and Servicing Agreement only at the direction
of one or more Participants to whose DTC accounts the Securities are credited.
DTC may take conflicting actions with respect to other undivided interests to
the extent that such actions are taken on behalf of Participants whose holdings
include such undivided interests.
NEITHER THE TRUST, THE SELLER, THE SERVICER, CIT, THE AFFILIATED PURCHASER,
THE OWNER TRUSTEE, THE INDENTURE TRUSTEE, THE CASH COLLATERAL DEPOSITOR NOR ANY
OF THE UNDERWRITERS WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY
PARTICIPANTS, CEDEL PARTICIPANTS OR EUROCLEAR PARTICIPANTS OR THE PERSONS FOR
WHOM THEY ACT AS NOMINEES WITH RESPECT TO (1) THE ACCURACY OF ANY RECORDS
MAINTAINED BY DTC, CEDEL, EUROCLEAR OR ANY PARTICIPANT, (2) THE PAYMENT BY DTC,
CEDEL, EUROCLEAR OR ANY PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN
RESPECT OF THE PRINCIPAL AMOUNT OF, OR INTEREST ON, THE SECURITIES, (3) THE
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DELIVERY BY ANY PARTICIPANT, CEDEL PARTICIPANT OR EUROCLEAR PARTICIPANT OF ANY
NOTICE TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF
THE INDENTURE OR THE TRUST AGREEMENT TO BE GIVEN TO SECURITYHOLDERS OR (4) ANY
OTHER ACTION TAKEN BY DTC AS THE SECURITYHOLDER.
Definitive Securities
The Notes and Certificates will be issued in fully registered, certificated
form ("Definitive Notes" and "Definitive Certificates", respectively, and,
together "Definitive Securities") to Security Owners or their nominees, rather
than to DTC or its nominee, only if (i) the Servicer advises the Trustees in
writing that DTC is no longer willing or able to discharge properly its
responsibilities as Depository with respect to the Securities and the Trustees
or the Servicer is unable to locate a qualified successor, (ii) the Servicer, at
its option, elects to terminate the book-entry system through DTC or (iii) after
the occurrence of an Event of Default or an Event of Termination, Note Owners
and Certificate Owners representing in the aggregate not less than a majority of
the outstanding principal balance of the Notes or the Certificate Balance advise
DTC through Participants in writing that the continuation of a book-entry system
through DTC (or a successor thereto) is no longer in the best interest of such
Note Owners or Certificate Owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Trustee is required to notify DTC of the availability
of Definitive Securities. Upon surrender by DTC of the global notes and global
certificates representing the Notes and Certificates and instructions for
re-registration, the Trustee will issue the Notes as Definitive Notes and the
Certificates as Definitive Certificates, and thereafter the Trustee will
recognize the holders of such Definitive Notes and Definitive Certificates as
Noteholders and Certificateholders, respectively, under the Sale and Servicing
Agreement ("Noteholders" and "Certificateholders" respectively, and together
"Securityholders" or "Holders").
Distributions of principal of the Securities and interest on the Securities
will be made by the Trustee directly to Holders in accordance with the
procedures set forth herein and in the Sale and Servicing Agreement.
Distributions of principal and interest on each Distribution Date will be made
to Holders in whose names the Definitive Securities were registered on the
Record Date. Such distributions will be made by check mailed to the address of
such Holder as it appears on the register maintained by the Trustee or the
Security Registrar. The final payment on any Securities (whether Definitive
Securities or the Securities registered in the name of Cede representing the
Securities), however, will be made only upon presentation and surrender of such
Note or Certificate at the office or agency specified in the notice of final
distribution to Holders.
Definitive Securities will be transferable and exchangeable at the offices
of the Trustee. No service charge will be imposed for any registration of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge imposed in connection therewith.
List of Security Holders
If Definitive Certificates have been issued, the Owner Trustee will, upon
written request by three or more Certificateholders or by holders of
Certificates evidencing not less than 25% of the Certificate Balance, within
five (5) Business Days afford such Certificateholders access during business
hours to the current list of Certificateholders for purposes of communicating
with other Certificateholders with respect to their rights under the Purchase
Agreements and the Trust Documents (provided such Certificateholders (i) state
that they wish to communicate with other Certificateholders with respect to
their rights under the Purchase Agreements, the Trust Documents or under the
Certificates and (ii) provide the Trustee and the Servicer with a copy of the
proposed communication). The Purchase Agreements and Trust Documents will not
provide for the holding of any annual or other meetings of Certificateholders.
If Definitive Notes have been issued, the Indenture Trustee will, upon
written request by three or more Noteholders or by holders of Notes evidencing
not less than 25% of the aggregate principal balance of the Notes, within five
(5) Business Days afford such Noteholders access during business hours to the
current list of Noteholders for purposes of communicating with other Noteholders
with respect to their rights under the Indenture (provided such Noteholders (i)
state that they wish to communicate with other Noteholders with respect to their
rights under the Indenture and (ii) provide the 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.
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Statements to Securityholders
On each Distribution Date, the Servicer will include with each distribution
to each Securityholder a statement, setting forth the following information for
the related Due Period:
(i) the amount of the distribution allocable to principal of the Notes
and to the Certificate Balance of the Certificates, including any overdue
principal;
(ii) the amount of the distribution allocable to interest on or with
respect to each class of Securities, including any overdue interest;
(iii) the Pool Balance, the Note Pool Factor and the Certificate Pool
Factor as of the end of the related Due Period;
(iv) the Servicing Fee for the related Due Period, including any
overdue Servicing Fee;
(v) the amount of Monthly Advances and Non-Reimbursable Payments on
such date;
(vi) the amount, if any, withdrawn from the Cash Collateral Account
and distributed to the Certificateholders with respect to such Distribution
Date;
(vii) the Available Cash Collateral Amount, after giving effect to any
deposit to or withdrawal from the Cash Collateral Account with respect to
such Distribution Date, and such amount expressed as a percentage of the
Pool Balance;
(viii) the aggregate principal balance of all Contracts which were
delinquent 30, 59 and 89 days or more as of the last day of the related Due
Period;
(ix) during the Funding Period, the amount of funds on deposit in the
Pre-Funding Account;
(x) during the Funding Period, the number and aggregate principal
balance of Subsequent Contracts;
(xi) during the Funding Period, the number and aggregate principal
balance of Subsequent Contracts purchased by the Trust on the related
Distribution Date;
(xii) during the Funding Period, the amount, if any, withdrawn from
the Capitalized Interest Account to make payments of interest on the
Securities;
(xiii) during the Funding Period, the amount remaining on deposit
in the Capitalized Interest Account;
(xiv) 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), the aggregate principal amount and percentage of
each of the Notes and Certificates which are being redeemed;
(xv) the amount, if any, by which the amount due to be distributed to
Noteholders and Certificateholders exceeds the actual amount distributed on
the related Distribution Date to Noteholders and Certificateholders,
respectively;
(xvi) the aggregate principal balance of all Contracts which became
Defaulted Contracts during the related Due Period;
(xvii) the number and aggregate principal amount of Contracts which
were prepaid, in part or in whole, during the related Due Period;
(xviii) the aggregate outstanding principal balance of the Notes as of
such Distribution Date after giving effect to any distributions on such
Distribution Date;
(xix) the Certificate Balance as of such Distribution Date (after
giving effect to any distributions on such Distribution Date); and
(xx) the Required Cash Collateral Amount.
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 furnish to each person who at any time during such
calendar year shall have been a Securityholder 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."
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THE PURCHASE AGREEMENTS AND THE TRUST DOCUMENTS
The following summary describes certain terms of the Purchase Agreement and
any Subsequent Purchase Agreement (together, the "Purchase Agreements") and the
Sale and Servicing Agreement, any Subsequent Transfer Agreements and the Trust
Agreement (together, the "Trust Documents"). Forms of the Purchase Agreements
and the Trust Documents have been filed as exhibits to the Registration
Statement of which this Prospectus forms a part. This summary does not purport
to be complete and is subject to, and qualified in its entirety by reference to,
all of the provisions of the Purchase Agreements and the Trust Documents.
Sale and Assignment of the Contracts
On or prior to the Closing Date and each Subsequent Transfer Date, pursuant
to the Purchase Agreement or a Subsequent Purchase Agreement, as the case may
be, between CITSF and the Company, CITSF will sell and assign to the Company,
without recourse, its entire interest in and to the Initial Contracts and
Subsequent Contracts, respectively, including its security interests in the
related Financed Vehicles. On the Closing Date and each Subsequent Transfer
Date, the Company will sell and assign to the Owner Trustee, without recourse,
all of its right, title and interest in and to such Contracts, including its
security interests in the Financed Vehicles. Certain of the Contracts will be
purchased by CITSF from CITCF-NY before they are sold to the Company. Each
Contract will be identified in a schedule appearing as an exhibit to each of the
Purchase Agreement and the Sale and Servicing Agreement (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 (which may be
) will, concurrently with the sale and assignment of
the Initial Contracts to it pursuant to the Sale and Servicing Agreement,
execute, authenticate and deliver the Notes and Certificates to the Company in
exchange for the Initial Contracts. The Company will sell the Notes and the
Certificates to the Underwriters.
CITSF will make certain representations and warranties in the Sale and
Servicing Agreement with respect to each Initial Contract as of the Closing
Date, including that (i) as of the Initial Cut-off Date, the most recent
scheduled payment of principal and interest was made by or on behalf of the
related Obligor or was not delinquent more than 30 days; (ii) no provision of a
Contract has been waived, altered or modified in any respect, except by
instruments or documents contained in the Contract File; (iii) each Contract is
a legal, valid and binding obligation of the related Obligor and is enforceable
in accordance with its terms (except as may be limited by laws affecting
creditors' rights generally); (iv) no right of rescission, set-off, counterclaim
or defense, including the defense of usury, has been asserted with respect to
any Contract; (v) the Obligor on each Contract is required to maintain physical
damage insurance covering the related Financed Vehicle in accordance with
CITSF's normal requirements or, if not so covered, is covered by a blanket
insurance policy maintained by CITSF and the Servicer has not obtained
Force-Placed Insurance (as hereinafter defined) with respect to any Contract;
(vi) each Contract was originated by a Dealer and was purchased by CITSF or
CITCF-NY in the ordinary course of its business; (vii) no Contract was
originated in or is subject to the laws of any jurisdiction whose laws would
make the transfer of the Contract to the Company under the Purchase Agreement,
to the Trust pursuant to the Sale and Servicing Agreement or pursuant to a
transfer of the Notes and Certificates, or the ownership of the Contracts by the
Trust, unlawful; (viii) each Contract complies with all requirements of law in
all material respects; (ix) no Contract has been satisfied, subordinated in
whole or in part or rescinded, and no Financed Vehicle has been released from
the lien of the related Contract in whole or in part; (x) each Contract creates
a valid and enforceable first priority security interest in favor of CITSF,
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 thereof by the Company to the
Trust, CITSF or the Company, respectively, had good and marketable title to each
Contract, free and clear of any encumbrance, equity, loan, pledge, charge, claim
or security interest, and was the sole owner and had full right to transfer such
Contract to the Company and the Trust, respectively; (xiii) as of the Initial
Cut-off Date, there was no default, breach, violation or event permitting
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acceleration under any Contract and, no event which with notice and the
expiration of any grace or cure period would constitute a default, breach,
violation or event permitting acceleration under such Contract (except for
payment delinquencies permitted by clause (i) above), and CITSF has not waived
any of the foregoing (except for payment delinquencies permitted by clause (i)
above); (xiv) there are, to the best of CITSF's knowledge, no liens or claims
which have been filed for work, labor or materials affecting a Financed Vehicle
securing a Contract, which are or may be liens prior to or equal or coordinate
with the lien of the Contract; (xv) each Contract is a fully-amortizing loan
with interest at the stated Contract Rate and provides for level payments over
the term of such Contract; (xvi) each Contract contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for realization against the collateral of the benefits of the
security (except as may be limited by creditors' rights generally); (xvii) the
description of each Contract set forth in the List of Contracts is true and
correct as of its date; (xviii) no Obligor is the United States of America or
any state or any agency, department, instrumentality or political subdivision
thereof; (xix) if the Obligor is in the military (including an Obligor who is a
member of the National Guard or is in the reserves) and the Contract is subject
to the Soldiers' and Sailors' Civil Relief Act of 1940, as amended (the
"Soldiers' and Sailors' Civil Relief Act"), or the California Military Reservist
Relief Act of 1991 (the "Military Reservist Relief Act"), such Obligor (each, a
"Relief Act Obligor") has not made a claim to CITSF that (A) the amount of
interest on the Contract should be limited to 6% pursuant to the Soldiers' and
Sailors' Civil Relief Act during the period of such Obligor's active duty status
or (B) payments on the Contract should be delayed pursuant to the Military
Reservist Relief Act, in either case unless a court has ordered otherwise upon
application of CITSF; (xx) there is only one original executed copy of each
Contract, which, immediately prior to the execution of the Sale and Servicing
Agreement, was in the possession of CITSF; (xxi) the Contract is "chattel paper"
as defined in the New Jersey UCC; and (xxii) the Contract satisfies the
selection criteria discussed above under "The Contract Pool--General".
The Sale and Servicing Agreement will require CITSF to make 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 Transfer 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 fourth
paragraph under the heading "The Contract Pool--General." The Subsequent
Financed Vehicles will consist of motor homes, travel trailers and other types
of recreational vehicles.
Under the terms of the Sale and Servicing Agreement and subject to certain
conditions specified in the Sale and Servicing Agreement, CITSF will be
obligated to purchase for the Purchase Price (as defined below) any Contract not
later than 90 days after CITSF becomes aware, or 85 days after CITSF's receipt
of written notice from either Trustee or the Servicer, of a breach of any
representation or warranty of CITSF in the Sale and Servicing Agreement referred
to in the two preceding paragraphs that materially and adversely affects the
Trust's interest in such Contract if such breach has not been cured. CITSF shall
effect such purchase by depositing the Purchase Price for such Contract in the
Collection Account on the date specified in the Sale and Servicing Agreement.
The "Purchase Price" for any Contract will be the remaining principal amount
outstanding on such Contract on the date of purchase, plus 30 days' interest
thereon in an amount equal to the sum of (i) the product of one-twelfth of the
weighted average of the Pass-Through Rate and of the Class A Rate and the
remaining principal amount outstanding on the Contract and (ii) accrued and
unpaid Servicing Fees thereon at the Servicing Fee Rate to the date of such
purchase. This purchase obligation constitutes the sole remedy available to the
Trust and the Securityholders for a breach of a representation and warranty
under the Sale and Servicing Agreement with respect to the Contracts (but not
with respect to any other breach by CITSF of its obligations under the Sale and
Servicing Agreement).
To reduce administrative costs, the Trust will appoint the Servicer as
initial custodian of the Contracts. The Contracts will not be stamped or
otherwise marked to reflect the transfer of the Contracts by CITSF to the
Company and by the Company to the Trust, and will not be segregated from the
other installment sale contracts of CITSF. CITSF's accounting records and
computer systems will reflect the sale and assignment of the Contracts by CITSF
to the Company and by the Company to the Trust, and UCC financing statements
perfecting such sale and assignment will be filed. The Obligors under the
Contracts will not be notified of the transfer of the Contracts to the Company
or to the Trust. See "Certain Legal Aspects of the Contracts".
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CITSF, the Company and the Trust will treat each of the transfers of the
Contracts from CITSF to the Company and from the Company to the Trust as a sale.
As a result of the sale of the Contracts by CITSF to the Company and by the
Company to the Trust, the Contracts will not be part of the assets of either
CITSF or the Company and should not be available to their respective creditors.
However, in the event of the insolvency of CITSF or the Company, it is possible
that a trustee in bankruptcy, conservator or receiver for, or a creditor of,
CITSF or the Company, as the case may be, may argue that the transaction between
CITSF and the Company or between the Company and the Trust, as the case may be,
was a pledge of the Contracts to secure a loan, rather than a true sale. This
position, if asserted, could prevent timely payments of amounts due on the
Certificates and, if accepted by the court, may result in delays or reductions
in distributions of principal and interest on such Securities. Because the
Contracts will remain in CITSF's possession and will not be stamped or otherwise
marked to reflect the assignment to the Trust, the Trust's interest in the
Contracts could be defeated, if a subsequent purchaser were to take physical
possession of the Contracts without knowledge of the assignment. See "Certain
Legal Aspects of the Contracts".
Accounts
The Servicer will establish and maintain with the Indenture Trustee one or
more accounts, in the name of the Indenture Trustee on behalf of the Noteholders
and Certificateholders, into which all payments made on or with respect to the
Contracts will be deposited (the "Collection Account") by the Servicer. The
Servicer will establish and maintain with the Indenture Trustee an account in
the name of the Indenture Trustee on behalf of the Noteholders, in which amounts
released from the Collection Account for payment to the Noteholders will be
deposited and from which distributions to the Noteholders will be made (the
"Note Distribution Account"). The Servicer will establish and maintain with the
Owner Trustee (or its designated agent) an account in the name of the Owner
Trustee on behalf of the Certificateholders, in which amounts released from the
Collection Account and the Cash Collateral Account 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 an Eligible Institution (as
defined below), initially the Owner Trustee (or its designated agent), an
account in the name of the Owner Trustee, in which the Initial Cash Collateral
Amount will be deposited and from which payments will be made (i) to the
Certificate Distribution Account for distribution to the Certificateholders,
(ii) to the Cash Collateral Depositor and (iii) to the Affiliated Purchaser, as
set forth in the Sale and Servicing Agreement and the Cash Collateral Agreement.
Amounts held in the Certificate Distribution Account and the Cash Collateral
Account will not be available to make payments of amounts due on the Notes, and
will not be pledged to the Indenture Trustee as collateral security for the
Notes.
An "Eligible Institution" means either (i) the corporate trust department
of the Owner Trustee, the Indenture Trustee or any paying agent satisfying the
criteria under the Trust Agreement or Indenture as applicable or (ii) a
depository institution or trust company organized under the laws of the United
States or any state, the deposits of which are insured to the full extent
permitted by law by the Bank Insurance Fund (currently administered by the
Federal Deposit Insurance Corporation), which is subject to supervision and
examination by federal or state authorities and (unless the Certificate Account
is a trust account maintained in the corporate trust department of such
depository institution) whose short-term deposits have been rated P-1 by Moody's
or A-1 by Standard & Poor's, or in one of the two highest rating categories by
Moody's and Standard & Poor's in the case of unsecured long-term debt.
All amounts held in each of the accounts established by the Servicer shall
be invested in Eligible Investments that mature not later than the Business Day
preceding the Distribution Date next succeeding the date of investment.
"Eligible Investments" are limited to investments, specified in the Sale and
Servicing Agreement, which meet the criteria of 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, Note
Distribution Account, Certificate Distribution Account and Cash Collateral
Account will not be available to make payments on the Securities.
Servicing Procedures
The Servicer will make reasonable efforts to collect all payments due with
respect to the Contracts and, in a manner consistent with the Sale and Servicing
Agreement, will continue such normal collection practices and procedures as it
follows with respect to comparable recreational vehicle installment sale
contracts it services for itself and others. See "Certain Legal Aspects of the
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Contracts." Consistent with its normal procedures, the Servicer may, in its
discretion, arrange with an Obligor to extend or modify the payment schedule on
a Contract provided that (i) the maturity of such Contract would not extend
beyond the 180th day prior to the Class A Final Scheduled Distribution Date and
(ii) the reducing, rescheduling, extension or other modification of the terms of
the Contract would not constitute a cancellation of such Contract and the
creation of a new installment sale contract. The Servicer will follow such
normal collection practices and procedures as it deems necessary or advisable to
realize upon any Contract with respect to which it determines that eventual
payment in full is unlikely or to realize upon any Defaulted Contract. With
respect to any Due Period, a "Defaulted Contract" means any Contract (except for
a Repurchased Contract) in respect of which payments exceeding $25 in the
aggregate were delinquent 120 days or more as of the last day of such Due
Period; provided, however, that a Paid-Ahead Contract and a Contract which is
delinquent due to the Soldiers and Sailors Relief Act of 1940 shall not be
deemed delinquent. The Servicer may sell the related Financed Vehicle securing
such Contract at a public or private sale, or take any other action permitted by
applicable law. See "Certain Legal Aspects of the Contracts." The net proceeds
of such realization will be deposited in the Collection Account.
Under the Sale and Servicing Agreement, the Servicer will be required to
use its best efforts to require the Obligors to obtain and maintain theft and
physical damage insurance on the Financed Vehicles in accordance with the
policies and procedures employed by the Servicer with respect to comparable new
or used recreational vehicle receivables that it services for itself or others.
The Sale and Servicing Agreement provides that neither the Servicer nor the
Company, nor any director, officer, employee or agent of the Servicer or the
Company, will be under any liability to the Trustees, the Trust or the
Securityholders for any action taken or for restraining from the taking of any
action in good faith pursuant to the Sale and Servicing Agreement, or for errors
in judgment; provided, however, that the Servicer, the Company or any such
person will not be protected against any liability which would otherwise be
imposed by reason of the failure to perform its obligations in compliance with
the standards of care set forth in the Sale and Servicing Agreement. 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 Sale and Servicing Agreement 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.
The Servicer shall keep in force throughout the term of the Agreement (i)
at such time as the long-term debt of its parent is rated less than "A" by
Standard & Poor's or less than "A3" by Moody's, a policy or policies of
insurance covering errors and omissions for failure to maintain insurance as
required by the Sale and Servicing Agreement and (ii) a fidelity bond. Such
policy or policies and such fidelity bond shall be in such form and amount as is
generally customary among persons which service a portfolio of recreational
vehicle contracts having an aggregate principal amount of $100 million or more
and which are generally regarded as servicers acceptable to institutional
investors.
A breach of certain covenants made by CITSF as Servicer in the Sale and
Servicing Agreement that materially and adversely affects the Trust's interest
in any Contract, would require the Servicer to purchase such Contract unless
such breach is cured within the period specified in the Sale and Servicing
Agreement.
Servicing Compensation
The Servicer will be entitled to receive the Servicing Fee for each Due
Period, payable on the following Distribution Date, equal to the sum of (i)
one-twelfth of the product of 1.00% per annum (the "Servicing Fee Rate") and the
Pool Balance as of the last day of the second preceding Due Period (or, in the
case of the first Distribution Date, as of the Initial Cut-off Date) and (ii)
any investment earnings on amounts on deposit in the Collection Account, the
Note Distribution Account and the Certificate Distribution Account. In addition,
the Servicer will be entitled to collect and retain any late fees, prepayment
charges, extension fees or other administrative fees or similar charges allowed
by applicable law with respect to the Contracts ("Late Fees"). Payments to the
Servicer of such amounts will compensate the Servicer for performing the
functions of a third party servicer of recreational vehicle receivables as an
agent for the Trust, including collecting and posting all payments, responding
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to inquiries of Obligors, investigating delinquencies, reporting federal income
tax information to Obligors, paying costs of disposition of defaults, monitoring
the collateral in cases of Obligor default and handling the foreclosure or other
liquidation of the Financed Vehicle in appropriate instances.
The Servicing Fee and Late Fees also will compensate the Servicer for
administering the Contracts, including reimbursing the Servicer for accounting
for collections, furnishing monthly and annual statements to the Trustee with
respect to distributions and generating federal income tax information. The
Servicing Fee and Late Fees also will compensate the Servicer for certain taxes,
accounting fees, outside auditor fees, data processing costs and other costs
incurred in connection with administering and servicing the Contracts.
Collections
The Servicer will deposit all payments on or with respect to the Contracts
received from Obligors and all proceeds of Contracts collected during each Due
Period into the Collection Account not later than two Business Days after
receipt. However, at any time that (i) CITSF remains the Servicer under the Sale
and Servicing Agreement and The CIT Group Holdings, Inc. (the parent of the
Servicer) has and maintains a short-term debt rating of "at least A-1 by
Standard & Poor's and either a short-term debt rating of P-1 or a long-term debt
rating of at least A2 by Moody's" (the "Required Servicer Ratings"), or (ii) the
Servicer obtains a letter of credit, surety bond or insurance policy (the
"Servicer Letter of Credit") as provided in the Sale and Servicing Agreement
under which demands for payment will be made to secure timely remittance of
monthly collections to the Collection Account and, in the case of clause (ii)
above, the Trustees are provided with a letter from each Rating Agency to the
effect that the utilization of such alternative remittance schedule will not
result in a qualification, reduction or withdrawal of its then-current rating of
the Securities, the Servicer will not be required to deposit payments by
Obligors on the Contracts in the Collection Account within two Business Days of
the date of processing. In such an event, the Servicer may make such deposits on
the Business Day immediately preceding the next Distribution Date in an amount
equal to the net amount of such deposits and payments which would have been made
had the conditions of the preceding sentence not applied. In the event that the
Servicer is permitted to make remittances of collections to the Collection
Account on a monthly basis pursuant to satisfaction of the second condition
described above, the Sale and Servicing Agreement will be modified, to the
extent necessary, without the consent of any Securityholder. Pending deposit
into the Collection Account, collections may be invested by the Servicer at its
own risk and for its own benefit and will not be segregated from its own funds.
The Company, CITSF or the Servicer, as the case may be, will remit the
aggregate Purchase Price of any Contracts to be purchased from the Trust into
the Collection Account on or before the Business Day immediately preceding the
related Distribution Date.
The Servicer will not be required to deposit in the Collection Account
amounts relating to the Contracts attributable to the following: (a) amounts
received with respect to each Contract (or property acquired in respect thereof)
that has been purchased by CITSF or the Servicer pursuant to the Sale and
Servicing Agreement and that are not required to be distributed to
Securityholders, (b) net investment earnings on funds deposited in the
Collection Account, the Note Distribution Account, the Certificate Distribution
Account and the Cash Collateral Account, (c) amounts received as Late Fees, (d)
amounts to be reimbursed to the Servicer in respect of unrecoverable Monthly
Advances, (e) amounts received in respect of the amounts, if any, of insurance
premiums added to the principal balance of a Contract after the Initial Cut-off
Date for each such Initial Contract, or after the related Subsequent Cut-off
Date for each such Subsequent Contract, (f) amounts received as liquidation
proceeds, to the extent the Servicer is entitled to reimbursement of liquidation
expenses related thereto, and (g) repossession of profits on liquidated
Contracts.
Monthly Advances
With respect to each Contract as to which there has been an Interest
Shortfall during the related Due Period (other than an Interest Shortfall
arising from a Contract which has been prepaid in full or which has been subject
to a Relief Act Reduction during the related Due Period), the Servicer shall
advance funds in the amount of such Interest Shortfall (each, a "Monthly
Advance"), but only to the extent that the Servicer, in its good faith
judgement, expects to recover such Monthly Advance from subsequent collections
with respect to interest on such Contract made by or on behalf of the obligor
thereunder (the "Obligor"), net liquidation proceeds or insurance proceeds with
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respect to such Contract. The Servicer shall be reimbursed for any Monthly
Advance from subsequent collections with respect to such Contract. If the
Servicer determines in its good faith judgement that an unreimbursed Monthly
Advance shall not ultimately be recoverable from such collections, the Servicer
shall be reimbursed for such Monthly Advance from collections on all Contracts.
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. The Servicer will not advance funds in respect of the principal
component of any scheduled payment.
"Interest Shortfall" means with respect to any Contract and any
Distribution Date, the excess of (x) the sum of (i) the product of one-twelfth
of the weighted average of the Pass-Through Rate and the Class A Rate multiplied
by the outstanding principal amount of such Contract as of the last day of the
second preceding Due Period (or, in the case of the first Due Period 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) calculated on the basis of a
360-day year comprised of twelve 30-day months and (ii) the product of (A)
one-twelfth of the Servicing Fee Rate and (B) the outstanding principal amount
of such Contract as of the last day of the second preceding Due Period (or, in
the case of the first Due Period 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 (y) the amount of interest, if any, collected on such Contract
in the related Due Period.
The Servicer will remit any Monthly Advance with respect to each Due Period
into the Collection Account not later than the Business Day preceding the next
following Distribution Date.
Non-Reimbursable Payment
When a payment of principal is made on or in respect of a Contract,
interest is paid on the unpaid principal balance of such Contract only to the
date of such payment. With respect to each Contract as to which there has been
an Interest Shortfall in the related Due Period arising from either a prepayment
in full of such Contract or a Relief Act Reduction in respect of such Contract
during such Due Period, the Sale and Servicing Agreement will require the
Servicer to deposit into the Collection Account on the Business Day immediately
preceding the following Distribution Date, without the right of subsequent
reimbursement, an amount equal to such Interest Shortfall (a "Non-Reimbursable
Payment").
Distributions
On or before the Determination Date preceding a Distribution Date, the
Servicer will make a determination and inform the Indenture Trustee and the
Owner Trustee of the following amounts with respect to the preceding Due Period:
(i) the aggregate amount of collections on the Contracts; (ii) the aggregate
amount of Monthly Advances to be remitted by the Servicer; (iii) the aggregate
Purchase Price of Contracts to be purchased by CITSF or the Servicer; (iv) the
aggregate amount to be distributed as principal and interest on the Notes on the
related Distribution Date; (v) the aggregate amount to be distributed as
principal and interest on the Certificates on the related Distribution Date;
(vi) the Servicing Fee; (vii) the aggregate amount of Non-Reimbursable Payments;
(viii) the amounts required to be withdrawn from the Cash Collateral Account for
such Distribution Date (which shall be equal to (I) the amount, if any (subject
to the Available Cash Collateral Amount), by which the Available Amount for such
Distribution Date after reimbursing the Servicer for any previously unreimbursed
Monthly Advances for which it is entitled to be reimbursed and making the
Servicer Payment to the Servicer and paying interest and principal on the Notes,
is less than the amounts set forth in clauses (e), (f) and (g) below with
respect to such Distribution Date, (II) any Cash Collateral Account Surplus (as
hereinafter defined) which is payable to the Cash Collateral Depositor or the
Affiliated Purchaser and (III) any Excess Collections (as hereinafter defined)
payable to the Cash Collateral Depositor); (ix) any amounts to be deposited into
the Cash Collateral Account; and (x) the aggregate amount of unreimbursed
Monthly Advances to be reimbursed to the Servicer, all as described below.
The "Available Amount" on any Distribution Date is equal to all amounts on
deposit in the Collection Account attributable to collections or deposits made
in respect of such Contracts in the related Due Period (together with the
Purchase Price for any Contract repurchased by CITSF resulting from breaches of
certain representations and warranties or repurchased by the Servicer resulting
from breaches of certain covenants, in each case as set forth in the Sale and
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Servicing Agreement, paid on or prior to the Deposit Date immediately preceding
such Distribution Date) less the following amounts (to the extent that the
Servicer has not already withheld such amounts from collections on the
Contracts): any repossession profits on liquidated Contracts, Liquidation
Expenses (as defined in the Sale 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; any amounts
incorrectly deposited in the Collection Account; and net investment earnings on
the funds in the Collection Account due to the Servicer pursuant to the Sale and
Servicing Agreement and any other amounts permitted to be withdrawn from the
Collection Account by the Servicer (or to be retained by the Servicer from
collections on the Contracts) pursuant to the Sale and Servicing Agreement.
On each Distribution Date the Indenture Trustee will withdraw the Available
Amount from the Collection Account to make the following payments (to the extent
sufficient funds are available therefor) in the following order:
(a) the aggregate amount of any unreimbursed Monthly Advances made by
the Servicer (and which are then due to be reimbursed to the Servicer) will
be paid to the Servicer;
(b) the Servicing Fee, including any overdue Servicing Fee, will (to
the extent not previously retained by the Servicer) be paid to the
Servicer;
(c) the Class A Interest Distribution Amount, including any overdue
Class A 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 (as hereinafter defined), to
the extent required by the Sale 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.
Credit Enhancement
Subordination of Certificates. The rights of the Certificateholders to
receive distributions with respect to the Contracts will be subordinated to the
rights of the Class A Noteholders, to the limited extent described herein. This
subordination is intended to enhance the likelihood of timely receipt by Class A
Noteholders of the full amount of interest and principal required to be paid to
them, and to afford such Class A Noteholders limited protection against losses
in respect of the Contracts.
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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 Class A Notes payable on such Distribution Date has been distributed to
the Class A Noteholders, other than payments from the Cash Collateral Account,
and (ii) principal until the Class A Notes have been paid in full, other than
distributions in respect of the Principal Liquidation Loss Amount.
The protection afforded to the Class A Noteholders by the subordination
feature described above will be effected by the preferential right of the Class
A Noteholders to receive, to the extent described herein, current distributions
from collections on or in respect of the Contracts prior to the application of
such collections to making payments in respect of the Certificates. There is no
other protection against losses on the Contracts afforded the Class A 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, the Cash Collateral Account
will be established pursuant to the Sale 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 hereinafter defined), 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 shall be a segregated account maintained with
an Eligible Institution. 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 and the Cash
Collateral Agreement for the benefit of the Certificateholders and the Trust,
and as provided in the Sale 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 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
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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 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 60 days
or more delinquent (including Contracts relating to Financed Vehicles that have
been repossessed) as a percentage of the Pool Balance for the three 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 three 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 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.
Net Deposits
As an administrative convenience, the Servicer will under certain
circumstances be permitted to make deposits of collections, Monthly Advances,
Non-Reimbursable Payments and the aggregate Purchase Price of Contracts
purchased by it for, or with respect to, a Distribution Date net of
distributions to be made to the Servicer with respect to such Distribution Date
(including, without limitation, Servicing Fee, reimbursement of nonrecoverable
Monthly Advances and amounts to be deducted in the definition of "Available
Amount" set forth under "--Distributions" above). The Servicer, however, will
account to the Indenture Trustee, the Owner Trustee and to the Securityholders
as if all such deposits and distributions were made on an aggregate basis for
each type of payment or deposit.
Statements to Trustees and Trust
On or before each Determination Date, the Servicer will provide to the
Indenture Trustee, Owner Trustee, any Paying Agent and CITSF 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".
Evidence as to Compliance
The Sale and Servicing Agreement will require the Servicer to deliver to
the Trustees a monthly report prior to each Distribution Date, setting forth
certain information regarding the Contract Pool and the Securities. Each such
report to the Trustees will be accompanied by a statement from an appropriate
officer of the Servicer certifying the accuracy of such report and stating that
the Servicer has not defaulted in the performance of its obligations under the
Sale and Servicing Agreement.
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The Sale and Servicing Agreement will require that on or before April 1 of
each year, the Servicer will deliver to the Trustees a report of independent
public accountants stating that such firm has, with respect to the Servicer's
overall servicing operations, examined such operations in accordance with the
requirements of the Uniform Single Audit Program for Mortgage Bankers, and
stating such firm's conclusions relating thereto.
The Servicer, on request of the Trustees, will furnish to the Trustees such
reasonably pertinent underlying data as can be generated by the Servicer's
existing data processing system without undue modification or expense.
Certain Matters Regarding the Servicer
The Sale and Servicing Agreement will provide that the Servicer may not
resign from its obligations and duties as Servicer thereunder, except upon
determination that the Servicer's performance of such duties is no longer
permissible under applicable law. Such resignation will not become effective
until the Indenture Trustee or a successor Servicer has assumed the Servicer's
servicing obligations and duties under the Sale and Servicing Agreement.
The Sale and Servicing Agreement will further provide that neither the
Servicer nor the Company nor any of their directors, officers, employees and
agents shall be under any liability to the Trustees, the Trust or the
Noteholders or Certificateholders for taking any action or for refraining from
taking any action pursuant to the Sale and Servicing Agreement, or for errors in
judgment; provided, however, that neither the Servicer nor any such person will
be protected against any breach of warranties or representations made in the
Sale and Servicing Agreement or failure to perform obligations in accordance
with the standards set forth in the Sale and Servicing Agreement or any
liability which otherwise would be imposed by reason of any breach of the terms
and conditions of the Sale and Servicing Agreement. In addition, the Sale and
Servicing Agreement will provide that the Servicer is under no obligation to
appear in, prosecute or defend any legal action which arises under the Sale and
Servicing Agreement and that, in its opinion, may cause it to incur any expense
or liability. The Servicer may, however, undertake any reasonable action that it
may deem necessary or desirable in respect of the Sale and Servicing Agreement
and the rights and duties of the parties thereto and the interests of the
Noteholders and Certificateholders thereunder.
Any corporation or other entity into which the Servicer may be merged or
consolidated, or any corporation or other entity resulting from any merger,
conversion or consolidation to which the Servicer is a party, or any corporation
or other entity succeeding to the business of the Servicer, which corporation or
other entity assumes the obligations of the Servicer, will be the successor of
the Servicer under the Sale and Servicing Agreement.
Physical Damage Insurance
The Sale and Servicing Agreement will provide that the Servicer, in
accordance with its customary servicing procedures, shall require that each
Obligor shall have obtained and shall maintain physical damage insurance
covering the Financed Vehicle, provided that such insurance shall be in an
amount no greater than the outstanding principal balance of the related Contract
or, if such insurance covers the interest of the related Obligor in the Financed
Vehicle, no greater than the greater of the outstanding principal balance of the
related Contract and the value of the Financed Vehicle, or such lesser amount
permitted by applicable law. The Servicer shall enforce its rights under the
Contracts to require the Obligors to maintain physical damage insurance, in
accordance with the Servicer's customary practices and procedures with respect
to comparable new or used recreational vehicle installment sale contracts that
it services for itself or others. If an Obligor fails to maintain such
insurance, the Servicer shall obtain and advance on the behalf of such Obligor,
as required under the terms of the applicable Contract and the Sale and
Servicing Agreement, the premiums for such insurance, with uninsured physical
damage loan insurance endorsements, each insurance policy naming the Servicer as
an additional insured and loss payee and issued by an insurer having a rating of
"A" or better by A.M. Best (such insurance being referred to herein as
"Force-Placed Insurance"). Such Force-Placed Insurance and any commissions or
finance charges collected by the Servicer in connection therewith shall be, to
the extent permitted by law in an amount in accordance with customary servicing
procedures, but in no event in an amount greater than the outstanding principal
balance of the related Contract or, if such insurance also covers the interest
of the related Obligor in the Financed Vehicle, no greater than the greater of
the outstanding principal balance of the related Contract and the value of the
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Financed Vehicle, or such lesser amount permitted by applicable law. The
Servicer shall be required to disclose to the related Obligor all information
with respect to such Force-Placed Insurance, commissions and finance charges as
required by applicable law. The Servicer does not, under its customary servicing
procedures, require Force-Placed Insurance when the principal balance of the
related Contract falls below the level or levels periodically established in
accordance with such customary servicing procedures. In accordance with such
customary servicing procedures, the Servicer may periodically readjust such
levels, suspend Force-Placed Insurance or arrange other methods of protection of
the Financed Vehicles that it deems necessary or advisable, provided that the
Servicer determines that such actions do not materially and adversely affect the
interests of the Certificateholders or the Noteholders. Any portion of the
principal balance of a Contract consisting of Force-Placed Insurance acquired
after the Initial Cut-off Date, or the related Subsequent Cut-off Date, will not
be owned by the Trust, and amounts allocable thereto will not be available for
distribution on the Securities. Unless otherwise designated by the Obligor, the
Servicer will not allocate payments with respect to Force-Placed Insurance
premiums added to the Contracts after the Initial Cut-off Date or a Subsequent
Cut-off Date, as the case may be, if any amount of principal or interest is due
but unpaid on the Contracts. The Servicer shall not deposit payments posted with
respect to such Force-Placed Insurance in the Collection Account and shall
instead promptly pay such amounts to an account of the Servicer maintained for
that purpose. In the event that an Obligor under a Contract with respect to
which the Servicer has advanced funds to obtain Force-Placed Insurance makes
scheduled payments under the Contract, but has failed to make scheduled payments
of such Force-Placed Insurance as due, and the Servicer has determined that
eventual payment of such amount is unlikely, the Servicer may, but shall not be
required to, take any action available to it, including determining that the
related Contract is a Defaulted Contract; provided, however, that any Net
Liquidation Proceeds with respect to such Contract shall be applied first to the
accrued and unpaid interest at the Contract Rate, then to the principal amount
outstanding, and the remainder, if any, to such Force-Placed Insurance.
Servicing -- Hazard Insurance
The Sale and Servicing Agreement will permit the Servicer or any affiliate
of the Servicer, to the extent permitted by law, to (a) 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 hazard
insurance policy (whether or not such hazard insurance policy is force-placed
pursuant to the provisions of any Contract), or any other insurance policy
whatsoever and (b) 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
An "Event of Termination" under the Sale and Servicing Agreement will
consist of (i) any failure by the Servicer to make any required deposit in any
of the accounts required to be made under the Sale and Servicing Agreement 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 Sale and Servicing Agreement (other than those described in
clause (i)) that materially and adversely affects the rights of the Noteholders
or Certificateholders which continues unremedied for 30 days after the giving of
written notice of such failure or breach; (iii) any assignment or delegation by
the Servicer of its duties or rights under the Sale and Servicing Agreement,
except as specifically permitted under the Sale and Servicing Agreement, or any
attempt to make such an assignment or delegation; (iv) certain events of
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings regarding the Servicer; or (v) the Servicer no longer
qualifies as an Eligible Servicer (as defined in the Sale and Servicing
Agreement). "Notice" as used herein shall mean notice to the Servicer by the
Trustees or the Company, or to the Company, the Servicer and the Trustees by the
Certificateholders holding not less than 25% of the outstanding Certificate
Balance and by Noteholders holding not less than 25% of the outstanding
principal amount of the Notes.
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Rights Upon Event of Termination
As long as an Event of Termination under the Sale and Servicing Agreement
remains unremedied, the Indenture Trustee may, and at the written direction of
the holders of Notes evidencing not less than a majority in principal amount of
such then outstanding Notes, shall, unless prohibited by applicable law,
terminate all (but no less than all) of the rights and obligations of the
Servicer under the Sale and Servicing Agreement and in and to the Contracts, and
the proceeds thereof, whereupon (subject to applicable law) the Indenture
Trustee or a successor Servicer under the Sale and Servicing Agreement will
succeed to all the responsibilities, duties and liabilities of the Servicer
under the Sale and Servicing Agreement and will be entitled to similar
compensation arrangements; provided, however, that neither the Indenture Trustee
nor any successor servicer will assume any obligation of CITSF to purchase
Contracts for breaches of representations or warranties, and the Indenture
Trustee or the successor Servicer will not be liable for any acts or omissions
of the Servicer occurring prior to a transfer of the Servicer's servicing and
related functions or for any breach by the Servicer of any of its obligations
contained in the Sale and Servicing Agreement. Notwithstanding such termination,
the Servicer shall be entitled to payment of certain amounts payable to it prior
to such termination, for services rendered prior to such termination. No such
termination will affect in any manner CITSF's obligation to purchase certain
Contracts for breaches of representations or warranties under the Sale and
Servicing Agreement. In the event that the Indenture Trustee would be obligated
to succeed the Servicer but is unwilling or unable so to act, it may appoint, or
petition to a court of competent jurisdiction for the appointment of, a
Servicer. Pending such appointment, the Indenture Trustee is obligated to act in
such capacity, unless the Indenture Trustee is prohibited by law from so acting.
The Indenture Trustee and such successor may agree upon the servicing
compensation to be paid, which in no event, without written consent of 100% of
the Securityholders, may be greater than the compensation to CITSF as Servicer
under the Sale and Servicing Agreement.
Waiver of Past Defaults
The holders of Notes evidencing at least a majority in principal amount of
the then outstanding Notes (or the holders of the Certificates evidencing not
less than a majority of the Certificate Balance, in the case that all the Notes
have been paid in full and the Indenture has been discharged in accordance with
its terms) may, on behalf of all such Noteholders and Certificateholders, waive
any default by the Servicer in the performance of its obligations under the Sale
and Servicing Agreement 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 Sale and Servicing Agreement. No such waiver will impair
such Noteholders' or Certificateholders' right with respect to subsequent
defaults.
Amendment
Each of the Sale and Servicing Agreement and the Trust Agreement may be
amended by the parties thereto and, in the event that such amendment affects the
Indenture Trustee, the Indenture Trustee, without prior notice to or the consent
of the related Noteholders or Certificateholders (i) to correct manifest error
or cure any ambiguity; (ii) 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 Notes or Certificates; (iv) to add to the covenants, restrictions or
obligations of the Company, the Servicer, the Owner Trustee or the Indenture
Trustee; (v) evidence and provide for the acceptance of the appointment of a
successor trustee with respect to the property owned by the Trust and add to or
change any provisions as shall be necessary to facilitate the administration of
the trusts under the Trust Agreement by more than one trustee pursuant to
Article VI of the Trust Agreement; or (vi) to add, change or eliminate any other
provisions provided that an amendment pursuant to clause (vi) will not, in the
opinion of counsel (which may be internal counsel to the Company or the
Servicer), adversely affect in any material respect the interests of the Trust,
the Noteholders or the Certificateholders. Each such agreement may also be
amended by the parties thereto, with the consent of the holders of at least a
majority in principal amount of such then outstanding Notes and the holders of
such Certificates evidencing at least a majority of the Certificate Balance for
the purpose of adding any provisions to or changing in any manner or eliminating
any provisions of the Sale and Servicing Agreement, or of modifying in any
manner the rights of such Noteholders or Certificateholders, respectively;
except, that no such amendment, may (i) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on
Contracts or distributions that are required to be made on any Note or
Certificate, any Contract Rate, the Pass-Through Rate or the Class A Rate or
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(ii) reduce the aforesaid percentage required of Noteholders and
Certificateholders to consent to any such amendment without the consent of all
of the Noteholders or Certificateholders, as the case may be. Notwithstanding
the foregoing, no amendment affecting the rights of the Cash Collateral
Depositor will be made without the consent of the Cash Collateral Depositor.
Insolvency Event
If any of certain events of insolvency, readjustment of debt, marshalling
of assets and liabilities, or similar proceedings with respect to such person
indicating its insolvency or inability to pay its obligations (each, an
"Insolvency Event") occurs with respect to the Affiliated Purchaser, the
Contracts shall be liquidated and the Trust will be terminated, unless, within
90 days after the date of such Insolvency Event, the Owner Trustee shall have
received written instructions from (i) each of the Certificateholders (other
than the Affiliated Purchaser), and (ii) each of the Noteholders to the effect
that each such party disapproves of the liquidation of such Contracts and
termination of such Trust. Promptly after the occurrence of any Insolvency Event
with respect to the Affiliated Purchaser, notice thereof is required to be given
to the Noteholders and Certificateholders; except that any failure to give such
required notice will not prevent or delay termination of the Trust. Upon
termination of the Trust, the Owner Trustee shall direct the Indenture Trustee
promptly to sell the assets of such Trust (other than the Certificate
Distribution Account, the Note Distribution Account or the Cash Collateral
Account) in a commercially reasonable manner and on commercially reasonable
terms. The proceeds from any such sale, disposition or liquidation of the
Contracts will be treated as collections on the Contracts and deposited in the
related Collection Account. If the proceeds from the liquidation of the
Contracts, the Note Distribution Account and the Certificate Distribution
Account are not sufficient to pay the Notes and Certificates in full, the amount
of principal returned to the Certificateholders will be reduced (to the extent
the Available Cash Collateral Amount is not sufficient to prevent such
reduction) and the Certificateholders will incur a loss. See "Risk
Factors--Certain Legal Aspects".
Affiliated Purchaser Liability
Under the Trust Agreement, the Affiliated Purchaser will agree to be liable
directly to an injured party for the entire amount of any losses, claims,
damages, liabilities or expenses (other than those incurred by (i) a Noteholder
or a Certificateholder in the capacity of an investor and (ii) the Trust under
the Cash Collateral Agreement) of the Trust to the extent that the Affiliated
Purchaser would be liable if the Trust were a partnership under the Delaware
Revised Uniform Limited Partnership Act in which the Affiliated Purchaser were a
general partner.
Termination
The obligations of the Servicer, the Company, the Affiliated Purchaser, the
Owner Trustee and the Indenture Trustee pursuant to the Purchase Agreements and
the Trust Documents will terminate upon the earliest to occur of (i) the
maturity or other liquidation of the last Contract and the disposition of any
amounts received upon liquidation of any property remaining in the Trust, (ii)
the payment to Securityholders of all amounts required to be paid to them
pursuant to the Purchase Agreements and the Trust Agreement, (iii) the
occurrence of either event described below and (iv) as otherwise required by
law, as described in the Trust Agreement.
In order to avoid excessive administrative expenses, CITSF will be
permitted at its option to purchase from the Trust, on any Distribution Date
following a Record Date on which the Pool Balance is 10% or less of the Initial
Pool Balance, all remaining Contracts at a price equal to the aggregate Purchase
Price for the Contracts (including Defaulted Contracts), plus the appraised
value of any other property held by the Trust (less liquidation expenses).
Exercise of such right will effect early retirement of the Securities. The
"Initial Pool Balance" equals the sum of (i) the Pool Balance as of the Initial
Cut-off Date and (ii) the aggregate principal balance of all Subsequent
Contracts added to the Trust as of their respective Subsequent Cut-off Dates.
Within ten days after a Distribution Date following a Record Date on which
the Pool Balance 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
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distributed to Securityholders on the second Distribution Date succeeding such
Record Date. Any purchaser of the Contracts must agree to the continuation of
CITSF as Servicer on terms substantially similar to those in the Sale and
Servicing Agreement. Any such sale will effect early retirement of the
Securities.
Such Trustee must receive at least two bids from prospective purchasers
that are considered at the time to be competitive participants in the market for
recreational vehicle retail installment sale contracts. The highest bid may not
be less than the fair market value of such Contracts and must equal the sum of
(i) the greater of (a) the aggregate Purchase Price for the Contracts (including
Defaulted Contracts), plus the appraised value of any other property held by the
Trust (less liquidation expenses) or (b) an amount that when added to amounts on
deposit in the Collection Account available for distribution to Securityholders
for such second succeeding Determination Date would result in proceeds
sufficient to distribute the amount of monthly principal and interest for such
Distribution Date and any unpaid principal and interest with respect to one or
more prior Distribution Dates, and (ii) the sum of (a) an amount sufficient to
reimburse the Servicer for any 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 the fair market value of such
Contracts has been offered. 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.
Such Trustee will give written notice of termination to each Securityholder
of record. The final distribution to each Securityholder will be made only upon
surrender and cancellation of such holder's Securities at any office or agency
of such Trustee specified for such purpose. Any funds remaining in the Trust,
after such Trustee has taken certain measures to locate a Securityholder and
such measures have failed, will be distributed to the Affiliated Purchaser.
CERTAIN LEGAL ASPECTS OF THE CONTRACTS
The following discussion contains summaries of certain legal aspects of
recreational vehicle contracts, which are general in nature. Because such legal
aspects are governed by applicable state law (which laws may differ
substantially), the summaries do not purport to be complete nor to reflect the
laws of any particular state, nor to encompass the laws of all states in which
the security for the Contracts is situated. The summaries are qualified in their
entirety by reference to the applicable federal and state laws governing the
Contracts.
General
As a result of the assignment of the Contracts to the Owner Trustee, the
Trust will succeed collectively to the rights (including the right to receive
payment on the Contracts) and will assume the obligations of the obligee under
the Contracts. Each Contract evidences both (a) the obligation of the obligor to
repay the loan evidenced thereby, and (b) the grant of a security interest in
the Financed Vehicle to secure repayment of such loan. Certain aspects of both
features of the Contracts are described more fully below.
The Contracts are "chattel paper" as defined in the Uniform Commercial Code
(the "UCC") as in effect in the various states of origination of the Contracts.
Pursuant to the UCC, the sale of chattel paper is treated in a manner similar to
perfection of a security interest in chattel paper. Under the Sale and Servicing
Agreement, the Servicer will retain possession of the Contracts as custodian for
the Owner Trustee, and will make an appropriate filing of a UCC financing
statement in New Jersey to perfect the sale of the Contracts by the Company to
the Owner Trustee. The Contracts will not be stamped to reflect their assignment
from CITCF-NY to CITSF, from CITSF to the Company or from the Company to the
Owner Trustee.
Under the Sale and Servicing Agreement, the Servicer will be obligated from
time to time to take such actions as are necessary to continue the perfection of
the Trust's interest in the Contracts and the proceeds thereof. CITSF will
warrant in the Sale and Servicing Agreement, with respect to each Contract,
that, as of the Closing Date for each Initial Contract, and as of the related
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Subsequent Transfer Date for each Subsequent Contract, the Contract has not been
sold, transferred, assigned or pledged by CITSF to any person other than the
Company, that immediately prior to the transfer and assignment of the Contracts
to the Company, CITSF has good and marketable title thereto, free and clear of
all liens, encumbrances, security interests and rights of others and,
immediately upon the transfer thereof, the Company will have good and marketable
title to the Contract, free and clear of all liens, encumbrances, security
interests and rights of others, and that the transfer has been perfected under
applicable law. In the event of an uncured breach of any such warranty that
materially adversely affects the interest of the Trust in a Contract transferred
by the Company to the Trust, the only recourse of the Certificateholders, the
Owner Trustee, or the Trust would be to require CITSF to purchase such Contract.
Pursuant to the Sale and Servicing Agreement, the Servicer will have
custody of the Contracts sold to the Trust. The Contracts and related
certificates of title will not be physically marked or segregated to indicate
that such Contracts have been sold to the Trust. If, through inadvertence or
otherwise, another party purchases (including the taking of a security interest
in) the Contracts for new value in the ordinary course of its business, without
actual knowledge of the Trust's interest, and takes possession of the Contracts,
such purchaser would acquire an interest in the Contracts superior to the
interest of the Trust.
Security Interests in the Financed Vehicles
General. Installment sale contracts such as the Contracts evidence the
credit sale of recreational vehicles by dealers to obligors; the contracts also
constitute personal property security agreements and include grants of security
interests in the related recreational vehicles under the UCC. In most states
(including California), perfection rules relating to security interests in
recreational vehicles are generally governed under state certificate of title
statutes (Alabama, Connecticut, Georgia, Maine, Massachusetts, Minnesota,
Mississippi, New Hampshire, New York, Rhode Island and Vermont have adopted the
Uniform Motor Vehicle Certificate of Title and Anti-Theft Act) or by the vehicle
registration laws of the state in which each recreational vehicle is located. In
states which have adopted the Uniform Motor Vehicle Certificate of Title and
Anti-Theft Act, security interests in recreational vehicles may be perfected
either by notation of the secured party's lien on the certificate of title or by
delivery of the certificate of title and payment of a fee to the state motor
vehicle authority, depending on particular state law. In states that do not have
a certificate of title statute or that make no provision for notation of a
security interest on a certificate of title, perfection is usually accomplished
by filing pursuant to the provisions of the UCC. In most states, including
California, a security interest in a recreational vehicle is perfected by
notation of the secured party's lien on the vehicle's certificate of title. Each
Contract prohibits the sale or transfer of the related Financed Vehicle without
the consent of CITSF.
Perfection of Sale. Pursuant to the Purchase Agreement, CITSF will sell and
assign its interests in the Contracts, including the security interests in the
Financed Vehicles granted thereunder, to the Company and, pursuant to the Sale
and Servicing Agreement, the Company will sell and assign its interest in the
Contracts, including the security interests in the Financed Vehicles granted
thereunder, to the Owner Trustee. UCC financing statements to perfect the sale
of (i) CITSF's interests in the Contracts and the Financed Vehicles to the
Company and (ii) the Company's interests in the Contracts and the Financed
Vehicles to the Owner Trustee, will be filed.
Perfection of CITSF's Security Interest in the Financed Vehicles. The
certificates of title relating to the Financed Vehicles name CITSF (or CITCF-NY)
as the secured party. In those instances where no certificate of title is
applicable under state law, a UCC-1 financing statement has been filed. CITSF
takes all actions necessary under the laws of the state in which the related
recreational vehicles are located to perfect its security interest in such
recreational vehicles, including, where applicable, having a notation of its
lien recorded on the related certificate of title or delivering the required
documents and fees, and obtaining possession of the certificate of title (if
possible). In the event CITSF (or CITCF-NY) fails, due to clerical errors, to
effect such notation or delivery, or files the security interest under the wrong
law (for example, under the UCC rather than under a motor vehicle title law),
the Securityholders may not have a first priority security interest in the
Financed Vehicle securing a Contract. In the Sale and Servicing Agreement, CITSF
has represented as of the Closing Date that each Contract creates a valid and
enforceable first priority security interest in favor of CITSF (or CITCF-NY) or
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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 within 90 days.
Perfection of Trust's Security Interest in Financed Vehicles. In each case,
except where applicable laws require the filing of a UCC- 1 financing statement,
the certificate of title names CITSF (or CITCF-NY) as the secured party. In the
case of Contracts which have CITCF-NY as the secured party, CITSF has not
amended the certificates of title to substitute CITSF as secured party.
Moreover, because of the administrative burden and expense, neither CITSF, the
Company nor the Trust will amend any certificate of title to identify the Trust
as the new secured party on the certificate of title relating to the Financed
Vehicles. However, the Servicer will continue to hold any certificates of title
relating to the Financed Vehicles in its possession as custodian for the Trust
pursuant to the Sale and Servicing Agreement. See "The Purchase Agreements and
the Trust Documents--Sale and Assignment of the Contracts." Accordingly, CITSF
(or CITCF-NY) will continue to be named as the secured party on the certificates
of title relating to the Financed Vehicles.
(i) California. A security interest in a motor vehicle registered in the
State of California (in which the greatest number of Financed Vehicles are
currently registered) may be perfected only by depositing with the Department of
Motor Vehicles a properly endorsed certificate of title for the vehicle showing
the secured party as "legal owner" thereon or if the vehicle has not been
previously registered, an application in usual form for an original registration
together with an application for registration of the secured party as "legal
owner." However, under the California Vehicle Code, a transferee of a security
interest in a motor vehicle is not required to reapply to the Department of
Motor Vehicles for a transfer of registration when the interest of the
transferee arises from the transfer of a security agreement by the "legal
owner." Accordingly, under California law, an assignment such as that under each
of the Purchase Agreement and the Sale and Servicing Agreement is an effective
conveyance of CITSF's and the Company's perfected security interest, as the case
may be, without such re-registration, and under the Purchase Agreement the
Company will succeed to CITSF's, and under the Sale and Servicing Agreement the
Trust will succeed to the Company's, rights as secured party.
(ii) Other States. In most states, assignments such as those under the
Purchase Agreement and the Sale and Servicing Agreement are an effective
conveyance of a security interest without amendment of any lien noted on a
vehicle's certificate of title, and the assignee succeeds thereby to the
assignor's rights as secured party. Because of the administrative burden and
expense, none of CITSF, the Company or the Trust will amend any certificate of
title to identify the Trust as the new secured party on the certificate of title
relating to the Financed Vehicles. Although re-registration of the recreational
vehicle in such states is not necessary to convey a perfected security interest
in the Financed Vehicles to the Trust, because the Trust will not be listed as
the secured party on the certificates of title to the Financed Vehicles, its
security interest could be defeated through fraud or negligence. In the absence
of fraud, forgery or administrative error, the notation of CITSF's 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 or
subsequent creditors who take a security interest in a Financed Vehicle.
However, with respect to Financed Vehicles in states in which the Trust failed
to obtain a first perfected security interest because it is not identified as
the secured party on the certificate of title, its security interest would be
subordinate to, among others, subsequent purchasers of such Financed Vehicles
and holders of first perfected security interests therein.
Continuity of Perfection. Under the laws of most states, a perfected
security interest in a recreational vehicle continues for four months after the
vehicle is moved to a new state from the one in which it is initially registered
and thereafter until the owner re-registers such recreational vehicle in the new
state. A majority of states require surrender of a certificate of title to
re-register a vehicle. In those states (including California) that require a
secured party to hold possession of the certificate of title to maintain
perfection of the security interest, the secured party would learn of the
re-registration through the request from the obligor under the related
installment sale contract to surrender possession of the certificate of title.
In the case of vehicles registered in states providing for the notation of a
lien on the certificate of title but not possession by the secured party, the
secured party would receive notice of surrender from the state of
re-registration if the security interest is noted on the certificate of title.
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Thus, the secured party would have the opportunity to re-perfect its security
interest in the vehicles in the state of relocation. However, these procedural
safeguards will not protect the secured party if through fraud, forgery or
administrative error, the debtor somehow procures a new certificate of title
that does not list the secured party's lien. Additionally, in states that do not
require a certificate of title for registration of a vehicle, re-registration
could defeat perfection.
In the ordinary course of servicing the Contracts, CITSF will take steps to
effect re-perfection upon receipt of notice of re-registration or information
from the obligor as to relocation. Similarly, when an obligor sells a Financed
Vehicle, CITSF must surrender possession of the certificate of title or will
receive notice as a result of its lien noted thereon and accordingly will have
an opportunity to require satisfaction of the related Contract before release of
the lien. Under the Sale and Servicing Agreement, the Servicer will be obligated
to take appropriate steps, at its own expense, to maintain perfection of a
security interest in the Financed Vehicles.
CITSF, as Servicer, will continue to hold certificates of title relating to
the Financed Vehicles in its possession as custodian for the Trust pursuant to
the Sale and Servicing Agreement. In the Sale and Servicing Agreement, CITSF, as
Servicer, will covenant that it will not release the Financed Vehicle securing
any Contract from the security interest granted therein except as contemplated
by the Sale and Servicing Agreement. CITSF, as Servicer, will also covenant that
it shall not impair the rights of the Trust in the Contacts or take any action
inconsistent with the Trust's ownership of the Contracts, except as permitted by
the Sale and Servicing Agreement. A breach of either such covenant that
materially and adversely affects the Trust's interest in any Contract, would
require the Servicer to purchase such Contract unless such breach is cured
within the period specified in the Sale and Servicing Agreement.
Priority of Certain Liens Arising by Operation of Law. Under the laws of
California and of most states, liens for repairs performed on a recreational
vehicle and liens for unpaid taxes take priority over even a first perfected
security interest in such vehicle. The Internal Revenue Code of 1986, as
amended, also grants priority to certain federal tax liens over the lien of a
secured party. The laws of certain states and federal law permit the
confiscation of motor vehicles by governmental authorities under certain
circumstances if used in unlawful activities, which may result in the loss of a
secured party's perfected security interest in a confiscated recreational
vehicle. CITSF will represent and warrant in the Sale and Servicing Agreement
that, as of the Closing Date, there were, to the best of CITSF's knowledge, no
liens or claims which have been filed for work, labor or materials affecting a
Financed Vehicle securing a Contract, which are or may be liens prior or equal
to the lien of the Contract. However, liens for repairs or taxes could arise at
any time during the term of a Contract. No notice will be given to the Owner
Trustee or Securityholders in the event such a lien or confiscation arises and
any such lien or confiscation arising after the date of initial issuance of the
Securities would not give rise to CITSF's purchase obligation under the Sale and
Servicing Agreement.
Repossession
In the event of default by an obligor, the holder of the related
installment sale contract has all the remedies of a secured party under the UCC,
except where specifically limited by other state laws. The UCC remedies of a
secured party include the right to repossession by self-help means, unless such
means would constitute a breach of the peace. Self-help repossession is the
method employed by the Servicer in most cases and is accomplished simply by
taking possession of the related recreational vehicle. In cases where the
obligor objects or raises a defense to repossession, or if otherwise required by
applicable state law, a court order must be obtained from the appropriate state
court, and the vehicle must then be recovered in accordance with that order. In
some jurisdictions (not including California), the secured party is required to
notify the debtor of the default and the intent to repossess the collateral and
be given a time period within which to cure the default prior to repossession.
In most states (including California), under certain circumstances after the
vehicle has been repossessed, the obligor may reinstate the related contract by
paying the delinquent installments and other amounts due.
Notice of Sale; Redemption Rights
The UCC and other state laws require the secured party to provide the
obligor with reasonable notice of the date, time and place of any public sale
and or the date after which any private sale of the collateral may be held. The
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obligor has the right to redeem the collateral prior to actual sale by paying
the secured party the unpaid principal balance of the obligation, accrued
interest thereon plus reasonable expenses for repossessing, holding and
preparing the collateral for disposition and arranging for its sale, plus, in
some jurisdictions, reasonable attorneys' fees or in some states, by payment of
delinquent installments or the unpaid principal balance of the related
obligation.
Deficiency Judgments and Excess Proceeds
The proceeds of resale of the Financed Vehicles generally will be applied
first to the expenses of resale and repossession and then to the satisfaction of
the related indebtedness. While some states impose prohibitions or limitations
on deficiency judgments if the net proceeds from resale do not cover the full
amount of the indebtedness, a deficiency judgment can be sought in California
and certain other states that do not prohibit or limit such judgments. In
addition to the notice requirement, the UCC requires that every aspect of the
sale or other disposition, including the method, manner, time, place and terms,
be "commercially reasonable." Most courts have held that when a sale is not
"commercially reasonable," the secured party loses its right to a deficiency
judgment. In addition, the UCC permits the debtor or other interested party to
recover for any loss caused by noncompliance with the provisions of the UCC.
Also, prior to a sale, the UCC permits the debtor or other interested person to
restrain the secured party from disposing of the collateral if it is established
that the secured party is not proceeding in accordance with the "default"
provisions under the UCC. However, the deficiency judgment would be a personal
judgment against the obligor for the shortfall, and a defaulting obligor may
have very little capital or sources of income available following repossession.
Therefore, in many cases, it may not be useful to seek a deficiency judgment or,
if one is obtained, it may be settled at a significant discount or be
uncollectible.
Occasionally, after resale of a recreational vehicle and payment of all
expenses and indebtedness, there is a surplus of funds. In that case, the UCC
requires the creditor to remit the surplus to any holder of a subordinate lien
with respect to such vehicle or, if no such lienholder exists, to the former
owner of the vehicle.
Certain Matters Relating to Insolvency
CITSF and the Company intend that the 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, CITSF to the Company, or by the Company
to the Trust, respectively, was a pledge of the Contracts rather than a sale and
that, accordingly, such Contracts should be part of such entity's bankruptcy
estate. Such a position, if presented to a court, even if ultimately
unsuccessful, could result in a delay in or reduction of distributions to the
Securityholders.
, an corporation and a wholly owned subsidiary
of CIT (the "Affiliated Purchaser"), will purchase 1% of the principal balance
of the Certificates. The Affiliated Purchaser will have the same rights with
regard to the Trust as all other Certificateholders based on its percentage
ownership of the Certificate Balance. The Trust Agreement will provide that if
an Insolvency Event with respect to the Affiliated Purchaser occurs, subject to
certain conditions, the Trust will dissolve. Certain steps have been taken in
structuring the transactions contemplated hereby that are intended to make it
less likely that an Insolvency Event with respect to the Affiliated Purchaser
will occur. These steps include the formation of the Affiliated Purchaser as a
separate, limited-purpose corporation pursuant to articles of incorporation
containing certain limitations (including restrictions on the nature of the
Affiliated Purchaser's business and a restriction on the Affiliated Purchaser's
ability to commence a voluntary case or proceeding under the United States
Bankruptcy Code or similar applicable state laws ("Insolvency Laws") without the
prior affirmative unanimous vote of its directors). However, there can be no
assurance that the activities or liabilities of the Affiliated Purchaser would
not result in an Insolvency Event.
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Although other courts have held otherwise, a case (Octagon Gas Systems,
Inc. v. Rimmer, 995 F.2d 948 (10th Cir.), cert. denied 114 S.Ct. 554 (1993))
decided by the United States Court of Appeals for the Tenth Circuit contains
language to the effect that, under Article 9 of the UCC, "accounts" (as defined
in the UCC) sold by a debtor would remain property of the debtor's bankruptcy
estate, whether or not the sale of the accounts was perfected under the UCC. UCC
Article 9 applies to the sale of "chattel paper" (as defined in the UCC) as well
as the sale of "accounts" and, although the Contracts constitute chattel paper
under the UCC rather than accounts, perfection of a security interest in both
chattel paper and accounts may be accomplished under the UCC by the filing of a
UCC-1 financing statement. If, following a bankruptcy of CITCF-NY, CITSF or of
the Company, a court were to follow the reasoning of the Tenth Circuit reflected
in the case described above, then the Contracts would be included in the
bankruptcy estate of CITCF-NY, CITSF or the Company, as the case may be, and
delays in payments of collections on or in respect of the Contracts, or loss of
principal and interest in respect of the Certificates, could occur.
The Company has taken steps in structuring the transactions described
herein that are intended to make it unlikely that the voluntary or involuntary
application for relief by CITSF under the Bankruptcy Code or similar applicable
state laws (collectively, "Insolvency Laws") will result in consolidation of the
assets and liabilities of the Company with those of CIT. These steps include the
creation of the Company as a wholly owned, limited purpose subsidiary of CIT
pursuant to a certificate of incorporation containing certain limitations
(including restrictions on the nature of the Company's business). Additionally,
the Company's Certificate of Incorporation prohibits merger, consolidation and
the sale of all or substantially all of its assets in certain circumstances,
without the prior affirmative unanimous vote of its directors including all
independent directors.
Consumer Protection Laws
Numerous federal and state consumer protection laws and related regulations
impose substantial requirements upon creditors and servicers involved in
consumer finance. These laws include the Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Federal Trade Commission Act, the Fair Credit Billing Act,
the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the
Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B and Z, the
Soldiers' and Sailors' Civil Relief Act, the Military Reservist Relief Act,
state adaptations of the National Consumer Act and of the Uniform Consumer
Credit Code and state motor vehicle retail installment sales acts, retail
installment sales acts and other similar laws. Also, the laws of California and
of certain other states impose finance charge ceilings and other restrictions on
consumer transactions and require contract disclosures in addition to those
required under federal law. These requirements impose specific statutory
liabilities upon creditors who fail to comply with their provisions. In some
cases, this liability could affect the ability of an assignee such as the Owner
Trustee to enforce consumer finance contracts such as the Contracts.
The so-called "Holder-in-Due-Course Rule" of the Federal Trade Commission
(the "FTC Rule"), has the effect of subjecting any assignee of the seller in a
consumer credit transaction to all claims and defenses which the obligor in the
transaction could assert against the seller of the goods. Liability under the
FTC Rule is limited to the amounts paid by the obligor under the contract, and
the holder of the contract may also be unable to collect any balance remaining
due thereunder from the obligor. The FTC Rule is generally duplicated by the
Uniform Consumer Credit Code, other state statutes or the common law in certain
states. Most of the Contracts will be subject to the requirements of the FTC
Rule. Accordingly, the Owner Trustee, as holder of the Contracts, will be
subject to any claims or defenses that the purchaser of the related Financed
Vehicle may assert against the seller of the Financed Vehicle. Such claims are
limited to a maximum liability equal to the amounts paid by the obligor under
the related Contracts.
Under California law and most state vehicle dealer licensing laws, sellers
of recreational vehicles are required to be licensed to sell vehicles at retail
sale. Numerous other federal and state consumer protection laws impose
requirements applicable to the origination and lending pursuant to the
Contracts, including the Truth in Lending Act, the Federal Trade Commission Act,
the Fair Credit Billing Act, the Fair Credit Reporting Act, the Equal Credit
Opportunity Act, the Fair Debt Collection Practices Act and the Uniform Consumer
Credit Code. In the case of some of these laws, the failure to comply with their
provisions may affect the enforceability of the related Contract. Neither the
Trust nor the Company has obtained any license required under any federal or
state consumer or mortgage banking laws or regulations, and the absence of such
licenses may impede the enforcement of certain rights or give rise to certain
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defenses in actions seeking enforcement rights. In addition, with respect to
used vehicles, the Federal Trade Commission's Rule on Sale of Used Vehicles
requires that all sellers of used vehicles prepare, complete, and display a
"Buyer's Guide" which explains the warranty coverage for such vehicles.
Furthermore, Federal Odometer Regulations promulgated under the Motor Vehicle
Information and Cost Savings Act require that all sellers of used vehicles
furnish a written statement signed by the seller certifying the accuracy of the
odometer reading. If a seller is not properly licensed or if either a Buyer's
Guide or Odometer Disclosure Statement was not provided to the purchaser of a
Financed Vehicle, the obligor may be able to assert a defense against the seller
of the Financed Vehicle.
Courts have applied general equitable principles to secured parties
pursuing repossession or litigation involving deficiency balances. These
equitable principles may have the effect of relieving an obligor from some or
all of the legal consequences of a default.
In several cases, consumers have asserted that the self-help remedies of
secured parties under the UCC and related laws violate the due process
protections of the Fourteenth Amendment to the Constitution of the United States
of America. Courts have generally either upheld the notice provisions of the UCC
and related laws as reasonable or have found that the creditor's repossession
and resale do not involve sufficient state action to afford constitutional
protection to consumers.
CITSF will represent and warrant under the Sale and Servicing Agreement
that each Contract complies with all requirements of law in all material
respects. A breach of such representation and warranty which materially
adversely affects the interests of the Trust in any Contract will create an
obligation of CITSF to purchase such Contract. See "The Purchase Agreements and
The Trust Documents--Sale and Assignment of the Contracts."
Other Limitations
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a creditor to
realize upon collateral or enforce a deficiency judgment. For example, in a
Chapter 13 proceeding under the federal bankruptcy law, a court may prevent a
creditor from repossessing a recreational vehicle, and, as part of the
rehabilitation plan, reduce the amount of the secured indebtedness to the market
value of the recreational vehicle at the time of bankruptcy (as determined by
the court), leaving the party providing financing as a general unsecured
creditor for the remainder of the indebtedness. A bankruptcy court may also
reduce the monthly payments due under the related contract or change the rate of
interest and time of repayment of the indebtedness.
Under the terms of the Soldiers' and Sailors' Civil Relief Act, an obligor
who enters the military service after the origination of such obligor's Contract
(including an Obligor who is a member of the National Guard or is in reserve
status at the time of the origination of the obligor's Contract and is later
called to active duty) may not be charged interest above an annual rate of 6%
during the period of such obligor's active duty status, unless a court orders
otherwise upon application of the lender. In addition, pursuant to the Military
Reservist Relief Act, under certain circumstances, California residents called
into active duty with the reserves can delay payments on retail installment sale
contracts, including the Contracts, for a period, not to exceed 180 days,
beginning with the order to active duty and ending 30 days after release. It is
possible that the foregoing could have an effect on the ability of the Servicer
to collect full amounts of interest on certain of the Contracts. In addition,
the Relief Acts impose limitations which would impair the ability of the
Servicer to repossess an affected Contract during the obligor's period of active
duty status. Thus, in the event that such a Contract goes into default, there
may be delays and losses occasioned by the inability to realize upon the related
Financed Vehicle in a timely fashion.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Set forth below is a summary of certain Federal income tax consequences of
the purchase, ownership and disposition of the Securities, applicable to initial
purchasers of the Securities. Schulte Roth & Zabel, counsel for the Trust is of
the opinion that the discussion hereunder fully and fairly discloses all
material Federal tax risks associated with the purchase, ownership and
disposition of the Securities.
This summary does not deal with all aspects of Federal income taxation
applicable to all categories of holders of the Securities, some of which may be
subject to special rules or special treatment under the Federal income tax laws.
For example, it does not discuss the specific tax treatment of Securityholders
that are insurance companies, banks and certain other financial institutions,
regulated investment companies, individual retirement accounts, tax-exempt
organizations or dealers in securities. Furthermore, this summary is based upon
present provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), the regulations promulgated thereunder, and judicial or ruling
authority, all of which are subject to change, which change may be retroactive.
Moreover, there are no cases or Internal Revenue Service ("IRS") rulings on
similar transactions involving a trust that issues debt and equity interests
with terms similar to those of the Notes and the Certificates. As a result, the
IRS may disagree with all or part of the discussion below.
