SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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F O R M 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 23, 1995
The CIT Group Securitization Corporation II
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
33-85224 22-3328188
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(Commission File Number) (IRS Employer Identification No.)
650 CIT Drive
Livingston, New Jersey 07039
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(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (201) 740-5000
N/A
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(Former name or former address, if changed since last report.)
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Item 2. Acquisition or Disposition of Assets.
On February 23, 1995 The CIT Group Securitization Corporation II (the
"Company") issued its Manufactured Housing Contract Senior/Subordinate
Pass-Through Certificates, Series 1995-1, Class A-1, Class A-2, Class A-3, Class
A-4 and Class A-5 Certificates (collectively, the "Offered Certificates") and
Class R Certificates, such Series representing interests in a pool of
manufactured housing installment sales contracts and installment loan agreements
(collectively, the "Contracts"). The Offered Certificates were offered pursuant
to Company's prospectus dated February 10, 1995 as supplemented by the
prospectus supplement dated February 15, 1995 (collectively referred to herein
as the "Prospectus").
The Class A-1 Certificates evidence an initial (approximate) 32.84%
ownership interest in the Trust. The Class A-2 Certificates evidence an initial
(approximate) 22.86% ownership interest in the Trust. The Class A-3 Certificates
evidence an initial (approximate) 27.80% ownership interest in the Trust. The
Class A-4 Certificates evidence an initial (approximate) 8.00% ownership
interest in the Trust. The Class A- 5 Certificates evidence an initial
(approximate) 8.50% ownership interest in the Trust. The Class R Certificates
evidence a 100% interest in the residual of the Trust.
The Class A-4, Class A-5 and Class R Certificates are subordinated to the
rights of the Class A-1, Class A-2 and Class A-3 Certificates to the extent
described in the Prospectus. The Class A-5 Certificates have the benefit of a
Limited Guarantee provided by The CIT Group Holdings, Inc. as described in the
Prospectus. The Class R Certificates represent the right to receive certain
residual cashflows.
The Trust consists of the Contracts and certain other property described in
the Prospectus, including, without limitation, $39,433,297 which was deposited
with the Trustee in a Pre-Funding Account. Amounts on deposit in the Pre-Funding
Account will be used to purchase additional manufactured housing installment
sales contracts and installment loan agreements which will also be Trust
property, as described in the Prospectus.
Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Pooling and Servicing Agreement annexed hereto
as Exhibit 4.1 (the "Pooling and Servicing Agreement").
All of the Contracts were acquired by the Company from The CIT Group/Sales
Financing, Inc. ("CITSF") pursuant to the terms of a Sale and Purchase Agreement
between the Company and CITSF dated as of February 1, 1995.
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Item 7. Financial Statements and Exhibits.
(c) Exhibits.
The following are filed herewith. The exhibit numbers correspond with Item
601(b) of Regulation S-K.
Exhibit No. Description
1 Underwriting Agreement between The CIT Group Securitization
Corporation II and CS First Boston Corporation on behalf of
itself and as representative of the several underwriters dated
February 15, 1995.
4.1 Pooling and Servicing Agreement between The CIT Group
Securitization Corporation II, The CIT Group/Sales
Financing, Inc. and The Chase Manhattan Bank (National
Association), as trustee, dated as of February 1, 1995.
4.2 Limited Guarantee, dated as of February 1, 1995, made by The
CIT Group Holdings, Inc. in favor of The Chase Manhattan Bank
(National Association), not in its individual capacity but
solely as Trustee.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE CIT GROUP SECURITIZATION
CORPORATION II
By:/s/ Joseph M. Leone
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Name: Joseph M. Leone
Title:Executive Vice President
Dated: March 7, 1995
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Exhibit 1
Underwriting Agreement
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EXECUTION COPY
MANUFACTURED HOUSING CONTRACT SENIOR/SUBORDINATE
PASS-THROUGH CERTIFICATES, SERIES 1995-1
THE CIT GROUP SECURITIZATION CORPORATION II
(SELLER)
February 15, 1995
UNDERWRITING AGREEMENT
CS FIRST BOSTON CORPORATION,
As Representative of the
Several Underwriters (the "Representative"),
Park Avenue Plaza
New York, New York 10055
Dear Sirs:
1. Introductory. The CIT Group Securitization Corporation II, a Delaware
corporation (the "Seller") and a wholly-owned limited-purpose finance subsidiary
of The CIT Group Holdings, Inc., a Delaware corporation ("CIT" or the
"Guarantor"), and CIT (collectively, the "Registrants") propose to cause the
issuance and sale from time to time of up to $500,000,000 of manufactured
housing contract pass-through certificates, all or a portion of which may be
supported by a limited guarantee of CIT. Each of such certificates and the
limited guarantee of CIT are registered under the registration statement
referred to in Section 2(a) (collectively, the "Registered Securities") and the
Seller has authorized the issuance and sale of the Class A-1, Class A-2, Class
A-3, Class A-4, and Class A-5 Manufactured Housing Contract Senior/Subordinate
Pass-Through Certificates, Series 1995-1 (the "Certificates") evidencing
interests in manufactured housing installment sales contracts and installment
loan agreements (the "Contracts") having an aggregate outstanding principal
balance of approximately $124,000,000. The Certificates will be issued under a
Pooling and Servicing Agreement (the "Pooling and Servicing Agreement") to be
dated as of February 1, 1995 among the Seller, The CIT Group/Sales Financing,
Inc. ( "CITSF" or the "Servicer") and The Chase Manhattan Bank (National
Association), as Trustee (the "Trustee" or "Chase"). The Certificates will
evidence specified interests in a pool of Contracts (the "Contract Pool") and
certain other property held in trust with respect to such Certificates. In
connection with the offering of the Certificates, CIT is entering into a Limited
Guarantee (the "Limited Guarantee"; and together with the Certificates, the
"Offered Securities") guaranteeing certain payments in respect of the Class A-5
Certificates. The Contracts and certain other assets of a Trust (the "Trust")
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will be sold by CITSF to the Seller pursuant to a Sale and Purchase Agreement
(the "Purchase Agreement") to be dated as of February 1, 1995 between CITSF and
the Seller and, in turn, by the Seller to the Trust pursuant to the Pooling and
Servicing Agreement.
The firm or firms listed on the attached Schedule I hereto which agreed to
purchase the Certificates are hereinafter referred to as the Underwriters (the
"Underwriters") of such Certificates, and the representative of the Underwriters
to whom this Underwriting Agreement (the "Agreement") is addressed is
hereinafter referred to as the Representative (the "Representative").
Capitalized terms used herein and not otherwise defined shall have the
meanings given them in the Pooling and Servicing Agreement.
2. Representations and Warranties of the Seller, the Guarantor and CITSF.
Each of the Seller, the Guarantor and CITSF, jointly and severally, represents
and warrants to, and agrees with, the Underwriters, as of the date hereof and as
of the date of the purchase and sale of the Certificates pursuant to Section 3
hereof (the "Closing Date") that:
(a) A registration statement on Form S-3 and Form S-11 (No. 33-85224),
including a prospectus, relating to the Registered Securities has been
filed with the Securities and Exchange Commission ("Commission") and has
become effective. Such registration statement, as amended as of the date of
this Agreement, is hereinafter referred to as the "Registration Statement,"
and the prospectus included in such Registration Statement, as supplemented
to reflect the terms of the Offered Securities as first filed with the
Commission after the date of this Agreement pursuant to and in accordance
with Rule 424(b) ("Rule 424(b)") under the Securities Act of 1933 ("Act"),
including all material incorporated by reference therein, is hereinafter
referred to as the "Prospectus." A "preliminary prospectus" means any form
of prospectus, including any prospectus supplement, relating to the Offered
Securities used prior to the date of this Agreement that is subject to
completion.
(b) On the effective date of the registration statement relating to
the Registered Securities, such registration statement conformed in all
respects to the requirements of the Act and the rules and regulations of
the Commission ("Rules and Regulations") and did not include any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading, and on the date of this Agreement the Registration Statement
and the preliminary prospectus conform, and at the time of the filing of
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the Prospectus in accordance with Rule 424(b), the Registration Statement
and the Prospectus will conform in all respects to the requirements of the
Act and the Rules and Regulations, and neither of such documents will
include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, except that the foregoing does not apply
to statements in or omissions from any of such documents based upon written
information furnished to the Seller by any Underwriter through the
Representative specifically for use therein. The Seller, CITSF and the
Guarantor hereby acknowledge that any information furnished by any of the
Underwriters specifically for use in the Registration Statement, any
preliminary prospectus or the Prospectus is the information contained under
the heading "Underwriting" in the preliminary prospectus relating to the
Offered Securities dated February 10, 1995 and in the prospectus supplement
relating to the Offered Securities dated February 15, 1995 (the
"Underwriters' Information").
(c) CIT meets the requirements for use of Form S-3 under the Act.
(d) The documents incorporated by reference in the Registration
Statement and Prospectus, at the time they were or hereafter are filed with
the Commission, complied and will comply in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended (the "1934
Act"), and the rules and regulations of the Commission thereunder.
(e) Each of the Seller, the Guarantor and CITSF have been duly
organized and are validly existing as corporations in good standing under
the laws of the State of Delaware with corporate power and authority to
own, lease and operate their respective properties and conduct their
respective businesses as described or incorporated in the Prospectus and to
enter into and perform their obligations under each of the Basic Documents
(as defined below) to which it is a party; and each of the Seller, the
Guarantor and 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 its respective business, properties,
assets, or condition (financial or other) or on its ability to perform its
obligations under any of the Basic Documents to which it is a party. "Basic
Documents" means this Agreement, the Pooling and Servicing Agreement, the
Purchase Agreement and the Limited Guarantee.
(f) The Seller is not in violation of its certificate of incorporation
or by-laws or in default in the performance or observance of any material
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obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to
which it is a party or by which it or its properties may be bound, which
default might result in any material adverse change in the financial
condition, earnings, affairs or business of the Seller or which might
materially and adversely affect the properties or assets thereof or the
ability to perform its obligations under any of the Basic Documents to
which it is a party.
(g) Neither the Guarantor nor CITSF is in violation of its certificate
of incorporation or by-laws or in default in the performance or observance
of any material obligation, agreement, covenant or condition contained in
any material contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which it is a party or by which it or its respective
properties may be bound, which default might result in any material adverse
change in the financial condition, earnings, affairs or business of either
the Guarantor or CITSF or which might materially and adversely affect the
properties or assets thereof or their ability to perform its obligations
under any of the Basic Documents to which it is a party.
(h) The execution and delivery by the Seller on the Closing Date of
the Basic Documents to which it is a party and the performance of its
obligations thereunder will be within the corporate power of the Seller and
duly authorized by all necessary corporate action on the part of the Seller
on and as of the Closing Date; and neither the issuance and sale of the
Certificates to the Underwriters, nor the execution and delivery by the
Seller of the Basic Documents to which it is a party, nor the consummation
by the Seller of the transactions therein contemplated, nor compliance by
the Seller with the provisions hereof or thereof, will materially conflict
with or result in a material breach of, or constitute a material default
under, any of the provisions of any law, governmental rule, regulation,
judgment, decree or order binding on the Seller or its properties or the
certificate of incorporation or by-laws of the Seller or any of the
provisions of any indenture, mortgage, contract or other instrument to
which the Seller is a party or by which the Seller is bound or result in
the creation or imposition of any lien, charge or encumbrance upon any of
its property pursuant to the terms of any such indenture, mortgage,
contract or other instrument.
(i) The execution and delivery by each of the Guarantor and CITSF on
and as of the Closing Date of any of the Basic Documents to which it is a
party and the performance of its obligations thereunder, will be within the
corporate power of each of the Guarantor and CITSF and duly authorized by
all necessary corporate action on the part of each of the Guarantor and
CITSF on and as of the Closing Date; and neither the issuance and sale of
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the Certificates to the Underwriters, nor the execution and delivery by the
Guarantor and CITSF of any of the Basic Documents to which it is a party,
nor the consummation by the Guarantor and CITSF of the transactions therein
contemplated, nor compliance by the Guarantor and CITSF with the provisions
hereof or thereof, will materially conflict with or result in a material
breach of, or constitute a material default under, any of the provisions of
any law, governmental rule, regulation, judgment, decree or order binding
on the Guarantor or CITSF or their respective properties or the certificate
of incorporation or by-laws of the Guarantor or CITSF, or any of the
provisions of any material indenture, mortgage, contract or other
instrument to which the Guarantor or CITSF is a party or by which the
Guarantor or CITSF is bound or result in the creation or imposition of any
lien, charge or encumbrance upon any of their respective property pursuant
to the terms of any such material indenture, mortgage, contract or other
instrument.
(j) This Agreement has been duly authorized, executed and delivered by
each of the Seller, the Guarantor and CITSF, and it constitutes a legal,
valid and binding instrument enforceable against each of the Seller, the
Guarantor and CITSF in accordance with its terms, subject (i) to applicable
bankruptcy, reorganization, insolvency, moratorium or other similar laws
affecting creditors' rights generally, (ii) as to enforceability, to
general principles of equity (regardless of whether enforcement is sought
in a proceeding in equity or at law) and (iii) as to enforceability with
respect to rights of indemnity thereunder, to limitations of public policy
under applicable securities laws.
(k) The Pooling and Servicing Agreement and the Purchase Agreement
when executed and delivered on the Closing Date and, in the case of the
Pooling and Servicing Agreement when executed and delivered by the Trustee,
will be duly authorized, executed and delivered by each of the Seller and
CITSF, and each will constitute a legal, valid and binding instrument
enforceable against each of the Seller and CITSF in accordance with its
terms, subject (i) to applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws affecting creditors' rights generally and
(ii) as to enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
(l) The Limited Guarantee when executed and delivered on the Closing
Date will be duly authorized, executed and delivered by the Guarantor and
it constitutes a legal, valid and binding instrument enforceable against
the Guarantor in accordance with its terms, subject (i) to applicable
bankruptcy, reorganization, insolvency, moratorium or other similar laws
affecting creditors' rights generally, and (ii) as to enforceability, to
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general principles of equity (regardless of whether enforcement is sought
in a proceeding in equity or at law). The Limited Guarantee is a senior,
general, unsecured obligation of CIT that ranks pari passu with all other
senior, general, unsecured obligations of CIT.
(m) As of the Closing Date, the Certificates will have been duly and
validly authorized by the Registrants, and, when executed and authenticated
as specified in the Pooling and Servicing Agreement, will be validly issued
and outstanding and will be entitled to the benefits of the Pooling and
Servicing Agreement.
(n) No filing or registration with, notice to or consent, approval,
authorization or order of any court or governmental authority or agency is
required for the consummation by the Seller, the Guarantor and CITSF of the
transactions contemplated by any of the Basic Documents to which it is a
party, except such as may be required under the Act, the Rules and
Regulations, or state securities or Blue Sky laws.
(o) The Seller, the Guarantor and CITSF each possess all material
licenses, certificates, authorities or permits issued by the appropriate
state, federal or foreign regulatory agencies or bodies necessary to
conduct the businesses now operated by them and as described in the
Prospectus, other than such licenses, certificates, authorities or permits
the failure of which to possess would not have a material adverse effect on
the interests of Certificateholders under the Pooling and Servicing
Agreement or the Limited Guarantee, and neither the Seller, the Guarantor
nor CITSF have received any notice of proceedings relating to the
revocation or modification of any such license, certificate, authority or
permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would materially and adversely affect the
conduct of the business, operations, financial condition or income of any
of the Seller, the Guarantor or CITSF or their ability to perform their
respective obligations under any of the Basic Documents to which it is a
party.
(p) As of the Closing Date, the Initial Contracts will have been duly
and validly assigned to the Trustee in accordance with the Pooling and
Servicing Agreement; and when such assignment is effected, a duly and
validly perfected transfer of all such Initial Contracts subject to no
prior lien, mortgage, security interest, pledge, charge or other
encumbrance created by the Seller, the Guarantor or CITSF will have
occurred. As of each Subsequent Transfer Date, the Subsequent Contracts
conveyed to the Trust on such date will have been duly and validly assigned
to the Trustee in accordance with the Pooling and Servicing Agreement; and
when such assignment is effective, the duly and validly perfected transfer
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of all such Subsequent Contracts will be subject to no prior lien, mortgage
security interest, pledge, charge or other encumbrance created by the
Seller, the Guarantor or CITSF.
(q) As of the Closing Date, each of the Initial Contracts will meet
the eligibility criteria described in the Prospectus and as of each
Subsequent Transfer Date the Subsequent Contracts being transferred to the
Trust will meet the eligibility criteria described in the Prospectus.
(r) The financial statements of CIT included or incorporated in the
Registration Statement and Prospectus present fairly the financial position
of CIT and its consolidated subsidiaries as of the dates shown and their
results of operations and cash flows for the periods shown, and such
financial statements have been prepared in conformity with generally
accepted accounting principles in the United States applied on a consistent
basis; and any schedules included in the Registration Statement present
fairly the information required to be stated therein.
(s) Except as disclosed or incorporated by reference in the
Prospectus, since the date of the latest audited financial statements of
CIT included or incorporated by reference in the Prospectus there has been
no material adverse change, nor any development or event which is
reasonably likely to result in a material adverse change, in the condition
(financial or other), business, properties or results of operations of CIT
and its subsidiaries taken as a whole.
(t) Neither the Seller, the Guarantor nor CITSF nor the Trust Fund
created by the Pooling and Servicing Agreement will be subject to
registration as an "investment company" under the Investment Company Act of
1940, as amended (the "1940 Act").
(u) In connection with the offering of the Offered Securities in the
State of Florida, the Seller hereby certifies that they have complied with
all provisions of Section 5.17.075 of the Florida Securities and Investor
Protection Act.
(v) As of the Closing Date, each of the respective representations and
warranties of the Seller and CITSF set forth in the Pooling and Servicing
Agreement will be true and correct, and the Underwriters may rely on such
representations and warranties as if they were set forth herein in full.
3. Purchase, Sale and Delivery of Certificates. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Seller agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to purchase
from the Seller, the aggregate principal amounts of the Certificates set forth
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opposite the names of the Underwriters in Schedule I hereto. Each class of
Certificates is to be purchased at a purchase price equal to a percentage of the
aggregate principal amount thereof specified in Schedule II hereto plus accrued
interest at the Remittance Rate for such Class of Certificates calculated from
(and including) February 23, 1995, to (but excluding) the Closing Date.
Against payment of the purchase price by wire transfer of immediately
available funds to the Seller, or to such bank as may be designated by the
Seller, the Seller will deliver the Certificates to the Representative, for the
account of the Underwriters, at the office of Schulte Roth & Zabel, 900 Third
Avenue, New York, New York 10022 on February 23, 1995 at 10:00 a.m., New York
time, or at such other time not later than seven full business days thereafter
as the Representative and the Seller determine, such time being herein referred
to as the "Closing Date". The Certificates to be so delivered will be initially
represented by one or more Certificates registered in the name of Cede & Co.,
the nominee of The Depository Trust Company ("DTC"). The interests of beneficial
owners of the Certificates will be represented by book entries on the records of
DTC and participating members thereof. Definitive Certificates will be available
only under the limited circumstances set forth in the Pooling and Servicing
Agreement. The certificates evidencing the Certificates will be made available
for checking and packaging at the offices of Schulte Roth & Zabel at least 24
hours prior to the Closing Date.
4. Offering by Underwriters. It is understood that the several Underwriters
propose to offer the Offered Securities for sale to the public as set forth in
the Prospectus.
5. Covenants of the Seller, the Guarantor and CITSF. Each of the Seller,
the Guarantor and CITSF, jointly and severally, covenants and agrees with the
several Underwriters that:
(a) The Registrants will file the Prospectus with the Commission
pursuant to and in accordance with subparagraph (2) (or, if applicable and
if consented to by the Representative, subparagraph (5)) of Rule 424(b) not
later than the second business day following the execution and delivery of
this Agreement. The Registrants will advise the Representative promptly of
any such filing pursuant to Rule 424(b).
(b) The Registrants will advise the Representative promptly of any
proposal to amend or supplement the Registration Statement or the
Prospectus, and will not effect any such amendment or supplementation
without the Representative's consent which consent shall not be
unreasonably withheld; and the Registrants will also advise the
Representative promptly of any amendment or supplementation of the
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Registration Statement or the Prospectus and of the institution by the
Commission of any stop order proceedings in respect of the Registration
Statement and will use its best efforts to prevent the issuance of any such
stop order and to obtain as soon as possible its lifting, if issued.
(c) The Registrants will arrange for the qualification of the Offered
Securities for offering and sale under the securities laws of such
jurisdictions in the United States as the Representative may reasonably
designate and will continue such qualifications in effect so long as
necessary under such laws for the distribution of such Offered Securities,
provided that in connection therewith the Registrants shall not be required
to qualify as a foreign corporation to do business nor become subject to
service of process generally, but only to the extent required for such
qualification, in any jurisdiction in which it is not currently so
qualified.
(d) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered by law in connection with sales by
any Underwriter or dealer, either (i) any event shall have occurred as a
result of which the Prospectus as then amended or supplemented would
include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or
(ii) for any other reason it shall be necessary to amend or supplement the
Prospectus to comply with the Act, the Registrants will promptly notify the
Representative and will promptly prepare and file with the Commission, at
their own expense, an amendment or a supplement to the Prospectus which
will correct such statement or omission or effect such compliance. Neither
your consent to, nor the Underwriters' delivery of, any such amendment or
supplement shall constitute a waiver of any of the conditions set forth in
Section 6 hereof.
(e) The Registrants will provide to the Trust, to be made to make
generally available to Certificateholders by the Trust, as soon as
practicable, but no later than sixteen months after the date hereof, an
earnings statement of the Trust covering a period of at least twelve
consecutive months beginning after the later of (i) the effective date of
the registration statement relating to the Registered Securities and (ii)
the effective date of the most recent post-effective amendment to the
Registration Statement to become effective prior to the date of this
Agreement and, in each case, satisfying the provisions of Section 11(a) of
the Act (including Rule 158 promulgated thereunder).
(f) The Registrants will furnish to each of the Underwriters copies of
the Registration Statement (two of which will be signed and include all
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exhibits), each related preliminary prospectus, the Prospectus and all
amendments and supplements to such documents, in each case as soon as
available and in such quantities as the Representative may from time to
time reasonably request.
(g) So long as any of the Certificates are outstanding, the Seller,
the Guarantor or CITSF, as the case may be, will furnish to the
Representative copies of all written reports or other written
communications (financial or otherwise) furnished or made available to
Certificateholders, and deliver to the Representative during such same
period, (i) as soon as they are available, copies of any reports and
financial statements filed by or on behalf of the Trust by the Registrants
with the Commission pursuant to the 1934 Act, (ii) CIT will furnish to the
Representative and, upon request, to each of the other Underwriters, (a) as
soon as practicable after the end of each fiscal year, a copy of its annual
report to stockholders for such year and (b) as soon as available, a copy
of each report and any definitive proxy statement of CIT filed with the
Commission under the 1934 Act, and (iii) such additional information
concerning the Seller, the Guarantor (which is not confidential relating to
the ability of CIT to meet its obligations under the Limited Guarantee) or
CITSF (relating to the Contracts, the servicing thereof or the ability of
CITSF to act as Servicer), the Certificates, the Limited Guarantee or the
Trust as the Representative may reasonably request from time to time.
(h) Whether or not the transactions contemplated by this Agreement are
consummated, the Seller, the Guarantor and CITSF will pay or cause to be
paid all costs and expenses incident to the performance of their respective
obligations hereunder, including (i) the preparation, issuance and delivery
of the Certificates, (ii) any fees charged by Moody's Investors Service,
Inc. ("Moody's" or the "Rating Agency") for the rating of the Certificates,
(iii) the expenses incurred in printing, reproducing and distributing the
registration statement as filed, the Registration Statement, preliminary
prospectuses and the Prospectus (including any amendments and supplements
thereto required pursuant to Section 5(d) hereof), (iv) the fees and
disbursements of counsel to the Seller, the Guarantor and CITSF and the
independent public accountants of the Seller, (v) the fees and
disbursements of the Trustee and its counsel, (vi) the fees of DTC in
connection with the book-entry registration of the Certificates, (vii) the
reasonable expenses of the Representative including the reasonable fees and
disbursements of its counsel, in connection with the initial qualification
of the Offered Securities for sale in the jurisdictions that the
Representative may designate pursuant to Section 5(c) hereof and in
connection with the preparation of any Blue Sky Survey and Legal Investment
Survey and (viii) the printing and delivery to the Underwriters, in such
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quantities as you may reasonably request, of copies of the Pooling and
Servicing Agreement and the Limited Guarantee. Subject to Section 8 hereof,
the Underwriters shall be responsible for their own costs and expenses,
including the fees and expenses of their counsel (other than the reasonable
expenses of the Representative including the reasonable fees and
disbursements of its counsel, in connection with the initial qualification
of the Offered Securities for sale in the jurisdictions that the
Representative may designate pursuant to Section 5(c) hereof and in
connection with the preparation of any Blue Sky Survey and Legal Investment
Survey).
(i) On or before the Closing Date, the Seller and CITSF shall cause
each of their respective books and records (including any computer records)
relating to the Contracts to be marked to show the Trust's absolute
ownership of the Contracts, and from and after the Closing Date neither the
Seller nor CITSF, as Servicer, shall take any action inconsistent with the
Trust's ownership of such Contracts, other than as permitted by the Pooling
and Servicing Agreement.
(j) Until the retirement of the Certificates, or until such time as
the Underwriters shall cease to maintain a secondary market in the
Certificates, whichever occurs first, the Seller or CITSF will deliver to
the Representative the certified public accountants' annual statements of
compliance furnished to the Trustee pursuant to the Pooling and Servicing
Agreement, as soon as such statements are furnished to the Trustee.
(k) To the extent, if any, that the rating provided with respect to
the Certificates by the Rating Agency is conditional upon the furnishing of
documents or the taking of any other actions by the Seller, the Guarantor
or CITSF, the Seller, the Guarantor or CITSF, as the case may be, shall
furnish such documents and take any such other actions as may be required
to satisfy such conditions.
(l) The Seller will prepare, or cause to be prepared, and file, or
cause to be filed, a timely election to treat the Contract Pool as a "real
estate mortgage investment conduit" ("REMIC") as such terms defined in the
Internal Revenue Code of 1986, as amended (the "Code"), for Federal income
tax purposes.
6. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Certificates will be
subject to the accuracy of the representations and warranties on the part of the
Seller, the Guarantor and CITSF contained or incorporated herein, to the
accuracy of the statements of officers of the Seller, the Guarantor and CITSF
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made pursuant to the provisions hereof, to the performance by the Seller, the
Guarantor and CITSF of its obligations hereunder and to the following additional
conditions precedent:
(a) On or prior to the date hereof, the Seller and the Representative
shall have received an agreed-upon procedures letter, dated as of the date
of this Agreement, of KPMG Peat Marwick LLP substantially in the form of
the draft to which the Representative has previously agreed and otherwise
in form and in substance satisfactory to the Representative and counsel for
the Underwriters.
(b) The Prospectus shall have been filed with the Commission in
accordance with the Rules and Regulations and Section 5(a) hereof. On or
prior to the Closing Date, no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for
that purpose shall have been instituted or, to the knowledge of the
Registrants, shall be contemplated by the Commission.
(c) You shall have received an officer's certificate, dated the
Closing Date, signed by the President or any Vice President or by a
principal financial or accounting officer of (i) the Seller representing
and warranting that, as of the Closing Date, to the best of such officer's
knowledge after reasonable investigation, the representations and
warranties of the Seller in this Agreement are true and correct, that the
Seller has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied hereunder at or prior to the Closing
Date, that no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or, to the best of their knowledge, are contemplated by the
Commission, (ii) CITSF in which such officers shall state that, to the best
of such officer's knowledge after reasonable investigation, the
representations and warranties of CITSF in this Agreement are true and
correct and that CITSF has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder and (iii) the
Guarantor representing and warranting that, as of the Closing Date, to the
best of such officer's knowledge after reasonable investigation, the
representations and warranties of the Guarantor in this Agreement are true
and correct, that the Guarantor has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to the Closing Date, that no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or, to the best of their
knowledge, are contemplated by the Commission.
(d) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development involving a
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prospective change, in or affecting particularly the business or properties
of the Trust, the Seller, CIT (in its capacity as Guarantor) or CITSF
which, in the judgment of a majority in interest of the Underwriters
(including the Representative), materially impairs the investment quality
of the Certificates or makes it impractical or inadvisable to proceed with
completion of the sale of and payment for the Certificates; (ii) any
downgrading in the rating of any debt securities of CIT or CITSF or any of
their direct or indirect subsidiaries by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g)
under the Act), or any public announcement that any such organization has
under surveillance or review its rating of any such debt securities (other
than an announcement with positive implications of a possible upgrading,
and no implication of a possible downgrading, of such rating); (iii) any
suspension or limitation of trading in securities generally on the New York
Stock Exchange or any setting of minimum prices for trading on such
exchange; (iv) any banking moratorium declared by Federal, New Jersey or
New York authorities; or (v) any outbreak or escalation of major
hostilities in which the United States is involved, any declaration of war
by Congress or any other substantial national or international calamity or
emergency if, in the judgment of a majority in interest of the Underwriters
(including the Representative), the effect of any such outbreak,
escalation, declaration, calamity or emergency makes it impractical or
inadvisable to proceed with completion of the sale of and payment for the
Certificates.
(e) In-house General Counsel of the Seller and CITSF, or other counsel
satisfactory to the Representative in its reasonable judgment, shall have
furnished to the Representative such counsel's written opinion, dated the
Closing Date, in substantially the form set forth below, with such changes
therein as counsel for the Underwriters shall reasonably agree:
(i) The Seller and CITSF have each been duly organized and are
validly existing as corporations in good standing under the laws of
the State of Delaware.
(ii) The Seller and CITSF each have the corporate power and
corporate authority to carry on their respective businesses as
described in the Prospectus and to own and operate their respective
properties in connection therewith.
(iii) The Seller and CITSF are each corporations duly organized,
validly existing and in good standing under the laws of the
jurisdiction of their organization and each has the corporate power to
own its assets and to transact the business in which it is currently
engaged and to perform their respective obligations under each of the
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Basic Documents to which it is a party. The Seller and CITSF are each
qualified to do business as a foreign corporation and each 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 Seller or CITSF, respectively or
on their ability to perform their respective obligations under this
Agreement, the Purchase Agreement or the Pooling and Servicing
Agreement.
(iv) This Agreement has been duly authorized, executed and
delivered by each of the Seller and CITSF, and each is a valid and
binding obligation of the Seller and CITSF enforceable against each of
the Seller and CITSF in accordance with its terms, except that (A)
such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally, (B) such enforcement
may be limited by general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law), and (C)
the enforceability as to rights to indemnity thereunder may be limited
under applicable law.
(v) The Pooling and Servicing Agreement and the Purchase
Agreement have been duly authorized, executed and delivered by each of
the Seller and CITSF, and each constitutes a valid and binding
obligation of, each of the Seller and CITSF, enforceable against each
of the Seller and CITSF in accordance with its terms, except that (A)
such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (B) such
enforcement may be limited by general principles of equity (regardless
of whether enforcement is sought in a proceeding in equity or at law).
(vi) The execution and delivery by each of the Seller and CITSF
of each of the Basic Documents to which it is a party, the performance
of their respective obligations thereunder and the signing of the
Registration Statement by the Seller are within the corporate power of
the Seller and CITSF, as applicable, and have been duly authorized by
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all necessary corporate action on the part of the Seller and CITSF, as
applicable; and neither the issue and sale of the Certificates, nor
the consummation of the transactions contemplated herein nor the
fulfillment of the terms hereof will, to the best of such counsel's
knowledge, conflict with or constitute a breach of, or default under,
or result in the creation or imposition of any lien, charge or
encumbrance upon any property or asset of the Seller or CITSF pursuant
to, any contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Seller or CITSF is a party or by which
either may be bound or to which the property or assets of the Seller
or CITSF are subject (which contracts, indentures, mortgages, loan
agreements, notes, leases and other such instruments have been
identified by the Seller or CITSF to such counsel), nor will such
action result in any violation of the provisions of the certificate of
incorporation or by-laws of the Seller or CITSF or, to the best of
such counsel's knowledge, any law, administrative regulation or
administrative or court decree of any state or federal courts,
regulatory bodies, other body, governmental entity or arbitrator
having jurisdiction over the Seller or CITSF.
(vii) To the best of such counsel's knowledge, no filing or
registration with or notice to or consent, approval, authorization or
order of any New Jersey or federal court or governmental authority or
agency is required for the consummation by the Seller or CITSF of the
transactions contemplated by this Agreement, except such as may be
required under the Act or the Rules and Regulations, or state
securities or Blue Sky laws.
(viii) There are no legal or governmental proceedings pending to
which the Seller or CITSF is a party or of which any property of the
Seller or CITSF is the subject, and no such proceedings are known by
such counsel to be threatened or contemplated by governmental
authorities or threatened by others, (A) that are required to be
disclosed in the Registration Statement or (B)(1) asserting the
invalidity of all or part of any of the Basic Documents, (2) seeking
to prevent the issuance of the Certificates, (3) that could materially
and adversely affect the Seller's or CITSF's obligations under any of
the Basic Documents or (4) seeking to affect adversely the federal or
state income tax attributes of the Certificates.
(ix) Such counsel is familiar with CITSF's standard operating
procedures relating to CITSF's acquisition of a perfected first
priority security interest in the manufactured homes financed by CITSF
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pursuant to manufactured housing installment sale contracts and
installment loan contracts in the ordinary course of CITSF's business.
Assuming that CITSF's standard procedures are followed with respect to
the perfection of security interests in the manufactured homes
securing the Contracts (the "Manufactured Homes") (and such counsel
has no reason to believe that CITSF has not or will not continue to
follow its standard procedures in connection with the perfection of
security interests in the Manufactured Homes), CITSF has acquired or
will acquire a perfected first priority security interest in the
Manufactured Homes.
(x) The Contracts are (i) chattel paper, as defined in the UCC in
the State of New Jersey and/or (ii) Land-Secured Contracts, as defined
in the Prospectus.
(f) In-house General Counsel of the Guarantor or other counsel
satisfactory to the Representative in its reasonable judgment, shall have
furnished to the Representative such counsel's written opinion, dated the
Closing Date, in substantially the form set forth below, with such changes
therein as counsel for the Underwriters shall reasonably agree:
(i) The Guarantor has been duly organized and is validly existing
as a corporation in good standing under the laws of the State of
Delaware, with the corporate power and corporate authority to carry on
its businesses and own its properties as described or incorporated in
the Prospectus and to perform its respective obligations under this
Agreement and the Limited Guarantee, and is duly qualified and
licensed and in good standing in each jurisdiction where its business
requires such qualification or licensing.
(ii) This Agreement and the Limited Guarantee have been duly
authorized, executed and delivered by the Guarantor and is a valid and
binding obligation of the Guarantor enforceable against the Guarantor
in accordance with its terms, except that (A) such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally, (B) such enforcement may be limited by general principles
of equity (regardless of whether enforcement is sought in a proceeding
in equity or at law), and (C) in the case of the enforceability of the
Limited Guarantee, as to rights to indemnity thereunder may be limited
under applicable law.
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(iii) The signing of the Registration Statement by the Guarantor
is within the corporate power of the Guarantor and has been duly
authorized by all necessary corporate action on the part of the
Guarantor; neither the issue and sale of the Limited Guarantee, nor
the consummation of the transactions contemplated herein and the
fulfillment of the terms hereof, or the performance by the Guarantor
or its obligations under the Limited Guarantee will, to the best of
such counsel's knowledge, conflict with or constitute a breach of, or
default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or asset of the Guarantor
pursuant to, any material contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the Guarantor is a
party or by which it may be bound or to which the property or assets
of the Guarantor are subject (which material contracts, indentures,
mortgages, loan agreements, notes, leases and other such instruments
have been identified by the Guarantor to such counsel), nor will such
action result in any violation of the provisions of the certificate of
incorporation or by-laws of the Guarantor or, to the best of such
counsel's knowledge, any law, administrative regulation or
administrative or court decree of any state or federal courts,
regulatory bodies, other body, governmental entity or arbitrator
having jurisdiction over the Guarantor.
(iv) To the best of such counsel's knowledge, no filing or
registration with or notice to or consent, approval, authorization or
order of any New York or federal court or governmental authority or
agency is required for the consummation by the Guarantor of the
transactions contemplated by this Agreement or the Limited Guarantee,
except such as may be required under the Act or the Rules and
Regulations, or state securities or Blue Sky laws.
(v) There are no legal or governmental proceedings pending to
which the Guarantor is a party or of which any property of the
Guarantor is the subject, and no such proceedings are known by such
counsel to be threatened or contemplated by governmental authorities
or threatened by others, (A) that are required to be disclosed in the
Registration Statement or (B)(1) asserting the invalidity of all or
part of this Agreement or the Limited Guarantee, (2) seeking to
prevent the issuance of the Limited Guarantee, (3) that could
materially and adversely affect the Guarantor's obligations under this
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Agreement or the Limited Guarantee or (4) seeking to affect adversely
the federal or state income tax attributes of the Certificates.
(vi) The documents incorporated by reference in the Registration
Statement and Prospectus, at the time they were or hereafter are filed
with the Commission, complied and will comply in all material respects
with the requirements of the 1934 Act and the Rules and Regulations,
except as to the financial statements and other financial and
statistical data included therein, to which I do not express any
opinion.
(vii) The conditions to the use by the Guarantor of a
registration statement on Form S-3 under the Act as set forth in the
General Instructions to Form S-3 have been satisfied with respect to
the Registration Statement and the Prospectus. To the best of my
knowledge, there are no contracts or documents of the Guarantor which
are required to be filed as exhibits to the Registration Statement
pursuant to the Act or the Rules and Regulations including any
documents incorporated by reference pursuant to Item 12 of Form S-3
which were filed under the 1934 Act which have not been so filed.
(viii) The Limited Guarantee is a senior, general, unsecured
obligation of the Guarantor that ranks pari passu with all other
senior, general, unsecured obligations of the Guarantor.
(g) Lowenstein, Sandler, Kohl, Fisher, and Boylan, special local New
Jersey counsel for the Seller, the Guarantor and CITSF, shall have
furnished to the Representative their written opinion, dated as of the
Closing Date, in form and substance satisfactory to you and counsel for the
Underwriters, to the effect that the security interest of the Trustee in
the Contracts and in the proceeds thereof will be perfected and will
constitute a first perfected security interest upon the taking of
possession of the Contracts by CITSF as custodian for the Trustee and upon
the filing of UCC financing statements in the offices of the Secretary of
State of New Jersey naming the Seller as the debtor and the Trustee as the
secured party; provided, however, that (i) for purposes of its opinion in
this paragraph such counsel may assume that (1) the Seller has good title
and is the sole owner and holder of each Contract free and clear of any
right of recision, set-off, defense or counterclaim, charges, security
interests or other rights of any nature and has full right and authority,
subject to no agreement with any other party, to sell, pledge and assign
the same, (2) immediately prior to conveyance thereof to the Seller, CITSF
was the obligee under the Contracts and CITSF has assigned all of its
right, title and interest in the Contracts to the Seller, (3) no Contract
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constitutes proceeds of any property subject to a third party's security
interest and (4) that the Seller's chief executive office is and during the
past four months has been in the State of New Jersey; (ii) for purposes of
its opinion in this paragraph, such counsel may assume that (1) the Trustee
took the assignment of the Contracts in good faith for value and without
notice or knowledge of any adverse claims, liens or encumbrances or of any
defense against or claim to the Contracts on the part of any person and (2)
the Trustee gave value for the Contracts and CITSF took possession of the
Contracts as agent for the Trustee in the ordinary course of the Trustee's
business; and (iii) such counsel need express no opinion (1) as to the
continuation of a security interest in the Contracts in the event CITSF
relinquishes possession of such Contracts and a subsequent purchaser takes
possession without notice of the Trustee's interest, (2) as to the
continuation of a security interest in the Contracts if continuation
statements are not filed as required by the Pooling and Servicing
Agreement, (3) as to the priority of any security interest in the Contracts
against any liens, claims or other interests that arise by operation of law
and do not require any filing or similar action in order to take priority
over perfected security interests, and (4) shall be inapplicable to any
Subsequent Contracts unless, upon the proper filing of UCC financing
statements describing the Subsequent Contracts, (a) the assumptions,
qualifications and limitations in this letter shall be true as to
conditions then existing and (b) all searches have been updated and reveal
no liens against any of the Subsequent Contracts. In addition, because it
is not practicable to review each of the Contracts, in rendering its
opinion, such counsel may assume that each Contract evidences a monetary
obligation and a security interest in a Manufactured Home that constituted
personal property, and not real property, at the origination thereof.
(h) Schulte Roth & Zabel, special counsel to the Seller, shall have
furnished to the Representative their written opinion, dated as of the
Closing Date, in substantially the form set forth below, with such changes
therein as counsel for the Underwriters shall reasonably agree:
(i) The Certificates have been duly authorized and, when executed
and authenticated by the Trustee as specified in the Pooling and
Servicing Agreement and issued and delivered and paid for as
contemplated by this Agreement, will be duly issued and outstanding
and entitled to the benefits of the Pooling and Servicing Agreement.
(ii) The Registration Statement became effective under the Act as
of January 5, 1995 and Post-Effective Amendment No. 1 became effective
under the Act as of February 15, 1995 and, to the best of our
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knowledge and information, no stop order suspending the effectiveness
of the Registration Statement or any part thereof or any amendment
thereto has been issued under the Act and no proceeding for that
purpose has been instituted or threatened by the Commission.
(iii) The conditions to the use by the Seller of a registration
statement on Form S-11 under the Act as set forth in the General
Instructions to Form S-11 have been satisfied with respect to the
Registration Statement and the Prospectus.
(iv) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended.
(v) The Trust is not, and will not as a result of the offer and
sale of the Certificates as contemplated in the Prospectus and in this
Agreement become, required to register as an "investment company"
under the Investment Company Act of 1940, as amended.
(vi) The statements in the prospectus supplement relating to the
Offered Securities, dated February 15, 1995, under the caption
"Description of the Certificates," insofar as such statements purport
to summarize certain terms of the Certificates, the Pooling and
Servicing Agreement and the Limited Guarantee, present a fair summary
of such documents.
(vii) To the best of our knowledge, there are no contracts or
documents of the Seller which are required to be filed as exhibits to
the Registration Statement pursuant to the Act or the Rules or
Regulations which have not been so filed.
(viii) The statements in the Prospectus under the headings
"Certain Federal Income Tax Consequences" and "ERISA Considerations,"
to the extent that they constitute matters of law or legal conclusions
with respect thereto, have been prepared or reviewed by such counsel
and are correct in all material respects.
(ix) The registration statement on Form S-3 and Form S-11 (No.
33-85224) relating to the Registered Securities as of its effective
date, the Registration Statement and the Prospectus as of the date of
this Agreement, and any amendment or supplement thereto, as of its
date, complied as to form in all material respects with the
requirements of the Act and the Rules and Regulations. We express no
opinion with respect to the financial statements, the exhibits,
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annexes and other financial, statistical, numerical or portfolio data,
economic conditions or financial condition of the portfolio
information included in or incorporated by reference into the
registration statement on Form S-3 and Form S-11 (No. 33-85224)
relating to the Registered Securities, the Registration Statement, the
Prospectus or any amendment or supplement thereto.
Such counsel shall state that it has participated in conferences with
officers and representatives of the Seller, the Guarantor and CITSF,
counsel to the Guarantor and CITSF and officers and representatives of the
Underwriters, at which conferences certain of the contents of the
Registration Statement and the Prospectus were discussed and, although such
counsel is not passing upon and does not assume any responsibility
whatsoever for, the factual accuracy, completeness or fairness of the
statements contained in the registration statement on Form S-3 and Form
S-11 (No. 33-85224) relating to the Registered Securities, the Registration
Statement or Prospectus (except as stated in Sections 6(h)(vi) and
6(h)(viii) above) and has made no independent check or verification thereof
for the purpose of rendering this opinion, on the basis of the foregoing
(relying as to materiality to a large extent upon the certificates of
officers and other representatives of the Seller, the Guarantor and CITSF),
no facts have come to their attention that leads such counsel to believe
that the registration statement on Form S-3 and Form S-11 (No. 33-85224)
relating to the Registered Securities, as of its effective date, the
Registration Statement, as of the date of this Agreement, or any amendment
thereto, as of its date, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Prospectus on its date contained or on the Closing Date contains, any
untrue statement of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that such counsel need express no view with
respect to the financial statements, tables, schedules, exhibits, annexes
and other financial, statistical, numerical or portfolio data, economic
conditions or financial condition of the portfolio included in or
incorporated by reference into, the Registration Statement or Prospectus.
Said counsel may state that they are admitted to practice only in the
State of New York, that they are not admitted to the Bar in any other State
and are not experts in the law of any other State and to the extent that
the foregoing opinions concern the laws of any other State such counsel may
rely upon the opinion of counsel satisfactory to the Underwriters and
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admitted to practice in such jurisdiction. Any opinions relied upon by such
counsel as aforesaid shall be addressed to the Underwriters and shall be
delivered together with the opinion of such counsel, which shall state that
such counsel believes that their reliance thereon is justified.
The Seller shall cause legal counsel to deliver to you such additional
opinions addressing the transfer by the Seller to the Trustee of its right
title and interest in and to the Contracts and other property included in
the Trust on the Closing Date as may be required by the Rating Agency.
(i) You shall have received an opinion of Stroock & Stroock & Lavan,
counsel for the Underwriters, dated the Closing Date, with respect to the
validity of the Certificates and such other related matters as the
Representative shall require and the Seller shall have furnished or caused
to be furnished to such counsel such documents as they may reasonably
request for the purpose of enabling them to pass upon such matters.
(j) You shall have received an opinion addressed to you, the Seller,
the Guarantor and CITSF of in-house counsel or special counsel to the
Trustee, dated the Closing Date and satisfactory in form and in substance
to the Representative and its counsel, to the effect that:
(i) The Trustee is a national banking association validly
existing under the laws of the United States of America and has the
full corporate power and authority to enter into, and to take all
action required of it, under the Pooling and Servicing Agreement.
(ii) The Pooling and Servicing Agreement has been duly
authorized, executed and delivered by Chase.
(iii) The Pooling and Servicing Agreement, assuming due
authorization, execution and delivery of such document by all other
parties thereto, constitutes the legal, valid and binding agreement of
Chase, except as enforceability thereof may be limited by bankruptcy,
insolvency, liquidation, reorganization, moratorium or other similar
laws affecting the enforcement of rights of creditors against Chase
generally, as such laws would apply in the event of bankruptcy,
insolvency, liquidation, receivership or reorganization or any
moratorium or similar occurrence affecting Chase, and the application
of general principals of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(iv) To the best of such counsel's knowledge, there are no
actions, proceedings or investigations pending or threatened against
Chase under the Pooling and Servicing Agreement before any court,
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administrative agency or other tribunal (A) asserting the invalidity
of the Pooling and Servicing Agreement or the Certificates, or (B)
seeking to prevent the issuance of the Certificates or consummation of
any of the transactions contemplated by the Pooling and Servicing
Agreement or the Certificates, or (C) that might materially or
adversely affect the performance by the Trustee of its obligations
under, or the validity or enforceability of the Pooling and Servicing
Agreement and the Certificates.
(v) The execution and delivery of the Pooling and Servicing
Agreement by the Trustee and the performance by the Trustee of its
terms do not conflict with or result in a violation of (a) any law or
regulation of the United States of America or the State of New York
governing the banking or trust powers of the Trustee, or (b) the
articles of association and by-laws of the Trustee.
(vi) No consent, approval or authorization of, filing or
registration with, or notice to, any court or governmental agency or
regulatory authority is required for the Trustee in connection with the
execution and delivery of, performance under, or compliance with, the
Pooling and Servicing Agreement or the Certificates.
(vii) The Certificates have been duly executed, authenticated and
delivered by the Trustee.
(k) The Class A-1 Certificates, Class A-2 Certificates and Class A-3
Certificates shall each have been rated "AAA" by Moody's, and the Class A-4
Certificates and Class A-5 Certificates shall have been rated at least
"AA3" by Moody's.
(l) On the Closing Date, you shall have received, addressed to you,
any additional opinions delivered by counsel pursuant to the request of the
Rating Agency rating the Certificates.
(m) On the Closing Date, counsel for the Underwriters shall have been
furnished with such documents and opinions as they reasonably may require
for the purpose of enabling them to pass upon the issuance and sale of the
Certificates as herein contemplated and related proceedings or in order to
evidence the accuracy and completeness of any of the representations and
warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Seller in connection with the issuance and
sale of the Certificates as herein contemplated shall be satisfactory in
form and substance to you and counsel for the Underwriters.
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7. Indemnification and Contribution. (a) CIT and CITSF will, jointly and
severally, indemnify and hold each Underwriter harmless against any losses,
claims, damages or liabilities, joint or several, to which such Underwriter may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus or preliminary
prospectus supplement, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse each
Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that CIT and CITSF will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission from
any of such documents in reliance upon and in conformity with written
information furnished to the Seller, the Guarantor or CITSF by any Underwriter
through the Representative specifically for use therein it being understood and
agreed that the only such information furnished by any Underwriter consists of
the Underwriters' Information.
(b) Each Underwriter, severally and not jointly, will indemnify and hold
harmless the Seller, the Guarantor and CITSF against any losses, claims, damages
or liabilities to which the Seller, the Guarantor or CITSF may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus or any amendment or supplement
thereto, or any related preliminary prospectus or preliminary prospectus
supplement, or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Seller, the Guarantor or
CITSF by such Underwriter through the Representative specifically for use
therein, and will reimburse any legal or other expenses reasonably incurred by
the Seller, the Guarantor or CITSF in connection with investigating or defending
any such action or claim as such expenses are incurred, it being understood and
-24-
<PAGE>
agreed that only such information furnished by any Underwriter consists of the
Underwriters' Information.
(c) Promptly after receipt by an indemnified party under this Section of
written notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under such subsection. In case any such action is brought against any
indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof and after acceptance by the indemnified party of counsel, the
indemnifying party 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 other than reasonable
costs of investigation. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action.
(d) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above in such proportion as is
appropriate to reflect not only the relative benefits received by the Seller,
the Guarantor and CITSF on the one hand and the Underwriters on the other from
the offering of the Offered Securities but also the relative fault of the
Seller, the Guarantor and CITSF on the one hand and the Underwriters on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Seller, the Guarantor and
CITSF on the one hand and the Underwriters on the other shall be deemed to be in
the same proportion as the total net proceeds from the offering of the Offered
-25-
<PAGE>
Securities (before deducting expenses) received by the Seller, the Guarantor and
CITSF bear to the total underwriting discounts and commissions received by the
Underwriters. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Seller, the Guarantor, CITSF or by the Underwriters
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The amount
paid by an indemnified party as a result of the losses, claims, damages or
liabilities referred to above in this subsection (d) shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any action or claim which is the
subject of this subsection (d). Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Certificates
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this subsection (d) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(e) The obligations of the Seller, the Guarantor and CITSF under this
Section shall be in addition to any liability which the Seller, the Guarantor
and CITSF may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
director of the Seller, the Guarantor or CITSF, to each officer of the Seller,
the Guarantor or CITSF who has signed the Registration Statement and to each
person, if any, who controls the Seller, the Guarantor or CITSF within the
meaning of the Act.
8. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Seller, the Guarantor and CITSF or their respective officers and of the
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation or statement as to the results
thereof, made by or on behalf of any Underwriter, the Seller, the Guarantor,
-26-
<PAGE>
CITSF or any of their respective representatives, officers or directors or any
controlling person, and will survive delivery of and payment for the
Certificates. If this Agreement is terminated pursuant to Section 9 or if for
any reason the purchase of the Certificates by the Underwriters is not
consummated, the Seller, the Guarantor and CITSF shall remain responsible for
the expenses to be paid or reimbursed by it pursuant to Section 5 hereof and the
respective obligations of the Seller, the Guarantor, CITSF and the Underwriters
pursuant to Section 7 hereof shall remain in effect. If the purchase of the
Certificates by the Underwriters is not consummated for any reason other than
solely because of the termination of this Agreement pursuant to Section 9 or the
occurrence of any event specified in clause (iii), (iv) or (v) of Section 6(d)
hereof, the Seller, the Guarantor and CITSF will reimburse the Underwriters for
all out-of-pocket expenses (including fees and disbursements of counsel)
reasonably incurred by them in connection with the offering of the Certificates.
9. Failure to Purchase the Certificates. If any Underwriter or Underwriters
default in their obligations to purchase Certificates hereunder and the
aggregate principal amount of the Certificates that such defaulting Underwriter
or Underwriters agreed but failed to purchase does not exceed 10% of the total
principal amount of the Certificates, you may make arrangements satisfactory to
the Seller, the Guarantor and CITSF for the purchase of such Certificates by
other persons, including any of the Underwriters, but if no such arrangements
are made by the Closing Date, the non-defaulting Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the Certificates that such defaulting Underwriters agreed but failed to
purchase. If the Underwriter or Underwriters so default and the aggregate
principal amount of the Certificates with respect to such default or defaults
exceed 10% of the total principal amount of the Certificates and arrangements
satisfactory to you, the Seller, the Guarantor and CITSF for the purchase of
such Certificates by other persons are not made within 36 hours after such
default, this Agreement will terminate without liability on the part of any
non-defaulting Underwriter, the Seller, the Guarantor or CITSF, except as
provided in Section 8. As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this Section. Nothing
herein will relieve a defaulting Underwriter or Underwriters from liability for
its default.
10. Notices. All communications hereunder will be in writing and, if sent
to the Representative or the Underwriters, will be mailed, delivered or sent by
facsimile transmission and confirmed to CS First Boston Corporation, Park Avenue
Plaza, 55 East 52nd Street, New York, New York 10055, Attention: Transactions
-27-
<PAGE>
Advisory Group (facsimile number (212) 318-0532); if sent to the Seller, will be
mailed, delivered or sent by facsimile transmission and confirmed to it at The
CIT Group Securitization Corporation II, 650 CIT Drive, Livingston, New Jersey
07039, Attention: James J. Egan, Jr., President (facsimile number (201)
740-5410); if sent to CIT, will be mailed, delivered or sent by facsimile
transmission and confirmed to it by The CIT Group Holdings, Inc., 1211 Avenue of
the Americas, New York, New York 10036, Attention: Joseph J. Carrol, Executive
Vice President and Chief Financial Officer (facsimile number (212) 536-1971);
and if sent to CITSF, will be mailed, delivered or sent by facsimile
transmission and confirmed to it at The CIT Group/Sales Financing, Inc., 650 CIT
Drive, Livingston, New Jersey 07039, Attention: James J. Egan, Jr., President
(facsimile number (201) 740-5410).
11. No Bankruptcy Petition. Each Underwriter agrees that, prior to the date
which is one year and one day after the payment in full of all securities issued
by the Seller or by a trust for which the Seller was the depositor which
securities were rated by any nationally recognized statistical rating
organization, it will not institute against, or join any other person in
instituting against, the Seller any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or other proceedings under any Federal or
state bankruptcy or similar law.
12. Successors. This Agreement will inure to the benefit of and be binding
upon the Underwriters, the Seller, CIT and CITSF and their respective successors
and the officers and directors and controlling persons referred to in Section 7,
and no other person will have any right or obligations hereunder.
13. Representation of Underwriters. The Representative will act for the
several Underwriters in connection with the transactions described in this
Agreement, and any action taken by Representative under this Agreement will be
binding upon all the Underwriters.
14. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to principles
of conflicts of laws.
15. Counterparts. This Agreement may be executed by each of the parties
hereto in any number of counterparts, and by each of the parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
-28-
<PAGE>
If the foregoing is in accordance with your understanding, please sign and
return to us a counterpart hereof, whereupon it will become a binding agreement
among the Seller, CIT, CITSF and the several Underwriters in accordance with its
terms.
Very truly yours,
THE CIT GROUP SECURITIZATION CORPORATION II
By: /s/ Joseph M. Leone
-------------------------------
Name: Joseph M. Leone
Title: Executive Vice President
THE CIT GROUP/SALES FINANCING, INC.
By: /s/ Joseph M. Leone
-------------------------------
Name: Joseph M. Leone
Title: Executive Vice President
THE CIT GROUP HOLDINGS, INC.
By: /s/ Ernest O. Stein
-------------------------------
Name: Ernest O. Stein
Title: EVP, Gen'l Counsel & Secretary
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the date
first above written:
CS FIRST BOSTON CORPORATION
By: /s/ Pilar M. Esperon
-------------------------------
Name: Pilar M. Esperon
Title: Vice President
Acting on behalf of itself
and as the Representative
of the several Underwriters.
-29-
<PAGE>
SCHEDULE I
Initial Principal
Amount of
Underwriter Class A-1 Certificates
----------- ----------------------
CS First Boston Corporation $20,358,000
First Chicago Capital Markets, Inc. $20,358,000
-----------
Total $40,176,000
===========
Initial Principal
Amount of
Underwriter Class A-2 Certificates
----------- ======================
CS First Boston Corporation $14,173,000
First Chicago Capital Markets, Inc. $14,173,000
-----------
Total $28,346,000
===========
Initial Principal
Amount of
Underwriter Class A-3 Certificates
----------- ======================
CS First Boston Corporation $17,239,000
First Chicago Capital Markets, Inc. $17,239,000
-----------
Total $34,478,000
===========
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<PAGE>
Initial Principal
Amount of
Underwriter Class A-4 Certificates
----------- ----------------------
CS First Boston Corporation $ 4,960,000
First Chicago Capital Markets, Inc. $ 4,960,000
-----------
Total $ 9,920,000
===========
Initial Principal
Amount of
Underwriter Class A-5 Certificates
----------- ----------------------
CS First Boston Corporation $ 5,270,000
First Chicago Capital Markets, Inc. $ 5,270,000
-----------
Total $10,540,000
===========
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<PAGE>
SCHEDULE II
Original
Principal Remittance
Class Balance Price % Price $ Rate%
- ----- --------- ------- ------- --------
A-1 40,716,000 99.528125 40,523,871.38 7.70
A-2 28,346,000 99.393750 28,174,152.38 8.05
A-3 34,478,000 99.156250 34,187,091.87 8.40
A-4 9,920,000 99.256250 9,846,220.00 8.95
A-5 10,540,000 99.212500 10,456,997.50 9.05
---------------
Total: $123,188,333.13
Total Price to Public: $123,949,420.63
Total Price to Seller: 123,188,333.13
---------------
Underwriting Discounts
and Commissions: $ 761,087.50
-32-
<PAGE>
Exhibit 4.1
Pooling and Servicing Agreement
<PAGE>
- --------------------------------------------------------------------------------
Manufactured Housing Contract
Senior/Subordinate
Pass-Through Certificates
Series 1995-1
POOLING AND SERVICING AGREEMENT
among
THE CIT GROUP SECURITIZATION CORPORATION II
as Seller,
THE CIT GROUP/SALES FINANCING, INC.
as Servicer,
and
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
not in its individual capacity but solely as Trustee
dated as of February 1, 1995
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS.................................................................. 1
SECTION 1.01. General.................................................. 1
SECTION 1.02. Specific Terms........................................... 1
ARTICLE II
ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACTS................................ 26
SECTION 2.01. Closing................................................. 26
SECTION 2.02. Conveyance of the Initial Contracts..................... 26
SECTION 2.03. Conditions of Closing for the Initial Contracts......... 26
SECTION 2.04. Conveyance of
Subsequent Contracts.................................. 28
SECTION 2.05. Conditions of Closing
for the Subsequent Contracts.......................... 29
SECTION 2.06. Acceptance by Trustee................................... 31
SECTION 2.07. REMIC Designations...................................... 31
SECTION 2.08. REMIC Tax Matters....................................... 31
SECTION 2.09. REMIC Certificate
Maturity Date......................................... 32
ARTICLE III
REPRESENTATIONS AND WARRANTIES............................................... 33
SECTION 3.01. Representations and
Warranties Regarding CITSF............................ 33
SECTION 3.02. Representations and
Warranties Regarding Each
Contract.............................................. 34
SECTION 3.03. Representations and
Warranties Regarding the
Contracts in the Aggregate............................ 39
SECTION 3.04. Representations and
Warranties Regarding the Contract
Files................................................. 40
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<PAGE>
SECTION 3.05. Repurchase of Contracts
or Substitution of Contracts for
Breach of Representations and
Warranties.......................................... 41
ARTICLE IV
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS................. 44
SECTION 4.01. Custody of Contracts.................................. 44
SECTION 4.02. Filings............................................... 45
SECTION 4.03. Name Change or
Relocation.......................................... 46
.