Prospective investors are advised to consult their own tax advisors with
regard to the Federal income tax consequences of the purchase, ownership and
disposition of the Securities, as well as the tax consequences arising under the
laws of any state, foreign country or other jurisdiction. The Trust has been
provided with an opinion of Schulte Roth & Zabel regarding certain of the
Federal income tax matters discussed below. An opinion of counsel, however, is
not binding on the IRS, and no ruling on any of the issues discussed below will
be sought from the IRS.
Certain Federal Tax Consequences with Respect to the Notes
Tax Characterization of the Notes and the Trust. Schulte Roth & Zabel has
advised the Trust that, based on the terms of the Notes and the transactions
relating to the Contracts as set forth herein, the Notes will be treated as debt
for Federal income tax purposes. However, there is no specific authority with
respect to the characterization for Federal income tax purposes of securities
having the same terms as the Notes.
Schulte Roth & Zabel is also of the opinion that, based on the applicable
provisions of the Trust Agreement and related documents, for Federal income tax
purposes, (i) the Trust will not be classified as an association taxable as a
corporation and (ii) the Trust will not be treated as a publicly traded
partnership taxable as a corporation. However, there are no authorities directly
dealing with similar transactions. If the IRS were to successfully characterize
the Trust as an association taxable as a corporation for Federal income tax
purposes, the income from the Contracts (reduced by deductions, possibly
including interest on the Notes) would be subject to Federal income tax at
corporate rates, which could reduce the amounts available to make payments on
the Notes. Likewise, if the Trust were subject to state or local income or
franchise tax, the amount of cash available to make payment on the Notes could
be reduced.
If, contrary to the opinion of Schulte Roth & Zabel, the IRS successfully
asserted that the Notes were not debt for Federal income tax purposes, the Notes
might be treated as equity interests in the Trust. If so, the Trust might be
taxable as a corporation with the adverse consequences described above (and the
taxable corporation would not be able to deduct interest on the Notes). The
remainder of this discussion assumes that the Notes will be treated as debt and
that the Trust will not be taxable as a corporation.
Interest Income on the Notes. The stated interest on the Notes will be
taxable to a Noteholder as ordinary income when received or accrued in
accordance with such Noteholder's method of tax accounting. Some or all of the
Notes may be issued with "original issue discount" within the meaning of Section
1273 of the Code ("OID"). The amount of OID on the Notes will equal the
difference between the issue price and the principal amount of the Notes unless
the OID is less then a statutorily defined de minimus amount.
OID will accrue to the Noteholders over the life of the Notes, taking
account of a reasonable prepayment assumption, based on a constant yield to
maturity method, using semi-annual compounding, and properly adjusted for actual
prepayments on the Contracts. The portion of OID that accrues during the time a
Noteholder owns the Notes (i) constitutes interest includable in the
Noteholder's gross income for federal income tax purposes and (ii) is added to
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the Noteholder's tax basis for purposes of determining gain or loss on the
maturity, redemption, prior sale, or other disposition of the Notes. Thus, the
effect of OID is to increase the amount of taxable income above the actual
interest payments during the life of the Notes.
Sale or Other Disposition. If a Noteholder sells a Note, the holder will
recognize gain or loss in an amount equal to the difference between the amount
realized on the sale and the holder's adjusted tax basis in the Note. The
adjusted tax basis of a Note to a particular Noteholder will equal the holder's
cost for the Note, increased by any OID, market discount and gain previously
included by such Noteholder in income with respect to the Note and decreased by
the amount of any bond premium previously amortized and by the amount of
principal payments previously received by such Noteholder with respect to such
Note. Subject to the rules of the Code concerning market discount on the Notes,
any such gain or loss will be capital gain or loss if the Note was held as a
capital asset. Capital losses generally may be deducted to the extent the
Noteholder has capital gains for the taxable year, and non-corporate Noteholders
can deduct a limited amount of such losses in excess of available capital gains.
Foreign Holders. If interest paid (or accrued) to a Noteholder who is a
nonresident alien, foreign corporation or other non-United States person (a
"foreign person") is not effectively connected with the conduct of a trade or
business within the United States by the foreign person, the interest generally
will be considered "portfolio interest," and generally will not be subject to
United States Federal income tax and withholding tax, if the foreign person (i)
is not actually or constructively a "10 percent shareholder" of the Trust
(including a holder of 10% of the outstanding Certificates) or the Affiliated
Purchaser nor a "controlled foreign corporation" with respect to which the Trust
or the Affiliated Purchaser is a "related person" within the meaning of the Code
and (ii) provides the person otherwise required to withhold U.S. tax with an
appropriate statement, signed under penalties of perjury, certifying that the
beneficial owner of the Note is a foreign person and providing the foreign
person's name and address. If the information provided in the statement changes,
the foreign person must so inform the person otherwise required to withhold U.S.
tax within 30 days of such change. The statement generally must be provided in
the year a payment occurs or in either of the two preceding years. If a Note is
held through a securities clearing organization or certain other financial
institutions, the organization or institution may provide a signed statement to
the withholding agent. However, in that case, the signed statement must be
accompanied by a Form W-8 or substitute form provided by the foreign person that
owns the Note. If such interest is not portfolio interest, then any payment of
such interest will be subject to United States Federal withholding tax at a rate
of 30%, unless reduced or eliminated pursuant to an applicable income tax
treaty.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Note by a foreign person will be exempt from United
States Federal income and withholding tax, provided that (i) the gain is not
effectively connected with the conduct of a trade or business in the United
States by the foreign person and (ii) in the case of an individual foreign
person, the foreign individual is present in the United States for 183 days or
more in the taxable year or does not have a tax home in the United States.
If the interest, gain or income on a Note held by a foreign person is
effectively connected with the conduct of a trade or business in the United
States by the foreign person (although exempt from the withholding tax
previously discussed if the holder provides an appropriate statement), the
holder generally will be subject to United States Federal income tax on the
interest, gain or income at regular Federal income tax rates. In addition, if
the foreign person is a foreign corporation, it may be subject to a branch
profits tax equal to 30% of its "effectively connected earnings and profits"
within the meaning of the Code for the taxable year, as adjusted for certain
items, unless it qualifies for a lower rate under an applicable income tax
treaty (as modified by the branch profits tax rules).
Information Reporting and Backup Withholding. The Trust will be required to
report annually to the IRS, and to each Noteholder of record, the amount of
interest paid on the Notes (and the amount of accrued OID, if any, and interest
withheld for Federal income taxes, if any) for each calendar year, except as to
exempt holders (generally, holders that are corporations, tax-exempt
organizations, qualified pension and profit-sharing trusts, individual
retirement accounts, or nonresident aliens who provide certification as to their
status as nonresidents). Accordingly, each holder (other than exempt holders who
are not subject to the reporting requirements) will be required to provide,
under penalties of perjury, a certificate containing the holder's name, address,
correct Federal taxpayer identification number and a statement that the holder
is not subject to backup withholding. Should a non-exempt Noteholder fail to
provide the required certification, the Trust will be required to withhold 31%
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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.
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" below. The Trust's income will consist primarily of
interest accrued on the Contracts including appropriate adjustments for market
discount (as discussed below), and any original issue discount and bond
premium), investment income from investments in the Trust Accounts and
Certificate Distribution Account and any gain upon collection or disposition of
the Contracts. The Trust's deductions will consist primarily of interest
accruing with respect to the Notes, servicing and other fees and losses or
deductions upon collection or disposition of the Contracts.
The tax items of a partnership are allocable to the partners in accordance
with the Code, Treasury regulations and the partnership agreement (here, the
Trust Agreement and Related Documents). The Trust Agreement will provide that
the Certificateholders will be allocated taxable income of the Trust for each
Interest Period equal to the sum of (i) the amount of interest that accrues on
the Certificates for such Interest Accrual Period based on the Certificate Rate;
(ii) an amount equivalent to interest that accrues during such Interest Accrual
Period on amounts previously due on the Certificates but not yet distributed;
and (iii) any Trust income attributable to discount on the Contracts that
corresponds to any excess of the principal amount of the Certificates over their
initial issue price. All remaining taxable income of the Trust will be allocated
to the Affiliated Purchaser. It is believed that this allocation will be valid
under applicable Treasury regulations, although no assurance can be given that
the IRS would not require a greater amount of income to be allocated to
Certificateholders. Moreover, under the foregoing method of allocation, holders
may be allocated income greater than the amount of interest accruing on the
Certificates based on the Pass-Through Rate or may be allocated income greater
than the amount of cash distributed to them.
An individual taxpayer may generally deduct miscellaneous itemized
deductions (which do not include interest expenses) only to the extent they
exceed two percent of the individual's adjusted gross income. Those limitations
would apply to an individual Certificateholder's share of expenses of the Trust
(including fees paid to the Servicer) and might result in such holder having net
taxable income that exceeds the amount of cash actually distributed to such
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holder over the life of the Trust. In addition, Section 68 of the Code provides
that the amount of certain itemized deductions otherwise allowable for the
taxable year of an individual whose adjusted gross income exceeds an
inflation-adjusted threshold amount specified in the Code ($114,700 for taxable
years beginning in 1995, in the case of a joint return) will be reduced by the
lesser of (i) 3% of the excess of adjusted gross income over the specified
threshold amount or (ii) 80% of the amount of itemized deduction otherwise
allowable for such taxable year.
The Trust intends to make all tax calculations relating to income and
allocations to Certificateholders on an aggregate basis. If the IRS were to
require that such calculations be made separately for each of the Contracts, the
Trust might be required to incur additional expense, but it is believed that
there would not be a material adverse effect on Certificateholders.
Market Discount. To the extent that the Contracts are purchased by the
Trust for a price that is less than the aggregate stated redemption price at
maturity of the Contracts, the Trust must account for "market discount" on the
Contracts pursuant to Section 1276 of the Code. Any market discount will be
accounted for each of the Contracts on an individual basis, and the Trust will
make an election to calculate such market discount as it economically accrues.
Any income resulting from the accrual of market discount will be allocated to
the Certificateholders as described above.
Original Issue Discount and Bond Premium. It is believed that the Contracts
were not and will not be issued with OID or at a premium, and, therefore, the
Trust should not have OID income or amortizable bond premium.
Section 708 Termination. Under Section 708 of the Code, a partnership will
be deemed to terminate for Federal income tax purposes if 50% or more of the
capital and profits interests in the partnership are sold or exchanged within a
12-month period. If such a termination occurs, the partnership will be
considered to distribute its assets to the partners, who would then be treated
as recontributing those assets to a new partnership. The Trust may not comply
with certain technical requirements that might apply when such a constructive
termination occurs. As a result, the Trust may be subject to certain tax
penalties and may incur additional expenses if it is required to comply with
those requirements. Furthermore, the Trust might not be able to comply due to
lack of data.
Disposition of Certificates. Generally, capital gain or loss will be
recognized on a sale of a Certificate in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificate sold.
A Certificateholder's tax basis in a Certificate will generally equal his cost
increased by his share of Trust income that is includable in his gross income
and decreased by any distributions received with respect to such Certificate. In
addition, both the tax basis in the Certificate and the amount realized on a
sale of a Certificate would include the holder's share of the Notes and other
liabilities of the Trust. A holder acquiring Certificates at different prices
may be required to maintain a single aggregate 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.
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Tax Consequences to Foreign Owners of Certificates. As discussed below, an
investment in a Certificate is not suitable for any non-U.S. person which is not
eligible for a complete exemption from U.S. withholding tax on interest under a
tax treaty with the United States. Accordingly, no interest in a Certificate
should be acquired by or on behalf of any such non-U.S. person.
No regulations, published rulings or judicial decisions exist that would
discuss the characterization for Federal withholding tax purposes with respect
to non-U.S. persons of a partnership with activities substantially the same as
the Trust. However, it is not expected that the trust would be considered to be
engaged in a trade or business in the United States for purposes of Federal
withholding taxes with respect to non-U.S. persons. If the Trust were considered
to be engaged in a trade or business in the United States for such purposes, the
income of the Trust distributable to a non-U.S. person would be subject to
Federal withholding tax at a rate of 35% for persons taxable as a corporation
and 39.6% for all other non-U.S. persons. Also, in such cases, a non-U.S. owner
of a Certificate that is a corporation may be subject to the branch profits tax.
If the Trust is notified that an owner of a Certificate is a foreign person, the
Trust may withhold as if it were engaged in a trade or business in the United
States in order to protect the Trust from possible adverse consequences of a
failure to withhold. Subsequent adoption of Treasury regulations or the issuance
of other administrative pronouncements may require the Trust to change its
withholding procedures.
Each foreign owner of a Certificate might be required to file a U.S.
individual or corporate income tax return (including in the case of a
corporation, the branch profits tax) on its share of the Trust's income. Each
foreign owner of a Certificate must obtain a taxpayer identification number from
the IRS and submit that number to the withholding agent on Form W-8 in order to
assure appropriate crediting of any taxes withheld. A foreign owner of a
Certificate generally would be entitled to file with the IRS a claim for refund
with respect to withheld taxes, taking the position that no taxes were due
because the Trust was not engaged in a U.S. trade or business. However, interest
payments made to (or accrued by) an owner of a Certificate who is a foreign
person may be considered guaranteed payments to the extent such payments are
determined without regard to the income of the Trust and for that reason or
because of the nature of the Contracts, the interest will likely not be
considered "portfolio interest." As a result, even if the Trust is not
considered to be engaged in a U.S. trade or business, foreign owners of
Certificates will likely be subject to United States Federal income tax which
must be withheld at a rate of 30 percent on their share of the Trust's income
(without reduction for interest expense), unless reduced or eliminated pursuant
to an applicable income tax treaty. If the Trust is notified that an owner of a
Certificate is a foreign person, the Trust may be required to withhold and pay
over such tax, which can exceed the amounts otherwise available for distribution
to such owner. A foreign owner would generally be entitled to file with the IRS
a refund claim for such withheld taxes, taking the position that the interest
was portfolio interest and therefore not subject to U.S. tax. However, the IRS
may disagree and no assurance can be given as to the appropriate amount of tax
liability. As a result, each potential foreign owner of a Certificate should
consult its tax advisor as to whether the tax consequences of holding an
interest in a Certificate make it an unsuitable investment.
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.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and Section 4975 of the Code prohibit a pension, profit
sharing or other employee benefit plan, as well as individual retirement
accounts and certain types of Keogh Plans (each a "Benefit Plan"), from engaging
in certain transactions with persons that are "parties in interest" under ERISA
or "disqualified persons" under the Code with respect to such Benefit Plan. A
violation of these "prohibited transaction" rules may generate excise tax and
other liabilities under ERISA and the Code for such persons.
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The Notes
The acquisition or holding of Notes by or on behalf of a Benefit Plan could
be considered to give rise to a prohibited transaction if the Seller, the Trust
or any of their respective affiliates is or becomes a party in interest or a
disqualified person with respect to such Benefit Plan. Certain exemptions from
the prohibited transaction rules could be applicable to the purchase and holding
of Notes by a Benefit Plan depending on the type and circumstances of the plan
fiduciary making the decision to acquire such Notes. Included among these
exemptions are: Prohibited Transaction Class Exemption ("PTCE") 90-1, regarding
investments by insurance company pooled separate accounts; PTCE 91-38 regarding
investments by bank collective investment funds; and PTCE 84-14, regarding
transactions effected by "qualified professional asset managers."
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 Certificateowner will be deemed to
have represented and warranted that it is not subject to the foregoing
limitation.
A plan fiduciary considering the purchase of the Securities should consult
its tax and or legal advisors regarding whether the assets of the Trust would be
considered plan assets, the possibility of exemptive relief from the prohibited
transaction rules and other issues and their potential consequences.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
(the "Underwriting Agreement") among 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 Notes and Certificates offered hereby, as set forth
opposite their respective names below:
Principal Amount Principal Amount
of Notes of Certificates
---------------- ----------------
.................. $ $
............... $ $
----------- -----------
Total ........................ $ $
=========== ===========
The Underwriting Agreement provides that the obligation of the Underwriters
to pay for and accept delivery of the Notes or Certificates 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 Notes
and Certificates if any are taken.
The Underwriters have advised the Company that they propose to offer the
Notes and Certificates 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 amount of the Notes and not in
excess of % of the principal balance of the Certificates. The Underwriters may
allow, and such dealers may reallow, a concession not in excess of % of the
principal amount of the Notes and not in excess of % of the principal balance
of the Certificates 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 in the Trust Accounts 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.
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NOTICE TO CANADIAN RESIDENTS
Resale Restrictions
The distribution of the Notes in Canada is being made only on a private
placement basis exempt from the requirement that the Trust prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of the Notes are effected. Accordingly, any resale of the Notes in Canada
must be made in accordance with applicable securities laws which will vary
depending on the relevant jurisdiction, and which may require resales to be made
in accordance with available statutory exemptions or pursuant to a discretionary
exemption granted by the applicable Canadian securities regulatory authority.
Purchasers are advised to seek legal advice prior to any resale of the Notes.
Representations of Purchasers
Each purchaser of Notes in Canada who receives a purchase confirmation will
be deemed to represent to the Seller, the Trust and the dealer from whom such
purchase confirmation is received that (i) such purchaser is entitled under
applicable provincial securities laws to purchase such Notes without the benefit
of a prospectus qualified under such securities laws, (ii) where required by
law, that such purchaser is purchasing as principal and not as agent, and (iii)
such purchaser has reviewed the text above under "Resale Restrictions".
Rights of Actions and Enforcement
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liability provisions of the U.S. federal securities laws.
The Trust, the Seller, the Servicer, the Affiliated Purchaser, the Owner
Trustee and the Indenture Trustee and their respective directors and officers,
if any, as well as the experts named herein, may be located outside of Canada
and, as a result, it may not be possible for Ontario purchasers to effect
service of process within Canada upon the Issuer or such persons. All or a
substantial portion of the assets of the Issuer and such persons may be located
outside of Canada and, as a result, it may not be possible to satisfy a judgment
against the Issuer or such persons in Canada or to enforce a judgment obtained
in Canadian courts against such Issuer or persons outside of Canada.
Notice to British Columbia Residents
A purchaser of the Notes to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any of
the Notes or Certificates acquired by such purchaser pursuant to this offering.
Such report must be in the form attached to British Columbia Securities
Commission Blanket Order BOR #88/5. Only one such report must be filed in
respect of the Notes acquired on the same date and under the same prospectus
exemption.
FINANCIAL INFORMATION
The Company has determined that its financial statements are not material
to the offering made hereby.
The Trust has been formed to own the Contracts and the other Trust assets
and to issue the Notes and Certificates. The Trust had no assets or obligations
prior to the issuance of the Notes and Certificates and will not engage in any
activities other than those described herein. Accordingly, no financial
statements with respect to the Trust are included in this Prospectus.
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RATINGS
It is a condition to the issuance of the Securities that the Class A Notes
be rated in the highest rating category by at least one Rating Agency and the
Certificates be rated in at least the third highest rating category by at least
one Rating Agency. The ratings of the Class A 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 Notes and Certificates should be evaluated
independently of similar security ratings assigned to other kinds of securities.
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Schulte Roth &
Zabel, New York, New York, for the Trust by Richards, Layton & Finger,
Wilmington, Delaware, and for the Underwriters by Stroock & Stroock & Lavan, New
York, New York. The material federal income tax consequences of the Notes and
the Certificates will be passed upon for the Company by Schulte Roth & Zabel.
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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 Owner Trust 1996-A (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
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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 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.
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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
(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.
78
<PAGE>
INDEX OF PRINCIPAL TERMS
ABS .................................................................. 26
ABS Table ............................................................ 27
Affiliated Purchaser ................................................. 17
Asset Service Center ................................................. 30
Available Amount ..................................................... 52
Available Cash Collateral Amount ..................................... 12
Auction Sale ......................................................... 36
Bankruptcy Code ...................................................... 17
Business Day ......................................................... 6
Capitalized Interest Account ......................................... 6
Cash Collateral Account .............................................. 11
Cash Collateral Account Surplus ...................................... 12
Cash Collateral Agreement ............................................ 11
Cash Collateral Depositor ............................................ 11
Cede ................................................................. 35
Cedel ................................................................ 3
Certificate Balance .................................................. 8
Certificate Distribution Account ..................................... 49
Certificate Final Scheduled Distribution Date ........................ 6
Certificate Interest Distribution Amount ............................. 40
Certificate Owner .................................................... 40
Certificate Pool Factor .............................................. 28
Certificateholders ................................................... 45
Certificates ......................................................... 3
chattel paper ........................................................ 58
CIT .................................................................. 3
CITCF-NY ............................................................. 4
CITSF ................................................................ 3
Class A Final Scheduled Distribution Date ............................ 6
Class A Interest Distribution Amount ................................. 36
Class A Notes ........................................................ 3
Class A Rate ......................................................... 7
Closing Date ......................................................... 5
Code ................................................................. 67
Collection Account ................................................... 49
Commission ........................................................... 35
Company .............................................................. 3
Contract Pool ........................................................ 21
Contract Rate ........................................................ 16
Contracts ............................................................ 4
Cross-Over Date ...................................................... 9
Dealers .............................................................. 4
Defaulted Contracts .................................................. 50
Definitive Certificates .............................................. 45
Definitive Notes ..................................................... 45
Definitive Securities ................................................ 45
Depository ........................................................... 35
Determination Date ................................................... 7
Distribution Date .................................................... 6
DTC .................................................................. 3
DTC Rules ............................................................ 43
Due Period ........................................................... 7
Eligible Institution ................................................. 49
Eligible Investments ................................................. 49
ERISA ................................................................ 15
Euroclear ............................................................ 3
Event of Termination ................................................. 57
79
<PAGE>
Events of Default .................................................... 37
Excess Collections ................................................... 12
Financed Vehicles .................................................... 4
FTC Rule ............................................................. 65
Funding Period ....................................................... 5
Holders .............................................................. 45
Indenture ............................................................ 3
Indenture Trustee .................................................... 3
Indirect Participants ................................................ 42
Initial Cash Collateral Amount ....................................... 11
Initial Contracts .................................................... 4
Initial Cut-off Date ................................................. 4
Initial Cut-off Date Pool Principal Balance .......................... 21
Initial Financed Vehicles ............................................ 4
Initial Pool Balance ................................................. 14
Insolvency Event ..................................................... 58
Insolvency Laws ...................................................... 18
Interest Accrual Period .............................................. 6
Interest Shortfall ................................................... 13
IRS .................................................................. 67
Issuer ............................................................... 3
Late Fees ............................................................ 13
List of Contracts .................................................... 47
Military Reservist Relief Act ........................................ 48
Monthly Advance ...................................................... 12
Moody's .............................................................. 49
Non-Reimbursable Payment ............................................. 13
Note Owner ........................................................... 35
Note Distribution Account ............................................ 49
Note Pool Factor ..................................................... 29
Noteholders .......................................................... 45
Notes ................................................................ 3
Obligor .............................................................. 13
OID .................................................................. 65
Optional Purchase .................................................... 36
Original Certificate Balance ......................................... 4
Owner Trustee ........................................................ 3
Paid-Ahead Contract .................................................. 26
Paid-Ahead Period .................................................... 26
Participants ......................................................... 42
Pass-Through Rate .................................................... 8
Pool Balance ......................................................... 9
Pre-Funded Amount .................................................... 5
Pre-Funded Percentage ................................................ 7
prepayments .......................................................... 24
Principal Distribution Amount ........................................ 36
Principal Liquidation Loss Amount .................................... 9
Purchase Agreement ................................................... 5
Purchase Agreements .................................................. 47
Purchase Price ....................................................... 48
Rating Agencies ...................................................... 14
Record Date .......................................................... 6
Related Documents .................................................... 39
Relief Act Obligor ................................................... 48
Required Cash Collateral Amount ...................................... 11
Required Servicer Ratings ............................................ 51
Sale and Servicing Agreement ......................................... 4
Securities ........................................................... 3
Securityholders ...................................................... 45
80
<PAGE>
Seller ............................................................... 3
Servicer ............................................................. 3
Servicer Letter of Credit ............................................ 51
Servicer Payment ..................................................... 7
Servicing Fee ........................................................ 13
Servicing Fee Rate ................................................... 13
Simple Interest Contract ............................................. 22
Soldiers' and Sailors' Civil Relief Act .............................. 48
Standard & Poor's .................................................... 49
Subsequent Contracts ................................................. 4
Subsequent Cut-off Date .............................................. 5
Subsequent Financed Vehicles ......................................... 4
Subsequent Transfer Agreement ........................................ 5
Subsequent Transfer Date ............................................. 5
Trust ................................................................ 3
Trust Agreement ...................................................... 4
Trust Documents ...................................................... 47
Trustees ............................................................. 3
UCC .................................................................. 16
Underwriters ......................................................... 18
Underwriting Agreement ............................................... 73
81
<PAGE>
No dealer, salesperson or other person has been authorized to give any
information or to make any representation not contained in this Prospectus and,
if given or made, such information or representation must not be relied upon as
having been authorized by the Company or any Underwriter. This Prospectus does
not constitute an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation. Neither the delivery of this
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
Page
----
Available Information ................................................. 2
Reports to Securityholders ............................................ 2
Summary ............................................................... 3
Risk Factors .......................................................... 16
Structure of the Transaction .......................................... 19
The Trust Property .................................................... 20
The Contract Pool ..................................................... 21
Maturity and Prepayment Considerations ................................ 24
Yield Considerations .................................................. 29
Pool Factors .......................................................... 29
Use of Proceeds ....................................................... 30
The CIT Group Securitization
Corporation II, Seller .............................................. 30
The CIT Group/Sales Financing, Inc.,
Servicer ............................................................ 30
The Notes ............................................................. 35
The Certificates ...................................................... 40
Certain Information Regarding the
Securities .......................................................... 42
The Purchase Agreements and the
Trust Documents ..................................................... 47
Certain Legal Aspects of the Contracts ................................ 60
Certain Federal Income Tax
Consequences ........................................................ 67
ERISA Considerations .................................................. 72
Underwriting .......................................................... 73
Notice to Canadian Residents .......................................... 74
Financial Information ................................................. 74
Ratings ............................................................... 75
Legal Matters ......................................................... 75
Annex I ............................................................... 76
Index of Principal Terms .............................................. 79
Until , 1996, all dealers effecting transactions in the
registered Securities, whether or not participating in this distribution, may be
required to deliver a Prospectus. This is in addition to the obligation of
dealers to deliver a Prospectus when acting as underwriters and with respect to
their unsold allotments or subscriptions.
<PAGE>
$
CIT RV
Owner Trust 1996-A
$ Class A % Asset
Backed Notes
$ % Asset Backed
Certificates
The CIT Group
Securitization
Corporation II,
Seller
The CIT Group/Sales
Financing, Inc.,
Servicer
Prospectus
Dated , 1996
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following is an itemized list of the estimated expenses to be incurred
in connection with the offering of the securities being offered hereunder other
than underwriting discounts and commissions.
SEC registration fee .................... $ 350
Attorney's fees and expenses ............ *
Accounting fees and expenses ............ *
Blue sky fees and expenses .............. *
Rating agency fees ...................... *
Trustee's fees and expenses ............. *
Printing expenses ....................... *
Miscellaneous fees and expenses ......... *
----------
Total ................................. $ *
==========
----------
* To be completed by amendment.
Item 14. Indemnification of Directors and Officers.
Subsection (a) of Section 145 of the General Corporation Law of Delaware
empowers a corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee, or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit, or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation except that no indemnification may be made in
respect of any claim, issue, or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine that despite the adjudication of liability, but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
Section 145 further provides that to the extent a director, officer,
employee, or agent of a corporation has been successful in the defense of any
action, suit, or proceeding referred to in subsections (a) 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.
II-1
<PAGE>
The Company's By-Laws provide for indemnification of directors and officers
of the Company to the full extent permitted by Delaware law.
In addition, the Registrant maintains directors' and officers'
reimbursement and liability insurance pursuant to standard form policies with
aggregate limits of $65,000,000. The risks covered by such policies do not
exclude liabilities under the Securities Act of 1933.
Pursuant to the form of Underwriting Agreement, the Underwriters will
agree, subject to certain conditions, to indemnify the Registrant, its
directors, certain of its officers and persons who control the Registrant within
the meaning of the Securities Act of 1933 against certain liabilities.
Item 15. Recent Sales of Unregistered Securities.
During June 1994, The CIT Group Securitization Corporation II (the
"Company") issued 200 shares of its Common Stock, no par value per share, to The
CIT Group Holdings, Inc. ("CIT"). No underwriters were involved in connection
with such issuance, which was exempt from registration pursuant to Section 4(2)
of the Securities Act of 1933, as amended (the "Securities Act").
Listed below are all other unregistered securities sold by the Company
since its formation. These Certificates were distributed by the placement agent
listed below and privately placed by such placement agent with institutional
investors in transactions exempt from the registration provisions of the
Securities Act.
Principal Amount Placement
Series Issue Date of Certificates Agent
----- --------- ---------------- ---------
1994-1 July 14, 1994 $42,033,000 (Class A) Goldman, Sachs & Co.
(Approximate)
Item 16. Exhibits and Financial Statement Schedules.
a. Exhibits:
1.1* Form of Underwriting Agreement
3.1 Certificate of Incorporation, as amended,
of The CIT Group Securitization Corporation II
3.2 By-laws of The CIT Group Securitization Corporation II
4.1 Form of Indenture between the Trust and the Indenture Trustee
4.2 Form of Trust Agreement between the Company and the Owner
Trustee
4.3 Form of Sale and Servicing Agreement between the Company,
CITSF and the Trust
5.1* Opinion of Schulte Roth & Zabel with respect to legality
5.2* Opinion of Richards, Layton & Finger with respect to legality
8.1* Opinion of Schulte Roth & Zabel with respect to tax matters
10.1 Form of Purchase Agreement
10.2 Form of Subsequent Purchase Agreement
23.1* Consent of Schulte Roth & Zabel
(included as part of Exhibit 5.1)
24.1 Powers of Attorney of The CIT Group Securitization
Corporation II (included on page II-4)
25.1* Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939 of the Indenture Trustee (bound separately)
- ----------
* To be filed by amendment.
II-2
<PAGE>
b. Financial Statement Schedules:
Not applicable.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes as follows:
(a) To provide to the Underwriters at the closing date specified in
the Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to provide prompt
delivery to each purchaser.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is therefore
unenforceable. In the event that a claim for indemnification against such
liabilities (other than payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of such Registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(c) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(d) For purposes of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time will be
deemed to be the initial bona fide offering thereof.
(e) The undersigned Registrant hereby undertakes to file an
application for the purpose of determining the eligibility of the trustee
to act under subsection (a) of Section 310 of the Trust Indenture Act in
accordance with the rules and regulations prescribed by the Commission
under Section 305(b)(2) of the Act.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Town of Livingston, State of New
Jersey, on December 15, 1995.
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 James J. Egan, Jr., Richard W. Bauerband and
Norman H. Rosen, or any of them (with the full power of each of them to act
alone), as his true and lawful attorney-in-fact and agent, with full power of
substitution, to sign on his behalf individually and in the capacity stated
below and to perform any acts necessary to be done in order to file all
amendments and post-effective amendments to this Registration Statement, and any
and all instruments or documents filed as part of or in connection with this
Registration Statement or the amendments thereto, and each of the undersigned
does hereby ratify and confirm all that said attorney-in-fact and agent, or his
substitutes, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- -----
<S> <C> <C>
/s/ JAMES J. EGAN, JR. President and Director December 15, 1995
- -------------------------------------
James J. Egan, Jr.
/s/ RICHARD W. BAUERBAND Executive Vice President December 15, 1995
- ------------------------------------- and Director
Richard W. Bauerband
/s/ FRANK GARCIA Vice President, Treasurer and December 15, 1995
- ------------------------------------- Controller (principal financial
Frank Garcia and accounting officer)
</TABLE>
II-4
CERTIFICATE OF INCORPORATION
OF
THE CIT GROUP SECURITIZATION CORPORATION II
FIRST: The name of the Corporation is The CIT Group Securitization
Corporation II (hereinafter referred to as the "Corporation").
SECOND: The address of the registered office of the corporation in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, City of
Wilmington, County of New Castle 19801. The name of the registered agent at that
address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is limited to: (a) issuing and
selling one or more series of bonds, pass-through certificates or other
securities secured primarily by mortgages, deeds of trust, manufactured housing,
recreational vehicle or marine retail installment contracts or any other type of
loan agreements (all of the foregoing collectively referred to herein as the
"Contracts"), investing in certain Contracts to be purchased with the proceeds
of bonds, pass-through certificates or other securities secured by Contracts and
taking certain other action with respect thereto, (b) selling interests in
Contracts, evidencing such interests with bonds, pass-through certificates or
other securities secured by the Contracts, using the proceeds of the sale of
such bonds, pass-through certificates or other securities secured by the
Contracts, to acquire Contracts, retaining or acquiring an interest (including a
subordinated interest) in Contracts acquired and sold, and taking certain other
action with respect thereto, and (c) acting as settlor or depositor of trusts or
other entities formed to issue bonds, pass-through certificates or other
securities secured by Contracts and investing in or selling beneficial interests
in the same. The Corporation is not otherwise authorized to trade or deal in
securities, or engage in any other activity other than (a) issuing and selling
bonds, pass-through certificates or other securities under an indenture, trust
agreement, pooling and servicing agreement or other agreement, (b) acting as
settlor or depositor of a trust or other entity formed to issue and sell bonds,
pass-through certificates or other securities and investing in or selling
beneficial interests in the same, (c) acquiring, owning, holding and pledging or
selling interests in Contracts, (d) investing cash balances on an interim basis
in certain short-term investments and (e) engaging in activities incidental to
and necessary to accomplish the foregoing.
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is 200 shares of no par Common Stock.
FIFTH:
(1) The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors.
(2) In furtherance and not in limitation of the power conferred upon
the directors by law, the directors shall, with the approval of 100% of the
directors (including the Independent Director, or if there is more than
one, all of the Independent Directors), have power to make, adopt, alter,
<PAGE>
amend and repeal from time to time by-laws of the Corporation, subject to
the right of the stockholders entitled to vote with respect thereto to
alter and repeal by-laws made by the directors.
(3) The number of directors of the Corporation shall be as from time
to time fixed by, or in the manner provided in, the By-Laws of the
Corporation. Election of directors need not be by written ballot unless the
By-Laws so provide. At least one director (the Independent Director, or if
there is more than one, all of the Independent Directors) and one executive
officer of the Corporation (who may be the same person) will not be a
director, officer or employee of any direct or ultimate parent of the
Corporation or of any direct or indirect subsidiary of such parent.
(4) In addition to the powers and authority hereinbefore or by statute
expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation, subject, nevertheless, to the
provisions of the General Corporation Law of the State of Delaware (the
"GCL"), this Certificate of Incorporation and any By-Laws adopted by the
stockholders; provided, however, that no By-Laws hereafter adopted by the
stockholders shall invalidate any prior act of the directors which would
have been valid if such By-Laws had not been adopted. The Corporation's
board of directors will duly authorize all of the Corporation's actions.
(5) The Corporation's assets will not be commingled with those of any
direct or ultimate parent of the Corporation or any subsidiary or affiliate
thereof.
(6) The Corporation will maintain separate corporate records and books
of account from those of any direct or ultimate Parent of the Corporation
or any subsidiary or affiliate thereof.
(7) The Corporation will maintain and conduct its business from an
office separate from that of any direct or ultimate parent, or affiliate,
of the Corporation or any subsidiary or affiliate thereof.
SIXTH: Meetings of stockholders may be held within or without the State of
Delaware, as the By-Laws may provide. The books of the Corporation may be kept
(subject to any provision contained in the GCL) outside the State of Delaware at
such place or places as may be designated from time to time by the Board of
Directors or in the By-Laws of the Corporation.
SEVENTH: The Corporation shall, to the maximum extent permitted from time
to time under the law of the State of Delaware, indemnify and upon request shall
advance expenses to any person who is or was a party or is threatened to be made
a party to any threatened, pending or completed action, suit, proceeding or
2
<PAGE>
claim, whether civil, criminal, administrative or investigative, by reason of
the fact that such person is or was or has agreed to be a director or officer of
this corporation or while a director or officer is or was serving at the request
of this corporation as a director, officer, partner, trustee, employee or agent
of any corporation, partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, against expenses
(including attorney's fees and expenses), judgments, fines, penalties and
amounts paid in settlement incurred in connection with the investigation,
preparation to defend or defense of such action, suit, proceeding or claim;
provided, however, that the foregoing shall not require the Corporation to
indemnify or advance expenses to any person in connection with any action, suit,
proceeding, claim or counterclaim initiated by or on behalf of such person. Such
indemnification shall not be exclusive of other indemnification rights arising
under any by-law, agreement, vote of directors or stockholders or otherwise and
shall inure to the benefit of the heirs and legal representatives of such
person. Any person seeking indemnification under this Article SEVENTH shall be
deemed to have met the standard of conduct required for such indemnification
unless the contrary shall be established. Any repeal or modification of the
foregoing provisions of this Article SEVENTH shall not adversely affect any
right or protection of a director or officer of the Corporation with respect to
any acts or omissions of such director or officer occurring prior to such repeal
or modification.
EIGHTH: No director shall be personally liable to the Corporation or any of
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) pursuant to Section 174 of the GCL or (iv) for any transaction from
which the director derived an improper personal benefit. Any repeal or
modification of this Article NINTH by the stockholders of the Corporation shall
not adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification with respect to acts or
omissions occurring prior to such repeal or modification.
NINTH: The Corporation shall not, without the affirmative vote of one
hundred percent (100%) of the directors (including the Independent Director, or
if there is more than one, all of the Independent Directors), institute
proceedings to be adjudicated bankrupt or insolvent; or consent to the
institution of bankruptcy or insolvency proceedings against it; or file a
petition seeking, or consent to, reorganization or relief under any applicable
federal or state law relating to bankruptcy; or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of this corporation or a substantial part of its property; or make any
assignment for the benefit of creditors; or admit in writing its inability to
pay its debts generally as they become due; or take any corporate action in
furtherance of any such action.
TENTH: For so long as the Corporation is able to pay its debts generally as
they become due, the Corporation shall not institute proceedings to be
adjudicated bankrupt or insolvent; or consent to the institution of bankruptcy
or insolvency proceedings against it; or file a petition seeking, or consent to,
3
<PAGE>
reorganization or relief under any applicable federal or state law relating to
bankruptcy; or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the corporation or of a
substantial part of its property; or make any assignment for the benefit of
creditors; or admit in writing its inability to pay its debts generally as they
become due; or take any corporate action in furtherance of any such action.
ELEVENTH: The Corporation will not issue any securities (other than common
or preferred stock of the Corporation), nor will it act as settlor or depositor
of any trust or other entity which issues securities of any securities, if
either such action would result in the downgrading by any nationally recognized
statistical rating organization (as defined in Rule 15c3-1 under the Securities
Exchange Act of 1934 or any successor Rule) of any outstanding securities of
either the Corporation or any trust or other entity of which the Corporation is
the settlor or depositor, which securities are then rated by such nationally
recognized statistical rating organization.
TWELFTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation, provided that, none
of Article FIFTH, EIGHTH, NINTH, TENTH or ELEVENTH shall be amended without the
affirmative vote of all the directors, including the Independent Director, or if
there is more than one, all of the Independent Directors.
THIRTEENTH: Martin I. Fineberg is the Sole Incorporator and his mailing
address is c/o Schulte Roth & Zabel, 900 Third Avenue, New York, New York 10022.
Dated: June 24, 1994
/s/ Martin I. Fineberg
-----------------------------------
Martin I. Fineberg
c/o Schulte Roth & Zabel
900 Third Avenue
New York, New York 10022
4
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
THE CIT GROUP SECURITIZATION CORPORATION II
* * * * * *
THE CIT GROUP SECURITIZATION CORPORATION II, a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware, DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, by the unanimous
written consent of its members, filed with the minutes of the board, adopted a
resolution proposing and declaring advisable the certain amendments to the
Certificate of Incorporation of said corporation. The resolutions setting forth
the proposed amendments are as follows:
RESOLVED, that the Certificate of Incorporation of The CIT Group
Securitization Corporation II be amended by changing the ELEVENTH Article
thereof so that, as amended, said Article shall be and shall read in its
entirety as follows:
"ELEVENTH: The Corporation will not issue any securities (other than common
stock of the Corporation), nor will it act as settlor or depositor of any trust
or other entity which issues securities of any securities, if either such action
would result in the downgrading by any nationally recognized statistical rating
organization (as defined in Rule 15c3-1 under the Securities Exchange Act of
1934 or any successor Rule) of any outstanding securities of either the
Corporation or any trust or other entity of which the Corporation is the settlor
or depositor (an "NRSO"), which securities are then rated by such nationally
recognized statistical rating organization."
5
<PAGE>
RESOLVED, that the Certificate of Incorporation of The CIT Group
Securitization Corporation II be amended and changing the TWELFTH Article
thereof so that, as amended, said Article shall read in its entirety and shall
be as follows:
"TWELFTH: In the event Moody's Investor's Service, Inc.'s (hereinafter
referred to as "Moody's") rating of the long-term debt of The CIT Group
Holding's, Inc. falls below A-2, one additional Independent Director shall be
elected to the Board of Directors of the Corporation."
RESOLVED, that the Certificate of Incorporation of The CIT Group
Securitization Corporation II be amended by adding in its entirety the following
Article THIRTEENTH and shall read in its entirety and shall be as follows:
"THIRTEENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation, provided that, none
of Articles THIRD, FIFTH, EIGHTH, NINTH, TENTH, ELEVENTH or TWELFTH shall be
amended without the affirmative vote of all the directors, including the
Independent Director, or if there is more than one, all of the Independent
Directors. The Corporation shall provide notice to each NRSO of any amendment to
any of Articles THIRD, FIFTH, EIGHTH, NINTH, TENTH, ELEVENTH or TWELFTH within a
reasonable period of time after the adoption of such amendment."
SECOND: That thereafter, pursuant to resolution of its Board of Directors,
the sole shareholder of said corporation, did consent in lieu of an annual
meeting, to the Amendment to the Certificate of Incorporation adopted by the
Board of Directors, in accordance with the applicable provisions of Section 228
of the General Corporation Law of the State of Delaware.
THIRD: That the aforesaid Amendment was duly adopted in accordance with the
applicable provisions of Sections 141(f), 228 and 242 of the General Corporation
Law of the State of Delaware.
6
<PAGE>
IN WITNESS WHEREOF said THE CIT GROUP SECURITIZATION CORPORATION II has
caused this Certificate to be signed by Joesph Leone, its Executive Vice
President, and attested by Norman H. Rosen, its Secretary, this 15th day of
February, 1995.
THE CIT GROUP SECURITIZATION CORPORATION II
By /s/ Joseph M. Leone
-----------------------------------
Joseph M. Leone
Executive Vice President
ATTEST:
By /s/ Norman H. Rosen
---------------
Norman H. Rosen
Secretary
7
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
THE CIT GROUP SECURITIZATION CORPORATION II
* * * * * *
THE CIT GROUP SECURITIZATION CORPORATION II, a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware, DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, by the unanimous
written consent of its members, filed with the minutes of the board, adopted a
resolution proposing and declaring advisable the certain amendments to the
Certificate of Incorporation of said corporation. The resolutions setting forth
the proposed amendments are as follows:
RESOLVED, that the Certificate of Incorporation of The CIT Group
Securitization Corporation II be amended by adding in its entirety the
following FOURTEENTH Article so that said Article shall be and shall read
in its entirety as follows:
"FOURTEENTH": Notwithstanding any other provision of this Certificate
of Incorporation and any provision of law that otherwise so empowers the
Corporation, the Corporation shall not, without the affirmative vote of one
hundred percent (100%) of the directors (including the Independent
Director, or if there is more than one, all of the Independent Directors),
(i) merge or consolidate with any other corporation or (ii) except as
otherwise provided in Article III and elsewhere in this Certificate of
Incorporation, sell all or substantially all of the assets of the
Corporation; provided that the Corporation shall provide 60 days prior
written notice to each NRSO of any such merger, consolidation or sale."
RESOLVED, that the Certificate of Incorporation of The CIT Group
Securitization Corporation II be amended by changing the THIRTEENTH Article
thereof so that, as amended, said Article shall be and shall read in its
entirety as follows:
"THIRTEENTH: The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and
all rights conferred upon stockholders herein are granted subject to this
reservation, provided that, none of Articles THIRD, FIFTH, EIGHTH, NINTH,
TENTH, ELEVENTH, TWELFTH or FOURTEENTH shall be amended without the
affirmative vote of all the directors, including the Independent Director,
or if there is more than one, all of the Independent Directors. The
Corporation shall provide notice to each NRSO of any amendment to any of
8
<PAGE>
Articles THIRD, FIFTH, EIGHTH, NINTH, TENTH, ELEVENTH, TWELFTH or
FOURTEENTH within a reasonable period of time after the adoption of such
amendment."
SECOND: That thereafter, pursuant to resolution of its Board of Directors,
the sole shareholder of said corporation, did consent in lieu of an annual
meeting, to the Amendment to the Certificate of Incorporation adopted by the
Board of Directors, in accordance with the applicable provisions of Section 228
of the General Corporation Law of the State of Delaware.
THIRD: That the aforesaid Amendment was duly adopted in accordance with the
applicable provisions of Sections 141(f), 228 and 242 of the General Corporation
Law of the State of Delaware.
9
<PAGE>
IN WITNESS WHEREOF said THE CIT GROUP SECURITIZATION CORPORATION II has
caused this Certificate to be signed by Richard W. Bauerband, Executive Vice
President, and attested by Norman H. Rosen, its Secretary, this 21 day of
August, 1995.
THE CIT GROUP SECURITIZATION
CORPORATION II
By: /s/ Richard W. Bauerband
-----------------------------------
Executive Vice President
ATTEST:
By: /s/ Norman H. Rosen
---------------
Secretary
10
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
THE CIT GROUP SECURITIZATION CORPORATION II
* * * * * *
THE CIT GROUP SECURITIZATION CORPORATION II, a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware, DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, by the unanimous
written consent of its members, filed with the minutes of the board, adopted a
resolution proposing and declaring advisable the certain amendments to the
Certificate of Incorporation of said corporation. The resolutions setting forth
the proposed amendments are as follows:
RESOLVED, that the Certificate of Incorporation of The CIT Group
Securitization Corporation II be amended by changing the FIFTH Article thereof
so that, as amended, Section (3) of said Article shall be and shall read in its
entirety as follows:
"(3) The number of directors of the Corporation shall be as from time to
time fixed by, or in the manner provided in, the By-Laws of the Corporation.
Election of directors need not be by written ballot unless the By-Laws so
provide. At least one director (the Independent Director, or if there is more
than one, all of the Independent Directors) will not be a director, officer or
employee of any direct or ultimate parent of the Corporation or of any direct or
indirect subsidiary of such parent. Notwithstanding the foregoing, the
Independent Director may be a director, officer or employee of any direct or
indirect subsidiary of the ultimate parent of the Corporation, provided that
each such corporation is formed with purposes limited to those similar to the
purposes of the Corporation."
SECOND: That thereafter, pursuant to resolution of its Board of Directors,
the sole shareholder of said corporation, did consent in lieu of an annual
meeting, to the Amendment to the Certificate of Incorporation adopted by the
Board of Directors, in accordance with the applicable provisions of Section 228
of the General Corporation Law of the State of Delaware.
THIRD: That the aforesaid Amendment was duly adopted in accordance with the
applicable provisions of Sections 141(f), 228 and 242 of the General Corporation
Law of the State of Delaware.
11
<PAGE>
IN WITNESS WHEREOF said THE CIT GROUP SECURITIZATION CORPORATION II has
caused this Certificate to be signed by Richard W. Bauerband, its Executive Vice
President, and attested by Norman H. Rosen, its Secretary, this 12th day of
October, 1995.
THE CIT GROUP SECURITIZATION CORPORATION II
By /s/ Richard W. Bauerband
-----------------------------------
Richard W. Bauerband
Executive Vice President
ATTEST:
By /s/ Norman H. Rosen
---------------
Norman H. Rosen
Secretary
BY-LAWS
OF
THE CIT GROUP SECURITIZATION CORPORATION II
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the Corporation
shall be in the City of Wilmington, County of New Castle, State of Delaware.
Section 2. Other Offices. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders for the election
of directors or for any other purpose shall be held at such time and place,
either within or without the State of Delaware as shall be designated from time
to time by the Board of Directors and stated in the notice of the meeting or in
a duly executed waiver of notice thereof.
Section 2. Annual Meetings. The Annual Meetings of Stockholders shall be
held on such date and at such time as shall be designated from time to time by
the Board of Directors and stated in the notice of the meeting, at which
meetings the stockholders shall elect by a plurality vote a Board of Directors,
and transact such other business as may properly be brought before the meeting.
Written notice of the Annual Meeting stating the place, date and hour of the
meeting shall be given to each stockholder entitled to vote at such meeting not
less than ten, nor more than sixty days before the date of the meeting.
Section 3. Special Meetings. Unless otherwise prescribed by law or by the
Certificate of Incorporation, Special Meetings of Stockholders, for any purpose
or purposes, may be called by either (i) the Chairman, if there be one, or (ii)
the President, (iii) any Vice President, if there be one, (iv) the Secretary or
(v) any Assistant Secretary, if there be one, and shall be called by any such
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<PAGE>
officer at the request in writing of a majority of the Board of Directors or at
the request in writing of stockholders owing a majority of the capital stock of
the Corporation issued and outstanding and entitled to vote. Such request shall
state the purpose or purposes of the proposed meeting. Written notice of a
Special Meeting stating the place, date and hour of the meeting and the purpose
or purposes for which the meeting is called shall be given not less than ten nor
more than sixty days before the date of the meeting to each stockholder entitled
to vote at such meeting.
Section 4. Quorum. Except as otherwise provided by law or by the
Certificate of Incorporation, the holders of a majority of the capital stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. If, however, such quorum shall not
be present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed. If the adjournment is for more than thirty days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder entitled to vote at
the meeting.
Section 5. Voting. Unless otherwise required by law, the Certificate of
Incorporation or these By-Laws (including without limitation Article III,
Section 7, Article VII, Sections 5 and 6 and Article IX, Section 1 hereof), any
question brought before any meeting of stockholders shall be decided by the vote
of the holders of a majority of the stock represented and entitled to vote
thereat. Each stockholder represented at a meeting of stockholders shall be
entitled to cast one vote for each share of the capital stock entitled to vote
thereat held by such stockholder. Such votes may be cast in person or by proxy
but, no proxy shall be voted on or after three years from its date, unless such
proxy provides for a longer period. The Board of Directors, in its discretion,
or the officer of the Corporation presiding at a meeting of stockholders, in his
discretion, may require that any votes cast at such meeting shall be cast by
written ballot.
Section 6. Consent of Stockholders in Lieu of Meeting. Unless otherwise
provided in the Certificate of Incorporation, any action required or permitted
to be taken at any Annual or Special Meeting of Stockholders of the Corporation,
may be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereof were present and voted. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
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<PAGE>
Section 7. List of Stockholders Entitled to Vote. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder of the Corporation who is
present.
Section 8. Stock Ledger. The stock ledger of the Corporation shall be the
only evidence as to who are the stockholders entitled to examine the stock
ledger, the list required by Section 7 of this Article II or the books of the
Corporation, or to vote in person or by proxy at any meeting of stockholders.
ARTICLE III
DIRECTORS
Section 1. Number, Election and Removal of Directors. The Board of
Directors shall consist of not less than one nor more than fifteen members, the
exact number of which shall initially be fixed by the Incorporator and
thereafter from time to time by the Board of Directors. The Board of Directors
shall at all times include at least one Director (the "Independent Director")
who is not a director, officer, 5% stockholder, employee or former employee of
the Corporation's direct or indirect parent or its subsidiaries. Except as
provided in Section 2 of this Article, directors shall be elected by a plurality
of the votes cast at Annual Meetings of Stockholders, and each director so
elected shall hold office until the next Annual Meeting and until his successor
is duly elected and qualified, or until his earlier resignation or removal. Any
director may resign at any time upon notice to the Corporation. Directors need
not be stockholders. At any time, Directors may be removed and their successors
chosen by the unanimous written consent of the holders of the outstanding stock
of the Corporation entitled to vote on the election of Directors.
Section 2. Vacancies. Subject to Section 1 of this Article, vacancies and
newly created directorships resulting from any increase in the authorized number
of directors may be filled by a majority of the directors then in office, though
less than a quorum, or by a sole remaining director, and the directors so chosen
shall hold office until the next annual election and until their successors are
duly elected and qualified, or until their earlier resignation or removal.
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<PAGE>
Section 3. Duties and Powers. The business of the Corporation shall be
managed by or under the direction of the Board of Directors which may exercise
all such powers of the Corporation and do all such lawful acts and things as are
not by statute or by the Certificate of Incorporation or by these By-Laws
directed or required to be exercised or done by the stockholders. The directors
of the Corporation shall act independently and in the interests of the
Corporation and in a manner consistent will the purposes stated herein and in
the Articles of Incorporation of the Corporation.
Section 4. Meetings. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without the State of
Delaware. Regular meetings of the Board of Directors may be held without notice
at such time and at such place as may from time to time be determined by the
Board of Directors. Special meetings of the Board of Directors may be called by
the Chairman, if there be one, the President, or any two directors. Notice
thereof stating the place, date and hour of the meeting shall be given to each
director either by mail not less than forty-eight (48) hours before the date of
the meeting, by telephone or telegram on twenty-four (24) hours notice, or on
such shorter notice as the person or persons calling such meeting may deem
necessary or appropriate in the circumstances.
Section 5. Quorum. Except as may be otherwise specifically provided by law,
the Certificate of Incorporation or these By-Laws, at all meetings of the Board
of Directors, a majority of the entire Board of Directors shall constitute a
quorum for the transaction of business and the act of a majority of the
directors present at any meeting at which there is a quorum shall be the act of
the Board of Directors. If a quorum shall not be present at any meeting of the
Board of Directors, the directors present thereat may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present.
Section 6. Actions of Board. Unless otherwise provided by the Certificate
of Incorporation or these By-Laws, any action required or permitted to be taken
at any meeting of the Board of Directors or of any committee thereof may be
taken without a meeting, if all the members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
Section 7. Meetings by Means of Conference Telephone. Unless otherwise
provided by the Certificate of Incorporation or these By-Laws, members of the
Board of Directors of the Corporation, or any committee designated by the Board
of Directors, may participate in a meeting of the Board of Directors or such
committee by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting pursuant to this Section 7 shall constitute
presence in person at such meeting.
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<PAGE>
Section 8. Committees. The Board of Directors may, by resolution passed by
a majority of the entire Board of Directors, designate one or more committees,
each committee to consist of one or more of the directors of the Corporation.
The Board of Directors may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of any such committee. In the absence or disqualification of a member of
a committee, and in the absence of a designation by the Board of Directors of an
alternate member to replace the absent or disqualified member, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any absent or
disqualified member. Any committee, to the extent allowed by law and provided in
the resolution establishing such committee, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation. Each committee shall keep regular minutes and
report to the Board of Directors when required.
Section 9. Compensation. The directors may be paid their expenses, if any,
of attendance at each meeting of the Board of Directors and may be paid a fixed
sum for attendance at each meeting of the Board of Directors or a stated salary
as director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefore. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
Section 10. Interested Directors. No contract or transaction between the
Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose if (i) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board of Directors
or committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (ii) the material facts as to
his or their relationship or interest and as to the contract or transaction are
disclosed or are known to the shareholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
shareholders; or (iii) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified, by the Board of
Directors, a committee thereof or the shareholders. Common or interested
directors may be counted in determining the presence of a quorum at a meeting of
the Board of Directors or of a committee which authorizes the contract or
transaction.
Section 11. Voluntary Bankruptcy, Insolvency or Other Similar Proceeding.
No amendment, modification or waiver of the Corporate Separateness Agreement
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<PAGE>
dated as of July 1, 1994 and no voluntary bankruptcy, insolvency or other
similar proceeding may be filed, instituted, approved or take place on behalf of
the Corporation without in each case the prior unanimous vote of the full Board
of Directors (including the Independent Director, or if there is more than one,
all of the Independent Directors) that specifically approves and authorizes such
action.
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Corporation shall be chosen by the
Board of Directors and shall be a President, a Vice President, a Secretary and a
Treasurer. The Board of Directors, in its discretion, may also choose a Chairman
of the Board of Directors (who must be a director) and one or more Assistant
Vice-Presidents, Assistant Secretaries, Assistant Treasurers and other officers.
The Corporation shall at all times have at least one executive officer (the
"Independent Officer") who is not a director, officer or employee of the direct
or indirect parent of the Corporation (such executive officer may be the same
person as the one Director, referred to in Article III, Section 1, who is not a
director, officer or employee of the direct or indirect parent of the
Corporation). Any number of offices may be held by the same person, unless
otherwise prohibited by law, the Certificate of Incorporation or these By-Laws.
The officers of the Corporation need not be stockholders of the Corporation nor,
except in the case of the Chairman of the Board of Directors, need such officers
be directors of the Corporation. The officers of the Corporation shall act
independently and in the interests of the Corporation and in a manner consistent
with the purposes stated herein or in the Articles of Incorporation of the
Corporation.
Section 2. Election. The Board of Directors at its first meeting held after
each Annual Meeting of Stockholders shall elect the officers of the Corporation
who shall hold their offices for such terms and shall exercise such powers and
perform such duties as shall be determined from time to time by the Board of
Directors; and all officers of the Corporation shall hold office until their
successors are chosen and qualified, or until their earlier resignation or
removal. Any officer elected by the Board of Directors may be removed at any
time by the affirmative vote of a majority of the Board of Directors. Any
vacancy occurring in any office of the Corporation shall be filled by the Board
of Directors. The salaries of all officers of the Corporation shall be fixed by
the Board of Directors.
Section 3. Voting Securities Owned by the Corporation. Powers of attorney,
proxies, waivers of notice of meeting, consents and other instruments relating
to securities owned by the Corporation may be executed in the name of and on
behalf of the Corporation by the President or any Vice-President and any such
officer may, in the name of and on behalf of the Corporation, take all such
action as any such officer may deem advisable to vote in person or by proxy at
any meeting of security holders of any corporation in which the Corporation may
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<PAGE>
own securities and at any such meeting shall possess and may exercise any and
all rights and power incident to the ownership of such securities and which, as
the owner thereof, the Corporation might have exercised and possessed if
present. The Board of Directors may, by resolution, from time to time confer
like powers upon any other person or persons.
Section 4. Chairman of the Board of Directors. The Chairman of the Board of
Directors, if there be one, shall preside at all meetings of the stockholders
and of the Board of Directors. He shall be the Chief Executive Officer of the
Corporation, and except where by law the signature of the President is required,
the Chairman of the Board of Directors shall possess the same power as the
President to sign all contracts, certificates and other instruments of the
Corporation which may be authorized by the Board of Directors. During the
absence or disability of the President, the Chairman of the Board of Directors
shall exercise all the powers and discharge all the duties of the President. The
Chairman of the Board of Directors shall also perform such other duties and may
exercise such other powers as from time to time may be assigned to him by these
By-Laws or by the Board of Directors.
Section 5. President. The President shall, subject to the control of the
Board of Directors and, if there be one, the Chairman of the Board of Directors,
have general supervision of the business of the Corporation and shall see that
all orders and resolutions of the Board of Directors are carried into effect. He
shall execute all bonds, mortgages, contracts and other instruments of the
Corporation requiring a seal, under the seal of the Corporation, except where
required or permitted by law to be otherwise signed and executed and except that
the other officers of the Corporation may sign and execute documents when so
authorized by these By-Laws, the Board of Directors or the President. In the
absence or disability of the Chairman of the Board of Directors, the President
shall be the Chief Executive Officer of the Corporation. The President shall
also perform such other duties and may exercise such other powers as from time
to time may be assigned to him by these By-Laws or by the Board of Directors.
Section 6. Vice-Presidents. At the request of the President or in his
absence or in the event of his inability or refusal to act (and if there be no
Chairman of the Board of Directors), the Vice-President or the Vice-Presidents
if there is more than one (in the order designated by the Board of Directors)
shall perform the duties of the President, and when so acting, shall have all
the powers of and be subject to all the restrictions upon the President. Each
Vice-President shall perform such other duties and have such other powers as the
Board of Directors from time to time may prescribe. If there be no Chairman of
the Board of Directors and no Vice-President, the Board of Directors shall
designate the officer of the Corporation who, in the absence of the President or
in the event of the inability or refusal of the President to act, shall perform
the duties of the President, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the President.
Section 7. Secretary. The Secretary shall attend all meetings of the Board
of Directors and all meetings of stockholders and record all the proceedings
thereat in a book or books to be kept for that purpose; the Secretary shall also
perform like duties for the standing committees when required. The Secretary
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<PAGE>
shall give, or cause to be given, notice of all meetings of the stockholders and
special meetings of the Board of Directors, and shall perform such other duties
as may be prescribed by the Board of Directors or President, under whose
supervision he shall be. If the Secretary shall be unable or shall refuse to
cause to be given notice of all meetings of the stockholders and special
meetings of the Board of Directors, and if there be no Assistant Secretary, then
either the Board of Directors or the President may choose another officer to
cause such notice to be given. The Secretary shall have custody of the seal of
the Corporation and the Secretary or any Assistant Secretary, if there be one,
shall have authority to affix the same to any instrument requiring it and when
so affixed, it may be attested by the signature of the Secretary or by the
signature of any such Assistant Secretary. The Board of Directors may give
general authority to any other officer to affix the seal of the Corporation and
to attest the affixing by his signature. The Secretary shall see that all books,
reports, statements, certificates and other documents and records required by
law to be kept or filed are properly kept or filed, as the case may be.
Section 8. Treasurer. The Treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the Corporation in
such depositories as may be designated by the Board of Directors. The Treasurer
shall disburse the funds of the Corporation as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, and shall render to
the President and the Board of Directors, at its regular meetings, or when the
Board of Directors so requires, an account of all his transactions as Treasurer
and of the financial condition of the Corporation. If required by the Board of
Directors, the Treasurer shall give the Corporation a bond in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of his office and for the restoration to
the Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation.
Section 9. Assistant Secretaries. Except as may be otherwise provided in
these By-Laws, Assistant Secretaries, if there be any, shall perform such duties
and have such powers as from time to time may be assigned to them by the Board
of Directors, the President, any Vice-President, if there be one, or the
Secretary, and in the absence of the Secretary or in the event of his disability
or refusal to act, shall perform the duties of the Secretary, and when so
acting, shall have all the powers of and be subject to all the restrictions upon
the Secretary.
Section 10. Assistant Treasurers. Assistant Treasurers, if there be any,
shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice-President,
if there be one, or the Treasurer, and in the absence of the Treasurer or in the
event of his disability or refusal to act, shall perform the duties of the
Treasurer, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the Treasurer. If required by the Board of Directors,
an Assistant Treasurer shall give the Corporation a bond in such sum and with
-8-
<PAGE>
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of his office and for the restoration to
the Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation.
Section 11. Other Officers. Such other officers as the Board of Directors
may choose shall perform such duties and have such powers as from time to time
may be assigned to them by the Board of Directors. The Board of Directors may
delegate to any other officer of the Corporation the power to choose such other
officers and to prescribe their respective duties and powers.
ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder of stock in the Corporation
shall be entitled to have a certificate signed, in the name of the Corporation
(i) by the Chairman of the Board of Directors, the President or a Vice-President
and (ii) by the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the Corporation, certifying the number of shares owned by
him in the Corporation.
Section 2. Signatures. Where a certificate is countersigned by (i) a
transfer agent other than the Corporation or its employee, or (ii) a registrar
other than the Corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
Section 3. Lost Certificates. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or his legal representative, to advertise the same in such manner
as the Board of Directors shall require and/or to give the Corporation a bond in
such sum as it may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
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<PAGE>
Section 4. Transfers. Stock of the Corporation shall be transferable in the
manner prescribed by law and in these By-Laws. Transfers of stock shall be made
on the books of the Corporation only by the person named in the certificate or
by his attorney lawfully constituted in writing and upon the surrender of the
certificate therefor, which shall be canceled before a new certificate shall be
issued.
Section 5. Record Date. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders of
any adjournment thereof, or entitled to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action, the Board of Directors may fix in advance, a
record date, which shall not be more than sixty days nor less than ten days
before the date of such meeting, nor more than sixty days prior to any other
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
Section 6. Beneficial Owners. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
law.
ARTICLE VI
NOTICES
Section 1. Notices. Whenever written notice is required by law, the
Certificate of Incorporation or these By-Laws, to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder, at his address
as it appears on the records of the Corporation, with postage thereon prepaid,
and such notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Written notice may also be given personally
or by telegram, telex or cable.
Section 2. Waivers of Notice. Whenever any notice is required by law, the
Certificate of Incorporation or these By-Laws, to be given to any director,
member of a committee or stockholder, a waiver thereof in writing, signed, by
the person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
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ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the Corporation,
subject to the provisions of the Certificate of Incorporation, if any, may be
declared by the Board of Directors at any regular or special meeting, and may be
paid in cash, in property, or in shares of the capital stock. Before payment of
any dividend, there may be set aside out of any funds of the Corporation
available for dividends such sum or sums as the Board of Directors from time to
time, in its absolute discretion, deems proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the Corporation, or for any proper purpose, and the Board of
Directors may modify or abolish any such reserve.
Section 2. Disbursements. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
Section 3. Fiscal Year. The fiscal year of the Corporation shall be fixed
by resolution of the Board of Directors.
Section 4. Corporate Seal. The corporate seal shall have inscribed thereon
the name of the Corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced, or otherwise.
Section 5. Separate Books and Records; Separate Accounts. The Corporation
shall (i) keep correct and complete books and records of account on an
unconsolidated basis, (ii) ensure that its funds and other assets are not
deposited in the same account as, or commingled with, those of its parent or any
subsidiary or affiliate of its parent, and (iii) maintain separate financial
statements, corporate records and books of account from those of its parent or
any subsidiary or affiliate of its parent.
Section 6. No Advances or Guarantees. The Corporation shall not (i) make
any advances to, or guarantees on behalf of, its parent or any subsidiary or
affiliate thereof, or (ii) receive from its parent or any subsidiary or
affiliate thereof any advance or guarantee on the Corporation's behalf.
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<PAGE>
ARTICLE
INDEMNIFICATION
Section 1. Power to Indemnify in Actions, Suits or Proceedings Other Than
Those by or in the Right of the Corporation. Subject to Section 3 of this
Article VIII, the Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, has reasonable cause to believe that his conduct was unlawful.
Section 2. Power to Indemnify in Actions, Suits or Proceedings by or in the
Right of the Corporation. Subject to Section 3 of this Article VIII, the
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation; except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
Corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnify for such
expenses which the Court of Chancery or such other court shall deem proper.
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<PAGE>
Section 3. Authorization of Indemnification. Any indemnification under this
Article VIII (unless ordered by a court) shall be made by the Corporation only
as authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the circumstances because
he has met the applicable standard of conduct set forth in Section 1 or Section
2 of this Article VIII, as the case may be. Such determination shall be made (i)
by the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to such action, suit or proceeding, or (ii) if such quorum
is not obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (iii) by the
stockholders. To the extent, however, that a director, officer, employee or
agent of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding described above, or in defense of any
claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith, without the necessity of authorization in the specific
case.
Section 4. Good Faith Defined. For purposes of any determination under
Section 3 of this Article VIII, a person shall be deemed to have acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, or, with respect to any criminal action or
proceeding, to have had no reasonable cause to believe his conduct was unlawful,
if his action is based on the records or books of account of the Corporation or
another enterprise, or on information supplied to him by the officers of the
Corporation or another enterprise in the course of their duties, or on the
advice of legal counsel for the Corporation or another enterprise or on
information or records given or reports made to the Corporation or another
enterprise by an independent certified public accountant or by an appraiser or
other expert selected with reasonable care by the Corporation or another
enterprise. The term "another enterprise" as used in this Section 4 shall mean
any other corporation or any partnership, joint venture, trust or other
enterprise of which such person is or was serving at the request of the
Corporation as a director, officer, employee or agent. The provisions of this
Section 4 shall not be deemed to be exclusive or to limit in any way the
circumstances in which a person may be deemed to have met the applicable
standard of conduct set forth in Sections 1 or 2 of this Article VIII, as the
case may be.
Section 5. Indemnification by a Court. Notwithstanding any contrary
determination in the specific case under Section 3 of this Article VIII, and
notwithstanding the absence of any determination thereunder, any director,
officer, employee or agent may apply to any court of competent jurisdiction in
the State of Delaware for indemnification to the extent otherwise permissible
under Sections 1 and 2 of this Article VIII. The basis of such indemnification
by a court shall be a determination by such court that indemnification of the
director, officer, employee or agent is proper in the circumstances because he
has met the applicable standards of conduct set forth in Sections 1 or 2 of this
Article VIII, as the case may be. Notice of any application for indemnification
pursuant to this Section 5 shall be given to the Corporation promptly upon the
filing of such application.
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Section 6. Expenses Payable in Advance. Expenses incurred in defending or
investigating a threatened or pending action, suit or proceeding may be paid by
the Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board of Directors in the specific case upon
receipt of an undertaking by or on behalf of the director, officer, employee or
agent to repay such amount unless it shall ultimately be determined that he is
entitled to be indemnified by the Corporation as authorized in this Article
VIII.
Section 7. Non-exclusivity and Survival of Indemnification. The
indemnification provided by this Article VIII shall not be deemed exclusive of
any other rights to which those seeking indemnification may be entitled under
any By-Law, agreement, contract, vote of stockholders or disinterested directors
or pursuant to the direction (howsoever embodied) of any court of competent
jurisdiction or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, it being the policy of the
Corporation that indemnification of the persons specified in Sections 1 and 2 of
this Article VIII shall be made to the fullest extent permitted by law. The
provisions of this Article VIII shall not be deemed to preclude the
indemnification of any person who is not specified in Sections 1 or 2 of this
Article VIII but whom the Corporation has the power or obligation to indemnify
under the provisions of the General Corporation Law of the State of Delaware, or
otherwise. The indemnification provided by this Article VIII shall continue as
to a person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and administrators of such
person.
Section 8. Insurance. The Corporation may purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or another enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power or the obligation to
indemnify him against such liability under the provisions of this Article VIII.
Section 9. Meaning of "Corporation" for Purposes of Article VIII. For
purposes of this Article VIII, references to "the Corporation" shall include, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had the power and authority
to indemnify its directors, officers, and employees or agents, so that any
person who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
the provisions of this Article VIII with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
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ARTICLE IX
AMENDMENTS
Section 1. Amendment of By-Laws. Except as otherwise set forth in this
Article IX, these By-Laws may be altered, amended or repealed, in whole or in
part, or new By-Laws may be adopted by the stockholders or by the Board of
Directors; provided, however, that notice of such alteration, amendment, repeal
or adoption of new By-Laws be contained in the notice of such meeting of
stockholders or Board of Directors, as the case may be. All such amendments must
be approved by either the holders of a majority of the outstanding capital stock
entitled to vote thereon or by a majority of the entire Board of Directors then
in office. Section 11 of Article III and Sections 5 and 6 of Article VII of
these By-Laws may be altered, amended or repealed only upon the unanimous vote
of the full Board of Directors (including the Independent Director, or if there
is more than one, all of the Independent Directors); provided, however, that
notice of such alteration, amendment, repeal or adoption of new By-Laws be
contained in the notice of such meeting of the Board of Directors.
Section 2. Entire Board of Directors. As used in this Article IX and in
these By-Laws generally, the term "entire Board of Directors" means the total
number of directors that the Corporation would have if there were no vacancies.
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================================================================================
THE CIT RV OWNER TRUST 1996-A
Class A ____% Asset Backed Notes
------------------------------------
INDENTURE
Dated as of February 1, 1996
------------------------------------
-----------------------------,
Indenture Trustee
================================================================================
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
===================================================================================================
TIA Indenture
Section Section
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
310(a)(1) ..................................... 6.11
(a)(2) ..................................... 6.11
(a)(3) ..................................... 6.10
(a)(4) ..................................... 6.14
(b) ..................................... 6.11
(c) ..................................... N.A.
311(a) ..................................... 6.12
(b) ..................................... 6.12
(c) ..................................... N.A.
312(a)) ..................................... 7.1, 7.2
(b) ..................................... 7.2
(c) ..................................... 7.2
313(a) ..................................... 7.4(a), 7.4(b)
(b)(1) ..................................... 7.4(a)
(b)(2) ..................................... 7.4(a)
(c) ..................................... 7.4(a)
(d) ..................................... 7.4(a)
314(a) ..................................... 7.3(a), 3.9
(b) ..................................... 3.6
(c)(1) ..................................... 2.2, 2.9, 4.1, 11.1
(c)(2) ..................................... 11.1(a)
(c)(3) ..................................... 11.1(a)
(d) ..................................... 2.9, 11.1(b)
(e) ..................................... 11.1(a)
(f) ..................................... 11.1(a)
315(a) ..................................... 6.1(b)
(b) ..................................... 6.5
(c) ..................................... 6.1(a)
(d) ..................................... 6.2, 6.1(c)
(e) ..................................... 5.13
316(a) last
sentence ..................................... 1.1
(a)(1)(A) ..................................... 5.11
(a)(1)(B) ..................................... 5.12
(a)(2) ..................................... Omitted
316(b),(c) ..................................... 5.7
317(a)(1) ..................................... 5.3(b)
(a)(2) ..................................... 5.3(d)
(b) ..................................... 3.3
318(a) ..................................... 11.7
===================================================================================================
</TABLE>
Note: This cross reference table shall not, for any purpose, be deemed to
be part of this Indenture.
N.A. means Not Applicable
i
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TABLE OF CONTENTS
Page
----
ARTICLE I ................................................................. 2
DEFINITIONS AND INCORPORATION BY REFERENCE ................................ 2
SECTION 1. Definitions ......................................... 2
SECTION 1.2 Incorporation by Reference of Trust Indenture Act ... 2
ARTICLE II ................................................................ 2
THE NOTES ................................................................. 2
SECTION 2.1 Form ................................................ 2
SECTION 2.2 Execution, Authentication and Delivery .............. 3
SECTION 2.3 Temporary Notes ..................................... 3
SECTION 2.4 Registration; Registration of Transfer and Exchange
of Notes ........................................... 4
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes .......... 5
SECTION 2.6 Persons Deemed Noteholders .......................... 6
SECTION 2.7 Payment of Principal and Interest ................... 6
SECTION 2.8 Cancellation of Notes ............................... 8
SECTION 2.9 Release of Collateral ............................... 8
SECTION 2.10 Book-Entry Notes .................................... 8
SECTION 2.11 Notices to Depository ............................... 9
SECTION 2.12 Definitive Notes .................................... 9
SECTION 2.13 Seller as Noteholder ................................ 10
SECTION 2.14 Tax Treatment ....................................... 10
ARTICLE III ............................................................... 10
COVENANTS ................................................................. 10
SECTION 3.1 Payment of Principal and Interest .................... 10
ii
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SECTION 3.2 Maintenance of Agency Office ......................... 10
SECTION 3.3 Money for Payments To Be Held in Trust ............... 11
SECTION 3.4 Existence ............................................ 12
SECTION 3.5 Protection of Trust Estate; Acknowledgment of Pledge . 13
SECTION 3.6 Opinions as to Trust Estate .......................... 13
SECTION 3.7 Performance of Obligations; Servicing of Contracts ... 14
SECTION 3.8 Negative Covenants ................................... 16
SECTION 3.9 Annual Statement as to Compliance .................... 16
SECTION 3.10 Consolidation, Merger, etc. of Issuer; Disposition
of Trust Assets .................................... 17
SECTION 3.11 Successor of Transferee .............................. 19
SECTION 3.12 No Other Business .................................... 19
SECTION 3.13 No Borrowing ......................................... 19
SECTION 3.14 Guarantees, Loans, Advances and Other Liabilities .... 19
SECTION 3.15 Servicer's Obligations ............................... 20
SECTION 3.16 Capital Expenditures ................................. 20
SECTION 3.17 Removal of Servicer .................................. 20
SECTION 3.18 Restricted Payments .................................. 20
SECTION 3.19 Notice of Events of Default .......................... 20
SECTION 3.20 Further Instruments and Acts ......................... 20
SECTION 3.21 Representations and Warranties by the Issuer to
the Indenture Trustee .............................. 21
ARTICLE IV ................................................................. 21
SATISFACTION AND DISCHARGE ................................................. 21
SECTION 4.1 Satisfaction and Discharge of Indenture .............. 21
SECTION 4.2 Application of Trust Money ........................... 22
SECTION 4.3 Repayment of Monies Held by Paying Agent ............. 22
SECTION 4.4 Duration of Position of Indenture Trustee ............ 22
iii
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ARTICLE V .................................................................. 23
DEFAULT AND REMEDIES ....................................................... 23
SECTION 5.1 Events of Default .................................... 23
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment ... 24
SECTION 5.3 Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee ................... 25
SECTION 5.4 Remedies; Priorities ................................. 27
SECTION 5.5 Optional Preservation of the Contracts ............... 29
SECTION 5.6 Limitation of Suits .................................. 29
SECTION 5.7 Unconditional Rights of Noteholders To Receive
Principal and Interest ............................. 30
SECTION 5.8 Restoration of Rights and Remedies ................... 30
SECTION 5.9 Rights and Remedies Cumulative ....................... 30
SECTION 5.10 Delay or Omission Not a Waiver ....................... 31
SECTION 5.11 Control by Noteholders ............................... 31
SECTION 5.12 Waiver of Past Defaults .............................. 31
SECTION 5.13 Undertaking for Costs ................................ 32
SECTION 5.14 Waiver of Stay or Extension Laws ..................... 32
SECTION 5.15 Action on Notes ...................................... 32
SECTION 5.16 Performance and Enforcement of Certain Obligations ... 33
ARTICLE VI ................................................................. 35
THE INDENTURE TRUSTEE ...................................................... 35
SECTION 6.1 Duties of Indenture Trustee .......................... 35
SECTION 6.2 Rights of Indenture Trustee .......................... 36
SECTION 6.3 Indenture Trustee May Own Notes ...................... 36
SECTION 6.4 Indenture Trustee's Disclaimer ....................... 37
SECTION 6.5 Notice of Defaults ................................... 37
SECTION 6.6 Reports by Indenture Trustee to Holders .............. 37
iv
<PAGE>
SECTION 6.7 Compensation; Indemnity .............................. 37
SECTION 6.8 Replacement of Indenture Trustee ..................... 38
SECTION 6.9 Merger or Consolidation of Indenture Trustee ......... 39
SECTION 6.10 Appointment of Co-Indenture Trustee or Separate
Indenture Trustee .................................. 39
SECTION 6.11 Eligibility; Disqualification ........................ 41
SECTION 6.12 Preferential Collection of Claims Against Issuer ..... 41
SECTION 6.13 Representations and Warranties of Indenture Trustee .. 41
SECTION 6.14 Indenture Trustee May Enforce Claims Without
Possession of Notes ................................ 42
SECTION 6.15 Suit for Enforcement ................................. 42
SECTION 6.16 Rights of Noteholders to Direct Indenture Trustee .... 42
ARTICLE VII ................................................................ 42
NOTEHOLDERS' LISTS AND REPORTS ............................................. 42
SECTION 7.1 Issuer To Furnish Indenture Trustee Names and
Addresses of Noteholders ........................... 42
SECTION 7.2 Preservation of Information, Communications
to Noteholders ..................................... 43
SECTION 7.3 Reports by Issuer .................................... 43
SECTION 7.4 Reports by Trustee ................................... 44
ARTICLE VIII ............................................................... 44
ACCOUNTS, DISBURSEMENTS AND RELEASES ....................................... 44
SECTION 8.1 Collection of Money .................................. 44
SECTION 8.2 Designated Accounts and the Cash Collateral Account; . 44
SECTION 8.3 General Provisions Regarding Accounts ................ 45
SECTION 8.4 Release of Trust Estate .............................. 46
SECTION 8.5 Opinion of Counsel ................................... 46
ARTICLE IX ................................................................. 47
SUPPLEMENTAL INDENTURES .................................................... 47
SECTION 9.1 Supplemental Indentures Without Consent of
Noteholders ........................................ 47
v
<PAGE>
SECTION 9.2 Supplemental Indentures With Consent of Noteholders . 48
SECTION 9.3 Execution of Supplemental Indentures ................ 49
SECTION 9.4 Effect of Supplemental Indenture .................... 49
SECTION 9.5 Conformity with Trust Indenture Act ................. 50
SECTION 9.6 Reference in Notes to Supplemental Indentures ....... 50
ARTICLE X .................................................................. 50
REDEMPTION OF NOTES ........................................................ 50
SECTION 10.1 Redemption .......................................... 50
SECTION 10.2 Form of Redemption Notice ........................... 51
SECTION 10.3 Notes Payable on Redemption Date .................... 51
ARTICLE XI ................................................................. 52
MISCELLANEOUS .............................................................. 52
SECTION 11.1 Compliance Certificate and Opinions, etc. ........... 52
SECTION 11.2 Form of Documents Delivered to Indenture Trustee .... 53
SECTION 11.3 Acts of Noteholders ................................. 54
SECTION 11.4 Notices, etc., to Indenture Trustee, Issuer and
Rating Agencies .................................... 55
SECTION 11.5 Notices to Noteholders; Waiver ...................... 56
SECTION 11.6 Alternate Payment and Notice Provisions ............. 56
SECTION 11.7 Conflict with Trust Indenture Act ................... 56
SECTION 11.8 Effect of Heading and Table of Contents ............. 57
SECTION 11.9 Successors and Assigns .............................. 57
SECTION 11.10 Separability ........................................ 57
SECTION 11.11 Benefits of Indenture ............................... 57
SECTION 11.12 Legal Holidays ...................................... 57
SECTION 11.13 Governing Law ....................................... 58
SECTION 11.14 Counterparts ........................................ 58
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SECTION 11.15 Recording Indenture ................................. 58
SECTION 11.16 No Recourse ......................................... 58
SECTION 11.17 No Petition ......................................... 59
SECTION 11.18 Inspection .......................................... 59
SECTION 11.19 Indemnification by and Reimbursement of the
Servicer .......................................... 60
EXHIBIT A-Form of Asset Backed Notes
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INDENTURE, dated as of February 1, 1996, between THE CIT RV OWNER TRUST 1996-A,
a Delaware business trust (the "Issuer"), and _____________________________, an
________ banking corporation, as trustee and not in its individual capacity (the
"Indenture Trustee").
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders of the Notes:
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the Closing Date, as
trustee for the benefit of the Noteholders and (only to the extent expressly
provided herein) the Certificateholders, all of the Issuer's right, title and
interest in and to (i) the Contracts (except, to the extent provided in the Sale
and Servicing Agreement, any Post Cut-off Date Insurance Add-Ons); (ii) all
monies received under the Initial Contracts on or after the Initial Cut-off Date
and under 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 (other than the Excluded Assets) established and maintained by the
Servicer pursuant to the Sale and Servicing Agreement (including all investments
in such accounts and all income from the funds therein and all proceeds
thereof); (iv) all monies on deposit in the Pre-Funding Account and the
Capitalized Interest Account (including all investments in such accounts and all
income from the funds therein and all proceeds thereof); (v) security interests
in the Financed Vehicles granted by the Obligors and any accessions thereto and
any other interest of the Issuer in the Financed Vehicles; (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 Issuer under the Sale and Servicing Agreement (but
excluding all rights of the Issuer to the Excluded Assets) and the Subsequent
Transfer Agreements and the Subsequent Purchase Agreements; and (viii) all
present and future claims, demands, causes and choses in action in respect of
any or all of the foregoing and all payments on or under and all proceeds of
every kind and nature whatsoever in respect of any or all of the foregoing,
including all proceeds of the conversion, voluntary or involuntary, into cash or
other liquid property, all cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every kind and other
forms of obligations and receivables, instruments and other property which at
any time constitute all or part of or are included in the proceeds of any and
all proceeds of the foregoing (collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of principal of and
interest on, and any other amounts owing in respect of, the Notes, equally and
ratably without prejudice, priority or distinction, and to secure compliance
with the provisions of this Indenture, all as provided in this Indenture.
The Indenture Trustee, as trustee on behalf of the Noteholders, acknowledges
such Grant, accepts the trusts under this Indenture in accordance with the
provisions of this Indenture.
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ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1. Definitions. Certain capitalized terms used in this Indenture
and not otherwise defined herein shall have the respective meanings assigned
them in the Sale and Servicing Agreement (the "Sale and Servicing Agreement")
dated as of February 1, 1996 among, the Issuer, The CIT Group Securitization
Corporation II (the "Company" or the "Seller") and The CIT Group/Sales
Financing, Inc., as Servicer ("CITSF"). All references in this Indenture to
Articles, Sections, subsections and exhibits are to the same contained in or
attached to this Indenture unless otherwise specified. All terms defined in this
Indenture shall have the defined meanings when used in any certificate, notice,
Note or other document made or delivered pursuant hereto unless otherwise
defined therein.
SECTION 1.2 Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the TIA, such provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture trustee" means the Indenture Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by a Commission rule have
the respective meanings assigned to them by such definitions.
ARTICLE II
THE NOTES
SECTION 2.1 Form.
(a) The Class A Notes, with the Indenture Trustee's certificate of
authentication, shall be substantially in the form set forth in Exhibit A, with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture, and may have such letters, numbers
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or other marks of identification and such legends or endorsements placed thereon
as may, consistently herewith, be determined by the officers executing such
Notes, as evidenced by their execution of the Notes. Any portion of the text of
any Note may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Note.
(b) The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders), all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
(c) The terms of the Notes as provided for in Exhibit A hereto are part of
the terms of this Indenture.
SECTION 2.2 Execution, Authentication and Delivery.
(a) Each Note shall be dated the date of its authentication, and shall be
issuable as a registered Note in the minimum denomination of $1,000 and in
integral multiples thereof (except for one Note which may be issued in a
denomination other than an integral multiple of $1,000).
(b) The Notes shall be executed on behalf of the Issuer by any of its
Authorized Officers. The signature of any such Authorized Officer on the Notes
may be manual or facsimile.
(c) Notes bearing the manual or facsimile signature of individuals who were
Authorized Officers of the Issuer at the time such signatures were affixed shall
bind the Issuer, notwithstanding that such individuals or any of them have
ceased to hold such office prior to the authentication and delivery of such
Notes or did not hold such office at the date of such Notes.
(d) The Indenture Trustee, in exchange for the Grant of the Contracts and
the other components of the Trust, and simultaneously with the constructive
delivery to the Indenture Trustee of the Contract Files with respect to the
Initial Contracts and the other components and assets of the Trust, shall cause
to be authenticated and delivered to or upon the order of the Issuer, the Class
A Notes for original issue in aggregate principal amount of $___________. The
aggregate principal amount of Notes outstanding at any time may not exceed
$___________ except as provided in Section 2.5.
(e) No Notes shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form set forth in Exhibit A,
executed by the Indenture Trustee by the manual signature of one of its
Authorized Officers, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly authenticated and
delivered hereunder.
SECTION 2.3 Temporary Notes.
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(a) Pending the preparation of Definitive Notes, if any, the Issuer may
execute, and upon receipt of an Issuer Order the Indenture Trustee shall
authenticate and deliver, such Temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, of the tenor of the Definitive
Notes in lieu of which they are issued and with such variations as are
consistent with the terms of this Indenture as the officers executing such Notes
may determine, as evidenced by their execution of such Notes.
(b) If Temporary Notes are issued, the Issuer shall cause Definitive Notes
to be prepared without unreasonable delay. After the preparation of Definitive
Notes, the Temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the Temporary Notes at the Agency Office of the Issuer to be
maintained as provided in Section 3.2, without charge to the Noteholder. Upon
surrender for cancellation of any one or more Temporary Notes, the Issuer shall
execute and the Indenture Trustee shall authenticate and deliver in exchange
therefor a like principal amount of Definitive Notes of authorized
denominations. Until so delivered in exchange, the Temporary Notes shall in all
respects be entitled to the same benefits under this Indenture as Definitive
Notes.
SECTION 2.4 Registration; Registration of Transfer and Exchange of Notes.
(a) The Issuer shall cause to be kept the Note Register, in which, subject
to such reasonable regulations as the Issuer may prescribe, the Issuer shall
provide for the registration of the Notes and the registration of transfers and
exchanges of the Notes. The Indenture Trustee shall initially be the Note
Registrar for the purpose of registering the Notes and transfers of the Notes as
herein provided. Upon any resignation of any Note Registrar, the Issuer shall
promptly appoint a successor Note Registrar or, if it elects not to make such an
appointment, assume the duties of the Note Registrar.
(b) If a Person other than the Indenture Trustee is appointed by the Issuer
as Note Registrar, the Issuer will give the Indenture Trustee prompt written
notice of the appointment of such Note Registrar and of the location, and any
change in the location, of the Note Register. The Indenture Trustee shall have
the right to inspect the Note Register at all reasonable times and to obtain
copies thereof. The Indenture Trustee shall have the right to rely upon a
certificate executed on behalf of the Note Registrar by an Executive Officer
thereof as to the names and addresses of the Noteholders and the principal
amounts and number of such Notes.
(c) Upon surrender for registration of transfer of any Note at the
Corporate Trust Office of the Indenture Trustee or the Agency Office of the
Issuer (and following the delivery, in the former case, of such Notes to the
Issuer by the Indenture Trustee), the Issuer shall execute, the Indenture
Trustee shall authenticate and the Noteholder shall obtain from the Indenture
Trustee, in the name of the designated transferee or transferees, one or more
new Notes in any authorized denominations, of a like aggregate principal amount.
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(d) At the option of the Noteholder, Notes may be exchanged for other Notes
of the same class in any authorized denominations, of a like aggregate principal
amount, upon surrender of the Notes to be exchanged at the Corporate Trust
Office of the Indenture Trustee or the Agency Office of the Issuer (and
following the delivery, in the former case, of such Notes to the Issuer by the
Indenture Trustee), the Issuer shall execute, and the Indenture Trustee shall
authenticate and the Noteholder shall obtain from the Indenture Trustee, the
Notes which the Noteholder making the exchange is entitled to receive.
(e) All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
(f) Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Indenture Trustee, (i) duly executed by the
Holder thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar which requirements include membership or
participation in Securities Transfer Agents Medallion Program ("Stamp") or such
other "signature guarantee program" as may be determined by the Note Registrar
in addition to, or in substitution for, Stamp, all in accordance with the
Exchange Act, and (ii) accompanied by such other documents as the Indenture
Trustee may require.
(g) No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer or Indenture Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Notes, other than exchanges pursuant to Sections 2.3 or 9.6 not involving any
transfer.
(h) The preceding provisions of this Section 2.4 notwithstanding, the
Issuer shall not be required to transfer or make exchanges, and the Note
Registrar need not register transfers or exchanges, of Notes that: (i) have been
selected for redemption pursuant to Article X, if applicable; or (ii) are due
for repayment within 15 days of submission to the Corporate Trust Office or the
Agency Office.
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes.
(a) If (i) any mutilated Note is surrendered to the Indenture Trustee, or
the Indenture Trustee receives evidence to its satisfaction of the destruction,
loss or theft of any Note, and (ii) there is delivered to the Indenture Trustee
such security or indemnity as may be required by it to hold the Issuer and the
Indenture Trustee harmless, then, in the absence of notice to the Issuer, the
Note Registrar or the Indenture Trustee that such Note has been acquired by a
bona fide purchaser, the Issuer shall execute and upon the Issuer's request the
Indenture Trustee shall authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Note, a replacement Note of a like
class and aggregate principal amount; provided, however, that if any such
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destroyed, lost or stolen Note, but not a mutilated Note, shall have become or
within seven days shall be due and payable, or shall have been called for
redemption, instead of issuing a replacement Note, the Issuer may make payment
to the Holder of such destroyed, lost or stolen Note when so due or payable or
upon the Redemption Date, if applicable, without surrender thereof.
(b) If, after the delivery of a replacement Note or payment in respect of a
destroyed, lost or stolen Note pursuant to subsection (a), a bona fide purchaser
of the original Note in lieu of which such replacement Note was issued presents
for payment such original Note, the Issuer and the Indenture Trustee shall be
entitled to recover such replacement Note (or such payment) from (i) any Person
to whom it was delivered, (ii) the Person taking such replacement Note from the
Person to whom such replacement Note was delivered; or (iii) any assignee of
such Person, except a bona fide purchaser, and the Issuer and the Indenture
Trustee shall be entitled to recover upon the security or indemnity provided
therefor to the extent of any loss, damage, cost or expense incurred by the
Issuer or the Indenture Trustee in connection therewith.
(c) In connection with the issuance of any replacement Note under this
Section 2.5, the Issuer may require the payment by the Holder of such Note of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other reasonable expenses (including all fees and
expenses of the Indenture Trustee) connected therewith.
(d) Any duplicate Note issued pursuant to this Section 2.5 in replacement
for any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be found at any time or be enforced by any
Person, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
(e) The provisions of this Section 2.5 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.6 Persons Deemed Noteholders. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee and any
agent of the Issuer or the Indenture Trustee may treat the Person in whose name
any Note is registered (as of the day of determination) as the Noteholder for
the purpose of receiving payments of principal of and interest on such Note and
for all other purposes whatsoever, whether or not such Note be overdue, and
neither the Issuer, the Indenture Trustee nor any agent of the Issuer or the
Indenture Trustee shall be affected by notice to the contrary.
SECTION 2.7 Payment of Principal and Interest.
(a) Interest on the Notes shall accrue in the manner set forth in the form
of the Class A Notes set forth in Exhibit A at the Class A Rate, and such
interest shall be payable on each Distribution Date as specified in the form of
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Class A Note set forth in Exhibit A. Any interest payable on any Note shall be
punctually paid or duly provided for by a deposit by or at the direction of the
Issuer into the Note Distribution Account on the applicable Distribution Date
and shall be paid to the Person in whose name such Note (or one or more
Predecessor Notes) is registered on the applicable Record Date, by check mailed
first-class, postage prepaid to such Person's address as it appears on the Note
Register on such Record Date; provided, however, that, unless and until
Definitive Notes have been issued pursuant to Section 2.12, with respect to
Notes registered on the applicable Record Date in the name of the Depository
(initially, Cede & Co.), payment shall be made by wire transfer in immediately
available funds to the account designated by the Depository.
(b) Prior to the occurrence of an Event of Default and a declaration in
accordance with Section 5.2 that the Notes have become immediately due and
payable, the outstanding principal of the Notes shall be payable in full on the
Class A Final Scheduled Distribution Date and, to the extent of funds available
therefor, in installments on the Distribution Dates (if any) preceding the Class
A Final Scheduled Distribution Date, in accordance with Section 8.2(c). All
principal payments on the Notes shall be made pro rata to the Noteholders
entitled thereto. Any principal payable on any Note shall be punctually paid or
duly provided for by a deposit by or at the direction of the Issuer into the
Note Distribution Account on the applicable Distribution Date and shall be paid
to the Person in whose name such Note (or one or more Predecessor Notes) is
registered on the applicable Record Date, by check mailed first-class, postage
prepaid to such Person's address as it appears on the Note Register on such
Record Date; provided, however, that, unless and until Definitive Notes have
been issued pursuant to Section 2.12, with respect to Notes registered on the
Record Date in the name of the Depository (initially, Cede & Co.), payment shall
be made by wire transfer in immediately available funds to the account
designated by the Depository, except for: (i) the final installment of principal
on any Note; and (ii) the Redemption Price (as hereinafter defined) for any
Notes, if so called, which, in each case, shall be payable as provided herein.
The funds represented by any such checks in respect of interest or principal
returned undelivered shall be held in accordance with Section 3.3.
(c) The entire unpaid principal amount of the Notes shall be due and
payable, if not previously paid, if:
(i) an Event of Default shall have occurred and be continuing; and
(ii) the Indenture Trustee or the Noteholders representing not less
than a majority of the aggregate outstanding principal amount of the Notes
have declared the Notes to be immediately due and payable in the manner
provided in Section 5.2.
(d) If the Issuer defaults in a payment of interest on the Notes, the
Issuer shall pay defaulted interest at the Class A Rate in any lawful manner.
The Issuer may pay such defaulted interest to the Persons who are Noteholders on
a subsequent special record date, which date shall be at least five Business
Days prior to the payment date. The Issuer shall fix or cause to be fixed any
such special record date and payment date, and, at least 15 days before any such
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special record date, the Issuer shall mail to each Noteholder and the Trustee a
notice that states the special record date, the payment date and the amount of
defaulted interest to be paid.
(e) With respect to any Distribution Date on which the final installment of
principal and interest on the Notes is to be paid, the Indenture Trustee shall
notify each Noteholder of record as of the Record Date for such Distribution
Date of the fact that the final installment of principal of and interest on such
Note is to be paid on such Distribution Date. Such notice shall be sent (i) on
such Record Date by facsimile, if Book-Entry Notes are outstanding; or (ii) not
later than three Business Days after such Record Date in accordance with Section
11.5(a) if Definitive Notes are outstanding, and shall specify that such final
installment shall be payable only upon presentation and surrender of such Note
and shall specify the place where such Note may be presented and surrendered for
payment of such installment. Notices in connection with redemptions of Notes
shall be mailed to Noteholders as provided in Section 10.2.
SECTION 2.8 Cancellation of Notes. All Notes surrendered for payment,
redemption, exchange or registration of transfer shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall be promptly canceled by the Indenture Trustee. The Issuer may at any
time deliver to the Indenture Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly canceled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for
any Notes canceled as provided in this Section 2.8, except as expressly
permitted by this Indenture. All canceled Notes may be held or disposed of by
the Indenture Trustee in accordance with its standard retention or disposal
policy as in effect at the time unless the Issuer shall direct by an Issuer
Order that they be destroyed or returned to it; provided, however, that such
Issuer Order is timely and the Notes have not been previously disposed of by the
Indenture Trustee.
SECTION 2.9 Release of Collateral. Subject to Section 11.1, the Indenture
Trustee shall release property from the lien of this Indenture only upon receipt
of an Issuer Request accompanied by an Officers' Certificate, an Opinion of
Counsel and Independent Certificates in accordance with TIA ss.ss.314(c) and
314(d)(1) or an Opinion of Counsel in lieu of such Independent Certificates to
the effect that the TIA does not require any such Independent Certificates.
SECTION 2.10 Book-Entry Notes. The Notes, upon original issuance, shall be
issued in the form of a typewritten Note or Notes representing the Book-Entry
Notes, to be delivered to The Depository Trust Company, the initial Depository
by or on behalf of the Issuer. Such Note or Notes shall be registered on the
Note Register in the name of the Depository, and no Note Owner shall receive a
Definitive Note representing such Note Owner's interest in such Note, except as
provided in Section 2.12. Unless and until the Definitive Notes have been issued
to Note Owners pursuant to Section 2.12:
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(a) the provisions of this Section 2.10 shall be in full force and
effect;
(b) the Note Registrar and the Indenture Trustee shall be entitled to
deal with the Depository for all purposes of this Indenture (including the
payment of principal of and interest on the Notes and the giving of
instructions or directions hereunder) as the sole holder of the Notes and
shall have no obligation to the Note Owners;
(c) to the extent that the provisions of this Section 2.10 conflict
with any other provisions of this Indenture, the provisions of this Section
2.10 shall control;
(d) the rights of the Note Owners shall be exercised only through the
Depository and shall be limited to those established by law and agreements
between such Note Owners and the Depository and/or the Depository
Participants. Unless and until Definitive Notes are issued pursuant to
Section 2.12, the initial Depository shall make book-entry transfers
between the Depository Participants and receive and transmit payments of
principal of and interest on the Notes to such Depository Participants,
pursuant to the Depository Agreement; and
(e) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Holders of Notes evidencing a
specified percentage of the aggregate outstanding principal amount of the
Notes, the Depository shall be deemed to represent such percentage only to
the extent that it has (i) received instructions to such effect from Note
Owners and/or Depository Participants owning or representing, respectively,
such required percentage of the beneficial interest in the Notes; and (ii)
has delivered such instructions to the Indenture Trustee.
SECTION 2.11 Notices to Depository. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Note Owners pursuant to Section
2.12, the Indenture Trustee shall give all such notices and communications
specified herein to be given to Noteholders to the Depository and shall have no
obligation to the Note Owners.
SECTION 2.12 Definitive Notes.
If (i) the Servicer advises the Indenture Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities with respect to the Notes and the Issuer is unable to locate a
qualified successor; (ii) the Servicer, at its option, advises the Indenture
Trustee in writing that it elects to terminate the book-entry system through the
Depository; or (iii) after the occurrence of an Event of Default or an Event of
Termination, Note Owners representing beneficial interests aggregating at least
a majority of the aggregate outstanding principal amount of the Notes advise the
Depository in writing that the continuation of a book-entry system through the
Depository is no longer in the best interests of the Note Owners, then the
Depository shall notify all Note Owners and the Indenture Trustee of the
occurrence of any such event and the Depository shall, after being informed by
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the Indenture Trustee, notify the Note Owners of the availability of Definitive
Notes to Note Owners requesting the same. Upon surrender to the Indenture
Trustee of the typewritten Note or Notes representing the Book-Entry Notes by
the Depository, accompanied by registration instructions, the Issuer shall
execute and the Indenture Trustee shall authenticate the Definitive Notes in
accordance with the instructions of the Depository. None of the Issuer, the
Servicer, the Note Registrar or the Indenture Trustee shall be liable for any
delay in delivery of such instructions and may conclusively rely on, and shall
be protected in relying on, such instructions. Upon the issuance of Definitive
Notes, the Indenture Trustee shall recognize the Holders of the Definitive Notes
as Noteholders.
SECTION 2.13 Seller as Noteholder. The Seller in its individual or any
other capacity may become the owner or pledgee of the Notes and may otherwise
deal with the Issuer or its affiliates with the same rights it would have if it
were not the Seller.
SECTION 2.14 Tax Treatment. The Issuer and the Indenture Trustee, by
entering into this Indenture, and the Noteholders, by acquiring any Note or
interest therein, (i) express their intention that the Notes qualify under
applicable tax law as indebtedness secured by the Contracts, and (ii) unless
otherwise required by appropriate taxing authorities, agree to treat the Notes
as indebtedness secured by the Contracts for the purpose of federal income
taxes, state and local income and franchise taxes, and any other taxes imposed
upon, measured by or based upon gross or net income.
ARTICLE III
COVENANTS
SECTION 3.1 Payment of Principal and Interest. The Issuer shall duly and
punctually pay the principal of and interest on the Notes in accordance with the
terms of the Notes and this Indenture. On each Distribution Date and on the
Redemption Date (if applicable), the Issuer shall cause amounts on deposit in
the Note Distribution Account to be distributed to the Noteholders in accordance
with Sections 2.7 and 8.2, less amounts properly withheld under the Code by any
Person from a payment to any Noteholder of interest and/or principal. Any
amounts so withheld shall be considered as having been paid by the Issuer to
such Noteholder for all purposes of this Indenture.
SECTION 3.2 Maintenance of Agency Office. As long as any of the Notes
remains outstanding, the Issuer shall maintain in the Borough of Manhattan, the
City of New York, an office (the "Agency Office"), being an office or agency
where Notes may be surrendered to the Issuer for registration of transfer or
exchange, and where notices and demands to or upon the Issuer in respect of the
Notes and this Indenture may be served. The Issuer hereby initially appoints the
Indenture Trustee to serve as its agent for the foregoing purposes. The Issuer
shall give prompt written notice to the Indenture Trustee of the location, and
of any change in the location, of any such office or agency. If at any time the
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Issuer shall fail to maintain any such office or agency or shall fail to furnish
the Indenture Trustee with the address thereof, such surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Indenture
Trustee, and the Issuer hereby appoints the Indenture Trustee as its agent to
receive all such surrenders, notices and demands.
SECTION 3.3 Money for Payments To Be Held in Trust.
(a) As provided in Section 8.2(a) and (b), all payments of amounts due and
payable with respect to any Notes that are to be made from amounts withdrawn
from the Note Distribution Account pursuant to Section 8.2(c) shall be made on
behalf of the Issuer by the Indenture Trustee or by another Paying Agent, and no
amounts so withdrawn from the Note Distribution Account for payments of Notes
shall be paid over to the Issuer except as provided in this Section 3.3.
(b) On or before each Distribution Date or the Redemption Date (if
applicable), the Issuer shall deposit or cause to be deposited in the Note
Distribution Account an aggregate sum sufficient to pay the amounts then
becoming due with respect to the Notes, such sum to be held in trust for the
benefit of the Persons entitled thereto and (unless the Paying Agent is the
Indenture Trustee) shall promptly notify the Indenture Trustee of its action or
failure so to act.
(c) The Issuer shall cause each Paying Agent other than the Indenture
Trustee to execute and deliver to the Indenture Trustee an instrument in which
such Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of
this Section 3.3, that such Paying Agent shall:
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and pay such sums to such Persons as herein provided;
(ii) give the Indenture Trustee notice of any default by the Issuer
(or any other obligor upon the Notes) of which it has actual knowledge in
the making of any payment required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default, upon the
written request of the Indenture Trustee, forthwith pay to the Indenture
Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of Notes if
at any time it ceases to meet the standards required to be met by a Paying
Agent in effect at the time of determination; and
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(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith.
(d) The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
(e) Subject to applicable laws with respect to escheat of funds, any money
held by the Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for one year
after such amount has become due and payable shall be discharged from such trust
and be paid to the Issuer on Issuer Request; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Indenture Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; provided, however, that the Indenture
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Issuer cause to be published once, in a newspaper
published in the English language, customarily published on each Business Day
and of general circulation in the City of New York, notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such publication, any unclaimed balance of
such money then remaining shall be repaid to the Issuer. The Indenture Trustee
may also adopt and employ, at the expense of the Issuer, any other reasonable
means of notification of such repayment (including, but not limited to, mailing
notice of such repayment to Holders whose Notes have been called but have not
been surrendered for redemption or whose right to or interest in monies due and
payable but not claimed is determinable from the records of the Indenture
Trustee or of any Paying Agent, at the last address of record for each such
Holder).
SECTION 3.4 Existence. Subject to Section 3.10, the Issuer shall keep in
full effect its existence, rights and franchises as a business trust under the
laws of the State of Delaware and shall obtain and preserve its qualification to
do business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Indenture, the
Notes, the Collateral and each other instrument or agreement included in the
Trust Estate.
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SECTION 3.5 Protection of Trust Estate; Acknowledgment of Pledge.
The Issuer shall from time to time execute and deliver all such supplements
and amendments hereto and all such financing statements, continuation
statements, instruments of further assurance and other instruments, and shall
take such other action necessary or advisable to:
(i) maintain or preserve the lien and security interest (and the priority
thereof) of this Indenture or carry out more effectively the purposes hereof;
(ii) perfect, publish notice of or protect the validity of any Grant made
or to be made by this Indenture;
(iii) enforce any rights under this Indenture against the Collateral; or
preserve and defend title to the Trust Estate and the rights of the Indenture
Trustee and the Noteholders in such Trust Estate against the claims of all
persons and parties, and the Issuer hereby designates the Indenture Trustee its
agent and attorney-in-fact to execute any financing statement, continuation
statement or other instrument required by the Indenture Trustee pursuant to this
Section 3.5.
SECTION 3.6 Opinions as to Trust Estate.
(a) On the Closing Date, the Issuer shall furnish to the Indenture Trustee
an Opinion of Counsel either stating that, in the opinion of such counsel, such
action has been taken with respect to the recording and filing of this
Indenture, any indentures supplemental hereto and any other requisite documents,
and with respect to the execution and filing of any financing statements and
continuation statements as are necessary to perfect and make effective the lien
and security interest of this Indenture and reciting the details of such action,
or stating that, in the opinion of such counsel, no such action is necessary to
make such lien and security interest effective.
(b) On or before April 15 in each calendar year, beginning April 15, 1996,
the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel either
stating that, in the opinion of such counsel, such action has been taken with
respect to the recording, filing, re-recording and refiling of this Indenture,
any indentures supplemental hereto and any other requisite documents and with
respect to the execution and filing of any financing statements and continuation
statements as is necessary to maintain the lien and security interest created by
this Indenture and reciting the details of such action or stating that in the
opinion of such counsel no such action is necessary to maintain the lien and
security interest created by this Indenture. Such Opinion of Counsel shall also
describe the recording, filing, re-recording and refiling of this Indenture, any
indentures supplemental hereto and any other requisite documents and the
execution and filing of any financing statements and continuation statements
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that will, in the opinion of such counsel, be required to maintain the lien and
security interest of this Indenture until April 15 in the following calendar
year.
SECTION 3.7 Performance of Obligations; Servicing of Contracts.
(a) The Issuer shall not take any action and shall use its reasonable
efforts not to permit any action to be taken by others that would release any
Person from any of such Person's material covenants or obligations under any
instrument or agreement included in the Trust Estate or that would result in the
amendment, hypothecation, subordination, termination or discharge of, or impair
the validity or effectiveness of, any such instrument or agreement, except as
otherwise expressly provided in this Indenture, the Sale and Servicing Agreement
or such other instrument or agreement.
(b) Issuer may contract with other Persons to assist it in performing its
duties under this Indenture, and any performance of such duties by a Person
identified to the Indenture Trustee in the Basic Documents or an Officers'
Certificate of the Issuer shall be deemed to be action taken by the Issuer.
Initially, the Issuer has contracted with the Servicer to assist the Issuer in
performing its duties under this Indenture.
(c) Issuer shall punctually perform and observe all of its obligations and
agreements contained in this Indenture, the Basic Documents and in the
instruments and agreements included in the Trust Estate, including but not
limited to filing or causing to be filed all UCC financing statements and
continuation statements required to be filed by the terms of this Indenture, the
Sale and Servicing Agreement and the Purchase Agreement in accordance with and
within the time periods provided for herein and therein.
(d) If the Issuer shall have knowledge of the occurrence of an Event of
Termination under the Sale and Servicing Agreement, the Issuer shall promptly
notify the Indenture Trustee and the Rating Agencies thereof, and shall specify
in such notice the response or action, if any, the Issuer has taken or is taking
with respect to such default. If an Event of Termination shall arise from the
failure of the Servicer to perform any of its duties or obligations under the
Sale and Servicing Agreement with respect to the Contracts, the Issuer and the
Indenture Trustee shall take all reasonable steps available to them pursuant to
the Sale and Servicing Agreement to remedy such failure or to effect a Service
Transfer pursuant to the Sale and Servicing Agreement.
Without derogating from the absolute nature of the assignment granted to the
Indenture Trustee under this Indenture or the rights of the Indenture Trustee
hereunder, the Issuer agrees that it shall not, without the prior written
consent of the Indenture Trustee or the Holders of at least a majority in
aggregate outstanding principal amount of the Notes, as applicable in accordance
with the terms thereof, amend, modify, waive, supplement, terminate or
surrender, or agree to any amendment, modification, supplement, termination,
waiver or surrender of, the terms of any Collateral or any of the Basic
Documents (other than the Cash Collateral Agreement), or waive timely
performance or observance by the Servicer or the Seller under the Sale and
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Servicing Agreement, a Subsequent Purchase Agreement, a Subsequent Transfer
Agreement or the Purchase Agreement. If any such amendment, modification,
supplement or waiver shall be so consented to by the Indenture Trustee or such
Holders, as applicable, the Issuer agrees, promptly following a request by the
Indenture Trustee to do so, to execute and deliver, in its own name and at its
own expense, such agreements, instruments, consents and other documents as the
Indenture Trustee may deem necessary or appropriate in the circumstances.
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SECTION 3.8 Negative Covenants. So long as any Notes are outstanding, the
Issuer shall not:
(a) sell, transfer, exchange or otherwise dispose of any of the properties
or assets of the Issuer, except the Issuer may (i) collect, liquidate, sell or
otherwise dispose of Contracts (including Repurchased Contracts and Liquidated
Contracts) and Financed Vehicles, (ii) make cash payments out of the Designated
Accounts and (iii) take other actions, in each case as contemplated by the Basic
Documents;
(b) claim any credit on, or make any deduction from the principal or
interest payable in respect of the Notes (other than amounts properly withheld
from such payments under the Code or applicable state law) or assert any claim
against any present or former Noteholder by reason of the payment of the taxes
levied or assessed upon any part of the Trust Estate;
(c) voluntarily commence any insolvency, readjustment of debt, marshalling
of assets and liabilities or other proceeding, or apply for an order by a court
or agency or supervisory authority for the winding-up or liquidation of its
affairs or any other event specified in Section 5.1(e); or
(d) either (i) permit the validity or effectiveness of this Indenture to be
impaired, or permit the Lien of this 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 Notes under this Indenture
except as may be expressly permitted hereby, (ii) permit any Lien or other
encumbrance (other than the Lien of this Indenture) to be created on or extend
to or otherwise arise upon or burden the Trust Estate or any part thereof or any
interest therein or the proceeds thereof (other than tax liens, mechanics' liens
and other liens that arise by operation of law, in each case on a Financed
Vehicle and arising solely as a result of an action or omission of the related
Obligor) or (iii) permit the Lien of this Indenture not to constitute a valid
first priority security interest in the Trust Estate (other than with respect to
any such tax, mechanics' or other Lien).
SECTION 3.9 Annual Statement as to Compliance. The Issuer shall deliver to
the Indenture Trustee, on or before April 15 of each year, beginning April 15,
1996, and otherwise in compliance with Section 314(a)(4) of the TIA, an
Officer's Certificate signed by an Authorized Officer, dated as of April 15 of
such year, stating that a review of the activities of the Issuer during such
fiscal year and of performance under this Indenture has been made and, to the
best of such Authorized Officer's knowledge, based on such review, the Issuer
has fulfilled all of its obligations under this Indenture throughout such year,
or, if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such Authorized Officer and the nature and
status thereof. A copy of such certificate may be obtained by any Noteholder by
a request in writing to the Issuer addressed to the Corporate Trust Office of
the Indenture Trustee.
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SECTION 3.10 Consolidation, Merger, etc. of Issuer; Disposition of Trust
Assets.
(a) The Issuer shall not consolidate or merge with or into any other
Person, unless:
(i) the Person (if other than the Issuer) formed by or surviving such
consolidation or merger shall be a Person organized and existing under the
laws of the United States of America or any State or the District of
Columbia and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Indenture Trustee, in form satisfactory to
the Indenture Trustee, the due and timely payment of the principal of and
interest on all Notes and the performance or observance of every agreement
and covenant of this Indenture on the part of the Issuer to be performed or
observed, all as provided herein;
(ii) immediately after giving effect to such merger or consolidation,
no Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction and such Person;
(iv) any action as is necessary to maintain the Lien created by this
Indenture shall have been taken; and
(v) the Issuer shall have delivered to the Indenture Trustee an
Officers' Certificate and an Opinion of Counsel addressed to the Issuer,
each stating:
(A) that such consolidation or merger and such supplemental
indenture comply with this Section 3.10;
(B) that such consolidation or merger and such supplemental
indenture shall have no material adverse tax consequence to the Trust
or any Noteholder or Certificateholder; and
(C) that such consolidation or merger and such supplemental
indenture comply with this Section 3.10;
(D) that all conditions precedent herein provided for in this
Section 3.10 have been complied with, which shall include any filing
required by the Exchange Act.
(b) Except as otherwise expressly permitted by this Indenture or the other
Basic Documents, the Issuer shall not sell, convey, exchange, transfer or
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otherwise dispose of any of its properties or assets (other than the Excluded
Assets), including those included in the Trust Estate, to any Person unless:
(i) the Person that acquires such properties or assets of the Issuer
(A) shall be a United States citizen or a Person organized and existing
under the laws of the United States of America or any State or the District
of Columbia and (B) by an indenture supplemental hereto, executed and
delivered to the Indenture Trustee, in form satisfactory to the Indenture
Trustee:
(1) expressly assumes the due and punctual payment of the
principal of and interest on all Notes and the performance or
observance of every agreement and covenant of this Indenture on the
part of the Issuer to be performed or observed, all as provided
herein;
(2) expressly agrees that all right, title and interest so sold,
conveyed, exchanged, transferred or otherwise disposed of shall be
subject and subordinate to the rights of Noteholders;
(3) unless otherwise provided in such supplemental indenture,
expressly agrees to indemnify, defend and hold harmless the Issuer
against and from any loss, liability or expense arising under or
related to this Indenture and the Notes; and
(4) expressly agrees that such Person (or if a group of Persons,
then one specified Person) shall make all filings with the Commission
(and any other appropriate Person) required by the Exchange Act in
connection with the Notes;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction and such Person;
(iv) any action as is necessary to maintain the Lien created by this
Indenture shall have been taken: and
(v) the Issuer shall have delivered to the Indenture Trustee an
Officers' Certificate and an Opinion of Counsel addressed to the Issuer,
each stating that:
(A) such sale, conveyance, exchange, transfer or disposition and
such supplemental indenture comply with this Section 3.10;
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(B) such sale, conveyance, exchange, transfer or disposition and
such supplemental indenture has no material adverse tax consequence to
the Trust or to any Noteholders or Certificateholders; and
(C) that all conditions precedent herein provided for in this
Section 3.10 have been complied with, which shall include any filing
required by the Exchange Act.
SECTION 3.11 Successor or Transferee.
(a) Upon any consolidation or merger of the Issuer in accordance with
Section 3.10(a), the Person formed by or surviving such consolidation or merger
(if other than the Issuer) shall succeed to, and be substituted for, and may
exercise every right and power of, the Issuer under this Indenture with the same
effect as if such Person had been named as the Issuer herein.
(b) Upon a sale, conveyance, exchange, transfer or disposition of all the
assets and properties of the Issuer pursuant to Section 3.10(b), the Trust shall
be released from every covenant and agreement of this Indenture to be observed
or performed on the part of the Issuer with respect to the Notes immediately
upon the delivery of written notice to the Indenture Trustee from the Person
acquiring such assets and properties stating that the Trust is to be so
released.
SECTION 3.12 No Other Business. The Issuer shall not engage in any business
or activity other than acquiring, holding and managing the Contracts, the other
assets of the Trust Estate, and the Excluded Assets and the proceeds therefrom
in the manner contemplated by the Basic Documents, issuing the Notes and the
Certificates, making payments on the Notes and the Certificates and such other
activities that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto, as set forth in Section 2.3 of the Trust
Agreement.
SECTION 3.13 No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness for money borrowed other than indebtedness for money borrowed in
respect of the Notes or in accordance with the Basic Documents.
SECTION 3.14 Guarantees, Loans, Advances and Other Liabilities. Except as
contemplated by this Indenture or the other Basic Documents, the Issuer shall
not make any loan or advance or credit to, or guarantee (directly or indirectly
or by an instrument having the effect of assuring another's payment or
performance on any obligation or capability of so doing or otherwise), endorse
or otherwise become contingently liable, directly or indirectly, in connection
with the obligations, stocks or dividends of, or own, purchase, repurchase or
acquire (or agree contingently to do so) any stock, obligations, assets or
securities of, or any other interest in, or make any capital contribution to,
any other Person.
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SECTION 3.15 Servicer's Obligations. The Issuer shall use its best efforts
to cause the Servicer to comply with its obligations under the Sale and
Servicing Agreement.
SECTION 3.16 Capital Expenditures. The Issuer shall not make any
expenditure (whether by long-term or operating lease or otherwise) for capital
assets (either real, personal or intangible property) other than the purchase of
the Contracts and other property and rights from the Seller pursuant to the
Basic Documents.
SECTION 3.17 Removal of Servicer. So long as any Notes are outstanding, the
Issuer shall not remove the Servicer without cause unless the Rating Agency
Condition shall have been satisfied in connection with such removal.
SECTION 3.18 Restricted Payments. Except for payments of principal or
interest on or redemption of the Notes and except as expressly provided in the
Basic Documents, so long as any Notes are outstanding, the Issuer shall not,
directly or indirectly:
(a) pay any dividend or make any distribution (by reduction of capital
or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise, in each case with respect to any ownership or equity
interest or similar security in or of the Issuer or to the Servicer;
(b) redeem, purchase, retire or otherwise acquire for value any such
ownership or equity interest or similar security; or
(c) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Issuer may make, or cause to be made, distributions
to the Servicer, the Owner Trustee, the Cash Collateral Depositor (and any
successor in interest thereto), the holder of the GP Interest and the
Certificateholders as permitted by, and to the extent funds are available for
such purpose under, the Sale and Servicing Agreement, the Cash Collateral
Agreement or the Trust Agreement. The Issuer shall not, directly or indirectly,
make payments to or distributions from the Collection Account except in
accordance with the Basic Documents.
SECTION 3.19 Notice of Events of Default. The Issuer agrees to give the
Indenture Trustee and the Rating Agencies prompt written notice of each Event of
Default hereunder, each Event of Termination, any Insolvency Event with respect
to the Affiliated Purchaser, each default on the part of the Seller or the
Servicer of their obligations under the Basic Documents.
SECTION 3.20 Further Instruments and Acts. Upon request of the Indenture
Trustee, the Issuer shall execute and deliver such further instruments and do
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such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 3.21 Representations and Warranties by the Issuer to the Indenture
Trustee. The Issuer hereby represents and warrants to the Indenture Trustee as
follows:
(a) Good Title. No Contract has been sold, transferred, assigned or pledged
by the Trust to any Person other than the Indenture Trustee; immediately prior
to the conveyance of the Contracts pursuant to this Indenture, the Trust had
good and marketable title thereto, free of any Lien; and, upon execution and
delivery of this Indenture by the Trust, the Indenture Trustee shall have all of
the right, title and interest of the Trust in, to and under the Contracts, the
unpaid indebtedness evidenced thereby and the collateral security therefor, free
of any Lien; and
(b) All Filings Made. All filings (including, without limitation, UCC
filings) necessary in any jurisdiction to give the Indenture Trustee a first
perfected ownership interest in the Contracts shall have been made.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1 Satisfaction and Discharge of Indenture. This Indenture shall
cease to be of further effect with respect to the Notes except as to: (i) rights
of registration of transfer and exchange; (ii) substitution of mutilated,
destroyed, lost or stolen Notes; (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon; (iv) Sections 3.3, 3.4, 3.5, 3.8,
3.10, 3.12, 3.13, 3.19 and 3.21; (v) the rights, obligations and immunities of
the Indenture Trustee hereunder (including the rights of the Indenture Trustee
under Section 6.7 and the obligations of the Indenture Trustee under Sections
4.2 and 4.4); and (vi) the rights of Noteholders as beneficiaries hereof with
respect to the property so deposited with the Indenture Trustee payable to all
or any of them, and the Indenture Trustee, on demand of and at the expense of
the Issuer, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture with respect to the Notes, if:
(a) either:
(1) all Notes theretofore authenticated and delivered (other than (A)
Notes that have been destroyed, lost or stolen and that have been replaced
or paid as provided in Section 2.5 and (B) Notes for whose payment money
has theretofore been deposited in trust or segregated and held in trust by
the Issuer and thereafter repaid to the Issuer or discharged from such
trust, as provided in Section 3.3) have been delivered to the Indenture
Trustee for cancellation: or
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(2) all Notes not theretofore delivered to the Indenture Trustee for
cancellation:
(A) have become due and payable,
(B) will be due and payable on the Class A Final Scheduled
Distribution Date within one year, or
(C) are to be called for redemption within one year under
arrangements satisfactory to the Indenture Trustee for the giving of
notice of redemption by the Indenture Trustee in the name, and at the
expense, of the Issuer,
and the Issuer, in the case of (A), (B) or (C) of subsection 4.1(a)(2)
above, has irrevocably deposited or caused to be irrevocably deposited with the
Indenture Trustee cash or direct obligations of or obligations guaranteed by the
United States of America (which will mature prior to the date such amounts are
payable), in trust for such purpose, in an amount sufficient to pay and
discharge the entire unpaid principal and accrued interest on such Notes not
theretofore delivered to the Indenture Trustee for cancellation when due on the
Class A Final Scheduled Distribution Date for such Notes or the Redemption Date
for such Notes (if such Notes have been called for redemption pursuant to
Section 10.1(a)(i) or (ii), or Section 10.1(b)), as the case may be;
(b) the Issuer has paid or caused to be paid all other sums payable
hereunder by the Issuer; and
(c) the Issuer has delivered to the Indenture Trustee an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA or the Indenture
Trustee) an Independent Certificate from a firm of certified public accountants,
each meeting the applicable requirements of Section 11.1(a) and each stating
that all conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
SECTION 4.2 Application of Trust Money. All monies deposited with the
Indenture Trustee pursuant to Section 4.1 shall be held in trust and applied by
it, in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent, as the Indenture Trustee
may determine, to the Holders of the particular Notes for the payment or
redemption of which such monies have been deposited with the Indenture Trustee,
of all sums due and to become due thereon for principal and interest; but such
monies need not be segregated from other funds except to the extent required
herein or in the Sale and Servicing Agreement or required by law.
SECTION 4.3 Repayment of Monies Held by Paying Agent. In connection with
the satisfaction and discharge of this Indenture with respect to the Notes, all
monies then held by any Paying Agent other than the Indenture Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
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the Issuer, be paid to the Indenture Trustee to be held and applied according to
Section 3.3 and thereupon such Paying Agent shall be released from all further
liability with respect to such monies.
SECTION 4.4 Duration of Position of Indenture Trustee. Notwithstanding the
earlier payment in full of all principal and interest due to the Noteholders
under the terms of the Notes and the cancellation of the Notes pursuant to
Section 3.1, the Indenture Trustee shall continue to act in the capacity as
Indenture Trustee hereunder and, for the benefit of the Certificateholders,
shall comply with its obligations under the Basic Documents, as appropriate,
until such time as all payments in respect of Certificate Balance and interest
due to the Certificateholders have been paid in full.
ARTICLE V
DEFAULT AND REMEDIES
SECTION 5.1 Events of Default. For the purposes of this Indenture, "Event
of Default" wherever used herein, means any one of the following events:
(a) failure to pay any interest on any Note as and when the same becomes
due and payable, and such default shall continue for a period of five (5) days;
or
(b) except as set forth in Section 5.1(c), failure to pay any installment
of the principal of any Note as and when the same becomes due and payable, and
such default continues unremedied for a period of thirty (30) days after there
shall have been given, by registered or certified mail, written notice thereof
to the Servicer by the Indenture Trustee or to the Servicer and the Indenture
Trustee by the Holders of not less than 25% of the outstanding principal balance
of the Notes; or
(c) failure to pay in full the outstanding principal balance of the Notes
on or prior to the Class A Final Scheduled Distribution Date; or
(d) default in the observance or performance in any material respect of any
covenant or agreement of the Issuer made in this Indenture (other than a
covenant or agreement for payment of principal or interest) which failure
materially and adversely affects the rights of the Noteholders, and such default
shall continue or not be cured, for a period of 30 days after there shall have
been given, by registered or certified mail, 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 at least 25% of the outstanding principal balance of the Notes, a written
notice specifying such default and requiring it to be remedied and stating that
such notice is a "Notice of Default" hereunder; or
(e) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial part of
the Trust Estate in an involuntary case under any applicable federal or state
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bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Issuer or for any substantial part of the Trust Estate,
or ordering the winding-up or liquidation of the Issuer's affairs, and such
decree or order shall remain unstayed and in effect for a period of 90
consecutive days; or
(f) the commencement by the Issuer of a voluntary case under any applicable
federal or state bankruptcy, insolvency or other similar law now or hereafter in
effect, or the consent by the Issuer to the entry of an order for relief in an
involuntary case under any such law, or the consent by the Issuer to the
appointment or taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of the Issuer or for any substantial
part of the Trust Estate, or the making by the Issuer of any general assignment
for the benefit of creditors, or the failure by the Issuer generally to pay its
debts as such debts become due, or the taking of action by the Issuer in
furtherance of any of the foregoing.
The Issuer shall deliver to the Indenture Trustee, within five Business Days
after learning of the occurrence thereof, written notice in the form of an
Officer's Certificate of any event which with the giving of notice and the lapse
of time would become an Event of Default under Section 5.1(c), its status and
what action the Issuer is taking or proposes to take with respect thereto.
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment.
(a) If an Event of Default should occur and be continuing, then and in
every such case, unless the principal amount of the Notes shall have already
become due and payable, either the Indenture Trustee or the Holders of Notes
representing not less than a majority of the aggregate outstanding principal
amount of the Notes may declare all the Notes to be immediately due and payable,
by a notice in writing to the Issuer (and to the Indenture Trustee if given by
the Noteholders) setting forth the Event or Events of Default, and upon any such
declaration the unpaid principal amount of such Notes, together with accrued and
unpaid interest thereon through the date of acceleration, shall become
immediately due and payable.
(b) At any time after such declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee as hereinafter provided in this Article V, the
Holders of Notes representing a majority of the aggregate outstanding principal
amount of the Notes, by written notice to the Issuer and the Indenture Trustee,
may waive all Defaults set forth in the notice delivered pursuant to Section
5.2(a), and rescind and annul such declaration and its consequences if:
(i) the Issuer has paid or deposited with the Indenture Trustee a sum
sufficient to pay
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(A) all payments of principal of and interest on all Notes and
all other amounts that would then be due hereunder or upon such Notes
if the Event of Default giving rise to such acceleration had not
occurred; and
(B) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee and its agents and counsel; and
(ii) all Events of Default, other than the nonpayment of the principal
of the Notes that has become due solely by such acceleration, have been
cured or waived as provided herein;
provided, that no such rescission and annulment shall extend to or affect any
subsequent default or impair any right consequent thereto; and provided further,
that if the Indenture Trustee shall have proceeded to enforce any right under
this Indenture and such proceedings shall have been discontinued or abandoned
because of such rescission and annulment or for any other reason, or shall have
been determined adversely to the Indenture Trustee, then and in every such case,
the Indenture Trustee, the Issuer and the Noteholders, as the case may be, shall
be restored respectively to their former positions and rights hereunder, and all
rights, remedies and powers of the Indenture Trustee, the Issuer and the
Noteholders, as the case may be, shall continue as though no such proceedings
had been taken.
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.
(a) The Issuer covenants that if an Event of Default occurs and is
continuing under Sections 5.1(a), 5.1(b) or 5.1(c) of this Indenture, then the
Issuer shall, upon demand of the Indenture Trustee, pay to the Indenture
Trustee, for the ratable benefit of the Noteholders in accordance with their
respective outstanding principal amounts, the whole amount then due and payable
on such Notes for principal and interest, with interest upon the overdue
principal, at the rate borne by the Notes and in addition thereto such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Indenture Trustee and its agents and counsel.
(b) If the Issuer shall fail forthwith to pay such amounts upon such
demand, the Indenture Trustee, in its own name and as trustee of an express
trust, may institute a proceeding for the collection of the sums so due and
unpaid, and may prosecute such Proceeding to judgment or final decree, and may
enforce the same against the Issuer or other obligor upon such Notes and collect
in the manner provided by law out of the property of the Issuer or other obligor
upon such Notes, wherever situated, the monies adjudged or decreed to be
payable.
(c) If an Event of Default occurs and is continuing, the Indenture Trustee
may, as more particularly provided in Section 5.4, in its discretion, proceed to
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protect and enforce its rights and the rights of the Noteholders, by such
appropriate Proceedings as the Indenture Trustee shall deem most effective to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy or legal or equitable
right vested in the Indenture Trustee by this Indenture or by law.
(d) If there shall be pending, relative to the Issuer or any other obligor
upon the Notes or any Person having or claiming an ownership interest in the
Trust Estate, proceedings under Title 11 of the United States Code or any other
applicable federal or state bankruptcy, insolvency or other similar law, or if a
receiver, assignee or trustee in bankruptcy or reorganization, liquidator,
sequestrator or similar official shall have been appointed for or taken
possession of the Issuer or its property or such other obligor or Person, or in
case of any other comparable judicial Proceedings relative to the Issuer or
other obligor upon the Notes, or to the creditors or property of the Issuer or
such other obligor, the Indenture Trustee, irrespective of whether the principal
of any Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand pursuant to the provisions of this Section 5.3, shall be
entitled and empowered, by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes and to file
such other papers or documents as may be necessary or advisable in order to
have the claims of the Indenture Trustee (including any claim for
reasonable compensation to the Indenture Trustee and each predecessor
Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all advances
made, by the Indenture Trustee and each predecessor Trustee, except as a
result of negligence or bad faith) and of the Noteholders allowed in such
Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of Notes in any election of a trustee, a standby
trustee or Person performing similar functions in any such Proceedings;
(iii) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Noteholders and of the Indenture Trustee on
their behalf; and
(iv) to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Indenture
Trustee or the Holders of Notes allowed in any judicial proceedings
relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
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payments to the Indenture Trustee, and, if the Indenture Trustee shall consent
to the making of payments directly to such Noteholders, to pay to the Indenture
Trustee such amounts as shall be sufficient to cover reasonable compensation to
the Indenture Trustee, each predecessor Trustee and their respective agents,
attorneys and counsel, and all other expenses and liabilities incurred, and all
advances made, by the Indenture Trustee and each predecessor trustee except as a
result of negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial or other
Proceedings relative thereto, and any such Proceedings instituted by the
Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Trustee and their respective agents and attorneys, shall be for the ratable
benefit of the Noteholders.
(g) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Noteholders, and it shall not be necessary to make any
Noteholder a party to any such Proceedings.
SECTION 5.4 Remedies; Priorities.
(a) If an Event of Default shall have occurred and be continuing and the
Notes have been accelerated under Section 5.2(a), the Indenture Trustee may do
one or more of the following (subject to Section 5.5):
(i) institute Proceedings in its own name and as trustee of an express
trust for the collection of all amounts then payable on the Notes or under
this Indenture with respect thereto, whether by declaration of acceleration
or otherwise, enforce any judgment obtained, and collect from the Issuer
and any other obligor upon such Notes monies adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust Estate;
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(iii) exercise any remedies of a secured party under the UCC and take
any other appropriate action to protect and enforce the rights and remedies
of the Indenture Trustee and the Noteholders; and
(iv) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
provided, however, that the Indenture Trustee may not sell or otherwise
liquidate the Trust Estate following an Event of Default, unless (A) the Holders
of all of the aggregate outstanding principal amount of the Notes consent
thereto, (B) the proceeds of such sale or liquidation distributable to the
Noteholders are sufficient to discharge in full the principal of and the accrued
interest on the Notes at the date of such sale or liquidation or (C) the
Indenture Trustee determines that the Trust Estate will not continue to provide
sufficient funds for the payment of principal of and interest on the Notes as
and when they would have become due if the Notes had not been declared due and
payable, and the Indenture Trustee obtains the consent of Holders of a majority
of the aggregate outstanding principal amount of the Notes. In determining such
sufficiency or insufficiency with respect to clauses (B) and (C), the Indenture
Trustee may, but need not, obtain and rely upon an opinion of an Independent
investment banking or accounting firm of national reputation as to the
feasibility of such proposed action and as to the sufficiency of the Trust
Estate for such purpose.
(b) If the Indenture Trustee collects any money or property pursuant to
this Article V, it shall pay out the money or property in the following order:
FIRST: to the Indenture Trustee for any amounts due under Section 6.7;
SECOND: to Noteholders for amounts due and unpaid on the Notes for
principal, ratably among all Noteholders, without preference or priority of
any kind, according to the amounts due and payable on all the Notes for
principal;
THIRD: to Noteholders for amounts due and unpaid on the Notes for
interest, ratably among all Noteholders, without preference or priority of
any kind, according to the amounts due and payable on all the Notes for
interest;
FOURTH: to the Issuer for distribution to the Certificateholders for
amounts due and unpaid on the Certificates for interest, ratably among all
such Certificateholders, without preference or priority of any kind,
according to the amounts due and payable on all the Certificates for
interest;
FIFTH: to the Issuer for distribution to the Certificateholders for
amounts due and unpaid on the Certificates for principal, ratably among all
such Certificateholders, without preference or priority of any kind,
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according to the amounts due and payable on all the Certificates for
principal;
SIXTH: to the Issuer for distribution to the Cash Collateral Depositor
of amounts due to it under the Cash Collateral Agreement; and
SEVENTH: to the Issuer for distribution to the holder of the GP
Interest.
The Indenture Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section 5.4. At least 15 days before
such record date, the Indenture Trustee shall mail to each Noteholder and the
Indenture Trustee a notice that states the record date, the payment date and the
amount to be paid.
SECTION 5.5 Optional Preservation of the Contracts. If the Notes have been
declared to be due and payable under Section 5.2 following an Event of Default
and such declaration and its consequences have not been rescinded and annulled,
the Indenture Trustee may, but need not, elect to take and maintain possession
of the Trust Estate. It is the desire of the parties hereto and the Noteholders
that there be at all times sufficient funds for the payment of principal of and
interest on the Notes, and the Indenture Trustee shall take such desire into
account when determining whether or not to take and maintain possession of the
Trust Estate. In determining whether to take and maintain possession of the
Trust Estate, the Indenture Trustee may, but need not, obtain and rely upon an
opinion of an Independent investment banking or accounting firm of national
reputation as to the feasibility of such proposed action and as to the
sufficiency of the Trust Estate for such purpose.
SECTION 5.6 Limitation of Suits. No Holder of any Note shall have any right
to institute any Proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(i) such Holder has previously given written notice to the Indenture
Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the aggregate outstanding
principal amount of the Notes have made written request to the Indenture
Trustee to institute such Proceeding in respect of such Event of Default in
its own name as Indenture Trustee hereunder;
(iii) such Holder or Holders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in complying with such request;
(iv) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute such
Proceedings; and
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(v) no direction inconsistent with such written request has been given
to the Indenture Trustee during such 60-day period by the Holders of a
majority of the aggregate outstanding principal amount of the Notes;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders of Notes or to enforce any right under this Indenture, except
in the manner herein provided and for the equal, ratable and common benefit of
all holders of Notes. For the protection and enforcement of the provisions of
this Section 5.6, each and every Noteholder shall be entitled to such relief as
can be given either at law or in equity.
If the Indenture Trustee shall receive conflicting or inconsistent requests
and indemnity from two or more groups of Holders of Notes, each representing
less than a majority of the aggregate outstanding principal amount of the Notes,
the Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
SECTION 5.7 Unconditional Rights of Noteholders To Receive Principal and
Interest. Notwithstanding any other provisions in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest, on such Note on or after the
respective due dates thereof expressed in such Note or in this Indenture (or, in
the case of redemption, if applicable, on or after the Redemption Date) and to
institute suit for the enforcement of any such payment, and such right shall not
be impaired without the consent of such Holder.
SECTION 5.8 Restoration of Rights and Remedies. If the Indenture Trustee or
any Noteholder has instituted any Proceeding to enforce any right or remedy
under this Indenture and such Proceeding has been discontinued or abandoned for
any reason or has been determined adversely to the Indenture Trustee or to such
Noteholder, then and in every such case the Issuer, the Indenture Trustee and
the Noteholders shall, subject to any determination in such Proceeding, be
restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Indenture Trustee and the Noteholders
shall continue as though no such Proceeding had been instituted.
SECTION 5.9 Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
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SECTION 5.10 Delay or Omission Not a Waiver. No delay or omission of the
Indenture Trustee or any Holder of any Note to exercise any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by law
to the Indenture Trustee or to the Noteholders may be exercised from time to
time, and as often as may be deemed expedient, by the Indenture Trustee or by
the Noteholders, as the case may be.
SECTION 5.11 Control by Noteholders. The Holders of a majority of the
aggregate outstanding principal amount of the Notes shall, subject to provision
being made for indemnification against costs, expenses and liabilities in a form
satisfactory to the Indenture Trustee, have the right to direct the time, method
and place of conducting any Proceeding for any remedy available to the Indenture
Trustee with respect to the Notes or exercising any trust or power conferred on
the Indenture Trustee; provided, however, that:
(i) such direction shall not be in conflict with any rule of law or
with this Indenture;
(ii) subject to the express terms of Section 5.4, any direction to the
Indenture Trustee to sell or liquidate the Trust Estate shall be by the
Holders of Notes representing not less than 100% of the aggregate
outstanding principal amount of the Notes;
(iii) if the conditions set forth in Section 5.5 have been satisfied
and the Indenture Trustee elects to retain the Trust Estate pursuant to
Section 5.5, then any direction to the Indenture Trustee by Holders of
Notes representing less than 100% of the aggregate outstanding principal
amount of the Notes to sell or liquidate the Trust Estate shall be of no
force and effect; and
(iv) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee that is not inconsistent with such direction;
provided, however, that, subject to Section 6.1, the Indenture Trustee need not
take any action that it determines might cause it to incur any liability or
might materially adversely affect the rights of any Noteholders not consenting
to such action.
SECTION 5.12 Waiver of Past Defaults.
(a) Prior to the declaration of the acceleration of the maturity of the
Notes as provided in Section 5.2, the Holders of not less than a majority of the
aggregate outstanding principal amount of the Notes may waive any past Default
or Event of Default and its consequences 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 hereof which cannot be modified or amended without the consent of the
Holder of each Note. In the case of any such waiver, the Issuer, the Indenture
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Trustee and the Noteholders shall be restored to their former positions and
rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereto.
(b) Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
SECTION 5.13 Undertaking for Costs. All parties to this Indenture agree,
and each Holder of any Note by such Holder's acceptance thereof shall be deemed
to have agreed, that any court may in its discretion require, in any Proceeding
for the enforcement of any right or remedy under this Indenture, or in any
Proceeding against the Indenture Trustee for any action taken, suffered or
omitted by it as Trustee, the filing by any party litigant in such Proceeding of
an undertaking to pay the costs of such Proceeding, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such Proceeding, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.13 shall not apply to:
(a) any Proceeding instituted by the Indenture Trustee;
(b) any Proceeding instituted by any Noteholder, or group of Noteholders,
in each case holding in the aggregate more than 10% of the aggregate outstanding
principal amount of the Notes; or
(b) any Proceeding instituted by any Noteholder for the enforcement of the
payment of principal of or interest on any Note on or after the respective due
dates expressed in such Note and in this Indenture (or, in the case of
redemption, on or after the Redemption Date).
SECTION 5.14 Waiver of Stay or Extension Laws. The Issuer covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon, or
plead or in any manner whatsoever claim or take the benefit or advantage of, any
stay or extension law wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of this Indenture. The Issuer
(to the extent that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law, and covenants that it shall not hinder, delay or
impede the execution of any power herein granted to the Indenture Trustee, but
shall suffer and permit the execution of every such power as though no such law
had been enacted.
SECTION 5.15 Action on Notes. The Indenture Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or remedies
of the Indenture Trustee or the Noteholders shall be impaired by the recovery of
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any judgment by the Indenture Trustee against the Issuer or by the levy of any
execution under such judgment upon any portion of the Trust Estate or upon any
of the assets of the Issuer.
SECTION 5.16 Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Indenture Trustee to do so and at
the Servicer's expense, the Issuer agrees to take all such lawful action as the
Indenture Trustee may reasonably request to compel or secure the performance and
observance by the Seller and the Servicer of their respective obligations to the
Issuer under or in connection with the Basic Documents (other than the Excluded
Assets) in accordance with the terms thereof, and to exercise any and all
rights, remedies, powers and privileges lawfully available to the Issuer under
or in connection with the Sale and Servicing Agreement to the extent and in the
manner reasonably directed by the Indenture Trustee, including the transmission
of notices of default on the part of the Seller or the Servicer thereunder and
the institution of legal or administrative actions or proceedings to compel or
secure performance by the Seller or the Servicer of each of their obligations
under the Basic Documents (other than with respect to the Excluded Assets).
(b) If an Event of Default has occurred and is continuing, the Indenture
Trustee may, and, at the direction (which direction shall be in writing or by
telephone (confirmed in writing promptly thereafter)) of the Holders of 66-2/3%
of the aggregate outstanding principal amount of the Notes shall, exercise all
rights, remedies, powers, privileges and claims of the Issuer against the Seller
or the Servicer under or in connection with the Basic Documents (other than with
respect to the Excluded Assets), including the right or power to take any action
to compel or secure performance or observance by the Seller or the Servicer of
each of their obligations to the Issuer thereunder and to give any consent,
request, notice, direction, approval, extension or waiver thereunder, and any
right of the Issuer to take such action shall be suspended.
(c) Promptly following a request from the Indenture Trustee to do so and at
the Servicer's expense, the Issuer agrees to take all such lawful action as the
Indenture Trustee may reasonably request to compel or secure the performance and
observance by CITSF of each of its obligations to the Seller under or in
connection with the Sale and Servicing Agreement, the Purchase Agreement and the
Subsequent Purchase Agreement in accordance with the terms thereof, and to
exercise any and all rights, remedies, powers and privileges lawfully available
to the Issuer under or in connection with the Sale and Servicing Agreement, the
Purchase Agreement and the Subsequent Purchase Agreement to the extent and in
the manner reasonably directed by the Indenture Trustee, including the
transmission of notices of default on the part of the Seller thereunder and the
institution of legal or administrative actions or proceedings to compel or
secure performance by CITSF of each of its obligations under the Sale and
Servicing Agreement, the Purchase Agreement and the Subsequent Purchase
Agreement.
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If an Event of Default has occurred and is continuing, the Indenture Trustee
may, and, at the direction (which direction shall be in writing or by telephone
(confirmed in writing promptly thereafter)) of the Holders of 66-2/3% of the
aggregate outstanding principal amount of the Notes shall, exercise all rights,
remedies, powers, privileges and claims of the Seller against CITSF under or in
connection with the Sale and Servicing Agreement, the Purchase Agreement and the
Subsequent Purchase Agreement, including the right or power to take any action
to compel or secure performance or observance by CITSF of each of its
obligations to the Seller thereunder and to give any consent, request, notice,
direction, approval, extension or waiver under the Sale and Servicing Agreement,
the Purchase Agreement and the Subsequent Purchase Agreement, and any right of
the Seller to take such action shall be suspended.
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ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.1 Duties of Indenture Trustee.
(a) If an Event of Default has occurred and is continuing, the Indenture
Trustee shall exercise the rights and powers vested in it by this Indenture and
use the same degree of care and skill in their exercise as a prudent person
would exercise or use under the circumstances ini the conduct of such person's
own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; provided, however, that the Indenture
Trustee shall examine the certificates and opinions to determine whether or
not they conform to the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this Section 6.1(c) does not limit the effect of Section 6.1(b);
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent
facts; and
(ii) the Indenture Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction properly delivered to it pursuant to Section 5.11.
(d) The Indenture Trustee shall not be liable for interest on any money
received by it except as the Indenture Trustee may agree in writing with the
Issuer.
(e) Money held in trust by the Indenture Trustee need not be segregated
from other funds except to the extent required by law or the terms of this
Indenture, the Sale and Servicing Agreement or the Trust Agreement.
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(f) No provision of this Indenture shall require the Indenture Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayments
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(g) Every provision of this Indenture relating to the Indenture Trustee
shall be subject to the provisions of this Section 6.1 and to the provisions of
the TIA.
(h) The Indenture Trustee shall take the actions required to be taken by it
set forth in Article XI of the Sale and Servicing Agreement in connection with a
sale of the Contracts.
SECTION 6.2 Rights of Indenture Trustee.
(a) The Indenture Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person. The Indenture
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel. The Indenture Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on the Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and the Indenture Trustee shall not be
responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed with
due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it takes or
omits to take in good faith which it reasonably believes to be authorized or
within its rights or powers; provided, however, that the Indenture Trustee's
conduct does not constitute wilful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Notes shall be full and complete authorization and protection from liability
in respect to any action taken, omitted or suffered by it hereunder in good
faith and in accordance with the advice or opinion of such counsel.
SECTION 6.3 Indenture Trustee May Own Notes. The Indenture Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Issuer, the Servicer or any of their respective
Affiliates with the same rights it would have if it were not Indenture Trustee;
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provided, however, that the Indenture Trustee shall comply with Sections 6.10
and 6.11. Any Paying Agent, Note Registrar, co-registrar or co-paying agent may
do the same with like rights.
SECTION 6.4 Indenture Trustee's Disclaimer. The Indenture Trustee shall not
be responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Notes, it shall not be accountable for the Issuer's use of
the proceeds from the Notes, and it shall not be responsible for any statement
of the Issuer in the Indenture or in any document issued in connection with the
sale of the Notes or in the Notes other than the Indenture Trustee's certificate
of authentication.
SECTION 6.5 Notice of Defaults. If a Default occurs and is continuing and
if it is known to a Responsible Officer of the Indenture Trustee, the Indenture
Trustee shall mail to each Noteholder notice of the Default within 90 days after
it occurs. Except in the case of a Default in payment of principal of or
interest on any Note, the Indenture Trustee may withhold the notice if and so
long as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of Noteholders.
SECTION 6.6 Reports by Indenture Trustee to Holders. The Indenture Trustee
shall deliver to each Noteholder the information and documents set forth in
Article VII, and, in addition, all such information with respect to the Notes as
may be required to enable such holder to prepare its federal and state income
tax returns.
SECTION 6.7 Compensation; Indemnity.
(a) The Issuer shall cause the Servicer pursuant to the Sale and Servicing
Agreement to pay to the Indenture Trustee from time to time reasonable
compensation for its services. The Indenture Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Issuer
shall cause the Servicer pursuant to the Sale and Servicing Agreement to
reimburse the Indenture Trustee for all reasonable out-of-pocket expenses
incurred or made by it, including costs of collection, in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Indenture Trustee's
agents, counsel, accountants and experts. The Issuer shall cause the Servicer
pursuant to the Sale and Servicing Agreement to indemnify the Indenture Trustee
in accordance with Section 8.02 of the Sale and Servicing Agreement.
(b) The Issuer's obligations to the Indenture Trustee pursuant to this
Section 6.7 shall survive the discharge of this Indenture. When the Indenture
Trustee incurs expenses after the occurrence of a Default specified in Section
5.1(d) or (e) with respect to the Issuer, the expenses are intended to
constitute expenses of administration under Title 11 of the United States Code
or any other applicable federal or state bankruptcy, insolvency or similar law.
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SECTION 6.8 Replacement of Indenture Trustee.
(a) The Indenture Trustee may resign at any time by so notifying the
Issuer. The Holders of a majority in aggregate outstanding principal amount of
the Notes may remove the Indenture Trustee by so notifying the Indenture Trustee
and may appoint a successor Indenture Trustee. Such resignation or removal shall
become effective in accordance with Section 6.8(c). The Issuer shall remove the
Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) the Indenture Trustee is adjudged a bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the Indenture
Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes incapable of acting.
(b) If the Indenture Trustee resigns or is removed or if a vacancy exists
in the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Holders
of a majority in aggregate outstanding principal amount of the Notes may appoint
a successor Indenture Trustee, but until a successor Indenture Trustee shall
have been so appointed by the Holders of the Notes, the Issuer shall appoint a
successor Indenture Trustee, and until the Issuer has appointed such successor
the resignation of the Indenture Trustee shall not become effective. After any
such appointment other than by the holders of the Notes, the person making such
appointment shall forthwith cause notice thereof to be mailed to the holders of
the Notes at their addresses as the same then appear in the register of the
Issuer; but any successor Trustee so appointed shall, immediately and without
further act, be superseded by a successor Trustee appointed by the holders of
the Notes in the manner above prescribed, if such appointment be made prior to
the expiration of one year from the date of the mailing of such notice by the
Issuer, or by such receivers, trustees, custodians, or assignees. A retiring
Indenture Trustee shall not be liable for any acts or omissions of a successor
Indenture Trustee occurring after the retirement of such retired Indenture
Trustee, which retirement was effected pursuant to the terms and subject to the
conditions of this Indenture.