SECTION 4.04. Chief Executive
Office.............................................. 47
SECTION 4.05. Costs and Expenses.................................... 47
ARTICLE V
SERVICING OF CONTRACTS ...................................................... 48
SECTION 5.01. Responsibility for
Contract Administration.............................. 48
SECTION 5.02. Standard of Care....................................... 48
SECTION 5.03. Records................................................ 48
SECTION 5.04. Inspection; Computer
Tape................................................. 49
SECTION 5.05. Certificate Account and
Pre-Funding Account.................................. 49
SECTION 5.06. Enforcement............................................ 54
SECTION 5.07. Trustee to Cooperate................................... 55
SECTION 5.08. Costs and Expenses..................................... 56
SECTION 5.09. Maintenance of
Insurance............................................ 56
SECTION 5.10. REMIC Compliance........................................ 58
SECTION 5.11. Repossession............................................ 60
SECTION 5.12. Retitling............................................... 60
-ii-
<PAGE>
ARTICLE VI
REPORTS...................................................................... 62
SECTION 6.01. Monthly Reports to the
Trustee............................................... 62
SECTION 6.02. Certificate of
Servicing Officer..................................... 62
SECTION 6.03. Other Data.............................................. 62
SECTION 6.04. Annual Report of
Accountants........................................... 63
SECTION 6.05. Statements to
Certificateholders.................................... 63
ARTICLE VII
SERVICE TRANSFER............................................................. 65
SECTION 7.01. Event of Termination.................................... 65
SECTION 7.02. Transfer................................................ 66
SECTION 7.03. Trustee to Act;
Appointment of Successor.............................. 67
SECTION 7.04. Notification to
Certificateholders and to
Moody's............................................... 67
SECTION 7.05. Effect of Transfer...................................... 68
SECTION 7.06. Transfer of Accounts. .................................. 68
ARTICLE VIII
DISTRIBUTIONS AND WITHDRAWALS FROM
CERTIFICATE ACCOUNT.......................................................... 69
SECTION 8.01. Monthly Distributions................................... 69
SECTION 8.02. Permitted Withdrawals
from the Certificate Account.......................... 73
SECTION 8.03. Repurchase Option....................................... 74
SECTION 8.04. Monthly Advances by the Servicer........................ 75
ARTICLE IX
THE CERTIFICATES............................................................. 77
SECTION 9.01. The Certificates........................................ 77
-iii-
<PAGE>
SECTION 9.02. Registration of
Transfer and Exchange of
Certificates.......................................... 78
SECTION 9.03. No Charge; Disposition
of Void Certificates.................................. 84
SECTION 9.04. Mutilated, Destroyed,
Lost or Stolen Certificates........................... 85
SECTION 9.05. Persons Deemed Owners................................... 85
SECTION 9.06. Access to List of
Certificateholders' Names and
Addresses............................................. 85
SECTION 9.07. Authenticating Agents................................... 86
ARTICLE X
INDEMNITIES.................................................................. 87
SECTION 10.01. Liabilities to
Obligors............................................. 87
SECTION 10.02. Tax Indemnification.................................... 87
SECTION 10.03. Servicer's
Indemnities.......................................... 87
SECTION 10.04. Operation of
Indemnities.......................................... 87
ARTICLE XI
THE TRUSTEE.................................................................. 89
SECTION 11.01. Duties of Trustee...................................... 89
SECTION 11.02. Certain Matters
Affecting the Trustee................................ 90
SECTION 11.03. Trustee Not Liable for
Certificates or Contracts............................ 91
SECTION 11.04. Rights of
Certificateholders to Direct
Trustee and to Waive Events of
Termination.......................................... 92
SECTION 11.05. Servicer to Pay
Trustee's Fees and Expenses......................... 93
-iv-
<PAGE>
SECTION 11.06. Eligibility
Requirements for Trustee............................ 93
SECTION 11.07. Resignation or Removal
of Trustee.......................................... 94
SECTION 11.08. Successor Trustee..................................... 95
SECTION 11.09. Merger or
Consolidation of Trustee............................ 95
SECTION 11.10. Obligor Claims........................................ 95
SECTION 11.11. Separate Trustees and
Co-Trustees......................................... 97
SECTION 11.12. Trustee May Own
Certificates........................................ 98
SECTION 11.13. Agents of Trustee..................................... 98
ARTICLE XII
MISCELLANEOUS................................................................ 99
SECTION 12.01. Servicer Not To
Resign. ........................................... 99
SECTION 12.02. Maintenance of Office
or Agency........................................... 99
SECTION 12.03. Termination........................................... 99
SECTION 12.04. Acts of
Certificateholders................................. 102
SECTION 12.05. Calculations......................................... 103
SECTION 12.06. Assignment or
Delegation by the Servicer;
Merger or Consolidation of the
Company, CITSF or the Servicer..................... 103
SECTION 12.07. Amendment............................................ 104
SECTION 12.08. Contribution of
Assets............................................. 106
SECTION 12.09. Notices.............................................. 106
SECTION 12.10. Merger and
Integration........................................ 107
SECTION 12.11. Reliance on Credit................................... 108
-v-
<PAGE>
SECTION 12.12. No Bankruptcy
Petition........................................... 108
SECTION 12.13. Headings............................................. 108
SECTION 12.14. Governing Law........................................ 108
SECTION 12.15. Counterparts......................................... 109
Exhibit A-1. Form of Class A-1 Certificates.............................. A-1
Exhibit A-2. Form of Class A-2 Certificates.............................. A-2
Exhibit A-3. Form of Class A-3 Certificates.............................. A-3
Exhibit B-1. Form of Class A-4 Certificate............................... B-1
Exhibit B-2. Form of Class A-5 Certificate............................... B-2
Exhibit C. Form of Class R Certificate................................. C-1
Exhibit D-1. Form of Assignment of Initial Contracts..................... D-1
Exhibit D-2. Form of Subsequent Transfer Agreement....................... D-2
Exhibit E-1. Certificate of Officers of CITSF
(Initial Contracts)....................................... E-1
Exhibit E-2. Certificate of Officers of CITSF
(Subsequent Contracts).................................... E-2
Exhibit F. Form of Opinion of Counsel for
CITSF..................................................... F-1
Exhibit G-1. Form of Trustee's Acknowledgement and
Certification (Initial Contracts)......................... G-1
Exhibit G-2. Form of Trustee's Acknowledgement and
Certification (Subsequent Contracts)...................... G-1
Exhibit H. Certificate of Servicing Officers........................... H-1
Exhibit I-1. Certificate Regarding Repurchased
Contracts................................................. I-1
Exhibit I-2. Certificate Regarding Substituted
Contracts................................................. I-2
Exhibit J. [Reserved].................................................. J-1
Exhibit K-1. [Reserved].................................................. K-1
Exhibit K-2. [Reserved].................................................. K-2
-vi-
<PAGE>
Exhibit L. Form of Monthly Report to
Certificateholders........................................ L-1
Exhibit M. Form of Transfer Affidavit.................................. M-1
Exhibit N. List of Initial Contracts................................... N-1
Exhibit O. Form of Subsequent Sale and Purchase
Agreement................................................. O-1
-vii-
<PAGE>
AGREEMENT, dated as of February 1, 1995, among The CIT Group Securitization
Corporation II, as seller (together with its permitted successors and assigns,
the "Company"), 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 The Chase Manhattan Bank (National Association), a national
banking association organized and existing under the laws of United States, not
in its individual capacity but solely as Trustee (together with permitted
successors and assigns, the "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.
"Accrual Period" means, with respect to any Remittance Date, the period
commencing on the most recent Remittance Date on which interest has been paid to
but excluding the following Remittance Date (or, in the case of the initial
Remittance Date the period from the Closing Date to but excluding such initial
Remittance Date).
"Addition Notice" means, with respect to the transfer of Subsequent
Contracts to the Trust pursuant to Section 2.04 of this Agreement, written
notice, which shall be given to the Trustee and the Rating Agency not later than
two Business Days prior to the related Subsequent Transfer Date, of the
Company's designation of Subsequent Contracts to be sold to the Trust and the
aggregate Stated Principal Balance of such Subsequent Contracts.
"Advance Payment" means any payment by an Obligor in advance of the Due
Period in which it would be due under such Contract and which payment is not a
Principal Prepayment; provided, however, that any payment by an Obligor of an
amount due 11 or more months after the beginning of the Due Period in which it
<PAGE>
is received shall be considered to be due for purposes of this Agreement, 11
months from the date of payment by such Obligor.
"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.
"Agreement" means this Pooling and Servicing Agreement.
"Amount Available" means, as to any Remittance Date, an amount equal to (a)
the amount on deposit in the Certificate Account as of the close of business on
the last day of the preceding Due Period (or which would have been on deposit on
such day but for the operation of the third to last sentence of Section
5.05(a)), any amounts deposited in the Certificate Account on or prior to such
Remittance Date from funds on deposit in the Pre-Funding Account pursuant to
Section 5.05(b)(iii), and the amounts deposited in the Certificate Account
pursuant to Section 3.05(a), and (v) less (b) the sum, as of the close of
business on the Business Day preceding such Remittance Date, of (i) aggregate
Repossession Profits, (ii) the Amount Held for Future Distribution and (iii)
amounts permitted to be withdrawn by the Servicer from the Certificate Account
in respect of the Contracts pursuant to clauses (b), (c), (d), (e), (f), (h) (to
the extent permitted by Section 5.05(a)) and (i), inclusive, of Section 8.02.
"Amount Held for Future Distribution" means, as to any Remittance Date, the
total of the amounts on deposit (or which would have been on deposit on such day
but for the operation of the third to last sentence of Section 5.05(a)) in the
Certificate Account as of the close of business on the last day of the related
Due Period on account of Advance Payments in respect of such Due Period (whether
or not received in such Due Period).
"Applicants" has the meaning assigned in Section 9.06.
"Appraised Value" means, with respect to any Manufactured Home, the value
of such Manufactured Home as determined by a professional appraiser (who may be
an employee of CITSF).
"Assumption Fee" means any assumption or other similar fee paid by the
Obligor on a Contract.
-2-
<PAGE>
"Authenticating Agent" means any authenticating agent appointed pursuant to
Section 9.07.
"Book-Entry Certificate" means any Certificate registered in the name of
the Depository or its nominee, ownership of which is reflected on the books of
the Depository or on the books of a person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
"Business Day" means any day other than (a) a Saturday or a Sunday or (b)
another day on which national banking institutions in the State of Oklahoma or
the State of New York are authorized or obligated by law, executive order, or
governmental decree to be closed.
"Certificate" means a Manufactured Housing Contract Senior/Subordinate
Pass-Through Certificate Series 1995-1 executed and delivered by the Trustee
substantially in the form of Exhibits A, B or C.
"Certificate Account" means a separate trust account maintained in the name
of the Trust in an Eligible Institution.
"Certificate Owner" means the person who is the beneficial owner of a
Book-Entry Certificate.
"Certificate Register" means the register maintained pursuant to Section
9.02.
"Certificate Registrar" means the registrar appointed pursuant to Section
9.02.
"Certificateholder" or "Holder" means the person in whose name a
Certificate is registered on the Certificate Register, except that, solely for
the purposes of giving any consent, waiver, request or demand pursuant to this
Agreement, any Senior Certificate, Class A-4 Certificate or any Class A-5
Certificate registered in the name of the Contract Seller, the Servicer or any
Affiliate of the Contract Seller or the Servicer shall be deemed not to be
outstanding, and the Percentage Interest evidenced thereby shall not be taken
into account in determining whether the requisite Percentage Interest necessary
to effect any such consent, request, waiver or demand has been obtained unless
all the Senior Certificates, all the Class A-4 Certificates or all the Class A-5
Certificates, as the case may be, are held by such Persons; provided, however,
that in determining whether the Trustee shall be protected in relying upon any
such consent, waiver, request or demand only Senior Certificates, Class A-4
Certificates and Class A-5 Certificates which the Trustee knows to be so owned
shall be so disregarded.
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"CITCF-NY" means The CIT Group/Consumer Finance, Inc.(NY), a wholly-owned
subsidiary of Holdings.
"CITSF" means The CIT Group/Sales Financing Inc., and its successors in
interest as permitted hereunder.
"Class A-1 Cross-over Date" means the point in time on the Remittance Date
on which the Class A-1 Principal Balance (after giving effect to the
distributions and adjustments on the Class A-1 Certificates on such Remittance
Date) is reduced to zero.
"Class A-2 Cross-over Date" means the point in time on the Remittance Date
on which the Class A-2 Principal Balance (after giving effect to the
distributions and adjustments on the Class A-2 Certificates on such Remittance
Date) is reduced to zero.
"Class A-3 Cross-over Date" means the point in time on the Remittance Date
on which the Class A-3 Principal Balance (after giving effect to the
distributions and adjustments on the Class A-3 Certificates on such Remittance
Date) is reduced to zero.
"Class A-4 Cross-over Date" means the point in time on the Remittance Date
on which the Class A-4 Principal Balance (after giving effect to the
distributions and adjustments on the Class A-4 Certificates on such Remittance
Date) is reduced to zero.
"Class A-4 Formula Principal Distribution Amount" means, as to any
Remittance Date on or after the Class A-3 Cross-Over Date, an amount equal to
the sum of (a) the Formula Principal Distribution Amount and (b) the Unpaid
Class A-4 Principal Shortfall; provided, however, that on the Class A-3
Cross-over Date, the balance, if any, after reducing the Class A- 3 Principal
Balance to zero of any amounts that would have been distributable on such date
pursuant to clause (c) of the term "Senior Certificate Formula Distribution
Amount" (assuming a sufficient Amount Available) shall instead be included in
clause (a) of this definition; provided, further, that the aggregate of all
amounts distributed pursuant to clauses (a) and (b) of this definition shall not
exceed the Original Class A-4 Principal Balance.
"Class A-5 Formula Principal Distribution Amount" means, as to any
Remittance Date, an amount equal to (a) on and after the Class A-4 Cross-over
Date, the sum of (i) the Formula Principal Distribution Amount and (ii) the
Unpaid Class A-5 Principal Shortfall and (b) prior to the Class A-4 Cross-over
Date, the Class A-5 Principal Liquidation Loss Amount; provided, however, that
on the Class A-4 Cross-over Date, the balance of any amounts that would have
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been distributable on such date pursuant to clause (c) of the term "Senior
Certificate Formula Distribution Amount" (assuming a sufficient Amount
Available) shall instead be included in clause (a) of this definition; provided,
further, that the aggregate of all amounts distributed pursuant to clauses (a),
(b) and (c) of this definition shall not exceed the Original Class A-5 Principal
Balance.
"Class A-4 Interest Distribution Amount" means, as to any Remittance Date,
the sum of (a) interest accrued during the related Accrual Period at the Class
A-4 Remittance Rate on the Class A-4 Principal Balance (after giving effect to
the reduction thereof on the preceding Remittance Date) and (b) the aggregate
Unpaid Class A-4 Interest Shortfall, if any, for such Remittance Date.
"Class A-5 Interest Distribution Amount" means, as to any Remittance Date,
the sum of (a) interest accrued during the related interest Accrual Period at
the Class A-5 Remittance Rate on the Class A-5 Principal Balance (after giving
effect to the reduction thereof on the preceding Remittance Date) and (b) the
aggregate Unpaid Class A-5 Interest Shortfall, if any, for such Remittance Date.
"Class A-4 Interest Shortfall" means, as to any Remittance Date, any amount
by which the amount distributed to Holders of Class A-4 Certificates on such
Remittance Date pursuant to clause (4) of Section 8.01(c) is less than the Class
A-4 Interest Distribution Amount.
"Class A-5 Interest Shortfall" means, as to any Remittance Date, any amount
by which the amount distributed to Holders of Class A-5 Certificates on such
Remittance Date pursuant to clause (6) of Section 8.01(c), together with any
Guarantee Payment, is less than the Class A-5 Interest Distribution Amount.
"Class A-5 Principal Liquidation Loss Amount" means, as to any Remittance
Date, the amount, if any, by which the sum of the Class A-1 Principal Balance,
Class A-2 Principal Balance, Class A-3 Principal Balance, Class A-4 Principal
Balance and Class A-5 Principal Balance for such Remittance Date (after giving
effect to all distributions of principal made or to be made on such Remittance
Date) exceeds the sum of the Pool Stated Principal Balance for such Remittance
Date 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.
"Class A-1 Principal Balance" means, as to any Remittance Date, the
Original Class A-1 Principal Balance less all amounts previously distributed to
Holders of Class A-1 Certificates on account of principal.
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"Class A-2 Principal Balance" means, as to any Remittance Date, the
Original Class A-2 Principal Balance less all amounts previously distributed to
Holders of Class A-2 Certificates on account of principal.
"Class A-3 Principal Balance" means, as to any Remittance Date, the
Original Class A-3 Principal Balance less all amounts previously distributed to
Holders of Class A-3 Certificates on account of principal.
"Class A-4 Principal Balance" means, as to any Remittance Date, the
Original Class A-4 Principal Balance less all amounts previously distributed to
Holders of Class A-4 Certificates on account of principal.
"Class A-5 Principal Balance" means, as to any Remittance Date, the
Original Class A-5 Principal Balance less all amounts previously distributed to
Holders of Class A-5 Certificates on account of Principal.
"Class A-4 Principal Shortfall" means, as to any Remittance Date, any
amount by which the amount distributed to Holders of Class A-4 Certificates on
such Remittance Date net of the amount distributed in respect of the Class A-4
Interest Distribution Amount (after giving effect to all distributions of
principal on such Remittance Date) pursuant to clause (5) of Section 8.01(c) is
less than the Class A-4 Formula Principal Distribution Amount for such
Remittance Date.
"Class A-5 Principal Shortfall" means, as to any Remittance Date, any
amount by which the amount distributed to Holders of Class A-5 Certificates on
such Remittance Date net of the amount distributed in respect of the Class A-5
Interest Distribution Amount (after giving effect to all distributions of
principal on such Remittance Date) pursuant to clause (6) of Section 8.03(c),
together with any Guarantee Payment, is less than the Class A-5 Formula
Principal Distribution Amount for such Remittance Date.
"Class A-1 Remittance Rate" means 7.70% per annum, computed on the basis of
a 360-day year of twelve 30-day months, subject to a maximum rate equal to
weighted average of the Net Contract Rates of the Contracts as of the first day
of the related Due Period.
"Class A-2 Remittance Rate" means 8.05% per annum, computed on the basis of
a 360-day year of twelve 30-day months, subject to a maximum rate equal to
weighted average of the Net Contract Rates of the Contracts as of the first day
of the related Due Period.
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"Class A-3 Remittance Rate" means 8.40% per annum, computed on the basis of
a 360-day year of twelve 30-day months, subject to a maximum rate equal to
weighted average of the Net Contract Rates of the Contracts as of the first day
of the related Due Period.
"Class A-4 Remittance Rate" means 8.95% per annum, computed on the basis of
a 360-day year of twelve 30-day months, subject to a maximum rate equal to
weighted average of the Net Contract Rates of the Contracts as of the first day
of the related Due Period.
"Class A-5 Remittance Rate" means 9.05% per annum, computed on the basis of
a 360-day year of twelve 30-day months, subject to a maximum rate equal to the
weighted average of the Net Contract Rate of the Contracts as of the first day
of the related Due Period.
"Class R Certificate" means any one of the Certificates executed by the
Trustee and authenticated by the Authenticating Agent substantially in the form
set forth in Exhibit C hereto and evidencing an interest designated as a
"residual interest" in the Trust REMIC for purposes of the REMIC Provisions.
"Class R Certificateholder" means the person in whose name a Class R
Certificate is registered on the Certificate Register.
"Closing Date" means February 23, 1995.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means The CIT Group Securitization Corporation II and its
permitted successors in interest.
"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.
"Contract(s)" means one or more of the Initial Contracts and/or Subsequent
Contracts.
"Contract File" means, as to each Contract (a) the original of the
Contract, (b) either (i) the original title document for the related
Manufactured Home 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
Manufactured Home is located do not provide for the issuance of title documents
for manufactured housing, other evidence of ownership of the related
Manufactured Home which is customarily relied upon in such jurisdiction as
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evidence of title to a manufactured housing unit; (c) evidence of one or more of
the following types of perfection of the security interest in the related
Manufactured Home 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 manufactured
housing unit as is customarily relied upon in the jurisdiction in which the
related Manufactured Home is located; (d) in the case of a Land-Secured
Contract, the related Mortgage with evidence of the recording thereon; (e) each
assignment of the Contract evidencing the chain of title of the Contract from
the originator thereof (if other than CITSF) to CITSF; and (f) any extension,
modification or waiver agreement(s).
"Contract Holders' Errors and Omissions Protection Policy" means the
contract holders' errors and omissions policy maintained by the Servicer or any
similar replacement policy, if any, pursuant to Section 5.09(c).
"Contract Rate" means, with respect to any particular Contract, the rate of
interest specified in that Contract.
"Contract Seller" means CITSF.
"Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of the execution of this Agreement is located at the
address set forth in Section 12.09.
"Cut-off Date" means February 1, 1995.
"Cut-off Date Pool Principal Balance" means the aggregate of the Cut-off
Date Principal Balances of the Initial Contracts.
"Cut-off Date Principal Balance" means, as to any Initial Contract, the
unpaid principal balance thereof at the Cut-off Date.
"Defaulted Contract" means, with respect to any Due Period, a 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 that any Contract
in respect of which such delinquencies were permitted by the Soldiers' and
Sailors' Relief Act of 1940 shall not be deemed a Defaulted Contract.
"Depository" means the initial Depository, The Depository Trust Company,
the nominee of which is CEDE & CO., and any permitted successor depository. The
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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 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.
"Determination Date" means the third Business Day prior to each Remittance
Date during the term of this Agreement, on which date the Servicer shall
determine the Amount Available and the amounts to be distributed on the
Certificates pursuant to Section 8.01 hereof and the amount of the Guarantee
Payment, if any, to be made on each Remittance Date.
"Due Date" means, as to any Contract, the date of the month on which the
monthly payment for such Contract is due.
"Due Period" means, as to any Remittance Date, the calendar month preceding
the month of such Remittance Date.
"Electronic Ledger" means the electronic master record of installment sales
contracts of the Servicer.
"Eligible Institution" means the Trustee or any depository institution or
trust company (which may be the Trustee or an Affiliate of the Trustee)
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
(presently administered by the Federal Deposit Insurance Corporation), which is
subject to supervision and examination by federal or state authorities and
(unless the Certificate Account or Pre-Funding Account is a trust account
maintained in the corporate trust department of such depository institution)
whose short term securities or unsecured long-term debt has been rated P-1 or
higher by Moody's in the case of short term securities, or in one of the two
highest rating categories by Moody's in the case of unsecured long-term debt.
"Eligible Investments" has the meaning assigned in Section 5.05(d).
"Eligible Servicer" means CITSF or any 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
manufactured housing installment sales contracts and installment loan
agreements.
"Eligible Substitute Contract" means, as to any Replaced Contract for which
such Eligible Substitute Contract is being substituted pursuant to Section
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3.05(b), a Contract that (a) as of the date of its substitution, satisfies all
of the representations and warranties (which, except when expressly stated to be
as of origination, shall be deemed to be determined as of the date of its
substitution rather than as of the Cut-off Date or any Subsequent Cut-off Date,
as the case may be, or the Closing Date or any Subsequent Transfer Date, as the
case may be) in Section 3.02 and does not cause any of the representations and
warranties in Section 3.03, to the extent previously applicable to the Replaced
Contract, and after giving effect to such substitution, to be incorrect, (b)
after giving effect to the payment due in the month of such substitution, has a
Stated Principal Balance that is not greater than the Stated Principal Balance
of such Replaced Contract, (c) has a Contract Rate that is at least equal to the
Contract Rate of such Replaced Contract and (d) has a remaining term to stated
maturity that is not greater than the remaining term to stated maturity of the
Replaced Contract. Notwithstanding the foregoing, in the event that on any date
more than one Eligible Substitute Contract is substituted for one or more
Replaced Contracts, the requirement set forth in clause (b) above with respect
to the Stated Principal Balance may be satisfied if the aggregate of the Stated
Principal Balances of such Eligible Substitute Contracts is not greater than the
aggregate of the Stated Principal Balances of such Replaced Contracts, the
requirement set forth in clause (c) above with respect to the Contract Rate may
be satisfied if the weighted average Contract Rate of such Eligible Substitute
Contracts is at least equal to the weighted average Contract Rate of such
Replaced Contracts; and the requirement set forth in clause (d) above with
respect to remaining term to stated maturity may be satisfied if the weighted
average remaining term to stated maturity of such Eligible Substitute Contracts
is not greater than the weighted average remaining term to stated maturity of
such Replaced Contracts.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Termination" has the meaning assigned in Section 7.01.
"Extension Fee" means any extension or other similar fee paid by the
Obligor on a Contract.
"Final Remittance Date" means the Remittance Date on which the final
distribution in respect of Certificates is made pursuant to Section 12.03.
"Force-Placed Insurance Premium" means any premium for hazard insurance
purchased by CITSF which has been added to the principal balance of the related
Contract by CITSF prior to the Cut-off Date in the case of an Initial Contract
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or, in the case of a Subsequent Contract, prior to the related Subsequent
Cut-off Date.
"Formula Principal Distribution Amount" means, as to any Remittance Date,
the sum of (i) any payments in respect of principal received during such Due
Period; (ii) all Partial Principal Prepayments applied and all Principal
Prepayments in Full received during such preceding Due Period; (iii) the Stated
Principal Balance of each Contract that became a Liquidated Contract during such
preceding Due Period; and (iv) the Stated Principal Balance of each Contract
which was repurchased immediately prior to such Remittance Date pursuant to
Section 3.05.
"Guarantee Fee" means 1/12 of the product of 0.25% and the Pool Stated
Principal Balance at the end of the second Due Period preceding such Remittance
Date (or, in the case of the first Remittance Date, the Cut-off Date).
"Guarantee Payment" means the amount, if any, by which the sum of the (x)
Class A-5 Interest Distribution Amount and (y) Class A-5 Formula Principal
Distribution Amount exceeds the remaining Amount Available after the
distribution of interest and principal payable to the Senior Certificateholders
and the Class A-4 Certificateholders pursuant to Section 8.01(c).
"Hazard Insurance Policy" means, with respect to each Contract, the policy
of fire and extended coverage insurance (and federal flood insurance, if the
related Manufactured Home was, at the time of origination thereof, and continues
to be, located in a federally designated special flood hazard area) required to
be maintained for the related Manufactured Home, as provided in Section 5.09,
and which, as provided in said Section 5.09, may be a blanket policy maintained
by the Servicer in accordance with the terms and conditions of said Section
5.09.
"Holder" has the same meaning as "Certificateholder".
"Holdings" means The CIT Group Holdings, Inc., a Delaware corporation.
"Independent" means, with respect to any specified Person, any person or
firm rendering an opinion on the Closing Date or any Person who (a) is in fact
independent of the specified Person, (b) does not have any direct financial
interest or any material indirect financial interest in the specified Person or
any Affiliate of the specified Person (other than acting as outside counsel for
the specified Person or such Affiliate), and (c) is not connected with the
specified Person as an officer, employee, promoter, underwriter, trustee,
partner, director (other than a law firm a member of which is a director) or
person performing similar functions. Except with respect to any person or firm
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rendering an opinion at the Closing, whenever it is herein provided that any
Independent Person's opinion or certificate shall be furnished to the Trustee,
such person shall be approved by the Trustee and such opinion or certificate
shall state that the signer has read this definition and that the signer is
independent within the meaning hereof.
"Initial Contract(s)" means one or more of the manufactured housing
installment sales contracts and installment loan agreements described in the
List of Initial Contracts (including Land-Secured Contracts), which constitute
part of the corpus of the Trust, and which Contracts are to be assigned by the
Company to the Trustee on the Closing Date; 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 payments which are received pursuant thereto on
and after the Cut-off Date, but excluding any payments which are received
pursuant thereto prior to the Cut-off Date.
"Initial Pool Principal Balance" means the sum of (i) the Cut-off Date Pool
Principal Balance and (ii) the aggregate Stated Principal Balances of all
Subsequent Contracts added to the Trust as of their respective Subsequent
Cut-off Dates.
"Insurance Proceeds" means proceeds paid by any insurer pursuant to any
insurance policy or contract relating to a Contract.
"Land-Secured Contract" means a Contract that is secured by (i) a security
interest in a Manufactured Home, and (ii) a Mortgage on real estate on which
such Manufactured Home is situated.
"Late Payment Fees" means late payment fees paid by Obligors on Contracts.
"Limited Guarantee" means the Limited Guarantee dated as of February 1,
1995 made by Holdings in favor of the Trustee for the benefit of the Class A-5
Certificateholders required pursuant to Section 2.03.
"Liquidated Contract" means any Defaulted 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 Defaulted Contract in
respect of which the related Manufactured Home and, in the case of Land-Secured
Contracts, Mortgaged Property, have been realized upon and disposed of and the
proceeds of such disposition have been received, shall be deemed to be a
Liquidated Contract; provided, however, that a Liquidated Contract which has
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been repurchased pursuant to Section 3.05(a), or as to which an Eligible
Substitute Contract has been substituted pursuant to Section 3.05(b), in either
case on or before the Business Day immediately preceding the Remittance Date
following the Due Period in which such Contract becomes a Liquidated Contract,
shall be deemed not to have become a Liquidated Contract during such Due Period.
"Liquidation Expenses" means out-of-pocket expenses (exclusive of any
overhead expenses) which are incurred by the Servicer in connection with the
liquidation of any Defaulted Contract, on or prior to the date on which the
related Manufactured Home and, in the case of Land-Secured Contracts, Mortgaged
Property, are disposed of, including, without limitation, legal fees and
expenses, and any related and unreimbursed expenditures for property taxes,
property preservation or restoration of the property to marketable condition.
"Liquidation Proceeds" means cash (including Insurance Proceeds) received
in connection with the liquidation of Defaulted Contracts, whether through
repossession, foreclosure sale or otherwise, including any rental income
realized from the repossessed Manufactured Home.
"List of Initial Contracts" means the list attached hereto as Exhibit N
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 Cut-off Date Principal Balance, (ii) the amount of the
monthly payment due from the Obligor as of the Cut-off Date, (iii) the Contract
Rate as of the 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.
"Loan-to-Value Ratio" means, with respect to any Contract, the original
principal amount thereof divided by the Original Value of the Manufactured Home
plus, in the case of a Land-Secured Contract, the Original Value of the
Mortgaged Property other than the Manufactured Home.
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"Manufactured Home" means a unit of manufactured housing, including all
accessions thereto, securing the indebtedness of the Obligor under the related
Contract.
"Monthly Advance" means, as to any Remittance Date, an amount of cash equal
to the difference between interest due on the Contracts at the related Contract
Rate on their respective Due Dates during the related Due Period and the amount
of interest received on such Contracts during the related Due Period, exclusive
of any such payment which the Servicer has determined would be a Nonrecoverable
Advance if an advance in respect of such payment were made by the Servicer.
"Monthly Advance Reimbursement Amount" means any amount received or deemed
to be received by the Servicer pursuant to Section 8.04 in reimbursement of a
Monthly Advance made out of its own funds.
"Monthly Report" has the meaning assigned in Section 6.05. The forms of the
Monthly Report for the Certificates are attached as Exhibit L hereto.
"Monthly Servicing Fee" means, as to any Remittance Date, one-twelfth of
the product of 1.00% and the Pool Stated Principal Balance as of the end of the
Due Period second preceding such Remittance Date (or, in the case of the first
Remittance Date, the Cut-off Date).
"Moody's" means Moody's Investors Service, Inc.
"Mortgage" means the mortgage, deed of trust or similar instrument creating
a first or second lien on an estate in fee simple in the real property securing
a Contract.
"Mortgaged Property" means the property subject to a Mortgage.
"Net Contract Rate" means, with respect to any Contract, the Contract Rate
of such Contract less the Monthly Servicing Fee allocable to such Contract for
the related Due Period.
"Net Liquidation Loss" means, with respect to a Liquidated Contract, the
amount, if any, by which (a) the outstanding principal balance of such
Liquidated Contract plus accrued and unpaid interest thereon to the date on
which such Liquidated Contract became a Liquidated Contract exceeds (b) the Net
Liquidation Proceeds for such Liquidated Contract.
"Net Liquidation Proceeds" means, as to any Liquidated Contract,
Liquidation Proceeds net of Liquidation Expenses.
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"Nonrecoverable Advance" means any advance made or proposed to be made
pursuant to Section 8.04, which the Servicer believes, in its good faith
judgment, is not, or if made would not be, ultimately recoverable from late
payments, Liquidation Proceeds or otherwise. 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 Trustee and stating the reasons for such determination.
"NRSRO" means any nationally recognized statistical rating organization.
"Obligor" means each Person who is indebted under a Contract.
"Offered Certificates" means the Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates and Class A-5
Certificates, collectively.
"Officers' Certificate" means a certificate signed by the chairman of the
board, president or any vice president of the Servicer and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion of counsel who may be counsel
for the Servicer, except that any opinion of counsel relating to the
qualification of the Trust as a REMIC or compliance with the REMIC Provisions
must be an opinion of counsel Independent with respect to the Company and the
Servicer.
"Original Class A-1 Principal Balance" means $40,716,000.
"Original Class A-2 Principal Balance" means $28,346,000.
"Original Class A-3 Principal Balance" means $34,478,000.
"Original Class A-4 Principal Balance" means $9,920,000.
"Original Class A-5 Principal Balance" means $10,540,000.
"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 Offered
Certificates, which amount is $39,433,297, pursuant to Section 5.05(b)(i).
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"Original Value" means (a) with respect to a Land- Secured Contract, the
sum of the original Appraised Value of the Manufactured Home plus the Appraised
Value of the real estate securing such Contract, if available, or the total
delivered sales price for such Manufactured Home, plus the Appraised Value of
the real estate securing such Contract, if available, plus in either case taxes,
fees and insurance, (b) with respect to any Manufactured Home that was new at
the time the related Contract was originated, the total delivered sale price for
such Manufactured Home, plus taxes, fees and insurance, and (c) with respect to
any Manufactured Home that was used at the time the related Contract was
originated, the lesser of the total delivered sales price or the Appraised Value
of such Manufactured Home, in each case, plus taxes, fees and insurance.
"Outstanding Amount Advanced" means, as to any Remittance Date, the
aggregate of all Monthly Advances remitted by the Servicer out of its own funds
pursuant to Section 8.04 less the aggregate of all Monthly Advance Reimbursement
Amounts actually received prior to such Remittance Date.
"Outstanding Contract" means, as to any Due Period, a Contract which was
not the subject of a Principal Prepayment in Full prior to such Due Period,
which did not become a Liquidated Contract prior to such Due Period, which was
not purchased prior to such Due Period pursuant to Section 3.05 and the stated
maturity date (as it existed on the Cut-off Date or the relevant Subsequent
Cut-off Date, as the case may be) of which has not occurred prior to such Due
Period.
"Ownership Interest" means, with respect to any Certificate, any ownership
or security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether direct
or indirect, legal or beneficial.
"Partial Principal Prepayment" means (a) any Principal Prepayment other
than a Principal Prepayment in Full and (b) any cash amount deposited in the
Certificate Account pursuant to the proviso in Section 3.05(a) or pursuant to
Section 3.05(b).
"Paying Agent" has the meaning assigned in Section 8.01(f).