(c) A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer. Thereupon the
resignation or removal of the retiring Indenture Trustee shall become effective,
and the successor Indenture Trustee shall have all the rights, powers and duties
of the Indenture Trustee under this Indenture. The successor Indenture Trustee
shall mail a notice of its succession to Noteholders. The retiring Indenture
Trustee shall promptly transfer all property held by it as Indenture Trustee to
the successor Indenture Trustee.
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(d) If a successor Indenture Trustee does not take office within 60 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Trustee, the Issuer or the Holders of a majority of the aggregate outstanding
principal amount of the Notes may petition any court of competent jurisdiction
for the appointment of a successor Indenture Trustee.
(e) If the Indenture Trustee fails to comply with Section 6.11, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee.
(f) Notwithstanding the replacement of the Indenture Trustee pursuant to
this Section 6.8, the Issuer's obligations under Section 6.7 and the Servicer's
corresponding obligations under the Sale and Servicing Agreement shall continue
for the benefit of the retiring Indenture Trustee.
SECTION 6.9 Merger or Consolidation of Indenture Trustee.
(a) Any corporation into which the Indenture Trustee may be merged or with
which it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Indenture Trustee shall be a party, or any
corporation succeeding to the corporate trust business of the Indenture Trustee,
shall be the successor of the Indenture Trustee under this Indenture; provided,
however, that such corporation shall be eligible under the provisions of Section
6.11, without the execution or filing of any instrument or any further act on
the part of any of the parties to this Indenture, anything in this Indenture to
the contrary notwithstanding.
(b) If at the time such successor or successors by merger or consolidation
to the Indenture Trustee shall succeed to the trusts created by this Indenture,
any of the Notes shall have been authenticated but not delivered, any such
successor to the Indenture Trustee may adopt the certificate of authentication
of any predecessor trustee, and deliver such Notes so authenticated; and in case
at that time any of the Notes shall not have been authenticated, any successor
to the Indenture Trustee may authenticate such Notes either in the name of any
predecessor hereunder or in the name of the successor to the Indenture Trustee.
In all such cases such certificate of authentication shall have the same full
force as is provided anywhere in the Notes or herein with respect to the
certificate of authentication of the Indenture Trustee.
SECTION 6.10 Appointment of Co-Indenture Trustee or Separate Indenture
Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Trust or any Financed Vehicle may at the time be located, the
Indenture Trustee shall have the power and may execute and deliver all
instruments to appoint one or more Persons to act as a co-trustee or
co-trustees, or separate trustee or separate trustees, of all or any part of the
Trust, and to vest in such Person or Persons, in such capacity and for the
benefit of the Noteholders, such title to the Trust, or any part hereof, and,
subject to the other provisions of this Section 6.10, such powers, duties,
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obligations, rights and trusts as the Indenture Trustee may consider necessary
or desirable. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 6.11 and no
notice to Noteholders of the appointment of any co-trustee or separate trustee
shall be required under Section 6.8.
(b) Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Indenture Trustee shall be conferred or imposed upon and exercised
or performed by the Indenture Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Indenture
Trustee joining in such act), except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be performed
the Indenture Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in any
such jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the Indenture
Trustee;
(ii) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Indenture and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Indenture Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Indenture Trustee. Every such instrument shall be filed with
the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee, its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect of
this Indenture on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
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SECTION 6.11 Eligibility; Disqualification. The Indenture Trustee shall at
all times satisfy the requirements of TIA ss. 310(a). The Indenture Trustee
shall have a combined capital and surplus of at least $50,000,000 as set forth
in its most recent published annual report of condition and it shall have a long
term unsecured debt rating of Baa3 or better by Moody's and BBB or better by
Standard & Poor's. The Indenture Trustee shall comply with TIA ss. 310(b);
provided, however, that there shall be excluded from the operation of TIA ss.
310(b)(1) any indenture or indentures under which other securities of the Issuer
are outstanding if the requirements for such exclusion set forth in TIA ss.
310(b)(1) are met.
SECTION 6.12 Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated.
SECTION 6.13 Representations and Warranties of Indenture Trustee. The
Indenture Trustee represents and warrants as of the Closing Date that:
(a) the Indenture Trustee is an Illinois banking corporation duly
organized, validly existing and in good standing under the laws of the State of
Illinois;
(b) the Indenture Trustee has full power, authority and legal right to
execute, deliver and perform this Indenture, and has taken all necessary action
to authorize the execution, delivery and performance by it of this Indenture;
(c) the execution, delivery and performance by the Indenture Trustee of
this Indenture (i) shall not violate any provision of any applicable law or
regulation governing the banking and trust powers of the Indenture Trustee or
any order, writ, judgment or decree of any court, arbitrator, or governmental
authority applicable to the Indenture Trustee or any of its assets, (ii) shall
not violate any provision of the corporate charter or by-laws of the Indenture
Trustee, or (iii) shall not violate any provision of, or constitute, with or
without notice or lapse of time, a default under, or result in the creation or
imposition of any Lien on any properties included in the Trust pursuant to the
provisions of any mortgage, indenture, contract, agreement or other undertaking
to which it is a party, which violation, default or Lien could reasonably be
expected to have a materially adverse effect on the Indenture Trustee's
performance or ability to perform its duties under this Indenture or on the
transactions contemplated in this Indenture;
(d) the execution, delivery and performance by the Indenture Trustee of
this Indenture shall not require the authorization, consent or approval of, the
giving of notice to, the filing or registration with, or the taking of any other
action in respect of, any governmental authority or agency regulating the
banking and corporate trust activities of the Indenture Trustee; and
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(e) this Indenture has been duly executed and delivered by the Indenture
Trustee and constitutes the legal, valid and binding agreement of the Indenture
Trustee, enforceable in accordance with its terms.
SECTION 6.14 Indenture Trustee May Enforce Claims Without Possession of
Notes. All rights of action and claims under this Indenture or the Notes may be
prosecuted and enforced by the Indenture Trustee without the possession of any
of the Notes or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Indenture Trustee shall be brought in its
own name as Indenture Trustee. Any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee, its agents and counsel, be for the ratable
benefit of the Noteholders in respect of which such judgment has been obtained.
SECTION 6.15 Suit for Enforcement. If an Event of Default shall occur and
be continuing, the Indenture Trustee, in its discretion may, subject to the
provisions of Section 6.1, proceed to protect and enforce its rights and the
rights of the Noteholders under this Indenture by Proceeding whether for the
specific performance of any covenant or agreement contained in this Indenture or
in aid of the execution of any power granted in this Indenture or for the
enforcement of any other legal, equitable or other remedy as the Indenture
Trustee, being advised by counsel, shall deem most effectual to protect and
enforce any of the rights of the Indenture Trustee or the Noteholders.
SECTION 6.16 Rights of Noteholders to Direct Indenture Trustee. Holders of
Notes evidencing not less than a majority of the aggregate outstanding principal
amount of the Notes shall have the right to direct the time, method and place of
conducting any Proceeding for any remedy available to the Indenture Trustee or
exercising any trust or power conferred on the Indenture Trustee; provided,
however, that subject to Section 6.1, the Indenture Trustee shall have the right
to decline to follow any such direction if the Indenture Trustee being advised
by counsel determines that the action so directed may not lawfully be taken, or
if the Indenture Trustee in good faith shall, by a Responsible Officer,
determine that the proceedings so directed would be illegal or subject it to
personal liability or be unduly prejudicial to the rights of Noteholders not
parties to such direction; and provided, further, that nothing in this Indenture
shall impair the right of the Indenture Trustee to take any action deemed proper
by the Indenture Trustee and which is not inconsistent with such direction by
the Noteholders.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.1 Issuer To Furnish Indenture Trustee Names and Addresses of
Noteholders. The Issuer shall furnish or cause to be furnished by the Servicer
to the Indenture Trustee (a) not more than five days before each Distribution
Date, a list, in such form as the Indenture Trustee may reasonably require, of
the names and addresses of the Holders of Notes as of the close of business on
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the Record Date, and (b) at such other times as the Indenture Trustee may
request in writing, within 14 days after receipt by the Issuer of any such
request, a list of similar form and content as of a date not more than 10 days
prior to the time such list is furnished; provided, however, that so long as the
Indenture Trustee is the Note Registrar, no such list shall be required to be
furnished.
SECTION 7.2 Preservation of Information, Communications to Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list furnished to the Indenture Trustee as provided
in Section 7.1 and the names and addresses of Holders of Notes received by the
Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may
destroy any list furnished to it as provided in such Section 7.1 upon receipt of
a new list so furnished.
(b) Noteholders may communicate pursuant to TIA ss. 312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have the
protection of TIA ss. 312(c).
SECTION 7.3 Reports by Issuer.
(a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after the Issuer
is required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) which the Issuer may be required
to file with the Commission pursuant to Section 13 or 15(d) of the Exchange
Act;
(ii) file with the Indenture Trustee and the Commission in accordance
with rules and regulations prescribed from time to time by the Commission
such additional information, documents and reports with respect to
compliance by the Issuer with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
(iii) supply to the Indenture Trustee (and the Indenture Trustee shall
transmit by mail to all Noteholders described in TIA ss. 313(c)) such
summaries of any information, documents and reports required to be filed by
the Issuer pursuant to clauses (i) and (ii) of this Section 7.3(a) as may
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be required by rules and regulations prescribed from time to time by the
Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer
shall end on December 31 of such year.
SECTION 7.4 Reports by Trustee.
(a) If required by TIA ss. 313(a), within 60 days after each June 1,
beginning with June 1, 1996, the Indenture Trustee shall mail to each Noteholder
as required by TIA ss. 313(c) a brief report dated as of such date that complies
with TIA ss. 313(a). The Indenture Trustee also shall comply with TIA ss.
313(b). A copy of any report delivered pursuant to this Section 7.4(a) shall, at
the time of its mailing to Noteholders, be filed by the Indenture Trustee with
the Commission and each stock exchange, if any, on which the Notes are listed.
The Issuer shall notify the Indenture Trustee if and when the Notes are listed
on any stock exchange.
(b) On each Distribution Date, the Indenture Trustee shall include with
each payment to each Noteholder a copy of the statement for the related Due
Period applicable to such Distribution Date as required pursuant to the Sale and
Servicing Agreement.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1 Collection of Money. Except as otherwise expressly provided
herein, the Indenture Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Indenture Trustee pursuant to this Indenture. The Indenture
Trustee shall apply all such money received by it as provided in this Indenture.
Except as otherwise expressly provided in this Indenture, if any default occurs
in the making of any payment or performance under any agreement or instrument
that is part of the Trust Estate, the Indenture Trustee may take such action as
may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate Proceedings. Any such action shall be
without prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article V.
SECTION 8.2 Designated Accounts and the Cash Collateral Account; Payments.
(a) On or prior to the Closing Date, the Issuer shall cause the Servicer to
establish and maintain, in the name of the Indenture Trustee or Owner Trustee,
as appropriate, for the benefit of the Noteholders or the Certificateholders
(and, in the case of the Cash Collateral Account, the Cash Collateral Depositor)
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as appropriate, the accounts as provided in Section 5.01 of the Sale and
Servicing Agreement.
(b) On or before each Distribution Date, all amounts of monies relating to
the preceding Due Period will be deposited into the Collection Account as
provided in Section 5.02 of the Sale and Servicing Agreement. On or before each
Distribution Date, the amount which is due to the Noteholders with respect to
the preceding Due Period will be transferred from the Collection Account to the
Note Distribution Account as provided in Section 5.05 of the Sale and Servicing
Agreement.
(c) On each Distribution Date and Redemption Date, the Indenture Trustee
shall distribute all amounts on deposit in the Note Distribution Account to
Noteholders in respect of the Notes to the extent of amounts due and unpaid on
the Notes for principal and interest. To the extent that the funds available for
distribution in the Note Distribution Account are not sufficient to pay all
amounts of accrued and unpaid principal and interest on the Notes, such amounts
will be distributed first in respect of interest and then in respect of
principal.
SECTION 8.3 General Provisions Regarding Accounts.
(a) So long as no Default or Event of Default shall have occurred and be
continuing, all or a portion of the funds in the Designated Accounts and the
Cash Collateral Account shall be invested in Eligible Investments and, in the
case in the Collection Account and the Note Distribution Account, reinvested by
the Indenture Trustee upon Issuer Order, and in the case of the Certificate
Distribution Account and the Cash Collateral Account, reinvested by the Owner
Trustee (or its designated agent) subject to the provisions of Section 5.01(c)
of the Sale and Servicing Agreement. The Issuer shall not direct the Indenture
Trustee to make any investment of any funds or to sell any investment held in
any of the Collection Account and the Note Distribution Account unless the
security interest granted and perfected in such account (to the extent provided
in the Basic Documents) shall continue to be perfected in such investment or the
proceeds of such sale, in either case without any further action by any Person,
and, in connection with any direction to the Indenture Trustee to make any such
investment or sale, if requested by the Indenture Trustee, the Issuer shall
deliver to the Indenture Trustee an Opinion of Counsel, acceptable to the
Indenture Trustee, to such effect.
(b) Subject to Section 6.1(c), the Indenture Trustee shall not in any way
be held liable by reason of any insufficiency in any of the Designated Accounts
or the Cash Collateral Account resulting from any loss on any Eligible
Investment included therein except for losses attributable to the Indenture
Trustee's failure to make payments on such Eligible Investments issued by the
Indenture Trustee, in its commercial capacity as principal obligor and not as
trustee, in accordance with their terms.
(c) If (i) the Servicer shall have failed to give investment directions for
any funds on deposit in the Designated Accounts to the Indenture Trustee by
11:00 a.m., New York City Time (or such other time as may be agreed by the
Servicer and the Indenture Trustee) on any Business Day; or (ii) a Default or
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Event of Default shall have occurred and be continuing with respect to the Notes
but the Notes shall not have been declared due and payable pursuant to Section
5.2, or, if such Notes shall have been declared due and payable following an
Event of Default, amounts collected or receivable from the Trust Estate are
being applied in accordance with Section 5.5 as if there had not been such a
declaration; then the Indenture Trustee shall, to the fullest extent
practicable, invest and reinvest funds in such Designated Accounts in one or
more Eligible Investments selected by the Indenture Trustee; provided that the
Indenture Trustee will not be liable for the performance of such investments so
long as it invests the funds in such Designated Accounts in Eligible
Investments.
SECTION 8.4 Release of Trust Estate.
(a) Subject to the payment of its fees and expenses pursuant to Section
6.7, the Indenture Trustee may, and when required by the provisions of this
Indenture shall, execute instruments to release property from the Lien of this
Indenture, or convey the Indenture Trustee's interest in the same, in a manner
and under circumstances that are consistent with the provisions of this
Indenture. No party relying upon an instrument executed by the Indenture Trustee
as provided in this Article VIII shall be bound to ascertain the Indenture
Trustee's authority, inquire into the satisfaction of any conditions precedent
or see to the application of any monies.
(b) The Indenture Trustee shall, at such time as there are no Notes
outstanding and all sums due to the Indenture Trustee pursuant to Section 6.7
have been paid, release any remaining portion of the Trust Estate that secured
the Notes from the Lien of this Indenture and release to the Issuer or any other
Person entitled thereto any funds then on deposit in the Designated Accounts (to
the extent such funds were subject to the Lien of this Indenture). The Indenture
Trustee shall release property from the Lien of this Indenture pursuant to this
Section 8.4(b) only upon receipt of an Issuer Request accompanied by an
Officer's Certificate, an Opinion of Counsel and (if required by the TIA)
Independent Certificates in accordance with TIA ss.ss. 314(c) and 314(d)(1)
meeting the applicable requirements of Section 11.1.
SECTION 8.5 Opinion of Counsel. The Indenture Trustee shall receive at
least seven days' notice when requested by the Issuer to take any action
pursuant to Section 8.4(a), accompanied by copies of any instruments involved,
and the Indenture Trustee shall also require as a condition to such action, an
Opinion of Counsel, in form and substance satisfactory to the Indenture Trustee,
stating the legal effect of any such action, outlining the steps required to
complete the same, and concluding that all conditions precedent to the taking of
such action have been complied with and such action shall not materially and
adversely impair the security for the Notes or the rights of the Noteholders in
contravention of the provisions of this Indenture; provided, however, that such
Opinion of Counsel shall not be required to express an opinion as to the fair
value of the Trust Estate. Counsel rendering any such opinion may rely, without
independent investigation, on the accuracy and validity of any certificate or
other instrument delivered to the Indenture Trustee in connection with any such
action.
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ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1 Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Holders of any Notes but with prior written
notice to the Rating Agencies and, in the case of clause (viii), satisfaction of
the Rating Agency Condition, the Issuer and the Indenture Trustee, when
authorized by an Issuer Order, at any time and from time to time, may enter into
one or more indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act as in force at the date of the execution
thereof), in form satisfactory to the Indenture Trustee, for any of the
following purposes:
(i) to correct or amplify the description of the Collateral or add
additional collateral;
(ii) to provide for the assumption of the Note and the Indenture
obligations by a permitted successor to the Trust;
(iii) to add additional covenants for the benefit of the related
Noteholders, or to surrender any rights or power conferred upon the Trust;
(iv) to convey, transfer, assign mortgage or pledge any property to or
with the Indenture Trustee;
(v) to cure any ambiguity or correct or supplement any provision in
the Indenture or any supplemental indenture which may be inconsistent with
any other provision of the Indenture or in any supplemental indenture;
(vi) to provide for the acceptance of the appointment of a successor
Indenture Trustee or to add or change any of the provisions of the
Indenture as shall be necessary and permitted to facilitate the
administration by more than one trustee;
(vii) to modify, eliminate or add to the provisions of the Indenture
in order to comply with the Trust Indenture Act of 1939, as amended; or
(viii) to add any provisions to, change in any manner or eliminate any
of the provisions of, the Indenture or modify in any manner the rights of
Noteholders under such Indenture; provided that any action specified in
this clause (viii) shall not, as evidenced by an opinion of counsel,
adversely affect in any material respect the interests of any Noteholder
unless Noteholder consent is otherwise obtained as described herein.
(b) The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, may, also without the consent of any of the Noteholders but with prior
notice to the Rating Agencies, at any time and from time to time enter into one
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or more indentures supplemental hereto for the purpose of adding any provisions
to, changing in any manner, or eliminating any of the provisions of, this
Indenture or modifying in any manner the rights of the Noteholders under this
Indenture; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests of
any Noteholder.
SECTION 9.2 Supplemental Indentures With Consent of Noteholders.
(a) The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, also may, with prior notice to the Rating Agencies and with the consent
of the Holders of not less than a majority of the aggregate outstanding
principal amount of the Notes, by Act (as defined in Section 11.3 hereof) of
such Holders delivered to the Issuer and the Indenture Trustee, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to, changing in any manner, or eliminating any of the provisions of,
this Indenture or of modifying in any manner the rights of the Noteholders under
this Indenture; provided, however, that no such supplemental indenture shall,
without the consent of the Holder of each outstanding Note affected thereby:
(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 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;
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(vi) decrease the percentage of the aggregate principal amount of the
Notes required to amend the sections of the Indenture which specify the
applicable percentage of aggregate principal amount of the Notes necessary
to amend the Indenture or certain other related agreements; or
(vii) permit the creation of any Lien ranking prior to or on a parity
with the Lien of the Indenture with respect to any of the collateral for
the Notes or, except as otherwise permitted or contemplated in the
Indenture, terminate the Lien of the Indenture on any such collateral or
deprive the Holder of any Note of the security afforded by the Lien of the
Indenture.
(b) The Indenture Trustee may in its discretion determine whether or not
any Notes would be affected (such that the consent of each would be required) by
any supplemental indenture proposed pursuant to this Section 9.2 and any such
determination shall be conclusive upon the Holders of all Notes, whether
authenticated and delivered thereunder before or after the date upon which such
supplemental indenture becomes effective. The Indenture Trustee shall not be
liable for any such determination made in good faith.
(c) It shall be sufficient if an Act of Noteholders approves the substance,
but not the form, of any proposed supplemental indenture.
(d) Promptly after the execution by the Issuer and the Indenture Trustee of
any supplemental indenture pursuant to this Section 9.2, the Indenture Trustee
shall mail to the Noteholders to which such amendment or supplemental indenture
relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
SECTION 9.3 Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, the Indenture Trustee shall be entitled to receive, and
subject to Sections 6.1 and 6.2, shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Indenture Trustee may, but shall
not be obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
SECTION 9.4 Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith with respect
to the Notes affected thereby, and the respective rights, limitations of rights,
obligations, duties, liabilities and immunities under this Indenture of the
Indenture Trustee, the Issuer and the Noteholders shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
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modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 9.5 Conformity with Trust Indenture Act. Every amendment of this
Indenture and every supplemental indenture executed pursuant to this Article IX
shall conform to the requirements of the TIA as then in effect so long as this
Indenture shall then be qualified under the TIA.
SECTION 9.6 Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Indenture
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture may
be prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for outstanding Notes of the same class.
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.1 Redemption.
(a) The Notes are subject to redemption upon (i) the exercise by the
Servicer of its option to purchase the Contracts pursuant to Section 11.01 of
the Sale and Servicing Agreement, (ii) the mandatory sale of the Contracts
pursuant to Section 11.02 of the Sale and Servicing Agreement, or (iii) at the
end of the Funding Period to the extent funds remain on deposit in the
Pre-Funding Account pursuant to Section 5.01(b)(iv) of the Sale and Servicing
Agreement. Such redemption shall occur on any Distribution Date. The purchase
price for the Notes shall be equal to the applicable redemption price as set
forth in such Sections (the "Redemption Price"), provided the Issuer has
available funds sufficient to pay such amount. The Issuer shall furnish the
Rating Agencies notice of such redemption. If the Notes are to be redeemed
pursuant to Section 10.1(a)(i) or 10.1(a)(ii), the Issuer shall furnish notice
thereof to the Indenture Trustee not later than 25 days prior to the Redemption
Date and the Issuer shall deposit into the Note Distribution Account, on or
before the Redemption Date, the aggregate Redemption Price of the Notes to be
redeemed, whereupon all such Notes shall be due and payable on the Redemption
Date. The Servicer shall give the Indenture Trustee written notice on the
Determination Date prior to the Distribution Date on which funds are to be
released from the Pre-Funding Account pursuant to Section 5.01(b)(iv) of the
Sale and Servicing Agreement with respect to redemption of the Notes pursuant to
Section 10.1(a)(iii).
(b) If the assets of the Trust are sold pursuant to Section 7.2 of the
Trust Agreement, all amounts deposited in the Note Distribution Account pursuant
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to the Sale and Servicing Agreement as a result thereof shall be paid to the
Noteholders. If amounts are to be paid to Noteholders pursuant to this Section
10.1(b), the Servicer or the Issuer shall, to the extent practicable, furnish
notice of such event to the Indenture Trustee not later than 25 days prior to
the Redemption Date whereupon all such amounts shall be payable on the
Redemption Date.
SECTION 10.2 Form of Redemption Notice.
(a) Notice of redemption of the Notes under Section 10.1(a) shall be given
by the Indenture Trustee by first class mail, postage prepaid, mailed not less
than five days in the case of Section 10(a)(i) and (ii) and not less than three
Business Days in the case of Section 10(a)(iii), prior to the applicable
Redemption Date to each Noteholder of Notes of record at such Noteholder's
address appearing in the Note Register.
(b) All notices of redemption shall state:
(i) the Redemption Date;
(ii) the applicable Redemption Price; and
(iii) the place where Notes are to be surrendered for payment of the
Redemption Price (which shall be the Agency Office of the Indenture Trustee
to be maintained as provided in Section 3.2).
(c) Notice of redemption of the Notes shall be given by the Indenture
Trustee in the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Note shall not impair or
affect the validity of the redemption of any other Note.
(d) Prior notice of redemption under Section 10.1(b) is not required to be
given to Noteholders.
SECTION 10.3 Notes Payable on Redemption Date.
The Notes subject to redemption shall, following notice of redemption as
required by Section 10.2 (in the case of redemption pursuant to Section
10.1(a)), on the Redemption Date cease to be outstanding for purposes of this
Indenture and shall thereafter represent only the right to receive the
applicable Redemption Price and (unless the Issuer shall default in the payment
of such Redemption Price) no interest shall accrue on such Redemption Price for
any period after the date to which accrued interest is calculated for purposes
of calculating such Redemption Price.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the Indenture Trustee
to take any action under any provision of this Indenture, the Issuer shall
furnish to the Indenture Trustee: (i) an Officer's Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) (if required by the TIA) an
Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with and (iii) (if required by
the TIA) an Independent Certificate from a firm of certified public accountants
meeting the applicable requirements of this Section 11.1, except that, in the
case of any such application or request as to which the furnishing of such
documents is specifically required by any provision of this Indenture, no
additional certificate or opinion need be furnished. Every certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Indenture shall include:
(i) a statement that each signatory of such certificate or opinion has
read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the judgment of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such signatory,
such condition or covenant has been complied with
(b) (i) Prior to the deposit with the Indenture Trustee of any Collateral
or other property or securities that is to be made the basis for the release of
any property or securities subject to the Lien of this Indenture, the Issuer
shall, in addition to any obligation imposed in Section 11.1(a) or elsewhere in
this Indenture, furnish to the Indenture Trustee an Officers' Certificate
certifying or stating the opinion of each person signing such certificate as to
the fair value (within 90 days of such deposit) to the Issuer of the Collateral
or other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officers' Certificate certifying or stating the opinion of any
signer thereof as to the matters described in clause (b)(i) above, the
Issuer shall also deliver to the Indenture Trustee an Independent
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Certificate as to the same matters, if the fair value to the Issuer of the
securities to be so deposited and of all other such securities made the
basis of any such withdrawal or release since the commencement of the then
current fiscal year of the Issuer, as set forth in the certificates
delivered pursuant to clause (i) above and this clause (b)(ii), is 10% or
more of the aggregate outstanding principal amount of the Notes, but such a
certificate need not be furnished with respect to any securities so
deposited, if the fair value thereof to the Issuer as set forth in the
related Officers' Certificate is less than $25,000 or less than one percent
of the aggregate outstanding principal amount of the Notes.
(iii) Other than with respect to the release of any Repurchased
Contracts or Liquidated Contracts or disbursement from the Pre-Funding
Account, whenever any property or securities are to be released from the
lien of this Indenture, the Issuer shall also furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of each
Person signing such certificate as to the fair value (within 90 days of
such release) of the property or securities proposed to be released and
stating that in the opinion of such person the proposed release will not
impair the security under this Indenture in contravention of the provisions
hereof.
(iv) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any
signatory thereof as to the matters described in clause (b)(iii) above, the
Issuer shall also furnish to the Indenture Trustee an Independent
Certificate as to the same matters if the fair value of the property or
securities and of all other property, other than Repurchased Contracts or
Liquidated Contracts or disbursement from the Pre-Funding Account, or
securities released from the lien of this Indenture since the commencement
of the then current calendar year, as set forth in the certificates
required by clause (b)(iii) above and this clause (b)(iv), equals 10% or
more of the aggregate outstanding principal amount of the Notes, but such
certificate need not be furnished in the case of any release of property or
securities if the fair value thereof as set forth in the related Officer's
Certificate is less than $25,000 or less than one percent of the then
aggregate outstanding principal amount of the Notes.
(v) Notwithstanding Section 2.9 or any other provision of this Section
11.1, the Issuer may (A) collect, liquidate, sell or otherwise dispose of
Contracts, Financed Vehicles and the Excluded Assets as and to the extent
expressly permitted or required by the Basic Documents, (B) make cash
payments out of the Designated Accounts, the Cash Collateral Account and
the other Excluded Assets as and to the extent expressly permitted or
required by the Basic Documents and (C) take any other action not
inconsistent with the TIA.
SECTION 11.2 Form of Documents Delivered to Indenture Trustee.
(a) In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
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or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
(b) Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Servicer, the Seller or the Issuer, stating that the information with
respect to such factual matters is in the possession of the Servicer, the Seller
or the Issuer, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
(c) Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
(d) Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
SECTION 11.3 Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Noteholders
or a class of Noteholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Noteholders in person
or by agents duly appointed in writing; and except as herein otherwise expressly
provided such action shall become effective when such instrument or instruments
are delivered to the Indenture Trustee, and, where it is hereby expressly
required, to the Issuer. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "Act" of
the Noteholders signing such instrument or instruments. Proof of execution of
any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Section 6.1)
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conclusive in favor of the Indenture Trustee and the Issuer, if made in the
manner provided in this Section 11.3.
(b) The fact and date of the execution by any person of any such instrument
or writing may be proved in any manner that the Indenture Trustee deems
sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Notes shall bind the Holder of every Note
issued upon the registration thereof or in exchange therefor or in lieu thereof,
in respect of anything done, omitted or suffered to be done by the Indenture
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
SECTION 11.4 Notices, etc., to Indenture Trustee, Issuer and Rating
Agencies. Any request, demand, authorization, direction, notice, consent, waiver
or Act of Noteholders or other documents provided or permitted by this Indenture
to be made upon, given or furnished to or filed with:
(a) the Indenture Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if made, given, furnished or filed
in writing to or with the Indenture Trustee at its Corporate Trust Office
and, unless otherwise specified in this Indenture, may be sent by
electronic facsimile transmission (with hard copy to follow via first class
mail), mailed by certified mail, return receipt requested, or delivered by
hand; or
(b) the Issuer by the Indenture Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if in writing and either sent by
electronic facsimile transmission (with hard copy to follow via first class
mail) or mailed, by certified mail, return receipt requested to the Issuer
and the Owner Trustee, care of the Owner Trustee at its Corporate Trust
Office or at any other address previously furnished in writing to the
Indenture Trustee by the Issuer.
The Issuer shall promptly transmit any notice received by it from the
Noteholders to the Indenture Trustee and the Indenture Trustee shall
likewise promptly transmit any notice received by it from the Noteholders
to the Issuer, with a copy to the Owner Trustee at its Corporate Trust
Office and a copy to ______________________________ at __________________,
________, ________, _____, Attention: _____________.
(c) Notices required to be given to the Rating Agencies by the Issuer,
the Indenture Trustee or the Owner Trustee shall be in writing, personally
delivered, sent by electronic facsimile transmission (with hard copy to
follow via first class mail) or mailed by certified mail, return receipt
requested to: (i) in the case of Moody's Investors Service, Inc., at the
following address: Moody's Investors Service, Inc., ABS Monitoring
Department, 99 Church Street, New York, New York 10007; and (ii) in the
case of Standard & Poor's Corporation, at the following address: Standard &
Poor's Corporation, 26 Broadway (20th Floor), New York, New York 10004,
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Attn: Asset Backed Surveillance Department or as to each of the foregoing,
at such other address as shall be designated by written notice to the other
parties.
SECTION 11.5 Notices to Noteholders; Waiver.
(a) Where this Indenture provides for notice to Noteholders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if it is in writing and mailed, first-class, postage prepaid to each
Noteholder affected by such event, at such Person's address as it appears on the
Note Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. If notice to Noteholders is
given by mail, neither the failure to mail such notice nor any defect in any
notice so mailed to any particular Noteholder shall affect the sufficiency of
such notice with respect to other Noteholders, and any notice that is mailed in
the manner herein provided shall conclusively be presumed to have been duly
given regardless of whether such notice is in fact actually received.
(b) Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
(c) In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
(d) Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute an Event of
Default.
SECTION 11.6 Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Indenture Trustee or any
Paying Agent to such Holder, that is different from the methods provided for in
this Indenture for such payments or notices. The Issuer shall furnish to the
Indenture Trustee a copy of each such agreement and the Indenture Trustee shall
cause payments to be made and notices to be given in accordance with such
agreements.
SECTION 11.7 Conflict with Trust Indenture Act.
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(a) If any provision hereof limits, qualifies or conflicts with another
provision hereof that is required to be included in this Indenture by any of the
provisions of the TIA, such required provision shall control.
(b) The provisions of TIAss.ss.310 through 317 that impose duties on any
Person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 11.8 Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 11.9 Successors and Assigns.
(a) All covenants and agreements in this Indenture and the Notes by the
Issuer shall bind its successors and assigns, whether so expressed or not.
(B) All covenants and agreements of the Indenture Trustee in this Indenture
shall bind its successors and assigns, whether so expressed or not.
SECTION 11.10 Separability.
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 11.11 Benefits of Indenture.
Nothing in this Indenture or in the Notes, express or implied, shall give
to any Person, other than the parties hereto and their successors hereunder, and
the Noteholders, and any other party secured hereunder, and any other Person
with an ownership interest in any part of the Trust Estate, any benefit or any
legal or equitable right, remedy or claim under this Indenture.
SECTION 11.12 Legal Holidays.
If the date on which any payment is due shall not be a Business Day, then
(notwithstanding any other provision of the Notes or this Indenture) payment
need not be made on such date, but may be made on the next succeeding Business
Day with the same force and effect as if made on the date on which nominally
due, and no interest shall accrue for the period from and after any such nominal
date.
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SECTION 11.13 Governing Law.
THIS INDENTURE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
SECTION 11.14 Counterparts.
This Indenture may be executed in any number of counterparts, each of which
so executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 11.15 Recording of Indenture.
If this Indenture is subject to recording in any appropriate public
recording offices, such recording is to be effected by the Issuer and at its
expense accompanied by an Opinion of Counsel (which may be counsel to the
Indenture Trustee or any other counsel reasonably acceptable to the Indenture
Trustee) to the effect that such recording is necessary either for the
protection of the Noteholders or any other Person secured hereunder or for the
enforcement of any right or remedy granted to the Indenture Trustee under this
Indenture.
SECTION 11.16 No Recourse.
No recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the
Notes or under this Indenture or any certificate or other writing delivered in
connection herewith or therewith, against:
(i) the Indenture Trustee or the Owner Trustee in its individual
capacity;
(ii) any owner of a beneficial interest in the Issuer; or
(iii) any partner, owner, beneficiary, agent, officer, director,
employee or agent of the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Owner Trustee or the Indenture Trustee or of any successor or assign of the
Indenture Trustee or the Owner Trustee in its individual capacity, except
as any such Person may have expressly agreed (it being understood that the
Indenture Trustee and the Owner Trustee have no such obligations in their
individual capacity) and except that any such partner, owner or beneficiary
shall be fully liable, to the extent provided by applicable law, for any
unpaid consideration for stock, unpaid capital contribution or failure to
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pay any installment or call owing to such entity. For all purposes of this
Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the
benefits of, the terms and provisions of Articles VI, VII and VIII of the
Trust Agreement.
SECTION 11.17 No Petition.
The Indenture Trustee, by entering into this Indenture, and each
Noteholder, by accepting a Note issued hereunder, hereby covenant and agree that
they shall not, prior to the date which is one year and one day after the
termination of this Indenture with respect to the Trust pursuant to Section 4.1,
acquiesce, petition or otherwise invoke or cause the Seller, the holder of the
GP Interest (which initially shall be The CIT GP Corporation) or the Trust to
invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the Seller or the Trust under any
federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Seller, the holder of the GP Interest or the Trust or any substantial
part of its property, or ordering the winding up or liquidation of the affairs
of the Seller or the Trust.
SECTION 11.18 Inspection.
The Issuer agrees that, on reasonable prior notice, it shall permit any
representative of the Indenture Trustee, during the Issuer's normal business
hours, to examine all the books of account, records, reports, and other papers
of the Issuer, to make copies and extracts therefrom, to cause such books to be
audited by Independent certified public accountants, and to discuss the Issuer's
affairs, finances and accounts with the Issuer's officers, employees and
Independent certified public accountants, all at such reasonable times and as
often as may be reasonably requested. The Indenture Trustee shall and shall
cause its representatives to hold in confidence all such information except to
the extent disclosure may be required by law (and all reasonable applications
for confidential treatment are unavailing) and except to the extent that the
Indenture Trustee may reasonably determine that such disclosure is consistent
with its obligations hereunder. Notwithstanding anything herein to the contrary,
the foregoing shall not be construed to prohibit (i) disclosure of any and all
information that is or becomes publicly known, or information obtained by the
Indenture Trustee from sources other than the Servicer or the Seller or any of
their affiliates, (ii) disclosure of any and all information (A) if required to
do so by any applicable statute, law, rule or regulation, (B) to any government
agency or regulatory body having authority to regulate or oversee any respects
of the Indenture Trustee's business, (C) pursuant to any subpoena, civil
investigative demand or similar demand or request of any court, regulatory
authority, arbitrator or arbitration to which the Indenture Trustee is a party,
(D) to any independent or internal auditor, agent, employee or attorney of the
Indenture Trustee reasonably having a need to know the same, provided that the
Indenture Trustee advises such recipient of the confidential nature of the
information being disclosed and such recipient agrees to keep the same
confidential in accordance with the terms hereof, or (iii) any other disclosure
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authorized by the Servicer or the Seller; provided, however, the Indenture
Trustee shall give the Servicer prior notice of any such disclosure.
SECTION 11.19 Indemnification by and Reimbursement of the Servicer.
The Indenture Trustee further acknowledges and accepts the conditions and
limitations with respect to the Servicer's obligation to indemnify, defend and
hold the Indenture Trustee harmless as set forth in the Sale and Servicing
Agreement.
* * * * *
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IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this
Indenture to be duly executed by their respective officers, thereunto duly
authorized, all as of the day and year first above written.
CIT RV OWNER TRUST 1996-A
------------------------------,
not in its individual capacity but solely as
Owner Trustee,
By:__________________________
Name:
Title:
-----------------------------,
an ________________ corporation
as Indenture Trustee,
By:__________________________
Name:
Title:
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EXHIBIT A
FORM OF ASSET BACKED NOTES
REGISTERED $_____________
No. 1
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. ___________
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange or payment, and any Note issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
CIT RV OWNER TRUST 1996-A
CLASS A ____% ASSET BACKED NOTES
CIT RV OWNER TRUST 1996-A, a business trust organized and existing under
the laws of the State of Delaware (herein referred to as the "Issuer"), for
value received, hereby promises to pay to _______________, or registered
assigns, the principal sum of _______________ DOLLARS ($_________) payable in
accordance with the Indenture, prior to the occurrence of an Event of Default
and a declaration that the Notes are due and payable, on each Distribution Date
to the extent of amounts available therefor in an amount equal to the difference
between (i) the sum of (x) the Pool Balance on the last day of the second
proceeding Due Period (or, in the case of the first Distribution Date the
Initial Cut-off Date Principal Balance) and (y) the amount on deposit in the
Pre-Funding Account (exclusive of Pre-Funding 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 Pre-Funding Earnings) on the last day of the preceding Due
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Period; provided, however, that the outstanding principal balance of this Note
shall be due and payable on the earlier of the April, 2011 Distribution Date
(the "Class A Final Scheduled Distribution Date") and the Redemption Date with
respect to a redemption of Notes, if any, pursuant to Section 10.1(a)(i) or (ii)
or Section 10.1(b) of the Indenture. On each Distribution Date until the
principal of this Note is paid or made available for payment, the Issuer shall
pay interest on this Note in an amount equal to one-twelfth of the product of
the rate per annum shown above and the principal amount of this Note outstanding
on the preceding Distribution Date after giving effect to all payments of
principal made on the preceding Distribution Date (or in the case of the first
Distribution Date, the original outstanding principal amount of this Note).
Interest on this Note will accrue for each Distribution Date from and including
the most recent Distribution Date on which interest has been paid to but
excluding the then current Distribution Date or, if no interest has yet been
paid, from November __, 1995. Interest will be computed on the basis of a
360-day year consisting of twelve 30-day months. Such principal of and interest
on this Note shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America which, at the time of payment, is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the Indenture referred to on the reverse
hereof or be valid or obligatory for any purpose.
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IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: CIT RV OWNER TRUST 1996-A
By: ______________________________,
not in its individual capacity but solely as
Owner Trustee under the Trust Agreement
By: ______________________________________
Name:
Title:
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
-----------------------------,
an ________________ corporation
not in its individual capacity but solely as Indenture
Trustee
By: ______________________________________
Name:
Title:
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REVERSE OF NOTE
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as Class A ____% Asset Backed Notes (herein called the "Class A
Notes" or "Notes"), all issued under an Indenture, dated as of February 1, 1996
(such Indenture, as supplemented or amended, is herein called the "Indenture"),
between the Issuer and _____________________________, an ________________
corporation, as trustee (the "Indenture Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Indenture Trustee and the
Noteholders. The Class A Notes are subject to all terms of the Indenture. All
terms used and not otherwise defined in this Note that are defined in the
Indenture, as supplemented or amended, shall have the meanings assigned to them
in or pursuant to the Indenture.
The Class A Notes and all other Notes issued pursuant to the Indenture are
and will be equally and ratably secured by the Collateral pledged as security
therefor as provided in the Indenture.
Subject to the immediately following paragraph, principal on the Class A
Notes shall be payable in full on the earlier of the Distribution Date which is
the Class A Final Scheduled Distribution Date for the Class A Notes set forth
above and the Redemption Date, if any, pursuant to Section 10.1(a)(i) or (a)(ii)
or Section 10.1(b) of the Indenture. In addition, principal on the Class A Notes
will be payable in installments on earlier Distribution Dates to the extent of
amounts available therefor, in the amounts and in the priorities set forth in
Section 8.2(c) of the Indenture. "Distribution Date," with respect to the Notes
means the fifteenth day of each month or, if any such date is not a Business
Day, the next succeeding Business Day, commencing _________ 15, 1996.
Notwithstanding the provisions of the preceding paragraph, the entire
unpaid principal amount of this Note shall be due and payable on the date on
which an Event of Default shall have occurred and be continuing and the
Indenture Trustee or the Noteholders representing not less than a majority of
the outstanding amount of the Notes have declared the Notes to be immediately
due and payable in the manner provided in Section 5.2 of the Indenture. In such
event, the Holders of all Notes shall be entitled to receive repayment of
principal ratably in proportion to their respective unpaid principal balances.
All principal payments on the Class A Notes shall be made pro rata to the
Holders of the Class A Notes.
Payments of interest on this Note at the rate of ____% per annum shall be
due and payable on each Distribution Date, together with the installment of
principal, if any, if not in full payment of this Note, shall be made by check
mailed to the Person whose name appears as the Registered Holder of this Note
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(or one or more Predecessor Notes) on the Note Register as of the close of
business on each Record Date, except that with respect to Notes registered on
the Record Date in the name of the nominee of the Depository (initially, such
nominee to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Note be submitted for notation of payment. The Record Date, with
respect to any Distribution Date, means the day immediately preceding such
Distribution Date, or if Definitive Notes are issued, the last day of the month
immediately preceding the month in which such Distribution Date occurs. Any
reduction in the principal amount of this Note (or any one or more Predecessor
Notes) effected by any payments made on any Distribution Date shall be binding
upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount of
this Note on a Distribution Date, then the Indenture Trustee, in the name of and
on behalf of the Issuer, shall notify the Person who is the Registered Holder
hereof as of the Record Date preceding such Distribution Date by notice sent in
accordance with Section 2.7(e) of the Indenture, and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Indenture Trustee's principal Corporate Trust Office or at the office of the
Indenture Trustee's agent appointed for such purposes located in the City of New
York.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, with such signature guaranteed by a commercial bank
or trust company located, or having a correspondent located, in the City of New
York or the city in which the Corporate Trust Office is located, or a member
firm of a national securities exchange, and such other documents as the
Indenture Trustee may require, and thereupon one or more new Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Note, but the transferor may be
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee or the Owner Trustee in their
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individual capacities, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee or the Owner Trustee in their individual capacities, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in their individual capacities, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture such Noteholder will not, prior to the
date which is one year and one day after the termination of this Indenture with
respect to the Issuer, acquiesce, petition or otherwise invoke or cause the
Seller, the holder of the GP Interest or the Issuer to invoke the process of any
court or government authority for the purpose of commencing or sustaining a case
against the Seller, the holder of the GP Interest or the Issuer under any
federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Seller, the holder of the GP Interest or the Issuer or any substantial
part of its property, or ordering the winding up or liquidation of the affairs
of the Seller, the holder of the GP Interest or the Issuer.
Each Noteholder, by acceptance of a Note or, in the case of a Note Owner, a
beneficial interest in a Note, unless otherwise required by appropriate taxing
authorities, agrees to treat the Notes as indebtedness secured by the Contracts
for the purpose of federal income taxes, state and local income and franchise
taxes and any other taxes imposed upon, measured by or based upon gross or net
income.
Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note shall
be overdue, and neither the Issuer, the Indenture Trustee nor any such agent
shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Noteholders under the Indenture at any time by the
Issuer with the consent of the Holders of Notes representing a majority of the
outstanding principal amount of all the Notes. The Indenture also contains
provisions permitting the Holders of Notes representing specified percentages of
the outstanding principal amount of the Notes, on behalf of the Holders of all
the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one of more
Predecessor Notes) shall be conclusive and binding upon such Holder and upon all
future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
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of such consent or waiver is made upon this Note. The Indenture also permits the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture without the consent of the Noteholders.
The term "Issuer" as used in this Note includes any successor to the Issuer
under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Indenture Trustee and the
Holders of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as provided
in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the laws
of the State of New York, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer to pay the
principal of and interest on this Note at the times, place and rate, and in the
coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, neither the Seller, the Servicer, the holder of
the GP Interest, the Indenture Trustee nor the Owner Trustee in their respective
individual capacities, any owner of a beneficial interest in the Issuer, nor any
of their respective partners, beneficiaries, agents, officers, directors,
employees or successors or assigns, shall be personally liable for, nor shall
recourse be had to any of them for, the payment of principal of or interest on,
or performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in this Note or the Indenture, it being expressly
understood that said covenants, obligations and indemnifications have been made
by the Owner Trustee solely as the Owner Trustee in the assets of the Issuer.
The Holder of this Note by the acceptance hereof agrees that, except as
expressly provided in the Basic Documents, in the case of an Event of Default
under the Indenture, the Holder shall have no claim against any of the foregoing
for any deficiency, loss or claim therefrom; provided, however, that nothing
contained herein shall be taken to prevent recourse to, and enforcement against,
the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
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TRUST AGREEMENT
BETWEEN
THE CIT GROUP SECURITIZATION CORPORATION II
SELLER
AND
------------------------------
OWNER TRUSTEE
DATED AS OF February 1, 1996
================================================================================
<PAGE>
TRUST AGREEMENT, dated as of February 1, 1996, between THE CIT GROUP
SECURITIZATION CORPORATION II, a Delaware corporation, as Seller, and
____________________________, a Delaware banking corporation, as Owner Trustee.
The Seller and the Owner Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions. Certain capitalized terms used in this Agreement
shall have the respective meanings assigned to them in the Sale and Servicing
Agreement of even date herewith, among the Seller, the Servicer and the Trust
(the "Sale and Servicing Agreement"). All references herein to "the Agreement"
or "this Agreement" are to the Trust Agreement, and all references herein to
Articles, Sections and subsections are to Articles, Sections and subsections of
this Agreement unless otherwise specified.
ARTICLE II
ORGANIZATION
SECTION 2.1 Name. The Trust created hereby shall be known as "CIT RV Owner
Trust 1996-A" in which name the Owner Trustee may conduct the business of the
Trust, make and execute contracts and other instruments on behalf of the Trust
and sue and be sued on behalf of the Trust.
SECTION 2.2 Office. The office of the Trust shall be in care of the Owner
Trustee at the Corporate Trust Office or at such other address as the Owner
Trustee may designate by written notice to the Certificate Owners and the
Seller.
SECTION 2.3 Purposes and Powers. The purpose of the Trust is to engage in
the following activities:
(i) to issue the Notes pursuant to the Indenture and the Certificates
pursuant to this Agreement, and to sell, transfer or exchange the Notes and
the Certificates;
(ii) with the proceeds of the sale of the Notes and the Certificates
to fund the Capitalized Interest Account and the Pre-Funding Account and to
pay the organizational, start-up and transactional expenses of the Trust
and to pay the balance of the proceeds to the Seller pursuant to the Sale
and Servicing Agreement;
(iii) to acquire, manage and hold the Contracts;
<PAGE>
(iv) to assign, grant, transfer, pledge, mortgage and convey the Trust
Estate pursuant to the terms of the Indenture and to hold, manage and
distribute to the Certificate Owners pursuant to the terms of this
Agreement and the Sale and Servicing Agreement any portion of the Trust
Estate released from the lien of, and remitted to the Trust pursuant to,
the Indenture;
(v) to enter into and perform its obligations and exercise its rights
under the Basic Documents to which it is to be a party;
(vi) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith;
(vii) to hold and administer the Certificate Distribution Account and
Cash Collateral Account and apply the proceeds thereof as provided in the
Sale and Servicing Agreement;
(viii) to acquire Subsequent Contracts from the Seller from time to
time with funds on deposit in the Pre-Funding Account; and
(ix) subject to compliance with the Basic Documents, to engage in such
other activities as may be required in connection with conservation of the
Owner Trust Estate and the making of distributions to the
Certificateholders and the Noteholders.
The Trust is hereby authorized to engage in the foregoing activities and shall
not engage in any activity other than in connection with the foregoing or other
than as required or authorized by the terms of this Agreement or the Basic
Documents.
SECTION 2.4 Appointment of Owner Trustee. The Seller hereby appoints the
Owner Trustee as trustee of the Trust effective as of the date hereof, to have
all the rights, powers and duties set forth herein.
SECTION 2.5 Initial Capital Contribution of Owner Trust Estate. The Seller
hereby sells, assigns, transfers, conveys and sets over to the Owner Trustee, as
of the date hereof, the sum of $10. The Owner Trustee hereby acknowledges
receipt in trust from the Seller, as of the date hereof, of the foregoing
contribution, which shall constitute the initial Owner Trust Estate and shall be
deposited in the Certificate Distribution Account.
SECTION 2.6 Declaration of Trust. The Owner Trustee hereby declares that it
shall hold the Owner Trust Estate in trust upon and subject to the conditions
set forth herein for the use and benefit of the Certificate Owners, subject to
the obligations of the Trust under the Basic Documents. It is the intention of
the parties hereto that the Trust constitute a business trust under the Business
Trust Statute and that this Agreement constitute the governing instrument of
such business trust. It is the intention of the parties hereto that, solely for
purposes of federal income taxes, state and local income and franchise taxes and
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any other taxes imposed upon, measured by, or based upon gross or net income,
the Trust shall be treated as a partnership. The parties agree that, unless
otherwise required by appropriate tax authorities, the Trust shall file or cause
to be filed annual or other necessary returns, reports and other forms
consistent with the characterization of the Trust as a partnership for such tax
purposes. Effective as of the date hereof, the Owner Trustee shall have all
rights, powers and duties set forth herein and in the Business Trust Statute
with respect to accomplishing the purposes of the Trust.
SECTION 2.7 Transfer of Interest to [ ]; Liability of
[ ].
(a) On the Closing Date, the Seller shall and does hereby transfer and
assign its entire interest in the Trust to [ ] and
[ ] shall otherwise in addition purchase a 1% interest in the
Trust (the "GP Interest"). The holder of the GP Interest (which initially shall
be [ ]) shall pay organizational expenses of the Trust as they may
arise or shall, upon the request of the Owner Trustee, promptly reimburse the
Owner Trustee for any such expenses paid by the Owner Trustee. The holder of the
GP Interest shall be liable directly to and shall indemnify the injured party
for all losses, claims, damages, liabilities and expenses of the Trust
(including Expenses, to the extent not paid out of the Owner Trust Estate) to
the extent that the holder of the GP Interest would be liable if the Trust were
a partnership under the Delaware Revised Uniform Limited Partnership Act in
which the holder of the GP Interest were a general partner; provided, however,
that the holder of the GP Interest shall not be liable for (i) any losses
incurred by a Certificateholder or a Certificate Owner in its capacity as an
investor in the Certificates or by a Noteholder or Note Owner in its capacity as
an investor in the Notes, (ii) any losses, claims, damages, liabilities and
expenses arising out of the imposition by any taxing authority of any federal,
state or local income or franchise taxes, or any other taxes imposed on or
measured by gross or net income, gross or net receipts, capital, net worth and
similar items (including any interest, penalties or additions with respect
thereto) upon the Certificateholders, the Certificate Owners, the Noteholders,
the Note Owners, the Owner Trustee or the Indenture Trustee (including any
liabilities, costs or expenses with respect thereto) with respect to the
Contracts not specifically indemnified or represented to hereunder or (iii) any
obligations or liabilities of the Trust or the Owner Trustee under, in
connection with or pursuant to the Cash Collateral Agreement. In addition, any
third party creditors of the Trust (other than in connection with the
obligations described in the preceding sentence for which the holder of the GP
Interest shall not be liable) shall be deemed third party beneficiaries of this
subsection 2.7(a). The obligations of the holder of the GP Interest under this
subsection 2.7(a) shall be evidenced by the Certificates issued pursuant to
Section 3.10, which for purposes of the Business Trust Statute shall be deemed
to be a separate class of Certificates from all other Certificates issued by the
Trust; provided, however, that the rights and obligations evidenced by all
Certificates, regardless of class, shall, except as provided in this subsection
2.7(a), be identical.
(b) No Certificate Owner, other than to the extent set forth in subsection
2.7(a) with respect to the holder of the GP Interest, shall have any personal
liability for any liability or obligation of the Trust.
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(c) No Certificate Owner, including the holder of the GP Interest, shall
have the right to exercise any control of the Trust other than to the extent of
its percentage ownership of the Certificates as provided herein.
SECTION 2.8 Title to Trust Property. Legal title to all the Owner Trust
Estate shall be vested at all times in the Trust as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Owner Trust Estate to be vested in a trustee or trustees, in which case
title shall be deemed to be vested in the Owner Trustee, a co-trustee and/or a
separate trustee, as the case may be, for the benefit of the Trust.
SECTION 2.9 Situs of Trust. The Trust shall be located and administered in
the State of Delaware. All bank accounts maintained by the Owner Trustee on
behalf of the Trust shall be located in the State of Delaware or the State of
New York. The Trust shall not have any employees in any state other than
Delaware or New York; provided, however, that nothing herein shall restrict or
prohibit the Owner Trustee from having employees within or without the State of
Delaware. Payments shall be received by the Trust only in Delaware or New York,
and payments will be made by the Trust only from Delaware or New York. The only
office of the Trust shall be the Corporate Trust Office in Delaware.
SECTION 2.10 Representations and Warranties of the Seller. The Seller
hereby represents and warrants to the Owner Trustee, as of the Closing Date,
that:
(a) The Seller has been organized and is validly existing as a corporation
in good standing under the laws of the State of Delaware, with power and
authority to own its properties and conduct its business as such properties are
presently owned and such business is presently conducted and had at all relevant
times, and now has, power, authority and legal right to acquire and own the
Contracts.
(b) The Seller is duly qualified to do business as a foreign corporation in
good standing, and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of property or the conduct of its
business requires such qualifications.
(c) The Seller has the power and authority to execute and deliver this
Agreement and to carry out its terms, the Seller has full power and authority to
sell and assign the property to be sold and assigned to and deposited with, as
part of, the Trust and the Seller has duly authorized such sale and assignment
to the Trust by all necessary corporate action; and the execution, delivery and
performance of this Agreement have been duly authorized by the Seller by all
necessary corporate action.
(d) The consummation of the transactions contemplated by this Agreement and
the fulfillment of the terms of this Agreement do not conflict with, result in
any breach of any of the terms and provisions of or constitute (with or without
notice or lapse of time) a default under its certificate of incorporation or
by-laws of the Seller, or any indenture, agreement or other instrument to which
the Seller is a party or by which it is bound, or result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of any
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such indenture, agreement or other instrument (other than pursuant to or as
contemplated by the Basic Documents), or violate any law or, to the best of its
knowledge, any order, rule or regulation applicable to the Seller of any court
or of any federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Seller or any of its
properties.
SECTION 2.11 Representations and Warranties of the Holder of the GP
Interest. [ ], as intended holder of the GP Interest, hereby
represents and warrants to the Owner Trustee, as of the Closing Date, that:
(a) It has been duly organized and is validly existing as a corporation in
good standing under the laws of the State of Illinois, with power and authority
to own its properties and to conduct its business as such properties are
presently owned and such business is presently conducted.
(b) It is duly qualified to do business as a foreign corporation in good
standing, and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of property or the conduct of its
business requires such qualifications.
(c) It has the power and authority to execute and deliver this Agreement
and to carry out its terms and the execution, delivery and performance of this
Agreement has been duly authorized by all necessary corporate action.
(d) The consummation of the transactions contemplated by this Agreement and
the fulfillment of the terms of this Agreement do not conflict with, result in
any breach of any of the terms and provisions of or constitute (with or without
notice or lapse of time) a default under its certificate of incorporation or
by-laws, or any indenture, agreement or other instrument to which it is a party
or by which it is bound, or result in the creation or imposition of any Lien
upon any of its properties pursuant to the terms of any such indenture,
agreement or other instrument (other than pursuant to or as contemplated by the
Basic Documents), or violate any law or, to the best of its knowledge, any
order, rule or regulation applicable to the Seller of any court or of any
federal or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the it or any of its properties.
(e) It has been duly capitalized by the delivery of a demand note (the
"Demand Note") from The CIT Group Holdings, Inc. ("CIT"), which Demand Note has
not been canceled, waived or terminated. The proceeds of such Demand Note have
not been used and will not be used to pay (i) any of the expenses of the holder
of the GP Interest in connection with the transfer contemplated by the Basic
Documents or (ii) the purchase price for such Certificates purchased pursuant to
Section 2.7. Such Demand Note is enforceable against CIT, subject to its terms,
and subject to the applicable bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and similar laws now or hereafter in effect relating
to creditors' rights generally and subject to the general principles of equity
(whether applied in a proceeding at law or in equity).
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<PAGE>
SECTION 2.12 Tax Treatment. Net income of the Trust for any month as
determined for Federal income tax purposes (and each item of income, gain, loss,
credit and deduction entering into the computation thereof) shall be allocated:
(a) to the extent of available net income, among the
Certificateholders as of the first Record Date following the end of such
month, in proportion to their ownership of principal amount of Certificates
on such date, an amount of net income up to the sum of (i) the amount of
monthly interest at the Pass-Through Rate to which the Certificateholders
are entitled to for the related Due Period, (ii) interest on the excess, if
any, of the amount of interest and principal due to the Certificateholders
for the preceding Distribution Date over the amount in respect of interest
at the Pass-Through Rate that is actually deposited in the Certificate
Distribution Account on such preceding Distribution Date, to the extent
permitted by law, at the Pass-Through Rate from such preceding Distribution
Date through the current Distribution Date, and (iii) the portion of the
market discount, if any, on the Contracts accrued during such month that is
allocable to the excess of the initial aggregate principal amount, if any,
of the Certificates over their initial aggregate issue price; and
(b) to the holder of the GP Interest, to the extent of any remaining
net income.
If the net income of the Trust for any month is insufficient for the allocations
described in clause (a) above, subsequent net income shall first be allocated to
make up such shortfall before being allocated as provided in clause (b). Net
losses of the Trust, if any, for any month as determined for Federal income tax
purposes (and each item of income, gain, loss, credit and deduction entering
into the computation thereof) shall be allocated to the holder of the GP
Interest to the extent the holder of the GP Interest is reasonably expected, as
determined by the Servicer, to bear the economic burden of such net losses, then
net losses shall be allocated among the Certificateholders as of the first
Record Date following the end of such month in proportion to their ownership of
principal amount of Certificates on such Record Date until the principal balance
of the Certificates is reduced to zero. The holder of the GP Interest is
authorized to modify the allocations in this paragraph if necessary or
appropriate, in its sole discretion, for the allocations to fairly reflect the
economic income, gain or loss to the holder of the GP Interest, the
Certificateholders, or as otherwise required by the Code.
ARTICLE III
THE CERTIFICATES
SECTION 3.1 Initial Certificate Ownership. Upon the formation of the Trust
by the contribution by the Seller pursuant to Section 2.5 and until the issuance
of the Certificates, the Seller shall be the sole beneficiary of the Trust.
SECTION 3.2 Form of the Certificates.
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(a) The Certificates shall be substantially in the form set forth in
Exhibit A and shall be issued in minimum denominations of $20,000 and in
integral multiples of $1,000 in excess thereof; provided, however, that (a)
Certificates may be issued to the holder of the GP Interest pursuant to Section
2.7 in such denominations as to represent at least 1% of the initial Certificate
Balance and (b) one Certificate may be issued in a denomination other than an
integral multiple of $1,000. The Certificates shall be executed on behalf of the
Trust by manual or facsimile signature of a Responsible Officer of the Owner
Trustee. Certificates bearing the manual or facsimile signatures of individuals
who were, at the time when such signatures shall have been affixed, authorized
to sign on behalf of the Trust, shall be valid and binding obligations of the
Trust, notwithstanding that such individuals or any of them shall have ceased to
be so authorized prior to the authentication and delivery of such Certificates
or did not hold such offices at the date of authentication and delivery of such
Certificates.
(b) The Definitive Certificates (as hereinafter defined) shall be
typewritten, printed, lithographed or engraved or produced by any combination of
these methods (with or without steel engraved borders) all as determined by the
officers executing such Certificates, as evidenced by their execution of such
Certificates.
(c) The terms of the Certificates set forth in Exhibit A shall form part of
this Agreement.
SECTION 3.3 Execution, Authentication and Delivery. Concurrently with the
sale of the Initial Contracts to the Trust pursuant to the Sale and Servicing
Agreement, the Owner Trustee shall cause the Certificates in an aggregate
principal amount equal to the initial Certificate Balance to be executed on
behalf of the Trust, authenticated and delivered to or upon the written order of
the Seller, signed by its chairman of the board, its president or any vice
president, without further corporate action by the Seller, in authorized
denominations. No Certificate shall entitle its holder to any benefit under this
Agreement, or shall be valid for any purpose, unless there shall appear on such
Certificate a certificate of authentication substantially in the form set forth
in Exhibit A, executed by the Owner Trustee, or by the Owner Trustee's
authenticating agent, by manual signature. Such authentication shall constitute
conclusive evidence that such Certificate shall have been duly authenticated and
delivered hereunder. All Certificates shall be dated the date of their
authentication. _____________________________ is hereby appointed as the Owner
Trustee's authenticating agent.
SECTION 3.4 Registration; Registration of Transfer and Exchange of
Certificates.
(a) The Certificate Registrar shall keep or cause to be kept, at the office
or agency maintained pursuant to Section 3.8, a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, the Owner Trustee
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as provided herein; provided, however, that no
Certificate may be subdivided upon transfer or exchange such that the
denomination of any resulting Certificate is less than $20,000.
______________________________ shall be the initial Certificate Registrar. Upon
any resignation of a Certificate Registrar, the Owner Trustee shall promptly
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appoint a successor or, if it elects not to make such an appointment, assume the
duties of Certificate Registrar.
(b) Upon surrender for registration or transfer of any Certificate at the
office or agency maintained pursuant to Section 3.8, the Owner Trustee shall
execute on behalf of the Trust, authenticate and deliver (or shall cause its
authenticating agent to authenticate and deliver), in the name of the designated
transferee or transferees, one or more new Certificates in authorized
denominations of a like aggregate amount dated the date of authentication by the
Owner Trustee or any authenticating agent.
(c) At the option of a Holder of Certificates, Certificates may be
exchanged for other Certificates of authorized denominations of a like aggregate
principal amount upon surrender of the Certificates to be exchanged at the
Corporate Trust Office maintained pursuant to Section 3.8. Whenever any
Certificates are so surrendered for exchange, the Owner Trustee shall execute on
behalf of the Trust, authenticate and deliver (or shall cause its authenticating
agent to authenticate and deliver) one or more Certificates dated the date of
authentication by the Owner Trustee or any authenticating agent. Such
Certificates shall be delivered to the Holder making the exchange.
(d) Every Certificate presented or surrendered for registration of transfer
or exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Owner Trustee and the Certificate Registrar duly executed by
the Holder or his attorney duly authorized in writing with such signature
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Certificate Registrar, which requirements include membership or
participation in the Securities Transfer Agent's Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Certificate
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Exchange Act. Each Certificate surrendered for registration of transfer or
exchange shall be canceled and subsequently destroyed by the Owner Trustee or
Certificate Registrar in accordance with its customary practice.
(e) No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Owner Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
SECTION 3.5 Mutilated; Destroyed; Lost or Stolen Certificates.
(a) If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate, and (ii) there is delivered
to the Certificate Registrar, the Owner Trustee and the Trust such security or
indemnity as may be required by them to hold each of them harmless, then, in the
absence of notice to the Certificate Registrar or the Owner Trustee that such
Certificate has been acquired by a bona fide purchaser, the Owner Trustee shall
execute on behalf of the Trust and the Owner Trustee shall authenticate and
deliver (or shall cause its authenticating agent to authenticate and deliver),
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in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a replacement Certificate of a like aggregate principal amount;
provided, however, that if any such destroyed, lost or stolen Certificate, but
not a mutilated Certificate, shall have become or within seven days shall be due
and payable, then instead of issuing a replacement Certificate the Owner Trustee
may pay such destroyed, lost or stolen Certificate when so due or payable.
(b) If, after the delivery of a replacement Certificate or payment in
respect of a destroyed, lost or stolen Certificate pursuant to subsection
3.5(a), a bona fide purchaser of the original Certificate in lieu of which such
replacement Certificate was issued presents for payment such original
Certificate, the Owner Trustee shall be entitled to recover such replacement
Certificate (or such payment) from the Person to whom it was delivered or any
Person taking such replacement Certificate from such Person to whom such
replacement Certificate was delivered or any assignee of such Person, except a
bona fide purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or expense
incurred by the Owner Trustee in connection therewith.
(c) In connection with the issuance of any replacement Certificate under
this Section 3.5, the Owner Trustee may require the payment by the Holder of
such Certificate of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other reasonable expenses
(including the fees and expenses of the Owner Trustee and the Certificate
Registrar) connected therewith.
(d) Any duplicate Certificate issued pursuant to this Section 3.5 in
replacement of any mutilated, destroyed, lost or stolen Certificate shall
constitute an original additional contractual obligation of the Trust, whether
or not the mutilated, destroyed, lost or stolen Certificate shall be found at
any time or be enforced by anyone, and shall be entitled to all the benefits of
this Agreement equally and proportionately with any and all other Certificates
duly issued hereunder.
(e) The provisions of this Section 3.5 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Certificates.
SECTION 3.6 Persons Deemed Certificateholders. Prior to due presentation of
a Certificate for registration of transfer, the Owner Trustee or the Certificate
Registrar may treat the Person in whose name any Certificate shall be registered
in the Certificate Register as the Certificateholder of such Certificate for the
purpose of receiving distributions pursuant to Article V and for all other
purposes whatsoever, and neither the Owner Trustee nor the Certificate Registrar
shall be affected by any notice to the contrary.
SECTION 3.7 Access to List of Certificateholders' Names and Addresses. The
Owner Trustee shall furnish or cause to be furnished to the Servicer, the Seller
and the holder of the GP Interest, within 15 days after receipt by the Owner
Trustee of a request therefor from the Servicer, the Seller or the holder of the
GP Interest in writing, a list, in such form as the Servicer, the Seller or the
holder of the GP Interest may reasonably require, of the names and addresses of
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the Certificateholders as of the most recent Record Date. If three or more
Holders of Certificates or one or more Holder of Certificates evidencing not
less than 25% of the Certificate Balance apply in writing to the Owner Trustee,
and such application states that the applicants desire to communicate with other
Certificateholders with respect to their rights under this Agreement or under
the Certificates and such application is accompanied by a copy of the
communication that such applicants propose to transmit, then the Owner Trustee
shall, within five Business Days after the receipt of such application, afford
such applicants access during normal business hours to the current list of
Certificateholders. Each Holder, by receiving and holding a Certificate, shall
be deemed to have agreed not to hold the Seller, the holder of the GP Interest
or the Owner Trustee accountable by reason of the disclosure of its name and
address, regardless of the source from which such information was derived.
SECTION 3.8 Maintenance of Corporate Trust Office. The Owner Trustee shall
maintain in the Borough of Brooklyn, the City of New York, an office or offices
or agency or agencies where Certificates may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Owner Trustee
in respect of the Certificates and the Basic Documents may be served. The Owner
Trustee initially designates the offices of ______________________________,
__________________, ________, ________ _____ as its principal office for such
purposes. The Owner Trustee shall give prompt written notice to the Seller and
to the Certificateholders of any change in the location of the Certificate
Register or any such office or agency.
SECTION 3.9 Appointment of Paying Agent. The Paying Agent shall make
distributions to Certificateholders from the Certificate Distribution Account
pursuant to Section 5.2 and make withdrawals from the Cash Collateral Account of
amounts to be deposited in the Certificate Distribution Account and amounts, if
any, to be paid to the holder of the GP Interest, in each case pursuant to the
Sale and Servicing Agreement and amounts to be paid to the Cash Collateral
Depositor pursuant to the Cash Collateral Agreement, and the Paying Agent shall
report the amounts of such distributions and withdrawals to the Owner Trustee
and the Servicer. Any Paying Agent shall have the revocable power to withdraw
funds from the Certificate Distribution Account and/or the Cash Collateral
Account for the purpose of making the distributions referred to above. The Owner
Trustee may revoke such power and remove the Paying Agent if the Owner Trustee
determines in its sole discretion that the Paying Agent shall have failed to
perform its obligations under this Agreement in any material respect. The Paying
Agent shall initially be ______________________________, and any co-paying agent
chosen by the Owner Trustee, and acceptable to the Servicer. The Paying Agent
shall be permitted to resign as Paying Agent upon 30 days' written notice to the
Owner Trustee. If ______________________________ shall no longer be the Paying
Agent, the Owner Trustee shall appoint a successor to act as Paying Agent (which
shall be an Eligible Institution). The Owner Trustee shall cause such successor
Paying Agent or any additional Paying Agent appointed by the Owner Trustee to
execute and deliver to the Owner Trustee an instrument in which such successor
Paying Agent or additional Paying Agent shall agree with the Owner Trustee that
as Paying Agent, such successor Paying Agent or additional Paying Agent shall
hold all sums, if any, held by it for payment to the Certificateholders in trust
for the benefit of the Certificateholders entitled thereto until such sums shall
be paid to such Certificateholders. The Paying Agent shall return all unclaimed
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funds to the Owner Trustee and upon removal of a Paying Agent such Paying Agent
shall also return all funds in its possession to the Owner Trustee. The
provisions of Sections 6.3, 6.6, 6.7 and 6.9 shall apply to the Owner Trustee
also in its role as Paying Agent (if the Owner Trustee shall also act as Paying
Agent), for so long as the Owner Trustee shall act as Paying Agent and, to the
extent applicable, to any other paying agent appointed hereunder. Any reference
in this Agreement to the Paying Agent shall include any co-paying agent unless
the context requires otherwise.
SECTION 3.10 Disposition by the Holder of the GP Interest. On and after the
Closing Date, the holder of the GP Interest shall retain beneficial and record
ownership of Certificates representing at least 1% of the Certificate Balance.
Any attempted transfer of any Certificate that would reduce such interest of the
holder of the GP Interest below 1% of the Certificate Balance shall be void. The
Owner Trustee shall cause any Certificate issued to the Seller to contain a
legend to such effect.
SECTION 3.11 Book-Entry Certificates. The Certificates, upon original
issuance, shall be issued in the form of a typewritten Certificate or
Certificates representing Book-Entry Certificates, to be delivered to The
Depository Trust Company, the initial Depository by or on behalf of the Trust;
provided, however, that one Definitive Certificate may be issued to
[ ], as holder of the GP Interest pursuant to Section 2.7. Such
Certificate or Certificates (other than the Definitive Certificate issued to
[ ]) shall initially be registered on the Certificate Register in
the name of Cede & Co., the nominee of the initial Depository and no Certificate
Owner shall receive a definitive Certificate representing such Certificate
Owner's interest in such Certificate, except as provided in Section 3.13. Unless
and until definitive fully registered Certificates (the "Definitive
Certificates") shall have been issued to Certificate Owners pursuant to Section
3.13:
(a) the provisions of this Section 3.11 shall be in full force and effect;
(b) the Certificate Registrar and the Owner Trustee shall be entitled to
deal with the Depository for all purposes of this Agreement (including the
payment of principal of and interest on the Certificates and the giving of
instructions or directions hereunder) as the sole Holder of the Certificate, and
shall have no obligation to the Certificate Owners;
(c) to the extent that the provisions of this Section 3.11 conflict with
any other provisions of this Agreement, the provisions of this Section 3.11
shall control;
(d) the rights of the Certificate Owners shall be exercised only through
the Depository and shall be limited to those established by law and agreements
between such Certificate Owners and the Depository and/or the Depository
Participants. Pursuant to the Certificate Depository Agreement unless and until
Definitive Certificates are issued pursuant to Section 3.13, the initial
Depository will make book-entry transfers among the Depository Participants and
receive and transmit payments of principal of and interest on the Certificates
to such Depository Participants;
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(e) whenever this Agreement requires or permits actions to be taken based
upon instructions or directions of Holders of Certificates evidencing a
specified percentage of the Certificate Balance, the Depository shall be deemed
to represent such percentage only to the extent that it has received
instructions to such effect from Certificate Owners and/or Depository
Participants owning or representing, respectively, such required percentage of
Certificates and has delivered such instructions to the Owner Trustee.
SECTION 3.12 Notices to Depository. Whenever a notice or other
communication to the Certificateholders is required under this Agreement, unless
and until Definitive Certificates shall have been issued to Certificate Owners
pursuant to Section 3.13, the Owner Trustee shall give all such notices and
communications specified herein to be given to Certificateholders to the
Depository and shall have no further obligation to the Certificate Owners,
except to the holder of the GP Interest.
SECTION 3.13 Definitive Certificates. If (i) the Servicer advises the Owner
Trustee in writing that the Depository is no longer willing or able to properly
discharge its responsibilities with respect to the Certificates, and the
Servicer is unable to locate a qualified successor, (ii) the Servicer at its
option advises the Owner Trustee in writing that it elects to terminate the
book-entry system through the Depository, or (iii) after the occurrence of an
Event of Default or an Event of Termination, Certificate Owners representing
beneficial interests aggregating at least a majority of the Certificate Balance
advise the Depository in writing that the continuation of a book-entry system
through the Depository is no longer in the best interest of the Certificate
Owners, then the Depository shall notify all Certificate Owners and the Owner
Trustee of the occurrence of any such event and of the availability of
Definitive Certificates to Certificate Owners requesting the same. Upon
surrender to the Owner Trustee of the typewritten Certificate or Certificates
representing the Book-Entry Certificates by the Depository, accompanied by
registration instructions, the Owner Trustee shall execute and authenticate the
Definitive Certificates in accordance with the instructions of the Depository.
Neither the Certificate Registrar nor the Owner Trustee shall be liable for any
delay in delivery of such instructions and may conclusively rely on, and shall
be protected in relying on, such instructions. Upon the issuance of Definitive
Certificates, the Owner Trustee shall recognize the Holders of the Definitive
Certificates as Certificateholders.
SECTION 3.14 Seller as Certificateholder. The Seller in its individual or
any other capacity may become the owner or pledgee of Certificates and may
otherwise deal with the Owner Trustee or its Affiliates as if it were not the
Seller.
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1 Prior Notice to Certificateholders with Respect to Certain
Matters. The Owner Trustee shall not take action with respect to the following
matters, unless (i) the Owner Trustee shall have notified the Certificateholders
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in writing of the proposed action at least 30 days before the taking of such
action, and (ii) the Certificateholders shall not have notified the Owner
Trustee in writing prior to the 30th day after such notice is given that such
Certificateholders have withheld consent or provided alternative direction:
(a) the initiation of any material claim or lawsuit by the Trust (except
claims or lawsuit brought in connection with the collection of payments due on
the Contracts) and the compromise of any material action, claim or lawsuit
brought by or against the Trust (except with respect to the aforementioned
claims or lawsuits for collection of payments due on the Contracts);
(b) the election by the Trust to file an amendment to the Certificate of
Trust (unless such amendment is required to be filed under the Business Trust
Statute), a conformed copy of which is attached hereto as Exhibit B;
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(d) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interest of the Certificateholders;
(e) the amendment, change or modification of the Sale and Servicing
Agreement, except to cure any ambiguity or defect or to amend or supplement any
provision in a manner that would not materially adversely affect the interests
of the Certificateholders or in circumstances in which the Sale and Servicing
Agreement expressly provides that the consent of the Certificateholders is not
required; or
(f) the appointment pursuant to the Indenture of a successor Note
Registrar, Paying Agent or Indenture Trustee or pursuant to this Agreement of a
successor Certificate Registrar, or the consent to the assignment by the Note
Registrar, Paying Agent or Indenture Trustee or Certificate Registrar of its
obligations under the Indenture or this Agreement, as applicable.
SECTION 4.2 Action by Certificateholders with Respect to Certain Matters.
The Owner Trustee shall not have the power, except upon the written direction of
the Certificateholders, to (a) remove the Servicer under the Sale and Servicing
Agreement pursuant to Section 9.01 thereof, (b) appoint a successor Servicer
pursuant to Section 9.02 of the Sale and Servicing Agreement, or (c) except as
expressly provided in the Basic Documents, sell the Contracts or any interest
therein after the termination of the Indenture.
SECTION 4.3 Action by Certificateholders with Respect to Bankruptcy. The
Owner Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy relating to the Trust without the unanimous prior approval of all
Holders of Certificates (including the holder of the GP Interest) and the
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delivery to the Owner Trustee by each such Certificateholder of a certificate
certifying that such Certificateholder reasonably believes that the Trust is
insolvent.
SECTION 4.4 Restrictions on Certificateholders' Power. The
Certificateholders shall not direct the Owner Trustee to take or refrain from
taking any action if such action or inaction would be contrary to any obligation
of the Trust or the Owner Trustee under this Agreement or any of the Basic
Documents or would be contrary to Section 2.3, nor shall the Owner Trustee be
obligated to follow any such direction, if given.
SECTION 4.5 Majority Control. Except as expressly provided herein, any
action that may be taken or consent that may be given or withheld by the
Certificateholders under this Agreement may be taken, given or withheld by the
Holders of Certificates evidencing not less than a majority of the Certificate
Balance. Except as expressly provided herein, any written notice of the
Certificateholders delivered pursuant to this Agreement shall be effective if
signed by Holders of Certificates evidencing not less than a majority of the
Certificate Balance at the time of the delivery of such notice.
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1 Establishment of Accounts.
(a) On or prior to the Closing Date, the Trust shall cause the Servicer to
establish and maintain, in the name of the Indenture Trustee or the Owner
Trustee, as appropriate, for the benefit of the Noteholders and
Certificateholders (and, in the case of the Cash Collateral Account, for the
benefit of the Certificateholders and the Cash Collateral Depositor) the
accounts as provided in Section 5.01 of the Sale and Servicing Agreement.
(b) The Owner Trustee shall possess all right, title and interest in and to
all funds on deposit from time to time in the Certificate Distribution Account
and the Cash Collateral Account and in all proceeds thereof. Except as otherwise
provided herein or in the Sale and Servicing Agreement, the Certificate
Distribution Account and the Cash Collateral Account shall be under the sole
dominion and control of the Owner Trustee for the benefit of the
Certificateholders and, in the case of the Cash Collateral Account, for the
benefit of the Certificateholders and the Cash Collateral Depositor, as their
respective interests may appear. If, at any time, the Certificate Distribution
Account or the Cash Collateral Account ceases to be held at an Eligible
Institution, the Owner Trustee (or the Servicer on behalf of the Owner Trustee,
if the Certificate Distribution Account or the Cash Collateral Account is not
then held by the Owner Trustee or an Affiliate thereof) shall within 10 Business
Days (or such longer period, not to exceed 30 calendar days, as to which each
Rating Agency may consent) establish a new Certificate Distribution Account or
Cash Collateral Account at an Eligible Institution and shall transfer any cash
and/or any investments to such new Certificate Distribution Account or Cash
Collateral Account, as the case may be.
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SECTION 5.2 Application of Trust Funds.
(a) On each Distribution Date, the Owner Trustee shall (i) transfer or
cause the transfer of amounts on deposit in the Cash Collateral Account to the
Certificate Distribution Account pursuant to Section 5.06 of the Sale and
Servicing Agreement, (ii) transfer and distribute, or cause to be transferred
and distributed, amounts on deposit in the Cash Collateral Account to the holder
of the GP Interest and the Cash Collateral Depositor, respectively, pursuant to
Section 5.06 of the Sale and Servicing Agreement and the applicable provisions
of the Cash Collateral Agreement, respectively, on or prior to such Distribution
Date, and (iii) distribute to the Certificateholders, on a pro rata basis,
amounts deposited in the Certificate Distribution Account pursuant to the Sale
and Servicing Agreement on or prior to such Distribution Date first in respect
of interest and then in respect of principal.
(b) On each Distribution Date, the Owner Trustee shall send to each
Certificateholder the statement provided to the Owner Trustee by the Servicer
pursuant to Section 5.08 of the Sale and Servicing Agreement on such
Distribution Date setting forth, among other things, the amount of the
distribution allocable to principal and to interest, the Certificate Balance
after giving effect to such distribution, the amount of funds on deposit in the
Pre-Funding Account during the Funding Period, the number and aggregate
principal balance of Subsequent Contracts purchased by the Trust on the related
Distribution Date during the Funding Period and the Servicer Payment with
respect to such Distribution Date or Monthly Period, as applicable.
(c) If any withholding tax is imposed on the Trust's payment (or
allocations of income) to a Certificateholder, such tax shall reduce the amount
otherwise distributable to the Certificateholder in accordance with this Section
5.2. The Owner Trustee is hereby authorized and directed to retain from amounts
otherwise distributable to the Certificateholders sufficient funds for the
payment of any tax that is legally owed by the Trust (but such authorization
shall not prevent the Owner Trustee from contesting any such tax in appropriate
proceedings and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings). The amount of any withholding tax imposed with
respect to a Certificateholder shall be treated as cash distributed to such
Certificateholder at the time it is withheld by the Trust and remitted to the
appropriate taxing authority. If there is a possibility that withholding tax is
payable with respect to a distribution (such as a distribution to a non-U.S.
Certificateholder), the Owner Trustee may in its sole discretion withhold such
amounts in accordance with this subsection 5.2(c). If a Certificateholder wishes
to apply for a refund of any such withholding tax, the Owner Trustee shall
reasonably cooperate with such Certificateholder in making such claim so long as
such Certificateholder agrees to reimburse the Owner Trustee for any
out-of-pocket expenses incurred.
(d) If the Indenture Trustee holds escheated funds for payment to the Trust
pursuant to Section 3.3(e) of the Indenture, the Owner Trustee shall, upon
notice from the Indenture Trustee that such funds exist, submit on behalf of the
Trust an Issuer Order to the Indenture Trustee pursuant to Section 3.3(e) of the
Indenture instructing the Indenture Trustee to pay such funds to or at the order
of the Seller.
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SECTION 5.3 Method of Payment. Subject to subsection 7.1(c), distributions
required to be made to Certificateholders on any Distribution Date shall be made
to each Certificateholder of record on the immediately preceding Record Date
either by wire transfer, in immediately available funds, to the account of such
Holder at a bank or other entity having appropriate facilities therefor, if (i)
such Certificateholder shall have provided to the Certificate Registrar
appropriate written instructions at least five Business Days prior to such
Record Date and such Holder's Certificates in the aggregate evidence a
denomination of not less than $1,000,000 or (ii) such Certificateholder is the
holder of the GP Interest, or an Affiliate thereof, or, if not, by check mailed
to such Certificateholder at the address of such holder appearing in the
Certificate Register; provided, however, that, unless Definitive Certificates
have been issued pursuant to Section 3.13, with respect to Certificates
registered on the Record Date in the name of the nominee of the Depository
(initially, such nominee to be Cede & Co.), distributions will be made by wire
transfer in immediately available funds to the account designated by such
nominee. Notwithstanding the foregoing, the final distribution in respect of the
Certificates (whether on the Certificate Final Distribution Date or otherwise)
will be payable only upon presentation and surrender of such Certificate at the
office or agency maintained for that purpose by the Owner Trustee pursuant to
Section 3.8.
SECTION 5.4 Accounting and Reports to the Certificateholders. The Internal
Revenue Service and Others. The Owner Trustee shall (a) maintain (or cause to be
maintained) the books of the Trust on a calendar year basis on the accrual
method of accounting, (b) deliver to each Certificateholder, as may be required
by the Code and applicable Treasury Regulations or otherwise, such information
as may be required to enable each Certificateholder to prepare its federal and
state income tax returns, (c) file such tax returns relating to the Trust and
make such elections as may from time to time be required or appropriate under
any applicable state or federal statute or rule or regulation thereunder so as
to maintain the Trust's characterization as a partnership for federal income tax
purposes, (d) cause such tax returns to be signed in the manner required by law
and (e) collect or cause to be collected any withholding tax as described in and
in accordance with subsection 5.2(c) with respect to income or distributions to
Certificateholders.
SECTION 5.5 Signature on Returns; Tax Matters Partner. The Owner Trustee
shall sign on behalf of the Trust any and all tax returns of the Trust, unless
applicable law requires a Certificateholder to sign such documents, in which
case such documents shall be signed by the holder of the GP Interest. To the
extent one may be required, the holder of the GP Interest shall be the "tax
matters partner" of the Trust pursuant to the Code.
ARTICLE VI
THE OWNER TRUSTEE
SECTION 6.1 Duties of Owner Trustee.
(a) The Owner Trustee undertakes to perform such duties, and only such
duties, as are specifically set forth in this Agreement and the other Basic
Documents, including the administration of the Trust in the interest of the
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Certificateholders, subject to the Basic Documents and in accordance with the
provisions of this Agreement and the Basic Documents. No implied covenants or
obligations shall be read into this Agreement.
(b) Notwithstanding the foregoing, the Owner Trustee shall be deemed to
have discharged its duties and responsibilities hereunder and under the Basic
Documents to the extent the Servicer has agreed in the Sale and Servicing
Agreement to perform any act or to discharge any duty of the Owner Trustee
hereunder or under any Basic Document, and the Owner Trustee shall not be liable
for the default or failure of the Servicer to carry out its obligations under
the Sale and Servicing Agreement.
(c) In the absence of bad faith on its part, the Owner Trustee may
conclusively rely upon certificates or opinions furnished to the Owner Trustee
and conforming to the requirements of this Agreement in determining the truth of
the statements and the correctness of the opinions contained therein; provided,
however, that the Owner Trustee shall have examined such certificates or
opinions so as to determine compliance of the same with the requirements of this
Agreement.
(d) The Owner Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this subsection 6.1(d) shall not limit the effect of subsection
6.1(a) or (b);
(ii) the Owner Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it is proved that the
Owner Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Owner Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 4.1, 4.2 or 6.4.
(e) Subject to Sections 5.1 and 5.2, monies received by the Owner Trustee
hereunder need not be segregated in any manner except to the extent required by
law or the Sale and Servicing Agreement and may be deposited under such general
conditions as may be prescribed by law, and the Owner Trustee shall not be
liable for any interest thereon.
(f) The Owner Trustee shall not take any action that (i) is inconsistent
with the purposes of the Trust set forth in Section 2.3 or (ii) would, to the
actual knowledge of a Responsible Officer of the Owner Trustee, result in the
Trust's becoming taxable as a corporation for federal income tax purposes. The
Certificateholders shall not direct the Owner Trustee to take action that would
violate the provisions of this Section 6.1 and any such direction shall be null
and void.
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SECTION 6.2 Rights of Owner Trustee. The Owner Trustee is authorized and
directed to execute and deliver the Basic Documents and each certificate or
other document attached as an exhibit to or contemplated by the Basic Documents
to which the Trust is to be a party, in such form as the Seller shall approve as
evidenced conclusively by the Owner Trustee's execution thereof. In addition to
the foregoing, the Owner Trustee is authorized, but shall not be obligated, to
take all actions required of the Trust pursuant to the Basic Documents. The
Owner Trustee is further authorized from time to time to take such action as the
Servicer recommends with respect to the Basic Documents.
SECTION 6.3 Acceptance of Trusts and Duties. Except as otherwise provided
in this Article VI, in accepting the trusts hereby created
_______________________________ acts solely as Owner Trustee hereunder and not
in its individual capacity and all Persons having any claim against the Owner
Trustee by reason of the transactions contemplated by this Agreement or any
Basic Document shall look only to the Owner Trust Estate for payment or
satisfaction thereof. The Owner Trustee accepts the trusts hereby created and
agrees to perform its duties hereunder with respect to such trusts but only upon
the terms of this Agreement. The Owner Trustee also agrees to disburse all
monies actually received by it constituting part of the Owner Trust Estate upon
the terms of the Basic Documents and this Agreement. The Owner Trustee shall not
be liable or accountable hereunder or under any Basic Document under any
circumstances, except (i) for its own negligent action, its own negligent
failure to act or its own willful misconduct or (ii) in the case of the
inaccuracy of any representation or warranty contained in Section 6.6 and
expressly made by the Owner Trustee. In particular, but not by way of limitation
(and subject to the exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall at no time have any responsibility or liability
for or with respect to the legality, validity and enforceability of any
Contract, or the perfection and priority of any security interest created by any
Contract in any Financed Vehicle or the maintenance of any such perfection and
priority, or for or with respect to the sufficiency of the Owner Trust Estate or
its ability to generate the payments to be distributed to Certificateholders
under this Agreement or the Noteholders under the Indenture, including, without
limitation: the existence, condition and ownership of any Financed Vehicle; the
existence and enforceability of any insurance thereon; the existence and
contents of any Contract on any computer or other record thereof; the validity
of the assignment of any Contract to the Trust or of any intervening assignment;
the completeness of any Contract; the performance or enforcement of any
Contract; the compliance by the Seller or the Servicer with any warranty or
representation made under any Basic Document or in any related document or the
accuracy of any such warranty or representation or any action of the Servicer,
the Trustee or the Servicer or any subservicer taken in the name of the Owner
Trustee.
(b) the Owner Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in accordance with the instructions of the Servicer
or any Certificateholder;
(c) no provision of this Agreement or any Basic Document shall require the
Owner Trustee to expend or risk funds or otherwise incur any financial liability
in the performance of any of its rights or powers hereunder or under any Basic
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Document, if the Owner Trustee shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents, including
the principal of and interest on the Notes or the Certificate Balance of and
interest on the Certificates;
(e) the Owner Trustee shall not be responsible for or in respect of and
makes no representation as to the validity or sufficiency of any provision of
this Agreement or for the due execution hereof by the Seller or for the form,
character, genuineness, sufficiency, value or validity of any of the Owner Trust
Estate or for or in respect of the validity or sufficiency of the Basic
Documents, the Notes, the Certificates (other than the certificate of
authentication on the Certificates) or of any Contracts or any related
documents, and the Owner Trustee shall in no event assume or incur any
liability, duty or obligation to any Noteholder, to any Certificateholder or the
Cash Collateral Depositor, other than as expressly provided for herein and in
the Basic Documents;
(f) the Owner Trustee shall not be liable for the default or misconduct of
the Servicer, the Indenture Trustee, the Seller or the Servicer under any of the
Basic Documents or otherwise and the Owner Trustee shall have no obligation or
liability to perform the obligations of the Trust under this Agreement or the
Basic Documents that are required to be performed by the Servicer under the Sale
and Servicing Agreement or the Indenture Trustee under the Indenture; and
(g) the Owner Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation under this Agreement or otherwise or in relation to this
Agreement or any Basic Document, at the request, order or direction of any of
the Certificateholders, unless such Certificateholders have offered to the Owner
Trustee security or indemnity satisfactory to it against the costs, expenses and
liabilities that may be incurred by the Owner Trustee therein or thereby. The
right of the Owner Trustee to perform any discretionary act enumerated in this
Agreement or in any Basic Document shall not be construed as a duty, and the
Owner Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of any such act.
SECTION 6.4 Action Upon Instruction by Certificateholders.
(a) Subject to Section 4.4, the Certificateholders may by written
instruction direct the Owner Trustee in the management of the Trust. Such
direction may be exercised at any time by written instruction of the
Certificateholders pursuant to Section 4.5.
(b) Notwithstanding the foregoing, the Owner Trustee shall not be required
to take any action hereunder or under any Basic Document if the Owner Trustee
shall have reasonably determined, or shall have been advised by counsel, that
such action is likely to result in liability on the part of the Owner Trustee or
is contrary to the terms hereof or of any Basic Document or is otherwise
contrary to law.
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(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or any
Basic Document, or is unsure as to the application, intent, interpretation or
meaning of any provision of this Agreement or the Basic Documents, the Owner
Trustee shall promptly give notice (in such form as shall be appropriate under
the circumstances) to the Certificateholders requesting instruction as to the
course of action to be adopted, and, to the extent the Owner Trustee acts in
good faith in accordance with any such instruction received, the Owner Trustee
shall not be liable on account of such action to any Person. If the Owner
Trustee shall not have received appropriate instructions within ten days of such
notice (or within such shorter period of time as reasonably may be specified in
such notice or may be necessary under the circumstances) it may, but shall be
under no duty to, take or refrain from taking such action which is consistent,
in its view, with this Agreement or the Basic Documents, and as it shall deem to
be in the best interests of the Certificateholders, and the Owner Trustee shall
have no liability to any Person for any such action or inaction.
SECTION 6.5 Furnishing of Documents. The Owner Trustee shall furnish (a) to
the Certificateholders, promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Owner Trustee
under the Basic Documents and (b) to Noteholders, promptly upon receipt of a
written request therefor, copies of the Purchase Agreement, any Subsequent
Purchase Agreements, the Sale and Servicing Agreement, any Subsequent Transfer
Agreements and this Agreement.
SECTION 6.6 Representations and Warranties of Owner Trustee. The Owner
Trustee hereby represents and warrants to the Seller, for the benefit of the
Certificateholders, that:
(a) It is a banking corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation.
(b) It has full power, authority and legal right to execute, deliver and
perform this Agreement, and has taken all necessary action to authorize the
execution, delivery and performance by it of this Agreement.
(c) The execution, delivery and performance by it of this Agreement (i)
shall not violate any provision of any law or regulation governing the banking
and trust powers of the Owner Trustee or any order, writ, judgment or decree of
any court, arbitrator or governmental authority applicable to the Owner Trustee
or any of its assets, (ii) shall not violate any provision of the corporate
charter or by-laws of the Owner Trustee, or (iii) shall not violate any
provision of, or constitute, with or without notice or lapse of time, a default
under, or result in the creation or imposition of any lien on any properties
included in the Trust pursuant to the provisions of any mortgage, indenture,
contract, agreement or other undertaking to which it is a party, which
violation, default or lien could reasonably be expected to have a materially
adverse effect on the Owner Trustee's performance or ability to perform its
duties as Owner Trustee under this Agreement or on the transactions contemplated
in this Agreement.
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(d) The execution, delivery and performance by the Owner Trustee of this
Agreement shall not require the authorization, consent or approval of, the
giving of notice to, the filing or registration with, or the taking of any other
action in respect of, any governmental authority or agency regulating the
banking and corporate trust activities of banks or trust companies in the
jurisdiction in which the Trust was formed.
(e) This Agreement has been duly executed and delivered by the Owner
Trustee and constitutes the legal, valid and binding agreement of the Owner
Trustee, enforceable in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, or other similar laws
affecting the enforcement of creditors' rights in general and by general
principles of equity, regardless of whether such enforceability is considered in
a proceeding in equity or at law.
SECTION 6.7 Reliance; Advice of Counsel.
(a) The Owner Trustee shall incur no liability to anyone in acting upon any
signature, instrument, notice, resolution, request, consent, order, certificate,
report, opinion, bond or other document or paper believed by it to be genuine
and believed by it to be signed by the proper party or parties and need not
investigate any fact or matter in any such document. The Owner Trustee may
accept a certified copy of a resolution of the board of directors or other
governing body of any corporate party as conclusive evidence that such
resolution has been duly adopted by such body and that the same is in full force
and effect. As to any fact or matter the method of the determination of which is
not specifically prescribed herein, the Owner Trustee may for all purposes
hereof rely on a certificate, signed by the president or any vice president or
by the treasurer or other authorized officers of the relevant party, as to such
fact or matter, and such certificate shall constitute full protection to the
Owner Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in the
performance of its duties and obligations under this Agreement or the Basic
Documents, the Owner Trustee: (i) may act directly or through its agents,
attorneys, custodians or nominees pursuant to agreements entered into with any
of them, and the Owner Trustee shall not be liable for the conduct or misconduct
of such agents, attorneys, custodians or nominees if such agents, attorneys,
custodians or nominees shall have been selected by the Owner Trustee with
reasonable care; and (ii) may consult with counsel, accountants and other
skilled professionals to be selected with reasonable care and employed by it.
The Owner Trustee shall not be liable for anything done, suffered or omitted in
good faith by it in accordance with the opinion or advice of any such counsel,
accountants or other such Persons and not contrary to this Agreement or any
Basic Document.
SECTION 6.8 Owner Trustee May Own Certificates and Notes. The Owner Trustee
in its individual or any other capacity may become the owner or pledgee of
Certificates or Notes and may deal with the Seller, the Indenture Trustee and
the Servicer in transactions in the same manner as it would have if it were not
the Owner Trustee.
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SECTION 6.9 Compensation and Indemnity. The Owner Trustee shall receive as
compensation for its services hereunder such fees as have been separately agreed
upon before the date hereof between the Seller, or any person representing the
Seller, and the Owner Trustee, and the Owner Trustee shall be entitled to be
reimbursed by the Servicer for its other reasonable expenses hereunder,
including the reasonable compensation, expenses and disbursements of such
agents, custodians, nominees, representatives, experts and counsel as the Owner
Trustee may employ in connection with the exercise and performance of its rights
and its duties hereunder. The Servicer shall indemnify the Owner Trustee and its
successors, assigns, agents and servants in accordance with the provisions of
Section 8.02 of the Sale and Servicing Agreement. The indemnities contained in
this Section 6.9 shall survive the resignation or termination of the Owner
Trustee or the termination of this Agreement. Any amounts paid to the Owner
Trustee pursuant to this Article VI shall be deemed not to be a part of the
Owner Trust Estate immediately after such payment.
SECTION 6.10 Replacement of Owner Trustee.
(a) The Owner Trustee may resign at any time and be discharged from the
trusts hereby created by giving 30 days' prior written notice thereof to the
Servicer, provided that such resignation shall not become effective until a
successor Owner Trustee has been appointed. The Servicer may appoint a successor
Owner Trustee by delivering a written instrument pursuant to Section 6.10(b). If
no successor Owner Trustee shall have been appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Owner Trustee may petition any court of competent jurisdiction for the
appointment of a successor Owner Trustee. The Servicer shall remove the Owner
Trustee if:
(i) the Owner Trustee shall cease to be eligible in accordance with
the provisions of Section 6.13 and shall fail to resign after written
request therefor by the Servicer;
(ii) the Owner Trustee shall be adjudged bankrupt or insolvent;
(iii) a receiver or other public officer shall be appointed or take
charge or control of the Owner Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation; or
(iv) the Owner Trustee shall otherwise be incapable of acting.
(b) If the Owner Trustee resigns or is removed or if a vacancy exists in
the office of Owner Trustee for any reason the Servicer shall promptly appoint a
successor Owner Trustee by written instrument, in duplicate (one copy of which
instrument shall be delivered to the outgoing Owner Trustee so removed and one
copy to the successor Owner Trustee) and shall pay all fees owed to the outgoing
Owner Trustee.
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(c) Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section 6.10
shall not become effective until a written acceptance of appointment is
delivered by the successor Owner Trustee to the outgoing Owner Trustee and the
Servicer and all fees and expenses due to the outgoing Owner Trustee are paid.
Any successor Owner Trustee appointed pursuant to this Section 6.10 shall be
eligible to act in such capacity in accordance with Section 6.13 and, following
compliance with the preceding sentence, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor under this Agreement,
with like effect as if originally named as Owner Trustee. The Servicer shall
provide notice of such resignation or removal of the Owner Trustee to each of
the Rating Agencies.
(d) The predecessor Owner Trustee shall upon payment of its fees and
expenses deliver to the successor Owner Trustee all documents and statements and
monies held by it under this Agreement. The Servicer and the predecessor Owner
Trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for fully and certainly vesting and confirming in the
successor Owner Trustee all such rights, powers, duties and obligations.
(e) Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section 6.10, the Servicer shall mail notice of the successor of such Owner
Trustee to all Certificateholders, the Indenture Trustee, the Noteholders and
the Rating Agencies .
SECTION 6.11 Merger or Consolidation of Owner Trustee. Any corporation into
which the Owner Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, provided
such corporation shall be eligible pursuant to Section 6.13, and without the
execution or filing of any instrument or any further act on the part of any of
the parties hereto; provided, however, that the Owner Trustee shall mail notice
of such merger, conversion or consolidation to the Rating Agencies.
SECTION 6.12 Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Owner Trust Estate or any Financed Vehicle may at the time be
located, the Servicer and the Owner Trustee acting jointly shall have the power
and shall execute and deliver all instruments to appoint one or more Persons
approved by the Owner Trustee to act as co-trustee, jointly with the Owner
Trustee, or as separate trustee or trustees, of all or any part of the Owner
Trust Estate, and to vest in such Person, in such capacity, such title to the
Trust, or any part thereof, and, subject to the other provisions of this Section
6.12, such powers, duties, obligations, rights and trusts as the Servicer and
the Owner Trustee may consider necessary or desirable. If the Servicer shall not
have joined in such appointment within 15 days after the receipt by it of a
request so to do, the Owner Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee under this Agreement shall be
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required to meet the terms of eligibility as a successor trustee pursuant to
Section 6.13 and no notice of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 6.10.
(b) Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Owner Trustee shall be conferred upon and exercised or performed
jointly by the Owner Trustee and such separate trustee or co-trustee (it
being understood that such separate trustee or co-trustee is not authorized
to act separately without the Owner Trustee joining in such act), except to
the extent that under any law of any jurisdiction in which any particular
act or acts are to be performed, the Owner Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the Trust
or any portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at the
direction of the Owner Trustee;
(ii) no trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement;
and
(iii) the Servicer and the Owner Trustee acting jointly may at any
time accept the resignation of or remove any separate trustee or
co-trustee.
(c) Any notice, request or other writing given to the Owner Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Owner
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Owner Trustee. Each such instrument shall be filed with the Owner
Trustee and a copy thereof given to the Servicer.
(d) Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
SECTION 6.13 Eligibility Requirements for Owner Trustee. The Owner Trustee
shall at all times: (a) be authorized to exercise corporate trust powers; (b)
have a combined capital and surplus of at least $50,000,000 and be subject to
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supervision or examination by federal or state authorities; and (c) have (or
have a parent which has) a long-term unsecured debt rating of at least "BBB" by
Standard & Poor's and have a long-term unsecured debt rating of at least "Baa3"
by Moody's. If such corporation shall publish reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purpose of this Section 6.13, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of this Section 6.13, the Owner Trustee shall
resign immediately in the manner and with the effect specified in Section 6.10.
At all times, the Owner Trustee or Co-trustee appointed pursuant hereto shall be
a person that satisfies the provisions of Section 3807(a) of the Business Trust
Statute (the "Delaware Trustee").
ARTICLE VII
TERMINATION OF TRUST AGREEMENT
SECTION 7.1 Termination of Trust Agreement.
(a) This Agreement has been entered into in part to induce the Indenture
Trustee and the Certificateholders from time to time to participate in the
transactions contemplated hereby, and each of the Owner Trustee, the holder of
the GP Interest and the Seller agree that the Indenture Trustee (so long as the
Indenture shall not have been terminated in accordance with its terms) and the
Certificateholders from time to time are third party beneficiaries hereof, and
shall be entitled to enforce the terms of this Agreement to the same extent as
if they were signatories hereto, subject, however, to Article IV hereof and to
the applicable provisions of the Indenture. So long as the Indenture shall not
have been terminated in accordance with its terms, this Agreement and the Trust
created hereby are irrevocable by the Owner Trustee and the Seller, unless the
Indenture Trustee and the Certificateholders consent in writing to such
termination. This Agreement (other than Section 6.9) and the Trust shall
terminate and be of no further force or effect on the earlier of: (i) the final
distribution by the Owner Trustee of all monies or other property or proceeds of
the Owner Trust Estate in accordance with the terms of the Indenture, the Sale
and Servicing Agreement (including the exercise by the Servicer of its option to
purchase the Contracts pursuant to Section 11.01 of the Sale and Servicing
Agreement or resulting from the mandatory sale of all Contracts pursuant to
Section 11.02 of the Sale and Servicing Agreement) and Article V, (ii) at the
time provided in Section 7.2 or (iii) twenty-one years less one day after the
death of the last survivor of all of the decedents of the grandparents of David
C. Rockefeller living on the date of the earliest execution of this Agreement by
any party hereto, but if this Agreement and the Trust created hereby shall be or
become authorized under applicable law to be valid for a period commencing on
the twenty-first anniversary of the death of such last survivor (or, without
limiting the generality of the foregoing, if legislation shall become effective
providing for the validity of this Agreement and the Trust created hereby for a
period in gross exceeding the period for which this Agreement and the Trust
created hereby are hereinabove stated to extend and be valid), then this
Agreement and the Trust created hereby shall not terminate under this subsection
(iii), but shall extend to and continue in effect, but only if such
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non-termination and extension shall then be valid under applicable law, until
the day proceeding such date as the same shall, under applicable law, cease to
be valid. Upon such termination, all monies or other property or proceeds
constituting part of the Owner Trust Estate shall be distributed in accordance
with the terms of the Agreement. The bankruptcy, liquidation, dissolution, death
or incapacity of any Certificateholder, other than the holder of the GP Interest
as described in Section 7.2, shall not (x) operate to terminate this Agreement
or the Trust, nor (y) entitle such Certificateholder's legal representatives or
heirs to claim an accounting or to take any action or proceeding in any court
for a partition or winding up of all or any part of the Trust or the Owner Trust
Estate nor (z) otherwise affect the rights, obligations and liabilities of the
parties hereto. The bankruptcy, liquidation or dissolution of the Owner Trustee
(or any other beneficiary herewith) will not terminate this Agreement or the
Trust, nor entitle such person's legal representatives or heirs, as appropriate,
to claim an accounting or to take any action or proceeding in any court for a
partition or winding up of the Trust or Owner Trust Estate, nor otherwise affect
the rights, obligations and liabilities of the parties hereto. No creditor of
any Certificateholder shall obtain legal title to or exercise legal or equitable
remedies with respect to the Owner Trust Estate as a result of such
Certificateholder's holding of the Certificate. No transfer, by operation of law
or otherwise, of any right, title and interest of any Certificateholder in and
to its undivided beneficial interest in the Owner Trust Estate shall operate to
terminate this Agreement or the Trust created hereby.
(b) Except as provided in Section 7.1(a), neither the Seller nor the holder
of the GP Interest nor any Certificateholder shall be entitled to revoke or
terminate the Trust.
(c) Notice of any termination of the Trust, specifying the Distribution
Date upon which the Certificateholders shall surrender their Certificates to the
Paying Agent for payment of the final distribution and cancellation, shall be
given by the Owner Trustee by letter to Certificateholders mailed within five
Business Days of receipt of notice of such termination from the Servicer given
pursuant to Section 11.01 of the Sale and Servicing Agreement, or within five
Business Days of the Owner Trustee receiving notice of such termination from the
Indenture Trustee pursuant to Section 11.02 of the Sale and Servicing Agreement,
stating: (i) the Distribution Date upon or with respect to which final payment
of the Certificates shall be made upon presentation and surrender of the
Certificates at the office of the Paying Agent therein designated; (ii) the
amount of any such final payment; and (iii) that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made only
upon presentation and surrender of the Certificates at the office of the Paying
Agent therein specified. The Owner Trustee shall give such notice to the
Certificate Registrar (if other than the Owner Trustee) and the Paying Agent at
the time such notice is given to Certificateholders. Upon presentation and
surrender of the Certificates, the Paying Agent shall cause to be distributed to
Certificateholders amounts distributable on such Distribution Date pursuant to
Section 5.2.
(d) If all of the Certificateholders shall not surrender their Certificates
for cancellation within six months after the date specified in the above
mentioned written notice, the Owner Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
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one year after the second notice all the Certificates shall not have been
surrendered for cancellation, the Owner Trustee may take appropriate steps, or
may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that shall remain
subject to this Agreement. Subject to applicable laws with respect to escheat of
funds, any funds remaining in the Trust after exhaustion of such remedies in the
preceding sentence shall be deemed property of the holder of the GP Interest and
distributed by the Owner Trustee to the holder of the GP Interest.
(e) Upon the winding up of the Trust and its termination, the Owner Trustee
shall cause the Certificate of Trust to be canceled by filing a certificate of
cancellation with the Secretary of State in accordance with the provisions of
Section 3810 of the Business Trust Statute.
SECTION 7.2 Dissolution upon Bankruptcy of the Holder of the GP Interest.
Upon the occurrence of an Insolvency Event with respect to the holder of the GP
Interest, this Agreement and the Trust shall be terminated and the Contracts
liquidated in accordance with Section 7.1 unless, within 90 days after such
occurrence, the Owner Trustee shall have received written instructions from (a)
each of the Certificateholders (other than the holder of the GP Interest) 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. Promptly after
the occurrence of any Insolvency Event with respect to the holder of the GP
Interest: (i) the holder of the GP Interest shall give the Indenture Trustee and
the Owner Trustee written notice of such Insolvency Event; (ii) the Owner
Trustee shall, upon the receipt of such written notice from the holder of the GP
Interest, give prompt written notice to the Certificateholders and the Indenture
Trustee of the occurrence of such event and (iii) the Indenture Trustee shall,
upon receipt of written notice of such Insolvency Event from the Owner Trustee
or the holder of the GP Interest, give prompt written notice to the Noteholders
of the occurrence of such event; provided, however, that any failure to give a
notice required by this sentence shall not prevent or delay in any manner a
termination of the Trust pursuant to the first sentence of this Section 7.2. If
no such instructions are received within such 90-day period, the Owner Trustee
shall direct the Indenture Trustee promptly to sell the assets of the Trust
(other than the Designated Accounts and the Cash Collateral Account) in a
commercially reasonable manner and on commercially reasonable terms. The
proceeds of any such sale, disposition or liquidation of the assets of the Trust
shall be treated as collections on the Contracts and deposited in the Collection
Account pursuant to Section 5.02 of the Sale and Servicing Agreement.
ARTICLE VIII
AMENDMENTS
SECTION 8.1 Amendments Without Consent of Certificateholders or
Noteholders. This Agreement may be amended by the Seller and the Owner Trustee
without the consent of any of the Noteholders or the Certificateholders (but
with prior written notice to each of the Rating Agencies and in the case of
clauses (iii) and (vi), satisfaction of the Rating Agency Condition), to (i)
correct manifest error or cure any ambiguity, (ii) correct or supplement any
provision in this Agreement that may be inconsistent with any other provision in
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this Agreement, (iii) add or amend any provision as requested by Moody's or
Standard & Poor's to maintain or improve the rating of the Notes or
Certificates, (iv) add to the covenants, restrictions or obligations of the
Seller, the holder of the GP Interest, the Owner Trustee or the Indenture
Trustee, (v) evidence and provide for the acceptance of the appointment of a
successor trustee with respect to the Owner Trust Estate and add to or change
any provisions as shall be necessary to facilitate the administration of the
trusts hereunder by more than one trustee pursuant to Article VI and (vi) add,
change or eliminate any other provision of this Agreement provided that an
amendment pursuant to this clause (vi), as evidenced by an Opinion of Counsel,
does not adversely affect in any material respect the interests of the
Noteholders or the Certificateholders.
SECTION 8.2 Amendments With Consent of Certificateholders and Noteholders.
This Agreement may be amended from time to time by the Seller and the Owner
Trustee with the consent of Noteholders whose Notes evidence not less than a
majority of the aggregate outstanding amount of the Notes as of the close of the
preceding Distribution Date and the consent of Certificateholders whose
Certificates evidence not less than a majority of the Certificate Balance as of
the close of the preceding Distribution Date (which consent, whether given
pursuant to this Section 8.2 or pursuant to any other provision of this
Agreement, shall be conclusive and binding on such Person and on all future
Holders of such Notes or Certificates and of any Notes or Certificates issued
upon the transfer thereof or in exchange thereof or in lieu thereof whether or
not notation of such consent is made upon the Notes or Certificates) for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement, or of modifying in any manner the rights of
the Noteholders or the Certificateholders; provided, however, that no such
amendment shall (a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on Contracts, or
distributions that shall be required to be made on any Note or Certificate, any
Contract Rate, the Pass Through Rate or the Class A Rate or (b) reduce the
aforesaid percentage required to consent to any such amendment, without the
consent of the holders of all Notes and all of the Certificate Balance with
respect to Certificates then outstanding. The Owner Trustee shall furnish notice
to each of the Rating Agencies prior to obtaining consent to any proposed
amendment under this Section 8.2.
SECTION 8.3 Form of Amendments.
(a) Promptly after the execution of any amendment, supplement or consent
pursuant to Section 8.1 or 8.2, the Owner Trustee shall furnish written
notification of the substance of such amendment or consent to each
Certificateholder and the Indenture Trustee.
(b) It shall not be necessary for the consent of Certificateholders, the
Noteholders or the Indenture Trustee pursuant to Section 8.2 to approve the
particular form of any proposed amendment or consent, but it shall be sufficient
if such consent shall approve the substance thereof. The manner of obtaining
such consents (and any other consents of Certificateholders provided for in this
Agreement or in any other Basic Document) and of evidencing the authorization of
the execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe.
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(c) Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
(d) Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Owner Trustee may, but shall not
be obligated to, enter into any such amendment which affects the Owner Trustee's
own rights, duties or immunities under this Agreement or otherwise.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 No Legal Title to Owner Trust Estate. The Certificateholders
shall not have legal title to any part of the Owner Trust Estate. The
Certificateholders shall be entitled to receive distributions with respect to
their undivided ownership interest therein only in accordance with Articles V
and VII. No transfer, by operation of law or otherwise, of any right, title, and
interest of the Certificateholders to and in their ownership interest in the
Owner Trust Estate shall operate to terminate this Agreement or the trusts
hereunder or entitle any transferee to an accounting or to the transfer to it of
legal title to any part of the Owner Trust Estate.
SECTION 9.2 Limitations on Rights of Others. Except for Section 2.7, the
last sentence of Section 5.2(a) and Section 9.12, the provisions of this
Agreement are solely for the benefit of the Owner Trustee, the Seller, the
Certificateholders, the Servicer and, to the extent expressly provided herein,
the Indenture Trustee and the Noteholders, and nothing in this Agreement,
whether express or implied, shall be construed to give to any other Person any
legal or equitable right, remedy or claim in the Owner Trust Estate or under or
in respect of this Agreement or any covenants, conditions or provisions
contained herein.
SECTION 9.3 Notices.
(a) All demands, notices and communications upon or to the Seller, the
Servicer, the Indenture Trustee, the Owner Trustee or the Rating Agencies under
this Agreement shall be in writing personally delivered, sent by electronic
facsimile (with hard copy to follow via first class mail), provided, however,
receipt of such is acknowledged by return facsimile or otherwise in writing, or
mailed by certified mail-return receipt requested, and shall be deemed to have
been duly given upon receipt (a) in the case of the Seller, at the following
address: 650 CIT Drive, Livingston, N.J. 07039, (b) in the case of the Servicer,
at the following address: 650 CIT Drive, Livingston, N.J. 07039, (c) in the case
of the Indenture Trustee, at its Corporate Trust Office, (d) in the case of the
Trust or the Owner Trustee, to the Owner Trustee at its Corporate Trust Office,
with a copy to _______________________________at __________________, ________,
__ _____, attn: _____________, (e) in the case of Moody's Investors Service,
Inc., to Moody's Investors Service, Inc., ABS Monitoring Department, 99 Church
Street, New York, New York 10007 and (f) in the case of Standard & Poor's
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Corporation, to Standard & Poor's Corporation, 26 Broadway (15th Floor), New
York, New York 10004, Attention: Asset Backed Surveillance Department, or at
such other address as shall be designated by such Person in a written notice to
the other parties to this Agreement.
(b) Any notice required or permitted to be given to a Certificateholder
shall be given by first-class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register. Any notice so mailed within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not the Certificateholder receives such notice.
SECTION 9.4 Severability. If any one or more of the covenants, agreements,
provisions or terms of this Agreement shall be for any reason whatsoever held
invalid, then such covenants, agreements, provisions or terms shall be deemed
severable from the remaining covenants, agreements, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the other
provisions of this Agreement or of the Certificates or the rights of the holders
thereof.
SECTION 9.5 Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument.
SECTION 9.6 Successors and Assigns. All covenants and agreements contained
herein shall be binding upon, and inure to the benefit of, the Seller, the Owner
Trustee and each Certificateholder and their respective successors and permitted
assigns, all as herein provided. Any request, notice, direction, consent, waiver
or other instrument or action by a Certificateholder shall bind the successors
and assigns of such Certificateholder.
SECTION 9.7 No Petition Covenant. Notwithstanding any prior termination of
this Agreement, the Trust (or the Owner Trustee on behalf of the Trust), each
Certificateholder or Certificate Owner, the Indenture Trustee and each
Noteholder or Note Owner shall not, prior to the date which is one year and one
day after the termination of this Agreement with respect to the holder of the GP
Interest or the Seller, acquiesce, petition or otherwise invoke or cause the
holder of the GP Interest to invoke the process of any court or governmental
authority for the purpose of commencing or sustaining a case against the holder
of the GP Interest or the Seller under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the holder of the
GP Interest or the Seller or any substantial part of its property, or ordering
the winding up or liquidation of the affairs of the holder of the GP Interest or
the Seller.
SECTION 9.8 No Recourse. Each Certificateholder by accepting a Certificate
acknowledges that such Certificateholder's Certificates represent beneficial
interests in the Trust only and do not represent interests in or obligations of
the Seller, the holder of the GP Interest, the Servicer, the Owner Trustee, the
Indenture Trustee or any Affiliate thereof and no recourse may be had against
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such parties or their assets, except as may be expressly set forth or
contemplated in this Agreement, the Certificates or the Basic Documents.
SECTION 9.9 Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
SECTION 9.10 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 9.11 Certificate Transfer Restrictions.
The Certificates may not be acquired by or for the account of (i) an
employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to
the provisions of Title I of ERISA, (ii) a plan described in Section 4975(e)(1)
of the Code or (iii) any entity whose underlying assets include plan assets by
reason of a plan's investment in the entity (each, a "Benefit Plan"). By
accepting and holding a Certificate, the Holder thereof and the Certificate
Owner shall each be deemed to have represented and warranted that it is not a
Benefit Plan and not subject to the foregoing limitation.
SECTION 9.12 Indemnification by the Servicer. The Owner Trustee further
acknowledges and accepts the conditions and limitations with respect to the
Servicer's obligation to indemnify, defend and hold the Owner Trustee harmless
as set forth in Section 8.02 of the Sale and Servicing Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to
be duly executed by their respective officers hereunto duly authorized, as of
the day and year first above written
------------------------------,
as Owner Trustee
By:
---------------------------
Name:
Title:
THE CIT GROUP SECURITIZATION
CORPORATION II
By:
---------------------------
Name:
Title:
Accepted and Agreed
with respect to the
provisions relating to
the intended holder of
the GP Interest:
[ ]
By:
---------------------------
Name:
Title:
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE ...................... 1
SECTION 1.1 Definitions .............................................. 1
ARTICLE II ORGANIZATION .................................................. 1
SECTION 2.1 Name ..................................................... 1
SECTION 2.2 Office ................................................... 1
SECTION 2.3 Purposes and Powers ...................................... 1
SECTION 2.4 Appointment of Owner Trustee ............................. 2
SECTION 2.5 Initial Capital Contribution of Owner Trust Estate ....... 2
SECTION 2.6 Declaration of Trust ..................................... 2
SECTION 2.7 Transfer of Interest to [ ];
Liability of [ ] ...................................... 3
SECTION 2.8 Title of Trust Property ................................... 4
SECTION 2.9 Situs of Trust ............................................ 4
SECTION 2.10 Representations and Warranties of the Seller ............. 4
SECTION 2.11 Representations and Warranties of the GP Interest ........ 5
SECTION 2.12 Tax Treatment ............................................ 6
ARTICLE III THE CERTIFICATES .............................................. 6
SECTION 3.1 Initial Certificate Ownership ............................. 6
SECTION 3.2 Form of the Certificates .................................. 6
SECTION 3.3 Execution, Authentication and Delivery .................... 7
SECTION 3.4 Registration; Registration of Transfer and
Exchange of Certificates ......................................... 7
SECTION 3.5 Mutilated; Destroyed; Lost or Stolen Certificates ......... 8
SECTION 3.6 Persons Deemed Certificateholders ......................... 9
SECTION 3.7 Access to List of Certificateholders'
Names and Addresses .............................................. 9
SECTION 3.8 Maintenance of Corporate Trust Office ..................... 10
SECTION 3.9 Appointment of Paying Agent ............................... 10
SECTION 3.10 Disposition by the Holder of the GP Interest ............. 11
SECTION 3.11 Book-Entry Certificates .................................. 11
SECTION 3.12 Notices to Depository .................................... 12
SECTION 3.13 Definitive Certificates .................................. 12
SECTION 3.14 Seller as Certificateholder .............................. 12
ARTICLE IV ACTIONS BY OWNER TRUSTEE ....................................... 12
SECTION 4.1 Prior Notice to Certificateholders with Respect
to Certain Matters ............................................... 12
SECTION 4.2 Action by Certificateholders with Respect
to Certain Matters ............................................... 13
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SECTION 4.3 Action by Certificateholders with Respect to Bankruptcy ... 13
SECTION 4.4 Restrictions on Certificateholders' Power ................. 14
SECTION 4.5 Majority Control .......................................... 14
ARTICLE V APPLICATION OF TRUST FUNDS; CERTAIN DUTIES ...................... 14
SECTION 5.1 Establishment of Accounts ................................. 14
SECTION 5.2 Application of Trust Funds ................................ 15
SECTION 5.3 Method of Payment ......................................... 16
SECTION 5.4 Accounting and Reports to the Certificateholders.
The Internal Revenue Service and Others .......................... 16
SECTION 5.5 Signature on Returns; Tax Matters Partner ................. 16
ARTICLE VI THE OWNER TRUSTEE ............................................... 16
SECTION 6.1 Duties of Owner Trustee ................................... 16
SECTION 6.2 Rights of Owner Trustee ................................... 18
SECTION 6.3 Acceptance of Trusts and Duties ........................... 18
SECTION 6.4 Action Upon Instruction by Certificateholders ............. 19
SECTION 6.5 Furnishing of Documents ................................... 20
SECTION 6.6 Representations and Warranties of Owner Trustee ........... 20
SECTION 6.7 Reliance; Advice of Counsel ............................... 21
SECTION 6.8 Owner Trustee May Own Certificates and Notes .............. 21
SECTION 6.9 Compensation and Indemnity ................................ 22
SECTION 6.10 Replacement of Owner Trustee ............................. 22
SECTION 6.11 Merger or Consolidation of Owner Trustee ................ 23
SECTION 6.12 Appointment of Co-Trustee or Separate Trustee ............ 23
SECTION 6.13 Eligibility Requirements for Owner Trustee ............... 24
ARTICLE VII TERMINATION OF TRUST AGREEMENT ................................. 25
SECTION 7.1 Termination of Trust Agreement ........................... 25
SECTION 7.2 Dissolution upon Bankruptcy of the Holder of
the GP Interest .................................................. 27
ARTICLE VIII AMENDMENTS ................................................... 27
SECTION 8.1 Amendments Without Consent of Certificateholders
or Noteholders ................................................... 27
SECTION 8.2 Amendments With Consent of Certificateholders
or Noteholders ................................................... 28
SECTION 8.3 Form of Amendments ........................................ 28
ARTICLE IX MISCELLANEOUS .................................................. 29
SECTION 9.1 No Legal Title to Owner Trust Estate ...................... 29
SECTION 9.2 Limitations on Rights of Others ........................... 29
SECTION 9.3 Notices ................................................... 29
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SECTION 9.4 Severability .............................................. 30
SECTION 9.5 Counterparts .............................................. 30
SECTION 9.6 Successors and Assigns .................................... 30
SECTION 9.7 No Petition Covenant ...................................... 30
SECTION 9.8 No Recourse ............................................... 30
SECTION 9.9 Headings .................................................. 31
SECTION 9.10 Governing Law ............................................ 31
SECTION 9.11 Certificate Transfer Restrictions ........................ 31
SECTION 9.12 Indemnification by the Servicer .......................... 31
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<PAGE>
EXHIBIT A
NUMBER ______ $ _________________
CUSIP NO. _________
SEE REVERSE FOR CERTAIN DEFINITIONS
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
NO INTEREST IN THIS CERTIFICATE MAY BE ACQUIRED BY OR FOR THE ACCOUNT OF
(i) AN "EMPLOYEE BENEFIT PLAN" (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, ("ERISA")) THAT IS SUBJECT
TO THE PROVISIONS OF TITLE I OF ERISA, (ii) A PLAN DESCRIBED IN SECTION
4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (INCLUDING, WITHOUT
LIMITATION, INDIVIDUAL RETIREMENT ACCOUNTS AND KEOGH PLANS), OR (iii) ANY ENTITY
WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF A PLAN'S INVESTMENT IN
THE ENTITY. BY ACCEPTING AND HOLDING THIS CERTIFICATE, THE HOLDER HEREOF AND THE
CERTIFICATE OWNER SHALL EACH BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT IT
IS NOT A BENEFIT PLAN.
PURSUANT TO THE TRUST AGREEMENT (AS DEFINED BELOW), [ ] ("GP
CORP") SHALL RETAIN BENEFICIAL AND RECORD OWNERSHIP OF CERTIFICATES REPRESENTING
AT LEAST 1% OF THE CERTIFICATE BALANCE, AND ANY ATTEMPTED TRANSFER OF THIS
CERTIFICATE THAT REDUCES THE BENEFICIAL AND RECORD INTEREST OF GP CORP TO BELOW
1% OF THE CERTIFICATE BALANCE SHALL BE VOID.
CIT RV OWNER TRUST 1996-A
____% ASSET BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined below, the
property of which includes a pool of retail installment sale contracts secured
by new and used recreational vehicles and sold to the Trust by The CIT Group
Securitization Corp II (This Certificate does not represent an interest in or
<PAGE>
obligation of The CIT Group Securitization Corporation II, The CIT Group/Sales
Financing, Inc. or The CIT Group Holdings, Inc. or any of their respective
affiliates, except to the extent described below.)
THIS CERTIFIES THAT ___________ is the registered owner of a nonassessable,
fully-paid, fractional undivided interest in CIT RV Owner Trust 1996-A (the
"Trust") formed by The CIT Group Securitization Corporation II, a Delaware
corporation.
The Trust was created pursuant to a Trust Agreement, dated as of February
1, 1996 (as amended and supplemented from time to time, the "Trust Agreement"),
between the Seller and ______________________________, as owner trustee (the
"Owner Trustee"), a summary of certain of the pertinent provisions of which is
set forth below. To the extent not otherwise defined herein, the capitalized
terms used herein have the meanings assigned to them in the Trust Agreement.
This Certificate is one of the duly authorized Certificates designated as
____% Asset Backed Certificates" (the "Certificates"). This Certificate is
issued under and is subject to the terms, provisions and conditions of the Trust
Agreement, to which Trust Agreement the holder of this Certificate by virtue of
the acceptance hereof assents and by which such holder is bound. The property of
the Trust includes a pool of simple interest retail installment sale contracts
(the "Contracts") secured by the new and used recreational vehicles financed
thereby (the "Financed Vehicles"), certain monies received under the Initial
Contracts on and after February 1, 1996 (the "Initial Cut-off Date") or under
the Subsequent Contracts as of the related Subsequent Cut-off Date, security
interests in the Initial Financed Vehicles, the Collection Account, the Cash
Collateral Account, the Note Distribution Account, the Certificate Distribution
Account, the Capitalized Interest Account and the Pre-Funding Account, in each
case together with the proceeds thereof (except for investment earnings on the
Cash Collateral Account), the proceeds from claims under certain insurance
policies in respect of individual Initial Financed Vehicles or the related
Obligors and certain rights under the Sale and Servicing Agreement. The rights
of the holders of the Certificates are subordinated to the rights of the holders
of the Notes, as set forth in the Sale and Servicing Agreement.
Under the Trust Agreement, there shall be distributed on the 15th day of
each month or, if such 15th day is not a Business Day, the next Business Day,
commencing on _________ 15, 1996 (each, a "Distribution Date"), to the person in
whose name this Certificate is registered on the related Record Date (as defined
below), such Certificateholder's fractional undivided interest in the amount of
interest and principal to be distributed to Certificateholders on such
Distribution Date. On each Distribution Date interest on this Certificate shall
be distributed in an amount equal to one-twelfth of the product of the rate per
annum shown above and the outstanding principal amount of this Certificate as of
the preceding Distribution Date after giving effect to all payments of principal
and other reductions in the principal amount of this Certificate to be made on
such Distribution Date (or in the case of the first Distribution Date the
original outstanding principal amount of this Certificate). The "Record Date,"
with respect to any Distribution Date, means the close of business on the day
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<PAGE>
immediately preceding such Distribution Date, or if Definitive Certificates are
issued, the last day of the month immediately preceding the month in which such
Distribution Date occurs.
The distributions in respect of principal and interest on this Certificate
are payable in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts. All
payments made by the Trust with respect to this Certificate shall be applied
first to interest due and payable on this Certificate as provided above and then
to the unpaid distributions in respect of principal on this Certificate.
The holder of this Certificate acknowledges and agrees that its rights to
receive distributions in respect of this Certificate are subordinated to the
rights of the Noteholders as and to the extent described in the Sale and
Servicing Agreement and the Indenture.
It is the intent of the Seller, the Servicer and the Certificateholders
that, for purposes of federal income, state and local income and franchise taxes
and any other taxes imposed upon, measured by or based upon gross or net income,
the Trust shall be treated as a partnership. Except as otherwise required by
appropriate taxing authorities, the Seller and the other Certificateholders by
acceptance of a Certificate, agree to treat, and to take no action inconsistent
with the treatment of, the Certificates for such tax purposes as interests in
such partnership.
Each Certificateholder or Certificate Owner, by its acceptance of a
Certificate or, in the case of a Certificate Owner, a beneficial interest in a
Certificate, covenants and agrees that such Certificateholder or Certificate
Owner, as the case may be, shall not, prior to the date which is one year and
one day after the termination of the Trust Agreement, acquiesce, petition or
otherwise invoke or cause the Seller, the Issuer or the holder of the GP
Interest to invoke the process of any court or governmental authority for the
purpose of commencing or sustaining a case against the Seller, the Issuer or the
holder of the GP Interest under any federal or state bankruptcy, insolvency,
reorganization or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Seller, the
Issuer or the holder of the GP Interest or any substantial part of its property,
or ordering the winding up or liquidation of the affairs of the Seller, the
Issuer or the holder of the GP Interest.
Distributions on this Certificate shall be made as provided in the Trust
Agreement by the Owner Trustee by wire transfer or check mailed to the
Certificateholder of record in the Certificate Register without the presentation
or surrender of this certificate or the making of any notation hereon, except
that with respect to Certificates registered on the Record Date in the name of
the nominee of the Depository (initially, such nominee to be Cede & Co.),
payments shall be made by wire transfer in immediately available funds to the
account designated by such nominee. Except as otherwise provided in the Trust
Agreement and notwithstanding the above, the final distribution on this
Certificate shall be made after due notice by the Owner Trustee of the pendency
of such distribution and only upon presentation and surrender of this
Certificate at the office maintained for such purpose by the Owner Trustee.
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Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been executed by
an authorized officer of the Owner Trustee by manual signature, this Certificate
shall not entitle the holder hereof to any benefit under the Trust Agreement or
the Sale and Servicing Agreement or be valid for any purpose.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
A-4
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not in
its individual capacity, has caused this Certificate to be duly executed.
CIT RV OWNER TRUST 1996-A
BY: ,
--------------------------------
not in its individual capacity,
but solely as Owner Trustee
By:
--------------------------
Name:
Title:
Dated:
-------------------------
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Trust
Agreement.
- ------------------------------ ------------------------------
not in its individual not in its individual
capacity but solely capacity but solely
as Owner Trustee as Owner Trustee
By: By:
-------------------------- -------------------------
Name:
-------------------------
Title: , as
----------------
authenticating agent
A-5
<PAGE>
REVERSE OF CERTIFICATE
The Certificates do not represent an obligation of, or an interest in, the
Seller, the Servicer, The CIT Group Holdings, Inc., the holder of the GP
Interest, the Indenture Trustee, the Owner Trustee, the Cash Collateral
Depositor or any affiliates of any of them and no recourse may be had against
such parties or their assets, except as may be expressly set forth or
contemplated herein or in the Trust Agreement or the Basic Documents. In
addition, this Certificate is not guaranteed by any governmental agency or
instrumentality and is limited in right of payment to certain collections and
recoveries with respect to the Contracts (and certain other amounts), all as
more specifically set forth herein and in the Trust Agreement and the Sale and
Servicing Agreement. A copy of each of the Sale and Servicing Agreement and the
Trust Agreement may be examined during normal business hours at the principal
office of the Seller, and at such other places, if any, designated by the
Seller, by any Certificateholder upon written request.
The Trust Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller and the rights of the Certificateholders under the Trust Agreement at any
time by the Seller and the Owner Trustee with the consent of the Holders of the
Notes evidencing not less than a majority of the aggregate outstanding amount of
the Notes as of the close of the preceding Distribution Date and the consent of
Certificateholders whose Certificates evidence not less than a majority of the
Certificate Balance as of the close of the preceding Distribution Date. Any such
consent by the Holder of this Certificate shall be conclusive and binding on
such holder and on all future Holders of this Certificate and of any Certificate
issued upon the transfer hereof or in exchange herefor or in lieu hereof whether
or not notation of such consent is made upon this Certificate. The Trust
Agreement also permits the amendment thereof, in certain circumstances, without
the consent of the Holders of any of the Certificates or the Notes.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained by
the Owner Trustee for such purposes, accompanied by a written instrument of
transfer in form satisfactory to the Owner Trustee and the Certificate Registrar
duly executed by the Holder hereof or such Holder's attorney duly authorized in
writing and thereupon one or more new Certificates of authorized denominations
evidencing the same aggregate interest in the Trust will be issued to the
designated transferee. The initial Certificate Registrar appointed under the
Trust Agreement is ______________________________.
The Certificates are issuable only as registered Certificates without
coupons in denominations of $20,000 or integral multiples of $1,000 in excess
thereof; provided, however, that one Certificate may be issued in a denomination
other than an integral multiple of $1,000 such that the holder of the GP
Interest may be issued at least 1% of the Certificate Balance (as described in
the Trust Agreement). As provided in the Trust Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
denomination, as requested by the Holder surrendering the same; provided,
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<PAGE>
however, that no Certificate may be subdivided such that the denomination of any
resulting Certificate is less than $20,000. No service charge shall be made for
any such registration of transfer or exchange, but the Owner Trustee or the
Certificate Registrar may require payment of a sum sufficient to cover any tax
or governmental charge payable in connection therewith.
The Owner Trustee, the Certificate Registrar and any agent of the Owner
Trustee or the Certificate Registrar may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Owner Trustee, the Certificate Registrar or any such agent shall be affected by
any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement and the
Trust created thereby shall terminate upon the payment to Certificateholders of
all amounts required to be paid to them pursuant to the Trust Agreement and the
Sale and Servicing Agreement and the disposition of all property held as part of
the Trust. CITSF may at its option purchase the Contracts at a price specified
in the Sale and Servicing Agreement, and such purchase of the Contracts shall
effect early retirement of the Certificates; provided, however, that such right
of purchase is exercisable on any Distribution Date following any Record Date as
of which the Pool Balance is 10% or less of the Initial Pool Balance. In
addition, within ten days following a Distribution Date as of which the Pool
Balance is 5% or less of the Initial Pool Balance an auction sale of the
remaining Contracts will be conducted (in each case, as described in the Sale
and Servicing Agreement) and such auction shall effect early retirement of the
Certificates.
A-7
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- ------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)
- ------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
Attorney
- ----------------------------------------------------------------------
to transfer said Certificate on the books of the Certificate Registrar, with
full power of substitution in the premises.
Dated: *
-------------- ---------------------
Signature Guaranteed:
----------------------------
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.
A-8
<PAGE>
EXHIBIT B
CERTIFICATE OF TRUST OF
CIT RV OWNER TRUST 1996-A
THIS Certificate of Trust of CIT RV Owner Trust 1996-A (the "Trust"), dated
as of February 1, 1996, is being duly executed and filed by
_______________________________, a Delaware banking corporation, as trustee, to
form a business trust under the Delaware Business Trust Act (12 Del. C. 3801 et
seq.).
1. Name. The name of the business trust formed hereby is CIT RV Owner Trust
1996-A.
2. Delaware Trustee. The name and business address of the Trust resident in
the State of Delaware is
----------------------------- -------------------,
- ----------, -- -----.
3. This Certificate of Trust shall be effective as of ________ __, 1996.
IN WITNESS WHEREOF, the undersigned, being the trustee of the Trust, has
executed this Certificate of Trust as of the date first-above written.
_______________________________, not in its individual capacity but
solely as Owner Trustee under a Trust Agreement dated as of February 1,
1996
By:
----------------------------------------
Name:
Title:
================================================================================
THE CIT GROUP SECURITIZATION CORPORATION II,
as Seller
THE CIT GROUP/SALES FINANCING, INC.,
as Servicer
CIT RV OWNER TRUST 1996-A
-------------------------------
SALE AND SERVICING AGREEMENT
Dated as of February 1, 1996
--------------------------------
$
CIT RV Owner Trust 1996-A
Class A ____% Asset Backed Notes
____% Asset Backed Certificates
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I
Definitions
1.01 General
1.02 Specific Terms
ARTICLE II
Conveyance of Contracts;
Acceptance by Trustee
2.01 Conveyance of the Initial Contracts
2.02 Conveyance of the Subsequent Contracts
2.03 Acceptance by Owner Trustee
ARTICLE III
Representations and Warranties; The Contracts
3.01A Representations and Warranties Regarding Each Contract
3.01B Representations and Warranties Regarding the Contracts
in the Aggregate
3.01C Representations and Warranties Regarding the Contract Files
3.01D Conditions of Closing for the Subsequent Contracts
3.02 Repurchase of Contracts for Breach of Representations
and Warranties
3.03 Custody of Contract Files
3.04 Duties of Servicer as Custodian
3.05 Instructions; Authority to Act
3.06 Effective Period and Termination
ARTICLE IV
Administration and Servicing of Contracts
4.01 Duties of Servicer
4.02 Collection of Contract Payments
4.03 Realization Upon Contracts
4.04 Physical Damage Insurance
4.05 Maintenance of Security Interests in Financed Vehicles; Retitling
4.06 Covenants of Servicer
4.07 Purchase of Contracts Upon Breach
4.08 Servicing Fee
<PAGE>
4.09 Servicer's Certificate
4.10 Annual Statement as to Compliance
4.11 Annual Report of Accountants
4.12 Duties of Owner Trustee
4.13 Reports to Securityholders and the Rating Agencies
4.14 Maintenance of Fidelity Bond and Errors and Omission Policy
4.15 Trustees to Cooperate
4.16 Costs and Expenses
ARTICLE V
Accounts; Distributions; Statements to Certificateholders
5.01 Collection Account, Pre-Funding Account, Capitalized
Interest Account and Cash Collateral Account
5.02 Collections; Applications
5.03 Monthly Advances
5.04A Non-Reimbursable Payments
5.04 Additional Deposits
5.05 Distributions
5.06 Cash Collateral Account
5.07 Net Deposits
5.08 Statements to Securityholders
ARTICLE VI
[Reserved]
ARTICLE VII
The Company
7.01 Representations of Company
7.02 Merger or Consolidation of Company
7.03 Limitation on Liability of the Company and Others
7.04 The Company May Own Securities
7.05 Indebtedness of and Sale of Assets by the Company
<PAGE>
ARTICLE VIII
The Servicer; Representations and Indemnities
8.01 Representations of CITSF
8.02 Liability of Servicer, Indemnities
8.03 Merger or Consolidation of Servicer
8.04 Limitation on Liability of Servicer and Others
8.05 Servicer Not To Resign
ARTICLE IX
Default
9.01 Events of Termination
9.02 Indenture Trustee to Act; Appointment of Successor
9.03 Notification to Securityholders
9.04 Rights to Direct Trustees and Waiver of Events of Termination
9.05 Effect of Transfer
ARTICLE X
[Reserved]
ARTICLE XI
Optional Purchase and Auction Sale
11.01 Optional Purchase of All Contracts
11.02 Mandatory Sale of all Contracts
<PAGE>
ARTICLE XII
Miscellaneous Provisions
12.01 Amendment
12.02 Protection of Title to Trust
12.03 Limitation on Rights of Securityholders
12.04 Governing Law
12.05 Notices
12.06 Severability of Provisions
12.07 Submission to Jurisdiction; Venue
12.08 Counterparts
12.09 Merger and Integration
12.10 Headings
EXHIBITS
Exhibit A List of Initial Contracts
Exhibit B Form of Subsequent Purchase Agreement
Exhibit C Form of Subsequent Transfer Agreement
Exhibit D Form of Assignment
Exhibit E Form of Owner Trustee's Acknowledgement and Certification
Exhibit F Form of Servicer's Certificate
Exhibit G Form of Monthly Report
Exhibit H Termination - Auction Procedures
Exhibit I Form of Officers' Certificate
<PAGE>
This Sale and Servicing Agreement, dated as of February 1, 1996, is made
among The CIT Group Securitization Corporation II, as seller (together with its
permitted successors and assigns, the "Company" or the "Seller"), The CIT
Group/Sales Financing, Inc., a corporation organized and existing under the laws
of the State of Delaware, as servicer (in its individual capacity, "CITSF," or,
together with its permitted successors and assigns, the "Servicer"), and CIT RV
Owner Trust 1996-A (the "Issuer" and the "Trust"), for which
______________________________, a Delaware banking corporation, acts not in its
individual capacity but solely as Owner Trustee (together with permitted
successors and assigns, the "Owner Trustee").
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, the parties hereto agree as provided herein:
ARTICLE I
Definitions
Section 1.01 General
For the purpose of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires, the terms defined in this Article
include the plural as well as the singular, the words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular Article, Section or other subdivision, and Section
references refer to Sections of this Agreement.
Section 1.02 Specific Terms
"Affiliate" of any specified Person means any other Person controlling or
controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
"Agency Office" means the office of the Trust maintained pursuant to
Section 3.2 of the Indenture.
"Amount Available" on any Distribution Date is equal to all amounts on
deposit in the Collection Account attributable to collections or deposits made
in respect of such Contracts in the related Due Period (together with the
Purchase Price for any Repurchased Contracts paid on or prior to the Deposit
Date immediately preceding such Distribution Date) less the following amounts
(to the extent that the Servicer has not already withheld such amounts from
collections on the Contracts): any repossession profits on Liquidated Contracts,
<PAGE>
any Liquidation Expenses 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; any amounts incorrectly deposited in the
Collection Account; and net investment earnings on the funds in the Collection
Account due to the Servicer pursuant to the Sale and Servicing Agreement and any
other amounts permitted to be withdrawn from the Collection Account by the
Servicer (or to be retained by the Servicer from collections on the Contracts)
pursuant to the Sale and Servicing Agreement.
"Available Cash Collateral Amount" means, with respect to any date of
determination, the lesser of (i) the Required Cash Collateral Amount and (ii)
the amount on deposit in the Cash Collateral Account, excluding Investment
Earnings with respect thereto.
"Authorized Officer" means with respect to the Trust, any officer of the
Owner Trustee who is authorized to act for the Owner Trustee in matters relating
to the Trust and who is identified on the list of Authorized Officers delivered
by the Owner Trustee to the Indenture Trustee on the Closing Date (as such list
may be modified or supplemented from time to time thereafter).
"Basic Documents" means the Certificate of Trust, the Trust Agreement, the
Sale and Servicing Agreement, the Indenture, the Cash Collateral Agreement, the
Purchase Agreement, any Subsequent Purchase Agreement and any Subsequent
Transfer Agreements.
"Benefit Plan" means a benefit plan as described in Section 9.11 of the
Trust Agreement.
"Book-Entry Certificates" means a beneficial interest in the Certificates,
ownership and transfers of which shall be made through book entries by a
Depository as described in Section 3.11 of the Trust Agreement.
"Book-Entry Notes" means a beneficial interest in the Notes, ownership and
transfers of which shall be made through book entries by a Depository as
described in Section 2.10 of the Indenture.
"Business Day" means any day other than a Saturday, Sunday or any day on
which banking institutions or trust companies in the States of New York,
Delaware, Illinois or Oklahoma are authorized or required by law, regulation or
executive order to be closed.
"Business Trust Statute" means Chapter 38 of Title 12 of the Delaware Code,
12 Del. Code ss. 3801 et seq., as the same may be amended from time to time.
"Capitalized Interest Account" means the account designated as such,
established and maintained pursuant to Section 5.01 of the Sale and Servicing
Agreement.
-2-
<PAGE>
"Cash Collateral Account" means the deposit account established and
maintained pursuant to Section 5.01(a)(iv) hereof.
"Cash Collateral Account Property" means the Cash Collateral Account, all
amounts deposited from time to time in the Cash Collateral Account and all
investments from time to time in the Cash Collateral Account, all income on such
investments and all cash and non-cash proceeds of such investments and all cash
and non-cash proceeds of such income from the date of the establishment of the
Cash Collateral Account until the termination thereof pursuant to the terms of
the Cash Collateral Agreement.
"Cash Collateral Account Surplus" means, as of any Distribution Date, the
amount, if any, by which Available Cash Collateral Amount, after taking into
account any deposits to the Cash Collateral Account pursuant to Section 5.06(a)
on such Distribution Date and any withdrawals from the Cash Collateral Account
pursuant to Section 5.06(b) or (c) on such Distribution Date, exceeds the
Required Cash Collateral Amount for the next Distribution Date.
"Cash Collateral Depositor" means the financial institution which is a
party to the Cash Collateral Agreement and which, pursuant to the Cash
Collateral Agreement, will make a loan to the Trust on the Closing Date, the
proceeds of which will be deposited in the Cash Collateral Account on the
Closing Date.
"Cash Collateral Agreement" means the Cash Collateral Agreement dated as of
February 1, 1996 among the Cash Collateral Depositor, the Trust, the Servicer
and the Owner Trustee.
"Certificate" means any one of the ____% Asset Backed Certificates executed
by the Owner Trustee and authenticated by the Owner Trustee in substantially the
form set forth in Exhibit A to the Trust Agreement.
"Certificate Balance" initially means, as of the Closing Date, $__________
and, on any Distribution Date thereafter, the initial Certificate Balance
reduced by (i) all distributions in respect of principal to the
Certificateholders actually made, including payments of any Principal
Liquidation Loss Amount and payments of any Principal Distribution Amount, (ii)
the aggregate amount of all Principal Liquidation Loss Amounts distributable to
Certificateholders to the extent such amounts have not been 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 previously distributed.
"Certificate Depository Agreement" means the Agreement, dated as of the
Closing Date, among the Trust, the Servicer, the Owner Trustee and The
Depository Trust Company (as the initial Depository), relating to the
Certificates, as the same may be amended and supplemented from time to time.
-3-
<PAGE>
"Certificate Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.1 of the Trust Agreement.
"Certificate Final Distribution Date" means the April, 2011, Distribution
Date.
"Certificateholder" means the holder of record of a Certificate pursuant to
the terms of the Trust Agreement.
"Certificate Interest Distribution Amount" means the amount of interest
payable on a Distribution Date to the Holders of the Certificates. Such amount
will equal one-twelfth of the product of the Pass-Through Rate and the
Certificate Balance as of the preceding Distribution Date, after giving effect
to any distributions of principal on the Certificates on such preceding
Distribution Date and other reductions in the Certificate Balance on such
preceding Distribution Date (or, in the case of the first Distribution Date, on
the basis of the original Certificate Balance), for the applicable Interest
Accrual Period.
"Certificate Pre-Funded Percentage" means the percentage derived from the
fraction, the numerator of which is the Certificate Balance and the denominator
of which is the sum of the initial principal balance of the Notes and the
initial Certificate Balance.
"Certificate of Trust" means the certificate of trust of the Issuer
substantially in the form of Exhibit B to the Trust Agreement to be filed for
the Trust pursuant to Section 3810(a) of the Business Trust Statute.
"Certificate Owners" means with respect to a Book-Entry Certificate, the
Person who is the beneficial owner of such Book-Entry Certificate, as reflected
on the books of the Depository, or on the books of a Person maintaining an
account with such Depository (directly as a Depository Participant or as an
indirect participant, in each case in accordance with the rules of such
Depository).
"Certificate Pool Factor" means a seven-digit decimal which the Servicer
will compute each month indicating the remaining Certificate Balance as of the
Distribution Date, as a fraction of the initial Certificate Balance. The
Certificate Pool Factor will be 1.0000000 as of the Initial Cut-off Date, and
thereafter will decline to reflect reductions in the outstanding principal
balance of the Certificates. A Certificateholder's portion of the aggregate
outstanding Certificate Balance is the product of (i) the original denomination
of the Certificateholder's Certificate and (ii) the Certificate Pool Factor.
"Certificate Register" means the register of Certificates specified in
Section 3.4 of the Trust Agreement.
"Certificate Registrar" means the registrar at any time of the Certificate
Register, appointed pursuant to Section 3.4 of the Trust Agreement.
-4-
<PAGE>
"CIT" means The CIT Group Holdings, Inc.
"CITCF-NY" means The CIT Group/Consumer Finance (NY).
"CITSF" means The CIT Group/Sales Financing, Inc., and its successors in
interest as permitted under the related agreement.
"Class A Final Scheduled Distribution Date" means the April, 2011
Distribution Date.
"Class A Interest Distribution Amount" means the amount of interest payable
on a Distribution Date to the Holders of the Class A Notes. Such amount will
equal one-twelfth of the product of the Class A Rate and the outstanding
principal amount of Class A Notes as of the preceding Distribution Date, after
giving effect to any distributions of principal on the Class A Notes on such
preceding Distribution Date (or, in the case of the first Distribution Date, on
the original outstanding principal amount of the Class A Notes), for the
applicable Interest Accrual Period.
"Class A Note" means any one of the Class A ____% Asset Backed Notes in the
aggregate principal amount of $___________ issued pursuant to the Indenture and
substantially in the form of Exhibit A to the Indenture.
"Class A Rate" means ____% per annum, calculated on the basis of a 360-day
year comprised of twelve 30-day months.
"Closing Date" means February __, 1996.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the Treasury Regulations promulgated thereunder.
"Collateral" means the collateral specified in the Granting Clause of the
Indenture.
"Collection Account" means the account designated as such established and
maintained pursuant to Section 5.01 of the Sale and Servicing Agreement.