"Percentage Interest" means, as to any Certificate, the percentage interest
evidenced thereby in distributions made on the related Class, such percentage
interest being equal to, (a) in the case of the Senior Certificates, the
percentage (carried to eight places) obtained from dividing the denomination of
such Certificate by the aggregate denomination of all Senior Certificates (which
equals the Original Class A-1 Principal Balance in the case of a Class A-1
Certificate, the Original Class A-2 Principal Balance in the case of a Class A-2
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Certificate, and the Original Class A-3 Principal Balance in the case of a Class
A-3 Certificate), (b) in the case of the Class A-4 Certificates, the percentage
(carried eight places) obtained by dividing the denomination of such Certificate
by the aggregate denomination of all Class A-4 Certificates (which equals the
Original Class A-4 Principal Balance), (c) in the case of the Class A-5
Certificates, the percentage (carried eight places) obtained by dividing the
denomination of such Certificate by the aggregate denomination of all Class A-5
Certificates (which equals the Original Class A-5 Principal Balance) and, (d) in
the case of the Class R Certificates, being equal to the percentage specified on
the face of such Certificate. The aggregate Percentage Interests for each Class
of Certificates shall equal 100%.
"Permitted Transferee" means, as to any Class R Certificateholder or any
other prospective transferee of a Class R Certificate, any Person other than (a)
the United States, a State or any political subdivision thereof, any possession
of the United States, a foreign government, an international organiza-tion, or
any agency or instrumentality of any of the foregoing, (b) an organization
(other than a cooperative described in Section 521 of the Code) which would not
be subject to tax under the Code (including the tax on unrelated business
taxable income, as defined in Section 512(a)(1) of the Code) on any excess
inclusions (as defined in Section 860E(c)(1) of the Code) with respect to any
Class R Certificate, (c) an organization which is engaged in furnishing
electrical energy, or providing telephone service, to persons in rural areas (as
described in Section 1381(a)(2)(C) of the Code), or (d) a Non-U.S. Person. The
terms "United States," "State" and "international organization" shall have the
meanings set forth in Code Section 7701 or any successor provision. A
corporation will not be treated as an instrumentality of the United States or of
any State or political subdivision thereof, if all of the activities are subject
to tax, and, with the exception of the Federal Home Loan Mortgage Corporation, a
majority of its board of directors is not selected by such governmental unit.
"Person" means any individual, corporation, partner- ship, joint venture,
association, joint stock company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political subdivision
thereof.
"Pool Stated Principal Balance" means, as to any Remittance Date, the
aggregate of the Stated Principal Balance of each Contract that was an
Outstanding Contract on the last day of the Due Period.
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"Pre-Funded Amount" means, with respect to any Determination Date, the
amount on deposit in the Pre-Funding Account.
"Pre-Funding Account" means the Pre-Funding Account established in
accordance with Section 5.05(b) hereof and maintained by the Trustee.
"Pre-Funding Earnings" means (i) with respect to the March 15, 1995
Remittance Date, the actual investment earnings earned on the Pre-Funded Amount
during the period beginning on the Closing Date through March 14, 1995
(inclusive), (ii) with respect to the April 15, 1995 Remittance Date, the actual
investment earnings earned on the Pre-Funded Amount during the period beginning
on March 15, 1995 through April 14, 1995 (inclusive), and (iii) with respect to
the May 15, 1995 Remittance Date, the actual investment earnings earned on the
Pre-Funded Amount during the period beginning on April 15, 1995 through May 14,
1995 (inclusive).
"Pre-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 (exclusive of any investment earnings) is less than
$100,000, (ii) the date on which any Event of Termination occurs (iii) the
insolvency of the Company, CITSF, Holdings or CITCF-NY and (iv) the close of
business on the May 15, 1995 Remittance Date.
"Principal Prepayment" means a payment or other recovery of principal on a
Contract (including any rebated portion of Force-Placed Insurance Premiums
received by CITSF on behalf of Obligors and 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 payment date on such Contract) to
reduce the outstanding principal amount due on such Contract prior to the date
or dates on which such principal amount is due.
"Principal Prepayment in Full" means any Principal Prepayment of the entire
principal balance of a Contract.
"Qualified Institutional Buyer" shall have the meaning specified in Rule
144A.
"Rating Agency" means Moody's or any successor thereto; provided that if
Moody's no longer has a rating outstanding on any Class of the Certificates,
then references herein to Moody's shall be deemed to refer to the NRSRO then
rating any Class of the Certificates (or, if more than one such NRSRO is then
rating any Class of the Certificates, to each such NRSRO as may be designated by
the Servicer), and references herein to ratings by or requirements of Moody's
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shall be deemed to have the equivalent meanings with respect to ratings by or
requirements of such NRSRO.
"Record Date" means the last Business Day of the month prior to the month
of the related Remittance Date.
"Registrar" means the registry appointed pursuant to Section 9.02.
"REMIC" means a "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC Certificate Maturity Date" means the "latest maturity date" of the
Senior Certificates, Class A-4 Certificates and Class A-5 Certificates as that
term is defined in Section 2.06.
"REMIC Provisions" means provisions of the federal income tax law and the
applicable state and local law relating to REMICs and related provisions, and
regulations promulgated thereunder, as the foregoing may be in effect from time
to time.
"Remittance Date" means the 15th day of each calendar month during the term
of this Agreement, or if such day is not a Business Day, the next succeeding
Business Day, commencing on March 15, 1995.
"REO Property" means any Manufactured Home and any related real estate
acquired in a repossession or foreclosure.
"Replaced Contract" has the meaning assigned in Section 3.05(b).
"Repossession Profits" means, as to any Remittance Date, the excess, if
any, of Liquidation Proceeds in respect to each Contract that became a
Liquidated Contract during the Due Period next preceding such Remittance Date
over the sum (a) of the unpaid principal balance of the related Liquidated
Contract plus (b) accrued and unpaid interest at the related Contract Rate on
the unpaid principal balance thereof from the Due Date to which interest was
last paid by the Obligor to the Due Date for such Contract in the month in which
such Contract became a Liquidated Contract plus (c) Liquidation Expenses plus
(d) amounts required to be paid to the Obligor or any party with an interest in
the related Manufactured Home that is senior to the interest of the Trust.
"Repurchase Event" shall mean (a) any Contract being subject to any right
of rescission, setoff, counterclaim or defense, including the defense of usury,
or (b) the operation of any of the terms of any Contract or the exercise of any
right thereunder (i) rendering such Contract unenforceable in whole or in part
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or (ii) subjecting such Contract to any right of rescission, setoff,
counterclaim or defense, including the defense of usury; and in each case such
condition materially adversely affects the Trust's interest in such Contract.
"Repurchase Price" means, with respect to a Contract to be repurchased
hereunder, an amount equal to the remaining principal amount outstanding on such
Contract on the date of repurchase plus accrued and unpaid interest thereon at
its Contract Rate up to the Due Date in the month of such repurchase.
"Responsible Officer" means, with respect to the Trustee, the chairman and
any vice chairman of the board of directors, the president, the chairman and
vice chairman of any executive committee of the board of directors, any officer
in the Corporate Trust Department of The Chase Manhattan Bank (National
Association) as long as it is the Trustee hereunder, including every vice
president, assistant vice president, the secretary, every assistant secretary,
cashier or any assistant cashier, controller or assistant controller, the
treasurer, every assistant treasurer, every trust officer, assistant trust
officer and every other officer or assistant officer of the Trustee customarily
performing functions similar to those performed by persons who at the time shall
be such officers, respectively, or to whom a corporate trust matter is referred
because of knowledge of, familiarity with, and authority to act with respect to
a particular matter.
"Rule 144A" shall mean Rule 144A under the Securities Act, as such Rule may
be amended from time to time.
"Sale and Purchase Agreement" means the Sale and Purchase Agreement, dated
as of February 1, 1995 between CITSF and the Company, providing for the sale of
the Initial Contracts from CITSF to the Company.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Senior Certificate" means any one of the Class A-1, Class A-2 or Class A-3
Certificates executed and delivered by the Trustee and authenticated by the
Authenticating Agent substantially in the form set forth in Exhibit A and
evidencing an interest designated as a "regular interest" in the Trust for
purposes of the REMIC Provisions, which certificates shall be senior to the
Class A-4 and Class A-5 Certificates.
"Senior Certificate Formula Distribution Amount" means, as to any
Remittance Date, an amount equal to the sum of (a) interest accrued during the
related Accrual Period at (i) the Class A-1 Remittance Rate on the Class A-1
Principal Balance (after giving effect to reductions thereof on the preceding
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Remittance Date), (ii) the Class A-2 Remittance Rate on the Class A-2 Principal
Balance (after giving effect to reductions thereof on the preceding Remittance
Date) and, (iii) the Class A-3 Remittance Rate on the Class A-3 Principal
Balance (after giving effect to reductions thereof on the preceding Remittance
Date), (b) the aggregate Unpaid Senior Certificate Interest Shortfall, if any,
(c) on or prior to the Class A-3 Cross-over Date, the Formula Principal
Distribution Amount and (d) the Unpaid Senior Certificate Principal Shortfall,
if any; provided, however, that the aggregate of all amounts distributed for all
Remittance Dates pursuant to clauses (c) and (d) shall not exceed the sum of the
Original Class A-1 Principal Balance, the Original Class A-2 Principal Balance
and the Original Class A-3 Principal Balance.
"Senior Certificate Interest Distribution Amount" means, as to each Class
of Senior Certificates and any Remittance Date, the sum of the amount specified
in clause (a)(i) through (a)(iii), as appropriate, of the definition of Senior
Certificate Formula Distribution Amount, and the Unpaid Senior Certificate
Interest Shortfall, if any, with respect to each such Class.
"Senior Certificate Interest Shortfall" means, as to each Class of Senior
Certificates and any Remittance Date, any amount by which the amount distributed
to Holders of such Class of Senior Certificates on such Remittance Date pursuant
to Section 8.01(c)(2)(i) is less than the Senior Certificate Interest
Distribution Amount for such Class.
"Senior Certificate Principal Shortfall" means, as to any Remittance Date,
any amount by which the amount distributed to Holders of Senior Certificates on
such Remittance Date net of the amount distributed in respect of the Senior
Certificate Interest Distribution Amount is less than the Formula Principal
Distribution Amount and the Unpaid Senior Certificate Principal Shortfall on
such Remittance Date.
"Senior Certificate Principal Deficiency Amount" means, as to any
Remittance Date prior to the Class A-3 Cross-Over Date, the amount, if any, by
which the sum of (x) the Pool Stated Principal Balance at the close of business
on the last day of the related Due Period and (y) the amounts on deposit in the
Pre-Funding Account, if any, at the close of business on the last day of the
related Due Period is less than the sum of the Class A-1 Principal Balance and
the Class A-2 Principal Balance and the Class A-3 Principal Balance (after
giving effect to all distributions of principal made on such Remittance Date).
"Service Transfer" has the meaning assigned in Section 7.02.
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"Servicer" means CITSF until any Service Transfer hereunder, and thereafter
means the new servicer appointed pursuant to Article VII.
"Servicing Fee" means, as to any Remittance Date, the sum of (a) the
Monthly Servicing Fee for such Remittance Date, (b) any Late Payment Fees paid
during the preceding calendar month, (c) any Extension Fees paid during the
preceding calendar month, (d) any Assumption Fees paid during the preceding
calendar month, and (e) any net investment earnings due to the Servicer as of
such Remittance Date.
"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 Trustee by the Servicer, as the same may be amended from time
to time.
"Stated Principal Balance" means, as of any Remittance Date, the unpaid
principal balance of a Contract at the end of the related Due Period.
"Subsequent Contract(s)" means one or more of the manufactured housing
installment sales contracts and installment loan agreements described in the
List of Subsequent Contracts (including Land-Secured Contracts), which
constitute part of the corpus of the Trust, and which Subsequent Contracts are
to be assigned by the Company to the Trustee; 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 payments which are received pursuant thereto on
and after the Subsequent Cut-off Date, but excluding any payments which are
received, pursuant thereto prior to the Subsequent Cut-off Date. The Trust may
purchase such Subsequent Contracts only from the Company and not from any other
person.
"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 Principal Balance" means, as to any Subsequent
Contract, the unpaid Stated Principal Balance thereof at the relevant Subsequent
Cut-off Date.
"Subsequent Cut-off Date Pool Principal Balance" means, as of any
Subsequent Transfer Date, the sum of (i) the Cut-off Date Pool Principal Balance
and (ii) the aggregate unpaid principal balances of the Subsequent Contracts to
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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 Sale and Purchase Agreement" means a Subsequent Sale and
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 O hereto.
"Subsequent Transfer Agreement" means each Subsequent Transfer Agreement
dated as of a Subsequent Transfer Date executed by the Trustee and the Company
substantially in the form of Exhibit D-2 hereto, by which Subsequent Contracts
are sold and assigned to the Trust.
"Subsequent Transfer Date" means the date specified in each Subsequent
Transfer Agreement, which date shall be on the 15th day of any month during the
Pre-Funding Period (or if such day is not a Business Day, the next succeeding
Business Day), but in no event later than the 20th day of such month, provided
that no Subsequent Transfer Date shall extend beyond the Pre-Funding Period.
"Transfer" means any direct or indirect transfer or sale of any Ownership
Interest in a Certificate.
"Transferee" means any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
"Treasury Regulations" means any proposed, temporary or final regulation
promulgated under the Code.
"Trust" means the trust created by this Agreement, the corpus of which
consists of all the rights, title and interest arising from and in connection
with each Contract including without limitation, (a) the security interests in
the Manufactured Homes securing such Contracts and any related Mortgages, deeds
of trust or similar instruments, (b) all rights to payments received by the
Company on or with respect to the Contracts on and after the Cut-off Date, or in
the case of any Subsequent Contracts on or after any Subsequent Cut-off Date
therefor, (c) all rights under any Hazard Insurance Policy relating to a
Manufactured Home securing a Contract for the benefit of the creditor of such
Contract and proceeds from any Contract Holders' Errors and Omissions Protection
Policy and any blanket hazard policy to the extent such proceeds relate to any
Manufactured Home, (d) all remittances, deposits and payments made into the
Certificate Account and amounts in the Certificate Account, (e) all remittances,
deposits and payments made into the Pre-Funding Account, (f) all rights to any
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related portions of force-placed insurance premiums, (g) all proceeds in any way
derived from any of the foregoing items and (h) all documents contained in the
Contract Files.
"Trust REMIC" shall mean that portion of the Trust for which an election is
made to be a REMIC in accordance with clause (b) of the first paragraph of
Section 5.10 hereof.
"Trustee" has the meaning given to such term in the preamble of this
Agreement.
"UCC" means the Uniform Commercial Code as in effect in the relevant
jurisdiction.
"Unpaid Class A-4 Interest Shortfall" means, as to any Remittance Date, the
amount, if any, of the Class A-4 Interest Shortfall for the prior Remittance
Date, plus accrued interest (to the extent payment thereof is legally
permissible) at the Class A-4 Remittance Rate on the amount thereof from such
prior Remittance Date to such current Remittance Date.
"Unpaid Class A-4 Principal Shortfall" means, as to any Remittance Date,
the amount, if any, by which the aggregate of the Class A-4 Principal Shortfalls
for prior Remittance Dates is in excess of the amounts distributed on prior
Remittance Dates to Holders of Class A-4 Certificates pursuant to clause (5) of
Section 8.01(c).
"Unpaid Class A-5 Interest Shortfall" means, as to any Remittance Date, the
amount, if any, of the Class A-5 Interest Shortfall for the prior Remittance
Date plus accrued interest (to the extent the payment thereof is legally
permissible) at the Class A-5 Remittance Rate in the amount thereof from such
prior Remittance Date to such current Remittance Date.
"Unpaid Class A-5 Principal Shortfall" means, as to any Remittance Date,
the amount, if any, by which the aggregate of the Class A-5 Principal Shortfalls
for prior Remittance Dates is in excess of the amounts distributed on prior
Remittance Dates to Holders of Class A-5 Certificates pursuant to clause (7) of
Section 8.01(c), together with any Guarantee Payments allocable to principal.
"Unpaid Senior Certificate Interest Shortfall" means, as to each Class of
Senior Certificates and any Remittance Date, the amount, if any, of the Senior
Certificate Interest Shortfall for the prior Remittance Date, plus accrued
interest (to the extent payment thereof is legally permissible) at the related
Remittance Rate on the amount thereof from such prior Remittance Date to such
current Remittance Date.
"Unpaid Senior Certificate Principal Shortfall" means, as to any Remittance
Date, the amount, if any, by which the aggregate of the Senior Certificate
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Principal Shortfalls for prior Remittance Dates is in excess of the amounts
distributed on prior Remittance Dates to Holders of Senior Certificates pursuant
to clause 3(ii) of Section 8.01(c).
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ARTICLE II
ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACTS
SECTION 2.01. Closing.
There is hereby created, by the Company as settlor, a separate trust which
shall be known as Manufactured Housing Contract Pass-Through Certificate Trust
1995-1. By the execution and delivery of this Agreement, the Company has agreed
that it will elect, or cause an election to be made, to treat the pool of assets
comprising the Trust as a REMIC except as set forth in Section 5.10. The Trust
shall be administered pursuant to the provisions of this Agreement for the
benefit of Certificateholders.
SECTION 2.02. Conveyance of the Initial Contracts.
Subject to the conditions set forth in Section 2.03, on the Closing Date,
the Company shall sell, transfer, assign, set over and otherwise convey to the
Trustee on behalf of the Trust by execution of an assignment substantially in
the form of Exhibit D-1 hereto (i) all the right, title and interest of the
Company in and to the Initial Contracts, including, without limitation, the
security interests in the Manufactured Homes securing such Initial Contracts and
any related Mortgages, all interest and principal received by the Company on or
with respect to the Initial Contracts on and after the Cut-off Date, (ii) all
rights under any Hazard Insurance Policy relating to a Manufactured Home
securing an Initial Contract for the benefit of the creditor of such Initial
Contract, (iii) the proceeds from any Contract Holders' Errors and Omissions
Protection Policy and all rights under any blanket hazard insurance policy to
the extent they relate to the Initial Contracts or the Manufactured Homes
related thereto, (iv) all documents contained in the Contract Files with respect
to the Initial Contracts, (v) all amounts held for the Trust in the Certificate
Account, (vi) any funds on deposit in the Pre-Funding Account, (vii) all rights
to any rebated portions of Force-Placed Insurance Premiums with respect to the
Initial Contracts and (viii) all proceeds in any way derived from any of the
foregoing. The parties intend that the conveyance of the Company's right, title
and interest in and to the Initial Contracts pursuant to this Agreement shall
constitute an absolute sale.
SECTION 2.03. Conditions of Closing for the Initial Contracts.
On or before the Closing Date, the Servicer shall deliver the following
documents to the Trustee:
(a) The List of Initial Contracts.
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(b) A certificate of officers of CITSF, substantially in the form of
Exhibit E-1 hereto.
(c) Opinions of counsel for CITSF, substantially in the form of Exhibit F
hereto.
(d) Copies of resolutions of the board of directors of CITSF approving the
execution, delivery and performance of this Agreement and the transactions
contemplated hereunder.
(e) Officially certified recent evidence of due organization and good
standing of CITSF.
(f) The following UCC-1 financing statements, each listing the Initial
Contracts as required by Article 9 of the UCC: (i) UCC-1 financing statement
executed by CITSF as debtor, naming the Company as secured party and filed in
New Jersey to perfect the sale from CITSF to the Company; (ii) UCC-1 financing
statement executed by the Company as debtor, naming the Trustee as secured party
and filed in New Jersey to perfect the sale from the Company to the Trustee and
(iii) such other filings under the UCC as may be appropriate.
(g) A blanket assignment of the Initial Contracts for each of the transfers
specified in Section 2.03(f) in the form of Exhibit D-1.
(h) An Officers' Certificate listing the Servicer's Servicing Officers.
(i) An Officers' Certificate stating that the Servicer has reviewed each
Initial Contract and the Contract File with respect thereto, and confirming that
each Initial Contract and the Contract File with respect thereto conforms in all
material respects to the List of Initial Contracts, that each Contract File with
respect to the Initial Contracts is complete in all material respects, and that
each Manufactured Home securing an Initial Contract is covered by a Hazard
Insurance Policy as required by Section 3.02(f).
(j) A letter from Moody's confirming that (a) the Class A-1 Certificates,
the Class A-2 Certificates and the Class A-3 Certificates have been assigned a
rating of at least "Aaa", (b) the Class A-4 Certificates have been assigned a
rating of at least "Aa3", and (c) the Class A-5 Certificates have been assigned
a rating of at least "Aa3".
(k) Evidence of deposit in the Certificate Account of (i) all funds
received with respect to the Initial Contracts on and after the Cut-off Date to
the Closing Date and (ii) the amount required to be deposited in the Certificate
Account with respect to each Initial Contract that has a first scheduled payment
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date in a month after February, 1995 pursuant to Section 5.05(a), together with
an Officer's Certificate to the effect that such amounts are correct.
(l) Evidence of deposit in the Pre-Funding Account of $39,433,297.
(m) An Officers' Certificate stating that the Servicer has accepted
delivery of the Initial Contracts and the Contract Files with respect thereto
and will hold such Initial Contracts and Contract Files with respect thereto as
custodian on behalf of the Trustee for the benefit of the Trust as provided
herein.
(n) The Limited Guarantee executed and delivered by Holdings.
(o) A letter from KPMG Peat Marwick, or another nationally recognized
accounting firm that is Independent with respect to CITSF, stating that such
firm has reviewed 110 sample Contracts chosen by CS First Boston Corporation
and, based on such sampling, concluding that the Initial Contracts conform in
all material respects to the List of Initial Contracts, specifying those Initial
Contracts which do not so conform.
(p) Any other documents or certificates that the Trustee may reasonably
request.
SECTION 2.04. Conveyance of Subsequent Contracts.
Subject to the conditions set forth in Section 2.05 and in consideration of
the 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 in the Pre-Funding
Account on such date, on such related Subsequent Transfer Date, the Company
shall sell, transfer, assign, set over and otherwise convey to the Trustee on
behalf of the Trust by execution of an assignment substantially in the form of
the Subsequent Transfer Agreement attached as Exhibit D-2 hereto (i) all the
right, title and interest of the Company in and to each Subsequent Contract
listed on the List of Subsequent Contracts delivered by the Company on such
Subsequent Transfer Date, including, without limitation, the security interests
in the Manufactured Home securing such Subsequent Contracts and any related
Mortgages, all interest and principal received by the Company on or with respect
to such Subsequent Contracts on and after the related Subsequent Cut-off Date,
(ii) all rights under any Hazard Insurance Policy relating to a Manufactured
Home securing such Subsequent Contract for the benefit of the creditor of such
Contract, (iii) the proceeds from any Contract Holders' Errors and Omissions
Protection Policy and all rights under any blanket hazard insurance policy to
the extent they relate to such Subsequent Contracts or the Manufactured Homes
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related thereto, (iv) all documents contained in the Contract Files with respect
to such Subsequent Contracts, (v) all rights to any rebated portions of
Forced-Placed Insurance Premiums with respect to such Subsequent Contracts and
(vi) all proceeds in any way derived from any of the foregoing. The parties
intend that the conveyance of the Company's right, title and interest in and to
any Subsequent Contracts pursuant to this Agreement shall constitute an absolute
sale. The "purchase price" shall be one hundred percent (100%) of the aggregate
Stated Principal Balances of the Subsequent Contracts so transferred as of the
related Subsequent Cut-off Date.
SECTION 2.05. 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 Trustee with an Addition Notice;
(b) The Servicer shall have delivered to the Trustee a duly executed
Subsequent Transfer Agreement;
(c) The Pre-Funding Period shall not have terminated;
(d) The Servicer shall have delivered to the Trustee an Officer's
Certificate confirming the satisfaction of each condition precedent specified in
this Section 2.05 and in the related Subsequent Transfer Agreement;
(e) The Company shall have delivered to the Trustee the Opinion of Counsel
required by the related Subsequent Sale and Purchase Agreement;
(f) An Officers' Certificate immediately following the transfer of such
Subsequent Contracts to the Trust that none of the following would occur: (i)
the weighted average original Loan-to-Value Ratio of the Contracts based on the
Subsequent Cut-off Date Pool Principal Balance would exceed 88%, (ii) more than
53% (by Subsequent Cut-off Date Pool Principal Balance) of the Contracts would
have original Loan-to-Value Ratios of greater than 90%, (iii) the weighted
average Net Contract Rate of the Contracts based on the Subsequent Cut-off Date
Pool Principal Balance would be less than 10.40%, (iv) the weighted average
Contract Rates of the Contracts based on the Subsequent Cut-off Date Pool
Principal Balance would be less than 11.40%, (v) more than 27% of the Contracts
based on the Subsequent Cut-off Date Pool Principal Balance will have Obligors
with mailing address in Texas, (vi) more than 10% of the Contracts by Subsequent
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Cut-off Date Pool Principal Balance would be attributable to loans to purchase
Manufactured Homes which were used at the time the related Contract was
originated, (vii) less than 70% of the Contracts by Subsequent Cut-off Date Pool
Principal Balance would be attributable to loans to purchase double-wide
Manufactured Homes, (vii) the weighted average remaining term to maturity of the
contracts based on the Subsequent Cut-off Date Pool Principal Balance would be
less than 235 months or more than 241 months or (ix) the weighted average credit
score of the Contracts based on the Subsequent Cut-off Date Pool Principal
Balance would decrease by more than 6% from the weighted average credit score of
the Initial Contracts as of the Cut-off Date. In addition, all of such
Subsequent Contracts must (i) be secured by Manufactured Homes (and in some
instances real estate) with Obligors having mailing addresses in the United
States (ii) have a Due Date in the month of the Subsequent Cut-off Date with
respect to such Subsequent Contract and (iii) have a final scheduled payment
date of no later than July 2020.
(g) The Servicer shall have delivered to the Trustee the relevant List of
Subsequent Contracts;
(h) An Officers' Certificate substantially in the form of Exhibit E-2
hereto;
(i) The Servicer shall have delivered to the Trustee 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 statement executed by
CITSF as debtor, naming the Company as secured party and filed in New Jersey to
perfect the sale from CITSF to the Company and (ii) UCC-1 financing statement
executed by the Company as debtor, naming the Trustee as secured party and filed
in New Jersey to perfect the sale from the Company to the Trustee;
(j) An Officers' Certificate 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 Contracts is
complete in all material respects, and that each Manufactured Home securing any
such Subsequent Contract is covered by a Hazard Insurance Policy as required by
Section 3.02(f);
(k) An Officers' Certificate that all funds received with respect to such
Subsequent Contracts on and after the relevant Subsequent Cut-off Date to the
Subsequent Transfer Date have been deposited in the Certificate Account; and
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(l) An Officers' Certificate 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 Trustee for the benefit of the Trust as
provided herein.
SECTION 2.06. Acceptance by Trustee.
(a) On the Closing Date, if the conditions set forth in Section 2.03 have
been satisfied, the Trustee shall deliver a certificate to the Company
substantially in the form of Exhibit G-1 hereto acknowledging conveyance of the
Initial Contracts and the Contract Files with respect thereto to the Trustee and
declaring that the Trustee, through the Servicer, as custodian, pursuant to
Section 4.01 hereof, will hold all Initial Contracts that have been delivered in
trust, upon the trusts herein set forth, for the use and benefit of all
Certificateholders, and shall issue to or upon the order of the Company
Certificates representing ownership of a beneficial interest in 100% of the
Trust.
(b) On any Subsequent Transfer Date, if the conditions set forth in Section
2.05 have been satisfied, the Trustee shall deliver a certificate to the Company
substantially in the form of Exhibit G-2 hereto acknowledging conveyance of the
relevant Subsequent Contracts and the Contract Files with respect thereto to the
Trustee and declaring that the Trustee, through the Servicer, as custodian,
pursuant to Section 4.01 hereof, will hold all Subsequent Contracts that have
been delivered in trust, upon the trusts herein set forth, for the use and
benefit of all Certificateholders.
SECTION 2.07. REMIC Designations.
The Closing Date is hereby designated as the "start-up day" of the REMIC
within the meaning of Section 860G(a)(9) of the Code. The Company hereby
designates each of the Senior Certificates, Class A-4 Certificates and the Class
A-5 Certificates as a class of "regular interests", and the Class R Certificates
as the single class of "residual interests" in the Trust REMIC for purposes of
the REMIC Provisions.
SECTION 2.08. REMIC Tax Matters.
The tax year of the Trust REMIC shall be the calendar year, and the Trust
REMIC shall use the accrual method of reporting income and loss.
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SECTION 2.09. REMIC Certificate Maturity Date.
Solely for purposes of satisfying Section 1.860G-1(a)(4)(iii) of the
Treasury Regulations, and based upon certain assumptions described below, the
"latest possible maturity date" of each of the Offered Certificates is no later
than August 15, 2020. The foregoing date represents the date by which the
Certificates would be reduced to zero as determined under a hypothetical
scenario which assumes, among other things, that (i) no scheduled interest and
principal payments on the Contracts are received after the respective Due Date,
(ii) there are no principal prepayments and (iii) the Company and the Servicer
will not exercise its option to purchase the Certificates pursuant to Section
8.03 of this Agreement and thereby cause a termination of the Trust pursuant to
Section 12.03 of this Agreement.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties Regarding CITSF.
CITSF represents and warrants that:
(a) 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.
(b) 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.
(c) 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.
(d) 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.
(e) Litigation. No litigation or administrative proceeding of or before any
court, tribunal or governmental body is currently pending, or to the knowledge
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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 3.02. Representations and Warranties Regarding Each Contract.
The Initial Contracts were, and the Subsequent Contracts will be,
originated or acquired from dealers by CITSF or an affiliate of CITSF in the
ordinary course of business. The Initial Contracts have been sold by CITSF to
the Company pursuant to the Sale and Purchase Agreement and each of the
Subsequent Contracts, subject to the satisfaction of the conditions set forth in
Section 2.05, will be sold by CITSF to the Company pursuant to the Subsequent
Sale and Purchase Agreement substantially in the form of Exhibit O hereto. In
connection with such sale, CITSF has made or will make as the case may be, the
representations and warranties in Sections 3.02, 3.03 and 3.04 to the Company
and has assumed the obligations in Section 3.05. As a condition of the purchase
by the Company of the Initial Contracts and any Subsequent Contracts, the
Company has required that CITSF make such representations and warranties
directly to the Trustee and the Certificateholders so that the Trustee 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 Trustee and the Certificateholders 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 Cut-off Date
(or the date of origination if later), 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 59 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 as the request
of CITSF) or was not more than 59 days delinquent.
(c) No Waivers. The terms of the Contract have not been waived, altered or
modified in any respect, except by instruments or documents identified in the
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Contract File 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.
(e) No Defenses. No right of rescission, setoff, counterclaim or defense,
including the defense of usury, has been asserted with respect to the Contract.
(f) Insurance. The Manufactured Home securing the Contract is covered by a
Hazard Insurance Policy in the amount required by Section 5.09. All premiums due
as of the Closing Date with respect to each Initial Contract, and as of the
Subsequent Transfer Date with respect to each Subsequent Contract, on such
insurance have been paid in full.
(g) Origination. The Contract was originated or acquired from a dealer by
CITSF or an affiliate of CITSF 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 Sale and Purchase Agreement in the case of
an Initial Contract, or under a Subsequent Sale and Purchase Agreement in the
case of a Subsequent Contract, the transfer of the Contract to the Trustee under
this Agreement or pursuant to transfers of Certificates, 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 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 Trustee's inspection, and shall deliver to the Trustee 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 Manufactured Home securing the
Contract has not been released from the lien of the Contract in whole or in
part.
(k) Valid Security Interest; Mortgage. The Contract (other than a
Land-Secured Contract) creates a valid and enforceable perfected first priority
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security interest in favor of CITSF or CITCF-NY in the Manufactured Home covered
thereby as security for payment of the Cut-off Date Principal Balance of such
Contract in the case of an Initial Contract or the Subsequent Cut-off Date Pool
Principal Balance in the case of a Subsequent Contract, which security interest
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 Manufactured Home covered thereby, to the Company, and the Company has
assigned all of its right, title and interest in such Contract and related
Manufactured Home to the Trustee on behalf of the Trust. The Trustee has and
will have a valid and perfected and enforceable first priority security interest
in such Manufactured Home. The Trustee, pursuant to the sale in Section 2.02 or
2.04, as the case may be, has and will have a valid and perfected ownership
interest in such Contract.