"Commission" means the Securities and Exchange Commission.
"Company" means The CIT Group Securitization Corporation II, and its
successors in interest as permitted under the related agreement.
"Computer Tape" means the computer tape generated by the Servicer which
provides information relating to the Contracts, and includes the master file and
the history file.
-5-
<PAGE>
"Contract(s)" means one or more of the Initial Contracts and/or Subsequent
Contracts.
"Contract File" means, as to each Contract (a) the original copy of the
Contract, (b) either (i) the original title document for the related Financed
Vehicle or a duplicate certified by the appropriate governmental authority which
issued the original thereof or the application for such title document, or (ii)
if the laws of the jurisdiction in which the related Financed Vehicle is located
do not provide for the issuance of title documents for recreational vehicles,
other evidence of ownership of the related Financed Vehicle which is customarily
relied upon in such jurisdiction as evidence of title to a recreational vehicle;
(c) evidence of one or more of the following types of perfection of the security
interest in the related Financed Vehicle granted by such Contract, as
appropriate: (i) notation of such security interest on the title document, (ii)
a financing statement meeting the requirements of the UCC, with evidence of
recording indicated thereon, or (iii) such other evidence of perfection of a
security interest in a recreational vehicle as is customarily relied upon in the
jurisdiction in which the related Financed Vehicle is located; (d) an assignment
of the Contract evidencing the chain of title of the Contract from the Dealer
which is the originator thereof to CITSF; and (e) any extension, modification or
waiver agreement(s).
"Contract Rate" means, with respect to any particular Contract, the rate of
interest specified in that Contract.
"Corporate Trust Office" means with respect to the Indenture Trustee or the
Owner Trustee, the principal office at which at any particular time the
corporate trust business of the Indenture Trustee or the Owner Trustee,
respectively, shall be administered, which offices at the Closing Date are
located, in the case of the Indenture Trustee, at 311 West Monroe Street,
Chicago, Illinois 60606, attn: Indenture Trust Administration, and in the case
of the Owner Trustee, at 802 Delaware Avenue, Wilmington, Delaware, 19801, attn:
John Mack.
"Cross-over Date" means the Distribution Date on which the Notes have been
paid in full.
"Dealer" means the dealer which sold a Financed Vehicle and which
originated and assigned the Contract relating to such Financed Vehicle to CITSF
or CITCF-NY under a Dealer Agreement.
"Dealer Agreement" means the agreement, if any, under which Contracts were
originated by a Dealer and sold to CITSF or CITCF-NY, and all documents and
instruments relating thereto.
"Default" means any occurrence that is, or with notice or the lapse of time
or both would become an Event of Default.
"Defaulted Contract" means, with respect to any Due Period, a Contract
(other than a Repurchased Contract) in respect of which payments exceeding $25
in the aggregate were delinquent 120 days or more as of the last day of such Due
-6-
<PAGE>
Period; provided, however, that a Paid-Ahead Contract and a Contract which is
delinquent due to the Soldiers' and Sailors' Relief Act of 1940 shall not be
deemed to be delinquent.
"Definitive Certificates" means the Certificates specified in Section 3.13
of the Trust Agreement.
"Definitive Notes" means the Notes specified in Section 2.12 of the
Indenture.
"Demand Note" means the note issued by CIT to The CIT GP Corporation which
is payable on demand.
"Deposit Date" means, with respect to any Distribution Date, the Business
Day immediately preceding such related Distribution Date.
"Depository" means the initial Depository, The Depository Trust Company,
the nominee of which is CEDE & CO., and any permitted successor depository. The
Depository shall at all times be a "clearing corporation" defined in Section
8-102(3) of the Uniform Commercial Code of the State of New York.
"Depository Agreement" means the Agreement, dated as of the Closing Date,
among the Trust, the Servicer, the Indenture Trustee and the Depository,
relating to the Notes, as the same may be amended and supplemented from time to
time.
"Depository Participant" means a broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Designated Accounts" means the Collection Account, the Note Distribution
Account, the Certificate Distribution Account, the Pre-Funding Account and the
Capitalized Interest Account, collectively.
"Determination Date" means the third Business Day prior to each
Distribution Date.
"Distribution Date" means the date on which payments of interest and
principal on the Securities will be made. Such Distribution Dates will be on the
fifteenth day of each month or, if any such day is not a Business Day, on the
next succeeding Business Day, commencing _________ 15, 1996.
"Draw Amount" has the meaning specified in Section 5.06(b) of the Sale and
Servicing Agreement.
-7-
<PAGE>
"Due Date" shall mean, with respect to each Contract, the day set forth in
such Contract as the date on which payments under such Contract are scheduled to
be made.
"Due Period" means with respect to any Distribution Date the period during
which principal, interest and fees will be collected on the Contracts for
application towards the payment of principal and interest to the Securityholders
and the payment of fees on such Distribution Date. The "Due Period" will be the
calendar month immediately preceding the Distribution Date. The first Due Period
will commence on and include February 1, 1996 and will end on and include
February 29, 1996.
"Electronic Ledger" means the electronic master record of installment sale
contracts of the Servicer.
"Eligible Institution" means either (i) the corporate trust department of
the Indenture Trustee, the Owner Trustee or any paying agent satisfying the
criteria under the Trust Agreement or Indenture, as applicable or (ii) a
depository institution or trust company organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch or agency of a foreign bank), (A) which has either a
long-term unsecured debt rating of AAA or a short-term senior unsecured debt or
certificate of deposit rating of A-1+ or better by Standard & Poor's and a
long-term senior unsecured debt rating of A1 or better and a short-term senior
unsecured debt rating of P-1 or better by Moody's or any other long-term,
short-term or certificate of deposit rating acceptable to the Rating Agencies
and (B) whose deposits are insured by the FDIC.
"Eligible Investments" means, at any time, any one or more of the
obligations and securities described in Section 5.01(c) of the Sale and
Servicing Agreement.
"Eligible Servicer" means CITSF, the Trustees or any other Person qualified
to act as Servicer of the Contracts under applicable federal and state laws and
regulations, which Person services not less than $100,000,000 in outstanding
principal amount of recreational or motor vehicle installment sale contracts.
"ERISA" means The Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" means an event as described in Section 5.1 of the
Indenture.
"Event of Termination" means an event specified in Section 9.01 of the Sale
and Servicing Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Assets" means any amounts on deposit in the Certificate
Distribution Account and Cash Collateral Account and any Investment Earnings
thereon.
-8-
<PAGE>
"Final Draw Amount" has the meaning set forth in Section 5.06(c) of the
Sale and Servicing Agreement.
"Financed Vehicle" with respect to a Contract means the new or used
Recreational Vehicle, together with all accessions thereto, securing an
Obligor's indebtedness under such Contract.
"Force-Placed Insurance" means insurance described in Section 4.04(a) of
the Sale and Servicing Agreement.
"Force-Placed Insurance Premium" means any premium for theft and physical
damage insurance purchased by CITSF or CITCF-NY.
"Funding Period" means the period commencing on the Closing Date and ending
on 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, (iv) the insolvency
of the Company, CITSF, CITCF-NY or CIT or (v) the close of business on ________
15, 1996.
"GP Interest" means the ownership interest of at least 1% of the
Certificate Balance, which shall initially be held by The CIT GP Corporation, as
described in Section 2.7 of the Trust Agreement.
"Grant" means to mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, and grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to the Indenture. A Grant of the Collateral or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the Granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of, the Collateral and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the Granting party or otherwise and generally to do
and receive anything that the Granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"Holder" means the Person in whose name a Note or Certificate is registered
on the Note Register or the Certificate Register, as applicable.
"Indenture" means the indenture, dated as of February 1, 1996, between the
Issuer and the Indenture Trustee, as amended and supplemented from time to time.
-9-
<PAGE>
"Indenture Trustee" means _____________________________, not in its
individual capacity but solely as trustee under the Indenture, or any successor
trustee under the Indenture.
"Independent" when used with respect to any specified Person, means that
the Person (i) is in fact independent of the Issuer, any other obligor upon the
Notes, the Seller and any Affiliates of any of the foregoing Persons, (ii) does
not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Seller or any Affiliate of
any of the foregoing Persons and (iii) is not connected with the Issuer, any
such other obligor, the Seller or any Affiliate of any of the foregoing Persons
as an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions.
"Independent Certificate" means a certificate or opinion to be delivered to
the Indenture Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1 of the Indenture,
made by an Independent appraiser or other expert appointed by an Issuer Order
and approved by the Indenture Trustee in the exercise of reasonable care, and
such opinion or certificate shall state that the signer has read the definition
of "Independent" in the Indenture and that the signer is Independent within the
meaning thereof.
"Initial Capitalized Interest Deposit" means the amount deposited in the
Capitalized Interest Account on the Closing Date from the proceeds of the sale
of the Notes and Certificates, which amount is $_______.
"Initial Cash Collateral Amount" means $_________.
"Initial Contract" means one or more of the fixed-rate simple interest
installment sale contracts described in the List of Initial Contracts, which
constitute part of the corpus of the Trust, and which Contracts are to be
assigned by the Company to the Trust; including, without limitation, all related
security interests, collateral, liens, insurance policies and guarantees of the
obligations of the related Obligor (other than guarantees, if any, by the
related Dealer) and any and all rights to receive payments which are received
pursuant thereto from and after the Initial Cut-off Date, but excluding any
rights to receive payments which are received pursuant thereto prior to the
Initial Cut-off Date.
"Initial Cut-off Date" means February 1, 1996.
"Initial Cut-off Date Principal Balance" means the aggregate unpaid
principal balance of all of the Initial Contracts as of the Initial Cut-off
Date.
"Initial Financed Vehicle" means a Financed Vehicle with respect to an
Initial Contract.
-10-
<PAGE>
"Initial Pool Balance" means 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.
"Insolvency Event" with respect to a specified Person, (i) the entry of a
decree or order by a court, agency or supervisory authority having jurisdiction
in the premises for the appointment of a conservator, receiver or liquidator for
such Person, in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of such
Person's affairs, and the continuance of any such decree or order unstayed and
in effect for a period of 90 consecutive days; (ii) the consent by such Person
to the appointment of a conservator, receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to such Person or of or relating to substantially all
of such Person's property, or (iii) such Person shall admit in writing its
inability to pay its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors or voluntarily suspend payment of
its obligations.
"Insurance Policy" means, with respect to each Contract, the policy of
physical damage and all other insurance covering the Financed Vehicles or the
Obligors, as provided in Section 4.04(a) of the Sale and Servicing Agreement,
and which, as provided therein, may be a blanket policy maintained by the
Servicer in accordance with the terms and conditions of such Section 4.04(b) of
the Sale and Servicing Agreement.
"Insurance Proceeds" means proceeds paid by any insurer pursuant to any
Insurance Policy.
"Interest Accrual Period" means the period for which interest is payable on
a Distribution Date on the Securities, which shall be the period from the most
recent Distribution Date on which interest has been paid to but excluding the
following Distribution Date, or in the case of the initial Distribution Date
from February __, 1996 to but excluding the initial Distribution Date.
"Interest Shortfall" means with respect to any Contract and any
Distribution Date, the excess of (x) the sum of (i) the product of one-twelfth
of the weighted average of the Pass-Through Rate and the Class A Rate multiplied
by the outstanding principal amount of such Contract as of the last day of the
second preceding Due Period (or, in the case of the first Due Period ending
after the Contract was acquired by the Trust, as of the Initial Cut-off Date or
the Subsequent Cut-off Date, as applicable to such Contract) calculated on the
basis of a 360-day year comprised of twelve 30-day months and (ii) the product
of (A) one-twelfth of the Servicing Fee Rate and (B) the outstanding principal
amount of such Contract as of the last day of the second preceding Due Period
(or, in the case of the first Due Period ending after the Contract was acquired
by the Trust, as of the Initial Cut-off Date or the Subsequent Cut-off Date, as
applicable to such Contract) over (y) the amount of interest, if any, collected
on such Contract in the related Due Period.
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"Investment Earnings" means investment earnings deposited in a Designated
Account or the Cash Collateral Account, as applicable, net of losses and
investment expenses.
"Issuer" means the Trust until a successor replaces it and, thereafter,
means the successor and, for purposes of any provision contained in the
Indenture and required by the TIA, each other obligor on the Notes.
"Issuer Order" and "Issuer Request" means a written order or request signed
in the name of the Issuer by any one of its Authorized Officers and delivered to
the Indenture Trustee
"Late Fees" means any late fees, prepayment charges, extension fees or
other administrative fees or similar charges allowed by applicable law with
respect to the Contracts.
"Lien" means any security interest, charge, pledge, equity or encumbrance
of any kind other than tax liens, mechanics' liens and any liens that attach by
operation of law.
"Liquidated Contract" means any Contract as to which the Servicer has
determined that all amounts which it expects to recover from or on account of
such Contract have been recovered; provided that any Contract in respect of
which the related Financed Vehicle has been realized upon and disposed of and
the proceeds of such disposition have been received, shall be deemed to be a
Liquidated Contract.
"Liquidation Expenses" means any out of pocket expenses incurred by the
Servicer hereunder relating to the liquidation of a Contract, permissible
hereunder.
"List of Initial Contracts" means the list attached to the Sale and
Servicing Agreement as Exhibit A identifying each Initial Contract constituting
part of the corpus of the Trust, which list (a) identifies each Initial Contract
and (b) sets forth as to each Initial Contract (i) the Initial Cut-off Date
Principal Balance, (ii) the amount of the monthly payment due from the Obligor
as of the Initial Cut-off Date, (iii) the Contract Rate as of the Initial
Cut-off Date and (iv) the maturity date.
"List of Subsequent Contracts" means, with respect to the sale of any
Subsequent Contracts by the Company to the Trust pursuant to a Subsequent
Transfer Agreement, the list attached to such Subsequent Transfer Agreement
identifying each Subsequent Contract which, upon the execution and delivery of
such Subsequent Transfer Agreement, will constitute part of the corpus of the
Trust, which list (a) identifies each such Subsequent Contract and (b) sets
forth as to each such Subsequent Contract (i) the Subsequent Cut-off Date
Principal Balance, (ii) the amount of monthly payment due from the Obligor as of
the applicable Subsequent Cut-off Date, (iii) the Contract Rate as of the
applicable Subsequent Cut-off Date and (iv) the maturity date.
"Military Reservist Relief Act" means the California Military Reservist
Relief Act of 1991.
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"Monthly Advance" means, with respect to any Distribution Date, any payment
made by the Servicer pursuant to Section 5.03 of the Sale and Servicing
Agreement on the preceding Deposit Date.
"Monthly Report" has the meaning assigned in Section 4.09 of the Sale and
Servicing Agreement. The form of Monthly Report is attached as Exhibit G to the
Sale and Servicing Agreement.
"Moody's" means Moody's Investors Service, Inc. and its successors in
interest.
"Net Liquidation Proceeds" means the monies collected (from whatever
source) during a Due Period on a Liquidated Contract, net of the sum of (a) any
amount expended by or on behalf of the Servicer in effecting such collections
permissible hereunder, plus (b) any payments required by law to be remitted to
the Obligor, except such amounts as constitute Post Cut-off Date Insurance
Add-ons.
"Nonrecoverable Advance" means any advance made or proposed to be made
pursuant to Section 5.03 in respect of a Contract, which the Servicer believes,
in its good faith judgment, is not, or if made would not be, ultimately
recoverable from subsequent collections in respect of interest on such Contract
made by or on behalf of the Obligor thereunder, Net Liquidation Proceeds or
insurance proceeds in respect of such Contract. 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. The determination by
the Servicer that any advance is, or if made would constitute, a Nonrecoverable
Advance, shall be evidenced by an officer's certificate of the Servicer
delivered to the Trustees and stating the reasons for such determination.
"Nonreimbursable Payment" shall have the meaning set forth in Section 5.04A
of the Sale and Servicing Agreement.
"Notes" means the Class A ____% Asset Backed Notes.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.01(a) of the Sale and Servicing
Agreement.
"Noteholder" means the holder of record of a Note pursuant to the
Indenture.
"Note Owners" with respect to a Book-Entry Note, means the Person who is
the beneficial owner of such Book-Entry Note, as reflected on the books of the
Depository, or on the books of a Person maintaining an account with such
Depository (directly as a Depository Participant or as an Indirect Participant,
in each case in accordance with the rules of such Depository).
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"Note Pool Factor" means 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.
"Note Pre-Funded Percentage" means the percentage derived from the fraction
the numerator of which is the initial principal balance of the Notes and the
denominator of which is the initial principal balance of the Notes and the
initial Certificate Balance.
"Note Register" means the register of the Notes as specified in Section 2.4
of the Indenture.
"Note Registrar" means the registrar at any time of the Note Register,
appointed pursuant to Section 2.4 of the Indenture.
"Obligor" means each Person who is indebted under a Contract.
"Officers' Certificate" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1 of the Indenture,
and delivered to the Indenture Trustee. Unless otherwise specified, any
reference in the Indenture to an officer's certificate shall be to an Officer's
Certificate of any Authorized Officer of the Issuer.
"Opinion of Counsel" means a written opinion of counsel who may, except as
otherwise expressly provided, be counsel (internal or external) for the Seller
or Servicer. In addition, for the purposes of the Indenture: (i) the opinion
shall be addressed to the Indenture Trustee as Indenture Trustee and (ii) the
opinion shall comply with any applicable requirements of Section 11.1 of the
Indenture and shall be in form and substance satisfactory to the Indenture
Trustee.
"Original Pre-Funded Amount" means the amount deposited in the Pre-Funding
Account on the Closing Date from the proceeds of the sale of the Notes and
Certificates, which amount is $__________.
"Outstanding Certificate Interest" means the aggregate amount for each
prior Distribution Date of the difference between (i) the Certificate Interest
Distribution Amount and (ii) the amount of interest actually distributed to the
Holders of the Certificates.
"Outstanding Class A Interest" means the aggregate amount for each prior
Distribution Date of the difference between (i) the Class A Interest
Distribution Amount and (ii) the amount of interest actually distributed to the
Holders of the Class A Notes.
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"Owner Trust Estate" means all right, title and interest of the Trust in
and to the property and rights assigned to the Trust pursuant to Article II of
the Sale and Servicing Agreement, all funds deposited from time to time in the
Designated Accounts and the Cash Collateral Account (except the Note
Distribution Account) and all other property of the Trust from time to time,
including any rights of the Owner Trustee and the Trust pursuant to the Basic
Documents.
"Owner Trustee" means ______________________________, a Delaware banking
corporation, or any successor trustee under the Trust Agreement.
"Paid-Ahead Contract" means a Contract in respect of which the related
Obligor, in addition to making his regularly scheduled payment in any Due
Period, makes one or more additional payments in such Due Period, such that the
Servicer, in accordance with its customary servicing procedures, (i) treats such
additional payments as a Principal Prepayment applied to reduce the principal
balance of the related Contract and (ii) does not require the Obligor to make a
scheduled payment in respect of such Contract for the number of Due Dates which
corresponds to the number of such additional scheduled payments.
"Pass-Through Rate" means ____% per annum, calculated on the basis of a
360-day year comprised of twelve 30-day months.
"Paying Agent" with respect to the Indenture means the Indenture Trustee or
any other Person that meets the eligibility standards for the Indenture Trustee
specified in Section 6.11 of the Indenture and is authorized by the Issuer to
make the payments to and distributions from the Collection Account and the Note
Distribution Account, including payment of principal and interest on the Notes
on behalf of the Issuer. "Paying Agent" with respect to the Trust Agreement
means any paying agent or co-paying agent appointed pursuant to Section 3.9 of
the Trust Agreement that meets the eligibility requirements of Section 6.13 of
the Trust Agreement.
"Person" means any legal person, including any individual, corporation,
partnership, joint venture, association, joint stock company, trust (including
any beneficiary thereof), unincorporated organization or government or any
agency or political subdivision thereof.
"Pool Balance" means the aggregate outstanding principal balance of the
Contracts.
"Post Cut-off Date Insurance Add-Ons" means Force-Placed Insurance Premiums
added to the Contracts on or after the Initial Cut-off Date with regard to each
Initial Contract, or on or after the related Subsequent Cut-off Date with regard
to each Subsequent Contract, which amounts are to be repaid to an account
separate from the Collection Account over the remaining life of such Contract.
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"Pre-Funding Account" means the Pre-Funding Account established and
maintained in accordance with Section 5.01(b) of the Sale and Servicing
Agreement.
"Pre-Funded Amount" means, with respect to any Determination Date, the
amount on deposit in the Pre-Funding Account.
"Pre-Funding Earnings" means (i) with respect to the _________ 15, 1996
Distribution Date, the actual Investment Earnings earned on the Pre-Funded
Amount during the period beginning on the Closing Date through _________ 14,
1996 (inclusive), (ii) with respect to the _______ 16, 1996 Distribution Date,
the actual Investment Earnings earned on the Pre-Funded Amount during the period
beginning on _________ 15, 1996 through _______ 15, 1996 (inclusive), and (iii)
with respect to the ________ 15, 1996 Distribution Date, the actual Investment
Earnings earned on the Pre-Funded Amount during the period beginning on _______
16, 1996 through ________ 14, 1996 (inclusive).
"Predecessor Notes" with respect to any particular Note means every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for purposes of this definition, any Note
authenticated and delivered under Section 2.5 of the Indenture in lieu of a
mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen Note.
"Principal Distribution Amount" equals 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 Principal
Balance) and (y) the Pre-Funded Amount (exclusive of Pre-Funding 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 Pre-Funded
Amount (exclusive of Pre-Funding Earnings) on the last day of the preceding Due
Period; provided, however, that the Principal Distribution Amount on the Class A
Final Scheduled Distribution Date will equal the outstanding principal balance
of the Notes as of such date and the Principal Distribution Amount on the
Certificate Final Distribution Date will equal the Certificate Balance on such
date. 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.
"Principal Liquidation Loss Amount" for any Distribution Date equals 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 but before giving effect to
any other reductions in the Certificate Balance on such Distribution Date)
exceeds the sum of the Pool Balance plus the Pre-Funded Amount (exclusive of
Pre-Funding Earnings), if any, at the close of business on the last day of the
related Due Period.
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"Principal Prepayment" means a payment or other recovery of principal on a
Contract (including Insurance Proceeds that are not liquidation proceeds, but
exclusive of liquidation proceeds) which is received in advance of its Due Date
and applied upon receipt (or, in the case of a partial Principal Prepayment,
upon the next scheduled payment date on such Contract) to reduce the outstanding
principal amount of such Contract prior to the date or dates on which such
principal amount is scheduled to be made.
"Principal Prepayment in Full" means any Principal Prepayment of the entire
principal balance of a Contract.
"Proceeding" means any suit in equity, action at law or other judicial or
administrative proceeding.
"Purchase Agreement" means the Purchase Agreement dated as of February 1,
1996, between the Seller and CITSF, as amended and supplemented from time to
time.
"Purchase Price" means, with respect to a Contract to be purchased under
the Sale and Servicing Agreement, an amount equal to the remaining principal
amount outstanding on such Contract on the date of purchase, plus 30 days'
interest thereon in an amount equal to the sum of (i) the product of one-twelfth
of the weighted average of the Pass-Through Rate and of the Class A Rate and the
remaining principal amount outstanding on the Contract and (ii) accrued and
unpaid Servicing Fees thereon at the Servicing Fee Rate to the date of such
purchase.
"Rating Agencies" as of any date means the nationally recognized
statistical rating organizations requested by the Seller to provide ratings of
the Notes and the Certificates which are rating the Notes and Certificates on
such date.
"Rating Agency Condition" with respect to any action means, the condition
that each Rating Agency shall have been given at least 10 days prior notice
thereof and that each of the Rating Agencies shall have notified the Seller, the
Servicer and the Issuer in writing that such action shall not result in a
downgrade or withdrawal of the then current rating of the Notes or Certificates.
"Record Date" with respect to any Distribution Date means the day
immediately preceding the related Distribution Date or, in the event Definitive
Securities have been issued, the last day of the month immediately preceding the
month in which such Distribution Date occurs.
"Recreational Vehicle" shall mean new or used motor homes, travel trailers
and other types of recreational vehicles.
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"Redemption Date" means the Distribution Date specified by the Servicer or
the Issuer pursuant to Section 10.1(a) or (b) of the Indenture, as applicable.
"Relief Act Reduction" shall mean the reduction of the rate of interest
payable on any Contract to a rate below the Contract Rate pursuant to the
Soldiers' and Sailors' Civil Relief Act or the Military Reservist Relief Act.
"Repurchased Contract" means, for any Due Period, a Contract which (i)
CITSF purchased pursuant to Section 3.02 of the Sale and Servicing Agreement or
(ii) the Servicer purchased pursuant to Section 4.07 of the Sale and Servicing
Agreement, in each case, effective as of a date preceding such Due Period.
"Required Cash Collateral Amount" means ____% of the sum of (i) the Pool
Balance and (ii) the amount (excluding Investment Earnings) on deposit in the
Pre-Funding Account, in each case, as of the first day of the related Due
Period, but in no event less than $_________; provided, however, that if, with
respect to any Distribution Date, (a) the average of the principal balance of
Contracts 60 days or more delinquent (including Contracts relating to Financed
Vehicles that have been repossessed) as a percentage of the Pool Balance for the
three 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 three 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, however, that the Required Cash Collateral
Amount 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.
"Responsible Officer" with respect to the Indenture Trustee or the Owner
Trustee means, any officer within the Corporate Trust Office of such trustee,
and, with respect to the Servicer, the President, any Vice President, Assistant
Vice President, Secretary, Assistant Secretary or any other officer or assistant
officer of such Person customarily performing functions similar to those
performed by any of the above designated officers and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge and familiarity with the particular subject.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement,
dated as of February 1, 1996, among the Seller, the Servicer and the Trust, as
amended and supplemented from time to time.
"Securities" means the Notes and the Certificates.
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"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Securityholders" means the Person in whose name a Note or Certificate is
registered on the Note Register or the Certificate Register, as applicable.
"Seller" means the Person executing the Sale and Servicing Agreement as the
Seller, or any successor in interest to the Seller pursuant to the terms of the
Sale and Servicing Agreement.
"Service Transfer" has the meaning assigned in Section 9.01 of the Sale and
Servicing Agreement.
"Servicer" means the Person executing the Sale and Servicing Agreement as
the Servicer, or any successor Servicer pursuant to a Service Transfer under the
Sale and Servicing Agreement.
"Servicer's Certificate" means a certificate, substantially in the form of
Exhibit F to the Sale and Servicing Agreement, completed by and executed on
behalf of the Servicer by a Servicing Officer in accordance with Section 4.09 of
the Sale and Servicing Agreement.
"Servicer's Errors and Omissions Protection Policy" means the errors and
omissions policy maintained by the Servicer or any similar replacement policy,
if any, pursuant to Section 4.14 of the Sale and Servicing Agreement.
"Servicing Fee" means, as to any Distribution Date, the sum of (i)
one-twelfth of the product of 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.
"Servicing Fee Rate" means 1%.
"Servicing Officer" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of Contracts whose name
appears on a list of servicing officers appearing in an Officers' Certificate
furnished to the Trust by the Servicer, as the same may be amended from time to
time.
"Servicer Payment" with respect to a Distribution Date means, the sum of
the Servicing Fee for such Distribution Date and the aggregate unpaid Servicing
Fees for past Distribution Date.
"Simple Interest Contract" means a Contract as to which interest is
calculated each day on the basis of the actual principal balance outstanding on
such day.
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"Soldiers' and Sailors' Civil Relief Act" means the Soldiers' and Sailors'
Civil Relief Act of
1940, as amended.
"Standard & Poor's" means Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc. and its successors in interest.
"Stated Principal Balance" means, as of any Distribution Date, the unpaid
principal balance of a Contract at the end of the related Due Period.
"Subsequent Contracts" means one or more of the fixed-rate simple interest
installment sale contracts described in the List of Subsequent Contracts, which
constitute part of the corpus of the Trust, and which Contracts are to be
assigned by the Company to the Trust; including, without limitation, all related
security interests, collateral, liens, insurance policies and guarantees of the
obligations of the related Obligor (other than guarantees, if any, by the
related Dealer) and any and all rights to receive payments which are received
pursuant thereto from and after the Subsequent Cut-off Date, but excluding any
rights to receive payments which are received pursuant thereto prior to the
Subsequent Cut-off Date.
"Subsequent Cut-off Date" means the beginning of business on the first day
of the month of the related Subsequent Transfer Date specified in a Subsequent
Transfer Agreement with respect to those Subsequent Contracts which are
transferred and assigned to the Trust pursuant to the related Subsequent
Transfer Agreement.
"Subsequent Cut-off Date Pool Principal Balance" means, as of any
Subsequent Transfer Date, the sum of (i) the Initial Cut-off Date Principal
Balance and (ii) the aggregate unpaid principal balances of the Subsequent
Contracts to be sold on such Subsequent Transfer Date as of the related
Subsequent Cut-off Date and (iii) if applicable, an amount calculated as
provided in clause (ii) with respect to all Subsequent Transfer Dates, if any,
occurring prior to such Subsequent Transfer Date.
"Subsequent Cut-off Date Principal Balance" means the aggregate unpaid
principal balance of all of the Subsequent Contracts transferred pursuant to a
Subsequent Transfer Agreement, as of the related Subsequent Cut-off Date.
"Subsequent Financed Vehicle" means a Financed Vehicle with regard to a
Subsequent Contract.
"Subsequent Purchase Agreement" means a Subsequent Purchase Agreement dated
as of a Subsequent Cut-off Date between CITSF and the Company providing for the
sale of Subsequent Contracts from CITSF to the Company and substantially in the
form of Exhibit B to the Sale and Servicing Agreement.
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"Subsequent Transfer Agreement" means each Subsequent Transfer Agreement
dated as of a Subsequent Transfer Date between the Trust and the Company
substantially in the form of Exhibit C to the Sale and Servicing Agreement, by
which Subsequent Contracts are sold and assigned to the Trust.
"Subsequent Transfer Date" means the date specified in the related
Subsequent Transfer Agreement.
"Temporary Notes" means the Notes specified in Section 2.3 of the
Indenture.
"TIA" or "Trust Indenture Act" means The Trust Indenture Act of 1939 as in
force on the date hereof, unless otherwise specifically provided.
"Treasury Regulations" means any proposed, temporary or final regulation
promulgated under the Code.
"Trust" means CIT RV Owner Trust 1996-A, a Delaware business trust created
by the Trust Agreement.
"Trust Agreement" means the Trust Agreement dated as of February 1, 1996
between the Seller and the Owner Trustee.
"Trust Estate" means all money, instruments, rights and other property that
are subject or intended to be subject to the lien and security interest of the
Indenture for the benefit of the Noteholders (including, without limitation, all
property and interest Granted to the Indenture Trustee), including any proceeds
thereof, but excluding the Excluded Assets.
"Trust Indenture Act" or "TIA" means The Trust Indenture Act of 1939 as in
force on the date hereof, unless otherwise specifically provided.
"Trustees" means both the Indenture Trustee and the Owner Trustee.
"UCC" means the Uniform Commercial Code as in effect in the relevant
jurisdiction.
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ARTICLE II
Conveyance of Contracts;
Acceptance by Trustee
Section 2.01 Conveyance of the Initial Contracts.
On the Closing Date, the Company shall sell, transfer, assign absolutely,
set over and otherwise convey to the Trust by execution of an assignment
substantially in the form of Exhibit D hereto, and the Trust shall purchase, (i)
all the right, title and interest of the Company in and to the Initial Contracts
and all the rights, benefits, and obligations arising from and in connection
with each Initial Contract, (ii) the security interests in the Initial Financed
Vehicles granted by the Obligors pursuant to the Initial Contracts, (iii) all
payments received by the Company on or with respect to the Initial Contracts on
or after the Initial Cut-off Date (exclusive of payments with respect to Post
Cut-off Date Insurance Add-Ons), (iv) the interest of the Company in any Initial
Financed Vehicle (including any right to receive future Net Liquidation
Proceeds) that secures the Initial Contracts and that shall have been
repossessed by the Servicer by or on behalf of the Trust; (v) all rights of the
Company to proceeds of Insurance Policies covering the Obligors and the Initial
Contracts, (vi) the proceeds from any Servicer's Errors and Omissions Protection
Policy, any fidelity bond and any blanket hazard policy, to the extent such
proceeds relate to any Initial Financed Vehicle, (vii) all rights of recourse
against any cosigner or under any personal guarantee with respect to the Initial
Contracts (other than any right as against a Dealer under a Dealer Agreement),
(viii) all amounts held for the Trust in the Collection Account, (ix) all
amounts held for the Trust in the Pre-Funding Account, (x) all amounts held for
the Trust in the Capitalized Interest Account, (xi) all proceeds in any way
derived from any of the foregoing items, and (xii) all documents contained or
required to be contained in the Contract Files relating to the Initial
Contracts. The parties intend and agree that the conveyance of the Company's
right, title and interest in and to the Initial Contracts (and all rights,
entitlements and amounts listed above) pursuant to this Agreement shall
constitute an absolute sale.
The Company hereby declares and covenants that it shall at no time have any
legal, equitable or beneficial interest in, or any right, including without
limitation any reversionary or offset right, to the Collection Account, the
Pre-Funding Account, the Capitalized Interest Account and the Cash Collateral
Account, and that, in the event it receives any of the same, it shall hold same
in trust for the benefit of the Trust on behalf of the Securityholders and shall
immediately endorse over to the Trust any such amount it receives.
Section 2.02 Conveyance of the Subsequent Contracts.
In consideration of the Owner Trustee's delivery on the related Subsequent
Transfer Date to or upon the order of the Company of the purchase price for the
Subsequent Contracts to be conveyed to the Trust on such date up to the balance
of funds on deposit in the Pre-Funding Account on such related Subsequent
Transfer Date, the Company shall sell, transfer, assign, set over and otherwise
convey to the Trust by execution of an assignment substantially in
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the form of the Subsequent Transfer Agreement attached hereto as Exhibit C, and
the Trust shall purchase, (i) all the right, title and interest of the Company
in and to the Subsequent Contracts and all the rights, benefits, and obligations
arising from and in connection with each Subsequent Contract, (ii) the security
interests in the Subsequent Financed Vehicles granted by the Obligors pursuant
to the Subsequent Contracts, (iii) all payments received by the Company on or
with respect to the Subsequent Contracts on or after the Subsequent Cut-off Date
(exclusive of payments with respect to Post Cut-off Date Insurance Add-Ons),
(iv) the interest of the Company in any Subsequent Financed Vehicle (including
any right to receive future Net Liquidation Proceeds) that secures the
Subsequent Contracts and that shall have been repossessed by the Servicer by or
on behalf of the Trust; (v) all rights of the Company to proceeds of Insurance
Policies covering the Obligors and the Subsequent Contracts, (vi) the proceeds
from any Servicer's Errors and Omissions Protection Policy, any fidelity bond
and any blanket hazard policy, to the extent such proceeds relate to any
Subsequent Financed Vehicle, (vii) all rights of recourse against any cosigner
or under any personal guarantee with respect to the Subsequent Contracts (other
than any right as against a Dealer under a Dealer Agreement), (viii) all
proceeds in any way derived from any of the foregoing items, and (ix) all
documents contained or required to be contained in the Contract Files relating
to the Subsequent Contracts. The parties intend and agree that the conveyance of
the Company's right, title and interest in and to the Subsequent Contracts
pursuant to this Agreement shall constitute an absolute sale. The "purchase
price" shall be one hundred percent (100%) of the aggregate principal amount
outstanding on the Subsequent Contracts so transferred as of the related
Subsequent Cut-off Date.
Section 2.03 Acceptance by Owner Trustee.
(a) On the Closing Date, the Owner Trustee shall deliver a certificate to
the Company substantially in the form of Exhibit E hereto acknowledging
conveyance of the Initial Contracts and Contract Files relating thereto to the
Owner Trustee and declaring that the Owner Trustee, through the Servicer, as
custodian, pursuant to Section 3.03 hereto, will hold all Contracts that have
been delivered in trust, upon the trusts herein set forth, for the use and
benefit of all Certificateholders and Noteholders, as their respective interests
may appear, subject to the terms and provisions of this Agreement and the Basic
Documents.
(b) On any Subsequent Transfer Date, the Owner Trustee shall deliver a
certificate to the Company substantially in the form of Exhibit E hereto
acknowledging conveyance of the Subsequent Contracts and Contract Files relating
thereto to the Owner Trustee and declaring that the Owner Trustee, through the
Servicer, as custodian, pursuant to Section 3.04 hereto, will hold all Contracts
that have been delivered in trust, upon the trusts herein set forth, for the use
and benefit of all Certificateholders and Noteholders, as their respective
interests may appear, subject to the terms and provisions of this Agreement and
the Basic Documents.
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ARTICLE III
Representations and Warranties; The Contracts
Section 3.01A. Representations and Warranties Regarding Each Contract.
The Initial Contracts have been sold by CITSF to the Company pursuant to
the Purchase Agreement. Any Subsequent Contracts will be sold by CITSF to the
Company pursuant to a Subsequent Purchase Agreement. In connection with such
sales, CITSF made the representations and warranties in Sections 3.01A, 3.01B,
3.01C and 8.01 of this Agreement to the Company (such representations and
warranties being incorporated in the Purchase Agreement and any Subsequent
Purchase Agreement) and assumed the obligations in Section 3.02 of this
Agreement. As a condition of the purchase by the Company, the Company has
required that CITSF make such representations and warranties directly to the
Trust and the Securityholders so that the Trust may recover directly against
CITSF on such representations and warranties rather than indirectly through
claims by the Company against CITSF. Consequently, CITSF represents and warrants
to the Trust and the Securityholders as to each Initial Contract as of the
Closing Date and as to each Subsequent Contract as of the related Subsequent
Transfer Date (except as otherwise expressly stated):
(a) List of Contracts. The information set forth in the List of Initial
Contracts or the List of Subsequent Contracts, as applicable, is true and
correct as of its date.
(b) Payments. With respect to an Initial Contract, as of the Initial
Cut-off Date, the payment of principal and interest for its Due Date next
preceding the Cut-off Date was made by or on behalf of the Obligor (without any
advance from CITSF or any Person acting at the request of CITSF) or was not
delinquent for more than 30 days and, with respect to a Subsequent Contract, as
of the related Subsequent Cut-off Date (or the date of origination, if later)
the payment of principal and interest for its Due Date next preceding the
related Subsequent Cut-off Date was made by or on behalf of the Obligor (without
an advance from CITSF or any Person acting at the request of CITSF) or was not
more than 30 days delinquent.
(c) No Waivers. The terms of the Contract have not been waived, altered,
amended or modified in any respect, except by instruments or documents
identified in the Contract File with respect thereto, and no waiver, alteration,
amendment or modification has caused such Contract to fail to meet any of the
other representations and warranties made by CITSF with respect thereto.
(d) Binding Obligation. The Contract is the legal, valid and binding
obligation of the Obligor thereunder and is enforceable in accordance with its
terms, except as such enforceability may be limited by laws affecting the
enforcement of creditors' rights generally and equitable remedies.
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(e) No Defenses. No facts which give rise to any right of rescission,
set-off, counterclaim or defense, including the defense of usury, by the
Obligor, have been asserted with respect to the Contract.
(f) Insurance. The Obligor on the Contract is required to maintain physical
damage insurance covering the related Financed Vehicle in accordance with
CITSF's normal requirements or, if not so covered, is covered by a blanket
insurance policy maintained by CITSF. As of the Initial Cut-off Date, the
Servicer has not obtained Force-Placed Insurance with respect to any Initial
Contract and, as of any Subsequent Cut-off Date, the Servicer has not obtained
Force-Placed Insurance with respect to any Subsequent Contract.
(g) Origination. The Contract was originated by a Dealer in the United
States of America and was purchased by CITSF or CITCF-NY in the ordinary course
of its business.
(h) Lawful Assignment. The Contract was not originated in and is not
subject to the laws of any jurisdiction whose laws would make the transfer of
the Contract to the Company under the Purchase Agreement in the case of an
Initial Contract, or under a Subsequent Purchase Agreement in the case of a
Subsequent Contract, the transfer of the Contract to the Trust under this
Agreement in the case of an Initial Contract, or under a Subsequent Transfer
Agreement in the case of a Subsequent Contract, or pursuant to transfers of
Securities, or the ownership of the Contracts by the Trust, unlawful.
(i) Compliance with Law. All requirements of any federal, state or local
law, including, without limitation, usury, truth in lending and equal credit
opportunity laws, applicable to the Contract have been complied with in all
material respects and such compliance is not affected by the Trust's ownership
of the Contracts, and CITSF shall for at least the period of this Agreement,
maintain in its possession, available for the Trust's inspection, and shall
deliver to the Trust upon demand, evidence of compliance with all such
requirements.
(j) Contract in Force. The Contract has not been satisfied or subordinated
in whole or in part or rescinded, and the Financed Vehicle securing the Contract
has not been released from the lien of the Contract in whole or in part.
(k) Valid Security Interest. The Contract creates a valid and enforceable
perfected first priority security interest in favor of CITSF, CITCF-NY or the
Dealer which originated such Contract in the Financed Vehicle covered thereby as
security for payment of the Initial Cut-off Date Principal Balance of such
Contract in the case of an Initial Contract or the Subsequent Cut-off Date
Principal Balance of such Contract in the case of a Subsequent Contract, which
security interest (if in favor of CITCF-NY or the Dealer) has been validly and
effectively assigned to CITSF. CITSF has assigned all of its right, title and
interest in such Contract, including the security interest in the Financed
Vehicle covered thereby, to the Company, and the Company has assigned all of its
right, title and interest in such Contract and such Financed Vehicle to the
Trust.
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(l) Notation of Security Interest. CITSF or CITCF-NY has taken all
necessary action with respect to the Contract to perfect the security interest
in the Financed Vehicle covered thereby in favor of CITSF or CITCF-NY. With
respect to each Contract, if the related Financed Vehicle is located in a state
in which notation of a security interest on the title document is required or
permitted to perfect such security interest, the title document shows, or if a
new or replacement title document with respect to such Financed Vehicle is being
applied for such title document will be issued within 180 days and will show,
CITSF or CITCF-NY as the holder of a first priority security interest in such
Financed Vehicle; if the related Financed Vehicle is located in a state in which
the filing of a financing statement under the UCC is required to perfect a
security interest in a Recreational Vehicle, such filings or recordings have
been duly made and show CITSF or CITCF-NY as secured party.
(m) Capacity of Parties. All parties to the Contract had legal capacity to
execute the Contract.
(n) Good Title. CITSF or CITCF-NY purchased the Contract for fair value and
took possession thereof in the ordinary course of its business, without
knowledge that the Contract was subject to a security interest in favor of a
third party. Neither CITSF, CITCF-NY nor the Company has sold, assigned or
pledged the Contract to any person other than CITSF, the Company or the Trust,
respectively. Prior to the transfer of the Contract by CITCF-NY to CITSF, CITSF
to the Company and by the Company to the Trust, CITCF-NY, CITSF or the Company,
respectively, had good and marketable title thereto free and clear of any
encumbrance, equity, loan, pledge, charge, claim or security interest and was
the sole owner thereof with full right to transfer the Contract to the Company
and the Trust, respectively. The Company paid fair value to CITSF for the
Contracts. Immediately upon the transfer thereof, the Trust for the benefit of
the Securityholders shall acquire good and marketable title to each Contract
free and clear of any encumbrance, equity, loan, pledge, charge, claim or
security interest, and the transfer thereof shall have been perfected under
applicable law.
(o) No Defaults. As of the Initial Cut-off Date for each Initial Contract,
and as of the related Subsequent Cut-off Date for each Subsequent Contract,
there was no default, breach, violation or event permitting acceleration
existing under the Contract and no event which, with notice and the expiration
of any grace or cure period, would constitute such a default, breach, violation
or event permitting acceleration under such Contract (except payment
delinquencies permitted by clause (b) above). Neither CITCF-NY nor CITSF has
waived any such default, breach, violation or event permitting acceleration
except payment delinquencies permitted by clause (b) above.
(p) No Liens. As of the Closing Date for each Initial Contract, and as of
the related Subsequent Transfer Date for each Subsequent Contract, there are, to
the best of CITSF's knowledge, no liens or claims which have been filed for
work, labor or materials affecting the Financed Vehicle securing the Contract
which are or may be liens prior to, or equal or coordinate with, the lien of the
Contract.
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(q) Equal Installments. The Contract is a Simple Interest Contract and
provides for level monthly payments which provide interest at the stated
Contract Rate and, if paid in accordance with its schedule, fully amortize the
loan over its original term.
(r) Enforceability. The Contract contains customary and enforceable
provisions such as to render the rights and remedies of the holder thereof
adequate for the realization against the collateral of the benefits of the
security, except as enforceability of such provisions may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally and by the availability of equitable remedies.
(s) Obligor Not a Governmental Entity. The Obligor on the Contract is not
the United States of America or any state or any agency, department,
instrumentality or political subdivision thereof.
(t) Obligor Not Subject to Bankruptcy Proceedings. The Obligor on the
Contract was not in a bankruptcy proceeding as of the Initial Cut-off Date for
each Initial Contract or as of the related Subsequent Cut-off Date for each
Subsequent Contract.
(u) No Repossession. As of the Initial Cut-off Date for each Initial
Contract, or as of the related Subsequent Cut-off Date for each Subsequent
Contract, the Financed Vehicle which secured the Contract has not been
repossessed without reinstatement.
(v) Obligor Not a Relief Act Obligor. If (i) the Obligor on the Contract is
in the military (including an Obligor who is a member of the National Guard or
is in the reserves) and (ii) the Contract is subject to the Soldiers' and
Sailors' Civil Relief Act or the Military Reservist Relief Act, such Obligor has
not made a claim to CITSF that
(A) the amount of interest on the related 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 such Contract should be delayed pursuant to the
Military Reservist Relief Act,
in either case, unless a court has ordered otherwise upon application of CITSF.
(w) Only One Original. There is only one original executed copy of the
Contract, which, immediately prior to the execution of the Agreement, was in the
possession of CITSF.
(x) Contract is Chattel Paper. The Contract is "chattel paper" as defined
in the New Jersey UCC.
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(y) Selection Criteria. As of the Initial Cut-off Date for each Initial
Contract, or as of the related Subsequent Cut-off Date for each Subsequent
Contract, the Contract satisfies the eligibility criteria discussed in the
Prospectus for the Securities under the heading "The Contract Pool-General".
Section 3.01B. Representations and Warranties Regarding the Contracts in
the Aggregate.
CITSF represents and warrants to the Trust and the Securityholders, that:
(a) Amounts. The aggregate principal amounts payable by Obligors under the
Initial Contracts as of the Initial Cut-off Date equal the Initial Cut-off Date
Principal Balance.
(b) Characteristics. The Contracts have the following characteristics as of
the Initial Cut-off Date:
(i) each Contract is secured by a Financed Vehicle which is a new or
used Recreational Vehicle;
(ii) each Initial Contract has a fixed Contract Rate, which is equal
to or greater than ____%;
(iii) the remaining maturity of each Initial Contract is at least _
months, but not more than ___ months;
(iv) the original maturity of each Initial Contract was at least __
months, but not more than ___ months;
(v) the weighted average remaining term to stated maturity of each
Initial Contract was at least ___ months;
(vi) the weighted average Contract Rate of the Initial Contracts was
_____%;
(vii) the final scheduled payment dates on the Initial Contracts range
from ___ 199_ to ______ 20__;
(viii) the average remaining principal balance of the Initial
Contracts per contract was $______;
(ix) the outstanding principal balances of the Initial Contracts
ranged from $_____ to $_______;
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(x) each of the Initial Contracts was first entered onto the
Servicer'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 ____ 199_ and ____ 199_;
(xi) not more than _% of the Contracts by Initial Cut-off Date
Principal Balance are located in any one state, as determined by
information provided by Obligors in their credit applications (except
Contracts secured by Financed Vehicles located in California, Texas,
Arizona, Florida, Oklahoma, and Missouri, which represent approximately
_____%, _____%, ____%, ____%, ____% and ____%, respectively, of the Initial
Cut-off Date Principal Balance) ;
(xii) not more than __% of the Contracts, by Initial Cut-off Date
Principal Balance, have credit scores below ___;
(xiii) at least __% of the Contracts, based on Initial Cut-off Date
Principal Balance, involved new Financed Vehicles at origination; and
(xiv) not more than _% of the Contracts, based on Initial Cut-off Date
Principal Balance, consist of Recreational Vehicles other than motor homes
and travel trailers.
(c) Computer Tape. As of Closing Date, in the case of the Initial
Contracts, and as of the related Subsequent Transfer Date, in the case of any
Subsequent Contracts, the Computer Tape made available by the Servicer was
complete and accurate as of its date and includes a description of the same
Contracts that are described in the List of Initial Contracts or the applicable
List of Subsequent Contracts, as the case may be.
(d) Marking Records. By the Closing Date in the case of the Initial
Contracts or by the related Subsequent Transfer Date in the case of the
Subsequent Contracts, CITSF has caused the portions of the Electronic Ledger
relating to the Contracts constituting part of the Trust to be clearly and
unambiguously marked to indicate that such Contracts constitute part of the
Trust and are owned by the Trust in accordance with the terms of the trust
created hereunder.
(e) No Adverse Selection. No adverse selection procedures have been
employed in selecting the Contracts from the recreational vehicle installment
sale contracts owned by CITSF which were purchased by CITSF from CITCF-NY or
Dealers, except that CITSF did not select any such contract which would cause a
breach of any representation or warranty of CITSF contained in this Agreement
that would materially adversely affect the Trust's interest in such Contract.
Section 3.01C. Representations and Warranties Regarding the Contract
Files.
CITSF represents and warrants to the Trust and the Securityholders that:
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(a) Possession. Immediately prior to the Closing Date in the case of the
Initial Contracts, or the Subsequent Transfer Date in the case of the Subsequent
Contracts, CITSF will have possession of each original Contract and the related
Contract File, and there are and there will be no custodial agreements in effect
materially and adversely affecting the right of CITSF to make, or to cause to be
made, any delivery required in connection with the conveyance of the Contracts
to the Company or from the Company to the Trust.
(b) Bulk Transfer Laws. The transfer, assignment and conveyance of the
Contracts and the Contract Files from CITSF to the Company and from the Company
to the Trust are not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction.
Section 3.01D. Conditions of Closing for the Subsequent Contracts.
On or before the transfer of any Subsequent Contracts on the related
Subsequent Transfer Date, the following conditions shall have been satisfied:
(a) The Servicer shall have provided the Rating Agencies and the Trustees
with notice, at least 2 Business Days prior to the Subsequent Transfer Date, of
the Subsequent Contracts to be sold and the aggregate principal balance thereof;
(b) The Servicer shall have delivered to the Trustees a duly executed
Subsequent Transfer Agreement;
(c) The Funding Period shall not have terminated;
(d) The Servicer shall have delivered to the Trustees an Officer's
Certificate confirming the satisfaction of each condition precedent specified in
this Section 3.01D and in the related Subsequent Transfer Agreement;
(e) The Company shall have delivered to the Trustees an Assignment in the
form of Exhibit D and the Opinion of Counsel required by the related Subsequent
Purchase Agreement;
(f) The Company shall have delivered an Officers' Certificate to each
Trustee and each Rating Agency certifying that immediately following the
transfer of such Subsequent Contracts to the Trust that none of the following
would occur: (i) the weighted average Contract Rate of the Contracts based on
the Subsequent Cut-off Date Pool Principal Balance would be less than _____%,
(ii) less than __% of the Contracts by Subsequent Cut-off Date Pool Principal
Balance would be attributable to loans to purchase new Recreational Vehicles at
the time the related Contract was originated, (iii) more than _% of the
Contracts by Subsequent Cut-off Date Pool Principal Balance would be
attributable to loans to purchase Recreational Vehicles other than motor homes
and travel trailers, (iv) the weighted average remaining term to maturity of the
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Contracts based on the Subsequent Cut-off Date Pool Principal Balance would be
more than 157 months and (v) more than __% of the Contracts based on the
Subsequent Cut-off Date Pool Principal Balance would have a credit score of less
than 179. In addition, all of such Subsequent Contracts must (i) be secured by
Recreational Vehicles with Obligors having mailing addresses in the United
States at the time of origination, (ii) have a Due Date in the month of the
Subsequent Cut-off Date with respect to such Subsequent Contract and not
constitute a Paid-Ahead Contract, (iii) have a final scheduled payment date of
no later than November 20, 2010; (iv) satisfy the representations and warranties
specified in this Agreement, (v) not be selected by either CIT or the Seller in
a manner that it believes is adverse to the interest of the Security Holders,
(vi) have a Contract Rate of at least ____%, (vii) provide for level monthly
payment which provide 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 180 months, (viii) as of the related Subsequent
Cut-off Date, the most recent scheduled payment of principal and interest on
each Subsequent Contract had been made by or on behalf of the related Obligor or
not have been delinquent more than 30 days, (ix) no Subsequent Financed Vehicle
will have been repossessed without reinstatement as of the related Subsequent
Cut-off Date, (x) as of the related Subsequent Cut-Off Date, no Obligor on any
Contract will be the subject of a bankruptcy proceeding, (xi) as of the related
Subsequent Cut-off Date, each Subsequent Contract will have a remaining
principal balance of not less than $_____ and not more than $_______, and (xii)
satisfy such other requirements as the Rating Agencies shall request;
(g) The Servicer shall have delivered to the Trustees the relevant List of
Subsequent Contracts;
(h) The Servicer shall have delivered an Officers' Certificate to the
Trustees substantially in the form of Exhibit I hereto;
(i) The Servicer shall have delivered to the Trustees evidence of filing
with the appropriate office in the following jurisdictions of the following
UCC-1 Financing Statements, each listing the relevant Subsequent Contracts as
required by Article 9 of the UCC: (i) UCC-1 Financing Statements executed by
CITSF as debtor, naming the Company as Secured Party and filed in New Jersey and
Oklahoma to perfect the sale from CITSF to the Company, (ii) UCC-1 Financing
Statements executed by the Company as debtor naming the Trust as secured party
and filed in New Jersey and Oklahoma to perfect the sale from the Company to the
Trust, and (iii) UCC-1 Financing Statements executed by the Trust as debtor,
naming the Indenture Trustee as secured party and filed in New Jersey, Oklahoma
and Delaware;
(j) The Servicer shall have delivered an Officers' Certificate to the
Trustees stating that the Servicer has reviewed each such Subsequent Contract
and the Contract File with respect thereto, and confirming that each such
Subsequent Contract and the Contract File with respect thereto conforms in all
material respects to the relevant List of Subsequent Contracts, that each
Contract File with respect to such Subsequent Contract is complete in all
material respects, and that each Recreational Vehicle securing any such
Subsequent Contract is covered by a Hazard Insurance Policy as required by this
Agreement;
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(k) The Servicer shall have delivered an Officers' Certificate to the
Trustees stating that all funds received with respect to such Subsequent
Contract on and after the relevant Subsequent Cut-off Date through the
Subsequent Transfer Date have been deposited in the Collection Account;
(l) The Servicer shall have delivered an Officers' Certificate to the
Trustees stating that the Servicer has accepted delivery of such Subsequent
Contracts and the Contract Files with respect to such Subsequent Contracts and
will hold such Subsequent Contracts and Contract Files as custodian on behalf of
the Trustees for the benefit of the Trust as provided herein;
(m) The Servicer shall have delivered to the Trustees one or more Opinions
of Counsel, either (1) stating that, in the opinion of such counsel, all
financing statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of the Trustees in
the Contracts, and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (2) stating that, in the
opinion of such counsel, no such action shall be necessary to preserve and
protect such interest; it being understood that the opinions on perfection
delivered by counsel on the Closing Date, if delivered on the Subsequent
Transfer Date as to the Subsequent Contracts, shall satisfy the foregoing
requirement; and
(n) The Seller and the Trustees shall not have been advised by either
Rating Agency that the conveyance of such Subsequent Contracts will result in a
qualification, modification or withdrawal of its then current rating of either
the Notes or the Certificates.
Section 3.02 Repurchase of Contracts for Breach of Representations and
Warranties.
(a) Subject to Section 3.02(b), CITSF shall repurchase a Contract, at its
Purchase Price, not later than 85 days after CITSF receives written notice from
either the Trustees or the Servicer, or not later than 90 days after CITSF
otherwise becomes aware, of a breach of any representation or warranty of CITSF
set forth in Section 3.01A or 3.01B of this Agreement that materially and
adversely affects the Trust's interest in such Contract and which breach has not
been cured. CITSF shall effect such repurchase by paying to the Servicer for
deposit in the Collection Account on the Deposit Date in the month following the
month in which the loan was repurchased the aggregate of the Purchase Price of
all Contracts that are required to be repurchased pursuant to the preceding
sentence. With respect to any Contract incorrectly described on the List of
Initial Contracts or any List of Subsequent Contracts, as the case may be, only
with respect to remaining unpaid principal balance, which CITSF would otherwise
be required to repurchase pursuant to this Section 3.02, CITSF may, in lieu of
repurchasing such Contract, deposit in the Collection Account, not later than
one Business Day after the first Determination Date which is more than 90 days
after CITSF becomes aware or receives written notice from the Trustees or the
Servicer of such incorrect description, cash in anamount sufficient to cure such
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deficiency or discrepancy. CITSF shall send written notice of any such cash
deposit to the Rating Agencies as promptly as possible following such deposit.
Notwithstanding any other provision of the Agreement, the obligation of CITSF
under this Section shall not terminate upon a Service Transfer pursuant to
Article VII.
(b) Promptly after any repurchase referred to in Section 3.02(a), the Trust
shall execute such documents as are presented to it by CITSF and are reasonably
necessary to reconvey the Repurchased Contract to CITSF.
(c) The repurchase obligation of CITSF set forth in this Section 3.02 shall
constitute the sole remedy available to the Trust and the Securityholders for a
breach of representation and warranty hereunder with respect to the Contracts
(but not with respect to any other breach by CITSF of its obligations hereunder,
as set forth herein).
Section 3.03 Custody of Contract Files.
To assure uniform quality in servicing the Contracts and to reduce
administrative costs, the Trust, upon the execution and delivery of this
Agreement, revocably appoints the Servicer, and the Servicer accepts such
appointment, to act as the agent of the Trust and as custodian of the Contract
File with respect to each Contract, each of which are hereby constructively
delivered to the Trust.
Section 3.04 Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer, in its capacity as custodian, shall hold the
Contract Files on behalf of the Trust for the use and benefit of the Trust and
maintain such accurate and complete accounts, records and computer systems
pertaining to the Contracts as shall enable the Owner Trustee and the Indenture
Trustee to comply with its obligations pursuant to this Agreement and the Basic
Documents.
As custodian, the Servicer shall have and perform the following powers and
duties:
(i) hold the Contract Files on behalf of the Trust, maintain accurate
records pertaining to each Contract to enable it to comply with the terms
and conditions of this Agreement, maintain a current inventory thereof,
conduct annual physical inspections of Contract Files held by it under this
Agreement and certify to the Trust annually that it continues to maintain
possession of such Contract Files;
(ii) implement policies and procedures in writing and signed by a
Servicing Officer, with respect to persons authorized to have access to the
Contract Files on the Servicer's premises and the receipting for Contract
Files taken from their storage area by an employee of the Servicer for
purposes of servicing or any other purposes; and
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(iii) attend to all details in connection with maintaining custody of
the Contract Files on behalf of the Trust.
In performing its duties under this Section 3.04, the Servicer agrees to
act with reasonable care, consistent with the same degree of skill and care that
it exercises with respect to similar contracts serviced by it for its own
account. The Servicer shall promptly report to the Trust in writing any failure
by it to hold the Contract Files as herein provided and shall promptly take
appropriate action to remedy any such failure. In acting as custodian of the
Contract Files, the Servicer agrees further not to assert any beneficial
ownership interests in the Contracts or the Contract Files. The Servicer agrees
to indemnify the Trust, the Certificateholders, the Noteholders, the Owner
Trustee and the Indenture Trustee for any and all liabilities, obligations,
losses, damages, payments, costs, or expense of any kind whatsoever which may be
imposed on, incurred or asserted against the Trust, the Certificateholders, the
Noteholders, the Owner Trustee and the Indenture Trustee as the result of any
act or omission by the Servicer relating to the maintenance and custody of the
Contract Files; provided, however, that the Servicer will not be liable for any
portion of any such amount resulting from the negligence or willful misconduct
of the Trust, the Certificateholders, the Noteholders, the Owner Trustee or the
Indenture Trustee.
(b) Maintenance of and Access to Records. The Servicer, in its capacity as
custodian, agrees to maintain the Contract Files at its office in the State of
Oklahoma, or at such of its offices as shall from time to time be identified to
the Trust by written notice. The Servicer, in its capacity as custodian, may
temporarily move individual Contract Files or any portion thereof without notice
as necessary to conduct collection and other servicing activities in accordance
with its customary practices and procedures, but shall promptly return such
Contract File as soon as practicable after it is no longer needed for such
purpose.
The Servicer, in its capacity as custodian, shall make available to the
Trust or its duly authorized representatives, attorneys or auditors the Contract
Files and the related accounts, records and computer systems maintained by the
Servicer at such times during normal operating hours as the Trust shall
reasonably instruct which does not unreasonably interfere with the Servicer's
normal operations or customer or employee relations.
(c) Release of Documents. Upon instruction from the Trust, the Servicer, in
its capacity as custodian, shall release or cause to be released any document in
the Contract Files to the Trust, the Trust's agent or the Trust's designee, as
the case may be, at such place or places as the Trust may designate, as soon as
practicable. The Servicer, in its capacity as custodian, shall not be
responsible for any loss occasioned by the failure of the Trust, its agent or
its designee to return any document or any delay in doing so.
Section 3.05 Instructions; Authority to Act.
The Servicer shall be deemed to have received proper instructions from
either of the Trustees with respect to the Contract Files upon its receipt of
written instructions signed by a Responsible Officer. A certified copy of a
by-law or of a resolution of the Board of Directors of the Owner Trustee or the
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Indenture Trustee, as applicable, shall constitute conclusive evidence of the
authority of any such Responsible Officer to act and shall be considered in full
force and effect until receipt by the Servicer of written notice to the contrary
given by the Trust.
Section 3.06 Effective Period and Termination. The Servicer's appointment
as custodian shall become effective as of the Closing Date and shall continue in
full force and effect until terminated pursuant to this Section 3.06 or until
this Agreement shall be terminated. The Servicer may perform its duties as
custodian through one or more agents, which agents may maintain physical
possession of Contract Files as agent for the Servicer acting as custodian. If
the Servicer shall resign as Servicer under Section 8.05 or if all of the rights
and obligations of the Servicer shall have been terminated under Section 9.01,
the appointment of the Servicer as custodian may be terminated by the Indenture
Trustee or by the Holders of Notes evidencing not less than a majority of the
aggregate outstanding principal balance of the Notes as of the close of the
preceding Distribution Date (or, if the Notes have been paid in full and the
Indenture has been discharged in accordance with its terms, by the Owner Trustee
or by the Holders of Certificates evidencing not less than a majority of the
Certificate Balance as of the close of the preceding Distribution Date), in the
same manner as rights and obligations of the Servicer may be terminated under
Section 9.01. The Trust may terminate the Servicer's appointment as custodian at
any time with cause upon written notification to the Servicer. As soon as
practicable after any termination of such appointment, the Servicer shall
deliver the Contract Files to the Trust or the Trust's agent at such place or
places as the Trust may reasonably designate. The Servicer shall cooperate with
the Trust in making the transfer and shall bear all of the Servicer's costs and
expenses with respect to such transfer, but the Trust shall bear the actual
costs and expenses of packing and transporting the Contract Files to the
location designated by the Trust. Notwithstanding the termination of the
Servicer as custodian, the Trust agrees that upon any such termination, the
Trust shall provide, or cause its agent to provide, access to the Contract Files
to the Servicer for the purpose of carrying out its duties and responsibilities
with respect to the servicing of the Contracts hereunder.
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ARTICLE IV
Administration and Servicing of Contracts
Section 4.01 Duties of Servicer.
(a) The Servicer, as agent for the Trust, shall manage, administer, service
and make collections on the Contracts and perform or cause to be performed all
contractual and customary undertakings of the holder of the Contracts to the
Obligor. The Trust, at the request of a Servicing Officer, shall furnish the
Servicer with any reasonable documents or take any action reasonably requested,
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder.
(b) In managing, administering, servicing and making collections on the
Contracts pursuant to this Agreement, the Servicer will exercise the same degree
of skill and care that the Servicer exercises with respect to similar contracts
serviced by the Servicer for its own account.
(c) The Servicer may enter into subservicing agreements with one or more
subservicers (which shall be Eligible Servicers) for the servicing and
administration of certain of the Contracts. References in this Agreement to
actions taken, to be taken, permitted to be taken, or restrictions on actions
permitted to be taken, by the Servicer in servicing the Contracts shall include
actions taken, to be taken, permitted to be taken, or restrictions on actions
permitted to be taken, by a subservicer on behalf of the Servicer. Each
subservicing agreement will be upon such terms and conditions as are not
inconsistent with this Agreement and the standard of care set forth herein and
as the Servicer and the subservicer have agreed. All compensation payable to a
subservicer under a subservicing agreement shall be payable by the Servicer from
its servicing compensation or otherwise from its own funds, and none of the
Trust, the Owner Trustee, the Indenture Trustee, the Certificateholders or the
Noteholders will have any liability to the subservicer with respect thereto.
Notwithstanding any subservicing agreement or any of the provisions of this
Agreement relating to agreements or any arrangements between the Servicer or a
subservicer or any reference to actions taken through such Persons or otherwise,
the Servicer shall remain obligated and liable to the Trust, the Owner Trustee,
the Indenture Trustee, the Certificateholders and the Noteholders for the
servicing and administering of the Contracts and the other Trust property in
accordance with the provisions of this Agreement without diminution of such
obligation or liability by virtue of such subservicing agreements.
Any subservicing agreement that may be entered into and any other
transactions or servicing arrangements relating to the Contracts and the other
Trust property involving a subservicer in its capacity as such and shall be
deemed to be between the subservicer and the Servicer alone, and the Owner
Trustee, the Indenture Trustee, the Certificateholders and the Noteholders shall
not be deemed parties thereto and shall have no claims, rights, obligations,
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duties or liabilities with respect to the subservicer except as set forth in the
next succeeding paragraph.
In the event the Servicer shall for any reason no longer be acting as such,
the successor Servicer may, in its discretion, thereupon assume all of the
rights and obligations of the outgoing Servicer under a subservicing agreement.
In such event, the successor Servicer shall be deemed to have assumed all of the
Servicer's interest therein and to have replaced the outgoing Servicer as a
party to each such subservicing agreement to the same extent as if such
subservicing agreement had been assigned to the successor Servicer, except that
the outgoing Servicer shall not thereby be relieved of any liability or
obligations on the part of the outgoing Servicer to the subservicer under such
subservicing agreement. The outgoing Servicer shall, upon request of the Trust,
but at the expense of the outgoing Servicer, deliver to the successor Servicer
all documents and records relating to each such subservicing agreement and the
Contracts and other Trust property then being serviced thereunder and an
accounting of amount collected and held by it and otherwise use its best efforts
to effect the orderly and efficient transfer of any subservicing agreement to
the successor Servicer. In the event that the successor Servicer elects not to
assume a subservicing agreement, the outgoing Servicer, at its expense, shall
cause the subservicer to deliver to the successor Servicer all documents and
records relating to the Contracts and the other Trust property being serviced
thereunder and all amounts held (or thereafter received) by such subservicer
(together with an accounting of such amounts) and shall otherwise use its best
efforts to effect the orderly and efficient transfer of servicing of the
Contracts and the other Trust property being serviced by such subservicer to the
successor Servicer.
(d) The Servicer's duties shall include collection and posting of all
payments, responding to inquiries by Obligors or by federal, state or local
governmental authorities with respect to the Contracts, investigating
delinquencies, reporting tax information to Obligors, administering and
enforcing Insurance Policies in accordance with its customary practices,
accounting for collections, furnishing monthly and annual statements to the
Trust with respect to distributions, and making Monthly Advances pursuant to
Section 5.03 hereof.
The Servicer shall be authorized and empowered by the Trust to execute and
deliver, on behalf of itself, the Trust, the Owner Trustee, the Indenture
Trustee, the Certificateholders, the Noteholders, or any of them, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge, and all other comparable instruments, with respect to the Contracts
or with respect to the Financed Vehicles.
Upon written request of the Servicer and receipt by the Trust of an
Officer's Certificate setting forth the facts underlying such request, the Trust
shall furnish the Servicer with any limited powers of attorney and other
documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder and the Trust shall not be held
liable for such actions of the Servicer thereunder.
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Section 4.02 Collection of Contract Payments. The Servicer shall make
reasonable efforts to collect all payments called for under the terms and
provisions of the Contracts as and when the same shall become due, and in
connection therewith shall follow such collection procedures as it follows with
respect to comparable new or used Recreational Vehicle installment sale
contracts that it services for itself and others. The Servicer shall not reduce
scheduled payments, extend any Contract or otherwise modify the terms of any
Contract; provided, however, that, consistent with its normal procedures, the
Servicer may extend or modify the payment schedule of any Contract for credit
related reasons that would be acceptable to the Servicer with respect to
comparable new or used Recreational Vehicles that it services for itself or
others, if (a) the maturity of such Contract would not be extended beyond the
180th day prior to the Class A Final Scheduled Distribution Date and (b) the
reducing, rescheduling, extension or other modification of the terms of the
Contract would not constitute a cancellation of such Contract and the creation
of a new installment sale contract. If, as a result of rescheduling or extending
of payments or any other modification, such rescheduling, extension or
modification breaches any of the terms of the preceding sentence, then the
Servicer shall be obligated to purchase such Contract pursuant to Section 4.07
hereof as of the last day of the Due Period on which it became aware or receives
written notice from the Trust of such failure. The Servicer may, in accordance
with its customary standards, policies and procedures, in its discretion waive
any Late Fees that may be collected in the ordinary course of servicing a
Contract.
Section 4.03 Realization Upon Contracts.
(a) The Servicer will, consistent with customary servicing procedures and
the terms of this Agreement, act with respect to the Contracts in such manner as
will maximize the receipt of principal and interest on the Contracts and Net
Liquidation Proceeds in respect of Defaulted Contracts.
Notwithstanding the standard of care specified in Section 4.01 hereof, the
Servicer shall commence procedures for the repossession of any Financed Vehicle
or take such other steps that in the Servicer's reasonable judgment will
maximize the receipt of principal and interest or Net Liquidation Proceeds with
respect to the Contract secured by such Financed Vehicle, including, without
limitation, selling such Financed Vehicle at a public or private sale, subject
to the requirements of the applicable state and federal law. In connection with
such repossession or foreclosure, the Servicer shall follow such practices and
procedures as it shall deem necessary or advisable and as shall be consistent
with Section 4.01 hereof. In the event that title to any Financed Vehicle is
acquired in foreclosure or by conveyance in lieu of foreclosure, the deed or
certificate of sale shall be issued to the Trust, or, at its election, to its
nominee on behalf of the Trust.
(b) The Servicer shall be entitled to recover all reasonable fees of third
parties and expenses incurred by it in the course of converting any Financed
Vehicle into cash proceeds including, without limitation, expenses relating to
recovery and repossession of such Financed Vehicles, from liquidation proceeds
with respect to such Financed Vehicle. The Net Liquidation Proceeds realized in
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connection with any such action with respect to a Contract shall be deposited by
the Servicer in the Collection Account in the manner specified in Section 5.02
hereof and shall be applied to reduce (or to satisfy, as the case may be) the
Purchase Price of the Contract, if such Contract is to be purchased by CITSF
pursuant to Section 3.02 hereof, is to be purchased by the Servicer pursuant to
Section 4.07 hereof, or is to be purchased by CITSF pursuant to Section 11.02
hereof. The foregoing shall be subject to the provision that, in any case in
which the Financed Vehicle shall have suffered damage, the Servicer shall not
expend funds in connection with the repair or the repossession of such Financed
Vehicle unless it shall determine in its sole discretion that such repair and/or
repossession will increase the Net Liquidation Proceeds of the related Contract
by an amount equal to or greater than the amount of such expenses.
(c) The Servicer may sue to enforce or collect upon Contracts, including
foreclosure of any security interest on a Financed Vehicle, in its own name, if
possible, or as agent for the Trust. If the Servicer elects to commence a legal
proceeding to enforce a Contract or any Insurance Policy in respect thereof, the
act of commencement shall be deemed to be an automatic assignment of the
Contract to the Servicer for purposes of collection only. If, however, in any
enforcement suit or legal proceeding it is held that the Servicer may not
enforce a Contract on the ground that it is not a real party in interest or a
holder entitled to enforce the Contract, the Trust shall, at the Servicer's
expense, take such steps as the Servicer deems necessary to enforce the
Contract, including bringing suit in its name or the names of the
Securityholders.
(d) Prior to a Service Transfer, the Servicer may grant to the Obligor on
any Contract any rebate, refund or adjustment out of the Collection Account that
the Servicer in good faith believes is required because of Principal Prepayment
in Full. The Servicer will not permit any rescission or cancellation of any
Contract.
(e) The Servicer may enforce any due-on-sale clause in a Contract if such
enforcement is called for under its then current servicing policies for
obligations similar to the Contracts, provided that such enforcement is
permitted by applicable law and will not adversely affect any applicable
insurance policy.
Section 4.04 Physical Damage Insurance.
(a) The Servicer, in accordance with its customary servicing procedures,
shall 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 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 enforce
its rights under the Contracts to require the Obligors to maintain physical
damage insurance, in accordance with the Servicer's customary practices and
procedures with respect to comparable new or used recreational vehicle
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installment sale contracts that it services for itself or others. If an Obligor
fails to maintain such insurance, the Servicer shall obtain and advance on
behalf of such Obligor, as required under the terms of the applicable Contract
and this Agreement, the premiums for such insurance, with uninsured physical
damage loan insurance endorsements, each insurance policy naming the Servicer as
an additional insured and loss payee, and issued by an insurer having a rating
of "A" or better by A.M. Best (such insurance being referred to herein as
"Force-Placed Insurance"). Such Force-Placed Insurance and any commissions or
finance charges collected by the Servicer in connection therewith shall be, to
the extent permitted by law, in an amount in accordance with customary servicing
procedures, but in no event in an amount greater than the outstanding principal
balance of the related Contract or, if such insurance also covers the interest
of the related Obligor in the Financed Vehicle, no greater than the greater of
the outstanding principal balance of the related Contract and the value of the
Financed Vehicle, or such lesser amount permitted by applicable law and the
Servicer shall disclose to the related Obligor all information with respect to
such Force-Placed Insurance, commissions and finance charges as required by
applicable law. The Servicer does not, under its customary servicing procedures,
require Force-Placed Insurance when the principal balance of the related retail
installment sale contract or installment loan falls below the level or levels
periodically established in accordance with such customary servicing procedures.
In accordance with such customary servicing procedures, the Servicer may
periodically readjust such levels, suspend Force-Placed Insurance or arrange
other methods of protection of the Financed Vehicles that it deems necessary or
advisable, provided that the Servicer determines that such actions do not
materially and adversely affect the interests of the Certificateholders or the
Noteholders. Any portion of the principal balance of a Contract consisting of
Post Cut-off Date Insurance Add-Ons will not be owned by the Trust, and amounts
allocable thereto will not be available for distribution on the Securities.