Each Land-Secured Contract will also be secured by a Mortgage. Each
Mortgage is a valid first or second lien on real property in favor of CITSF or
CITCF-NY securing the amount owed by the Obligor under the Contract subject only
to (i) the lien of current real property taxes and assessments, (ii) covenants,
conditions and restrictions, rights of way, easements and other matters of
public record as of the date of recording of such Mortgage, such exceptions
appearing of record being acceptable to mortgage lending institutions generally
in the area wherein the property subject to the Mortgage is located or
specifically reflected in the appraisal obtained in connection with the
origination of the related Land-Secured Contract obtained by the Originator,
(iii) other matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be provided
by such Mortgage and (iv) in the case of a second lien, a first lien. CITSF has
assigned to the Company, and the Company has assigned to the Trustee, all of its
right, title and interest in such Mortgage.
Each Land-Secured Contract will be secured by a first or second Mortgage
upon the land on which the Manufactured Home is located and will also be secured
by either (A) a perfected first security interest or (B) a recorded first
Mortgage on the Manufactured Home (depending on whether the Manufactured Home is
affixed to the land and upon the specific provisions of applicable state law).
The Trustee, pursuant to the sale in Section 2.02 or 2.04, as the case may
be, has and will have a valid and perfected ownership interest in such Mortgage.
(l) Capacity of Parties. All parties to the Contract had legal capacity to
execute the Contract.
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(m) Good Title. CITSF has not sold, assigned or pledged the Contract to any
person other than the Company and prior to the transfer of the Contract by CITSF
to the Company and the Company to the Trust, CITSF 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. The Company paid fair value to CITSF for the
Contract.
(n) No Defaults. As of the Cut-off Date in the case of an Initial Contract
and as of the related Subsequent Cut-off Date in the case of a Subsequent
Contract (or in each case the date of origination, if later), 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). CITSF has not waived any such default, breach, violation or
event permitting acceleration except payment delinquencies permitted by clause
(b) above.
(o) No Liens. As of the Closing Date in the case of an Initial Contract,
and as of the Subsequent Transfer Date with respect to a 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 Manufactured Home or any
related Mortgaged Property securing the Contract which are or may be liens prior
to, or equal or coordinate with, the lien of the Contract (other than a first
Mortgage in the case of a Land-Secured Contract secured by a second Mortgage).
(p) Simple Interest. The Contract is a fixed rate, simple interest
Contract.
(q) 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 provided thereby, 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.
(r) Not Real Estate. If a Manufactured Home is considered or classified as
part of the real estate on which it is located under the laws of the
jurisdiction in which it is located, (a) a UCC fixture filing was made, or (b) a
Mortgage was recorded, or (c) under applicable law, even though the Manufactured
Home is part of the real estate, no fixture filing or mortgage recording is
required to protect the priority of CITSF's security interest on these
Manufactured Homes, or, (d) irrespective of (a), (b) or (c) foregoing, no person
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in fact holds a security interest or mortgage lien upon the Manufactured Home
prior to CITSF's security interest therein.
(s) Notation of Security Interest. With respect to each Contract other than
a Land-Secured Contract, if the related Manufactured Home 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 Manufactured Home is
being applied for such title document will be issued within 180 days and will
show, CITCF-NY, CITSF or any other successor in interest to CITCF-NY or CITSF as
the holder of a first priority security interest in such Manufactured Home; if
the related Manufactured Home is located in a state in which the filing of a
financing statement under the UCC is required to perfect a security interest in
manufactured housing, such filings or recordings have been duly made and show
CITCF-NY, CITSF or any other successor in interest to CITCF-NY or CITSF as
secured party. If the related Manufactured Home secures a Land-Secured Contract,
such Manufactured Home is subject to a Mortgage properly filed in the
appropriate public recording office or such Mortgage will be properly filed in
the appropriate public recording office within 60 days of the Closing Date for
an Initial Contract or within 60 days of the related Subsequent Transfer Date
for a Subsequent Contract, naming CITCF-NY, CITSF or any other successor in
interest to CITCF-NY or CITSF as mortgagee. The Trustee will, after the Closing
Date in the case of an Initial Contract and after the related Subsequent
Transfer Date in the case of a Subsequent Contract, have the same rights as the
secured party of record would have (if such secured party were still the owner
of the Contract) against all Persons (including CITSF and any trustee in
bankruptcy of CITSF or an affiliate of CITSF) claiming an interest in such
Manufactured Home.
(t) Qualified Mortgage for REMIC. Each Contract is a "qualified mortgage"
under Section 860G(a)(3) of the Code, and the related Manufactured Home is a
"single family residence" within the meaning of Section 25(e)(10) of the Code.
Each Manufactured Home (i) has a minimum of 400 square feet of living space,
(ii) has a minimum width in excess of 102 inches and (iii) is of a kind
customarily used at a fixed location. As of the Cut-off Date in the case of an
Initial Contract, or the related Subsequent Cut-off Date in the case of a
Subsequent Contract, no Contract was in repossession nor did CITSF consider
acceleration and liquidation of any particular Contract to be reasonably
foreseeable.
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(u) Manufactured Homes. The Manufactured Homes securing the Contracts
consist of manufactured homes within the meaning of 42 United States Code,
Section 5402(6).
(v) Conventional Contracts. All of the Contracts are conventional Contracts
(i.e., not insured or guaranteed by any governmental agency).
(w) Location. All of the Contracts are secured by Manufactured Homes and/or
real estate located in the United States.
SECTION 3.03. Representations and Warranties Regarding the Contracts in the
Aggregate.
(a) Amounts. The aggregate principal amounts payable by Obligors under the
Initial Contracts as of the Cut-off Date equal the Cut-off Date Pool Principal
Balance.
(b) Characteristics. The Contracts have the following characteristics as of
the Cut-off Date: (i) no more than 10.83% of the Initial Contracts by Cut-off
Date Pool Principal Balance are secured by Manufactured Homes which have
Obligors with mailing addresses in any one state (except with respect to Initial
Contracts secured by Manufactured Homes which have Obligors with mailing
addresses in Texas which does not exceed 26.36% by Cut-off Date Pool Principal
Balance); (ii) not more than 0.72% of the Initial Contracts by Cut-off Date Pool
Principal Balance are secured by Manufactured Homes located in an area with the
same zip code; (iii) no Initial Contract has a remaining term to stated maturity
of less than 34 months or more than 300 months; (iv) the final scheduled payment
date on the Initial Contract with the latest maturity is in February, 2020; (v)
no more than 7.00% of the Cut-off Date Pool Principal Balance is attributable to
loans for purchases of used Manufactured Homes; (vi) no Initial Contract was
originated before September 1, 1994; (vii) the Stated Principal Balance of each
Initial Contract is not less than $5,048; (viii) no more than 22.08% of the
Cut-off Date Pool Principal Balance represents Land-Secured Contracts; (ix) the
first payment date of each Contract is on or after December 1, 1994 and (x) the
weighted average of the Contract Rates of the Initial Contracts as of the
Cut-off Date was approximately 11.32%.
(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.
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(d) Marking Records. By the Closing Date, in the case of the Initial
Contracts, and by the relevant Subsequent Transfer Dates, 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. Except for the effect of the representations and
warranties made in Sections 3.02 and 3.03 hereof, no adverse selection
procedures have been employed in selecting the Contracts.
(f) Loan-to-Value Ratio. At the time of their origination, (i) no more
than 53% (by Cut-off Date Pool Principal Balance or Subsequent Cut-off Date Pool
Principal Balance, as the case may be) of the Contracts had Loan-to-Value Ratios
of greater than 90% and (ii) each of the Contracts had a Loan-to-Value Ratio not
greater than 125% and, in the case of a Contract that has been modified, at the
time of origination and at the time such Contract was modified.
(g) Conditions Precedent. On the related Subsequent Transfer Date, the
criteria set forth in Section 2.05(f) with respect to the Subsequent Contracts
being transferred to the Trust on such Subsequent Transfer Date have been
satisfied in all material respects.
(h) As of the Cut-off Date, in the case of the Initial Contracts, and as of
the Subsequent Cut-off Date, in the case of the related Subsequent Contracts,
(i) no Advance Payments have been or will have been received by the Contract
Seller or the Company with respect to such Initial Contracts or Subsequent
Contracts, as the case may be and (ii) no Partial Prepayments have been or will
have been received by the Contract Seller or the Company before the Cut-off Date
or Subsequent Cut-off Date, as the case may be, with respect to such Initial
Contracts or Subsequent Contracts, as the case may be, which have not been
applied to reduce the unpaid principal balance thereof prior to the Cut-off Date
or the Subsequent Cut-off Date, as applicable.
SECTION 3.04. Representations and Warranties Regarding the Contract Files.
CITSF represents and warrants to the Trustee and the Certificateholders as
of the Closing Date, in case of the Initial Contracts, and as of the related
Subsequent Transfer Date, in the case of a Subsequent Contract, that:
(a) Possession. Immediately prior to the Closing Date for each Initial
Contract, or the related Subsequent Transfer Date for each Subsequent Contract,
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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.
(b) Bulk Transfer Laws. The transfer, assignment and conveyance of the
Contracts and the Contract Files with respect thereto to the Company are not
subject to the bulk transfer or any similar statutory provisions in effect in
any applicable jurisdiction.
SECTION 3.05. Repurchase of Contracts or Substitution of Contracts for
Breach of Representations and Warranties.
(a) Subject to Section 3.05(b), CITSF shall repurchase a Contract, at its
Repurchase Price, not later than 85 days after CITSF receives written notice
from the Trustee or the Servicer, or not later than 90 days after CITSF
otherwise becomes aware, of (i) a breach of any representation or warranty of
CITSF set forth in Section 3.02 or 3.03 of this Agreement that materially
adversely affects the Trust's interest in such Contract and which breach has not
been cured or (ii) the occurrence of a Repurchase Event which has not been
cured. CITSF shall effect such repurchase by paying to the Servicer for deposit
in the Certificate Account on the Business Day immediately preceding the
Remittance Date in the month following the month in which the loan was
repurchased the aggregate of the Repurchase 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 3.05, CITSF may, in lieu of repurchasing such Contract,
deposit in the Certificate 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 Trustee or the Servicer of such incorrect
description, cash in an amount sufficient to cure such deficiency or
discrepancy. CITSF shall send written notice of any such cash deposit to Moody's
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.
Notwithstanding the provisions of the preceding paragraph, but subject to
Section 3.05(b), CITSF will not be required to repurchase a Contract (or deposit
cash in the Certificate Account as provided in the preceding paragraph) as a
result of a breach of a representation or warranty or the occurrence of a
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Repurchase Event unless the Trustee has received an Opinion of Counsel that such
repurchase (or deposit of cash) will not cause the Trust REMIC to fail to
qualify as a REMIC at any time under the then applicable REMIC Provisions. The
Servicer shall attempt to obtain such Opinion of Counsel. CITSF shall, subject
to this Section 3.05, repurchase such Contract or substitute an Eligible
Substitute Contract (or deposit cash in the Certificate Account as provided in
the preceding paragraph) and shall guarantee the payment of any tax imposed
under the REMIC Provisions as a result of such repurchase, substitute, or
deposit by paying to the Trustee the amount of such tax not later than five
Business Days before such tax shall be due and payable to the extent that
amounts previously paid over to and then held by the Trustee pursuant to Section
5.10 hereof are insufficient to pay such tax and all other taxes chargeable
under Section 5.10. Pursuant to Section 5.10, the Servicer is hereby directed to
withhold, and shall withhold and pay over to the Trustee, an amount sufficient
to pay such tax and any other taxes imposed on "prohibited transactions" under
Section 860F(a)(i) of the Code or imposed on "contributions after start up date"
under Section 860G(d) of the Code from amounts otherwise distributable to Class
R Certificateholders. The Servicer shall give notice to the Trustee at the time
of such repurchase (or deposit) of the amounts due from CITSF pursuant to the
guarantee of CITSF and notice as to who should receive such payment.
The Trustee shall have no obligation to pay any such amounts pursuant to
this Section other than from moneys provided to it by CITSF or from moneys held
in the funds and accounts created under this Agreement. The Trustee shall be
deemed conclusively to have complied with this Section if it follows the
directions of CITSF.
In the event any tax that is guaranteed by CITSF is refunded to the Trust
or otherwise is determined not to be payable, CITSF shall be repaid the amount
of such refund or that portion of any guarantee payment made by CITSF that is
not applied to the payment of such tax.
(b) On or prior to the date that is the second anniversary of the Closing
Date, CITSF, at its election, may substitute an Eligible Substitute Contract for
a Contract that it is obligated to repurchase pursuant to Section 3.05(a) (such
Contract being referred to as the "Replaced Contract") upon satisfaction of the
following conditions:
(i) CITSF shall have conveyed to the Trustee the Contract to be
substituted for the Replaced Contract and the Contract File related to such
Contract and CITSF shall have marked the Electronic Ledger indicating that
such Contract constitutes part of the Trust;
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(ii) the Contract to be substituted for the Replaced Contract is an
Eligible Substitute Contract and CITSF delivers an Officers' Certificate,
substantially in the form of Exhibit I-2 hereto, to the Trustee certifying
that such Contract is an Eligible Substitute Contract;
(iii) CITSF shall have delivered to the Trustee evidence of filing of
a UCC-1 financing statement executed by CITSF as debtor, naming the Trustee
as secured party and filed in New Jersey and Oklahoma, listing such
Contract as required by Article 9 of the UCC;
(iv) CITSF shall have delivered to the Trustee an Opinion of Counsel
to the effect that the substitution of such Contract for such Replaced
Contract will not cause the Trust REMIC to fail to qualify as a REMIC at
any time under then applicable REMIC Provisions or cause any "prohibited
transaction" that will result in the imposition of a tax under such REMIC
Provision;
(v) if the Stated Principal Balance of such Replaced Contract is
greater than the Stated Principal Balance of the Contract being
substituted, CITSF shall have deposited in the Certificate Account the
amount of such excess and shall have included in the Officers' Certificate
required by clause (ii) above a certification that such deposit has been
made; and
(vi) CITSF shall have delivered to Moody's prior written notice of
such substitution.
Upon satisfaction of such conditions, the Trustee shall add such Contract to,
and delete such Replaced Contract from, the List of Initial Contracts or the
relevant List of Subsequent Contracts, as the case may be. Such substitution
shall be effected prior to the expiration of the period in which CITSF is
otherwise obligated to repurchase such Replaced Contract pursuant to Section
3.05(a). Promptly after any substitution of Contract, CITSF shall give written
notice of such substitution to Moody's.
(c) Promptly after the repurchase referred to in Section 3.05(a) or the
substitution referred to in Section 3.05(b), the Trustee shall execute such
documents as are presented to it by CITSF and are reasonably necessary to
reconvey the repurchased Contract or Replaced Contract, as the case may be, to
CITSF.
(d) The repurchase obligation of CITSF set forth in this Section 3.05 shall
constitute the sole remedy available to the Trust and the Certificateholders 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).
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ARTICLE IV
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS
SECTION 4.01. Custody of Contracts.
(a) Subject to the terms and conditions of this Section 4.01, the Servicer
shall act as custodian of the Contract Files for the benefit of the
Certificateholders and the Trustee.
(b) The Servicer agrees to maintain the related Contract Files at its
office in the State of Oklahoma as shall from time to time be identified to the
Trustee by written notice. The Servicer 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. To facilitate servicing and to save administration costs, the
Contract Files will not be physically segregated from other similar documents
that are in CITSF's possession.
(c) As custodian, the Servicer shall have and perform the following powers
and duties:
(i) hold the Contract Files on behalf of the Certificateholders and
the Trustee, maintain accurate records pertaining to each Contract to
enable the Servicer to comply with the terms and conditions of this
Agreement, maintain a current inventory thereof, conduct annual physical
inspections of the Contract Files held by it under this Agreement and
certify to the Trustee 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 Servicers' 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
(iii) attend to all details in connection with maintaining custody of
the Contract Files on behalf of the Certificateholders and the Trustee.
(d) Subject to Section 5.02, in performing its duties under this Section
4.01, the Servicer agrees to exercise that degree of skill and 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; provided, however that such degree
of skill and care shall be at least as favorable as the degree of skill and care
generally applied by servicers of manufactured housing installment sales
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contracts for institutional investors. The Servicer shall promptly report to the
Trustee 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 Certificateholders and the 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
Certificateholders and the 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 any
Certificateholder or the Trustee. The Trustee shall have no duty to monitor or
otherwise oversee the Servicer's performance as custodian hereunder, subject to
the requirements of Article VII herein.
SECTION 4.02. Filings.
On or prior to the Closing Date in the case of the Initial Contracts, or
the related Subsequent Transfer Date in the case of any Subsequent Contracts,
the Servicer shall cause the UCC-1 financing statements referred to in Sections
2.03(f) and 2.05(f) to be filed. The Servicer shall cause to be filed all
necessary continuation statements of the UCC-1 financing statement referred to
in Sections 2.03(f) and 2.05(f) on which it is the debtor, and the Company shall
cause to be filed all necessary continuation statements of the UCC-1 financing
statement referred to in Sections 2.03(f) and 2.05(f) on which it is the
debtor. From time to time the Servicer shall, subject to the following
paragraph, take and cause to be taken such actions and execute such documents as
are necessary to perfect and protect the Certificateholders' interests in the
Contracts and their proceeds and the Manufactured Homes 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 Company's accounting records and computer systems
will be marked to reflect the sale and assignments of the Contracts by CITSF and
the Company as contemplated herein.
The Servicer will maintain the Trustee's perfected first priority security
interest in each Manufactured Home and a first or second lien on each Mortgaged
Property 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 the certificate of title relating to any
Manufactured Home to name CITSF as the lienholder where CITSF did not originate
the related Contract, the Servicer will not amend any certificate of title to
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name the Company or the Trustee as the lienholder, and neither the Servicer nor
the Company will deliver any certificate of title to the Trustee or note thereon
the Trustee's interest; and further provided, however, that because of the
expense and administrative inconvenience involved, the Servicer will not record
the successive assignments of the first or second lien on any Mortgaged Property
from CITCF-NY to CITSF (if applicable), from CITSF to the Company and from the
Company to the Trustee, unless (i) CITSF is no longer a direct or indirect
subsidiary of Holdings, (ii) the long-term senior debt rating of Holdings is
downgraded below A by Moody's or (iii) CITSF is no longer the Servicer
hereunder, in which case the Servicer or the new Servicer, as the case may be,
will record such successive assignments in the name of the Trustee within sixty
(60) days, and provided further that in the event such a downgrade of the said
long term senior debt should occur, CITSF will deliver to the Trustee all
original mortgage notes which evidence any Land-Secured Contracts, and the
Trustee will hold same, unless CITSF needs the possession of any such note in
connection with (1) any suit or foreclosure relating to a Land-Secured Contract,
or (2) the satisfaction or repurchase by CITSF pursuant to Section 3.05 of any
Land-Secured Contract or (3) any other reasonable need related to CITSF's
obligations as Servicer in the opinion of CITSF and the Trustee, in which case
the Trustee shall return same to CITSF for its use as so required, and CITSF
shall return same to the Trustee (unless the Land-Secured Contract shall be
satisfied or repurchased) when possession by CITSF is no longer needed. The
Servicer shall provide the Trustee with notice within ten (10) days of the
occurrence of any events specified in clause (i), (ii) or (iii) of the
immediately preceding sentence.
SECTION 4.03. Name Change or Relocation.
(a) 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 Trustee 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 Moody's.
(b) 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
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such change, shall file, or cause to be filed, such amendments or financing
statements as may be required to preserve, perfect and protect the
Certificateholders' interests in the Contracts and proceeds thereof and in the
Manufactured Homes.
SECTION 4.04. Chief Executive Office.
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.
SECTION 4.05. Costs and Expenses.
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 Certificateholders' right, title and interest in and
to the Contracts (including, without limitation, the security interest in the
Manufactured Homes granted thereby).
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ARTICLE V
SERVICING OF CONTRACT
SECTION 5.01. Responsibility for Contract Administration.
The Servicer 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 Trustee, 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. CITSF is hereby appointed the Servicer until such time as any Service
Transfer shall be effected under Article VII.
SECTION 5.02. Standard of Care.
In managing, administering, servicing and making collections on the
Contracts pursuant to this Agreement, the Servicer will exercise that degree of
skill and care consistent with the same degree of skill and care that the
Servicer exercises with respect to similar contracts serviced by the Servicer
for its own account; provided, however, that (i) such degree of skill and care
shall be at least as favorable as the degree of skill and care generally applied
by servicers of manufactured housing installment sales contracts for
institutional investors. Notwithstanding the foregoing, the Servicer shall not
release or waive the right to collect the unpaid balance on a Contract or grant
an extension of payments (for a period in excess of three months) due on a
Contract, unless either (i) such release, waiver or extension is occasioned by a
default or a reasonably foreseeable default (in the opinion of the Servicer) on
such Contract; or (ii) such release, waiver or extension is of a type which
Counsel has advised has been identified by the Code or Treasury Regulations
which would not be treated as an exchange of the Contract for purposes of
Section 1001 of the Code; or (iii) unless the Servicer obtains an Opinion of
Counsel to the effect that such action will not cause the Trust to fail to
qualify as a REMIC under the Code and under the relevant state and local law or
result in the imposition of taxes on the Trust under the REMIC Provisions.
SECTION 5.03. Records.
The Servicer shall during the period it is Servicer hereunder, maintain
such books of account and other records as will enable the Trustee to determine
the status of each Contract.
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SECTION 5.04. Inspection; Computer Tape.
(a) At all times during the term hereof, the Servicer shall afford the
Trustee 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 Trustee or its authorized
agents. The examination referred to in this Section 5.04 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 Trustee may make, the Trustee 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 VI and compliance
with the standards represented to exist as to each Contract in this Agreement.
(b) At all times during the term hereof, the Servicer shall keep available
a copy of the List of Initial Contracts and each List of Subsequent Contracts at
its principal executive office for inspection by Certificateholders.
SECTION 5.05. Certificate Account and Pre-Funding Account.
(a) Certificate Account. On or before the Closing Date, the Trustee shall
establish the Certificate Account on behalf of the Trust with an Eligible
Institution. If, at any time, the Certificate Account ceases to be maintained
with an Eligible Institution, the 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 the Rating Agency may consent) establish a new
Certificate Account meeting the condition specified above, transfer any cash
and/or any investments to such new Certificate Account and from the date such
new Certificate Account is established, it shall be the "Certificate Account".
The Certificate Account shall be entitled "The Chase Manhattan Bank (National
Association) as trustee for the benefit of Holders of Manufactured Housing
Contract Senior/Subordinate Pass-Through Certificates, Series 1995-1 (The CIT
Group/Sales Financing, Inc., Servicer) Certificate Account." The Servicer shall,
subject to the third following sentence, deposit in the Certificate Account, no
later than two Business Days after the Closing Date, any amounts representing
payments received on the Contracts on and after the Cut-off Date in the case of
the Initial Contracts and on and after the related Subsequent Cut-off Date in
the case of the Subsequent Contracts, regardless of when due. In addition, the
Company shall be obligated to pay to the Servicer for deposit in the Certificate
Account, with respect to each Initial Contract that has a first scheduled
payment date in a month after February, 1995, an amount equal to the product of
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(x) one-twelfth of the Contract Rate for such Contract times the Stated
Principal Balance of such Contract and (y) the number of months after February,
1995 in which the month of the first scheduled payment date of such Initial
Contract occurs. The Servicer shall, subject to the following sentence, pay into
the Certificate 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,
Liquidation Proceeds (net of Liquidation Expenses), Insurance Proceeds, Monthly
Advances and any Repurchase Price (or cash deposit) paid pursuant to Section
3.05. Notwithstanding anything in this Agreement to the contrary, for so long
as, and only so long as, CITSF shall remain the Servicer hereunder and CITSF
remains a direct or indirect subsidiary of Holdings, (i) if Holding shall have
and maintain a short-term debt rating of at least P-1 by Moody's (notice of the
failure to maintain such rating shall be given to the Trustee by the Servicer
within ten (10) days of the occurrence thereof) and (ii) the Trustee shall have
received an Opinion of Counsel that any action taken pursuant to this sentence
shall not adversely affect the status of the Trust REMIC as a REMIC or result in
the imposition of a tax upon the Trust, the Servicer may make the deposits to
the Certificate Account specified in the three preceding sentences on a monthly
basis, but not later than the Business Day immediately preceding the Remittance
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 Certificate Account during such
Due Period but for the provisions of this sentence. The Servicer shall not be
required to deposit in the Certificate Account amounts that are otherwise
permitted to be withdrawn therefrom pursuant to clauses (b), (c), (d), (e), (f),
(h) and (i) of Section 8.02 or amounts that are payable to the Servicer pursuant
to Section 8.03; provided, however, the Servicer shall be required to so deposit
the Monthly Servicing Fee referred to in Section 8.02(h) unless: (i) CITSF is
the Servicer and (ii) with respect to any Remittance Date the Servicer has
determined, on the related Determination Date, that the Amount Available is
otherwise sufficient to make all required distributions of principal and
interest on the Offered Certificates on such Remittance Date. All amounts paid
into the Certificate Account under this Agreement shall be held in trust for the
Certificateholders (or the Servicer, to the extent the Servicer is entitled to
receive any such amounts pursuant to this Agreement) until payment of any such
amounts is authorized under this Agreement.
(b) Pre Funding Account.
(i) On or before the Closing Date, the Trustee shall establish the
Pre-Funding Account on behalf of the Trust with an Eligible Institution. If, at
any time during the Pre- Funding Period, the Pre-Funding Account ceases to be
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maintained with an Eligible Institution, the 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 the Rating Agency may consent)
establish a new Pre-Funding Account meeting the condition specified above,
transfer any cash and/or any investments to such new Pre-Funding Account and
from the date such new Pre-Funding Account is established, it shall be the
"Pre-Funding Account". The Pre-Funding Account shall be entitled "The Chase
Manhattan Bank (National Association) as trustee for the benefit of Holders of
Manufactured Housing Contract Senior/Subordinate Pass-Through Certificates,
Series 1995-1 (The CIT Group/Sales Financing, Inc., Servicer) Pre-Funding
Account". On the Closing Date, the Trustee will deposit, on behalf of the
Certificateholders, in the Pre-Funding Account, the Original Pre-Funded Amount.
(ii) On any Subsequent Transfer Date, the Servicer shall instruct the
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, upon satisfaction of the
conditions set forth in Section 2.05 hereof, with respect to such transfer. In
no event shall the Servicer be permitted to instruct the Trustee to release from
the Pre-Funding Account with respect to Subsequent Contracts to be transferred
to the Trust an amount in excess of the Original Pre-Funded Amount.
(iii) On the Remittance Dates occurring in March, April and May of 1995,
the Trustee shall withdraw from the Pre-Funding Account and deposit in the
Certificate Account for payment to the Holders of the Offered Certificates on
such Remittance Dates, Pre-Funding Earnings in an amount equal to the
difference, if any, between (x) the sum of the Senior Certificate Interest
Distribution Amount, the Class A-4 Interest Distribution Amount and the Class
A-5 Interest Distribution Amount payable on such Remittance Dates and (y) that
portion of the Amount Available allocated to make such interest payments on such
Remittance Dates. On such Remittance Dates, the Trustee shall first pay to the
Senior Certificateholders, to the extent available, the Pre-Funding Earnings so
withdrawn such that the Senior Certificateholders will receive the Senior
Certificate Interest Distribution Amount payable on such Remittance Date,
second, pay to the Class A-4 Certificateholders, to the extent available, the
remaining Pre-Funding Earnings so withdrawn such that the Class A-4
Certificateholders will receive the Class A-4 Certificate Interest Distribution
Amount, payable on such Remittance Date and third, pay to the Class A-5
Certificateholders, to the extent available, the remaining Pre-Funding Earnings
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so withdrawn such that the Class A-5 Certificateholders will receive the Class
A-5 Certificate Interest Distribution Amount payable on such Remittance Date.
(iv) On the last day of the Pre-Funding Period (or, if such day is not a
Business Day, on the next succeeding Business Day) (but in no event later than
the May 15, 1995 Remittance Date) the Servicer shall instruct the Trustee to
withdraw from the Pre-Funding Account, and the Trustee shall so withdraw, the
difference, if any, between (A) 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 Trustee
shall apply such amount to prepay the principal amount of the outstanding Senior
Certificates, on a sequential basis, on the Remittance Date immediately
following the Pre-Funding Period or if the end of the Pre-Funding Period is on a
Remittance Date, then on such date.
(v) Any Pre-Funding Earnings on deposit in the Pre-Funding Account on the
last day of the Pre-Funding Period which were not distributed to the
Certificateholders pursuant to Section 5.05(b)(iii) shall be deposited in the
Certificate Account on such date and shall constitute part of the Amount
Available on the first Remittance Date thereafter or, if the end of the
Pre-Funding Period is on a Remittance Date, then on such date.
(c)[Reserved.]
(d) The Eligible Institution maintaining the Certificate Account and the
Pre-Funding Account shall, in the name of the Trustee, as trustee, invest the
amounts in the Certificate Account and the Pre-Funding Account, respectively,
solely in Eligible Investments that mature not later than one Business Day prior
to the next succeeding Remittance Date, in accordance with instructions provided
to the Trustee by the Servicer 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 Certificate Account from
funds on deposit in the Pre-Funding Account pursuant to Section 5.05(b) and
funds deposited in the Certificate Account with respect to Initial Contracts
which have a first scheduled payment date in a month after February, 1995
pursuant to Section 5.05(a) may not be invested at all. All net income and gain
from the investment of funds in the Certificate Account and the Pre-Funding
Account shall be deposited in the Certificate Account and the Pre-Funding
Account, respectively. All income and gain realized from any such investment of
funds in the Certificate 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 Remittance Date pursuant to subsection
8.02(i). All income and gain realized from any such investment of funds in the
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Pre-Funding Account shall be distributed as provided in Section 5.05(b). An
amount equal to any net loss on such investments shall be deposited in the
Certificate 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, 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) (A) 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 Trustee or any Affiliate of
the Trustee, acting in its commercial capacity) incorporated under the laws
of the United States of America or any state thereof 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 (B) any other demand or time deposit or
certificate of deposit which is fully insured by the Federal Deposit
Insurance Corporation;
(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;
(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 Aa from Moody's at
the time of such investment;
(v) commercial paper having a rating of at least P-1 from Moody's at
the time of such investment; and
(vi) money market funds are rated Aaa or P-1 by Moody's, including,
without limitation, the VistaSM Money Market Fund or any other fund for
which the Trustee or an affiliate of the Trustee serves as an investment
advisor, administrator, shareholder servicing agent and/or custodian or
subcustodian, notwithstanding that (i) the Trustee or an affiliate of the
Trustee charges and collects fees and expenses from such funds for services
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rendered, (ii) the 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 the Trustee or an
affiliate of the 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 the Trustee may charge and collect for services rendered pursuant
to this instrument).
The Trustee may trade with itself or with an Affiliate on an arm's length
basis in the purchase or sale of such Eligible Investments.
SECTION 5.06. Enforcement.
(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
Liquidation Proceeds in respect of Defaulted Contracts.
(b) The Servicer may sue to enforce or collect upon Contracts, including
foreclosure of any security interest or Mortgaged Property, in its own name, if
possible, or as agent for the Trustee. If the Servicer elects to commence a
legal proceeding to enforce a Contract, 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 Trustee
on behalf of 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 Certificateholders.
(c) The Servicer shall exercise any rights of recourse against third
persons that exist with respect to any Contract in accordance with the
Servicer's usual practice. In exercising recourse rights, the Servicer is
authorized on the Trustee's behalf to reassign the Contract or to resell the
related Manufactured Home to the person against whom recourse exists at the
price set forth in the document creating the recourse.
(d) Prior to a Service Transfer the Servicer may grant to the Obligor on
any Contract any rebate, refund or adjustment out of the Certificate Account
that the Servicer in good faith believes is required because of a Principal
Prepayment In Full of the Contract. The Servicer will not permit any rescission
or cancellation of any Contract, except to the extent, if any, required by law.