Unless otherwise designated by the Obligor, the Servicer will not allocate
payments to Post Cut-off Date Insurance Add-Ons if any amount of principal or
interest is due but unpaid on the Contracts. The Servicer shall not deposit
payments posted with respect to Post Cut-off Date Insurance Add-Ons in the
Collection Account and shall instead promptly pay such amounts to an account of
the Servicer maintained for that purpose. In the event that an Obligor under a
Contract with respect to which the Servicer has advanced funds to obtain
Force-Placed Insurance makes scheduled payments under the Contract, but has
failed to make scheduled payments of such Post Cut-off Date Insurance Add-Ons 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 the Post Cut-off Date Insurance Add-Ons.
(b) The Servicer may, in lieu of causing individual Insurance Policies to
be maintained with respect to each Financed Vehicle pursuant to subsection (a)
of this Section 4.04 maintain one or more blanket insurance policies covering
losses on the Obligor's interest in the Contracts resulting from the absence or
insufficiency of individual Insurance Policies. To the extent that the Obligor's
individual insurance policy does not cover theft of the Financed Vehicle (to the
extent required under the Servicer's customary practices and procedures with
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respect to comparable new or used recreational vehicle installment sale
contracts that it services for itself or others), the Servicer shall Force-Place
Insurance, which may be obtained pursuant to one or more blanket insurance
policies covering theft and other risks. The proceeds of any such blanket
insurance policies relating to the Contracts shall be deposited in the
Collection Account as collections on the Contracts in accordance with the
provisions of Article V hereof.
Any such blanket policy shall be substantially in the form and in the
amount carried by the Servicer as of the date of this Agreement. The Servicer
shall pay the premium for such policy on the basis described therein. The
Servicer shall not, however, be required to deposit any deductible amount with
respect to (a) claims under individual Hazard Insurance Policies maintained
pursuant to subsection (a) of this Section 4.04, or (b) claims under any blanket
insurance policy. If the insurer under such blanket insurance policy shall cease
to be acceptable to the Servicer, the Servicer shall exercise its best
reasonable efforts to obtain from another insurer a replacement policy
comparable to such policy. The Servicer shall provide each Rating Agency with
notice of the occurrence of any event specified in the preceding sentence.
Section 4.05 Maintenance of Security Interests in Financed Vehicles;
Retitling.
(a) The Servicer, in accordance with its customary servicing procedures,
shall take such steps as are necessary to maintain perfection of the security
interest created by each Contract in the related Financed Vehicle in favor of
CITSF or CITCF-NY. The Servicer hereby agrees to take such steps as are
necessary to re-perfect such security interest in the name of CITSF or CITCF-NY
in the event of the relocation of a Financed Vehicle to a jurisdiction other
than the jurisdiction in which steps had been taken to perfect the security
interest in favor of CITSF or CITCF-NY. In the event that the assignment of the
Contract to the Trust is insufficient without a notation on the related Financed
Vehicle's certificate of title, to grant to the Trust a perfected security
interest in the related Financed Vehicle, CITSF or CITCF-NY hereby agrees to
serve as the Trust's agent for the purpose of perfecting the security interest
in such Financed Vehicle and that CITSF's or CITCF-NY's listing as the secured
party on the certificate of title is in the capacity as agent of the Trust.
(b) If, at any time, a Service Transfer has occurred and CITSF is no longer
the Servicer, and the new Servicer is unable to foreclose upon a Financed
Vehicle because the title document for such Financed Vehicle does not show such
Servicer or the Trust as the holder of the first priority security interest in
the Financed Vehicle, such Servicer shall take all necessary steps to apply for
a replacement title document showing it or the Trust as the secured party.
(c) In order to facilitate the Servicer's actions, as described in
subsection 4.05(b) hereof, CITSF will provide the Servicer with any necessary
power of attorney permitting it to retitle the Financed Vehicle. The Company
hereby appoints the Trust its attorney-in-fact for the purposes to endorse, as
appropriate, the certificate of title relating to any Financed Vehicle in order
to cause a change in the registration of legal owner of the Financed Vehicle to
the Trust at such time as such certificate of title is endorsed and delivered to
the Department of Motor Vehicles of the State of California (or any other state
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department of motor vehicles) with appropriate fees. The Company will provide
the Trust with any necessary power of attorney for such purpose.
(d) If the Servicer is unable to retitle the Financed Vehicle, in the event
that the Servicer seeks to foreclose on a Financed Vehicle then CITSF will take
all actions necessary to act with the Servicer, to the extent permitted by law,
to foreclose upon the Financed Vehicle, including, as appropriate, the filing of
any UCC-1 or UCC-2 financing statements necessary to perfect the security
interest in any Financed Vehicle.
Section 4.06 Covenants of Servicer. The Servicer shall make the following
covenants on which the Owner Trustee and Indenture Trustee will rely in
accepting the Contracts in trust and executing and authenticating the
Certificates and the Notes:
(i) Security Interest to Remain in Force. The Financed Vehicle
securing each Contract shall not be released from the security interest
granted by the Contract in whole or in part except as contemplated herein;
(ii) No Impairment. The Servicer shall not impair the rights of the
Trust in the Contracts or take any action inconsistent with the Trust's
ownership of the Contracts, except as expressly provided herein;
(iii) Amendments. The Servicer shall not increase the number of
payments under a Contract, nor increase the principal amount of such
Contract which is used to finance the purchase price of the related
Recreational Vehicles, nor extend or forgive payments on a Contract, except
as provided in Section 4.02 hereof; and
(iv) Compliance with Insurance Policies. The Servicer shall not fail
to comply with the provisions of any Insurance Policy, if the failure to so
comply would impair the protection or benefit to be afforded by such
Insurance Policies.
Section 4.07 Purchase of Contracts Upon Breach
The Servicer or the Trustees, as the case may be, shall inform the other
parties promptly, in writing, upon the discovery of any breach by the Servicer
of its covenants under Section 4.04(a) with respect to Force-Placed Insurance,
Section 4.06 and the proviso in Section 4.02 hereof which materially and
adversely affects the Trust's interest in any Contract. The Trustees shall not
be deemed to have discovered such a breach until such time as a Responsible
Officer of the Trustees receives written notice of such breach. Except as
otherwise specified in Section 4.02 hereof, unless the breach shall have been
cured, the Servicer shall purchase such Contract, at its Purchase Price, not
later than the first Determination Date which is more than 60 days after the
Servicer receives written notice from the Trustees, or not later than 60 days
after the Servicer otherwise becomes aware of, a breach of any of its
obligations with respect to Force-Placed Insurance under Section 4.04(a) hereof
or any representation or warranty of the Servicer in Section 4.06 hereof that
materially and adversely affects the Trust's interest in such Contract. The
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Servicer shall effect such purchase by depositing, in accordance with Section
5.04 hereof, the Purchase Price of such Contract (less any Net Liquidation
Proceeds deposited, or to be deposited, by the Servicer in the Collection
Account with respect to such Contract pursuant to Section 5.02 hereof) in the
Collection Account on the Deposit Date immediately preceding the Determination
Date referred to in the preceding sentence. The effective date of such purchase
shall be the last day of the Due Period preceding such Determination Date. The
sole remedy of the Trust, the Owner Trustee, the Indenture Trustee, the
Certificateholders or the Noteholders against the Servicer with respect to a
breach pursuant to Section 4.06 hereof or Section 4.02 hereof shall be to
require the Servicer to purchase Contracts pursuant to this Section 4.07.
Section 4.08 Servicing Fee.
The Servicing Fee for a Distribution Date shall be equal to the sum of (i)
one-twelfth of the product of 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 Certificate
Distribution Account and the Note Distribution Account. In addition, the
Servicer will be entitled to collect and retain any Late Fees received by the
Servicer from Obligors during the preceding Due Period.
Section 4.09 Servicer's Certificate.
On or before each Determination Date, the Servicer shall furnish a report
(the "Monthly Report"), which shall be in substantially the form of Exhibit G,
to the Owner Trustee, the Indenture Trustee, any Paying Agent (under the
Indenture and the Trust Agreement) and (if CITSF is not the Servicer) CITSF. The
determination by the Servicer of the amount of the distributions to be made
pursuant to Section 5.05 hereof shall, in the absence of obvious error, be
presumptively deemed to be correct for all purposes hereunder, and the Trustees
shall be protected in relying upon the same without any independent check or
verification. The Servicer shall also specify in the Monthly Report each
Contract which CITSF or the Servicer is required to purchase as of the last day
of the related Due Period and each Contract which the Servicer shall have
determined to be a Defaulted Contract or a Liquidated Contract during such Due
Period. The Trustees shall not be required to recompute, verify or recalculate
information contained in the Servicer's Certificate.
Each Monthly Report shall be accompanied by a certificate of a Servicing
Officer substantially in the form of Exhibit F, certifying the accuracy of the
Monthly Report and that no Event of Termination or event that with notice or
lapse of time or both would become an Event of Termination has occurred, or if
such event has occurred and is continuing, specifying the event and its status.
In addition, the Servicer shall, on request of the Trustees, furnish the
Trustees such underlying data as can be generated by the Servicer's existing
data processing system without undue modification or expense.
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Section 4.10 Annual Statement as to Compliance
(a) The Servicer shall deliver to the Trustees within 90 days after the end
of each calendar year commencing March 31, 1996, a certificate signed by the
president, the treasurer or any vice president of the Servicer, stating that (i)
a review of the activities of the Servicer during the preceding calendar year of
its performance under this Agreement has been made under such officer's
supervision and (ii) to the best of such officer's knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement
throughout such preceding calendar year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof.
(b) The Servicer shall deliver to the Trustees, promptly after having
obtained knowledge thereof, an Officers' Certificate specifying any event which
with the giving of notice or lapse of time, or both, would become an Event of
Termination under clause (i) or (ii) of Section 9.01 hereof. The Company shall
deliver to the Trustees, promptly after having obtained knowledge thereof, an
Officer's Certificate specifying any event which with the giving of notice or
lapse of time, or both, would become an Event of Termination under clause (i) or
(ii) of Section 9.01 hereof.
Section 4.11 Annual Report of Accountants. Within 90 days after the end of
each calendar year, commencing March 31, 1996, the Servicer, at its expense,
shall cause a firm of independent public accountants which is a member of the
American Institute of Certified Public Accountants to furnish a statement to the
Trustee to the effect that such firm has, with respect to the Servicer's overall
servicing operations, examined such operations in accordance with the
requirements of the Uniform Single Audit Program for Mortgage Bankers, and
stating such firm's conclusions relating thereto. Copies of the annual statement
of accountants shall also be provided to each Rating Agency.
Section 4.12 Duties of Owner Trustee
In accordance with Section 6.1(b) of the Trust Agreement, the Servicer will
comply with, on behalf of the Owner Trustee, the requirements of Sections 5.4
and 5.5 of the Trust Agreement and Sections 3.6, 3.9 and 7.3 of the Indenture.
Section 4.13 Reports to Securityholders and the Rating Agencies
(a) Concurrently with each distribution charged to the Certificate
Distribution Account and the Note Distribution Account, the Owner Trustee and
the Indenture Trustee, respectively, so long as it has received the Monthly
Report from the Servicer, shall forward or cause to be forwarded by mail to each
Securityholder, such Monthly Report.
(b) The Servicer shall forward to each Rating Agency each letter of the
Independent certified public accountants' described in Section 4.11 hereof, each
Servicer's Certificate, each annual statement as to compliance described in
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Section 4.10 hereof and each statement to Securityholders described in Section
5.08 hereof.
Section 4.14 Maintenance of Fidelity Bond and Errors and Omission
Policy.
The Servicer shall during the term of its service as Servicer maintain in
force (a) at such time as the long-term debt of its parent is rated less than A
by Standard & Poor's or less than A3 by Moody's, a policy or policies of
insurance covering errors and omissions for failure to maintain insurance as
required by this Agreement, and (b) a fidelity bond in respect of its officers,
employees and agents. Such policy or policies and such fidelity bond shall be in
such form and amount as is generally customary among Persons which service a
portfolio of recreational vehicle installment sale contracts having an aggregate
principal amount of $100,000,000 or more and which are generally regarded as
servicers acceptable to institutional investors.
Section 4.15 Trustees to Cooperate.
Upon payment in full on any Contract, the Servicer will notify the Trustees
by certification of a Servicing Officer (which certification shall include a
statement to the effect that all amounts received in connection with such
payments which are required to be deposited in the Collection Account pursuant
to Section 5.05 have been so deposited). The Servicer is authorized to execute
an instrument in satisfaction of such Contract and to do such other acts and
execute such other documents as the Servicer deems necessary to discharge the
Obligor thereunder and eliminate the security interest in the Financed Vehicle
related thereto. The Servicer shall determine when a Contract has been paid in
full. To the extent that insufficient payments are received on a Contract
credited by the Servicer as prepaid or paid in full and satisfied, the shortfall
shall be paid by the Servicer out of its own funds.
Section 4.16 Costs and Expenses.
Except as provided in Section 4.03 hereof, all costs and expenses incurred
by the Servicer in carrying out its duties hereunder, including all fees and
expenses incurred in connection with the enforcement of Contracts (including
enforcement of Defaulted Contracts and repossessions of Financed Vehicles
securing such Contracts), shall be paid by the Servicer and the Servicer shall
not be entitled to reimbursement hereunder.
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ARTICLE V
Accounts; Distributions; Statements to Certificateholders
Section 5.01 Collection Account, Pre-Funding Account, Capitalized Interest
Account and Cash Collateral Account.
(a) (i) On or before the Closing Date, there shall be established and
maintained in the name of the Indenture Trustee, for the benefit of the
Noteholders and Certificateholders, with an Eligible Institution (which
initially shall be the Indenture Trustee) an account known as the "CIT RV Owner
Trust 1996-A Collection Account" (the "Collection Account"), bearing an
additional designation clearly indicating that the funds deposited therein are
held for the benefit of the Noteholders and Certificateholders.
(ii) On or before the Closing Date, there shall be established and
maintained in the name of the Indenture Trustee, for the benefit of the
Noteholders, with the Indenture Trustee an account known as the "CIT RV Owner
Trust 1996-A Note Distribution Account" (the "Note Distribution Account"),
bearing an additional designation clearly indicating that the funds deposited
therein are held for the benefit of the Noteholders.
(iii) On or before the Closing Date, pursuant to the Trust Agreement, there
shall be established and maintained in the name of the Owner Trustee, for the
benefit of the Certificateholders, with an Eligible Institution (which initially
shall be ______________________________, the Paying Agent of the Owner Trustee)
an account known as the "CIT RV Owner Trust 1996-A Certificate Distribution
Account" (the "Certificate Distribution Account"), bearing an additional
designation clearly indicating that the funds deposited therein are held for the
benefit of the Certificateholders and owned by the Trust.
(iv) On or before the Closing Date, there shall be established and
maintained in the name of the Owner Trustee with an Eligible Institution (which,
initially, shall be ______________________________, the Paying Agent of the
Owner Trustee), an account known as the "CIT RV Owner Trust 1996-A Cash
Collateral Account (the "Cash Collateral Account"), bearing a designation
clearly indicating that the funds deposited therein are held for the benefit of
the Certificateholders and owned by the Trust.
(b) Pre Funding Account and Capitalized Interest Account.
(i) On or before the Closing Date, there shall be established and
maintained the Pre-Funding Account and the Capitalized Interest Account, in
the name of the Owner Trustee, on behalf of the Trust for the benefit of
the Noteholders and Certificateholders with an Eligible Institution (which,
initially, shall be the Indenture Trustee). If, at any time during the
Funding Period, the Pre-Funding Account or the Capitalized Interest Account
ceases to be maintained with an Eligible Institution, the Indenture Trustee
(or the Servicer on its behalf) shall within five (5) Business Days (or
such longer period, not to exceed thirty (30) calendar days, as to which
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the Rating Agency may consent) establish a new Pre-Funding Account or
Capitalized Interest Account meeting the condition specified above,
transfer any cash and/or any investments to such new Pre-Funding Account or
Capitalized Interest Account and from the date such new Pre-Funding Account
or Capitalized Interest Account is established, they shall be the
"Pre-Funding Account" or "Capitalized Interest Account", as appropriate.
The Pre-Funding Account shall be entitled the "CIT RV Owner Trust 1996-A
Pre-Funding Account". The Capitalized Interest Account shall be entitled
the "CIT RV Owner Trust 1996-A Capitalized Interest Account". Each of the
Pre-Funding Account and the Capitalized Interest Account shall bear an
additional designation clearly indicating that the funds on deposit therein
are held for the benefit of, and owned by, the Trust. On the Closing Date,
the Trust will deposit the Original Pre-Funded Amount into the Pre-Funding
Account and deposit the Initial Capitalized Interest Deposit into the
Capitalized Interest Account.
(ii) On any Subsequent Transfer Date, the Servicer shall instruct the
Owner Trustee to withdraw from the Pre-Funding Account an amount equal to
100% of the unpaid principal balance thereof as of the related Subsequent
Cut-off Date of the Subsequent Contracts sold to the Trust on such
Subsequent Transfer Date and pay such amount to or upon the order of
Company with respect to such transfer. In no event shall the Servicer be
permitted to instruct the Owner Trustee to release from the Pre-Funding
Account with respect to Subsequent Contracts to be transferred to the Trust
an amount, which, when added to the amounts previously released from the
Pre-Funding Account to acquire Subsequent Contracts, would exceed the
Original Pre-Funded Amount.
(iii) On the Distribution Dates occurring in _________, _______ and
________ of 1996, the Owner Trustee shall withdraw Pre-Funding Earnings
from the Pre-Funding Account, to the extent available, and deposit such
amount in the Collection Account for payment to the Holders of the
Securities on such Distribution Dates, in an amount equal to the
difference, if any, between (x) the sum of the amount of interest payable
to the Noteholders on such Distribution Date and the amount of interest
payable to the Certificateholders on such Distribution Date and (y) that
portion of the Amount Available allocated to make such interest payments to
Noteholders and Certificateholders, respectively, on such Distribution
Dates. On such Distribution Dates, such funds, if any, shall be used first
to pay to the Noteholders, to the extent available, the Pre-Funding
Earnings so withdrawn such that the Noteholders will receive such amounts
of interest due on such Distribution Date, and second, to pay to the
Certificateholders, to the extent available, the remaining Pre-Funding
Earnings so withdrawn such that the Certificateholders will receive such
amounts of interest due on such Distribution Date.
(iv) On the Distribution Dates occurring in _________, _______ and
________ of 1996, the Owner Trustee shall withdraw monies on deposit in the
Capitalized Interest Account, to the extent available, and deposit such
amount in the Collection Account for payment to the Holders of the
Securities on such Distribution Date, in an amount equal to the excess, if
any, of (x) the product of (1) the weighted average of the Class A Rate and
the Pass-Through Rate as of the first day of the related Interest Accrual
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Period and (2) the undisbursed funds (excluding investment earnings) in the
Pre-Funding Account (as of the last day of the related Due Period) over (y)
the amount if any Pre-Funding Earnings in the Pre-Funding Account that are
available to pay interest on the Securities on such Distribution Date
pursuant to clause (iii) above. On such Distribution Dates, such funds, if
any, shall be used first to pay to the Noteholders, to the extent
available, the amount so withdrawn such that the Noteholders will receive
such amounts of interest due on such Distribution Date, and second, to pay
to the Certificateholders, to the extent available, the amount so withdrawn
such that the Certificateholders will receive such amounts of interest due
on such Distribution Date.
(v) On the last day of the Funding Period (or, if such day is not a
Business Day, on the next succeeding Business Day) (but in no event later
than the ________ 1996 Distribution Date) the Servicer shall instruct the
Owner Trustee to withdraw from the Pre-Funding Account, and the Owner
Trustee shall so withdraw, the difference, if any, between (A) the sum of
the Original Pre-Funded Amount, and (B) all amounts theretofore withdrawn
from the Pre-Funding Account with respect to the purchase and transfer to
the Trust of Subsequent Contracts, and the Owner Trustee shall (i) deposit
the Note Pre-Funded Percentage of such amounts into the Note Distribution
Account and (ii) deposit the Certificate Pre-Funded Percentage of such
amounts into the Certificate Distribution Account. Such amounts will be
used to prepay the principal amount of the outstanding Notes and
Certificates in accordance with the Note Pre-Funded Percentage and the
Certificate Pre-Funded Percentage, respectively, on the Distribution Date
immediately following the Funding Period or if the end of the Funding
Period is on a Distribution Date, then on such date.
(vi) Any Pre-Funding Earnings on deposit in the Pre-Funding Account
and all amounts remaining on deposit in the Capitalized Interest Account on
the last day of the Funding Period which were not distributed to the
Securityholders pursuant to Section 5.01(b) shall be deposited by the Owner
Trustee in the Collection Account on such date and shall constitute part of
the Amount Available on the first Distribution Date thereafter or, if the
end of the Funding Period is on a Distribution Date, then on such date.
(c) The Eligible Institution maintaining the accounts described in this
Section 5.01(a) and (b) shall, in the name of the Trust invest amounts on
deposit solely in Eligible Investments that mature not later than one Business
Day prior to the next succeeding Distribution Date, in accordance with
instructions provided to the Trustees by the Servicer in writing (or, in the
case of the Cash Collateral Account, in accordance with instructions provided to
the Servicer by the Cash Collateral Depositor, on behalf of the Owner Trustee
and the Cash Collateral Depositor, in writing). Once such funds are invested,
such Eligible Institution shall not change the investment of such funds.
Notwithstanding the foregoing, amounts deposited in the Collection Account from
funds on deposit in the Pre-Funding Account pursuant to Section 5.01(b) may not
be invested at all. All Investment Earnings from the investment of funds in the
accounts described in this Section 5.01(a) and (b) shall be deposited in the
accounts in which such Investment Earnings were earned; provided, however,
Investment Earnings from the investment of funds in the Cash Collateral Account
shall be retained in a separate interest subaccount of the Cash Collateral
Account and realized losses, if any, on amounts so invested shall be charged
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against undistributed Investment Earnings from the Cash Collateral Account. All
Investment Earnings realized from any such investment of funds in the Collection
Account, Certificate Distribution Account and Note Distribution Account (to the
extent investment of such funds is permitted hereunder) shall be for the benefit
of the Servicer and may be withdrawn by the Servicer on each Distribution Date
pursuant to subsection 5.05(b)(ii). All Investment Earnings realized from any
such investment of funds in the Pre-Funding Account and the Capitalized Interest
Account shall be distributed as provided in Section 5.01(b). All Investment
Earnings realized from any such investment of funds in the Cash Collateral
Account shall be distributed as provided in Section 5.06. An amount equal to any
net loss on such investments shall be deposited in the Collection Account, the
Certificate Distribution Account and Note Distribution Account by the Servicer
out of its own funds, without right to reimbursement, immediately as realized.
"Eligible Investments" are any of the following:
(i) direct obligations of, and obligations fully guaranteed by, the
United States of America, the Federal Home Loan Mortgage Corporation (if
then rated Aaa by Moody's), the Federal National Mortgage Association, or
any agency or instrumentality of the United States of America the
obligations of which are backed by the full faith and credit of the United
States of America and which are non-callable;
(ii) demand and time deposits in, certificates of deposit of, bankers'
acceptances issued by, or federal funds sold by any depository institution
or trust company (including the Trustees or any Affiliate of the Trustees,
acting in their commercial capacity) incorporated under the laws of the
United States of America or any state thereof or the District of Columbia
(or any domestic branch or agency of a foreign bank) and subject to
supervision and examination by federal and/or state authorities, so long
as, at the time of such investment or contractual commitment providing for
such investment, the commercial paper or other short-term debt obligations
of such depository institution or trust company have been rated at least
P-1 or higher from Moody's and A-1+ from Standard & Poor's (or, with
respect to the investment of any amounts on deposit in the Cash Collateral
Account or the Certificate Distribution Account, such Standard & Poor's
rating shall be at least A-1); or any other demand or time deposit or
certificate of deposit which is fully insured by the Federal Deposit
Insurance Corporation and which is rated at least P-1 by Moody's;
(iii) repurchase obligations with respect to any security described in
either clause (i) or (ii) above and entered into with any institution whose
commercial paper is at least rated P-1 from Moody's and at least A-1+ by
Standard & Poor's (or, with respect to the investment of any amounts on
deposit in the Cash Collateral Account or the Certificate Distribution
Account, such Standard & Poor's rating shall be at least A-1);
(iv) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America or
any State thereof which have a credit rating of at least A2 or P-1 from
Moody's and at least AA- from Standard & Poor's at the time of such
investment (or, with respect to the investment of any amounts on deposit in
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the Cash Collateral Account or the Certificate Distribution Account, such
Standard & Poor's rating shall be at least A);
(v) commercial paper having a rating of at least P-1 from Moody's and
at least A-1+ from Standard & Poor's (or, with respect to the investment of
any amounts on deposit in the Cash Collateral Account or the Certificate
Distribution Account, such Standard & Poor's rating shall be at least A-1)
at the time of such investment; and
(vi) money market funds which are rated Aaa by Moody's and at least
AAAm or AAAm-G by Standard & Poor's, including funds which meet such rating
requirements for which the Trustees or an affiliate of the Trustees serves
as an investment advisor, administrator, shareholder servicing agent and/or
custodian or subcustodian, notwithstanding that (i) such Trustee or an
affiliate of such Trustee charges and collects fees and expenses from such
funds for services rendered, (ii) such Trustee charges and collects fees
and expenses for services rendered pursuant to this instrument, and (iii)
services performed for such funds and pursuant to this instrument may
converge at any time. (The Seller and the Servicer specifically authorize
such Trustee or an affiliate of such Trustee to charge and collect all fees
and expenses from such funds for services rendered to such funds, in
addition to any fees and expenses such Trustee may charge and collect for
services rendered pursuant to this instrument).
The Trustees may trade with themselves, each other, or with an Affiliate on
an arm's length basis in the purchase or sale of such Eligible Investments.
Section 5.02 Collections; Applications
(a) Deposits to Collection Account. Subject to subsections 5.02(b) and (c),
the Servicer shall deposit in the Collection Account, no later than two Business
Days after the Closing Date, any amounts representing payments received on the
Contracts on or after the Initial Cut-off Date through and including the Closing
Date. Subject to subsections 5.02(b) and (c), the Servicer shall deposit in the
Collection Account as promptly as practicable (not later than the second
Business Day) following the receipt thereof by the Servicer, all amounts
received in respect of the Contracts, including all loan payments from Obligors,
Net Liquidation Proceeds and Insurance Proceeds.
(b) Monthly Deposits to Collection Account. Notwithstanding anything in
this Agreement to the contrary, for so long as, and only so long as,
(i) CITSF shall remain the Servicer hereunder and CITSF remains a
direct or indirect subsidiary of CIT, if CIT shall have and maintain a
short-term debt rating of at least A-1 by Standard & Poor's and either a
short-term debt rating of P-1 or a long-term debt rating of at least A2 by
Moody's, or
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(ii) the Servicer obtains a letter of credit, surety bond or insurance
policy (the "Servicer Letter of Credit") under which demands for payment
will be made to secure timely remittance of monthly collections to the
Collection Account and the Trustees are provided with a letter from each
Rating Agency to the effect that the utilization of such alternative
remittance schedule and any amendment required to be made to this Agreement
in connection therewith will not result in a qualification, reduction or
withdrawal of its then-current rating of the Notes or Certificates,
the Servicer may make the deposits to the Collection Account specified in
subsection 5.05(a) on a monthly basis, but not later than the Deposit Date
immediately preceding the Distribution Date following the last day of the Due
Period within which such payments were processed by the Servicer, in an amount
equal to the net amount of such deposits and payments which would have been made
to the Collection Account during such Due Period but for the provisions of this
subsection 5.02(b). In the event that the Servicer is permitted to make
remittances of collections to the Collection Account pursuant to Section
5.02(b)(ii), this Agreement may be modified, to the extent necessary, without
the consent of any Securityholder.
(c) Amounts Not Required to be Deposited. The Servicer will not be required
to deposit in the Collection Account amounts relating to the Contracts
attributable to the following:
(i) amounts received with respect to each Contract (or property
acquired in respect thereof) that has been purchased by CITSF or the
Servicer pursuant to this Agreement and that are not required to be
distributed to Securityholders,
(ii) net investment earnings on funds deposited in the Collection
Account, the Certificate Distribution Account, the Note Distribution
Account and the Cash Collateral Account,
(iii) amounts received as Late Fees,
(iv) amounts received in respect of Post Cut-off Date Insurance
Add-ons,
(v) any repossession profits on Liquidated Contracts,
(vi) amounts received as liquidation proceeds, to the extent the
Servicer is entitled to reimbursement of liquidation expenses relating
thereto pursuant to Section 4.03, and
(vii) amounts to be reimbursed to the Servicer in respect of
Nonrecoverable Advances.
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(e) Permitted Withdrawals from the Collection Account. The Indenture
Trustee will, from time to time as provided herein, make withdrawals from the
Collection Account of amounts deposited in said account pursuant to this
Agreement that are attributable to the Contracts for the following purposes:
(i) to make payments and distributions in the amounts and in the
manner provided for in Section 5.05;
(ii) to pay to CITSF or the Servicer with respect to each Contract or
property acquired in respect thereof that has been purchased pursuant to
Section 3.02, 4.02, 4.07, 11.01 or 11.02, all amounts received thereon and
not required to be distributed to Noteholders and Certificateholders;
(iii) to withdraw any amount deposited in the Collection Account that
was not required to be deposited therein; and
(iv) to reimburse the Servicer out of liquidation proceeds for
liquidation expenses incurred by it, to the extent such reimbursement is
permitted under Section 4.03 and to the extent such expenses have not
otherwise been reimbursed.
Since, in connection with withdrawals pursuant to clauses (ii) and (iv) of this
subsection 5.02(d), CITSF's entitlement thereto is limited to collections or
other recoveries on the related Contract, the Servicer shall keep and maintain
separate accounting, on a Contract by Contract basis, for the purpose of
justifying any withdrawal from the Collection Account pursuant to such clauses.
The Servicer shall keep and maintain an accounting for the purpose of justifying
any withdrawal from the Collection Account pursuant to clause (iii) of this
subsection 5.02(d).
Section 5.03 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 either (i) a Principal Prepayment in Full of
a Contract or (ii) a Contract which has been subject to a Relief Act Reduction
during such Due Period), the Servicer shall make a Monthly Advance in the amount
of such Interest Shortfall, but only to the extent the Servicer, in its good
faith judgment, expects to recoup such Monthly Advance from subsequent payments
of interest by or on behalf of the Obligors, Net Liquidation Proceeds or
proceeds from Insurance Policies with respect to the related Contract. The
Servicer shall not be obligated to make any advance to the Trust in respect of
the principal component of scheduled payments on any Contract which is not paid
during the Due Period in which they are due.
The Servicer shall deposit any such Monthly Advance into the Collection
Account in next-day funds or immediately available funds no later than 12:00
noon, New York time, on the related Deposit Date. The Servicer shall be
reimbursed for any such Monthly Advance by subsequent collections in respect of
interest on such Contract made by or on behalf of the Obligor, and Net
Liquidation Proceeds or proceeds from Insurance Policies with respect to such
Contract. If an unreimbursed Monthly Advance shall become a Nonrecoverable
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Advance, the Servicer shall be reimbursed from collections on all the Contracts
in the Trust in the order of priority set forth in Section 5.05 hereof.
Section 5.04A Non-Reimbursable Payments. On each Deposit Date, the Servicer
shall make a deposit (a "Non-Reimbursable Payment") to the Collection Account in
respect of each Contract for which there has been an Interest Shortfall during
the preceding Due Period arising either from a Principal Prepayment in Full or a
Relief Act Reduction in respect of such Contract during such Due Period, in an
amount equal to the Interest Shortfall.
The Servicer shall deposit the aggregate amount of Non-Reimbursable
Payments in respect of a Due Period into the Collection Account at the time and
in the manner specified in Section 5.03. The Servicer shall not be entitled to
reimbursement for any Non-Reimbursable Payment.
Section 5.04 Additional Deposits. CITSF and the Servicer, as the case may
be, shall deposit into the Collection Account the aggregate Purchase Price
pursuant to Sections 3.02, 4.02, 4.07, 11.01 and 11.02, as applicable. All
remittances shall be made to the Collection Account, in next-day funds or
immediately available funds, no later than 12:00 noon, New York time, on the
related Deposit Date.
Section 5.05 Distributions.
(a) On or before the Determination Date preceding a Distribution Date, the
Servicer will make a determination and inform the Indenture Trustee and the
Owner Trustee of the following amounts with respect to the preceding Due Period:
(i) the aggregate amount of collections on the Contracts; (ii) the aggregate
amount of Monthly Advances to be remitted by the Servicer; (iii) the aggregate
Purchase Price of Contracts to be purchased by CITSF or the Servicer; (iv) the
aggregate amount to be distributed as principal and interest on the Notes on the
related Distribution Date; (v) the aggregate amount to be distributed as
principal and interest on the Certificates on the related Distribution Date;
(vi) the Servicing Fee; (vii) the aggregate amount of Non-Reimbursable Payments;
(viii) the amounts required to be withdrawn from the Cash Collateral Account for
such Distribution Date in accordance with Sections 5.05(b) and 5.06 hereof and
the applicable provisions of the Cash Collateral Agreement; (ix) any amounts to
be deposited into the Cash Collateral Account pursuant to Sections 5.05(b)(viii)
and 5.06 hereof and the applicable provisions of the Cash Collateral Agreement
and (x) the aggregate amount of unreimbursed Monthly Advances to be reimbursed
to the Servicer.
(b) On each Distribution Date the Indenture Trustee, based on the
instruction provided by the Servicer in subsection (a) above, will withdraw the
Amount Available from the Collection Account to make the following payments (to
the extent sufficient funds are available therefor) in the following order and
priority:
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(i) 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;
(ii) the Servicer Payment (to the extent not previously retained
by the Servicer) will be paid to the Servicer;
(iii) the Class A Interest Distribution Amount, including any
Outstanding Class A Interest, will be deposited into the Note
Distribution Account, for payment to the Noteholders;
(iv) on and prior to the Cross-over Date, the Principal
Distribution Amount, including any unpaid principal due on prior
Distribution Dates, will be deposited into the Note Distribution
Account, for payment to the Noteholders;
(v) the Certificate Interest Distribution Amount, including any
Outstanding Certificate Interest, will be deposited into the
Certificate Distribution Account, for payment to the
Certificateholders;
(vi) 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;
(vii) on and after the Cross-over Date, the Principal
Distribution Amount (to the extent not paid to Noteholders on the
Cross-over Date), including any unpaid principal due on prior
Distribution Dates, will be deposited into the Certificate
Distribution Account, for payment to the Certificateholders;
(viii) an amount equal to the lesser of (a) the balance, if any,
remaining after the payments in clauses (i) through (vii) above and
(b) the sum of (1) the amount by which the Required Cash Collateral
Amount with respect to the following Distribution Date exceeds the
amount on deposit in the Cash Collateral Account (exclusive of
Investment Earnings on amounts on deposit therein) on the current
Distribution Date after giving effect to any withdrawals therefrom on
such Distribution Date, and (2) the amount, if any, by which (I) the
amount of payments of principal and interest required to be made on
the Loan on such Distribution Date pursuant to the Cash Collateral
Agreement exceeds (II) the Investment Earnings accrued on the Cash
Collateral Account since the preceding Deposit Date, will be deposited
in the Cash Collateral Account, for payment to the Certificateholders,
the Cash Collateral Depositor and the holder of the GP Interest in
accordance with the provisions of Section 5.06 hereof and the Cash
Collateral Agreement; and
(ix) the balance, if any, remaining after the payments in clauses
(i) through (viii) above shall be distributed to the holder of the GP
Interest.
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(c) On each Distribution Date, the Indenture Trustee and the Owner Trustee
shall distribute all amounts in the Note Distribution Account and the
Certificate Distribution Account, respectively, to the Noteholders and the
Certificateholders, respectively as provided in the Indenture and Trust
Agreement respectively.
Section 5.06. Cash Collateral Account. (a) The Owner Trustee shall, on the
Closing Date, deposit or cause to be deposited in the Cash Collateral Account by
wire transfer of immediately available funds the Initial Cash Collateral Amount
from the proceeds of the loan to be made on the Closing Date by the Cash
Collateral Depositor under the Cash Collateral Agreement. On each Distribution
Date, the Owner Trustee shall deposit or cause to be deposited into the Cash
Collateral Account by wire transfer of immediately available funds any amount it
receives pursuant to Section 5.05(b)(viii) of this Agreement, which amount shall
be designated as being for deposit in the Cash Collateral Account. The Owner
Trustee shall have the sole right to make withdrawals from the Cash Collateral
Account and to exercise all rights with respect to the Cash Collateral Account
Property. Amounts withdrawn from the Cash Collateral Account and paid to the
Certificateholders, the Cash Collateral Depositor or the holder of the GP
Interest, as provided herein and in the Cash Collateral Agreement, shall not be
required to be reimbursed to the Cash Collateral Account by the Trustees, the
Securityholders, the Cash Collateral Depositor, any Paying Agent or any
transferee thereof.
(b) In the event that the sum of the Certificate Interest Distribution
Amount (including any Outstanding Certificate Interest), Principal Liquidation
Loss Amount and Principal Distribution Amount to be distributed to the
Certificateholders for any Distribution Date exceeds the amount deposited in the
Certificate Distribution Account pursuant to Sections 5.05(b)(v), 5.05(b)(vi)
and 5.05(b)(vii) of this Agreement, respectively, on such Distribution Date, the
Servicer shall instruct the Owner Trustee in writing to withdraw or cause to be
withdrawn from the Cash Collateral Account on or before the related Deposit Date
the lesser of the amount of such excess and the Available Cash Collateral Amount
(the "Draw Amount"). The Owner Trustee shall deposit such amount, or cause such
amount to be deposited, into the Certificate Distribution Account no later than
12:00 noon, New York City time, on such Deposit Date.
(c) On or before the Deposit Date immediately preceding the Certificate
Final Distribution Date, the Servicer shall instruct the Owner Trustee to
withdraw or cause to be withdrawn from the Cash Collateral Account an amount
(the "Final Draw Amount") equal to the lesser of (i) the Certificate Balance on
the Certificate Final Distribution Date, after giving effect to distributions of
the Principal Distribution Amount to Certificateholders on the Certificate Final
Distribution Date pursuant to Section 5.05(b)(vii) of this Agreement and (ii)
the amount on deposit in the Cash Collateral Account, excluding Investment
Earnings with respect thereto, after giving effect to any withdrawal from the
Cash Collateral Account pursuant to clause (b) of this Section 5.06. The Owner
Trustee shall deposit such amount, or cause such amount to be deposited, into
the Certificate Distribution Account no later than 12:00 noon, New York City
time, on such Deposit Date.
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(d) Investment Earnings on amounts on deposit in the Cash Collateral
Account and Cash Collateral Account Surplus on deposit in the Cash Collateral
Account shall be distributed to the Cash Collateral Depositor to the extent
required by Sections 3(a) and (b) of the Cash Collateral Agreement.
(e) On each Distribution Date, the Owner Trustee shall pay to the holder of
the GP Interest any amounts which remain on deposit in the Cash Collateral
Account after making the payments contemplated by the foregoing subparagraphs
(b) and (d), and which are in excess of the Required Cash Collateral Amount for
the following Distribution Date. On the Certificate Final Distribution Date, the
Owner Trustee shall pay to the holder of the GP Interest any amounts remaining
on deposit in the Cash Collateral Account after paying the Final Draw Amount to
the Certificateholders as contemplated by subparagraph (c) above and paying the
outstanding principal and interest payable to the Cash Collateral Depositor
pursuant to Section 3(c) of the Cash Collateral Agreement.
(f) If at any time the Cash Collateral Account ceases to be maintained at
an Eligible Institution as required by Section 5.01(a), the Owner Trustee shall
within 10 Business Days (or such longer period not to exceed 30 calendar days,
as to which each Rating Agency may consent) establish a new Cash Collateral
Account meeting the conditions specified in Section 5.01(a) and shall transfer
any and all cash and investments in the Cash Collateral Account to such new Cash
Collateral Account.
Section 5.07 Net Deposits. CITSF (in whatever capacity) may make the
remittances required pursuant to this Agreement, net of amounts to be retained
by it or distributed to it (also in whatever capacity), pursuant to this
Agreement, for so long as (a) it shall be the Servicer and (b) it will be
entitled, pursuant to Section 5.02, to make deposits on a monthly basis, rather
than a daily basis. Nonetheless, the Servicer shall account for all of the
above-described amounts as if such amounts were deposited and distributed
separately.
Section 5.08 Statements to Securityholders. On each Distribution Date, the
Servicer shall prepare and will include with the distribution to each
Securityholder, a statement setting forth for the related Due Period the
following information:
(i) the amount of the distribution allocable to principal of the Notes
and to the Certificate Balance of the Certificates, including any overdue
principal;
(ii) the amount of the distribution allocable to interest on or with
respect to each class of Securities, including any overdue interest;
(iii) the Pool Balance, the Note Pool Factor and the Certificate Pool
Factor as of the end of the related Due Period;
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(iv) the Servicer Payment for such Distribution Date;
(v) the amount of Monthly Advances and Non-Reimbursable Payments on
such date;
(vi) 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;
(vii) during the Funding Period, the amount of funds on deposit in the
Pre-Funding Account;
(viii) during the Funding Period, the number and aggregate principal
balance of Subsequent Contracts;
(ix) during the Funding Period, the number and aggregate principal
balance of Subsequent Contracts purchased by the Trust on the related
Distribution Date;
(x) the aggregate outstanding principal balance of the Notes as of
such Distribution Date after giving effect to any distributions on such
Distribution Date;
(xi) the Certificate Balance as of such Distribution Date after giving
effect to any distributions thereon and reductions thereto on such
Distribution Date;
(xii) the Draw Amount, if any, and the Final Draw Amount (if
applicable) with respect to such Distribution Date;
(xiii) the Available Cash Collateral Amount, after giving effect to
any deposit to or withdrawal from the Cash Collateral Account with respect
to such Distribution Date, and such amount expressed as a percentage of the
Pool Balance; and
(xiv) the Required Cash Collateral Amount.
Within a reasonable period of time after the end of each calendar year, but
not later than the latest date permitted by law, the Servicer shall furnish or
cause to be furnished to each Person who at any time during the calendar year
was a Securityholder a statement containing the information with respect to
interest accrued and principal paid on its Securities during such calendar year.
Such obligation shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided to the Securityholders
pursuant to any requirements of the Code as from time to time in force.
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ARTICLE VI
[Reserved]
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ARTICLE VII
The Company
Section 7.01 Representations of Company.
The Company hereby makes the following representations as to itself on
which the Owner Trustee and the Indenture Trustee on behalf of the Trust shall
rely in accepting the Contracts in trust and authenticating the Certificates and
the Notes, respectively. The representations shall speak as of the execution and
delivery of this Agreement, and shall survive the sale of the Contracts to the
Trust.
(i) Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the corporate power to own its
assets and to transact the business in which it is currently engaged. The
Company is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which the character of the business
transacted by it or properties owned or leased by it requires such
qualification and in which the failure so to qualify would have a material
adverse effect on the business, properties, assets, or condition (financial
or other) of the Company or on the Certificates or the transactions
contemplated by this Agreement.
(ii) Authorization; Binding Obligations. The Company has the power and
authority to make, execute, deliver and perform this Agreement and all of
the transactions contemplated under this Agreement, and has taken all
necessary corporate action to authorize the execution, delivery and
performance of this Agreement. When executed and delivered, this Agreement
will constitute the legal, valid and binding obligation of the Company
enforceable in accordance with its terms, except as enforcement of such
terms may be limited by bankruptcy, insolvency or similar laws affecting
the enforcement of creditors' rights generally and by the availability of
equitable remedies.
(iii) No Consent Required. The Company is not required to obtain the
consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement the failure of
which so to obtain would have a material adverse effect on the business,
properties, assets or condition (financial or otherwise) of the Company or
on the Certificates or the transactions contemplated by this Agreement.
(iv) No Violations. The execution, delivery and performance of this
Agreement by the Company will not violate any provision of any existing law
or regulation or any order or decree of any court or the Articles of
Incorporation or Bylaws of the Company, or constitute a material breach of
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any mortgage, indenture, contract or other agreement to which the Company
is a party or by which the Company may be bound.
(v) Litigation. No litigation or administrative proceeding of or
before any court, tribunal or governmental body is currently pending, or to
the knowledge of the Company threatened, against the Company or any of its
properties or with respect to this Agreement or the Certificates which, if
adversely determined, would in the opinion of the Company have a material
adverse effect on the transactions contemplated by this Agreement.
Section 7.02 Merger or Consolidation of Company
Any Person into which the Company may be merged or consolidated, or any
corporation resulting from any merger or consolidation to which the Company
shall be a party, or any Person succeeding to the business of the Company, shall
be the successor of the Company hereunder, without the execution or filing of
any paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding. The Company shall promptly notify each
Rating Agency of any such merger to which it is a party and such merger shall
satisfy the Rating Agency Condition.
Section 7.03 Limitation on Liability of the Company and Others.
(a) Neither the Company nor any of the directors, officers, employees or
agents of the Company shall be under any liability to the Owner Trustee, the
Indenture Trustee, the Certificateholders or the Noteholders for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment; notwithstanding anything herein to
the contrary, no party to this Agreement shall have any recourse against the
Company for any actions taken, or failed to be taken, by the Company.
(b) The Company and any director, officer, employee or agent of the Company
may rely in good faith on any document of any kind prima facie properly executed
and submitted by any Person respecting any matters arising hereunder.
(c) The Company shall not be under any obligation to appear in, prosecute
or defend any legal action which arises under this Agreement.
Section 7.04 The Company May Own Securities.
The Company and any Person controlling, controlled by, or under common
control with the Company may in its individual or any other capacity become the
owner or pledgee of Notes or Certificates with the same rights as it would have
if it were not the Company or an Affiliate thereof, except as otherwise provided
in the definition of "Noteholder" or "Certificateholder", respectively. Notes
and Certificates so owned by or pledged to the Company or such controlling or
commonly controlled Person shall have an equal and proportionate benefit under
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the provisions of this Agreement, without preference, priority or distinction as
among all of the Notes and Certificates.
Section 7.05 Indebtedness of and Sale of Assets by the Company..
(a) The Company will not incur any material indebtedness (other than
indebtedness which is contemporaneously repaid upon the issuance of securities
by the Company or by selling any assets in connection therewith to the extent
permitted by its Certificate of Incorporation) nor will it sell all or
substantially all of its assets, if either such action would result in the
downgrading by Moody's of any outstanding securities of the Company or any trust
or other entity of which the Company is the settlor or depositor, which
securities are then rated by Moody's; provided, however, nothing contained in
this Agreement shall prohibit the Company from issuing any securities or acting
as the settlor or depositor of any trust or other entity (or selling any assets
in connection therewith) to the extent permitted by its Certificate of
Incorporation.
(b) Prior to the issuance of any securities by the Company, the Company
shall give at least 5 days' prior written notice to Moody's with a copy of the
Prospectus or Preliminary Prospectus Supplement and, on the issuance date, a
copy of the agreements pertaining to such securities of the type in the
definition of Basic Documents.
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ARTICLE VIII
The Servicer; Representations and Indemnities
Section 8.01 Representations of CITSF.
CITSF hereby makes the following representations on which the Owner Trustee
and the Indenture Trustee on behalf of the Trust shall rely in accepting the
Contracts in trust and authenticating the Certificates and the Notes,
respectively. The representations shall speak as of the execution and delivery
of this Agreement, and shall survive the sale of the Contracts to the Trust.
(i) Organization and Good Standing. CITSF is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the corporate power to own its
assets and to transact the business in which it is currently engaged. CITSF
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the character of the business
transacted by it or properties owned or leased by it requires such
qualification and in which the failure so to qualify would have a material
adverse effect on the business, properties, assets, or condition (financial
or other) of CITSF or on the Certificates or the transactions contemplated
by the Agreement.
(ii) Authorization; Binding Obligations. CITSF has the power and
authority to make, execute, deliver and perform this Agreement and all of
the transactions contemplated under this Agreement, and has taken all
necessary corporate action to authorize the execution, delivery and
performance of this Agreement. When executed and delivered, this Agreement
will constitute the legal, valid and binding obligation of CITSF
enforceable in accordance with its terms, except as enforcement of such
terms may be limited by bankruptcy, insolvency or similar laws affecting
the enforcement of creditors' rights generally and by the availability of
equitable remedies.
(iii) No Consent Required. CITSF is not required to obtain the consent
of any other party or any consent, license, approval or authorization from,
or registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement the failure of which so to obtain would
have a material adverse effect on the business, properties, assets or
condition (financial or otherwise) of CITSF or on the Certificates or the
transactions contemplated by the Agreement.
(iv) No Violations. The execution, delivery and performance of this
Agreement by CITSF will not violate any provision of any existing law or
regulation or any order or decree of any court or the Articles of
Incorporation or Bylaws of CITSF, or constitute a material breach of any
mortgage, indenture, contract or other agreement to which CITSF is a party
or by which CITSF may be bound.
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(v) Litigation. No litigation or administrative proceeding of or
before any court, tribunal or governmental body is currently pending, or to
the knowledge of CITSF threatened, against CITSF or any of its properties
or with respect to this Agreement or the Certificates which, if adversely
determined, would in the opinion of CITSF have a material adverse effect on
the transactions contemplated by this Agreement.
Section 8.02 Liability of Servicer, Indemnities.
The Servicer shall be liable in accordance herewith only to the extent of
the obligations specifically undertaken by the Servicer, CITSF or the Company
under this Agreement and shall have no other obligations or liabilities
hereunder.
(i) The Servicer shall defend, indemnify, and hold harmless the Owner
Trustee, the Indenture Trustee, the Trust, the Certificateholders and the
Noteholders from and against any and all costs, expenses, losses, damages,
claims, and liabilities, arising out of or resulting from the negligent use
or operation by the Servicer of a Financed Vehicle, to the extent such loss
is not reimbursed pursuant to any Insurance Policy, the Servicer's Errors
and Omission Policy or any fidelity bond.
(ii) Subject to Section 8.04(a), the Servicer will defend and
indemnify the Owner Trustee, the Indenture Trustee, the Trust, the
Certificateholders and the Noteholders against any and all costs, expenses,
losses, damages, claims and liabilities arising out of or resulting from
any negligent action taken, or negligently failed to be taken, by the
Servicer with respect to any Financed Vehicle, to the extent such loss is
not reimbursed pursuant to any Insurance Policy, the Servicer's Errors and
Omission Policy or any fidelity bond.
(iii) The Servicer agrees to pay, and shall indemnify, defend, and
hold harmless the Owner Trustee, the Indenture Trustee, the Trust, the
Certificateholders and the Noteholders from and against, any taxes that may
at any time be asserted with respect to, and as of the date of, the
transfer of the Contracts to the Trust, including, without limitation, any
sales, gross receipts, personal or real property, privilege or license
taxes (but not including any federal, state or other taxes arising out of
the creation of the Trust and the issuance of the Notes and Certificates or
distributions with respect thereto) and costs, expenses and reasonable
counsel fees in defending against the same.
(iv) The Servicer shall indemnify, defend, and hold harmless the Owner
Trustee, the Indenture Trustee, the Trust, the Certificateholders and the
Noteholders from and against any and all costs, expenses, losses, claims,
damages, and liabilities to the extent that such cost, expense, loss,
claim, damage, or liability arose out of, or was imposed upon such Persons,
through the willful misfeasance, negligence, or bad faith of the Servicer
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in the performance of its duties under this Agreement or by reason of
reckless disregard of its obligations and duties under this Agreement.
(v) The Servicer shall indemnify, defend, and hold harmless from and
against, and pay to the Trustees all costs, expenses, losses, claims,
damages, and liabilities arising out of or incurred in connection with the
acceptance or performance of the trusts and duties herein contained in
accordance with the terms and conditions herein and in the Indenture and
the Trust Agreement, as the case may be, except to the extent that such
cost, expense, loss, claim, damage or liability: (a) shall be due to the
willful misfeasance, gross negligence or bad faith of such Trustee; (b)
relates to any tax other than the taxes with respect to which the Company
shall be required to indemnify such Trustee pursuant to this Agreement; (c)
shall arise from such Trustee's breach of any of its representations or
warranties set forth in the Trust Agreement or the Indenture, as
applicable; (d) shall be one as to which the Company is required to
indemnify such Trustee or (e) shall arise out of or be incurred in
connection with the acceptance or performance by such Trustee of the duties
of successor Servicer hereunder.
Indemnification under this Section 8.02 shall include reasonable fees and
expenses of counsel in any litigation appointed by the Servicer and reasonably
satisfactory to the indemnitee, provided that the Servicer shall only be
required to pay the fees and expenses of one counsel in any single litigation
(or related proceedings) for all indemnitees; provided, however, if in the
written opinion of counsel reasonably satisfactory to the Servicer, the
interests of the Servicer and the Indenture Trustee conflict such that the
Servicer and the Indenture Trustee may not both be represented by such counsel,
upon ten days prior written notice to the Servicer, the Indenture Trustee may
hire one other counsel, and the Indemnification under this Section 8.02 shall
also include the reasonable fees and expenses of such other counsel. If the
Servicer or the Company shall have made any indemnity payments pursuant to this
Section 8.02 and the recipient thereafter collects any of such amounts from
others, the recipient shall promptly repay such amounts to the Servicer and/or
the Company, without interest. The indemnities under this Section 8.02 shall
survive the resignation or removal of the Trustees, or the termination of the
Trust Agreement and this Agreement.
Section 8.03 Merger or Consolidation of Servicer.
Any person 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 shall be a party, or any Person succeeding
to the business of the Servicer (which Person assumes the obligations of the
Servicer), shall be the successor of the Servicer hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding; provided,
however, that the successor or surviving Person to the Servicer shall satisfy
the criteria set forth in the definition of an Eligible Servicer. The Servicer
shall promptly notify each Rating Agency of any such merger to which it is a
party.
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Section 8.04 Limitation on Liability of Servicer and Others.
(a) Neither the Servicer nor the Company, nor any of the directors,
officers, employees or agents of the Servicer or the Company shall be under any
liability to the Trustees, the Trust or the Securityholders for any action taken
or for refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Servicer, the Company or any such Person against any
breach of warranties or representations made herein, or failure to perform its
or his obligations in compliance with any standard of care set forth in this
Agreement, or any liability which otherwise would be imposed by reason of any
breach of the terms and conditions of this Agreement.
(b) The Servicer and any director, officer, employee or agent of the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
(c) Except as arises from its duties as Servicer hereunder, the Servicer
shall not be under any obligation to appear in, prosecute or defend any legal
action which arises under this Agreement and which in its opinion may involve it
in any expenses or liability; provided, however, that the Servicer and the
Company may in its discretion undertake any such action which it may deem
necessary or desirable in respect of this Agreement and the rights and duties of
the parties hereto. In such event, the legal expenses and costs of such action
and any liability resulting therefrom shall be expenses, costs and liabilities
of the Trust payable from the Collection Account and the Servicer and the
Company shall be entitled to be reimbursed therefor out of the Collection
Account.
Section 8.05 Servicer Not To Resign. The Servicer shall not resign from its
obligations and duties under this Agreement except upon determination that the
performance of its duties shall no longer be permissible under applicable law,
compliance with which could not be realized without material adverse impact on
the Servicer's financial condition. Notice of any such determination permitting
the resignation of the Servicer shall be communicated to the Trustees and the
Rating Agencies at the earliest practicable time (and, if such communication is
not in writing, shall be confirmed in writing at the earliest practicable time)
and any such determination permitting the resignation of the Servicer shall be
evidenced by an Opinion of Counsel to such effect delivered to the Trustee. No
such resignation shall become effective until the Indenture Trustee or a
successor Servicer shall have assumed the responsibilities and obligations of
the Servicer in accordance with Section 9.02.
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ARTICLE IX
Default
Section 9.01 Events of Termination.
"Event of Termination" means the occurrence of any of the following:
(a) Any failure by the Servicer to make any deposit into an account
required to be made hereunder and the continuance of such failure for a period
of five Business Days after the Servicer has become aware that such deposit was
required;
(b) Failure on the Servicer's part to observe or perform in any material
respect any covenant or agreement in this Agreement (other than pursuant to
Section 9.01(a)), which failure continues unremedied for 30 days after the date
on which written notice of such failure, requiring the same to be remedied,
shall have been given to the Servicer by the Indenture Trustee, the Owner
Trustee or the Company or to the Servicer, the Company and the Trustees by
Holders of Notes or Certificates evidencing not less than 25% of the aggregate
outstanding principal balance of the Notes, or the outstanding Certificate
Balance, respectively;
(c) Any assignment or delegation by the Servicer of its duties or rights
hereunder except as specifically permitted hereunder, or any attempt to make
such an assignment or delegation;
(d) A court or other governmental authority having jurisdiction in the
premises shall have entered a decree or order for relief in respect of the
Servicer in an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar official) of
the Servicer, as the case may be, or for any substantial liquidation of its
affairs, and such order remains undischarged and unstayed for at least 60 days;
(e) The Servicer shall have commenced a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or shall
have consented to the entry of an order for relief in an involuntary case under
any such law, or shall have consented to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian or sequestrator (or
other similar official) of the Servicer or for any substantial part of its
property, or shall have made any general assignment for the benefit of its
creditors, or shall have failed to, or admitted in writing its inability to, pay
its debts as they become due, or shall have taken any corporate action in
furtherance of the foregoing; or
(f) The failure of the Servicer to be an Eligible Servicer.
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If an Event of Termination has occurred and is continuing, the Indenture
Trustee may or at the written direction of Holders of Notes evidencing a
majority of the aggregate outstanding principal balance of the Notes (or, if the
Notes have been paid in full and the Indenture has been discharged in accordance
with its terms, by the Owner Trustee or Holders of Certificates evidencing a
majority or more of the Certificate Balance) shall, unless prohibited by
applicable law, terminate all (but not less than all) of the Servicer's
management, administrative, servicing and collection functions (such termination
being herein called a "Service Transfer"). On receipt of such notice (or, if
later, on a date designated therein), all authority and power of the Servicer
under this Agreement, whether with respect to the Contracts, the Contract Files
or otherwise (except with respect to the Collection Account, the transfer of
which shall be governed by Section 9.06), shall pass to and be vested in the
Indenture Trustee pursuant to and under this Section 9.01 (however, if all of
the Notes have been paid in full and the Indenture has been discharged in
accordance with its terms, such authority shall pass to and be vested in the
Owner Trustee pursuant to and under this Section 9.01); and, without limitation,
such Trustee is authorized and empowered to execute and deliver on behalf of the
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments (including, without limitation, documents required to make such
Trustee or a successor servicer the sole lienholder or legal title holder of
record of each Financed Vehicle), and to do any and all acts or things necessary
or appropriate to effect the purposes of such notice of termination. Each of
CITSF and the Servicer agrees to cooperate with such Trustee in effecting the
termination of the responsibilities and rights of the Servicer hereunder,
including, without limitation, the transfer to such Trustee for administration
by it of all cash amounts which shall at the time be held by the Servicer for
deposit, or have been deposited by the Servicer, in the Collection Account, or
for its own account in connection with its services hereafter or thereafter
received with respect to the Contracts and the execution of any documents
required to make such Trustee or a successor Servicer the sole lienholder or
legal title holder of record in respect of each Financed Vehicle. The Servicer
shall be entitled to receive any other amounts which are payable to the Servicer
under this Agreement, at the time of the termination of its activities as
Servicer, to the extent that funds in the Collection Account are available for
the payment thereof without reducing the amount of distributions that would be
made to Holders of the Notes and Certificates. The Servicer shall transfer to
the new Servicer (i) the Servicer's records relating to the Contracts in such
electronic form as the new Servicer may reasonably request and (ii) the
Contracts and any of the Contract Files in the Servicer's possession.
Section 9.02 Indenture Trustee to Act; Appointment of Successor.
On and after the time the Servicer receives a notice of termination
pursuant to Section 9.01 or a notice of determination pursuant to Section 8.05,
the Indenture Trustee shall be the successor in all respects to the Servicer in
its capacity as Servicer under this Agreement and the transactions set forth or
provided for herein and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof, and the Servicer shall be relieved of such responsibilities, duties and
liabilities arising after such Service Transfer; provided, however, that (i) the
Indenture Trustee will not assume any obligations of CITSF pursuant to Section
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3.02 or be obligated to deposit any net loss on an investment directed by a
predecessor Servicer pursuant to Section 5.01(b), and (ii) the Indenture Trustee
shall not be liable for any acts or omissions of the Servicer occurring prior to
such Service Transfer or for any breach by CITSF of any of its representations
and warranties contained herein or in any related document or agreement. The
Indenture Trustee and any successor Servicer shall have no responsibility for
failure of CITSF and any predecessor Servicer to deliver to the Indenture
Trustee or such successor Servicer any property or funds belonging to the Trust,
including but not limited to the funds, records, Contracts and Contract Files.
As compensation therefor, the Indenture Trustee shall, except as provided in
this Section 9.02, be entitled to such compensation as the Servicer would have
been entitled to hereunder if no such notice of termination had been given.
Notwithstanding the above, the Indenture Trustee may, if it shall be unwilling
so to act, or shall, if it is legally unable so to act, appoint, or petition a
court of competent jurisdiction to appoint, an Eligible Servicer as the
successor to the Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Servicer hereunder. Pending
appointment of a successor to the Servicer hereunder, unless the Indenture
Trustee is prohibited by law from so acting, the Indenture Trustee shall act in
such capacity as hereinabove provided. In connection with such appointment and
assumption, the Indenture Trustee may make such arrangements for the
compensation of such successor out of payments on Contracts as it and such
successor shall agree; provided, however, that no such compensation shall,
without the written consent of 100% of the Securityholders, be in excess of the
Servicing Fee. The Indenture Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession.
Section 9.03 Notification to Securityholders.
(a) Promptly following the occurrence of any Event of Termination, the
Servicer shall give written notice thereof to the Trustees, the Cash Collateral
Depositor (so long as the Loan under the Cash Collateral Agreement is still
outstanding) and the Securityholders at their respective addresses appearing on
the Certificate Register and the Note Register and to each Rating Agency.
(b) Within 10 days following any termination or appointment of a successor
to the Servicer pursuant to this Article IX, the Trustees shall give written
notice thereof to the Cash Collateral Depositor (so long as the Loan under the
Cash Collateral Agreement is still outstanding) and to the Certificateholders
and Noteholders at their respective addresses appearing on the Certificate
Register and the Note Register.
(c) The Indenture Trustee shall give written notice to each Rating Agency
at least 30 days prior to the date upon which any Eligible Servicer (other than
the Indenture Trustee) is to assume the responsibilities of Servicer pursuant to
Section 9.02, naming such successor Servicer.
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Section 9.04 Rights to Direct Trustees and Waiver of Events of Termination.
Holders of Notes or Certificates evidencing not less than 25% of the
aggregate outstanding principal amount of the Notes or 25% of the Certificate
Balance, respectively, shall have the right to direct the time, method, and
place of conducting any proceeding for any remedy available to the Indenture
Trustee or the Owner Trustee, respectively, or exercising any trust or power
conferred on the Trustees; provided, however, that, subject to Section 10.01,
the Trustees shall have the right to decline to follow any such direction which
such Trustee (being advised by counsel) determines that the action so directed
may not lawfully be taken, or if such Trustee in good faith shall, by a
Responsible Officer or Officers of such Trustee, determine that the proceedings
so directed would be illegal or involve it in personal liability or be unduly
prejudicial to the rights of Noteholders or Certificateholders not parties to
such direction; provided further that nothing in this Agreement shall impair the
right of the Trustees to take any action deemed proper by such Trustee and which
is not inconsistent with such direction by the Noteholders or
Certificateholders.
Holders of Notes evidencing not less than a majority of the aggregate
outstanding principal balance of the Notes (or, if all of the Notes have been
paid in full and the Indenture has been discharged in accordance with its terms,
Certificates evidencing not less than a majority of the Certificate Balance)
may, on behalf of the Noteholders and Certificateholders, waive any past Event
of Termination hereunder and its consequences (except a continuing failure to
make any required deposits to or payments from the Collection Account and the
other accounts contemplated herein in accordance with this Agreement, which
default cannot be waived without the consent of all Securityholders) and, upon
any such waiver, such Event of Termination shall cease to exist and shall be
deemed to have been cured for every purpose of this Agreement; but no such
waiver shall extend to any subsequent or other Event of Termination or impair
any right consequent thereon.
Section 9.05. Effect of Transfer.
(a) After the Service Transfer, the Indenture Trustee or new Servicer may
notify the Obligors to make payments directly to the new Servicer that are due
under the Contracts after the effective date of the Service Transfer.
(b) After the Service Transfer, the replaced Servicer shall have no further
obligations with respect to the management, administration, servicing or
collection of the Contracts and the new Servicer shall have all of such
obligations, except that the replaced Servicer shall remain liable for any
liability of the replaced Servicer hereunder that was already accrued at the
time of the Service Transfer and except that the replaced Servicer will transmit
or cause to be transmitted directly to the new Servicer for its own account,
promptly on receipt and in the same form in which received, any amounts
(properly endorsed where required for the new Servicer to collect them) received
as payments upon or otherwise in connection with the Contracts.
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(c) A Service Transfer shall not affect the rights and duties of the
parties hereunder (including but not limited to the indemnities and other
agreements of the Servicer and CITSF) other than those relating to the
management, administration, servicing or collection of the Contracts.
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ARTICLE X
[Reserved]
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ARTICLE XI
Optional Purchase and Auction Sale
Section 11.01 Optional Purchase of All Contracts.
On any Distribution Date, following any Record Date as of which the Pool
Balance is 10% or less of the Initial Pool Balance, CITSF shall have the option
to purchase the Contracts (including the Defaulted Contracts), any Financed
Vehicles in the Trust relating to Defaulted Contracts and all rights relating to
the Contracts under all Insurance Policies. To exercise such option, CITSF shall
notify the Trustees and the Depository, if any, in writing, no later than the
20th day of the month preceding the month as of which such purchase is to be
effected occurs; provided, however, that CITSF shall not effect any such
purchase if the long-term unsecured obligations of its parent are rated less
than Baa3 by Moody's or less than BBB by Standard & Poor's, unless the Trustees
shall have received an Opinion of Counsel acceptable to it that payment of the
purchase price to the Securityholders will not constitute a voidable preference
or a fraudulent transfer under the United States Bankruptcy Code. CITSF shall
effect such purchase by depositing, in accordance with Section 5.04, the
aggregate Purchase Price of the Contracts (less any other amounts deposited, or
to be deposited, by the Servicer in the Collection Account with respect to the
Contract pursuant to Section 5.02) plus the appraised value of any other
property held by the Trust and purchased by CITSF (less liquidation expenses) in
the Collection Account on the Deposit Date immediately following the month in
which such purchase is to be effected; provided, however, in no event shall the
amount so deposited, when added to the amounts on deposit in the Collection
Account on such date and available for distribution to Securityholders on the
next Distribution Date, be less than the amount required to pay all accrued and
unpaid interest on the Notes, the remaining principal balance of the Notes,
accrued and unpaid interest on the Certificates and the Certificate Balance,
after giving effect to the reimbursement of the Servicer for all unpaid Monthly
Advances and the Servicer Payment. The effective date of such purchase shall be
the last day of the Due Period which ends in the month referred to in the
preceding sentence.
Section 11.02 Mandatory Sale of all ContractsSection 11.02 Mandatory Sale
of all Contracts. In accordance with the procedures and schedule set forth in
Exhibit H hereto (the "Auction Procedures"), the Indenture Trustee (or, if the
Notes have been paid in full and the Indenture shall have been discharged in
accordance with its terms, the Owner Trustee) shall conduct an auction (the
"Auction") of the Contracts remaining in the Trust (such Contracts hereinafter
referred to as the "Auction Property") in order to effect a termination of the
Trust pursuant to Section 7.1 of the Trust Agreement on the second Distribution
Date succeeding the Record Date on which the Pool Balance is 5% or less of the
Initial Pool Balance. Such Auction shall be conducted within 10 days following
the Distribution Date following the Record Date on which the Pool Balance is 5%
or less of the Initial Pool Balance. CITSF and the Company may, but shall not be
required to, bid at the Auction. Such Trustee shall sell and transfer the
Auction Property to the highest bidder therefor at the Auction provided that:
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(i) the Auction has been conducted in accordance with the Auction
Procedures;
(ii) such Trustee has received good faith bids for the Auction
Property from two prospective purchasers that are considered by such
Trustee, in its sole discretion, to be competitive participants in the
market for recreational vehicle retail installment sale contracts;
(iii) a financial advisor, as advisor to such Trustee (in such
capacity, the "Advisor"), shall have advised such Trustee in writing that
at least two of such bidders (including the winning bidder) are
participants in the market for recreational vehicle retail installment sale
contracts willing and able to purchase the Auction Property;
(iv) the highest bid in respect of the Auction Property is not less
than the aggregate fair market value of the Auction Property (as determined
by such Trustee in its sole discretion);
(v) any bid submitted by CITSF, the Company or any affiliate of either
of them shall reasonably represent the fair market value of the Auction
Property, as independently verified and represented in writing by a
qualified independent third party evaluator (which may include the Advisor
or an investment banking firm) selected by such Trustee; and
(vi) the highest bid would result in proceeds from the sale of the
Auction Property which will be at least equal to the sum of (A) the greater
of (1) 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 (2) an amount that, when added to
amounts on deposit in the Collection Account and available for distribution
to Securityholders on the second Distribution Date following the
consummation of such sale (the "Liquidation Distribution Date"), would
result in proceeds sufficient to distribute to Securityholders the amounts
of interest due to the Securityholders for such Distribution Date and any
unpaid interest payable to the Securityholders with respect to one or more
prior Distribution Dates and the outstanding principal amount of the Notes
and the Certificate Balance, and (B) the sum of (1) an amount sufficient to
reimburse the Servicer for any unreimbursed Monthly Advances for which it
is entitled to reimbursement and (2) the Servicing Fee payable on such
second Distribution Date, including any unpaid Servicing Fees with respect
to one or more prior Due Periods.
Provided that all of the conditions set forth in clauses (i) through (vi)
have been met, such Trustee shall sell and transfer the Auction Property,
without representation, warranty or recourse, to such highest bidder in
accordance with and upon completion of the Auction Procedures. Such Trustee
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shall deposit the purchase price for the Auction Property in the Collection
Account at least one Business Day prior to such second succeeding Distribution
Date. In addition, the Auction must stipulate that the Servicer be retained to
service the Contracts on terms substantially similar to those in the Agreement.
In the event that any of such conditions are not met or such highest bidder
fails or refuses to comply with any of the Auction Procedures, such Trustee
shall decline to consummate such sale and transfer. In the event such sale and
transfer is not consummated in accordance with the foregoing, however, such
Trustee may from time to time in the future, but shall not under any further
obligation to, solicit bids for sale of the assets of the Trust Fund upon the
same terms and conditions as set forth above.
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 pursuant to this Section
11.02.
If applicable, the Indenture Trustee shall provide notice to the Owner
Trustee of the termination of the Trust pursuant to this Section 11.02 as soon
as practicable upon the consummation of the mandatory sale of the Contracts
pursuant to this Section 11.02.
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ARTICLE XII
Miscellaneous Provisions
Section 12.01 Amendment. This Agreement may be amended in writing by the
Company, the Servicer and the Owner Trustee (and, in the event such amendments
affect the Indenture Trustee, the Indenture Trustee) without prior notice to or
the consent of any of the Securityholders, and in the case of clauses (vi) and
(vii), upon satisfaction of the Rating Agency Condition, (i) to correct manifest
error or cure any ambiguity, (ii) to correct or supplement any provisions herein
or therein which may be inconsistent with any other provisions herein or
therein, as the case may be, (iii) to add or amend any provisions as requested
by Moody's or Standard & Poor's in order to maintain or improve any rating of
the Notes or Certificates (it being understood that, after the Closing Date,
neither the Owner Trustee, the Indenture Trustee, the Company nor CITSF is
obligated to maintain or improve such rating); (iv) to add to the covenants,
restrictions or obligations of the Company, the Servicer, the Owner Trustee or
the Indenture Trustee; (v) to evidence and provide for the acceptance of the
appointment of a successor trustee with respect to the Owner Trust Estate and
add to or change any provisions as shall be necessary to facilitate the
administration of the trusts under the Trust Agreement by more than one trustee
pursuant to Article VI of the Trust Agreement or (vi) to add, change or
eliminate any other provisions provided that an amendment pursuant to this
clause (vi), shall not, as evidenced by an Opinion of Counsel for the Servicer
or the Company, adversely affect in any material respect the interests of the
Trust, any Noteholder or any Certificateholder.
This Agreement may also be amended in writing from time to time by the
Company, the Servicer and the Owner Trustee (and, in the event such amendments
affect the Indenture Trustee, the Indenture Trustee), with the consent of
Holders of Certificates evidencing not less than a majority of the Certificate
Balance and the consent of Holders of Notes evidencing not less than a majority
of the aggregate outstanding principal balance of the Notes, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement, or of modifying in any manner the rights of the
Certificateholders or Noteholders, respectively; provided, however, that no such
amendment shall (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments of Contracts, or
distributions that shall be required to be made on any Certificate or Note,
respectively, the Contract Rate, the Pass-Through Rate or the Class A Rate or
(ii) reduce the aforesaid percentage required to consent to any such amendment,
without the consent of the Holders of all Certificates and Notes then
outstanding.
Notwithstanding the foregoing, no amendment materially affecting the rights
of the Cash Collateral Depositor shall be made without the consent of the Cash
Collateral Depositor (so long as the Loan under the Cash Collateral Agreement is
still outstanding).
Promptly after the execution of any amendment or consent pursuant to this
Section, the Owner Trustee shall furnish written notification of the substance
of such amendment to each Certificateholder and each Noteholder (but only if
such amendment is pursuant to the second paragraph of this Section 12.01) and
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(so long as the Loan under the Cash Collateral Agreement is still outstanding)
the Cash Collateral Depositor and, in all cases, to each Rating Agency, which
notification will be prepared by the Servicer and delivered to such Trustee.
It shall not be necessary for the consent of the Certificateholders, the
Noteholders or the Cash Collateral Depositor pursuant to this Section 12.01 to
approve the particular form of any proposed amendment or consent, but it shall
be sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization of the execution
thereof by Certificateholders, the Noteholders or the Cash Collateral Depositor,
as the case may be, shall be subject to such reasonable requirements as such
Trustee may prescribe.
Such Trustee may, but shall not be obligated to, enter into any such
amendment which affects such Trustee's own rights, duties or immunities under
this Agreement or otherwise. However, no such amendment shall be permitted
without the consent of the Trustee whose rights, duties or immunities are being
modified.
In connection with any amendment pursuant to this Section 12.01, the Owner
Trustee shall be entitled to receive an Opinion of Counsel to the Servicer to
the effect that such amendment is authorized or permitted by the Agreement.
Upon the execution of any amendment or consent pursuant to this Section
12.01, this Agreement shall be modified in accordance therewith, and such
amendment or consent shall form a part of this Agreement for all purposes, and
every Holder of Securities theretofore or thereafter issued hereunder shall be
bound thereby.
Section 12.02 Protection of Title to Trust. (a) On or prior to the Closing
Date, the Servicer shall cause the following UCC-1 financing statements to be
filed:
(i) UCC-1 financing statement executed by CITCF-NY as debtor, naming
CITSF as secured party and filed in New Jersey and Oklahoma City to perfect
the sale from CITCF-NY to CITSF;
(ii) UCC-1 financing statement executed by CITSF as debtor, naming the
Company as secured party and filed in New Jersey and Oklahoma City to
perfect the sale from CITSF to the Company;
(iii) UCC-1 financing statement executed by the Company as debtor,
naming the Owner Trustee as secured party and filed in New Jersey and
Oklahoma City to perfect the sale from the Company to the Owner Trustee;
and
(iv) UCC-1 financing statement executed by the Owner Trustee as
debtor, naming the Indenture Trustee as secured party and filed in New
Jersey, Oklahoma City, and Delaware to perfect the security interest
granted in the Collateral by the Indenture.