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(e) Prior to a Service Transfer, the Servicer may, consistent with its
customary servicing procedures and in accordance with Section 5.02, grant to the
Obligor on any Contract an extension of payments due under such Contract,
provided that such extension does not result in any payments coming due on or
after August 15, 2020, and provided further that Obligors may not be solicited
for extensions and no more than one extension of payments under a Contract for
more than three months may be granted in any twelve-month period.
(f) 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. If an assumption of a Contract is permitted by the Servicer
upon the conveyance of the related Manufactured Home, the Servicer shall use its
best efforts to obtain an assumption agreement in connection therewith and
deliver such assumption agreement to the Trustee for addition to the related
Contract File.
(g) In the event that applicable state law requires that the sale of any
Mortgaged Property to which the Trustee has acquired title, through foreclosure
or otherwise, be conducted through a licensed real estate broker, the Servicer
shall retain such broker, and the fees payable to such broker in connection with
any such sale shall constitute Liquidation Expenses.
SECTION 5.07. Trustee to Cooperate.
Upon payment in full on any Contract, the Servicer will notify the Trustee
by certification of a Servicing Officer (which certification shall include a
statement to the effect that such Contract has been paid in full and that all
amounts received in connection with such payments which are required to be
deposited in the Certificate 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 reasonably deems to be necessary to discharge the Obligor
thereunder and eliminate the security interest in the Manufactured Home 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. From time to time as appropriate for
servicing and repossession in connection with any Contract, the Trustee shall,
upon written request of a Servicing Officer and delivery to the Trustee, of a
receipt signed by such Servicing Officer, cause the original Contract and the
related Contract File to be released to the Servicer and shall execute such
documents as the Servicer shall deem necessary to the prosecution of any such
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proceedings. The Trustee shall stamp the face of any such Contract to be
released to the Servicer with a notation that the Contract has been assigned to
the Trustee. Such receipt shall obligate the Servicer to return the original
Contract and the related Contract File to the Trustee when its need by the
Servicer has ceased unless the Contract shall be liquidated or repurchased as
described in Section 3.05. Upon the request of a Servicing Officer, the Trustee
shall perform such other acts as reasonably requested by the Servicer and
otherwise cooperate with the Servicer in enforcement of the Certificateholders'
rights and remedies with respect to the Contracts.
SECTION 5.08. Costs and Expenses.
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 Manufactured Homes securing such Contracts), shall be paid by
the Servicer and the Servicer shall not be entitled to reimbursement hereunder,
except that the Servicer shall be reimbursed out of the Liquidation Proceeds of
a Defaulted Contract for ordinary and necessary Liquidation Expenses incurred by
it directly in connection with realizing upon the related Manufactured Home. To
the extent that nonpayment of any taxes or charges would result in the creation
of a lien upon any Manufactured Home having a priority equal or senior to the
lien of the related Contract (except for real estate taxes that would create a
lien for taxes that are not yet due and payable), the Servicer shall pay any
such delinquent tax or charge and be reimbursed by the related Obligor or from
Liquidation Proceeds in respect of such Contract.
SECTION 5.09. Maintenance of Insurance.
(a) Except as otherwise provided in subsection (b) of this Section 5.09,
the Servicer shall cause to be maintained with respect to each Contract and each
Manufactured Home that has been repossessed in connection with a Defaulted
Contract one or more Hazard Insurance Policies which provide, at a minimum, the
same coverage as a standard form fire and extended coverage insurance policy
that is customary for manufactured housing, issued by a company authorized to
issue such policies in the state in which the related Manufactured Home is
located, and in an amount which is not less than the maximum insurable value of
such Manufactured Home or the principal balance due from the Obligor on the
related Contract, whichever is less; provided, however, that the amount of
coverage provided by each Hazard Insurance Policy shall be sufficient to avoid
the application of any co-insurance clause contained therein; and provided,
further, that such Hazard Insurance Policies may provide for customary
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deductible amounts. When a Manufactured Home's location was, at the time of
origination of the related Contract, and continues to be, within a federally
designated special flood hazard area, the Servicer shall also cause such flood
insurance to be maintained, which coverage shall be at least equal to the
minimum amount specified in the preceding sentence or such lesser amount as
may be available under the federal flood insurance program; provided, however,
that the failure of the Servicer to maintain such flood insurance coverage in
the case of a Contract for which such flood insurance coverage was not
maintained as of the Cut-off Date or relevant Subsequent Cut-off Date, as the
case may be, shall not give rise to an Event of Termination under Section 7.01.
Each Hazard Insurance Policy caused to be maintained by the Servicer shall
contain a standard loss payee clause in favor of the Servicer and its successors
and assigns. If any Obligor is in default in the payment of premiums on its
Hazard Insurance Policy or Policies, the Servicer shall pay such premiums out of
its own funds, and may separately add such premium to the Obligor's obligation
as provided by the Contract, but shall not add such premium to the remaining
principal balance of the Contract.
(b) The Servicer may, in lieu of causing individual Hazard Insurance
Policies to be maintained with respect to each Manufactured Home pursuant to
subsection (a) of this Section 5.09, and shall, to the extent that the related
Contract does not require the Obligor to maintain a Hazard Insurance Policy with
respect to the related Manufactured Home, 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 Hazard Insurance Policies. 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 5.09, 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 the Rating Agency with notice of the occurrence of any event
specified in the preceding sentence.
(c) The Servicer shall keep in force throughout the term of this Agreement
(i) at such time as the long-term debt of its parent is rated 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 (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
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manufactured housing contracts having an aggregate principal amount of
$100,000,000 or more and which are generally regarded as servicers acceptable to
institutional investors.
SECTION 5.10. REMIC Compliance.
The parties intend that the Trust REMIC formed hereunder shall constitute,
and that the affairs of the Trust REMIC shall be conducted so as to qualify it
as, a "real estate mortgage investment conduit" as defined in and in accordance
with the REMIC Provisions. In furtherance of such intention, the Servicer
covenants and agrees that it shall and, with respect to clauses (d) and (e) in
this paragraph, the Trustee covenants and agrees that it shall: (a) cause to be
prepared by a nationally recognized firm of public accountants designated by the
Company and filed, all required federal tax returns for the Trust including, but
not limited to, Form 1066 (which must be signed by the Trustee) and Schedule Q,
using a calendar year as the taxable year for the Trust when and as required by
the REMIC Provisions and other applicable federal income tax laws; (b) cause an
election to be made, on behalf of the Trust, to be treated as a REMIC on the
federal information tax return of the Trust for its first taxable year, in
accordance with the REMIC Provisions; provided, however, that such election
shall not be made with respect to the Pre-Funding Account and shall specifically
exclude the Pre-Funding Account (but not any Subsequent Contracts and all rights
with respect thereto transferred to the Trust in accordance with Section 2.04,
which shall be subject to such election) from the assets for which a REMIC
election is made; (c) prepare and forward or cause to be prepared and forwarded,
to the Certificateholders all information reports as and when required to be
provided to them in accordance with the REMIC Provisions; (d) conduct the
affairs of the Trust at all times that any Senior Certificate, Class A-4
Certificate or Class A-5 Certificate is outstanding so as to maintain the status
of the Trust REMIC as a REMIC under the REMIC Provisions; and (e) not knowingly
or intentionally take any action or omit to take any action that would cause the
termination of the REMIC status of the Trust. The Servicer covenants and agrees
that it shall, to the extent permitted by law, act as agent (and the Servicer is
hereby appointed to act as agent) on behalf of the Trust and in such capacity it
shall: (a) pay the amount of any federal income tax (to the extent that funds
distributable to the Class R Certificateholders are not available), including
prohibited transaction penalty taxes (exclusive of any such tax charged to CITSF
(if CITSF is not the Servicer) pursuant to Section 3.05), imposed on the Trust
when and as the same shall be due and payable (but such obligation shall not
prevent the Servicer or any other appropriate Person from contesting any such
tax in appropriate proceedings and shall not prevent the Servicer from
withholding payment of such tax, if permitted by law, pending the outcome of
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such proceedings); (b) conduct the affairs of the Trust at all times that any
Senior Certificate, Class A-4 Certificate or Class A-5 Certificate is
outstanding so as to maintain the status of the Trust REMIC as a REMIC under the
REMIC Provisions; and (c) not knowingly or intentionally take any action or omit
to take any action that would cause the termination of the REMIC status of the
Trust REMIC.
In the event that any tax is imposed on "prohibited transactions" of the
Trust as defined in Section 860F(a)(2) of the Code or on "contributions after
startup date" as defined in Section 860G(d) of the Code, such tax shall be
charged against amounts otherwise distributable to the holders of the Class R
Certificates in accordance with their Percentage Interests to the extent
hereinafter provided. Notwithstanding anything to the contrary contained herein,
the Servicer shall retain from amounts otherwise distributable to the holders of
the Class R Certificates on any Remittance Date sufficient funds for the
payment of such tax, including without limitation any tax payable pursuant to
Section 3.05, and shall pay such amount to the Trustee or, if the Servicer
(other than as a Class R Certificateholder) has paid such tax, reimburse the
Servicer therefor (to the extent that the Servicer has not been previously
reimbursed or indemnified therefor). The Servicer agrees first to seek
indemnification for any such tax payment from any indemnifying parties before
reimbursing itself from amounts otherwise distributable to the holders of the
Class R Certificates.
In the event that any Manufactured Home is acquired in a repossession,
foreclosure or other realization procedure (an "REO Property"), the Servicer
shall sell such REO Property within two years of its acquisition by the Trust,
unless, at the request of the Servicer, the Trustee seeks, and subsequently
receives, an Opinion of Counsel, addressed to the Trustee and the Servicer, to
the effect that the holding by the Trust of such REO Property subsequent to two
years after its acquisition will not result in the imposition of taxes on
"prohibited transactions" of the Trust as defined in Section 860F of the Code or
cause the Trust REMIC to fail to qualify as a REMIC at any time that any
Certificates are outstanding. The Servicer shall manage, conserve, protect and
operate each REO Property such that it will qualify as "foreclosure property"
within the meaning of Section 860G(a)(8) and will not result in the receipt by
the REMIC of any "income from nonpermitted assets" within the meaning of Section
860F(a)(2)(B) or the Code. Pursuant to its efforts to sell such REO Property,
the Servicer shall either itself or through an agent selected by the Servicer
protect and conserve such REO Property in the same manner and to such extent as
it is customary in the locality where such REO Property is located and may,
incident to its conservation and protection of the interests of the
Certificateholders, rent the same, or any part thereof, as the Servicer deems
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to be in the best interest of the Servicer and the Certificateholders for the
period prior to the sale of such REO Property.
The Servicer shall deposit all Liquidation Proceeds (net of Liquidation
Expenses) in the Certificate Account in accordance with Section 5.05(a). The
Servicer shall include with its Monthly Report to the Trustee a separate report
specifying, with respect to each Contract that becomes a Liquidated Contract
during the prior Due Period, the unpaid principal balance and the Liquidation
Proceeds (net of Liquidation Expenses) for such Contract.
SECTION 5.11. Repossession.
Notwithstanding the standard of care specified in Section 5.02, the
Servicer shall commence procedures for the repossession of any Manufactured Home
or the foreclosure upon any Mortgaged Property or take such other steps that in
the Servicer's reasonable judgment will maximize the receipt of principal and
interest or Liquidation Proceeds with respect to the Contract secured by such
Manufactured Home, subject to the requirements of the applicable state and
federal law, no later than five Business Days after the time when such Contract
becomes a Defaulted Contract, provided that if the Servicer has actual knowledge
that a Mortgaged Property is affected by hazardous waste, then the Servicer
shall not cause the Trustee to acquire title to such Mortgaged Property in a
foreclosure or similar proceeding. For purposes of the last proviso in the
preceding sentence, the Servicer shall not be deemed to have actual knowledge
that a Mortgaged Property is affected by hazardous waste unless it shall have
received written notice that hazardous waste is present on such property and
such written notice has been made a part of the Contract File with respect to
the related Contract. In connection with such foreclosure or other conversion,
the Servicer shall follow such practices and procedures as it shall deem
necessary or advisable and as shall be consistent with Section 5.02. In the
event that title to any Mortgaged Property is acquired in foreclosure or by deed
in lieu of foreclosure, the deed or certificate of sale shall be issued to the
Trustee, as Trustee, or, at its election, to its nominee on behalf of the
Trustee, as Trustee.
SECTION 5.12. Retitling.
(a) 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 Manufactured
Home because the title document for such Manufactured Home does not show such
Servicer or the Trustee as the holder of the first or second priority security
interest in the Manufactured Home, such Servicer shall take all necessary steps
to apply for a replacement title document showing it or the Trustee as the
secured party.
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(b) In order to facilitate the Servicer's actions, as described in
subsection (a) of this Section 5.12, CITSF will provide the Servicer with any
necessary power of attorney permitting it to retitle the Manufactured Home.
(c) If the Servicer is still unable to retitle the Manufactured Home, CITSF
will take all actions necessary to act with the Servicer to foreclose upon the
Manufactured Home, including, as appropriate, the filing of any UCC-1 or UCC-2
financing statements necessary to perfect the security interest in any
Manufactured Home that constitutes a fixture under the laws of the jurisdiction
in which it is located and all actions necessary to perfect the security
interest in any Manufactured Home that is considered or classified as part of
the real estate on which it is located under the laws of the jurisdictions in
which it is located.
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ARTICLE VI
REPORTS
SECTION 6.01. Monthly Reports to the Trustee.
On or before the Determination Date, the Servicer shall furnish a report
(the "Monthly Report") to the Trustee, any Paying Agent and (if CITSF is not the
Servicer) CITSF. The determination by the Servicer of the amount of the
distributions to be made to the Senior Certificateholders, the Class A-4
Certificateholders, the Class A-5 Certificateholders and the Class R
Certificateholders and, with respect to reimbursing the Servicer for the Monthly
Advances made by it as provided in Section 8.04, the Servicer shall, in the
absence of obvious error, be presumptively deemed to be correct for all purposes
hereunder, and the Trustee shall be protected in relying upon the same without
any independent check or verification.
In addition, on or before the Determination Date preceding a Remittance
Date, the Servicer will make a determination and inform the Trustee of the
following amounts, to the extent that such information is not contained in the
Monthly Report: (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 pursuant to the Agreement; (iv) the aggregate amount to be distributed
as principal and interest on the Certificates on the related Remittance Date;
(v) the Monthly Servicing Fee; and (vi) the Guarantee Fee.
SECTION 6.02. Certificate of Servicing Officer.
Each Monthly Report pursuant to Section 6.01 shall be accompanied by a
certificate of a Servicing Officer substantially in the form of Exhibit H,
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.
SECTION 6.03. Other Data.
In addition, the Servicer shall, on request of the Trustee, furnish the
Trustee such underlying data as can be generated by the Servicer's existing data
processing system without undue modification or expense. No later than the May
15, 1995 Remittance Date the Company shall provide Moody's with information with
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respect to the Pool Stated Principal Balance of the contracts and the Stated
Principal Balance of any Subsequent Contracts transferred to the Trust and other
similar information provided to Moody's with respect to the Initial Contracts
prior to the Closing Date. All material information provided by the Company with
respect to the Subsequent Contracts to Moody's shall be provided by the Company
to the Trustee.
SECTION 6.04. Annual Report of Accountants.
On or before April 1 of each year, commencing April 1, 1995, 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 Moody's.
SECTION 6.05. Statements to Certificateholders.
Concurrently with each distribution charged to the Certificate Account, the
Trustee, so long as it has received the Monthly Report from the Servicer, shall
forward or cause to be forwarded by mail to each Certificateholder (or to the
Depository), the Monthly Report in the form attached as Exhibit L hereto.
The Trustee (so long as it has received the Monthly Report from the
Servicer) and the Servicer shall inform any Certificateholder inquiring by
telephone of the information contained in the most recent Monthly Report. The
Trustee shall be entitled to rely upon the accuracy of the Monthly Report
without independent verification unless it knows or has reason to know that the
information contained therein is not accurate.
Within a reasonable period of time after the end of each calendar year, the
Trustee shall furnish or cause to be furnished to each Person who at any time
during the calendar year was a Certificateholder a statement containing the
information with respect to interest accrued and principal paid on its
Certificates during such calendar year and such other information as the
Servicer's deems necessary or desirable for Certificate-holders to prepare their
tax returns. Such obligation of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code as from time to
time in force.
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Copies of all reports provided to the Trustee shall also be provided by the
Servicer to Moody's.
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ARTICLE VII
SERVICE TRANSFER
SECTION 7.01. Event 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, which failure continues
unremedied for thirty (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 Trustee or the Company or to the Servicer and the Trustee by
Holders of Offered Certificates evidencing, as to such Class, Percentage
Interests aggregating not less than 25%;
(c) Any assignment by the Servicer of its duties or rights hereunder except
as specifically permitted hereunder, or any attempt to make such an assignment;
(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 sixty
(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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SECTION 7.02. Transfer.
If an Event of Termination has occurred and is continuing, the Trustee may,
or at the written direction of Certificateholders with aggregate Percentage
Interests representing 25% or more of the Trust 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 Certificate Account and the Pre-Funding
Account, the transfer of which shall be governed by Section 7.06), shall pass to
and be vested in the Trustee pursuant to and under this Section 7.02 (subject to
applicable law regarding the Trustee's ability to make advances), unless
prohibited by applicable law; and, without limitation, the 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 the Trustee or a
successor servicer the sole lienholder or legal title holder of record of each
Manufactured Home), 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 the Trustee in effecting the
termination of the responsibilities and rights of the Servicer hereunder,
including, without limitation, the transfer to the 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 Certificate 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 the Trustee or a successor servicer the sole lienholder or
legal title holder of record in respect of each Manufactured Home. 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 Certificate Account are available for
the payment thereof without reducing the amount of distributions that would be
made to Holders of the Offered 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 the Contract Files in the Servicer's possession.
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SECTION 7.03. Trustee to Act; Appointment of Successor.
On and after the time the Servicer receives a notice of termination
pursuant to Section 7.02, the 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 Trustee will not assume any
obligations of CITSF pursuant to Section 3.05 and (ii) the 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. As compensation
therefor, the Trustee shall, except as provided in Section 7.02 and in this
Section 7.03, 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 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 Trustee is
prohibited by law from so acting, the Trustee shall act in such capacity as
hereinabove provided. In connection with such appointment and assumption, the
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
Certificateholders, be in excess of the Servicing Fee. The Trustee and such
successor shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession.
SECTION 7.04. Notification to Certificateholders and to Moody's.
(a) Promptly following the occurrence of any Event of Termination, the
Servicer shall give written notice thereof to the Trustee, Certificateholders at
their respective addresses appearing on the Certificate Register and to Moody's.
(b) Within ten (10) days following any termination or appointment of a
successor to the Servicer pursuant to this Article VII, the Trustee shall give
written notice thereof to Certificateholders at their respective addresses
appearing on the Certificate Register.
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(c) The Trustee shall give written notice to Moody's at least thirty (30)
days prior to the date upon which any Eligible Servicer (other than the Trustee)
is to assume the responsibilities of Servicer pursuant to Section 7.03, naming
such successor Servicer.
SECTION 7.05. Effect of Transfer.
(a) After the Service Transfer, the 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.
(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 pursuant to Article X and Sections 3.05,
11.05 and 11.10(f)) other than those relating to the management, administration,
servicing or collection of the Contracts.
SECTION 7.06. Transfer of Accounts.
Notwithstanding the provisions of Section 7.02, if the Certificate Account
and the Pre-Funding Account shall be maintained with the Servicer and an Event
of Termination shall occur and be continuing, the Servicer shall, promptly after
receipt of a notice of termination, if any, pursuant to Section 7.02, establish,
or cooperate with the Trustee to establish, new accounts in trust for the
Certificateholders conforming with the requirements of this Agreement with an
Eligible Institution other than the Servicer and promptly transfer, or cooperate
with the Trustee to transfer, all funds in the Certificate Account or the
Pre-Funding Account to such new accounts, which shall thereafter be deemed the
Certificate Account and the Pre-Funding Account, respectively, for the purposes
hereof.
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ARTICLE VIII
DISTRIBUTIONS AND WITHDRAWALS FROM
CERTIFICATE ACCOUNT
SECTION 8.01. Monthly Distributions.
(a) Distributions on the Certificates shall be made from funds in the
Certificate Account (but only to the extent of the Amount Available for the
related Remittance Date). Each Certificateholder as of a Record Date shall be
paid on the next succeeding Remittance Date by check mailed to such
Certificateholder at the address for such Certificateholder appearing on the
Certificate Register (or, if a Certificateholder holds an aggregate Percentage
Interest of at least 5% of the Certificates and if such Certificateholder so
requests, by wire transfer of immediately available funds pursuant to written
instructions delivered to the Trustee at least ten (10) days prior to such
Remittance Date, which instructions, until revised, shall remain operative for
all Remittance Dates thereafter), such Certificateholder's Percentage Interest
of the amount to be distributed. Final payment on any Certificate shall be made
only upon presentation of such Certificate at the office or agency of the Paying
Agent.
(b) Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, which shall credit the amount of such distribution to
the accounts of its Depository Participants in accordance with its normal
procedures. Each Depository Participant shall be responsible for disbursing such
distribution to the Certificate Owners that it represents and to each indirect
participating brokerage firm (a "brokerage firm" or "indirect participating
firm") for which it acts as agent. Each brokerage firm shall be responsible for
disbursing funds to the Certificate Owners that it represents. All such credits
and disbursements with respect to a Book-Entry Certificate are to be made by the
Depository and the Depository Participants in accordance with the provisions of
the Book-Entry Certificates and the Depository's rules. Neither the Trustee, the
Certificate Registrar, the Contract Seller, the Company nor the Servicer shall
have any responsibility therefor except as otherwise provided by applicable law.
To the extent applicable and not contrary to the rules of the Depository, the
Trustee shall comply with the provisions of the forms of the Offered
Certificates as set forth in Exhibits A and B hereto.
(c) On each Remittance Date, the Amount Available in the Certificate
Account plus the amount of any Monthly Advances will be distributed to
Certificateholders, the Servicer and Holdings in the amounts and in the
priorities set forth below:
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1. to pay the Monthly Servicing Fee (and any other amounts owed to the
Servicer pursuant to Section 7.02) to the Servicer, if CITSF is not the
Servicer;
2. to pay the Senior Certificate Interest Distribution Amount as
follows:
(i) the amount in clause (a)(i) of the definition of Senior
Certificate Formula Distribution Amount to the Class A-1
Certificateholders; the amount in clause (a)(ii) of the definition of
Senior Certificate Formula Distribution Amount to the Class A-2
Certificateholders and the amount in clause (a)(iii) of the definition
of Senior Certificate Formula Distribution Amount to the Class A-3
Certificateholders; or, if the Amount Available is less than the sum
of the amounts specified in this clause (i), pro rata to the Holders
of each Class of Senior Certificates based on the amount of interest
payable to the Holders of each such Class pursuant to this clause (i);
and
(ii) the aggregate Unpaid Senior Certificate Interest Shortfall
pro rata to the Holders of each Class of Senior Certificates based on
the Unpaid Senior Certificate Interest Shortfall of each such Class;
3. after payment of the amounts specified in clauses (1) and (2)
above, as follows:
(i) if there is a Senior Certificate Principal Deficiency Amount
as of such Remittance Date, the sum of the remaining Amount Available
and the remaining Monthly Advances, pro rata, to each Class of Senior
Certificates based on the Principal Balance of each such Class (but in
no event shall such amount exceed the Principal Balance of any such
Class);
(ii) if there is an Unpaid Senior Certificate Principal Shortfall
on such Remittance Date, then an amount equal to the lesser of such
Unpaid Senior Certificate Principal Shortfall and the sum of the
remaining Amount Available and the remaining Monthly Advances (after
giving effect to the payment of the amounts specified in clauses (1),
(2) and (3)(i) above) shall be distributed pro rata to each Class of
Senior Certificates based on the Unpaid Senior Certificate Principal
Shortfall of each such Class;
(iii) if such Remittance Date is on or prior to the Class A-1
Cross-over Date, then the lesser of the sum of the remaining Amount
Available and the remaining Monthly Advances (after giving effect to
the
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distributions in clauses (1), (2) and (3)(ii) above) and the Formula
Principal Distribution Amount shall be distributed to the Class A-1
Certificateholders;
(iv) if such Remittance Date is on or after the Class A-1
Cross-over Date but not after the Class A-2 Cross-over Date, then the
lesser of the sum of the remaining Amount Available and the remaining
Monthly Advances (after giving effect to the distributions in clauses
(1), (2) and (3)(ii) above) and the Formula Principal Distribution
Amount shall be distributed to the Class A-2 Certificateholders
(reduced, if such Remittance Date is on the Class A-1 Cross-over Date,
by the amount of the Formula Principal Distribution Amount actually
distributed to the Class A-1 Certificateholders on such date); and
(v) if such Remittance Date is on or after the Class A-2
Cross-over Date but not after the Class A-3 Cross-over Date, then the
lesser of the sum of the remaining Amount Available and the remaining
Monthly Advances (after giving effect to the distributions in clauses
(1), (2) and (3)(ii) above) and the Formula Principal Distribution
Amount shall be distributed to the Class A-3 Certificateholders
(reduced, if such Remittance Date is on the Class A-2 Cross-over Date,
by the amount of the Formula Principal Distribution Amount actually
distributed to the Class A-2 Certificateholders on such date);
provided, however, that the aggregate of all amounts distributed pursuant to
this clause (3) to the Holders of any Class of Senior Certificates shall not
exceed the Original Class A-1 Principal Balance, the Original Class A-2
Principal Balance, the Original Class A-3 Principal Balance, as the case may be.
4. to pay the Class A-4 Interest Distribution Amount to the Class A-4
Certificateholders, first to the payment of the amount in clause (a) of the
definition of Class A-4 Interest Distribution Amount and then to the
payment of any Unpaid Class A-4 Interest Shortfall;
5. after payment of the amounts specified in clauses (1), (2), (3) and
(4) above, to pay the Class A-4 Formula Principal Distribution Amount to
the Class A-4 Certificateholders;
6. after payment of the amounts specified in clauses (1) through (5)
above, to pay the Class A-5 Interest Distribution Amount to the Class A-5
Certificateholders, first to the payment of the amount in clause (a) of the
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definition of Class A-5 Interest Distribution Amount and then to the
payment of any Unpaid Class A-5 Interest Shortfall;
7. after giving effect to the distributions made pursuant to clauses
(1) through (6) above on such Remittance Date, to pay the Class A-5 Formula
Principal Distribution Amount to the Class A-5 Certificateholders;
8. to pay the Monthly Servicing Fee (and any other amounts owed to the
Servicer pursuant to Section 7.02) to CITSF, if CITSF is the Servicer;
9. to pay the Guarantee Fee to Holdings; and
10. all remaining Amounts Available (after giving effect to the
distributions in clauses (1), (2), (3), (4), (5), (6), (7), (8) and (9)
above) shall be paid to the Class R Certificateholders.
Not later than the third Business Day prior to each Remittance Date, the
Servicer shall notify the Guarantor of the amount of the Guarantee Payment, if
any, for such Remittance Date. The Limited Guarantee shall require the Guarantor
to deposit the Guarantee Payment, if any, for a Remittance Date into the
Certificate Account on the Business Day preceding such Remittance Date. If on
any Remittance Date, the Amount Available plus the amount of any Monthly
Advances remaining after the application thereof pursuant to clauses (1) through
(5) above is insufficient to make the distributions in respect of the Class A-5
Certificates required by clauses (6) and (7) above, then the Trustee shall
release from the Certificate Account the Guarantee Payment deposited therein for
such Remittance Date and apply such amount to the payments required by clauses
(6) and (7) above.
Notwithstanding the foregoing, following the payment in full of all principal
and interest required hereunder to be paid to the holders of the Offered
Certificates, Holdings will be entitled to receive from the Amount Available an
amount equal to the aggregate of all Guarantee Payments made by Holdings under
the Limited Guarantee prior to any distributions being made to the Class R
Certificateholders pursuant to clause 10 of Section 8.01(c).
Amounts deposited in the Certificate Account which may not be invested as
provided in Section 5.05(d) shall, to the extent applicable, be deemed to be the
first funds distributed from the Amount Available.
(d) Notwithstanding the foregoing, amounts otherwise distributable to a
Certificateholder pursuant to such paragraph which are required to be withheld
and remitted to a taxing authority shall be withheld and remitted to such taxing
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authority, and such amounts shall be treated as actually distributed to such
Certificateholder for all purposes of this Agreement.
(e) The Servicer may direct the Trustee to pay to the Servicer an amount
equal to unreimbursed Monthly Advances (without interest) with respect to each
Contract for which the Servicer has made a Monthly Advance, to the extent not
netted from deposits to the Certificate Account pursuant to Section 5.05, by
wire transfer of immediately available funds, from subsequent collections with
respect to interest on or with respect to such Contract, Net Liquidation
Proceeds and Insurance Proceeds or the Repurchase Price of such Contract. In the
event that any such Monthly Advance shall become a Nonrecoverable Advance in the
related Due Period, the Servicer shall receive with such wire transfer the
amount necessary to fully reimburse the Servicer for such Monthly Advance or
part thereof from amounts available in the Certificate Account with respect to
such Due Period.
(f) The Trustee shall appoint an Eligible Institution to be the paying
agent (the "Paying Agent") and cause it to make the payments to the
Certificateholders required hereunder. The Trustee initially appoints itself,
with its office at The Chase Manhattan Bank (National Association), 4 Chase
MetroTech Center, Brooklyn, New York 11245, Attention: Corporate Trust
Administration, as such Paying Agent. The Trustee shall require the Paying Agent
(if other than the Trustee) to agree in writing that all amounts held by it for
payment hereunder will be held in trust for the benefit of the
Certificateholders and that it will notify the Trustee of any failure by the
Servicer to make funds available to the Paying Agent for the payment of amounts
due on the Certificates. In respect of each Remittance Date, the Trustee shall
withdraw from the Certificate Account (to the extent of the related Amount
Available) and, as applicable, the Pre-Funding Account in accordance with this
Agreement and deposit in an account established by the Paying Agent for the
purpose of this Section funds sufficient to make the distribution to
Certificateholders pursuant to this Section and, as applicable, pursuant to
Section 5.05(b). Such funds shall be available to the Paying Agent by 11:00 A.M.
on each Remittance Date.
SECTION 8.02. Permitted Withdrawals from the Certificate Account.
The Trustee will, from time to time as provided herein, make withdrawals
from the Certificate Account of amounts deposited in said account pursuant to
Section 5.05 that are attributable to the Contracts for the following purposes:
(a) to make payments to Certificateholders in the amounts and in the
manner provided for in Section 8.01;
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(b) to pay to CITSF with respect to each Contract or property acquired
in respect thereof that has been purchased pursuant to Section 3.05, all
amounts received thereon and not required to be distributed to
Certificateholders as of the date on which the related Stated Principal
Balance or Repurchase Price is determined;
(c) to make payments to the Servicer in the amounts and in the manner
provided for in Section 8.01(e);
(d) to reimburse the Servicer out of Liquidation Proceeds for
Liquidation Expenses and taxes incurred by it, to the extent such
reimbursement is permitted pursuant to Section 5.08;
(e) to reimburse the Servicer for the payment of taxes as permitted by
Section 5.10;
(f) to withdraw any amount deposited in the Certificate Account that
was not required to be deposited therein;
(g) to make payments to Holdings of the Guarantee Fee;
(h) to pay to the Servicer the Servicing Fees for such Remittance Date
and the Servicing Fees from any prior Remittance Date previously unpaid;
and
(i) to pay to the Servicer net investment earnings from funds on
deposit in the Certificate Account due to the Servicer pursuant to Section
5.05(b).
Since, in connection with withdrawals pursuant to clause (b) of the
preceding paragraph, 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 Certificate Account pursuant to such clause.
The Servicer shall keep and maintain an accounting for the purpose of justifying
any withdrawal from the Certificate Account pursuant to clause (f).
SECTION 8.03. Repurchase Option.
(a) The Trust created hereby and the respective obligations and
responsibilities of the Company, the Servicer and the Trustee created hereby
(other than the responsibility of the Trustee to make any final distributions to
Certificateholders as set forth below) shall terminate upon the earlier of (i)
the Remittance Date following the later of the final payment or other
liquidation (or any advance with respect thereto) of the last Contract remaining
in the Trust or the termination of the Trust pursuant to Section 12.03, or (ii)
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the purchase by the Company or the Servicer pursuant to the following sentence.
The Company or the Servicer, at their respective options and subject to
Subsection 8.03(b), may purchase all of the Contracts and all property acquired
in respect of any Contract remaining in the Trust at any time at which the Pool
Stated Principal Balance is less than 10% of the Initial Pool Principal Balance
at a price equal to the greatest of (A) the sum of (1) 100% of the Stated
Principal Balance of each Contract (other than any Contract as to which title to
the underlying property has been acquired and whose fair market value is
included pursuant to clause (2) below as of the Final Remittance Date) and (2)
the fair market value of such acquired property (as determined by the Servicer
as of the close of business on the third Business Day next preceding the date
upon which notice of any such termination is furnished to Certificateholders
pursuant to Section 12.03), (B) the aggregate fair market value (as determined
by the Servicer as of the close of business on such third Business Day) of all
of the assets of the Trust, and (C) the remaining Pool Stated Principal Balance
as of the close of business on such third Business Day, plus, in each case, any
unpaid interest on the Senior Certificates, any unpaid interest on the Class A-4
Certificates and any unpaid interest on the Class A-5 Certificates as well as
one month's interest at the applicable Contract Rate on the Stated Principal
Balance of each Contract (including any Contract as to which the related
Manufactured Home has been repossessed).
(b) In the case of any purchase by the Servicer pursuant to the last
sentence of paragraph (a) above, the Servicer shall provide to the Trustee the
certification required by Section 5.07 and the Trustee shall, promptly following
payment of the purchase price release to the Servicer the Contract Files
pertaining to the Contracts being purchased.
SECTION 8.04. Monthly Advances by the Servicer.
(a) By the close of business on each Determination Date the Servicer shall
deposit in the Certificate Account, out of its own funds, the Monthly Advance
for the following Remittance Date.
(b) On each Remittance Date, the Servicer shall reimburse itself for the
Outstanding Amount Advanced to the extent of actual collections of payments on
the related Contracts.
(c) If the Servicer determines that any advance made pursuant to Section
8.04(a) has become a Nonrecoverable Advance and, at the time of such
determination, there exists an Outstanding Amount Advanced, then the Servicer
shall reimburse itself out of funds to be deposited into the Certificate Account
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pursuant to Section 5.05 for the amount of such Nonrecoverable Advance, but only
to the extent of such Outstanding Amount Advanced.
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ARTICLE IX
THE CERTIFICATES
SECTION 9.01. The Certificates.
The Senior Certificates, the Class A-4 Certificates and the Class A-5
Certificates shall be substantially in the forms set forth in Exhibits A, B-1
and B-2, respectively, and shall, on original issue, be executed by manual or
facsimile signature of the Company by any one of its President, Vice Presidents,
Secretary, Treasurer or other authorized officers and authenticated by the
Trustee to or upon the order of the Company upon receipt. The Senior
Certificates shall be evidenced by (i) one or more Class A-1 Certificates
representing $40,716,000 initial aggregate principal balance, (ii) one or more
Class A-2 Certificates representing $28,346,000 initial aggregate principal
balance and (iii) one or more Class A-3 Certificates representing $34,478,000
initial aggregate principal balance, beneficial ownership of such Certificates
to be held through Book-Entry Certificates in minimum dollar denominations of
$1,000 and integral dollar multiples of $1,000 in excess thereof. The Class A-4
Certificates shall be evidenced by one or more Class A-4 Certificates
representing $9,920,000 initial aggregate principal balance, beneficial
ownership of such Certificate to be held through one or more Book-Entry
Certificates in minimum dollar denominations of $1,000 and integral dollar
multiples of $1,000 in excess thereof. The Class A-5 Certificates shall be
evidenced by one or more Class A-5 Certificates representing $10,540,000 initial
aggregate principal balance, beneficial ownership of such Certificate to be held
through one or more Book-Entry Certificates in minimum dollar denominations of
$1,000 and integral dollar multiples of $1,000 in excess thereof. The Class R
Certificates shall be issuable in Percentage Interests.
The Certificates shall be authenticated by manual signature on behalf of
the Trustee by a duly authorized Responsible Officer or authorized signatory.
Certificates bearing the signatures of individuals who were at any time the
proper officers of the Company shall bind the Company, notwithstanding that
such individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Certificate or did not hold such offices at
the date of such Certificates. No Certificate shall be entitled to any benefit
under this Agreement, or be valid for any purpose, unless such Certificate has
been authenticated by manual signature in accordance with this Section, and such
signature upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication,
except for those Certificates authenticated on the Closing Date, which shall be
dated the Closing Date.
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SECTION 9.02. Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall keep at the office or agency to be maintained in
accordance with Section 12.02 a "Certificate Register" in which Trustee shall
provide for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Trustee initially appoints itself to be the
"Certificate Registrar" and transfer agent for the purpose of registering
Certificates and transfers and exchanges of Certificates as provided herein.
Promptly after the Closing Date the Trustee will give the Servicer, in writing,
the names of all Class R Certificateholders and the Trustee will give the
Servicer, prompt written notice of any change in the Class R Certificateholders.
The Trustee will give prompt written notice to Certificateholders and the
Servicer of any change in the Certificate Registrar.
(b) No transfer, sale, pledge or other disposition of any Class R
Certificate or any interest therein (including any transfer by a Certificate
Owner of any interest in a Book-Entry Certificate) shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities Act and effective registration or qualification under applicable
state securities laws or is made in a transaction that does not require such
registration or qualification. Until such time as the Class R Certificates shall
be registered pursuant to a registration statement filed under the Securities
Act, the Class R Certificates shall bear a legend to the effect set forth in the
preceding sentence.
In the event that (i) registration of a transfer of a Class R Certificate
or any interest therein (including any transfer by a Certificate Owner of any
interest in a Book-Entry Certificate) is to be made in reliance upon the
exemption from registration under the Securities Act contained in Rule 144A,
such transfer shall be made only to a Qualified Institutional Buyer which is
aware that the transfer of such Certificate is being made in reliance on Rule
144A and is acquiring such Certificate for its own account or for the account of
a Qualified Institutional Buyer, as the case may be, and such transferee shall
be deemed to have represented that the foregoing is true and correct and that
such transferee understands that such Certificates have not been and will not be
registered under the Securities Act and may not be reoffered, resold, pledged or
otherwise transferred except (A) to a person who such transferee reasonably
believes is a Qualified Institutional Buyer in a transaction meeting the
requirements of Rule 144A and (B) in accordance with all applicable securities
laws of the states of the United States.
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In the event that registration of a transfer of a Class R Certificate or
any interest therein (including any transfer by a Certificate Owner of any
interest in a Book-Entry Certificate) is to be made in reliance upon an
exemption from registration under the Securities Act (other than the exemption
from registration contained in Rule 144A) and applicable state securities laws
in order to assure compliance with the Securities Act, the transferor or the
transferee shall deliver to the Trustee, the Company and the Contract Seller an
Opinion of Counsel (which may be internal counsel) that such transfer may be
made pursuant to an exemption from the Securities Act (other than the exemption
from registration contained in Section 3(a)(2) thereof).
The Holder of a Class R Certificate (or the Certificate owner, as
applicable) desiring to effect a transfer of such Certificate shall, and does
hereby agree to, indemnify the Trustee, the Company and the Servicer against any
liability that may result if such transfer is not so exempt or is not made in
accordance with such federal and state laws.
Neither the Seller nor the Trustee is obligated to register the Class R
Certificates under the Securities Act or under any state securities laws.
Prospective transferors of Class R Certificates (or Book-Entry
Certificates), and prospective transferees of Certificates (or Book-Entry
Certificates) that are Qualified Institutional Buyers buying Certificates in
reliance upon Rule 144A may request from the Servicer information regarding the
Trust and the Trust assets. Within five (5) Business Days of any such request,
the Servicer shall deliver to any such prospective transferor or transferee (i)
a copy of each Monthly Report delivered to Certificateholders since the first
Remittance Date pursuant to Section 6.05, (ii) information relating to the
Seller, the Servicer, the Contracts and this Agreement substantially in the
form of Prospectus dated February 10, 1995 and Prospectus Supplement relating to
the Certificates, dated February 15, 1995 and (iii) such other information as
may be required to comply with Rule 144A and any interpretation thereof. The
Contract Seller authorizes the Servicer to so deliver such monthly statements.
(c) [Reserved.]
(d) Each Person who has or who acquires any Ownership Interest in a Class R
Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions and to have
irrevocably appointed the Servicer as its attorney-in-fact to negotiate the
terms of any mandatory sale under clause (vi) below and to execute all
instruments of transfer and to do all other things necessary in connection with
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any such sale, and the rights of each Person acquiring any Ownership Interest in
a Class R Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a Class
R Certificate shall be a Permitted Transferee and shall promptly notify the
Servicer of any change or impending change in its status as a Permitted
Transferee.
(ii) No Ownership Interest in a Class R Certificate may be Transferred
without the express written consent of the Servicer, and the Trustee shall
not register the Transfer of any Class R Certificate without such consent
with respect to any proposed Transfer. In connection with any proposed
Transfer of any Ownership Interest in a Class R Certificate, the Servicer
shall, as a condition to such consent, require delivery to it, form and
substance satisfactory to it, and the proposed Transferee shall deliver to
the Servicer, the following:
(A) an affidavit (a "Transfer Affidavit") of the proposed
Transferee, in the form attached as Exhibit M hereto, that it is not a
"disqualified organization" within the meaning of Section 860E(e)(5)
of the Code, and that the proposed Transferee is not acquiring its
Ownership Interest in the Class R Certificate as a nominee, trustee or
agent for, or for the benefit of, any Person who is not a Permitted
Transferee; and
(B) an express agreement by the proposed Transferee to be bound
by and to abide by the provisions of this Section and the restrictions
noted on the face of the Class R Certificates.
(iii) Notwithstanding the delivery of a Transfer Affidavit by a
proposed Transferee under clause (ii) above, if the Servicer has actual
knowledge that the Transfer Affidavit is false, no Transfer of an Ownership
Interest in a Class R Certificate to such proposed Transferee shall be
effected.
(iv) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall agree (A) to require a Transfer Affidavit from
any other Person to whom such Person attempts to Transfer its Ownership
Interest in a Class R Certificate and (B) not to Transfer its Ownership
Interest in a Class R Certificate or to cause the Transfer of an Ownership
Interest in a Class R Certificate to any other Person if it has actual
knowledge that such Transfer Affidavit is false.
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(v) Any attempted or purported Transfer of any Ownership Interest in a
Class R Certificate in violation of the provisions of this Section shall be
absolutely null and void and shall vest no rights in the purported
Transferee. If any purported Transferee shall become a Holder of a Class R
Certificate in violation of the provisions of this Section, then, upon
discovery by or due notification of the Trustee that the registration of
Transfer of such Class R Certificate was not in fact permitted by this
Section, the last preceding Permitted Transferee shall be restored to all
rights as Holder thereof retroactive to the date of registration of
Transfer of such Class R Certificate. The Trustee shall be under no
liability to any Person for any registration of transfer of a Class R
Certificate that is in fact not permitted by this Section or for making any
payments due on such Certificate to the Holder thereof or taking any other
action with respect to such Holder under the provisions of this Agreement
so long as the Transfer was registered with the express prior written
consent of the Servicer. The Trustee shall be entitled but not obligated to
recover from any Holder of a Class R Certificate that was in fact not a
Permitted Transferee at the time it became a Holder or, at such subsequent
time as it became other than a Permitted Transferee, all payments made on
such Class R Certificate at and after either such time. Any such payments
so recovered by the Trustee shall be paid and delivered by the Trustee to
the last preceding Permitted Transferee of such Certificate.
(vi) If any purported Transferee shall become a Holder of a Class R
Certificate in violation of the restrictions in this Section, then the
Servicer shall have the right without notice to the Holder or any prior
Holder of such Class R Certificate, to sell such Class R Certificate to a
purchaser selected by the Servicer on such terms as the Servicer may
choose. Such purchaser may be the Servicer itself or any Affiliate of the
Servicer. The proceeds of such sale, net of commissions (which may include
commissions payable to the Servicer or its Affiliates), expenses and taxes
due, if any, will be remitted by the Servicer to the last preceding
Permitted Transferee of such Class R Certificate, except that in the event
that the Servicer determines that the Holder or any prior Holder of such
Class R Certificate may be liable for any amount due under this Section or
any other provision of this Agreement, the Servicer may withhold a
corresponding amount from such remittance as security for such claim. The
terms and conditions of any sale under this clause (vi) shall be determined
in the sole discretion of the Servicer, and it shall not be liable to any
Person having an Ownership Interest in a Class R Certificate as a result of
its exercise of such discretion.
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Upon notice to the Servicer that any legal or beneficial interest in any
portion of a Class R Certificate has been transferred, either directly or
indirectly to any person that is not a Permitted Transferee or an agent
(including a broker, nominee, or middleman) of such Transferee in contravention
of the foregoing restrictions, the Servicer agrees to furnish to the Internal
Revenue Service and to the transferor of such Class R Certificate or such agent
such information necessary to the application of Section 860E(e) of the Code as
may be required by the Code or any regulations or administrative pronouncements
thereunder, including but not limited to the present value of the total
anticipated excess inclusions with respect to such Class R Certificate (or
portion thereof) for periods after such transfer. At the election of the
Servicer, the Servicer may charge a reasonable fee for computing and furnishing
such information to the transferor or to such agent referred to above; however,
the Servicer shall in no event be excused from furnishing such information to
the Internal Revenue Service. The foregoing restrictions on transfer contained
in this Section 9.02(d) shall cease to apply to Transfers occurring on or after
the date on which there shall have been delivered to the Trustee, the Company
and the Servicer, in form and substance satisfactory to the Servicer, an Opinion
of Counsel that eliminating such restrictions will not cause the Trust REMIC to
fail to qualify as a REMIC at any time while the Certificates are outstanding.
(e) At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same Class of authorized denominations of the same
aggregate denomination, upon surrender of the Certificates to be exchanged at
such office. Whenever any Certificates are so surrendered for exchange, the
Company shall execute and deliver, and the Trustee shall authenticate, the
Certificates which the Certificateholder making the exchange is entitled to
receive. Every Certificate presented or surrendered for transfer or exchange
shall be duly endorsed by, or shall be accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by, the holder thereof or his or her attorney duly authorized in
writing.
(f) Except as provided in paragraph (g) below the Book-Entry Certificates
shall at all times remain registered in the name of the Depository or its
nominee and at all times: (i) registration of the Senior, Class A-4 and Class
A-5 Certificates may not be transferred by the Trustee except to another
Depository; (ii) the Depository shall maintain book-entry records with respect
to the Certificate Owners and with respect to ownership and transfers of such
Senior, Class A-4 and Class A-5 Certificates; (iii) ownership and transfers of
registration of the Senior, Class A-4 and Class A-5 Certificates on the books of
the Depository shall be governed by applicable rules established by the
Depository; (iv) the Depository may collect its usual and customary fees,
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charges and expenses from its Depository Participants; (v) the Trustee shall
deal with the Depository, Depository Participants and indirect participating
firms as representatives of the Certificate Owners of the Senior, Class A-4 and
Class A-5 Certificates for purposes of exercising the rights of Holders under
this Agreement, and requests and directions for and votes of such
representatives shall not be deemed to be inconsistent if they are made with
respect to different Certificate Owners; and (vi) the Trustee may rely and shall
be fully protected in relying upon information furnished by the Depository with
respect to its Depository Participants and furnished by the Depository
Participants with respect to indirect participating firms and persons shown on
the books of such indirect participating firms as direct or indirect Certificate
Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owner. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificates Owners
it represents or of brokerage firms for which it acts as agent in accordance
with the Depository's normal procedures.
(g) If (x)(i) the Company or the Depository advises the Trustee in writing
that the Depository is no longer willing or able properly to discharge its
responsibilities as Depository, and (ii) the Trustee or the Company is unable to
locate a qualified successor, or (y) the Company at its sole option advises the
Trustee in writing that it elects to terminate the book-entry system through the
Depository, the Trustee shall notify all Certificate Owners, through the
Depository, of the occurrence of any such event and of the availability of
definitive, fully registered Senior Certificates, Class A-4 Certificates or
Class A-5 Certificates (the "Definitive Certificates") to Certificate Owners
requesting the same. Upon surrender to the Trustee of the Senior Certificates,
Class A-4 Certificates or Class A-5 Certificates by the Depository, accompanied
by registration instructions from the Depository for registration, the Trustee
shall issue the Definitive Certificates. Neither the Company nor the 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 all references herein to
obligations imposed upon or to be performed by the Depository shall be deemed to
be imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Certificates and the Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder.
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(h) On or prior to the Closing Date, there shall be delivered to the
Depository one Class A-1 Certificate, one Class A-2 Certificate, one Class A-3
Certificate, one Class A-4 Certificate, one Class A-5 Certificate, each in
registered form registered in the name of the Depository's nominee, Cede & Co.,
the total face amount of which represents 100% of the Original Class A-1
Principal Balance, the Original Class A-2 Principal Balance, the Original Class
A-3 Principal Balance, the Original Class A-4 Principal Balance and the Original
Class A-5 Principal Balance, respectively. If, however, the aggregate principal
amount of a Class of Senior Certificates, Class A-4 Certificates or the Class
A-5 Certificates exceeds $100,000,000, one Senior Certificate, Class A-4
Certificate and/or one Class A-5 Certificate will be issued with respect to each
$100,000,000 of principal amount and an additional Certificate of such Class or
Classes will be issued with respect to any remaining principal amount. Each such
Senior Certificate, Class A-4 or Class A-5 Certificate registered in the name of
the Depository's nominee shall bear the following legend:
"Unless this Certificate is presented by an authorized representative of
The Depository Trust Company to the Trustee or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as requested by an authorized
representative of The Depository Trust Company (and any payment is made to Cede
& Co. or to such other entity as is requested by an authorized representative of
the Depository Trust Company), 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."
(i) No transfer of a Class A-4 or Class A-5 Certificate or any interest
therein shall be made to any employee benefit plan, trust or account that is
subject to ERISA, or that is described in Section 4975(e)(1) of the Code (each a
"Plan"), unless the prospective transferee of such Certificate or interest
therein provides the Servicer and the Trustee with a certification of facts and,
at its own expense, an Opinion of Counsel which establishes to the satisfaction
of the Servicer and the Trustee that such transfer will not result in a
violation of Section 406 of ERISA or Section 4975 of the Code or cause the
Servicer, the Company or the Trustee to be deemed a fiduciary of such Plan or
result in the imposition of an excise tax under Section 4975 of the Code.
SECTION 9.03. No Charge; Disposition of Void Certificates.
No service charge shall be made to a Certificateholder for any transfer or
exchange of Certificates, but the Certificate Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
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in connection with any transfer or exchange of Certificates. All Certificates
surrendered for transfer and exchange shall be disposed of in a manner approved
by the Trustee.
SECTION 9.04. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) 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 (b) there is delivered to
the Certificate Registrar and the Trustee such security or indemnity as may be
required by each to save each of them harmless, then in the absence of notice to
the Certificate Registrar or the Trustee that such Certificate has been acquired
by a bona fide purchaser, the Trustee shall authenticate, and the Company shall
execute and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of the same Class and
same denomination. Upon the issuance of any new Certificate under this Section
9.04, the Trustee may require the payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in relation thereto and any
other expenses connected therewith. Any duplicate Certificate issued pursuant to
this Section 9.04 shall constitute complete and indefeasible evidence of
ownership of the Percentage Interest evidenced thereby, as if originally issued,
whether or not the destroyed, lost or stolen Certificate shall be found at any
time.
SECTION 9.05. Persons Deemed Owners.
Prior to due presentation of a Certificate for registration of transfer,
the Servicer, the Company, the Trustee, the Paying Agent and the Certificate
Registrar may treat the person in whose name any Certificate is registered as
the owner of such Certificate for the purpose of receiving remittances pursuant
to Section 8.01 and for all other purposes whatsoever, and none of the Servicer,
the Company, the Trustee, the Certificate Registrar, the Paying Agent or any
agent of the Servicer, the Company, the Trustee, the Paying Agent or the
Certificate Registrar shall be affected by notice to the contrary.
SECTION 9.06. Access to List of Certificateholders' Names and Addresses.
The Certificate Registrar will furnish to the Trustee, the Servicer and the
Company within five Business Days after receipt by the Certificate Registrar of
a request therefor from the Trustee, the Servicer or the Company, in writing, a
list, in such form as the Trustee, the Servicer or the Company may reasonably
require, of the names and addresses of the Certificateholders as of the most
recent Record Date. If Holders of Certificates evidencing, as to any Class,
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Percentage Interests aggregating 25% or more (hereinafter referred to as
"Applicants") apply in writing to the 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 is
accompanied by a copy of the communication which such Applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt of
such application, afford such Applicants access during normal business hours to
the most recent list of Certificateholders held by the Trustee. If such list is
as of a date more than ninety (90) days prior to the date of receipt of such
Applicants' request, the Trustee shall promptly request from the Certificate
Registrar a current list as provided above, and shall afford such Applicants
access to such list promptly upon receipt. Every Certificateholder, by receiving
and holding a Certificate, agrees with the Certificate Registrar and the Trustee
that none of the Company, the Servicer, the Certificate Registrar or the Trustee
shall be held accountable by reason of the disclosure of any such information as
to the names and addresses of the Certificateholders hereunder, regardless of
the source from which such information was derived.
SECTION 9.07. Authenticating Agents.
The Trustee may appoint one or more Authenticating Agents with power to act
on its behalf and subject to its direction in the authentication of the
Certificates. For all purposes of this Agreement, the authentication of
Certificates by the Authenticating Agent pursuant to this Section shall be
deemed to be the authentication of Certificates "by the Trustee".
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ARTICLE X
INDEMNITIES
SECTION 10.01. Liabilities to Obligors.
No liability to any Obligor under any of the Contracts arising out of any
act or omission to act of the Servicer in servicing the Contracts prior to the
Closing Date in the case of the Initial Contracts or the related Subsequent
Transfer Date in the case of any Subsequent Contracts is intended to be assumed
by the Company, the Trust, the Trustee or the Certificateholders under or as a
result of this Agreement and the transactions contemplated hereby and, to the
maximum extent permitted and valid under mandatory provisions of law, the
Company, the Trust, the Trustee and the Certificateholders expressly disclaim
such assumption.
SECTION 10.02. Tax Indemnification.
CITSF agrees to defend and indemnify the Trust, the Trustee, the
Certificateholders and the Company for any taxes which may at any time be
asserted with respect to, and as of the date of, the conveyance 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 Certificates or distributions with respect thereto) and costs, expenses
and reasonable counsel fees in defending against the same.
SECTION 10.03. Servicer's Indemnities.
The Servicer shall defend, hold harmless and indemnify the Company, the
Trust, the Trustee and the Certificateholders against any and all costs,
expenses, losses, damages, claims and liabilities, including reasonable fees and
expenses of counsel and expenses of litigation, in respect of any negligent or
wrongful action taken or failed to be taken by the Servicer with respect to any
Contract while it was the Servicer. This indemnity shall survive any Service
Transfer (but a Servicer's obligations under this Section 10.03 shall not relate
to any actions of any subsequent Servicer after a Service Transfer) and any
payment of the amount owing under, or any repurchase by CITSF of, any such
Contract.
SECTION 10.04. Operation of Indemnities.
Indemnification under this Article shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If CITSF or
the Servicer has made any indemnity payments to the Trustee, the Company or the
Certificateholders pursuant to this Article and if either the Trustee, the
Company or the Certificateholders thereafter collects any of such amounts from
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others, the Trustee, the Company or the Trust will repay such amounts collected
to CITSF or the Servicer, as the case may be, without interest.
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ARTICLE XI
THE TRUSTEE
SECTION 11.01. Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Termination and after
the curing of all Events of Termination which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. If an Event of Termination has occurred (which has not been cured),
the Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform as to form to the requirements of this Agreement.
Subject to Section 11.03, no provision of this Agree-ment shall be
construed to relieve the Trustee from liability for its own negligent action,
its own negligent failure to act or its own misconduct; provided, however, that:
(a) Prior to the occurrence of an Event of Termina-tion, and after the
curing of all such Events of Termination which may have occurred, the duties and
obligations of the Trustee shall be determined solely by the express provisions
of this Agreement, the Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the Trustee, the Trustee
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certifi-cates or opinions furnished to
the Trustee and conforming to the requirements of this Agreement;
(b) The Trustee shall not be personally liable for an error of judgment
made in good faith by a Responsible Officer of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts;
(c) The Trustee shall not be personally liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance with
the direction of the Holders of 25% or more of the Certificates relating to the
time, method and place of conducting any proceeding for any remedy available
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to the Trustee, or exercising any trust or power conferred upon the Trustee,
under this Agreement; and
(d) The Trustee shall not be charged with knowledge of any event referred
to in Section 7.01 or knowledge of the fact that a Mortgaged Property is
affected by hazardous waste as described in Section 5.11 unless a Responsible
Officer of the Trustee at the Corporate Trust Office obtains actual knowledge of
such event or fact or the Trustee receives written notice of such event or fact
from the Servicer or the Holders of 25% or more of the Certificates.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the perform-ance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it. None
of the provisions contained in this Agreement shall in any event require the
Trustee to perform, or be responsible for the manner of performance of, any of
the obligations of CITSF, the Company or the Servicer under this Agreement,
except during such time, if any, as the Trustee shall be the successor to, and
be vested with the rights, duties, powers and privileges of, the Servicer in
accordance with the terms of this Agreement.
SECTION 11.02. Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 11.01:
(a) The Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, Officers' Certificate, certificate of a
Servicing Officer, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) The Trustee may consult with counsel and any opinion of any counsel
shall be full and complete authorization and protection in respect of any action
taken or suffered or omitted by it hereunder in good faith and in accordance
with such opinion of counsel;
(c) The 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 hereunder or in relation hereto, at the request, order or direction
of any of the Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
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incurred therein or thereby; provided, however, that nothing contained herein
shall relieve the Trustee of the obligations, upon the occurrence of an Event of
Termination (which has not been cured), to exercise such of the rights and
powers vested in it by this Agreement, and to use the same degree of care and
skill in their exercise as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs;
(d) Prior to the occurrence of an Event of Termination and after the curing
of all Events of Termination which may have occurred, the Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or document, unless
requested in writing so to do by Holders of 25% or more of the Certificates;
provided, however, that if the payment within a reasonable time to the Trustee
of the costs, expenses or liabilities likely to be incurred by it in the making
of such investigation is, in the opinion of the Trustee, not reasonably assured
to the Trustee by the security afforded to it by the terms of this Agreement,
the Trustee may require reasonable indemnity against such cost, expense or
liability as a condition to so proceeding. The reasonable expense of every such
examination shall be paid by the Servicer or, if paid by the Trustee, shall be
reimbursed by the Servicer upon demand; and
(e) The Trustee may execute any of the trusts or powers hereunder or
perform by duties hereunder either directly or by or through agents or attorneys
and shall not be liable for any acts or omissions of such agents or attorneys if
appointed by its with due care hereunder.
SECTION 11.03. Trustee Not Liable for Certificates or Contracts.
The Trustee assumes no responsibility for the correctness of the recitals
contained herein or in the Certificates (other than the Trustee's authentication
thereof). The Trustee makes no representations as to the validity or sufficiency
of this Agreement or of the Certificates (other than its authentication or
execution thereof) or of any Contract, Contract File or related document. The
Trustee shall not be accountable for the use or application by the Servicer or
the Company of funds paid to CITSF in consideration of conveyance of the
Contracts to the Company by CITSF or deposited in or withdrawn from the
Certificate Account by the Servicer.
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SECTION 11.04. Rights of Certificateholders to Direct Trustee and to Waive
Events of Termination.
Holders of the Senior Certificates, Class A-4 Certificates and Holders of
Class A-5 Certificates evidencing, as to each such Class, Percentage Interests
aggregating 25% or more shall have the right to direct the time, method, and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee; provided, however, that,
subject to Section 11.01, the Trustee shall have the right to decline to follow
any such direction if the Trustee being advised by counsel determines that the
action so directed may not lawfully be taken, or if the Trustee in good faith
shall, by a Responsible Officer or Officers of the Trustee, determine that the
proceedings so directed would be illegal or involve it in personal liability or
be unduly prejudicial to the rights of Certificateholders not parties to such
direction; provided further that nothing in this Agreement shall impair the
right of the Trustee to take any action deemed proper by the Trustee and which
is not inconsistent with such direction by the Certificateholders; and provided
further that the Trustee shall instead follow the directions of the Holders of
the Senior Certificates, Class A-4 Certificates and Holders of Class A-5
Certificates evidencing, as to each such Class, Percentage Interests aggregating
51% or more whenever it receives conflicting directions from the Senior
Certificates, Class A-4 Certificateholders and Class A-5 Certificateholders.
Holders of the Senior Certificates, Class A-4 Certificates and Holders of Class
A-5 Certificates evidencing, as to each such Class, Percentage Interests
aggregating 51% or more may on behalf of Certificateholders waive any past Event
of Termination hereunder and its consequences, except a default in respect of a
covenant or provision hereof which under Section 12.07 cannot be modified or
amended without the consent of all Certificateholders, 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. Following the Fourth Cross-over Date, if all distributions payable to
the Senior Certificateholders have either been made or provided for in
accordance with this Agreement, then the Holders of Class A-4 and A-5
Certificates may exercise the rights given to the Senior Certificateholders
under this Section. Following the Class A-4 Cross-over Date, then the Holders of
the Class A-5 Certificates may exercise the rights given to the Senior
Certificateholders and the Class A-4 Certificateholders under this Section.
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SECTION 11.05. Servicer to Pay Trustee's Fees and Expenses.
The Servicer agrees:
(a) that the Servicer shall pay to the Trustee reasonable compensation
on each Remittance Date for all services rendered by it hereunder (which
compensation is set forth in a letter agreement between the Servicer and
the Trustee dated the Closing Date and which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
(b) except as otherwise expressly provided herein, that the Servicer
shall reimburse the Trustee on each Remittance Date, to the extent
requested by the Trustee, for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provisions
of this Agreement (including the reasonable compensation and the expenses
and disbursements of it agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(c) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration
of the Trust and its duties hereunder, including the costs and expenses of
defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder including
the costs and expenses of defending itself against any claim or liability
in connection with the exercise or performance of any of the Trustee's
powers or duties hereunder.
The covenants in this Section 11.05 shall be for the benefit of the Trustee
in its capacities as Trustee, Paying Agent and Certificate Registrar hereunder,
and shall survive the termination of this Agreement.
SECTION 11.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation or a national
banking association having its principal office in a state and city acceptable
to the Company and organized and doing business under the laws of the United
States of America or any State, authorized under such laws to exercise corporate
trust powers, and, approved for insurance by the Secretary of Housing and Urban
Development pursuant to Section 2 of the National Housing Act, and shall have a
combined capital and surplus of at least $50,000,000 or shall be a member of a
bank holding system the aggregate combined capital and surplus of which is
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$50,000,000 provided that the Trustee's separate capital and surplus shall at
all times be at least the amount required by Section 310(a)(2) of the Trustee
Indenture Act of 1939, as amended and the Trustee shall be subject to
supervision and examination by a federal or state authority having jurisdiction
over depositary institutions. If such corporation publishes reports of condition
at least annually, pursuant to law or to the requirements of a supervising or
examining authority, then for the purposes of this Section 11.06, the combined
capital and surplus of such Person shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 11.06, the Trustee shall resign immediately in the
manner and with the effect specified in Section 11.07.
SECTION 11.07. Resignation or Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Servicer, the Company and
Moody's. Upon receiving such notice of resignation, the Company shall promptly
appoint a successor Trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to each of the Servicer and the Company and
one copy to the successor Trustee. If no successor Trustee shall have been so
appointed and shall have accepted appointment within thirty (30) days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
If, at any time, the Trustee shall cease to be eligible in accordance with
the provisions of Section 11.06 and shall fail to resign after written request
therefor by the Company, or if at any time the Trustee shall be legally unable
to act, or shall be adjudged a bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then the Company may remove the
Trustee. If the Company shall have removed the Trustee under the authority of
the immediately preceding sentence, the Company shall promptly appoint a
successor Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to the
successor Trustee. Upon appointment of any successor Trustee, the Trustee being
replaced shall change the name of the Certificate Account to the name of such
successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 11.07 shall not become
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effective until acceptance of appointment by the successor Trustee as provided
in Section 11.08.
SECTION 11.08. Successor Trustee.
Any successor Trustee appointed as provided in Section 11.07 shall execute,
acknowledge and deliver to the Servicer, the Company and to its predecessor
Trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor Trustee shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with like effect as if originally named as Trustee. The
Servicer, the Company and the predecessor 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 Trustee all such rights,
powers, duties and obligations.
No successor Trustee shall accept appointment as provided in this Section
11.08 unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 11.06.
Upon acceptance of appointment by a successor Trustee as provided in this
Section 11.08, the Servicer shall cause notice of the succession of such Trustee
hereunder to be mailed to each Certificateholder at their addresses as shown in
the Certificate Register. If the Servicer fails to mail such notice within ten
days after acceptance of appointment by the successor Trustee, the successor
Trustee shall cause such notice to be mailed at the expense of the Servicer.
SECTION 11.09. Merger or Consolidation of Trustee.
Any Person into which the Trustee may be merged or converted or with which
it may be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
the corporate trustee business of the Trustee, shall be the successor of the
Trustee hereunder, provided such Person shall be eligible under the provisions
of Section 11.06, 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.
SECTION 11.10. Obligor Claims.
In connection with any offset defenses, or affirmative claims for recovery,
asserted in legal actions brought by Obligors under one or more Contracts based
upon provisions therein or upon other rights or remedies arising from, any legal
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requirements applicable to the Contracts, including, without limitation, the
Federal Trade Commission's Trade Regulation Rule Concerning Preservation of
Consumers' Claims and Defenses (16 C.F.R. ss. 433) as amended from time to time:
(a) The Trustee is not, and shall not be deemed to be, either in any
individual capacity, as trustee hereunder or otherwise, a creditor, or a
joint venturer with or an Affiliate of, or acting in concert or cooperation
with, any seller of Manufactured Homes, in the arrangement, origina-tion or
making of Contracts. The Trustee is the holder of the Contracts only as
trustee on behalf of the Certificateholders, and not as a principal or in
any individual or personal capacity.
(b) The Trustee shall not be personally liable for or obligated to pay
Obligors, any affirmative claims asserted thereby, or responsible to
Certificateholders for any offset defense amounts applied against Contract
payments, pursuant to such legal actions.
(c) The Trustee will pay, solely from available Trust money,
affirmative claims for recovery by Obligors only pursuant to final judicial
orders or judgments, or judicially-approved settlement agreements,
resulting from such legal actions.
(d) The Trustee will comply with judicial orders and judgments which
require its actions or cooperation in connection with Obligors' legal
actions to recover affirmative claims against Certificateholders.
(e) The Trustee will cooperate with and assist Certificateholders in
their defense of legal actions by Obligors to recover affirmative claims if
such cooperation and assistance is not contrary to the interests of the
Trustee as a party to such legal actions and if the Trustee is
satisfactorily indemnified for all liability, costs and expenses (including
the reasonable costs and expenses of counsel) arising therefrom.
(f) CITSF hereby agrees to indemnify, hold harmless and defend the
Company, the Trustee and Certificateholders from and against any and all
liability, loss, costs and expenses of the Company, the Trustee and
Certificateholders resulting from any affirmative claims for recovery
asserted or collected by Obligors under the Contracts. Notwithstanding any
other provision of this Agreement, the obligation of CITSF under this
Section 11.10(f) shall not terminate upon a Service Transfer pursuant to
Article VII; provided, however, that CITSF is not obligated under this
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Section on account of any claims arising due to the actions of any
successor Servicer.
SECTION 11.11. Separate Trustees and Co-Trustees.
The Company shall have the power from time to time to appoint one or more
persons or corporations to act either as co-trustees jointly with the Trustee,
or as separate trustees, or as custodians, for the purpose of conforming to any
legal requirement, restriction or condition (i) with respect to the holding of
the Contracts or the Contract Files or (ii) with respect to the enforcement of a
Contract in any state in which a Manufactured Home is located or in any state in
which any portion of the Trust is located. The separate trustees, co-trustees,
or custodians so appointed shall be trustees or custodians for the benefit of
all Certificateholders and shall, subject to the provisions of the following
paragraph, have such power, rights and remedies as shall be specified in the
instrument of appointment; provided, however, that no such appointment shall, or
shall be deemed to, constitute the appointee an agent of the Trustee.
Every separate trustee, co-trustee and custodian shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(a) all powers, duties, obligations and rights conferred upon the
Trustee in respect of the receipt, custody and payment of moneys shall be
exercised solely by the Trustee;
(b) all other rights, powers, duties and obligations conferred or
imposed upon the Trustee, to the extent also imposed upon such separate
trustees, co-trustees or custodians, shall be conferred or imposed upon
and exercised or performed by the Trustee and such separate trustee,
co-trustee, or custodian jointly, except to the extent that under any law
of any jurisdiction in which any particular act or acts are to be
performed, the Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including holding of the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed by such separate trustee,
co-trustee, or custodian;
(c) no separate trustee, co-trustee or custodian hereunder shall be
personally liable by reason of any act or omission of any other separate
trustee, co-trustee or custodian hereunder; and
(d) the Company may at any time accept the resignation of or remove
any separate trustee, co-trustee or custodian, so appointed by it.
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If any separate trustee, co-trustee or custodian 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 Trustee, to
the extent permitted by law, without the appointment of a new or successor
trustee or custodian. The reasonable fees and expenses of any such separate
trustee, co-trustee or custodian shall be treated as additional fees and
expenses of the Trustee subject to Section 11.05 and payable by the Servicer if
and only to the extent the Servicer shall have consented in writing to his or
its appointment, which consent shall not be unnecessarily withheld.
SECTION 11.12. Trustee May Own Certificates.
The Trustee in its individual or other capacity may become the owner or
pledgee of Certificates representing less than all the beneficial interest in
the Trust with the same rights as it would have if it were not Trustee.
SECTION 11.13. Agents of Trustee.
To the extent not prohibited by law and not inconsistent with the terms of
this Agreement (including, without limitation, Section 11.11), the Trustee may,
with the prior consent of the Company, appoint one or more agents to carry out
ministerial matters on behalf of the Trustee under this Agreement.
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ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Servicer Not To Resign.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon determination that the performance of its duties
hereunder is no longer permissible under this Agreement or applicable law. Any
such determination permitting the resignation of the Servicer shall be evidenced
by an Opinion of Counsel for the Servicer to such effect delivered to the
Trustee. No such resignation shall become effective until the Trustee or a
successor Servicer shall have assumed the responsibilities and obligations of
the Servicer in accordance with Section 7.03.
SECTION 12.02. Maintenance of Office or Agency.
The Trustee will maintain, at its own expense, an office in New York City.
Such offices are currently located at the addresses set forth in Section 12.09.
The Trustee will give prompt written notice to Certificateholders of any change
in the location of the Certificate Register or any such office or agency.
SECTION 12.03. Termination.
(a) Subject to the other provisions of this Section, the respective
obligations and responsibilities of the Company, the Servicer and the Trustee
created hereby (other than the obligation of the Trustee to make certain
payments after the Final Remittance Date to Certificateholders and the
obligation of the Servicer to send certain notices as hereinafter set forth)
shall terminate upon the last action required to be taken by the Trustee on the
Remittance Date pursuant to this Section 12.03 following the earlier of: (i) the
purchase by the Company or the Servicer on any Remittance Date of all Contracts
and all property acquired in respect of any Contract remaining in the Trust
pursuant to Section 8.03 or (ii) the final payment or other liquidation (or any
advance with respect thereto) of the last Contract remaining in the Trust or the
disposition of all property acquired upon repossession of any Manufactured Home;
provided, however, that in no event shall the trust created hereby continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late ambassador of the United States to
the Court of St. James, living on the date hereof.
(b) Notice of any termination, specifying the Final Remittance Date (which
shall be a date that would otherwise be a Remittance Date) upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
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of the final distribution and cancellation, shall be given promptly by the
Servicer (if the Company or the Servicer is exercising its right to purchase the
assets of the Trust) or by the Trustee (in any other case) by letter to
Certificateholders mailed out not earlier than the 15th day and not later than
the 25th day of the month (or, in the case of final payment of liquidation of
the last contract remaining in the Trust, as promptly as practicable after
receipt of such final payment or liquidation) next preceding the month of such
final distribution specifying (i) the Final Remittance Date upon which final
payment of the Certificates will be made upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein designated, (ii) the
amount of any such final payment and (iii) that the Record Date otherwise
applicable to such Remittance Date is not applicable, payments being made only
upon presentation and surrender of the Certificates at the office or agency of
the Trustee herein specified. Such notice shall provide that, in addition to any
other office or agency of the Trustee designated therein, the presentation and
surrender of Certificates as aforesaid may occur at an office or agency of the
Trustee in New York City specified therein. If the Servicer is obligated to give
notice to Certificateholders as aforesaid, it shall give such notice to the
Trustee, the Certificate Registrar and to Moody's at the time such notice is
given to Certificateholders. In the event such notice is given by the Servicer,
the Company or the Servicer shall deposit in the Certificate Account on or
before the Final Remittance Date in immediately available funds an amount equal
to the purchase price for the assets of the Trust computed as above provided.
(c) Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed, in accordance with written instructions from the
Servicer, in the following order of priority, to Certificateholders on the final
Remittance Date in proportion to their respective Percentage Interests an amount
equal to (i) as to the Senior Certificates, the Senior Certificate Principal
Balance, together with any unpaid interest at the related Remittance Rate and
interest for the related Accrual Period at the related Remittance Rate on the
Class A-1 Principal Balance, the Class A-2 Principal Balance and the Class A-3
Principal Balance, as appropriate, (ii) as to the Class A-4 Certificates, any
unpaid interest for the related Accrual Period thereon at the Class A-4
Remittance Rate and interest at the Class A-4 Remittance Rate on the Class A-4
Principal Balance, (iii) as to the Class A-5 Certificates, any unpaid interest
thereon at the Class A-5 Remittance Rate and interest for the related Accrual
Period at the Class A-5 Remittance Rate on the Class A-5 Principal Balance, (iv)
as to each outstanding Class of Senior Certificates, the outstanding Principal
Balances thereof, (v) as to the Class A-4 Certificates, the outstanding
Principal Balance thereof, (vi) as to the Class A-5 Certificates, the
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outstanding Principal Balance thereof, and (vii) as to the Class R Certificates,
the amount which remains on deposit in the Certificate Account (other than
amounts retained to meet claims) after application pursuant to clauses (i)-(vi)
above.
(d) In the event that all of the Certificateholders shall not surrender
their Certificates for final payment and cancellation on or before the Final
Remittance Date, the Trustee shall on such date cause all funds in the
Certificate Account not distributed in final distribution to Certificateholders
to be withdrawn therefrom and credited to the remaining Certificateholders by
depositing such funds in a separate escrow account for the benefit of such
Certificateholders, and the Servicer (if the Company or the Servicer exercised
its right to purchase the assets of the Trust) or the Trustee (in any other
case) 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 one year after the second notice, all the
Certificates shall not have been surrendered for cancellation, the 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 on deposit in
such escrow account.
(e) Upon any termination pursuant to this Section, the Trust shall be
terminated in accordance with the following additional requirements, unless the
Trustee has received an Opinion of Counsel to the effect that the failure of the
Trust to comply with the requirements of this Section will not (i) result in the
imposition of taxes on "prohibited transactions" of the Trust as described in
Section 860F of the Code, or (ii) cause the Trust REMIC to fail to qualify as a
REMIC at any time that any Senior Certificates, Class A-4 Certificates or Class
A-5 Certificates are outstanding:
(i) Within ninety (90) days prior to the Final Remittance Date set
forth in the notice given by the Servicer or the Trustee under this
Section, the Holders of 100% of the aggregate Percentage Interests
evidenced by the Class R Certificates shall adopt a plan of complete
liquidation of the Trust; and
(ii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the Final Remittance Date, the Servicer as
agent of the Trustee shall sell all of the assets of the Trust to the
Company or the Servicer as the case may be, for cash.
By their acceptance of the Class R Certificates, the holders thereof hereby
agree to adopt such a plan of complete liquidation upon the written request of
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the Servicer or the Company and to take such other action in connection
therewith as may be reasonably requested by CITSF.
SECTION 12.04. Acts of Certificateholders.
(a) Except as otherwise specifically provided herein, whenever
Certificateholder approval, authorization, direction, notice, consent, waiver,
or other action is required hereunder, such approval, authorization, direction,
notice, consent, waiver or other action shall be deemed to have been given or
taken on behalf of, and shall be binding upon, all Certificateholders if agreed
to by Holders of Certificates of the specified Class or Classes evidencing, as
to each such Class, Percentage Interests aggregating 51% or more.
(b) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or
by agent 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 Trustee and, where required, to the Servicer. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Agreement and (subject to Section 11.01)
conclusive in favor of the Trustee, the Servicer and the Company if made in the
manner provided in this Section.
(c) The fact and date of the execution by any Certificateholder of any such
instrument or writing may be proved in any reasonable manner which the Trustee
deems sufficient.
(d) The ownership of Certificates shall be proved by the Certificate
Register.
(e) Any request, demand, authorization, direction, notice, consent, waiver
or other act by a Certificateholder shall bind every holder of every Certificate
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof, in respect of anything done, or omitted to be done by the Trustee,
the Servicer or the Company in reliance thereon, whether or not notation of such
action is made upon such security.
(f) The Trustee may require such additional proof of any matter referred to
in this Section as it shall deem necessary.
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<PAGE>
SECTION 12.05. Calculations.
Except as otherwise provided in this Agreement, all interest rate and basis
point calculations under this Agreement will be made on the basis of a 360-day
year consisting of twelve thirty-day months and will be carried out to at least
three decimal places.
SECTION 12.06. Assignment or Delegation by the Servicer; Merger or
Consolidation of the Company, CITSF or the Servicer.
Except as specifically authorized hereunder, and except for its obligations
as Servicer, in respect of which a transfer thereof is dealt with under Article
VII, the Servicer may not assign or delegate any of its rights or obligations
hereunder, except its right to receive any fees pursuant to this Agreement,
absent the prior written consent of Holders of Certificates of each Class
evidencing, as to each such Class, Percentage Interests aggregating 66-1/2% or
more, and any attempt to do so without such consent shall be void.
Notwithstanding the foregoing, CITSF may not delegate its obligation to
repurchase contracts under Section 3.05.
Notwithstanding the foregoing, any person into which the Company, CITSF or
the Servicer may be merged or consolidated, or any corporation resulting from
any merger or consolidation to which the Company, CITSF or the Servicer shall be
a party, or any Person succeeding to the business of the Company, CITSF or the
Servicer, shall be the successor of the Company, CITSF or 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. Each of CITSF, the Company and the Servicer shall promptly
notify Moody's of any such merger to which it is a party.
Neither the Company nor the Servicer, nor any of the directors, officers,
employees or agents of the Company or the Servicer, shall be under any liability
to the Trustee or the Certificateholders 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
Company, the Servicer 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. The Company, the Servicer and any director,
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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. Neither the Company nor the Servicer shall 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 Company or the Servicer may
in its discretion undertake any such action which it may deem necessary or
desirable to in respect of this Agreement and the rights and duties of the
parties hereto and the interests of the Certificateholders thereunder. In such
event, the legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs and liabilities payable from the Certificate
Account and the Company and the Servicer shall be entitled to be reimbursed
therefor out of the Certificate Account.
SECTION 12.07. Amendment.
(a) This Agreement may be amended from time to time by the Company, the
Servicer and the Trustee, without the consent of any of the Certificateholders,
(i) to correct manifest error, to cure any ambiguity, 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, (ii) to add any other
provisions with respect to matters or questions arising under this Agreement
which shall not be inconsistent with the provisions of this Agreement, and (iii)
to add or amend any provisions as required by Moody's or another NRSRO in order
to maintain or improve any rating of the Certificates (it being understood that,
after the rating required by Section 2.02 hereof has been obtained, neither the
Trustee, the Company nor CITSF is obligated to maintain or improve such rating);
provided, however, that such action shall not, as evidenced by an Opinion of
Counsel for the Servicer or the Company, adversely affect in any material
respect the interests of any Certificateholder (including, without limitation,
the maintenance of the status of the Trust as a REMIC under the Code and under
relevant state and local law).
(b) This Agreement may also be amended from time to time by the Company,
the Servicer and the Trustee, with the consent of Holders of Certificates of
each Class affected thereby evidencing, as to each such Class, Percentage
Interests aggregating 51% or more, for the purpose of adding any of the
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; provided, however, that no such amendment shall (i) reduce
in any manner the amount of, or delay the timing of, collections of payments on
the Contracts or distributions which are required to be made on any Certificate
without the consent of the holder of each Certificate affected thereby, (ii)
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reduce the aforesaid percentage required to consent to any such amendment,
without the consent of the holders of all Certificates then outstanding, (iii)
result in the disqualification of the Trust REMIC as a REMIC under the Code,
(iv) adversely affect the status of the Trust as a REMIC or the status of the
Certificates as "regular interests" therein, (v) cause any tax (other than any
tax imposed on "net income from foreclosure property" under Section 860G(c)(1)
of the Code that would be imposed without regard to such amendment) to be
imposed on the Trust, including, without limitation, any tax imposed on
"prohibited transactions" under Section 860G(d)(1) of the Code, or (vi)
adversely affect in any material respect the interest of the Class R
Certificateholders without the unanimous consent of the Class R
Certificateholders.
(c) This Agreement may also be amended from time to time, without the
consent of any of the Certificateholders, by the Company, the Servicer and the
Trustee to modify, eliminate or add to the provisions of this Agreement to such
extent as shall be necessary to (i) maintain the qualification of the Trust
REMIC as a REMIC under the Code and under relevant state and local law or avoid,
or reduce the risk of, the imposition of any tax on the Trust under the Code
that would be a claim against the Trust assets, provided that (A) there shall
have been delivered an Opinion of Counsel addressed to the Trustee to the effect
that such action is necessary to maintain such qualification or avoid any such
tax or reduce the risk of its imposition and (B) such amendment shall not have
any of the effects described in the proviso to Section 12.07(a), or (ii) prevent
the Trust from entering into any "prohibited transaction" as defined in Section
860F of the Code, provided that such amendment shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests of
any Certificateholder (including, without limitation, the maintenance of the
Trust REMIC as a REMIC under the Code and under relevant state and local law).
(d) This Agreement shall not be amended under this section without the
consent of any of the Certificateholders if such amendment would result in the
disqualification of the Trust REMIC as a REMIC under the Code or relevant state
and local law.
(e) Promptly after the execution of any amendment or consent pursuant to
this Section, the Trustee shall furnish written notification of the substance of
such amendment to each Certificateholder (but only if such amendment is pursuant
to Section 12.07(b) and affects the Class of Certificates held by such
Certificateholder) and, in all cases, to Moody's (which shall be furnished no
later than 5 days after the execution and delivery thereof), which notification
will be prepared by the Servicer and delivered to the Trustee.
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(f) It shall not be necessary for the consent of Certificateholders under
this Section to approve the particular form of any proposed amendment, 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 shall be subject to such reasonable
requirements as the Trustee may prescribe.
(g) The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this Agreement or otherwise.
(h) In connection with any amendment pursuant to this Section, the 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.
(i) Upon the execution of any amendment or consent pursuant to this
Section, 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 Certificates theretofore or thereafter issued hereunder shall be
bound thereby.
SECTION 12.08. Contribution of Assets.
Following the Closing Date, the Trustee shall not accept any contribution
of additional assets to the Trust unless the Trustee has received an Opinion of
Counsel addressed to the Trustee to the effect that (i) the contribution of such
assets into the Trust will not cause the Trust REMIC to fail to qualify as a
REMIC under the Code and under the relevant state and local law and (ii) such
contribution will not cause the imposition of a tax on "prohibited transactions"
(as defined in Section 860F of the Code or under similar provisions under the
relevant state and local law) or on contributions to the Trust after the
"start-up day" (as defined in Section 860G of the Code or under similar
provisions under the relevant state and local law) with respect thereto.
SECTION 12.09. Notices.
All communications and notices pursuant hereto to the Company, the Servicer
and the Trustee and Moody's shall be in writing and delivered or mailed to it at
the appropriate following address:
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If to the Company:
The CIT Group Securitization Corporation II
650 CIT Drive
Livingston, New Jersey 07039
Attention: President
If to the Servicer:
The CIT Group/Sales Financing, Inc.
650 CIT Drive
Livingston, New Jersey 07039
Attention: President
If to the Trustee or the Paying Agent:
The Chase Manhattan Bank (National Association)
Corporate Trust Administration
4 Chase MetroTech Center, 3rd Floor
Brooklyn, New York 11245
Attention: Bryan Kossove
If to Moody's:
Moody's
95 Church Street
New York, New York 10007
Attention: Mark Stancher
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 shall
be in writing and delivered or mailed at the address shown in the Certificate
Register.
SECTION 12.10. 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.
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SECTION 12.11. Reliance on Credit.
The parties hereto acknowledge that, with respect to receiving payments on
the Certificates, the Certificateholders are relying on the Obligors to make
payments on the Contracts and not on the Credit worthiness of the Company, the
Contract Seller, Holdings or any of their respective affiliates, except insofar
as the Holders of the Class A-5 Certificates are relying on the payments to be
made by Holdings under the Limited Guarantee. The parties hereto further
acknowledge that the transfer of any Contracts by the Contract Seller to the
Company or by the Company to the Trust is intended to be a true sale of such
Contracts, and not a financing, such that creditors of the Contract Seller and
the Company are intended to have no further claim to the Contracts or any
payments made thereon as a source of repayment of any indebtedness of the
Contract Seller or the Company to such creditors.
SECTION 12.12. No Bankruptcy Petition.
Each of the Contract Seller and the Trustee agrees that, prior to the date
which is one year and one day after the payment in full of the Offered
Certificates it will not institute against, or join any other person in
instituting against, the Company or the Trust any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other proceedings under
any Federal or state bankruptcy or similar law.
SECTION 12.13. Headings.
The headings herein are for purposes of reference only and shall not
otherwise affect the meaning or interpretation of any provision hereof.
SECTION 12.14. 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.
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SECTION 12.15. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of February
1, 1995.
THE CIT GROUP/SALES FINANCING, INC.
By: /s/ ROBIN H. GORDON
--------------------------------
Name: ROBIN H. GORDON
Title: VICE PRESIDENT
THE CIT GROUP SECURITIZATION
CORPORATION II
By: /s/ ROBIN H. GORDON
--------------------------------
Name: ROBIN H. GORDON
Title: VICE PRESIDENT
THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION)
not in its individual
capacity but solely as
Trustee
By: /s/ BRYAN H. KOSSOVE
--------------------------------
Name: BRYAN H. KOSSOVE
Title: ASSISTANT SECRETARY
<PAGE>
Exhibit 4.2
Limited Guarantee
<PAGE>
EXECUTION COPY
LIMITED GUARANTEE, dated as of February 1, 1995, made by The CIT Group
Holdings, Inc. ("Holdings") in favor of The Chase Manhattan Bank (National
Association), not in its individual capacity but solely as Trustee (the
"Trustee") under the Pooling and Servicing Agreement dated as of February 1,
1995, among The CIT Group Securitization Corporation II ("CIT Securitization"),
The CIT Group/Sales Financing, Inc. ("CIT Sales Financing") and the Trustee (the
"Pooling and Servicing Agreement") for the benefit of the Class A-5
Certificateholders.
WHEREAS, Section 2.03 of the Pooling and Servicing Agreement requires the
execution and delivery of this Limited Guarantee by Holdings on or before the
Closing Date (as defined in the Pooling and Servicing Agreement);
WHEREAS, Holdings will derive substantial benefit from the transactions
contemplated by the Pooling and Servicing Agreement, including, without
limitation, the payment of the Guarantee Fee (as defined in the Pooling and
Servicing Agreement) to Holdings and the sale of the contracts by Holdings'
subsidiary, CIT Sales Financing, to CIT Securitization, the sale of the
Contracts by CIT Securitization to the Trustee, and the issuance and sale of the
Offered Certificates (as defined in the Pooling and Servicing Agreement) in the
manner contemplated therein;
WHEREAS, capitalized terms used herein and not otherwise defined herein
shall have the meaning ascribed to such terms in the Pooling and Servicing
Agreement; and
WHEREAS, in order to induce the parties to the Pooling and Servicing
Agreement to enter into the Pooling and Servicing Agreement and perform their
respective obligations thereunder, Holdings is willing to execute and deliver
this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Holdings hereby unconditionally
agrees as follows:
SECTION 1. The Guarantee.
(a) Holdings, hereby unconditionally and absolutely guarantees the
payment to the Trustee, on behalf of the Series A-5 Certificateholders, of
the payment of the Guarantee Payment due to the Class A-5
Certificateholders on each Remittance Date. Not later than the third
Business Day prior to each Remittance Date, the Servicer shall notify
Holdings of the amount of the Guarantee Payment, if any, for such
Remittance Date and not later than the Business Day preceding each
Remittance Date, Holdings shall, deposit the Guarantee Payment, if any, for
such Remittance Date into the Certificate Account.
(b) The obligations of Holdings under this Limited Guarantee shall not
terminate upon or otherwise be reduced by a Service Transfer pursuant to
Article VII of the Pooling and Servicing Agreement, by any amendment to the
Pooling and Servicing Agreement, the Sale and Purchase Agreement, any
Subsequent Sale and Purchase Agreement or any other agreement relating to
<PAGE>
the Certificateholders or any breach by any party to any such agreement of
its obligations thereunder or the failure of Holdings to receive all or any
part of the Guarantee Fee.
(c) The obligations of Holdings under this Limited Guarantee shall
terminate one year following the Remittance Date on which the Class A-5
Principal Balance has been reduced to zero and all accrued interest on the
Class A-5 Certificates has been paid in full.
(d) The obligation of Holdings to make the Guarantee Payments
described in clause (a) above shall be unconditional and irrevocable.
SECTION 2. Representations and Warranties.
In making this Limited Guarantee Holdings represents and warrants to the
Trustee and the Certificateholders that:
(a) Organization and Good Standing. Holdings 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.
Holdings 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 Holdings.
(b) Authorization; Binding Obligations. Holdings has the power and
authority to make, execute, deliver and perform this Limited Guarantee and
all of the transactions contemplated under this Limited Guarantee, and has
taken all necessary corporate action to authorize the execution, delivery
and performance of this Limited Guarantee. When executed and delivered,
this Limited Guarantee will constitute the legal, valid and binding
obligation of Holdings 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.
(c) No Consent Required. Holdings 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 Limited Guarantee the
failure of which so to obtain would have a material adverse effect on the
business, properties, assets or condition (financial or otherwise) of
Holdings.
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(d) No Violations. The execution, delivery and performance of this
Limited Guarantee by Holdings 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 Holdings, or constitute a material
breach of any mortgage, indenture, contract or other agreement to which
Holdings is a party or by which Holdings may be bound.
(e) Litigation. No litigation or administrative proceeding of or
before any court, tribunal or governmental body is currently pending, or to
the knowledge of Holdings threatened, against Holdings or any of its
properties or with respect to this Limited Guarantee or the Certificates
which, if adversely determined, would in the opinion of Holdings have a
material adverse effect on the transactions contemplated by this Limited
Guarantee.
SECTION 3. Miscellaneous.
(a) All payments by Holdings under this Limited Guarantee will be made
free and clear of and without deduction for any present or future income,
stamp or other taxes, levies, imposts, deductions, charges, fees,
withholdings, liabilities, restrictions or conditions of any nature
whatsoever now or hereafter imposed, levied, collected, assessed or
withheld by any jurisdiction or by any political subdivision or taxing
authority thereof or therein, and all interest, penalties or similar
liabilities ("Taxes"); provided, however, that Holdings shall not be
obligated to pay any amount allocable to Taxes which the Trust was required
to withhold.
(b) Holdings will not exercise any rights which it may acquire by way
of subrogation hereunder, by any payment made by it hereunder or otherwise,
until such date when all amounts of principal and interest payable to the
Holders of all Classes of Certificates shall have been paid in full. If any
amount shall be paid to Holdings on account of such subrogation rights at
any time when all of the amounts of principal and interest payable to the
Holders of all Classes of Certificates shall not have been paid in full,
such amount shall be held in trust for the benefit of the
Certificateholders, shall be segregated from the other funds of Holdings
and shall forthwith be applied in whole or in part against such amounts
owed in accordance with the terms of the Pooling and Servicing Agreement.
(c) This Limited Guarantee is not secured by a security interest in,
pledge of or lien on any assets of Holdings or any of its subsidiaries. The
Limited Guarantee is a senior, unsecured general obligation of Holdings and
is not supported by any letter of credit or other credit enhancement
arrangement.
(d) This Limited Guarantee may be amended from time to time by the
Company, Holdings, the Servicer and the Trustee, without the consent of any
of the Certificateholders, (i) to correct manifest error, to cure any
ambiguity, 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, (ii) to add any other provisions with respect to matters or
questions arising under this Limited Guarantee which shall not be
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<PAGE>
inconsistent with the provisions of this Limited Guarantee, and (iii) to
add or amend any provisions as required by Moody's or another NRSRO in
order to maintain or improve the rating of the Class A-5 Certificates (it
being understood that, after the rating required by Section 2.02 of the
Pooling and Servicing Agreement has been obtained, neither the Trustee, the
Company, CITSF or Holdings is obligated to maintain or improve such
rating); provided, however, that such action shall not, as evidenced by an
opinion of counsel for Holdings, adversely affect in any material respect
the interests of any Certificateholder.
This Limited Guarantee may also be amended from time to time by the
Company, Holdings, the Servicer and the Trustee, with the consent of
Holders of the Class A-5 Certificates evidencing Percentage Interests
aggregating 51% or more, for the purpose of adding any of the provisions to
or changing in any manner or eliminating any of the provisions of this
Limited Guarantee or of modifying in any manner the rights of the Class A-5
Certificateholders; provided, however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, any Guarantee
Payment or (ii) grant by contract or operation of law any defense to the
payment of any Guarantee Payment without the consent of the Holder of each
Class A-5 Certificate affected thereby.
The Guarantor shall provide Moody's with a copy of any amendment made
to this Limited Guarantee no later than five (5) days after the execution
and delivery thereof.
(e) This Limited Guarantee shall be construed in accordance with and
governed by the internal laws of the State of New York applicable to
contracts made and to be performed thereon without regard to conflicts of
law principles. Any litigation relating to or arising out of this Limited
Guarantee shall be brought and maintained in the courts of the State of New
York or in the United States District Court for the Southern District of
New York.
(f) Holdings agrees that, prior to the date which is one year and one
day after the payment in full of the Offered Certificates it will not
institute against, or join any other person in instituting against, the
Company or the Trust any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or other proceedings under any
Federal or state bankruptcy or similar law.
(g) Holdings hereby acknowledges that the Guarantee Fee is
subordinated to payments in respect of the Offered Certificates and the
Monthly Servicing Fee to the extent provided in the Pooling and Servicing
Agreement and will be payable only if and to the extent funds are available
therefor in accordance with the Pooling and Servicing Agreement. Holdings
further acknowledges that the failure of Holdings to receive, in whole or
in part, payment of the Guarantee Fee shall not in any way diminish
Holdings' obligations hereunder and Holdings hereby waives any right of
set-off or counterclaim against the Trust for the failure to receive all or
any part of such Guarantee Fee.
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IN WITNESS WHEREOF, The CIT Group Holdings, Inc. has duly executed this
Limited Guarantee as of the day and year first written above.
THE CIT GROUP HOLDINGS, INC.
By: /s/ Corinne M. Taylor
-------------------------------------
Name: Corinne M. Taylor
Title: Senior Vice President
and Treasurer
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<PAGE>