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The Servicer shall cause to be filed all necessary continuation statements
of the UCC-1 financing statement referred to in the previous sentence on which
it is the debtor, and the Servicer shall cause to be filed all necessary
continuation statements of the UCC-1 financing statement referred to in the
previous sentence on which it is the debtor.
From time to time the Servicer shall, subject to the following sentence,
take and cause to be taken such actions and execute such documents as are
necessary to perfect and protect the Noteholders' and Certificateholders'
interests in the Contracts and their proceeds against all other persons,
including, without limitation, the filing of financing statements, amendments
thereto and continuation statements, the execution of transfer instruments and
the making of notations on or taking possession of all records or documents of
title.
The Servicer will maintain the Trust's perfected first priority security
interest in each Financed Vehicle so long as the related Contract is the
property of the Trust; provided, however, that because of the expense and
administrative inconvenience involved, the Servicer will not amend any
certificate of title to name CITSF, the Company or the Trust as the lienholder,
and neither the Servicer nor the Company will deliver any certificate of title
to the Trust or note thereon the Trust's interest.
The Servicer agrees to pay all reasonable costs and disbursements in
connection with the perfection and the maintenance of perfection, as against all
third parties, of the Noteholders' and Certificateholders' right, title and
interest in and to the Contracts (including, without limitation, the security
interest in the Financed Vehicles granted thereby).
(b) During the term of this Agreement, neither the Company nor CITSF shall
change its name, identity or structure or relocate its chief executive office
without first giving notice thereof to the Trustees and the Servicer. In
addition, following any such change in the name, identity, structure or location
of the chief executive office of the Company or CITSF, the Company or CITSF, as
appropriate, shall give prior written notice thereof to each Rating Agency.
If any change in the Company's, the Servicer's or CITSF's name, identity or
structure or the relocation of its chief executive office would make any
financing or continuation statement or notice of lien filed under this Agreement
seriously misleading within the meaning of applicable provisions of the UCC or
any title statute or would cause any such financing or continuation statement or
notice of lien to become unperfected (whether immediately or with lapse of
time), the Servicer no later than five days after the effective date of such
change, shall (subject to the proviso in the final sentence of the last
paragraph of Section 12.01(a)) file, or cause to be filed, such amendments or
financing statements as may be required to preserve, perfect and protect the
Noteholders' and Certificateholders' interests in the Contracts and proceeds
thereof and in the Financed Vehicles.
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(c) During the term of this Agreement, the Company and CITSF will maintain
their respective chief executive offices in one of the States of the United
States.
(d) The Servicer shall maintain accounts and records as to each Contract
accurately and in sufficient detail to permit (i) the reader thereof to know at
any time the status of such Contract, including payments and recoveries made and
payments owing (and the nature of each) and (ii) reconciliation between payments
or recoveries on (or with respect to) each Contract and the amounts from time to
time deposited in the Collection Account in respect of such Contract.
(e) Each of the Company and the Servicer shall maintain its computer
systems so that, from and after the time of sale under this Agreement of the
Contracts to the Trust, the master computer records of the Company and the
Servicer (including archives) that shall refer to a Contract indicate clearly
that such Contract is owned by the Trust. Indication of the Trust's ownership of
a Contract shall be deleted from or modified on the Company's and the Servicer's
computer systems when, and only when, the Contract shall have been paid in full,
purchased or assigned pursuant hereto.
(f) At all times during the term hereof, the Servicer shall afford the
Trust and its authorized agents reasonable access during normal business hours
to the Servicer's records relating to the Contracts and will cause its personnel
to assist in any examination of such records by the Trust or its authorized
agents. The examination referred to in this Section 12.01(f) will be conducted
in a manner which does not unreasonably interfere with the Servicer's normal
operations or customer or employee relations. Without otherwise limiting the
scope of the examination the Trust may make, the Trust or its authorized agents
may, using generally accepted audit procedures, verify the status of each
Contract and review the Electronic Ledger and records relating thereto for
conformity to Monthly Reports prepared pursuant to Article V and compliance with
the standards represented to exist as to each Contract in this Agreement.
Nothing in this Section 12.01(f) shall affect the obligation of the Servicer to
observe any applicable law prohibiting disclosure of information regarding the
Obligors, and the failure of the Servicer to provide access to information as a
result of such obligation shall not constitute a breach of this Section
12.01(f).
(g) Upon request, the Servicer shall furnish to the Trust, within five
Business Days, a list of all Contracts by contract number and name of Obligor as
of the end of the most recent Due Period held as part of the Trust, together
with a reconciliation of such list to the List of Contracts and to each of the
Servicer Certificates indicating removal of Contracts from the Trust.
At all times during the term hereof, the Servicer shall keep available a
copy of the List of Contracts at its principal executive office for inspection
by Securityholders.
(h) The Servicer shall, to the extent required by applicable law, cause the
Notes and Certificates to be registered with the Securities and Exchange
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Commission pursuant to Section 12(b) or Section 12(g) of the Securities Exchange
Act of 1934 within the time periods specified in such sections.
Section 12.03 Limitation on Rights of Securityholders.
The death or incapacity of any Securityholder shall not operate to
terminate this Agreement or the Trust, nor entitle the Securityholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations, and liabilities of the parties to
this Agreement or any of them.
No Securityholder shall have any right to vote (except as provided in
Sections 9.04 and this Section 12.02) or in any manner otherwise control the
operation and management of the Trust, or the obligations of the parties to this
Agreement, nor shall anything set forth in this Agreement or contained in the
terms of the Securities, be construed so as to constitute the Holders as
partners or members of an association; nor shall any Securityholder be under any
liability to any third person by reason of any action taken pursuant to any
provision of this Agreement.
No Securityholder shall have any right by virtue or by availing itself of
any provisions of this Agreement to institute any suit, action, or proceeding in
equity or at law upon or under or with respect to this Agreement, except as
provided in Section 10.03(b); no one or more Holders of Securities shall have
any right in any manner whatever by virtue or by availing itself or themselves
of any provisions of this Agreement to affect, disturb, or prejudice the rights
of the Holders of any other of the Securities, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right
under this Agreement, except in the manner provided in this Agreement and for
the equal, ratable and common benefit of all Securityholders. For the protection
and enforcement of the provisions of this Section 12.02, each Securityholder and
the Trust shall be entitled to such relief as can be given either at law or in
equity.
Section 12.04 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York,
without regard to its conflict-of-laws provisions.
Section 12.05 Notices. All communications and notices pursuant hereto to
the Company, the Servicer, Moody's and Standard & Poor's shall be in writing and
delivered or mailed to it at the appropriate following address:
If to the Company:
The CIT Group Securitization Corporation II
650 CIT Drive
Livingston, New Jersey 07039
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Attention: President
If to the Servicer:
The CIT Group/Sales Financing, Inc.
650 CIT Drive
Livingston, New Jersey 07039
Attention: President
If to Standard & Poor's:
Standard & Poor's Corporation
25 Broadway
New York, New York 10004
Attention: ABS Group/Market Surveillance
If to Moody's:
Moody's Investors Service Inc.
99 Church Street
New York, New York 10007
or at such other address as the party may designate by notice to the other
parties hereto, which notice shall be effective when received.
All communications and notices pursuant hereto to a Certificateholder or a
Noteholder shall be in writing and delivered or mailed at the address shown in
the Certificate Register or Note Register, respectively.
Copies of all communications and notices required hereunder to be given to
the Owner Trustee shall be sent to ______________________________ at
___________________, ________, ________, _____, Attention: -------------.
Section 12.06 Severability of Provisions. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the
Certificates and Notes or the rights of the Holders thereof.
Section 12.07 Submission to Jurisdiction; Venue. The parties hereto with
respect to any action or claim brought against or by the Trust submit to
jurisdiction in the state or federal courts in New York, New York, and agree to
New York, New York as the venue for any such claim or action.
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Section 12.08 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.
Section 12.09. Merger and Integration. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived, or supplemented except as provided herein.
Section 12.10 Headings. The headings herein are for purposes of reference
only and shall not otherwise affect the meaning or interpretation of any
provision hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of February
1, 1996.
THE CIT GROUP/SALES FINANCING, INC.
By: ________________________________
Name:
Title:
THE CIT GROUP SECURITIZATION
CORPORATION II
By: ________________________________
Name:
Title:
CIT RV OWNER TRUST 1996-A
By: ______________________________
not in its individual capacity but solely as
Owner Trustee on behalf of the Trust
By: ____________________________
Name:
Title:
Acknowledged and Accepted:
_______________________ not in its individual
capacity but solely as Indenture Trustee,
By: ________________________
Name:
Title:
<PAGE>
EXHIBIT A
LIST OF INITIAL CONTRACTS
<PAGE>
EXHIBIT B
SUBSEQUENT PURCHASE AGREEMENT
This Subsequent Purchase Agreement dated as of __________ __, 1996 (the
"Agreement"), is between THE CIT GROUP SECURITIZATION CORPORATION II, as
purchaser (the "Purchaser"), and THE CIT GROUP/SALES FINANCING, INC., as seller
(the "Seller").
Reference is hereby made to the Purchase Agreement dated as of February 1,
1996 between the parties hereto (the "Purchase Agreement") pursuant to which the
Purchaser purchased from the Seller the recreational vehicle installment sales
contracts set forth on Exhibit A thereto (the "Initial Contracts"). The
Purchaser sold the Initial Contracts to the trust established pursuant to the
Trust Agreement dated as of February 1, 1996 between the Purchaser and
______________________________, as trustee (the "Owner Trustee").
Pursuant to the Sale and Servicing Agreement dated as of February 1, 1996
between the CIT RV Owner Trust 1996-A (the "Trust"), the Purchaser and the
Seller, the Purchaser agreed to purchase from the Seller and the Seller agreed
to sell to the Purchaser, subject to the terms and conditions set forth in
Section _____ of the Sale and Servicing Agreement, Subsequent Contracts for the
fixed purchase price specified in the Sale and Servicing Agreement for delivery
on the date specified herein. The purchase price for any Subsequent Contract
will be funded from money on deposit in the Pre-Funding Account during the
Funding Period. The purchase of any Subsequent Contract by the Purchaser must be
evidenced by the execution and delivery of a Subsequent Purchase Agreement
substantially in the form of Exhibit B to the Sale and Servicing Agreement.
Accordingly, subject to the terms hereof and the Sale and Servicing Agreement,
the Seller agrees to sell, and the Purchaser agrees to purchase, the
recreational vehicle installment sales contracts set forth on Exhibit A hereto
(collectively, the "Subsequent Contracts"), having an aggregate outstanding
principal balance as of ________ __, 1996 (the "Subsequent Cut-Off Date") of
$______________.
The Purchaser and the Seller wish to prescribe the terms and conditions of
the purchase by the Purchaser of the Subsequent Contracts and the servicing and
administration of the Subsequent Contracts.
In consideration of the premises and the mutual agreements hereinafter set
forth, the Purchaser and the Seller agree as follows:
<PAGE>
ARTICLE
DEFINITIONS
SECTION 1.1. Definitions. Certain capitalized terms used in this Agreement
shall have the respective meanings assigned to them in the Sale and Servicing
Agreement. All references in this Agreement to Articles, Sections, subsections
and exhibits are to the same contained in or attached to this Agreement unless
otherwise specified.
ARTICLE
SALE AND CONVEYANCE OF SUBSEQUENT CONTRACTS;
CONTRACT FILES
SECTION 2.1. Sale and Conveyance of Contracts. On _________ __, 1996 (the
"Subsequent Transfer Date"), subject to the terms and conditions hereof, the
Seller shall sell, transfer, assign absolutely, set over and otherwise convey to
the Purchaser as of the Subsequent Transfer Date (i) all the right, title and
interest of the Company in and to the Subsequent Contracts and all the rights,
benefits, and obligations arising from and in connection with each Subsequent
Contract, (ii) the security interests in the Subsequent Financed Vehicles
granted by the Obligors pursuant to the Subsequent Contracts, (iii) all payments
received by the Company on or with respect to the Subsequent Contracts on or
after the Subsequent Cut-off Date (exclusive of payments with respect to Post
Cut-off Date Insurance Add-Ons), (iv) the interest of the Company in any
Subsequent Financed Vehicle (including any right to receive future Net
Liquidation Proceeds) that secures the Subsequent Contracts and that shall have
been repossessed by the Servicer by or on behalf of the Trust; (v) all rights of
the Company to proceeds of Insurance Policies covering the Obligors and the
Subsequent Contracts, (vi) the proceeds from any Servicer's Errors and Omissions
Protection Policy, any fidelity bond and any blanket hazard policy, to the
extent such proceeds relate to any Subsequent Financed Vehicle, (vii) all rights
of recourse against any cosigner or under any personal guarantee with respect to
the Subsequent Contracts (other than any right as against a Dealer under a
Dealer Agreement), (viii) all proceeds in any way derived from any of the
foregoing items, and (ix) all documents contained or required to be contained in
the Contract Files relating to the Subsequent Contracts. The parties intend and
agree that the conveyance of the Seller's right, title and interest in and to
the Subsequent Contracts (and all rights, entitlements and amounts listed above)
pursuant to this Agreement shall constitute an absolute sale.
SECTION 2.2. Purchase Price; Payments on the Subsequent Contracts.
The purchase price for the Subsequent Contracts shall be an amount equal to
$_______________, which is the aggregate outstanding principal balance of the
Subsequent Contracts transferred pursuant to this Agreement as of the Subsequent
Cut-off Date, and the Seller hereby acknowledges receipt of such amount in
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<PAGE>
respect of the sale of the Subsequent Contracts hereunder. Such purchase price
shall be payable in immediately available funds on the Subsequent Transfer Date
from funds on deposit in the Pre-Funding Account.
The Purchaser shall be entitled to all payments of principal and interest
received on or after the Subsequent Cut-off Date. All payments of principal and
interest received before the Subsequent Cut-off Date shall belong to the Seller.
The Seller shall hold in trust for the Purchaser and shall promptly remit to the
Purchaser, any payments on the Subsequent Contracts received by the Seller that
belong to the Purchaser under the terms of this Agreement.
SECTION 2.3. Conditions to Sale of Subsequent Contracts. The Purchaser's
obligations hereunder are subject to the following conditions:
1. The Purchaser shall have received:
a. the Sale and Servicing Agreement executed by all the parties
thereto,
b. the documents listed in Section 3.01D of the Sale and Servicing
Agreement, and
c. such other opinions and documents as the Purchaser may reasonably
require in connection with the purchase of the Subsequent Contracts
hereunder or the sale of the Notes and Certificates;
2. The representations and warranties with respect to the Subsequent
Contracts of (i) the Seller and the Servicer made in the Sale and Servicing
Agreement and (ii) the Seller made in the Purchase Agreement and this
Agreement shall be true and correct with respect to the Subsequent
Contracts on the Subsequent Transfer Date; and
3. The conditions for transfer of the Subsequent Contracts from the
Purchaser to the Trust set forth in Section 3.01D of the Sale and Servicing
Agreement have been fulfilled.
SECTION 2.4. Examination of Files. The Seller will make the Contract Files
with respect to the Subsequent Contracts available to the Purchaser or its agent
for examination at the Trust's offices or such other location as otherwise shall
be agreed upon by the Purchaser and the Seller.
SECTION 2.5. Transfer of Subsequent Contracts. Pursuant to the Sale and
Servicing Agreement, the Purchaser will assign all of its right, title and
interest in and to the Subsequent Contracts to the Trust for the benefit of the
Securityholders. The Purchaser has the right to assign its interest under this
Agreement as may be required to effect the purposes of the Sale and Servicing
Agreement, by written notice to the Seller and without the consent of the
Seller, and the assignee shall succeed to the rights and obligations hereunder
of the Purchaser.
B-3
<PAGE>
ARTICLE
REPRESENTATIONS AND WARRANTIES OF THE SELLER
SECTION 3.1. Representations and Warranties of the Seller.
1. The representations and warranties of the Seller contained in Article
III of the Sale and Servicing Agreement with respect to the Subsequent Contracts
are incorporated herein, and are made to the Purchaser on the Subsequent
Transfer Date, as if set forth herein and as if made to the Purchaser on the
date hereof. The Seller will make such representations and warranties in the
Sale and Servicing Agreement directly to the Trust and will become obligated in
respect of such representations and warranties pursuant to Article III of the
Sale and Servicing Agreement. On the Subsequent Transfer Date, the Seller shall
deliver to the Purchaser an Officers' Certificate, dated the Subsequent Transfer
Date, to the effect that the representations and warranties made in the Sale and
Servicing Agreement with respect to the Subsequent Contracts by the Seller are
true and correct as of the Subsequent Transfer Date.
2. It is understood and agreed that the representations and warranties
incorporated by reference in this Agreement by Section 3.1(1) hereof shall
remain operative and in full force and effect, shall survive the transfer and
conveyance of the Subsequent Contracts by the Seller to the Purchaser and by the
Purchaser to the Trust, and shall inure to the benefit of the Purchaser, the
Trust and their successors and permitted assignees.
3. The Seller shall indemnify the Purchaser and the Servicer and hold the
Purchaser and the Servicer harmless against any loss, penalties, fines,
forfeitures, legal fees and related costs, judgments and other costs and
expenses resulting from any claim, demand, defense or assertion based on or
grounded upon, or resulting from, a breach of the Seller's representations and
warranties contained or incorporated by reference in this Agreement. It is
understood and agreed that the obligation of the Seller set forth in this
Section 3.1 to indemnify the Purchaser and the Servicer as provided in this
Section 3.1 constitutes the sole remedy of the Purchaser and the Servicer
respecting a breach of the foregoing representations and warranties. The Trust
shall also have the remedies provided in the Sale and Servicing Agreement.
4. Each indemnified party shall give prompt notice to the Seller of any
action commenced against it with respect to which indemnity may be sought
hereunder but failure to so notify an indemnifying party shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement, unless the failure to notify materially prejudices the rights and
condition of the Seller. The Seller shall be entitled to participate in any such
action, and to assume the defense thereof, and after notice from the Seller to
an indemnified party of its election to assume the defense thereof, the Seller
will not be liable to such indemnified party under this Section for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof.
B-4
<PAGE>
5. Any cause of action against the Seller or relating to or arising out of
the breach of any representations and warranties made or incorporated by
reference in this Section 3.1 shall accrue as to any Subsequent Contract upon
discovery of such breach by the Purchaser or the Servicer or notice thereof by
the Seller to the Purchaser and the Servicer, failure by the Seller to cure such
breach and demand upon the Seller by the Purchaser for all amounts payable in
respect of such Subsequent Contract.
ARTICLE IV
MISCELLANEOUS PROVISIONS
SECTION 4.1. Amendment. This Agreement may be amended from time to time by
the Seller and the Purchaser by written agreement signed by the Seller and the
Purchaser.
SECTION 4.2. Counterparts. For the purpose of facilitating the execution of
this Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.
SECTION 4.3. Termination. The Seller's obligations under this Agreement
shall survive the sale of the Subsequent Contracts to the Purchaser.
SECTION 4.4. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of New York and the obligations, rights and remedies
of the parties hereunder shall be determined in accordance with such laws.
SECTION 4.5. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed by
first class mail, postage prepaid, to in the case of the Seller, The CIT
Group/Sales Financing, Inc., 650 CIT Drive, Livingston, New Jersey 07039,
Attention: President, or such other address as may hereafter be furnished to
Purchaser in writing by the Seller, or in the case of the Purchaser, The CIT
Group Securitization Corporation II, 650 CIT Drive, Livingston, New Jersey
07039, Attention: President, or such other address as may hereafter be furnished
to the Seller by the Purchaser.
SECTION 4.6. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
B-5
<PAGE>
SECTION 4.7. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the Seller and the Purchaser and their respective
successors and assigns, as may be permitted hereunder.
SECTION 4.8. Opinion. The Counsel to the Seller shall deliver to the
Purchaser and the Trustees an opinion in the form of Exhibit B hereto.
B-6
<PAGE>
IN WITNESS WHEREOF, the Seller and the Purchaser have caused their names to
be signed hereto by their respective officers thereunto duly authorized as of
the day and year first above written.
THE CIT GROUP SECURITIZATION
CORPORATION II,
as Purchaser
By:____________________________
Name:__________________________
Title:_________________________
THE CIT GROUP/SALES FINANCING, INC.,
as Seller
By:____________________________
Name:__________________________
Title:_________________________
B-7
<PAGE>
EXHIBIT A
List of Subsequent Contracts
B-8
<PAGE>
EXHIBIT B
FORM OF OPINION OF COUNSEL
[Date]
- -----------------------------,
solely in its capacity as Indenture Trustee
under the Sale and Servicing Agreement referred
to herein
111 West Monroe Street
P.O. Box 755
Chicago, IL 60690-0755
- ------------------------------,
solely in its capacity as Owner Trustee
under the Sale and Servicing Agreement
- -----------
- ---------------
__________, DE _____
Dear Sirs,
I have acted as counsel to The CIT Group/Sales Financing, Inc. ("CITSF")
and The CIT Group Securitization Corporation II, a Delaware corporation (the
"Company"), in connection with the sale of CIT RV Owner Trust 1996-A, Class A
____% Asset Backed Notes (the "Notes") and ____% Asset Backed Certificates (the
"Certificates" and, collectively with the Notes, the "Securities"). The Notes
represent obligations of, and the Certificates represent interests in, a trust,
the CIT RV Owner Trust 1996-A (the "Trust"), consisting of a pool of installment
sale contracts secured by new and used recreational vehicles (collectively, the
"Contracts") and certain related property. The Company purchased certain of the
Contracts from CITSF (the "Initial Contracts") pursuant to a Purchase Agreement,
dated as of February 1, 1996, by and between CITSF and the Company. Additional
Contracts are being purchased by the Company from CITSF (the "Subsequent
Contracts") pursuant to the Subsequent Purchase Agreement dated as of ________
__, 1996 (the "Subsequent Purchase Agreement"). Pursuant to a Sale and Servicing
Agreement, dated as of February 1, 1996 (the "Sale and Servicing Agreement"),
among the Company, CITSF and the Trust, the Company transferred the Initial
Contracts to the Trust. The Company will also transfer, pursuant to the Sale and
Servicing Agreement, the Subsequent Contracts to the Trust, the corpus of which
will consist of each of the Initial Contracts and the Subsequent Contracts and
certain other property transferred by the Company to the Trust.
B-9
<PAGE>
All capitalized terms used herein and not defined shall have the meanings
assigned to them in the Subsequent Purchase Agreement.
In rendering the following opinions, I have examined (i) the Subsequent
Purchase Agreement; (ii) the Sale and Servicing Agreement; (iii) the Certificate
of Incorporation of each of CITSF and the Company; (iv) the By-laws of each of
CITSF and the Company; (v) copies of certain unanimous consents adopted by the
Board of Directors of the Company authorizing the issuance and sale of the
Securities and the purchase of the Contracts; and (vi) copies of certain
unanimous written consents of the Board of Directors of CITSF. I have also
examined such other documents and made such investigations of law as I have
considered necessary and appropriate for the purposes of the opinions expressed
herein. I have assumed the authenticity of signatures on original documents and
the conformity to the original of all documents submitted to me as certified,
conformed or photostatic copies and have relied as to all matters of fact on
certificates, representations or statements by officers of the Company or CITSF.
In making my examination of agreements, instruments and other documents and
in giving opinions herein, I have assumed that the Trustees have and had the
power and capacity to execute and deliver such agreements, instruments and other
documents and to perform all of their obligations thereunder and that such
agreements, instruments and other documents were duly authorized by all
requisite action by or on behalf of the Trustees were duly executed,
acknowledged, as necessary, and delivered by or on behalf of and are the legal,
valid and binding obligations of, and are enforceable in accordance with their
terms against, the Trustees.
Based upon, and subject to, the foregoing I am of the opinion that:
1. The Subsequent Purchase Agreement has been duly authorized, executed and
delivered by each of CITSF and the Company and constitutes the legal, valid and
binding agreement of each of CITSF and the Company, and is enforceable against
each of CITSF and the Company in accordance with its terms; the Subsequent
Purchase Agreement is effective to transfer all of CITSF's right, title and
interest in and to the Subsequent Contracts and other property described in
Section 2.1 of the Subsequent Purchase Agreement to the Company; the Sale and
Servicing Agreement is effective to transfer all of the Company's right, title
and interest in and to such Subsequent Contracts and other property to the Trust
subject to no prior liens or encumbrances.
2. No consent, approval, authorization or order of, registration or filing
with, or notice to any governmental authority or court is required under federal
laws or the laws of the State of Delaware for the execution, delivery and
performance by the Company of the Subsequent Purchase Agreement or the
consummation of any other transaction contemplated thereby by the Company,
except for those which have been obtained or except such as may be required
under the Securities Act of 1933, as amended or the regulations promulgated
thereunder or state securities or Blue Sky laws of any jurisdiction.
B-10
<PAGE>
3. No consent, approval, authorization or order of, registration or filing
with, or notice to, any governmental authority or court is required under
federal laws or the laws of the State of Delaware for the execution, delivery
and performance by CITSF of the Subsequent Purchase Agreement or the
consummation of any other transaction contemplated thereby by CITSF except for
those which have been obtained or except such as may be required under the
Securities Act of 1933, as amended or the regulations promulgated thereunder or
state securities or Blue Sky laws of any jurisdiction.
I am furnishing this opinion to you solely for your benefit. This opinion
is not to be used, circulated, quoted or otherwise referred to or relied on by
any other person or for any other purpose.
The foregoing opinion is given on the express understanding that the
undersigned is an officer of the Company and CITSF and shall in no event incur
any personal liability in connection with the said opinion.
Very truly yours,
B-11
<PAGE>
EXHIBIT C
FORM OF SUBSEQUENT TRANSFER AGREEMENT
The CIT Group Securitization Corporation II, as Seller, and the CIT RV
Owner Trust 1996-A (the "Trust"), as Purchaser, pursuant to the Sale and
Servicing Agreement, dated as of February 1, 1996, among the Seller, The CIT
Group/Sales Financing, Inc., as Servicer and the Trust (the "Sale and Servicing
Agreement"), hereby confirm their understanding with respect to the sale by the
Seller and the purchase by the Purchaser of those Recreational Vehicle Contracts
listed on the attached List of Subsequent Contracts (the "Subsequent
Contracts").
Conveyance of Subsequent Contracts. The Seller shall sell, transfer, assign
absolutely, set over and otherwise convey to the Purchaser as of the Subsequent
Transfer Date (i) all the right, title and interest of the Seller in and to the
Subsequent Contracts and all the rights, benefits, and obligations arising from
and in connection with each Subsequent Contract, (ii) the security interests in
the Subsequent Financed Vehicles granted by the Obligors pursuant to the
Subsequent Contracts, (iii) all payments received by the Seller on or with
respect to the Subsequent Contracts on or after the Subsequent Cut-off Date
(exclusive of payments with respect to Post Cut-off Date Insurance Add-Ons),
(iv) the interest of the Seller in any Subsequent Financed Vehicle (including
any right to receive future Net Liquidation Proceeds) that secures the
Subsequent Contracts and that shall have been repossessed by the Servicer by or
on behalf of the Trust; (v) all rights of the Seller to proceeds of Insurance
Policies covering the Obligors and the Subsequent Contracts, (vi) the proceeds
from any Servicer's Errors and Omissions Protection Policy, any fidelity bond
and any blanket hazard policy, to the extent such proceeds relate to any
Subsequent Financed Vehicle, (vii) all rights of recourse against any cosigner
or under any personal guarantee with respect to the Subsequent Contracts (other
than any right as against a Dealer under a Dealer Agreement), (viii) all
proceeds in any way derived from any of the foregoing items and (ix) all
documents contained or required to be contained in the Contract Files relating
to the Subsequent Contracts. The parties intend and agree that the conveyance of
the Seller's right, title and interest in and to the Subsequent Contracts (and
all rights, entitlements and amounts listed above) pursuant to this Agreement
shall constitute an absolute sale.
The costs relating to the delivery of the documents specified in this
Subsequent Transfer Agreement and the Sale and Servicing Agreement shall be
borne by the Seller.
The Seller hereby affirms the representations and warranties set forth in
the Sale and Servicing Agreement that relate to the Subsequent Contracts as of
the date hereof. The Seller hereby confirms that it has delivered notice of the
sale of the Subsequent Contracts pursuant to the Sale and Servicing Agreement
and that each of the conditions relating to the transfer of the Subsequent
Contracts, set forth in the Sale and Servicing Agreement, have been satisfied as
of the date hereof.
<PAGE>
All terms and conditions of the Sale and Servicing Agreement are hereby
ratified, confirmed and incorporated herein, provided that in the event of any
conflict the provisions of this Subsequent Transfer Agreement shall control over
the conflicting provisions of the Sale and Servicing Agreement.
Terms capitalized herein and not defined herein shall have their respective
meanings as set forth in the Sale and Servicing Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Subsequent Transfer
Agreement to be duly executed as of this ____ day of __________, 1996.
THE CIT GROUP SECURITIZATION
CORPORATION II, as Seller
By:________________________________
Name:
Title:
THE CIT RV OWNER TRUST 1996-A
By: ______________________________,
as Owner Trustee
By:________________________________
Name:
Title:
C-2
<PAGE>
EXHIBIT D
FORM OF ASSIGNMENT
In accordance with the Sale and Servicing Agreement (the "Agreement") dated
as of February 1, 1996, among The CIT Group/Sales Financing, Inc. ("CITSF"), The
CIT Group Securitization Corporation II (the "Company"), and the CIT RV Owner
Trust 1996-A (the "Trust"), the Company does hereby sell, transfer, assign, set
over and otherwise convey to the Trust created by the Trust Agreement, (i) all
right, title and interest of the Company in and to the Initial Contracts and all
the rights, benefits and obligations arising from and in connection with each
Initial Contract, (ii) the security interests in the Initial Financed Vehicles
granted by the Obligors pursuant to the Initial Contracts, (iii) all payments
received by the Company on or with respect to the Initial Contracts on or after
the Initial Cut-off Date (exclusive of payments with respect to Post Cut-off
Date Insurance Add-Ons), (iv) the interest of the Company in any Initial
Financed Vehicle (including any right to receive future Net Liquidation
Proceeds) that secures the Initial Contracts and that shall have been
repossessed by the Servicer by or on behalf of the Trust; (v) all rights of the
Company to proceeds of Insurance Policies covering the Obligors and the Initial
Contracts, (vi) the proceeds from any Servicer's Errors and Omissions Protection
Policy, any fidelity bond and any blanket hazard policy, to the extent such
proceeds relate to any Initial Financed Vehicle, (vii) all rights of recourse
against any cosigner or under any personal guarantee with respect to the Initial
Contracts (other than any right as against a Dealer under a Dealer Agreement),
(viii) all amounts held for the Trust in the Collection Account, (ix) all
amounts held for the Trust in the Pre-Funding Account, (x) all amounts held for
the Trust in the Capitalized Interest Account, (xi) all proceeds in any way
derived from any of the foregoing items and (xii) all documents contained or
required to be contained in the Contract Files relating to the Initial
Contracts. The parties intend and agree that the conveyance of the Company's
right, title and interest in and to the Initial Contracts (and all rights,
entitlements and amounts listed above) pursuant to this Agreement shall
constitute an absolute sale.
All capitalized terms used herein without definition have the meanings
ascribed to such terms in the Agreement. This Assignment is made pursuant to the
Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed this ___ day of ________, 1996.
THE CIT GROUP SECURITIZATION
CORPORATION II
By:___________________________
Name:
Title:
<PAGE>
FORM OF ASSIGNMENT OF SUBSEQUENT CONTRACTS
For good and valuable consideration in the amount of $______________ paid
by the CIT RV Owner Trust 1996-A (the "Purchaser"), to The CIT Group
Securitization Corporation II (the "Seller"), the Seller does hereby sell,
transfer, assign absolutely, set over and otherwise convey to the Purchaser as
of the Subsequent Transfer Date (i) all the right, title and interest of the
Seller in and to the Subsequent Contracts and all the rights, benefits, and
obligations arising from and in connection with each Subsequent Contract, (ii)
the security interests in the Subsequent Financed Vehicles granted by the
Obligors pursuant to the Subsequent Contracts, (iii) all payments received by
the Seller on or with respect to the Subsequent Contracts on or after the
Subsequent Cut-off Date (exclusive of payments with respect to Post Cut-off Date
Insurance Add-Ons), (iv) the interest of the Seller in any Subsequent Financed
Vehicle (including any right to receive future Net Liquidation Proceeds) that
secures the Subsequent Contracts and that shall have been repossessed by the
Servicer by or on behalf of the Trust; (v) all rights of the Seller to proceeds
of Insurance Policies covering the Obligors and the Subsequent Contracts, (vi)
the proceeds from any Servicer's Errors and Omissions Protection Policy, any
fidelity bond and any blanket hazard policy, to the extent such proceeds relate
to any Subsequent Financed Vehicle, (vii) all rights of recourse against any
cosigner or under any personal guarantee with respect to the Subsequent
Contracts (other than any right as against a Dealer under a Dealer Agreement),
(viii) all proceeds in any way derived from any of the foregoing items, and (ix)
all documents contained or required to be contained in the Contract Files
relating to the Subsequent Contracts. The parties intend and agree that the
conveyance of the Seller's right, title and interest in and to the Subsequent
Contracts (and all rights, entitlements and amounts listed above) pursuant to
this Agreement shall constitute an absolute sale. Certain capitalized terms used
in this Assignment shall have the respective meanings assigned to them in the
Sale and Servicing Agreement, dated as of February 1, 1996, among The CIT Group
Securitization Corporation II, CITSF and the CIT RV Owner Trust 1996-A.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed this _____ day of __________, 1996.
THE CIT GROUP SECURITIZATION CORPORATION II
By: __________________________
Name:
D-2
<PAGE>
EXHIBIT E
FORM OF OWNER TRUSTEE'S ACKNOWLEDGMENT AND CERTIFICATION
______________________________, a national banking association, acting as
Owner Trustee (the "Owner Trustee") of the Trust created pursuant to the Trust
Agreement, dated as of February 1, 1996, between The CIT Group Securitization
Corporation II (the "Company") and the Owner Trustee, acknowledged pursuant to
the Sale and Servicing Agreement dated as of February 1, 1996 among the Company,
The CIT Group/Sales Financing, Inc. and the Owner Trustee (the "Agreement"),
that the Owner Trustee has received, and holds in trust thereunder the following
through the Servicer as custodian: (i) all the right, title and interest of the
Company in and to the [Initial] [Subsequent] Contracts and all the rights,
benefits, and obligations arising from and in connection with each [Initial]
[Subsequent] Contract, (ii) the security interests in the [Initial] [Subsequent]
Financed Vehicles granted by the Obligors pursuant to the [Initial] [Subsequent]
Contracts, (iii) all payments received by the Company on or with respect to the
[Initial] [Subsequent] Contracts on or after the [Initial] [Subsequent] Cut-off
Date (exclusive of payments with respect to Post Cut-off Date Insurance
Add-Ons), (iv) the interest of the Company in any [Initial] [Subsequent]
Financed Vehicle (including any right to receive future Net Liquidation
Proceeds) that secures the [Initial] [Subsequent] Contracts and that shall have
been repossessed by the Servicer by or on behalf of the Trust; (v) all rights of
the Company to proceeds of Insurance Policies covering the Obligors and the
[Initial] [Subsequent] Contracts, (vi) the proceeds from any Servicer's Errors
and Omissions Protection Policy, any fidelity bond and any blanket hazard
policy, to the extent such proceeds relate to any [Initial] [Subsequent]
Financed Vehicle, (vii) all rights of recourse against any cosigner or under any
personal guarantee with respect to the [Initial] [Subsequent] Contracts (other
than any right as against a Dealer under a Dealer Agreement), (viii) all
proceeds in any way derived from any of the foregoing items, (ix) all documents
contained or required to be contained in the Contract Files relating to the
[Initial] [Subsequent] Contracts, (x) the Collection Account, (xi) the
Pre-Funding Account, and (xii) the Capitalized Interest Account. [The Owner
Trustee shall issue to, or upon the written order of, the Company Certificates
representing ownership of a beneficial interest in 100% of the Trust and Notes
representing obligations of the Trust.] Capitalized terms used herein have the
meanings given them in the Agreement.
<PAGE>
IN WITNESS WHEREOF, ______________________________, as Owner Trustee, has
caused this acknowledgment to be executed by its duly authorized officer as of
this ___ day of ________, 1996.
______________________________,
as Owner Trustee
By____________________________
Name:
Title:
E-2
<PAGE>
EXHIBIT F
THE CIT GROUP/SALES FINANCING, INC.
CERTIFICATE OF SERVICING OFFICERS
The undersigned certify that they are the [title] and [title], respectively
of The CIT Group/Sales Financing, Inc., a corporation organized under the laws
of Delaware ("CITSF"), and that as such they are duly authorized to execute and
deliver this certificate on behalf of CITSF pursuant to Section 4.09 of the Sale
and Servicing Agreement, dated as of February 1, 1996 (the "Agreement"), among
CITSF, The CIT Group Securitization Corporation II and
______________________________, as Owner Trustee (all capitalized terms used
herein without definition having the respective meanings specified in the
Agreement), and further certify that:
1. The Monthly Report for the period from _________ to _______ attached to
this certificate is complete and accurate in accordance with the requirements of
Sections 4.09 and 5.08 of the Agreement; and
2. As of the date hereof, no Event of Termination or event that with notice
or lapse of time or both would become an Event of Termination has occurred. [If
an Event of Termination has occurred, such Event of Termination shall be
specified and its current status reported.]
IN WITNESS WHEREOF, we have affixed hereunto our signatures this ____ day
of _____, 199_.
THE CIT GROUP/SALES FINANCING, INC.
By:_______________________________
Name:
Title:
By:_______________________________
Name:
Title:
<PAGE>
EXHIBIT G
THE CIT RV OWNER TRUST 1996-A
CLASS A ____% ASSET BACKED NOTES
____% ASSET BACKED CERTIFICATES
MONTHLY REPORT
DISTRIBUTION DATE: __________, 199_
Amount Available $_____________
Distribution Amounts
1. Aggregate Note distribution$_____________
2. Aggregate Certificate distribution $_____________
Interest
3. Aggregate amount of Interest
a. Notes$_____________
b. Certificates$_____________
4. Total distribution in respect of interest
a. Notes $_____________
b. Certificates$_____________
Principal
5. Principal Distribution Amount$_____________
6. Distribution made in respect of Principal
a. Notes$_____________
b. Certificates$_____________
7. Outstanding Principal Balance of Notes:$_____________
<PAGE>
8. Certificate Balance$_____________
Contract Pool
9. Pool Balance$_____________
10. Note Pool Factor$_____________
11. Certificate Pool Factor$_____________
Delinquency Information
Aggregate Principal
Number Balance
------------------------------
12. Delinquent Contracts
a. 30-59 days ______ $_________________
b. 60-89 days ______ $_________________
c. 90 days or more ______ $_________________
13. Repossessed Contracts ______ $_________________
14. Repossessed Contracts
Remaining in Inventory ______ $_________________
Miscellaneous
15. Monthly Servicing Fee $_____________
16. Amount of Servicer Fee Paid $_____________
17. Amount withdrawn from the Cash Collateral $_____________
Account and Delivered to Certificateholders
18. Available Cash Collateral Amount after _____________%
any withdrawl or deposit to the Cash
Collateral Account divided by the Pool
Balance
19. Amount of Funds on deposit in the $_____________
Pre-Funding Account
G-2
<PAGE>
20. Weighted average Contract Rate of all _____________%
outstanding Contracts
21. Number of Subsequent Contracts _____________
22. Aggregate principal balance of $_____________
Subsequent Contracts
23. Number of Subsequent Contracts Purchased ____________
24. Aggregate Stated Principal Balance of the $_____________
Subsequent Contracts purchase
25. Amount of Monthly Advances by Servicer $_____________
Amount of Non-Reimbursable Payments by $_____________
Servicer
G-3
<PAGE>
EXHIBIT H
TERMINATION - AUCTION PROCEDURES
The following sets forth the auction procedures to be followed in
connection with a sale effected pursuant to Section 11.02 of the Sale and
Servicing Agreement (the "Agreement"), dated as of February 1, 1996, between The
CIT Group Securitization Corporation II, the CIT Group/Sales Financing, Inc. and
______________________________, as Owner Trustee. Capitalized terms used herein
that are not otherwise defined shall have the meanings described thereto in the
Agreement. All references herein to "Trustee" shall be references to
_____________________________, as Indenture Trustee, pursuant to an Indenture,
dated as of February 1, 1996, between the Owner Trustee and the Indenture
Trustee. However, if the Notes have been paid in full, and the Indenture has
been discharged in accordance with its terms, all references herein to "Trustee"
shall be references to the Owner Trustee.
I. Pre-Auction Process
(a) Upon receiving notice of the Auction Date, the Advisor will initiate
its general Auction procedures consisting of the following: (i) with
the assistance of the Servicer, prepare a general solicitation package
along with a confidentiality agreement; (ii) derive a list of
qualified bidders, in a commercially reasonable manner; (iii) initiate
contact with all qualified bidders; (iv) send a confidentiality
agreement to all qualified bidders; (v) upon receipt of a signed
confidentiality agreement, send solicitation packages to all
interested bidders on behalf of the Trustee; and (vi) notify the
Servicer of all potential bidders and anticipated timetable.
(b) The general solicitation package will include: (i) the prospectus from
the public offering of the Notes and Certificates; (ii) a copy of all
monthly servicing reports or a copy of all annual servicing reports
and the prior year's monthly servicing reports; (iii) a form of a
Purchase Agreement and Sale and Servicing Agreement; (iv) a
description of the minimum purchase price required to cause the
Trustee to sell the Auction Property as set forth in Section 11.02 of
the Agreement; (v) a formal bidsheet; (vi) a detailed timetable; and
(vii) a preliminary data tape of the Pool Scheduled Principal Balance
as of the related Distribution Date reflecting the same data
attributes used to create the Initial Cut-off Date tables for the
prospectus dated February __, 1996 relating to the public offering of
the Notes and Certificates.
(c) The Trustee, with the assistance of the Servicer and the Advisor, will
maintain an auction package beginning at the time of closing of the
transaction, which will contain terms (i)-(iii) listed in the
preceding paragraph. If the Advisor is unable to perform its role as
advisor to the
<PAGE>
Trustee, the Servicer acting in its capacity under the Agreement will
select a successor Advisor and inform the Trustee of its actions.
(d) The Advisor will send solicitation packages to all bidders at least 15
business days before the Auction Date. Bidders will be required to
submit any due diligence questions in writing to the Advisor for
determination of their relevancy, no later than 10 business days
before the Auction Date. The Servicer and the Advisor will be required
to satisfy all relevant questions at least five Business Days prior to
the Auction Date and distribute the questions and answers to all
bidders.
II. Auction Process
(a) ______________________, in its role as Advisor to the Trustee, will be
allowed to bid in the Auction, but will not be required to do so.
(b) The Servicer will also be allowed to bid in the Auction if it deems
appropriate, but will not be required to do so.
(c) On the Auction Date, all bids will be due by facsimile to the offices
of the Trustee by 1:00 p.m. New York City time, with the winning bidder
to be notified by 2:00 p.m. New York City time. All acceptable bids (as
described in Section 11.02 of the Agreement) will be due on a
conforming basis on the bid sheet contained in the solicitation
package.
(d) If the Trustee receives fewer than two market value bids from
participants in the market for recreational vehicle retail installment
sale contract willing and able to purchase the Auction Property, the
Trustee shall decline to consummate the sale.
(e) Upon notification to the winning bidder, a good faith deposit equal to
one percent (1%) of the Pool Balance will be required to be wired to
the Trustee upon acceptance of the bid. This deposit, along with any
interest income attributable to it, will be credited to the purchase
price but will not be refundable. The Trustee will establish a separate
account for the acceptance of the good faith deposit, until such time
as the account is fully funded and all monies are transferred into the
Collection Account, such time not to exceed one Business Day before the
related Distribution Date (as described above).
(f) The winning bidder will receive on the Auction Date a copy of the draft
Purchase Agreement, Sale and Servicing Agreement and Servicer's
Representations and Warranties (which shall be substantially identical
to the representations and warranties set forth in Section 8.01 of the
Agreement).
(g) ____________, in its capacity as Advisor to the Trustee, will provide
to the Trustee a letter concluding whether or not the winning bid is a
fair market value bid. _________________ will also provide such letter
H-2
<PAGE>
if it is the winning bidder. In the case where __________ or the
Servicer is the winning bidder it will in its letter provide for market
comparable and valuations.
(h) The Auction will stipulate that the Servicer be retained to service the
Contracts sold pursuant to the terms of the Purchase and Sale Agreement
and Servicing Agreement.
H-3
<PAGE>
EXHIBIT I
THE CIT GROUP/SALES FINANCING, INC.
CERTIFICATE OF OFFICER
The undersigned certifies that the undersigned is the ____________________
of The CIT Group/Sales Financing, Inc., a corporation organized under the laws
of Delaware ("CITSF"), and that as such is duly authorized to execute and
deliver this certificate on behalf of CITSF in connection with the Sale and
Servicing Agreement, dated as of February 1, 1996 (the "Agreement"), among
CITSF, The CIT Group Securitization Corporation II and the CIT RV Owner Trust
1996-A (all capitalized terms used herein without definition having the
respective meanings specified in the Agreement), and further certify that:
(i) attached hereto as Exhibit I is a true and correct copy of the
Articles of Incorporation of CITSF, together with all amendments thereto as
in effect on the date hereof;
(ii) attached hereto as Exhibit II is a true and correct copy of the
By-laws of CITSF, as amended, as in effect on the date hereof;
(iii) the representations and warranties of CITSF contained in
Sections 8.01 and 3.01C of the Agreement are true and correct on and as of
the date hereof and, to the best of their knowledge, the representations
and warranties of CITSF contained in Sections 3.01A and 3.01B of the
Agreement are true and correct on and as of the date hereof;
(iv) no event with respect to CITSF has occurred and is continuing
which would constitute an Event of Termination or an event that, with
notice or lapse of time or both, would become an Event of Termination under
the Agreement; and
(v) each of the agreements and conditions of CITSF to be performed on
or before the date hereof pursuant to the Agreement have been performed in
all material respects.
IN WITNESS WHEREOF, I have affixed hereunto my signature this __ day of
_______________, 1996.
-------------------
Name:
Title:
PURCHASE AGREEMENT
This Purchase Agreement dated as of February 1, 1996 (the "Agreement"), is
between THE CIT GROUP SECURITIZATION CORPORATION II, as purchaser (the
"Purchaser"), and THE CIT GROUP/SALES FINANCING, INC., as seller (the "Seller").
Subject to the terms hereof, the Seller agrees to sell, and the Purchaser
agrees to purchase, the recreational vehicle installment sales contracts set
forth on Exhibit A (collectively, the "Contracts"), having an aggregate
outstanding principal balance as of February 1, 1996 (the "Initial Cut-off
Date") of approximately $ .
It is the intention of the Seller and the Purchaser that the Purchaser
shall sell the Contracts to the CIT RV Owner Trust 1996-A and shall enter into a
Sale and Servicing Agreement, dated as of the date hereof, with the CIT RV Owner
Trust 1996-A and the Seller, pursuant to which ____% Asset Backed Certificates
(the "Certificates"), evidencing ownership interests in the Contracts and Class
A ____% Asset Backed Notes secured by the Contracts, will be issued.
The Purchaser and the Seller wish to prescribe the terms and conditions of
the purchase by the Purchaser of the Contracts and the servicing and
administration of the Contracts.
In consideration of the premises and the mutual agreements hereinafter set
forth, the Purchaser and the Seller agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Certain capitalized terms used in this Agreement
shall have the respective meanings assigned to them in the Sale and Servicing
Agreement. All references in this Purchase Agreement to Articles, Sections,
subsections and exhibits are to the same contained in or attached to this
Purchase Agreement unless otherwise specified.
ARTICLE II
SALE AND CONVEYANCE OF CONTRACTS;
CONTRACT FILES
SECTION 2.01. Sale and Conveyance of Contracts. On the Closing Date,
subject to the terms and conditions hereof, the Seller shall sell, transfer,
assign absolutely, set over and otherwise convey to the Purchaser (i) all the
right, title and interest of the Seller in and to the Initial Contracts and all
the rights, benefits, and obligations arising from and in connection with each
<PAGE>
Initial Contract, (ii) the security interests in the Initial Financed Vehicles
granted by the Obligors pursuant to the Initial Contracts, (iii) all payments
received by the Seller on or with respect to the Initial Contracts on or after
the Initial Cut-off Date (exclusive of payments with respect to Post Cut-off
Date Insurance Add-Ons), (iv) the interest of the Seller in any Initial Financed
Vehicle (including any right to receive future Net Liquidation Proceeds) that
secures the Initial Contracts and that shall have been repossessed by the
Servicer by or on behalf of the Trust; (v) all rights of the Seller to proceeds
of Insurance Policies covering the Obligors and the Initial Contracts, (vi) the
proceeds from any Servicer's Errors and Omissions Protection Policy, any
fidelity bond and any blanket hazard policy, to the extent such proceeds relate
to any Initial Financed Vehicle, (vii) all rights of recourse against any
cosigner or under any personal guarantee with respect to the Initial Contracts
(other than any right as against a Dealer under a Dealer Agreement), (viii) all
amounts held for the Trust in the Collection Account, (ix) all amounts held for
the Trust in the Pre-Funding Account, (x) all amounts held for the Trust in the
Capitalized Interest Account, (xi) all proceeds in any way derived from any of
the foregoing items, and (xii) all documents contained or required to be
contained in the Contract Files relating to the Initial Contracts. The parties
intend and agree that the conveyance of the Seller's right, title and interest
in and to the Initial Contracts pursuant to this Agreement shall constitute an
absolute sale.
The Seller hereby declares and covenants that it shall at no time have any
legal, equitable or beneficial interest in, or any right, including without
limitation any reversionary or offset right, to the Collection Account, the
Pre-Funding Account, the Capitalized Interest Account and the Cash Collateral
Account, and that, in the event it receives any of the same, it shall hold same
in trust for the benefit of the Trust on behalf of the Securityholders and shall
immediately endorse over to the Trust any such amount it receives.
SECTION 2.02. Purchase Price; Payments on the Contracts.
(a) The purchase price for the Contracts shall be an amount equal to
$______________. Such purchase price shall be payable in immediately available
funds on the Closing Date.
(b) The Purchaser shall be entitled to all payments of principal and
interest received on or after the Initial Cut-off Date. All payments of
principal and interest received before the Initial Cut-off Date shall belong to
the Seller. The Seller shall hold in trust for the Purchaser and shall promptly
remit to the Purchaser, any payments on the Contracts received by the Seller
that belong to the Purchaser under the terms of this Agreement.
SECTION 2.03. Conditions to Sale of Contracts. The Purchaser's obligations
hereunder are subject to the following conditions:
(a) The Purchaser shall have received (i) the Sale and Servicing Agreement
executed by all the parties thereto, (ii) all documents required by the Sale and
Servicing Agreement and (iii) such other opinions and documents as the Purchaser
may reasonably require in connection with the purchase of the Contracts
hereunder or the sale of the Notes and Certificates;
2
<PAGE>
(b) The representations and warranties of the Seller and the Servicer made
in the Sale and Servicing Agreement shall be true and correct on the Closing
Date; and
(c) The Purchaser shall have received from counsel to the Seller a letter
stating that the Purchaser may rely on such counsel's opinion delivered pursuant
to the Sale and Servicing Agreement and such counsel's opinions to Moody's
Investors Service, Inc. and Standard and Poor's Corporation in respect of the
sale of the Contracts to the Purchaser by the Seller, or such opinions may be
addressed and delivered to the Purchaser.
SECTION 2.04. Examination of Files. The Seller will make the Contract Files
with respect to the Initial Contracts available to the Purchaser or its agent
for examination at the Trust's offices or such other location as otherwise shall
be agreed upon by the Purchaser and the Seller.
SECTION 2.05. Transfer of Contracts. Pursuant to the Sale and Servicing
Agreement, the Purchaser will assign all of its right, title and interest in and
to the Contracts to the Trust for the benefit of the Securityholders. The
Purchaser has the right to assign its interest under this Agreement as may be
required to effect the purposes of the Sale and Servicing Agreement, by written
notice to the Seller and without the consent of the Seller, and the assignee
shall succeed to the rights and obligations hereunder of the Purchaser.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER;
REPURCHASE OF CONTRACTS
SECTION 3.01. Representations and Warranties of the Seller.
(a) The representations and warranties of the Seller contained in the Sale
and Servicing Agreement are incorporated herein, and are made to the Purchaser
on the date hereof, as if set forth herein and as if made to the Purchaser on
the date hereof. The Seller will make such representations and warranties in the
Sale and Servicing Agreement directly to the Trust and will become obligated in
respect of such representations and warranties pursuant to the Sale and
Servicing Agreement. On the Closing Date, the Seller shall deliver to the
Purchaser an Officers' Certificate, dated the Closing Date, to the effect that
the representations and warranties made in the Sale and Servicing Agreement by
the Seller are true and correct as of the Closing Date.
(b) It is understood and agreed that the representations and warranties
incorporated by reference in this Agreement by Section 3.01(a) hereof shall
remain operative and in full force and effect, shall survive the transfer and
conveyance of the Contracts by the Seller to the Purchaser and by the Purchaser
to the Trust, and shall inure to the benefit of the Purchaser, the Trust and
their successors and permitted assignees.
3
<PAGE>
(c) The Seller shall indemnify the Purchaser and the Servicer and hold the
Purchaser and the Servicer harmless against any loss, penalties, fines,
forfeitures, legal fees and related costs, judgments and other costs and
expenses resulting from any claim, demand, defense or assertion based on or
grounded upon, or resulting from, a breach of the Seller's representations and
warranties contained or incorporated by reference in this Agreement. It is
understood and agreed that the obligation of the Seller set forth in this
Section 3.01 to indemnify the Purchaser and the Servicer as provided in this
Section 3.01 constitutes the sole remedy of the Purchaser and the Servicer
respecting a breach of the foregoing representations and warranties. The Trust
shall also have the remedies provided in the Sale and Servicing Agreement.
(d) Each indemnified party shall give prompt notice to the Seller of any
action commenced against it with respect to which indemnity may be sought
hereunder but failure to so notify an indemnifying party shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement, unless the failure to notify materially prejudices the rights and
condition of the Seller. The Seller shall be entitled to participate in any such
action, and to assume the defense thereof, and after notice from the Seller to
an indemnified party of its election to assume the defense thereof, the Seller
will not be liable to such indemnified party under this Section for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof.
(e) Any cause of action against the Seller or relating to or arising out of
the breach of any representations and warranties made or incorporated by
reference in this Section 3.01 shall accrue as to any Contract upon (i)
discovery of such breach by the Purchaser or the Servicer or notice thereof by
the Seller to the Purchaser and the Servicer, (ii) failure by the Seller to cure
such breach and (iii) demand upon the Seller by the Purchaser for all amounts
payable in respect of such Contract.
ARTICLE IV
MISCELLANEOUS PROVISIONS
SECTION 4.01. Amendment. This Agreement may be amended from time to time by
the Seller and the Purchaser by written agreement signed by the Seller and the
Purchaser.
SECTION 4.02. Counterparts. For the purpose of facilitating the execution
of this Agreement as herein provided and for other purposes, this Agreement may
be executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.
SECTION 4.03. Termination. The Seller's obligations under this Agreement
shall survive the sale of the Contracts to the Purchaser.
4
<PAGE>
SECTION 4.04. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance with
such laws.
SECTION 4.05. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed by
first class mail, postage prepaid, to (i) in the case of the Seller, The CIT
Group/Sales Financing, Inc., 650 CIT Drive, Livingston, New Jersey 07039,
Attention: President, or such other address as may hereafter be furnished to
Purchaser in writing by the Seller or (ii) in the case of the Purchaser, The CIT
Group Securitization Corporation II, 650 CIT Drive, Livingston, New Jersey
07039, Attention: President, or such other address as may hereafter be furnished
to the Seller by the Purchaser.
SECTION 4.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
SECTION 4.07. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the Seller and the Purchaser and their respective
successors and assigns, as may be permitted hereunder.
5
<PAGE>
IN WITNESS WHEREOF, the Seller and the Purchaser have caused their names to
be signed hereto by their respective officers thereunto duly authorized as of
the day and year first above written.
THE CIT GROUP SECURITIZATION
CORPORATION II,
as Purchaser
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
THE CIT GROUP/SALES FINANCING, INC.,
as Seller
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
6
<PAGE>
EXHIBIT A
List of Contracts
SUBSEQUENT PURCHASE AGREEMENT
This Subsequent Purchase Agreement dated as of _________, 1996 (the
"Agreement"), is between THE CIT GROUP SECURITIZATION CORPORATION II, as
purchaser (the "Purchaser"), and THE CIT GROUP/SALES FINANCING, INC., as seller
(the "Seller").
Reference is hereby made to the Purchase Agreement dated as of February 1,
1996 between the parties hereto (the "Purchase Agreement") pursuant to which the
Purchaser purchased from the Seller the recreational vehicle installment sales
contracts set forth on Exhibit A thereto (the "Initial Contracts"). The
Purchaser sold the Initial Contracts to the trust established pursuant to the
Trust Agreement dated as of February 1, 1996 between the Purchaser and
______________________________, as trustee (the "Owner Trustee").
Pursuant to the Sale and Servicing Agreement dated as of February 1, 1996
between the CIT RV Owner Trust 1996-A (the "Trust"), the Purchaser and the
Seller, the Purchaser agreed to purchase from the Seller and the Seller agreed
to sell to the Purchaser, subject to the terms and conditions set forth in
Section 3.01D of the Sale and Servicing Agreement, Subsequent Contracts for the
fixed purchase price specified in the Sale and Servicing Agreement for delivery
on the date specified herein. The purchase price for any Subsequent Contract
will be funded from money on deposit in the Pre-Funding Account during the
Funding Period. The purchase of any Subsequent Contract by the Purchaser must be
evidenced by the execution and delivery of a Subsequent Purchase Agreement
substantially in the form of Exhibit B to the Sale and Servicing Agreement.
Accordingly, subject to the terms hereof and the Sale and Servicing Agreement,
the Seller agrees to sell, and the Purchaser agrees to purchase, the
recreational vehicle installment sales contracts set forth on Exhibit A hereto
(collectively, the "Subsequent Contracts"), having an aggregate outstanding
principal balance as of _________, 1996 (the "Subsequent Cut-Off Date") of
$___________________.
The Purchaser and the Seller wish to prescribe the terms and conditions of
the purchase by the Purchaser of the Subsequent Contracts and the servicing and
administration of the Subsequent Contracts.
In consideration of the premises and the mutual agreements hereinafter set
forth, the Purchaser and the Seller agree as follows:
DEFINITIONS
SECTION 1.1. Definitions. Certain capitalized terms used in this Agreement
shall have the respective meanings assigned to them in the Sale and Servicing
Agreement. All references in this Agreement to Articles, Sections, subsections
and exhibits are to the same contained in or attached to this Agreement unless
otherwise specified.
<PAGE>
SALE AND CONVEYANCE OF SUBSEQUENT CONTRACTS;
CONTRACT FILES
SECTION 2.1. Sale and Conveyance of Contracts. On __________, 1996 (the
"Subsequent Transfer Date"), subject to the terms and conditions hereof, the
Seller shall sell, transfer, assign absolutely, set over and otherwise convey to
the Purchaser as of the Subsequent Transfer Date (i) all the right, title and
interest of the Company in and to the Subsequent Contracts and all the rights,
benefits, and obligations arising from and in connection with each Subsequent
Contract, (ii) the security interests in the Subsequent Financed Vehicles
granted by the Obligors pursuant to the Subsequent Contracts, (iii) all payments
received by the Company on or with respect to the Subsequent Contracts on or
after the Subsequent Cut-off Date (exclusive of payments with respect to Post
Cut-off Date Insurance Add-Ons), (iv) the interest of the Company in any
Subsequent Financed Vehicle (including any right to receive future Net
Liquidation Proceeds) that secures the Subsequent Contracts and that shall have
been repossessed by the Servicer by or on behalf of the Trust; (v) all rights of
the Company to proceeds of Insurance Policies covering the Obligors and the
Subsequent Contracts, (vi) the proceeds from any Servicer's Errors and Omissions
Protection Policy, any fidelity bond and any blanket hazard policy, to the
extent such proceeds relate to any Subsequent Financed Vehicle, (vii) all rights
of recourse against any cosigner or under any personal guarantee with respect to
the Subsequent Contracts (other than any right as against a Dealer under a
Dealer Agreement), (viii) all proceeds in any way derived from any of the
foregoing items, and (ix) all documents contained or required to be contained in
the Contract Files relating to the Subsequent Contracts. The parties intend and
agree that the conveyance of the Seller's right, title and interest in and to
the Subsequent Contracts (and all rights, entitlements and amounts listed above)
pursuant to this Agreement shall constitute an absolute sale.
SECTION 2.2. Purchase Price; Payments on the Subsequent Contracts.
A. The purchase price for the Subsequent Contracts shall be an amount equal
to $________________, which is the aggregate outstanding principal balance of
the Subsequent Contracts transferred pursuant to this Agreement as of the
Subsequent Cut-off Date, and the Seller hereby acknowledges receipt of such
amount in respect of the sale of the Subsequent Contracts hereunder. Such
purchase price shall be payable in immediately available funds on the Subsequent
Transfer Date from funds on deposit in the Pre-Funding Account.
B. The Purchaser shall be entitled to all payments of principal and
interest received on or after the Subsequent Cut-off Date. All payments of
principal and interest received before the Subsequent Cut-off Date shall belong
to the Seller. The Seller shall hold in trust for the Purchaser and shall
promptly remit to the Purchaser, any payments on the Subsequent Contracts
received by the Seller that belong to the Purchaser under the terms of this
Agreement.
2
<PAGE>
SECTION 2.3. Conditions to Sale of Subsequent Contracts. The Purchaser's
obligations hereunder are subject to the following conditions:
A. The Purchaser shall have received: the Sale and Servicing Agreement
executed by all the parties thereto, the documents listed in Section 3.01D of
the Sale and Servicing Agreement, and such other opinions and documents as the
Purchaser may reasonably require in connection with the purchase of the
Subsequent Contracts hereunder or the sale of the Notes and Certificates;
B. The representations and warranties with respect to the Subsequent
Contracts of (i) the Seller and the Servicer made in the Sale and Servicing
Agreement and (ii) the Seller made in the Purchase Agreement and this Agreement
shall be true and correct with respect to the Subsequent Contracts on the
Subsequent Transfer Date; and
C. The conditions for transfer of the Subsequent Contracts from the
Purchaser to the Trust set forth in Section 3.01D of the Sale and Servicing
Agreement have been fulfilled.
SECTION 2.4. Examination of Files. The Seller will make the Contract Files
with respect to the Subsequent Contracts available to the Purchaser or its agent
for examination at the Trust's offices or such other location as otherwise shall
be agreed upon by the Purchaser and the Seller.
SECTION 2.5. Transfer of Subsequent Contracts. Pursuant to the Sale and
Servicing Agreement, the Purchaser will assign all of its right, title and
interest in and to the Subsequent Contracts to the Trust for the benefit of the
Securityholders. The Purchaser has the right to assign its interest under this
Agreement as may be required to effect the purposes of the Sale and Servicing
Agreement, by written notice to the Seller and without the consent of the
Seller, and the assignee shall succeed to the rights and obligations hereunder
of the Purchaser.
REPRESENTATIONS AND WARRANTIES OF THE SELLER;
REPURCHASE OF CONTRACTS
SECTION 3.1. Representations and Warranties of the Seller.
A. The representations and warranties of the Seller contained in Article
III of the Sale and Servicing Agreement with respect to the Subsequent Contracts
are incorporated herein, and are made to the Purchaser on the Subsequent
Transfer Date, as if set forth herein and as if made to the Purchaser on the
date hereof. The Seller will make such representations and warranties in the
Sale and Servicing Agreement directly to the Trust and will become obligated in
respect of such representations and warranties pursuant to Article III of the
Sale and Servicing Agreement. On the Subsequent Transfer Date, the Seller shall
deliver to the Purchaser an Officers' Certificate, dated the Subsequent Transfer
Date, to the effect that the representations and warranties made in the Sale and
3
<PAGE>
Servicing Agreement with respect to the Subsequent Contracts by the Seller are
true and correct as of the Subsequent Transfer Date.
B. It is understood and agreed that the representations and warranties
incorporated by reference in this Agreement by Section 3.1.A hereof shall remain
operative and in full force and effect, shall survive the transfer and
conveyance of the Subsequent Contracts by the Seller to the Purchaser and by the
Purchaser to the Trust, and shall inure to the benefit of the Purchaser, the
Trust and their successors and permitted assignees.
C. The Seller shall indemnify the Purchaser and the Servicer and hold the
Purchaser and the Servicer harmless against any loss, penalties, fines,
forfeitures, legal fees and related costs, judgments and other costs and
expenses resulting from any claim, demand, defense or assertion based on or
grounded upon, or resulting from, a breach of the Seller's representations and
warranties contained or incorporated by reference in this Agreement. It is
understood and agreed that the obligation of the Seller set forth in this
Section 3.1 to indemnify the Purchaser and the Servicer as provided in this
Section 3.1. constitutes the sole remedy of the Purchaser and the Servicer
respecting a breach of the foregoing representations and warranties. The Trust
shall also have the remedies provided in the Sale and Servicing Agreement.
D. Each indemnified party shall give prompt notice to the Seller of any
action commenced against it with respect to which indemnity may be sought
hereunder but failure to so notify an indemnifying party shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement, unless the failure to notify materially prejudices the rights and
condition of the Seller. The Seller shall be entitled to participate in any such
action, and to assume the defense thereof, and after notice from the Seller to
an indemnified party of its election to assume the defense thereof, the Seller
will not be liable to such indemnified party under this Section for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof.
discovery of such breach by the Purchaser or the Servicer or notice thereof
by the Seller to the Purchaser and the Servicer, b. failure by the Seller to
cure such breach and c. demand upon the Seller by the Purchaser for all amounts
payable in respect of such Subsequent Contract.
MISCELLANEOUS PROVISIONS
SECTION 4.1. Amendment. This Agreement may be amended from time to time by
the Seller and the Purchaser by written agreement signed by the Seller and the
Purchaser.
SECTION 4.2. Counterparts. For the purpose of facilitating the execution of
this Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.
4
<PAGE>
SECTION 4.3. Termination. The Seller's obligations under this Agreement
shall survive the sale of the Subsequent Contracts to the Purchaser.
SECTION 4.4. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of New York and the obligations, rights and remedies
of the parties hereunder shall be determined in accordance with such laws.
in the case of the Seller, The CIT Group/Sales Financing, Inc., 650 CIT
Drive, Livingston, New Jersey 07039, Attention: President, or such other address
as may hereafter be furnished to Purchaser in writing by the Seller, or b. in
the case of the Purchaser, The CIT Group Securitization Corporation II, 650 CIT
Drive, Livingston, New Jersey 07039, Attention: President, or such other address
as may hereafter be furnished to the Seller by the Purchaser.
SECTION 4.6. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
SECTION 4.7. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the Seller and the Purchaser and their respective
successors and assigns, as may be permitted hereunder.
SECTION 4.8. Opinion. The Counsel to the Seller shall deliver to the
Purchaser and the Trustees an opinion in the form of Exhibit B hereto.
5
<PAGE>
IN WITNESS WHEREOF, the Seller and the Purchaser have caused their names to
be signed hereto by their respective officers thereunto duly authorized as of
the day and year first above written.
THE CIT GROUP SECURITIZATION
CORPORATION II,
as Purchaser
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
THE CIT GROUP/SALES FINANCING, INC.,
as Seller
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
6
<PAGE>
EXHIBIT A
List of Subsequent Contracts
<PAGE>
EXHIBIT B
FORM OF OPINION OF COUNSEL
[Date]
- -----------------------------,
solely in its capacity as Indenture Trustee
under the Sale and Servicing Agreement referred
to herein
- ----------------------
- -------, -- -----
- ------------------------------,
solely in its capacity as Owner Trustee
under the Sale and Servicing Agreement
- -------------------
__________, DE _____
Dear Sirs,
I have acted as counsel to The CIT Group/Sales Financing, Inc. ("CITSF")
and The CIT Group Securitization Corporation II, a Delaware corporation (the
"Company"), in connection with the sale of CIT RV Owner Trust 1996-A, Class A
____% Asset Backed Notes (the "Notes") and ____% Asset Backed Certificates (the
"Certificates" and, collectively with the Notes, the "Securities"). The Notes
represent obligations of, and the Certificates represent interests in, a trust,
the CIT RV Owner Trust 1996-A (the "Trust"), consisting of a pool of installment
sale contracts secured by new and used recreational vehicles (collectively, the
"Contracts") and certain related property. The Company purchased certain of the
Contracts from CITSF (the "Initial Contracts") pursuant to a Purchase Agreement,
dated as of February 1, 1996, by and between CITSF and the Company. Additional
Contracts are being purchased by the Company from CITSF (the "Subsequent
Contracts") pursuant to the Subsequent Purchase Agreement dated as of _________,
1996 (the "Subsequent Purchase Agreement"). Pursuant to a Sale and Servicing
Agreement, dated as of February 1, 1996 (the "Sale and Servicing Agreement"),
among the Company, CITSF and the Trust, the Company transferred the Initial
Contracts to the Trust. The Company will also transfer, pursuant to the Sale and
Servicing Agreement, the Subsequent Contracts to the Trust, the corpus of which
will consist of each of the Initial Contracts and the Subsequent Contracts and
certain other property transferred by the Company to the Trust.
All capitalized terms used herein and not defined shall have the meanings
assigned to them in the Subsequent Purchase Agreement.
<PAGE>
In rendering the following opinions, I have examined (i) the Subsequent
Purchase Agreement; (ii) the Sale and Servicing Agreement; (iii) the Certificate
of Incorporation of each of CITSF and the Company; (iv) the By-laws of each of
CITSF and the Company; (v) copies of certain unanimous consents adopted by the
Board of Directors of the Company authorizing the issuance and sale of the
Securities and the purchase of the Contracts; and (vi) copies of certain
unanimous written consents of the Board of Directors of CITSF. I have also
examined such other documents and made such investigations of law as I have
considered necessary and appropriate for the purposes of the opinions expressed
herein. I have assumed the authenticity of signatures on original documents and
the conformity to the original of all documents submitted to me as certified,
conformed or photostatic copies and have relied as to all matters of fact on
certificates, representations or statements by officers of the Company or CITSF.
In making my examination of agreements, instruments and other documents and
in giving opinions herein, I have assumed that the Trustees have and had the
power and capacity to execute and deliver such agreements, instruments and other
documents and to perform all of their obligations thereunder and that such
agreements, instruments and other documents were duly authorized by all
requisite action by or on behalf of the Trustees were duly executed,
acknowledged, as necessary, and delivered by or on behalf of and are the legal,
valid and binding obligations of, and are enforceable in accordance with their
terms against, the Trustees.
Based upon, and subject to, the foregoing I am of the opinion that:
The Subsequent Purchase Agreement has been duly authorized, executed and
delivered by each of CITSF and the Company and constitutes the legal, valid and
binding agreement of each of CITSF and the Company, and is enforceable against
each of CITSF and the Company in accordance with its terms; the Subsequent
Purchase Agreement is effective to transfer all of CITSF's right, title and
interest in and to the Subsequent Contracts and other property described in
Section 2.1 of the Subsequent Purchase Agreement to the Company; the Sale and
Servicing Agreement is effective to transfer all of the Company's right, title
and interest in and to such Subsequent Contracts and other property to the Trust
subject to no prior liens or encumbrances.
No consent, approval, authorization or order of, registration or filing
with, or notice to any governmental authority or court is required under federal
laws or the laws of the State of Delaware for the execution, delivery and
performance by the Company of the Subsequent Purchase Agreement or the
consummation of any other transaction contemplated thereby by the Company,
except for those which have been obtained or except such as may be required
under the Securities Act of 1933, as amended or the regulations promulgated
thereunder or state securities or Blue Sky laws of any jurisdiction.
No consent, approval, authorization or order of, registration or filing
with, or notice to, any governmental authority or court is required under
federal laws or the laws of the State of Delaware for the execution, delivery
and performance by CITSF of the Subsequent Purchase Agreement or the
consummation of any other transaction contemplated thereby by CITSF except for
those which have been obtained or except such as may be required under the
Securities Act of 1933, as amended or the regulations promulgated thereunder or
state securities or Blue Sky laws of any jurisdiction.
<PAGE>
I am furnishing this opinion to you solely for your benefit. This opinion
is not to be used, circulated, quoted or otherwise referred to or relied on by
any other person or for any other purpose.
The foregoing opinion is given on the express understanding that the
undersigned is an officer of the Company and CITSF and shall in no event incur
any personal liability in connection with the said opinion.
Very truly yours,
<PAGE>
ASSIGNMENT OF SUBSEQUENT CONTRACTS
For good and valuable consideration in the amount of $______________ paid
by THE CIT GROUP SECURITIZATION CORPORATION II (the "Purchaser"), to THE CIT
GROUP/SALES FINANCING, INC. (the "Seller"), CITSF does hereby sell, transfer,
assign absolutely, set over and otherwise convey to the Purchaser as of the
Subsequent Transfer Date (i) all the right, title and interest of the Company in
and to the recreational vehicle intallment sales contracts set forth on Exhibit
A to the Subsequent Purchase Agreement, dated as of _________, 1996, between the
Purchaser and the Seller (the "Subsequent Contracts") and all the rights,
benefits, and obligations arising from and in connection with each Subsequent
Contract, (ii) the security interests in the Subsequent Financed Vehicles
granted by the Obligors pursuant to the Subsequent Contracts, (iii) all payments
received by the Company on or with respect to the Subsequent Contracts on or
after the Subsequent Cut-off Date (exclusive of payments with respect to Post
Cut-off Date Insurance Add-Ons), (iv) the interest of the Company in any
Subsequent Financed Vehicle (including any right to receive future Net
Liquidation Proceeds) that secures the Subsequent Contracts and that shall have
been repossessed by the Servicer by or on behalf of the Trust; (v) all rights of
the Company to proceeds of Insurance Policies covering the Obligors and the
Subsequent Contracts, (vi) the proceeds from any Servicer's Errors and Omissions
Protection Policy, any fidelity bond and any blanket hazard policy, to the
extent such proceeds relate to any Subsequent Financed Vehicle, (vii) all rights
of recourse against any cosigner or under any personal guarantee with respect to
the Subsequent Contracts (other than any right as against a Dealer under a
Dealer Agreement), (viii) all proceeds in any way derived from any of the
foregoing items, and (ix) all documents contained or required to be contained in
the Contract Files relating to the Subsequent Contracts. The parties intend and
agree that the conveyance of the Seller's right, title and interest in and to
the Subsequent Contracts (and all rights, entitlements and amounts listed above)
pursuant to this Agreement shall constitute an absolute sale. Certain
capitalized terms used in this Assignment shall have the respective meanings
assigned to them in the Sale and Servicing Agreement, dated as of February 1,
1996, among The CIT Group Securitization Corporation II, CITSF and the CIT RV
Owner Trust 1996-A.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed this day of _______, 1996.
THE CIT GROUP/SALES FINANCING, INC.
By:
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Name:
Title:
