-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ba6eCEMQ8OlpmzUqrDTE9lEhOn5CA/hibvBw+Ika1MSl0aDJzdR/1nyE+RWxyTc1 YZI8qZybVnTIfJim3SL3uw== 0000891092-98-000024.txt : 19980130 0000891092-98-000024.hdr.sgml : 19980130 ACCESSION NUMBER: 0000891092-98-000024 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 14 FILED AS OF DATE: 19980128 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CIT GROUP SECURITIZATION CORP II CENTRAL INDEX KEY: 0000931494 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] IRS NUMBER: 223328188 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: SEC FILE NUMBER: 333-43323 FILM NUMBER: 98515756 BUSINESS ADDRESS: STREET 1: 650 CIT DR CITY: LIVINGSTON STATE: NJ ZIP: 07039 BUSINESS PHONE: 2017405000 MAIL ADDRESS: STREET 1: 650 CIT DRIVE STREET 2: 650 CIT DRIVE CITY: LIVINGSTON STATE: NJ ZIP: 07039 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CIT GROUP INC CENTRAL INDEX KEY: 0000020388 STANDARD INDUSTRIAL CLASSIFICATION: SHORT-TERM BUSINESS CREDIT INSTITUTIONS [6153] IRS NUMBER: 132994534 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: SEC FILE NUMBER: 333-43323-01 FILM NUMBER: 98515757 BUSINESS ADDRESS: STREET 1: 1211 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 2125361950 MAIL ADDRESS: STREET 1: 1211 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10036 FORMER COMPANY: FORMER CONFORMED NAME: CIT GROUP HOLDINGS INC /DE/ DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: CIT FINANCIAL CORP/OLD/ DATE OF NAME CHANGE: 19860512 S-3/A 1 FORM S-3/A As filed with the Securities and Exchange Commission on January 28, 1998 Registration No. 333-43323 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 ---------- THE CIT GROUP SECURITIZATION CORPORATION II THE CIT GROUP, INC. (Exact name of each registrant specified in its charter) ---------- Delaware 22-3328188 Delaware 6146 13-2994534 (State or other (Primary Standard Industrial (I.R.S. Employer jurisdiction of Classification Code Number) Identification No.) incorporation or organization) THE CIT GROUP SECURITIZATION CORPORATION II THE CIT GROUP, INC. 650 CIT Drive 1211 Avenue of the Americas Livingston, New Jersey 07039 New York, New York 10036 (201) 535-3514 (212) 536-1950 (Address of principal (Address of principal executive offices) executive offices) ---------- ERNEST D. STEIN, ESQ. Executive Vice President, General Counsel & Secretary THE CIT GROUP, INC. 1211 Avenue of the Americas New York, New York 10036 (212)-536-1950 (Name and address of agent for service) Copies to: PAUL N. WATTERSON, ESQ. SCHULTE ROTH & ZABEL LLP 900 Third Avenue New York, New York 10022 ---------- Approximate date of commencement of proposed sale to the public: From time to time after this Registration Statement becomes effective. If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. |_| If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. |X| If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_| If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_| If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. |_| CALCULATION OF REGISTRATION FEE
============================================================================================================== Proposed Proposed Amount to Maximum Maximum Amount of Title of each class of be Offering aggregate registration securities to be registered registered Price Per offering fee(3) Unit price(1) - -------------------------------------------------------------------------------------------------------------- Asset-Backed Securities.................... $1,200,000,000 100% $1,200,000,000 $363,286.37 - -------------------------------------------------------------------------------------------------------------- Limited Guarantees of The CIT Group, Inc.(2).......................... ==============================================================================================================
(1) Estimated solely for the purpose of calculating the registration fee on the basis of the proposed maximum aggregate offering price, pursuant to Rule 457(c). (2) May be issued in connection with issuance of the Asset-Backed Securities of trusts formed by The CIT Group Securitization Corporation II. No additional consideration will be paid for the Limited Guarantee; accordingly, no separate filing fee is being paid herewith, pursuant to Rule 457(n). (3) Pursuant to Rule 457(b), the required fee paid herewith has been reduced by $350.00, which is the amount equal to the fee previously paid with respect to this registration statement pursuant to Rule 457. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. ================================================================================ Prospectus Supplement (To Prospectus dated __________, ____) $ CIT Marine Trust ____-_ The CIT Group Securitization Corporation II, Seller The CIT Group/Sales Financing, Inc., Servicer The CIT Marine Trust ____-_ (the "Trust" or the "Issuer") will be formed pursuant to a Trust Agreement, to be dated as of __________ 1, ____, between The CIT Group Securitization Corporation II (the "Company" or the "Seller") and _______________, as trustee (the "Owner Trustee"), and will issue Class A-1 ____% Asset-Backed Notes (the "Class A-1 Notes"), Class A-2 ____% Asset-Backed Notes (the "Class A-2 Notes"), Class A-3 ____% Asset-Backed Notes (the "Class A-3 Notes"), Class A-4 ____% Asset-Backed Notes (the "Class A-4 Notes"), Class A-5 ____% Asset-Backed Notes (the "Class A-5 Notes"), Class A-6 ____% Asset-Backed Notes (the "Class A-6 Notes"), Class A-7 ____% Asset-Backed Notes (the "Class A-7 Notes" and, together with the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class A-5 Notes and Class A-6 Notes, the "Class A Notes") and the Class B ____% Asset-Backed Notes (the "Class B Notes" and, together with the Class A Notes, the "Notes") in the principal amounts of $_________, $_________, $_________, $__________, $_________, $_________, $_________, and $__________, respectively, pursuant to an Indenture, to be dated as of __________ 1, ____ between the Issuer and _______________, as trustee (the "Indenture Trustee"). The Trust will also issue ____% Asset-Backed Certificates (the "Certificates" and, together with the Notes, the "Securities") with an Original Certificate Balance of $__________. (Continued on following page) A discussion of certain risk factors that should be considered by prospective purchasers of the Securities offered hereby can be found on page S-21 herein and on page 23 in the accompanying Prospectus. THE SECURITIES WILL REPRESENT INTERESTS IN OR OBLIGATIONS OF THE TRUST AND WILL NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF THE CIT GROUP SECURITIZATION CORPORATION II, THE CIT GROUP/SALES FINANCING, INC. OR ANY OF THEIR RESPECTIVE AFFILIATES. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. Price to Underwriting Proceeds to the Public(1) Discount Company(1)(2) Per Class A-1 Note.............. ________% _______% ________% Per Class A-2 Note.............. ________% _______% ________% Per Class A-3 Note.............. ________% _______% ________% Per Class A-4 Note.............. ________% _______% ________% Per Class A-5 Note.............. ________% _______% ________% Per Class A-6 Note.............. ________% _______% ________% Per Class A-7 Note.............. ________% _______% ________% Per Class B Note................ ________% _______% ________% Per Certificate................. ________% _______% ________% Total........................... $____________ $_________ $___________ (1) Plus accrued interest, if any, at the respective Interest Rate or the Pass-Through Rate, as appropriate, from __________ 1, ----. (2) Before deduction of expenses payable by the Company estimated at $_______. The Securities are offered by the Underwriters, when, as and if delivered to and accepted by the Underwriters, subject to prior sale, withdrawal or modification of the offer without notice, approval of counsel and other conditions. It is expected that delivery of the Notes will be made in book-entry form through the facilities of The Depository Trust Company ("DTC"), Cedel Bank, societe anonyme ("Cedel") and the Euroclear System ("Euroclear") and that the Certificates will be ready for delivery in fully registered, certificated form in New York, New York, in each case on or about __________, ____, against payment therefor in immediately available funds. [UNDERWRITERS] The date of this Prospectus Supplement is __________, ____. (continued from preceding page) The assets of the Trust will primarily include a pool of marine installment sale contracts, direct loans and U.S. preferred ship mortgages (the "Contracts") secured by the new and used boats, boat motors and boat trailers financed thereby (the "Financed Boats"), certain monies received under the Contracts on and after __________ 1, ____ (the "Cut-off Date"), an assignment of the security interests in the Financed Boats, the Collection Account, the Certificate Distribution Account, the Note Distribution Account and the Reserve Account, in each case together with the proceeds thereof, the proceeds from claims under certain insurance policies in respect of individual Financed Boats or the related Obligors and certain rights under the Sale and Servicing Agreement, to be dated as of __________ 1, ____ (the "Sale and Servicing Agreement"), among the Seller, the Servicer, and the Trust. The Notes will be secured by assets of the Trust (other than the Certificate Distribution Account) pursuant to the Indenture. The Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes, the Class A-6 Notes, the Class A-7 Notes and the Class B Notes will bear interest at the per annum rate of ____%, ____%, ____%, ____%, ____%, ____%, ____% and ____%, respectively (each, an "Interest Rate"). Interest on the Class A-1 Notes will be calculated on the basis of a 360-day year and the actual number of days elapsed in the related Interest Accrual Period. Interest on each other class of Notes will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Interest on the Notes will generally be payable on the fifteenth day of each month (each, a "Distribution Date"), commencing __________ 15, ____. Principal on the Notes will be payable on each Distribution Date to the extent described herein. No principal payments will be made (i) on the Class A-2 Notes until the Class A-1 Notes have been paid in full, (ii) on the Class A-3 Notes until the Class A-2 Notes have been paid in full, (iii) on the Class A-4 Notes until the Class A-3 Notes have been paid in full, (iv) on the Class A-5 Notes until the Class A-4 Notes have been paid in full, (v) on the Class A-6 Notes until the Class A-5 Notes have been paid in full or (vi) on the Class A-7 Notes until the Class A-6 Notes have been paid in full, except under certain circumstances described herein. Distributions of principal and interest on the Class B Notes will be subordinated in priority to payments due on the Class A Notes to the extent described herein. The Certificates represent fractional undivided interests in the Trust. The Certificates will bear interest at the rate of ____% per annum (the "Pass-Through Rate") and will be distributed to Certificateholders on each Distribution Date to the extent described herein. Distributions of interest and principal on the Certificates will be subordinated in priority of payment to payment of interest and principal on the Notes, to the extent described herein. No principal will be paid on the Certificates until all of the Notes have been paid in full. The final scheduled Distribution Date for the Certificates will be the __________ Distribution Date. The final scheduled Distribution Date for the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes, the Class A-6 Notes, the Class A-7 Notes and the Class B Notes will be the __________, __________, __________, __________, __________, __________, __________ and _____________ Distribution Date, respectively. The aggregate outstanding principal amount of the Securities is likely to be paid earlier than such dates due to a variety of factors including an Optional Purchase or Auction Sale as described herein. There currently is no secondary market for the Securities and there is no assurance that one will develop. The Underwriters expect, but are not obligated, to make a market in the Securities. There is no assurance that any such market will develop, or if one does develop, that it will continue or provide sufficient liquidity. CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES OFFERED HEREBY, INCLUDING OVER-ALLOTMENT, STABILIZING TRANSACTIONS, SYNDICATE SHORT COVERING TRANSACTIONS AND PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES SEE "PLAN OF DISTRIBUTION" HEREIN. S-2 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain of the matters discussed under the caption "The CIT Group/Sales Financing, Inc., Servicer" may constitute forward-looking statements within the meaning of Section 7A of the Securities Act of 1933, as amended, and as such may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the marine portfolio of The CIT Group/Sales Financing, Inc. to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. This Prospectus Supplement does not contain complete information about the offering of the Securities. Additional information is contained in the Prospectus of the Seller dated __________, ____ (the "Prospectus") and purchasers are urged to read both this Prospectus Supplement and the Prospectus in full. Sales of the Securities may not be consummated unless the purchaser has received both this Prospectus Supplement and the Prospectus. To the extent, if any, that any statement in the final Prospectus Supplement is inconsistent with statements contained in this Prospectus Supplement, the statements in the final Prospectus Supplement shall control. Terms used and not otherwise defined herein shall have the respective meanings ascribed to such terms in the Prospectus. S-3 SUMMARY This Summary is qualified in its entirety by reference to the detailed information appearing elsewhere in this Prospectus Supplement and in the accompanying Prospectus. Certain capitalized terms used in the Summary are defined elsewhere in this Prospectus Supplement or in the Prospectus. Issuer........................ CIT Marine Trust ____-_ (the "Trust" or the "Issuer"), a Delaware business trust to be formed by the Seller and the Owner Trustee pursuant to the Trust Agreement, to be dated as of __________ 1, ____ (the "Trust Agreement"). Seller........................ The CIT Group Securitization Corporation II (the "Company"), a wholly-owned, limited purpose subsidiary of The CIT Group, Inc. ("CIT"). Neither CIT nor any of its affiliates, including the Company and The CIT Group/Sales Financing, Inc. ("CITSF"), has guaranteed, insured or is otherwise obligated with respect to the Securities. See "Risk Factors--Limited Obligations." Servicer...................... The CIT Group/Sales Financing, Inc. (in such capacity referred to herein as the "Servicer"), a wholly-owned subsidiary of CIT. The Servicer will be responsible for managing, administering, servicing and making collections on the Contracts held by the Trust. Owner Trustee................. _______________, as trustee under the Trust Agreement (the "Owner Trustee"). Indenture Trustee............. _______________, as trustee under the Indenture, to be dated as of __________ 1, ____ (the "Indenture Trustee" and, together with the Owner Trustee, the "Trustees"). Risk Factors.................. Certain potential risks and other considerations are particularly relevant to a decision to invest in any securities sold hereunder. See "Risk Factors." The Notes..................... The CIT Marine Trust ____-_ Class A-1 ____% Asset-Backed Notes (the "Class A-1 Notes"), Class A-2 ____% Asset-Backed Notes (the "Class A-2 Notes"), Class A-3 ____% Asset-Backed Notes (the "Class A-3 Notes"), Class A-4 ____% Asset-Backed Notes (the "Class A-4 Notes" ), Class A-5 ____% Asset-Backed Notes (the "Class A-5 Notes"), Class A-6 ____% Asset-Backed Notes (the "Class A-6 Notes"), Class A-7 ____% Asset-Backed Notes (the "Class A-7 Notes" and, together with the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes and the Class A-6 Notes, the "Class A Notes") and Class B ____% Asset-Backed Notes (the "Class B Notes" and, together with the Class A Notes, the "Notes" and, together with the Certificates, the "Securities") will represent obligations of the Trust secured by assets of the Trust (other than the Certificate Distribution Account). See "The Notes--General." Payments in respect of the Class B Notes will be subordinated to payments on the Class A Notes, to the extent described herein. S-4 The Trust will issue $________, $________, $__________, $__________, $________, $________, $________ and $________ aggregate principal amount of Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class A-5 Notes, Class A-6 Notes, Class A-7 Notes and Class B Notes, respectively, pursuant to an Indenture, to be dated as of __________ 1, ____, between the Issuer and the Indenture Trustee (the "Indenture"). See "The Notes--General." The Notes will be issued in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof and will be available in book-entry form only. Persons acquiring beneficial interests in the Notes ("Note Owners") will hold their interests through DTC in the United States or Cedel Bank, societe anonyme ("Cedel") or the Euroclear System ("Euroclear") in Europe. Definitive Notes (as defined in the Prospectus) will be issued only under the limited circumstances described herein and in the Prospectus. Unless and until Notes of a class are issued in definitive form, all references herein to distributions, notices, reports and statements to and to actions by and effects upon the related Noteholders will refer to the same actions and effects with respect to DTC or Cede, as the case may be, for the benefit of the related Note Owners in accordance with the DTC procedures. See "Certain Information Regarding the Securities--Book-Entry Registration" and "--Definitive Securities" in the Prospectus and Annex I hereto. The Certificates.............. The CIT Marine Trust ____-_ ____% Asset-Backed Certificates (the "Certificates") will represent fractional undivided interests in the Trust. See "The Certificates--General." The Trust will issue $_________ aggregate face amount of Certificates (the "Original Certificate Balance") pursuant to the Trust Agreement. Payments in respect of the Certificates will be subordinated to payments on the Notes to the extent described herein and in the Prospectus. See "The Certificates--General." The Certificates will be issued in minimum denominations of $20,000 and integral multiples of $1,000 in excess thereof; provided, however, that one Certificate may be issued in a denomination other than an integral multiple of $1,000 such that the Affiliated Owner may be issued at least 1% of the Original Certificate Balance. The Certificates will be issued in fully registered, certificated form ("Definitive Certificates") to Certificateholders or their nominees. See "Certain Information Regarding the Securities--Definitive Securities" in the Prospectus. Purchasers of Certificates and their assignees (i) must represent that they are United States persons (as defined in Section 7701(a) of the Code) and provide a certification of non-foreign status under penalties of perjury and (ii) must represent and certify that they are not (a) an employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA, (b) a plan described in Section 4975(e)(1) of the Code, or (c) S-5 any entity whose underlying assets include plan assets by reason of a plan's investment in the entity. Property of the Trust......... The property of the Trust will primarily include (i) a pool of marine installment sale contracts, direct loans and U.S. preferred ship mortgages (the "Contracts") secured by the new and used boats, boat motors and boat trailers financed thereby (the "Financed Boats"), (ii) certain monies received under the Contracts on and after __________ 1, ____ (the "Cut-off Date"), (iii) an assignment of the security interests in the Financed Boats, (iv) the Collection Account, the Certificate Distribution Account, the Note Distribution Account and the Reserve Account, in each case together with the proceeds thereof, (v) the proceeds from claims under certain insurance policies in respect of individual Financed Boats or the related Obligors and (vi) certain rights under the Sale and Servicing Agreement, to be dated as of __________ 1, ____ (the "Sale and Servicing Agreement"), among the Seller, the Servicer and the Trust. CITSF will be obligated to repurchase Contracts (a "Repurchased Contract") upon the occurrence of certain breaches of representations and warranties (a "Repurchase Event"). See "The Purchase Agreements and the Trust Documents--Sale and Assignment of the Contracts" and "--Servicing Procedures" in the Prospectus. The Contracts................. The property of the Trust will consist primarily of marine installment sale contracts for boats originated by boat dealers ("Dealers") and acquired by CITSF or The CIT Group/Consumer Finance, Inc. (NY) ("CITCF-NY"), marine loans originated directly by CITSF or one of its affiliates, or acquired by CITSF or one of its affiliates from unaffiliated third parties and U.S. preferred ship mortgages. The Financed Boats will consist of boats, boat motors and boat trailers. See "The Contract Pool." On or prior to the date of issuance of the Securities (the "Closing Date"), CITCF-NY will sell certain contracts that will constitute a portion of the Contracts to CITSF pursuant to a purchase agreement, to be dated as of __________ 1, ____, and CITSF will sell the Contracts to the Company pursuant to a purchase agreement, to be dated as of __________ 1, ____ (the "Purchase Agreement"), and the Company will sell the Contracts to the Trust pursuant to the Sale and Servicing Agreement. CITSF or one of its affiliates (directly or through Dealers) originated all of the Contracts in accordance with CITSF's underwriting standards or acquired the Contracts from unaffiliated third parties (in which event CITSF reviewed the Contracts to confirm that they conformed to CITSF's underwriting standards). As of the Cut-off Date, the Contracts had a weighted average original maturity of _____ months and a remaining weighted average maturity of _____ months. The final scheduled payment date on the Contract with the last maturity occurs in __________. See "The Contract Pool." The Contracts will generally be prepayable at any time without premium or S-6 penalty to the purchaser of the related Financed Boat or other person or persons who are obligated to make payments under the Contract (each, an "Obligor"). Distribution Dates............ Payments of interest and principal on the Securities will be made on the fifteenth day of each month or, if any such day is not a Business Day, on the next succeeding Business Day (each, a "Distribution Date"), commencing __________ 15, ____. Payments on the Notes on each Distribution Date will be made to the holders of record of the related Notes at the close of business on the Business Day immediately preceding such Distribution Date or, in the event Definitive Notes (as defined in the Prospectus) have been issued, at the close of business on the last Business Day of the month immediately preceding the month in which such Distribution Date occurs and payments on the Certificates on each Distribution Date will be made to the holders of record of the related Certificates, at the close of business on the last Business Day of the month immediately preceding the month in which such Distribution Date occurs (each, a "Record Date"). To the extent not previously paid in full prior to such time, the outstanding face amount of the Certificates will be payable on the Distribution Date occurring in __________ (the "Certificate Final Scheduled Distribution Date") and the outstanding principal amount of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes, the Class A-6 Notes, the Class A-7 Notes and the Class B Notes will be payable on the Distribution Date occurring in __________, ___________, ___________, ___________, ___________, ___________, ___________ and __________, respectively (the "Class A-1 Note Final Scheduled Distribution Date," the "Class A-2 Note Final Scheduled Distribution Date," the "Class A-3 Note Final Scheduled Distribution Date," the "Class A-4 Note Final Scheduled Distribution Date," the "Class A-5 Note Final Scheduled Distribution Date," the "Class A-6 Note Final Scheduled Distribution Date," the "Class A-7 Note Final Scheduled Distribution Date" and the "Class B Note Final Scheduled Distribution Date," respectively). A "Business Day" is any day other than a Saturday, Sunday or any day on which banking institutions or trust companies in the states of New York, __________, __________ or Oklahoma are authorized by law, regulation or executive order to be closed. Due Period.................... With respect to any Distribution Date, the "Due Period" is the period during which principal, interest and other amounts will be collected on the Contracts for application towards the payment of principal and interest to the Securityholders and the payment of fees on such Distribution Date. The "Due Period" will be the calendar month immediately preceding the Distribution Date. The first Due Period will commence on and include __________ 1, ____ and will end on and include __________, ____. S-7 Determination Date............ The "Determination Date" is the third Business Day prior to each Distribution Date. On each Determination Date, the Servicer will determine the Available Amount for distribution on the related Distribution Date, allocate such amounts between the Notes, the Certificates and the Servicer Payment, and advise the Trustees (or the paying agent appointed pursuant to the Indenture or the Trust Agreement) of the amounts of the payments to be made to Securityholders, all as described under "The Purchase Agreements and The Trust Documents--Distributions." The "Available Amount" on any Distribution Date is equal to the excess of (A) the sum of (i) all amounts on deposit in the Collection Account attributable to collections or deposits made in respect of the Contracts (including any Late Fees (as defined in the Prospectus)), in the related Due Period and (ii) the Purchase Price for any Contract repurchased by CITSF as a result of breaches of certain representations and warranties or purchased by the Servicer as a result of breaches of certain covenants and any Monthly Advances made by the Servicer, if such Purchase Price or Monthly Advance is paid on the Deposit Date immediately preceding such Distribution Date, over (B) the sum of the following amounts (to the extent that the Servicer has not already withheld such amounts from collections on the Contracts): (i) any repossession profits on Liquidated Contracts, Liquidation Expenses incurred and taxes and insurance advanced by the Servicer in respect of Financed Boats that are reimbursable to the Servicer under the Sale and Servicing Agreement, (ii) any amounts incorrectly deposited in the Collection Account, (iii) net investment earnings on the funds in the Collection Account and (iv) any other amounts permitted to be withdrawn from the Collection Account by the Servicer (or to be retained by the Servicer from collections on the Contracts) pursuant to the Sale and Servicing Agreement. Terms of the Notes............ The principal terms of the Notes will be as described below: A. Interest Rate............. The Class A-1 Notes will bear interest at the rate of ____% per annum (the "Class A-1 Interest Rate"), the Class A-2 Notes will bear interest at the rate of ____% per annum (the "Class A-2 Interest Rate"), the Class A-3 Notes will bear interest at the rate of ____% per annum (the "Class A-3 Interest Rate"), the Class A-4 Notes will bear interest at the rate of ____% per annum (the "Class A-4 Interest Rate"), the Class A-5 Notes will bear interest at the rate of ____% per annum (the "Class A-5 Interest Rate"), the Class A-6 Notes will bear interest at the rate of ____% per annum (the "Class A-6 Interest Rate"), the Class A-7 Notes will bear interest at the rate of ____% per annum (the "Class A-7 Interest Rate") and the Class B Notes will bear interest at the rate of ____% per annum (the "Class B Interest Rate"). The interest rates for the various classes of Notes are referred to herein collectively as "Interest Rates." B. Interest.................. Interest on the outstanding principal amount of each class of Notes will accrue at the applicable Interest Rate from and including the Closing Date (in the case of the first Distribution S-8 Date) or from and including the preceding Distribution Date to but excluding the Distribution Date (each, an "Interest Accrual Period"). On each Distribution Date, the Indenture Trustee will distribute to the Noteholders of each class accrued interest at the applicable Interest Rate on the outstanding principal amount of such class to the extent of the Available Amount remaining after payment of the Servicer Payment. To the extent the remaining Available Amount on a Distribution Date is insufficient to pay Noteholders the entire amount of interest due on such Distribution Date, such shortfall will be funded from the Reserve Account, subject to the Available Reserve Amount, under the circumstances described herein. Interest on the Class A-1 Notes will be calculated on the basis of a 360-day year and the actual number of days elapsed in the related Interest Accrual Period. Interest on each other class of Notes will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Interest on the Notes of any class for any Distribution Date due but not paid on such Distribution Date will be due on the next Distribution Date in addition to an amount equal to interest on such amount at the applicable Interest Rate (to the extent lawful). See "The Notes--Payment of Interest." The "Servicer Payment" is equal on each Distribution Date to the sum of the reimbursement then due to the Servicer for outstanding Monthly Advances and the Servicing Fee (including any unpaid Servicing Fees for past Distribution Dates); provided, however, that if CITSF or one of its affiliates is the Servicer, the Servicing Fee (including any unpaid Servicing Fees for past Distribution Dates) shall not be included in the Servicer Payment but instead shall be payable to the Servicer on each Distribution Date only from the Available Amount, if any, remaining after the principal and interest payable on the Securities on such Distribution Date have been paid. Interest payments to all classes of Class A Noteholders will have the same priority. Under certain circumstances, the amount available for interest payments could be less than the amount of interest payable on the Class A Notes on any Distribution Date, in which case each class of Class A Noteholders will receive their ratable share (based upon the aggregate amount of interest due to such class of Class A Noteholders) of the aggregate amount available to be distributed in respect of interest on the Class A Notes. Interest on the Class B Notes will not be paid on any Distribution Date until interest on the Class A Notes for such Distribution Date has been paid in full. In addition, notwithstanding the foregoing, if an Event of Default has occurred and the Notes have been accelerated, payments of interest on and principal of the Class B Notes will not be paid until the Class A Notes have been paid in full. C. Principal................. Principal of the Class A Notes will be payable on each Distribution Date in an amount equal to the Class A Noteholders' Principal Distribution Amount, to the extent of the Available Amount remaining after payment of the Servicer S-9 Payment and interest due on the Notes on such Distribution Date. To the extent the remaining Available Amount on a Distribution Date is insufficient to fund the entire Class A Noteholders' Principal Distribution Amount due on such Distribution Date, such shortfall will be funded from the Reserve Account, subject to the Available Reserve Amount remaining after any withdrawals from the Reserve Account to make payments of interest due on the Notes on such Distribution Date, under the circumstances described herein. Principal of the Class B Notes will be payable on each Distribution Date in an amount equal to the Class B Noteholders' Principal Distribution Amount, to the extent of the Available Amount remaining after payment of the Servicer Payment and interest due on the Notes and principal due on the Class A Notes on such Distribution Date. To the extent the remaining Available Amount on a Distribution Date is insufficient to fund the entire Class B Noteholders' Principal Distribution Amount due on such Distribution Date, such shortfall will be funded from the Reserve Account, subject to the Available Reserve Amount remaining after any withdrawals from the Reserve Account to make payments of interest due on the Notes and principal due on the Class A Notes on such Distribution Date, under the circumstances described herein. Notwithstanding the foregoing, if an Event of Default has occurred and the Notes have been accelerated, payments of interest on and principal of the Class B Notes will not be paid until the Class A Notes have been paid in full. On each Distribution Date prior to the Distribution Date on which the Class A-1 Notes have been paid in full, principal of the Class A-1 Notes will be payable in an amount equal to 100% of the Class A Noteholders' Principal Distribution Amount. On each Distribution Date on and after the Distribution Date on which the Class A-1 Notes have been paid in full, principal of the Class A-2 Notes will be payable, until the Class A-2 Notes have been paid in full, in an amount equal to 100% of the Class A Noteholders' Principal Distribution Amount (less any portion of the Class A Noteholders' Principal Distribution Amount applied on such Distribution Date to reduce the outstanding principal amount of the Class A-1 Notes to zero). On each Distribution Date on and after the Distribution Date on which the Class A-2 Notes have been paid in full, principal of the Class A-3 Notes will be payable, until the Class A-3 Notes have been paid in full, in an amount equal to 100% of the Class A Noteholders' Principal Distribution Amount (less any portion of the Class A Noteholders' Principal Distribution Amount applied on such Distribution Date to reduce the outstanding principal amount of the Class A-1 Notes and the Class A-2 Notes to zero). On each Distribution Date on and after the Distribution Date on which the Class A-3 Notes have been paid in full, principal of the Class A-4 Notes will be payable, until the Class A-4 Notes have been paid in full, in an amount equal to 100% of the Class A Noteholders' Principal Distribution Amount (less any portion of the Class A Noteholders' Principal Distribution Amount applied on such Distribution Date to reduce the outstanding principal amount of the Class A-1 Notes, the S-10 Class A-2 Notes and the Class A-3 Notes to zero). On each Distribution Date on and after the Distribution Date on which the Class A-4 Notes have been paid in full, principal of the Class A-5 Notes will be payable, until the Class A-5 Notes have been paid in full, in an amount equal to 100% of the Class A Noteholders' Principal Distribution Amount (less any portion of the Class A Noteholders' Principal Distribution Amount applied on such Distribution Date to reduce the outstanding principal amount of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes to zero). On each Distribution Date on and after the Distribution Date on which the Class A-5 Notes have been paid in full, principal of the Class A-6 Notes will be payable, until the Class A-6 Notes have been paid in full, in an amount equal to 100% of the Class A Noteholders' Principal Distribution Amount (less any portion of the Class A Noteholders' Principal Distribution Amount applied on such Distribution Date to reduce the outstanding principal amount of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes and the Class A-5 Notes to zero). On each Distribution Date on and after the Distribution Date on which the Class A-6 Notes have been paid in full, principal of the Class A-7 Notes will be payable, until the Class A-7 Notes have been paid in full, in an amount equal to 100% of the Class A Noteholders' Principal Distribution Amount (less any portion of the Class A Noteholders' Principal Distribution Amount applied on such Distribution Date to reduce the outstanding principal amount of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes and the Class A-6 Notes to zero). On each Distribution Date, principal of the Class B Notes will be payable, until the Class B Notes have been paid in full, in an amount equal to 100% of the Class B Noteholders' Principal Distribution Amount. The "Principal Distribution Amount" on each Distribution Date is equal to the sum of the following amounts with respect to the related Due Period, in each case calculated in accordance with the method specified in each Contract: (i) all payments of principal (including all Principal Prepayments applied during the related Due Period) made on each Contract during the related Due Period, (ii) the Stated Principal Balance of each Contract which, as of the related Deposit Date, was purchased by CITSF or the Servicer pursuant to the Sale and Servicing Agreement, and (iii) the Stated Principal Balance of each Contract which became a Liquidated Contract during the related Due Period; provided, however, that (x) payments of principal (including Principal Prepayments) with respect to a Liquidated Contract or a Repurchased Contract received after the last day of the Due Period in which the Contract became a Liquidated Contract or a Repurchased Contract shall not be included in the Principal Distribution Amount, and (y) if a Liquidated Contract is purchased by CITSF or the Servicer pursuant to the Sale and Servicing Agreement on the Deposit Date immediately following the Due Period in which it became a Liquidated Contract, no amount will be included with respect to such Contract in the Principal Distribution Amount pursuant to clause (iii) of the definition thereof. S-11 "Class A Noteholders' Principal Distribution Amount" means, for any Distribution Date, the sum of (i) the Class A Noteholders' Monthly Principal Amount for such Distribution Date and (ii) the Class A Noteholders' Principal Carryover Shortfall for such Distribution Date; provided, that the Class A Noteholders' Principal Distribution Amount shall not exceed the outstanding principal balance of the Class A Notes. In addition, on the Note Final Scheduled Distribution Date of each class of Class A Notes, the principal required to be deposited in the Note Distribution Account will include the amount necessary (after giving effect to other amounts to be deposited in the Note Distribution Account on such Distribution Date and allocable to principal) to reduce the outstanding principal balance of the related class of Class A Notes to zero. "Class B Noteholders' Principal Distribution Amount" means, for any Distribution Date, the sum of (i) the Class B Noteholders' Monthly Principal Amount for such Distribution Date and (ii) the Class B Noteholders' Principal Carryover Shortfall for such Distribution Date; provided, that the Class B Noteholders' Principal Distribution Amount shall not exceed the outstanding principal balance of the Class B Notes. In addition, on the Class B Note Final Scheduled Distribution Date, the principal required to be deposited in the Note Distribution Account will include the amount necessary (after giving effect to other amounts to be deposited in the Note Distribution Account on such Distribution Date and allocable to principal) to reduce the outstanding principal balance of the Class B Notes to zero. No principal payments will be made (i) on the Class A-2 Notes until the Class A-1 Notes have been paid in full, (ii) on the Class A-3 Notes until the Class A-2 Notes have been paid in full, (iii) on the Class A-4 Notes until the Class A-3 Notes have been paid in full, (iv) on the Class A-5 Notes until the Class A-4 Notes have been paid in full, (v) on the Class A-6 Notes until the Class A-5 Notes have been paid in full or (vi) on the Class A-7 Notes until the Class A-6 Notes have been paid in full. Notwithstanding the foregoing, if an Event of Default has occurred and the Notes have been accelerated, principal payments will be made on each class of Class A Notes pro rata on the basis of their respective unpaid principal amounts. The outstanding principal amount of the Class A-1 Notes, to the extent not previously paid, will be payable on the Class A-1 Note Final Scheduled Distribution Date; the outstanding principal amount of the Class A-2 Notes, to the extent not previously paid, will be payable on the Class A-2 Note Final Scheduled Distribution Date; the outstanding principal amount of the Class A-3 Notes, to the extent, not previously paid, will be payable on the Class A-3 Note Final Scheduled Distribution Date; the outstanding principal amount of the Class A-4 Notes, to the extent not previously paid, will be payable on the Class A-4 Note Final Scheduled Distribution Date; the outstanding principal amount of the Class A-5 Notes, to the extent not previously paid, will be payable on the S-12 Class A-5 Note Final Scheduled Distribution Date; the outstanding principal amount of the Class A-6 Notes, to the extent not previously paid, will be payable on the Class A-6 Note Final Scheduled Distribution Date; the outstanding principal amount of the Class A-7 Notes, to the extent not previously paid, will be payable on the Class A-7 Note Final Scheduled Distribution Date; and the outstanding principal amount of the Class B Notes, to the extent not previously paid, will be payable on the Class B Note Final Scheduled Distribution Date. See "The Notes--Payments of Principal." D. Redemption................ In the event of an Optional Purchase or Auction Sale, as described herein, the outstanding Notes will be redeemed, at a redemption price equal to the unpaid principal amount of the Notes plus accrued and unpaid interest thereon at the applicable Interest Rates. See "Summary--Optional Purchase of the Contracts," "--Auction Sale," "The Notes--Redemption" and "The Purchase Agreements and The Trust Documents--Termination" in the Prospectus. E. Limited Rights............. Except as described herein, if an Event of Default occurs under the Indenture, the Class B Noteholders will not have any right to direct or to consent to any remedies therefor by the Indenture Trustee, including acceleration of the Notes or the sale of Contracts, until the Class A Notes have been paid in full. If an Event of Termination occurs, the Class B Noteholders will not have any right to direct or consent to removal of the Servicer or waiver of any Event of Termination until the Class A Notes have been paid in full. Terms of the Certificates..... The principal terms of the Certificates will be as described below: A. Pass-Through Rate......... The Certificates will bear interest at the rate of ____% per annum (the "Pass-Through Rate"). B. Interest.................. Interest in respect of a Distribution Date will accrue at the Pass-Through Rate during the related Interest Accrual Period. On each Distribution Date, the Owner Trustee will distribute pro rata to Certificateholders accrued interest at the Pass-Through Rate on the outstanding Certificate Balance to the extent of the Available Amount remaining after payment of the Servicer Payment and interest and principal due on the Notes on such Distribution Date. To the extent the remaining Available Amount on a Distribution Date is insufficient to pay Certificateholders the entire amount of interest due on such Distribution Date, such shortfall will be funded from the Reserve Account, subject to the Available Reserve Amount remaining after any withdrawals from the Reserve Account to make payments of interest and principal due on the Notes on such Distribution Date, under the circumstances described herein. Interest on the Certificates for any Distribution Date due but not paid on such Distribution Date will be due on the next Distribution Date in addition to an amount equal to interest on such amount at the Pass-Through Rate (to the extent lawful). Interest on the Certificates will be calculated on the basis of a 360-day year consisting of twelve 30-day months. See "The Certificates - Distributions of Interest." S-13 The "Certificate Balance" means the Original Certificate Balance reduced by all distributions allocable to principal actually made to Certificateholders. The rights of Certificateholders to receive distributions of interest will be subordinated to the rights of Noteholders to receive distributions of interest and principal, as described herein. If an Event of Default has occurred and the Notes have been accelerated, Certificateholders will not be entitled to receive any distributions until the Notes have been paid in full. See "The Certificates--Distributions of Interest." C. Principal................. On each Distribution Date prior to the Distribution Date on which the Notes have been paid in full (the "Cross-Over Date"), the Certificateholders will not be entitled to any payments of principal. On each Distribution Date on or after the Cross-Over Date, principal of the Certificates will be payable, subject to the remaining Available Amount and the remaining Available Reserve Amount, in an amount equal to the Certificateholders' Principal Distribution Amount with respect to such Distribution Date. Such principal payments will be funded to the extent of the Available Amount remaining after payment of the Servicer Payment, payment of interest and principal in respect of the Notes on the Cross-Over Date, and payment of interest due on the Certificates on such Distribution Date. To the extent the remaining Available Amount on a Distribution Date is insufficient to fund the entire Certificateholders' Principal Distribution Amount due on such Distribution Date, such shortfall will be funded from the Reserve Account, subject to the Available Reserve Amount remaining after any withdrawals from the Reserve Account to make payments of interest and principal due on the Notes and interest due on the Certificates on such Distribution Date, under the circumstances described herein. The rights of Certificateholders to receive distributions of principal (following the payment of interest on the Certificates) will be subordinated to the rights of Noteholders to receive distributions of interest and principal. In the event that the Certificates are outstanding on the Certificate Final Scheduled Distribution Date (after taking into account distributions on such date), the Indenture Trustee will withdraw (or cause to be withdrawn) from the Reserve Account (to the extent funds are available therefor in the Reserve Account), and will deposit in the Certificate Distribution Account for distribution to the Certificateholders in retirement of the Certificates, an amount equal to the Certificate Balance. D. Redemption................ In the event of an Optional Purchase or Auction Sale, the Certificates will be redeemed at a redemption price equal to the Certificate Balance plus accrued and unpaid interest thereon at the Pass-Through Rate. See "Summary--Optional Purchase of the Contracts," "--Auction Sale" and "The Certificates--Redemption" in the Prospectus. S-14 E. Limited Rights............ Except as described herein, if an Event of Default occurs under the Indenture, the Certificateholders will not have any right to direct or to consent to any remedies therefor exercisable by the Indenture Trustee, including the sale of the Contracts, until the Notes have been paid in full, and if an Event of Termination occurs, the Certificateholders will not have any right to direct or consent to removal of the Servicer or the waiver of such Event of Termination until the Notes have been paid in full. See "Risk Factors--Rights of Noteholders and Certificateholders" herein and "The Purchase Agreements and the Trust Documents--Event of Termination," "--Rights Upon Event of Termination" and "--Waiver of Past Defaults" in the Prospectus. Subordination ................ To the extent described herein, the rights of the Certificateholders to receive distributions with respect to the Contracts will be subordinated to the rights of the Noteholders, and the rights of the Class B Noteholders to receive distributions with respect to the Contracts will be subordinated to the rights of the Class A Noteholders. This subordination is intended to enhance the likelihood of timely receipt by the Class A Noteholders (and to a lesser extent the Class B Noteholders) of the full amount of interest and principal required to be paid to them, and to afford the Class A Noteholders (and to a lesser extent the Class B Noteholders) limited protection against losses in respect of the Contracts. No distribution will be made to the Certificateholders on any Distribution Date in respect of (i) interest until the full amount of interest and principal on the Notes payable on such Distribution Date has been distributed to the Noteholders, and (ii) principal until the Notes have been paid in full. No distribution will be made to the Class B Noteholders on any Distribution Date in respect of (i) interest until the full amount of interest on the Class A Notes payable on such Distribution Date has been distributed to the Class A Noteholders, and (ii) principal until the full amount of principal on the Class A Notes payable on such Distribution Date has been distributed to the Class A Noteholders. The Class A Noteholders will be entitled to receive current distributions of interest prior to the Class B Noteholders receiving any current distributions of interest. See "Summary--Terms of the Notes--Interest" and "The Notes--Payments of Interest." In addition, the Class A Noteholders will be entitled to receive their share of the current distribution of principal prior to the Class B Noteholders receiving their share of the current distribution of principal. See "Summary--Terms of the Notes--Principal" and "The Notes--Payments of Principal." Reserve Account............... On the Closing Date, an account (the "Reserve Account") will be established pursuant to the Sale and Servicing Agreement. The Indenture Trustee will have the right to withdraw (or cause to be withdrawn) payments from the Reserve Account under certain circumstances specified below. The Reserve Account will not be funded on the Closing Date. After the S-15 Closing Date, the Reserve Account will be funded with the Excess Collections, if any, and certain investment earnings on funds deposited in the Reserve Account. With respect to any Distribution Date, the amount available to be withdrawn from the Reserve Account (the "Available Reserve Amount") will equal the lesser of (i) the Specified Reserve Amount and (ii) the amount on deposit in the Reserve Account before giving effect to any deposit to be made to the Reserve Account on such Distribution Date. If the Available Amount on any Distribution Date is insufficient (after paying the Servicer Payment) to pay the interest and principal required to be distributed on the Securities on such Distribution Date, the Indenture Trustee will withdraw (or cause to be withdrawn) from the Reserve Account an amount equal to the lesser of the amount of such deficiency or the Available Reserve Amount. The Reserve Account will be available to provide a source of funds to make payments of principal or interest on the Notes and the Certificates in the same order of priority specified for distributions of the Available Amount. See "Enhancement--Reserve Account" and "The Purchase Agreements and the Trust Documents - Distributions." If the Available Reserve Amount is zero (which will be the case on the Closing Date), holders of the Securities will bear the risk of loss resulting from default by Obligors and will have to look primarily to the value of the related Financed Boats for recovery of the outstanding principal and unpaid interest on the defaulted Contracts. On each Distribution Date, the Servicer will deposit Excess Collections, if any, into the Reserve Account in an amount sufficient to increase the amount on deposit in the Reserve Account to the Specified Reserve Amount for the next Distribution Date. Excess Collections, if any, not so required to be deposited in the Reserve Account will be paid to the Affiliated Owner. "Excess Collections" for any Distribution Date will equal the amounts collected or deposited in respect of the Contracts in the related Due Period and which remain in the Collection Account on such Distribution Date after taking into account distributions to be made on the Securities and payments and reimbursements to be made to the Servicer on such Distribution Date. See "The Purchase Agreements and The Trust Documents--Distributions." The "Specified Reserve Amount" with respect to any Distribution Date means ___% of the Pool Balance as of the first day of the related Due Period, but in no event less than $__________ (subject to adjustment based on delinquencies and losses on the Contracts), provided that the Specified Reserve Amount shall never be greater than the sum of the aggregate principal amount of the Notes and the outstanding balance of the Certificates and may be reduced from time to time if the Rating Agencies shall have given prior written notice to the Seller, the Servicer and the Issuer that such reduction will not result in a downgrade or withdrawal of the then current ratings of the Notes or the Certificates. See "Enhancement--Reserve Account." If, on any Distribution Date, the Available Reserve Amount (after taking into account any deposits to and withdrawals S-16 from the Reserve Account pursuant to the Sale and Servicing Agreement on such Distribution Date) exceeds the Specified Reserve Amount for the next Distribution Date, such excess will be withdrawn from the Reserve Account and paid to the Affiliated Owner. See "Enhancement--Reserve Account." The sole source of funding for the Reserve Account will be the Excess Collections, and the Excess Collections may not be sufficient to fund the Reserve Account in an amount equal to the Specified Reserve Amount or to replenish the Reserve Account after funds are withdrawn to make payments on the Securities. Neither the Seller nor the Servicer will be obligated to deposit any of their own funds into the Reserve Account in the event that the Excess Collections are not sufficient to fund the Reserve Account in an amount equal to the Specified Reserve Amount. Accordingly, the Distribution Date by which the Reserve Account will be funded in an amount equal to the Specified Reserve Amount for such Distribution Date cannot be predicted. Monthly Advances.............. With respect to each Contract as to which there has been a Payment Shortfall during the related Due Period (other than a Payment Shortfall arising from a Contract which has been prepaid in full or which has been subject to a Relief Act reduction during the related Due Period), the Servicer shall advance funds in the amount of such Payment Shortfall (each, a "Monthly Advance"), but only to the extent that the Servicer, in its good faith judgment, expects to recover such Monthly Advance from subsequent interest collections on such Contract made by or on behalf of the Obligor thereunder, or from Net Liquidation Proceeds or insurance proceeds with respect to such Contract. The Servicer shall be reimbursed for any Monthly Advance from subsequent interest collections with respect to such Contract. If the Servicer determines in its good faith judgment that an unreimbursed Monthly Advance shall not ultimately be recoverable from subsequent interest collections, the Servicer shall be reimbursed for such Monthly Advance from collections on all Contracts. In determining whether an advance is or will be nonrecoverable, the Servicer need not take into account that it might receive any amounts in a deficiency judgment against an Obligor. The Servicer will not make a Monthly Advance in respect of (i) the principal component of any scheduled payment or (ii) a Payment Shortfall arising from a Contract which has been prepaid in full or which has been subject to a Relief Act Reduction during the related Due Period. See "The Purchase Agreements and The Trust Documents--Monthly Advances" herein and in the Prospectus. "Payment Shortfall" means with respect to any Contract and any Distribution Date, the excess of (A) the product of (1) one-twelfth of the Contract Rate of such Contract and (2) the outstanding principal amount of such Contract as of the last day of the second preceding Due Period (or, in the case of the first Due Period ending after the Contract was acquired by the Trust, as of the Cut-off Date), over (B) the amount of interest, if any, collected on such Contract during the related Due Period. S-17 Non-Reimbursable Payments..... The Servicer will not be obligated to make any Non-Reimbursable Payments (as defined in the Prospectus). Servicing Fees................ The Servicer shall receive a monthly fee (the "Servicing Fee"), payable on each Distribution Date, equal to the sum of (i) one-twelfth of the product of _____% (the "Servicing Fee Rate") and the Pool Balance as of the last day of the second preceding Due Period (or, in the case of the first Distribution Date, as of the Cut-off Date) and (ii) any investment earnings on amounts on deposit in the Collection Account, the Note Distribution Account and the Certificate Distribution Account; provided, however, if CITSF or an affiliate thereof is not the Servicer, the Servicing Fee Rate shall be a rate determined at the time of the appointment of a successor Servicer but not to exceed _____%. See "The Purchase Agreements and The Trust Documents--Servicing Compensation" herein and in the Prospectus. Optional Purchase of the Contracts............... At its option, CITSF may purchase all the Contracts on any Distribution Date on which the Pool Balance as of the last day of the related Due Period is __% or less of the Initial Pool Balance, at a purchase price determined as described under "The Purchase Agreements and The Trust Documents--Termination" herein and in the Prospectus. The "Initial Pool Balance" equals the Pool Balance as of the Cut-off Date. Auction Sale.................. Within ten days after the first Distribution Date on which the Pool Balance as of the last day of the related Due Period is __% or less of the Initial Pool Balance, the Indenture Trustee (or, if the Notes have been paid in full and the Indenture has been discharged in accordance with its terms, the Owner Trustee) shall solicit bids for the purchase of the Contracts remaining in the Trust. In the event that satisfactory bids are received as described in "The Purchase Agreements and The Trust Documents--Termination" in the Prospectus, the net sale proceeds (after the Servicer Payment) will be distributed to Securityholders, in the same order of priority as collections received in respect of the Contracts, on the second Distribution Date succeeding such Due Period. If satisfactory bids are not received, such Trustee shall decline to sell the Contracts and shall not be under any obligation to solicit any further bids or otherwise negotiate any further sale of the Contracts. See "The Purchase Agreements and The Trust Documents--Termination" herein and in the Prospectus. Ratings....................... It is a condition to the issuance of the Class A Notes that the Class A-1 Notes be rated "A-1+" by Standard & Poor's Ratings Service, a division of The McGraw-Hill Companies, Inc. ("S&P") and "P-1" by Moody's Investors Service, Inc. ("Moody's") (each, a "Rating Agency") and that the Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class A-5 Notes, Class A-6 Notes and the Class A-7 Notes be rated "AAA" by S&P and "Aaa" by Moody's . It is a condition to the issuance of the Class B Notes that the Class B Notes be rated at least "A" by S&P and "A2" by Moody's. It is a condition to the issuance of the Certificates that the Certificates be rated at least "BBB" by S&P and "Baa2" by Moody's. The ratings of the Class A Notes will be based primarily on the Contracts, S-18 the Reserve Account and the terms of the Securities, including the subordination provided by the Class B Notes and the Certificates. The ratings of the Class B Notes will be based primarily on the Contracts, the Reserve Account and the terms of the Securities, including the subordination provided by the Certificates. The ratings of the Certificates will be based primarily on the Contracts and the Reserve Account. The ratings of the Securities should be evaluated independently from similar ratings on other types of securities. The ratings do not address the possibility that Securityholders may suffer a lower than anticipated yield. The ratings do not address the likelihood that the Securities will be retired following the sale of the Contracts by the Trustee as described above under "Auction Sale" or "Optional Purchase of the Contracts." There can be no assurance that any rating will remain in effect for any given period of time or that a rating will not be lowered or withdrawn by the assigning Rating Agency if, in its judgment, circumstances so warrant. In the event that the rating initially assigned to any of the Securities is subsequently lowered or withdrawn for any reason, no person or entity will be obligated to provide any additional credit enhancement with respect to such Securities. There can be no assurance whether any other rating agency will rate any of the Securities, or if one does, what rating would be assigned by any such other rating agency. A security rating is not a recommendation to buy, sell or hold securities. Certain Federal Income Tax Considerations.......... For Federal income tax purposes: (1) the Notes will constitute indebtedness and (2) the Certificates will constitute interests in a trust fund that will not be treated as an association taxable as a corporation. Each Noteholder, by acceptance of a Note, will agree to treat the Notes as indebtedness, and each Certificateholder, by the acceptance of a Certificate, will agree to treat the Trust as a partnership in which the Certificateholders are partners for Federal income tax purposes. Alternative characterizations of the Notes and the Certificates are possible, but would not result in materially adverse tax consequences to Noteholders or Certificateholders. See "Certain Federal Income Tax Consequences." ERISA Considerations.......... Subject to certain considerations discussed under "ERISA Considerations" herein, the Notes will be eligible for purchase by employee benefit plans that are subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). Fiduciaries of employee benefit plans subject to ERISA, or plans subject to Section 4975 of the Internal Revenue Code of 1986 (the "Code") should carefully review with their legal advisors whether the purchase or holding of the Notes offered hereby could give rise to a transaction prohibited or not otherwise permissible under ERISA or the Code. Any benefit plan fiduciary considering the purchase of the Notes should, among other things, consult with its counsel in determining whether all required conditions have been satisfied. See "ERISA Considerations." S-19 Employee benefit plans subject to ERISA will not be eligible to purchase the Certificates. Legal Investment.............. The Class A-1 Notes will be eligible securities for purchase by money market funds under Rule 2a-7 under the Investment Company Act of 1940, as amended. The appropriate characterization of the Certificates and each class of the Notes under various legal investment restrictions applicable to the investment activities of certain institutions, and thus the ability of investors subject to these restrictions to purchase the Certificates and the Notes, may be subject to significant interpretive uncertainties. All investors whose investment authority is subject to legal restrictions should consult their own legal advisors to determine whether, and to what extent, the Certificates and each class of the Notes will constitute legal investments for them. S-20 RISK FACTORS Prospective Securityholders should consider the following risk factors in connection with the purchase of the Securities: 1. Limited Obligations. The Securities will not represent an interest in or an obligation of The CIT Group, Inc. ("CIT"), The CIT Group Securitization Corporation II (the "Company"), the Affiliated Owner or any Servicer (including The CIT Group/Sales Financing, Inc. ("CITSF")) or any of their respective affiliates. The Securities will not be insured or guaranteed by any government agency or instrumentality, CIT or any of its affiliates (including the Company, the Affiliated Owner, and CITSF), the Underwriters or any of their affiliates, or any other Servicer or any of its affiliates. CIT will not issue a Limited Guarantee (as defined in the Prospectus) supporting the Notes or the Certificates. 2. Risk of Loss. An investment in the Securities may be affected by, among other things, a downturn in regional or local economic conditions. These regional or local economic conditions are often volatile and historically have affected the delinquency, loan loss and liquidation experience of pools of marine installment sale contracts and direct loans secured by boats. In addition, the credit criteria and underwriting guidelines under which CITSF originates marine installment sale contracts and direct loans were changed in 1994. The delinquency and loan loss experience for CITSF's portfolio has been affected adversely by this change in credit criteria. See "The CIT Group/Sales Financing, Inc., Servicer--Delinquency and Loan Loss Experience." Since the market value of boats generally declines with age and since in certain states the Trustees may not have a first perfected security interest in the Financed Boats, the Servicer may not recover the entire amount owing under a defaulted Contract. See "Certain Legal Aspects of the Contracts" in the Prospectus. In such a case, the Securityholders may suffer a corresponding loss. The market value of the Financed Boats could be or could become lower than the outstanding principal balances of the Contracts that they secure. Sufficiently high liquidation losses on the Contracts will have the effect of reducing, and could eliminate (a) the protection against loss afforded to the Class A Noteholders by the subordination of the Class B Notes and the Certificates, (b) the protection against loss afforded to the Class B Noteholders by the subordination of the Certificates, (c) the protection against loss afforded to the Securityholders by the Available Reserve Amount, if any, and (d) the amount of the Excess Collections available to fund the Reserve Account. If the Certificate Balance and the Available Reserve Amount is reduced to zero, the holders of the Notes will bear the risk of loss resulting from default by Obligors and will have to look primarily to the value of the related Financed Boats for recovery of the outstanding principal and unpaid interest on the defaulted Contracts. If the Available Reserve Amount is zero (which will be the case on the Closing Date), holders of the Certificates will bear the risk of loss resulting from default by Obligors and will have to look primarily to the value of the related Financed Boats for recovery of the outstanding principal and unpaid interest on the defaulted Contracts. 3. Certain Matters Relating to Insolvency. CITCF-NY, CITSF and the Company intend that transfers of Contracts from The CIT Group/Consumer Finance, Inc. (NY) ("CITCF-NY") to CITSF, from CITSF to the Company and from the Company to the Trust, constitute sales, rather than pledges of the Contracts to secure indebtedness. However, if CITCF-NY, CITSF or the Company were to become a debtor under Title 11 of the United States Code, 11 U.S.C. ss.101 et seq. (the "Bankruptcy Code"), it is possible that a creditor, receiver, other party in interest or trustee in bankruptcy of such debtor, or such debtor as debtor-in-possession, may contend that the sales of the Contracts by CITCF-NY to CITSF, by CITSF to the Company, or by the Company to the Trust, respectively, were pledges of the Contracts rather than sales and that, accordingly, such Contracts should be part of such assigning entity's bankruptcy estate. Such a position, if presented to a court, even if ultimately unsuccessful, could result in a delay in or reduction of distributions to the Securityholders. See "Certain Legal Aspects of the Contracts--Certain Matters Relating to Insolvency" in the Prospectus. 4. Limited Assets; Subordination. The Trust will not have, nor is it permitted or expected to have, any significant assets or sources of funds other than the Contracts and the amounts on deposit in the Reserve Account. Noteholders generally must rely for repayment upon payments on the Contracts and, if and to the extent available on each Distribution Date to cover shortfalls in distributions of interest and principal on the Notes, amounts on deposit in the Reserve Account. However, funds deposited in the Reserve Account are limited in amount, and the amount required to be maintained on deposit therein will be reduced as the Pool Balance declines. If the amount on deposit in the Reserve Account is exhausted, and, in the case of the Class A Noteholders, to the extent the subordination of amounts distributable to the Class B Noteholders and the Certificates is insufficient, and, in the S-21 case of the Class B Noteholders, to the extent the subordination of amounts distributable to Certificateholders is insufficient, the Trust will depend solely on current collections on the Contracts to make payments on the Securities. The Trust will covenant to sell the Contracts if directed to do so by the Indenture Trustee in accordance with the Indenture following an acceleration of the Notes upon an Event of Default. However, the market value of the Contracts at any time may not be equal to or greater than the aggregate outstanding principal balance of the Notes and the interest accrued thereon. Therefore, upon an Event of Default with respect to the Notes, there may not be sufficient funds available to repay Noteholders in full. In addition, the amount of principal required to be distributed to Noteholders under the Indenture is generally limited to amounts available to be deposited in the Note Distribution Account for such purpose. Therefore, the failure to pay principal on the Notes may not result in the occurrence of an Event of Default until the Note Final Scheduled Distribution Date applicable to each class of the Notes. Any actions taken by the Class A Noteholders upon an Event of Default may also increase losses to the Class B Noteholders and the Certificateholders. Upon a sale by the Trust of the Contracts, the net proceeds from such sale remaining after payment of all amounts due to the Servicer and the Noteholders may not be sufficient to pay the Certificate Balance and interest accrued thereon. See "The Notes-The Indenture-Events of Default; Rights Upon Event of Default" in the Prospectus. Payments of interest and principal of the Class B Notes will be subordinated in priority of payment to payments of interest and principal on the Class A Notes, to the extent described herein. In addition, if an Event of Default has occurred and the Notes have been accelerated, payments of interest on and principal of the Class B Notes will not be made until the Class A Notes have been paid in full. Payments of interest and principal of the Certificates will be subordinated in priority of payment to payments of interest and principal on the Notes. 5. Limited Source of Funding for Reserve Account. On the Closing Date, there will be no funds on deposit in the Reserve Account. The Reserve Account will be funded solely from the Excess Collections, and the Excess Collections may not be sufficient to fund the Reserve Account on any Distribution Date in an amount equal to the Specified Reserve Amount for such Distribution Date or to replenish the Reserve Account after funds are withdrawn to make payments on the Securities. The Excess Collections to be deposited in the Reserve Account are limited and will be reduced as the Pool Balance is reduced. If funds are deposited in the Reserve Account, they will be available to pay principal and interest on the Securities on any Distribution Date, but the funds available for such purpose will not exceed the Available Reserve Amount for such Distribution Date. If funds in the Reserve Account are exhausted, the Securityholders will depend solely on the Contracts as the source of repayment. Liquidations of Contracts may reduce, and perhaps eliminate, the amount of Excess Collections that would otherwise have been available on any Distribution Date to fund the Reserve Account, because before any excess interest collections are available to fund the Reserve Account such excess interest collections must be applied first to pay the portion of the Principal Distribution Amount equal to the difference between the Stated Principal Balance of Liquidated Contracts and the Net Liquidation Proceeds thereof. Any event or circumstance which causes the Trust not to receive a full month's interest at the Contract Rate on a Contract also will reduce the amount of Excess Collections that would otherwise have been available on any Distribution Date to fund the Reserve Account. Accordingly, the amount of Excess Collections will be less than it otherwise would have been if a Contract is prepaid in full or becomes subject to a Relief Act Reduction. Delinquencies on the Contracts also will reduce, and perhaps eliminate, the Excess Collections that otherwise would have been available on any Distribution Date to fund the Reserve Account if the Servicer does not make a Monthly Advance in respect of such delinquencies or if the Servicer reimburses itself for a Monthly Advance from collections on other Contracts as provided herein. 6. Geographic Concentration of Obligors. A significant concentration of the Contracts have Obligors with mailing addresses in the states of __________, __________ and __________. Based on the Pool Balance as of the Cut-off Date, _____%, _____% and _____% of the Contracts have Obligors with mailing addresses in __________, __________ and __________, respectively. Because of the relative lack of geographic diversity, losses on the related Contracts may be higher than would be the case if there were more diversification. The economies of such states may be adversely affected to a greater degree than that of other areas of the country by certain regional economic conditions. An economic downturn in __________, __________ or __________ may have an adverse effect on the ability of Obligors in such states to meet their payment obligations under the Contracts. S-22 7. Maturity and Prepayment Considerations. The weighted average life of the Notes and the Certificates will generally be influenced by the rate at which the principal balances of the Contracts are paid, which payment may be in the form of scheduled amortization or prepayments. The Contracts are prepayable by the Obligors at any time. Prepayments may also result from Contracts becoming Liquidated Contracts or from repurchases of Contracts. Any reinvestment risks resulting from a faster or slower incidence of prepayment of the Contracts will be borne entirely by the Securityholders. See "The Purchase Agreements and the Trust Documents--Termination" regarding CITSF's option to purchase the Contracts and "The Purchase Agreements and the Trust Documents--Sale and Assignment of the Contracts" in the Prospectus. In addition, the Servicer may, on a case-by-case basis, permit extensions with respect to the due dates of payments on Contracts in accordance with the Sale and Servicing Agreement. See "The Purchase Agreements and the Trust Documents--Modification of Contracts." Any such extensions may increase the weighted average life of the Securities. However, the Servicer will not be permitted to grant any such extension if as a result the final scheduled payment on a Contract would fall after the 180th day prior to the Certificate Final Scheduled Distribution Date. 8. Ratings of the Securities. It is a condition to the issuance of the Class A Notes that the Class A-1 Notes be rated "A-1+" by S&P and "P-1" by Moody's and that the Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class A-5 Notes, Class A-6 Notes and the Class A-7 Notes be rated "AAA" by S&P and "Aaa" by Moody's . It is a condition to the issuance of the Class B Notes that the Class B Notes be rated at least "A" by S&P and "A2" by Moody's. It is a condition to the issuance of the Certificates that the Certificates be rated at least "BBB" by S&P and "Baa2" by Moody's. The foregoing ratings do not address the likelihood that the Securities will be retired following the sale of the Contracts by the applicable Trustee. There can be no assurance that any rating will remain in effect for any given period of time or that a rating will not be lowered or withdrawn by the Rating Agency if, in its judgment, circumstances so warrant. In the event that the rating initially assigned to the Securities is subsequently lowered or withdrawn for any reason, no person or entity will be obligated to provide any additional credit enhancement with respect to such Securities. There can be no assurance that any other rating agency will rate the Notes or the Certificates, or if one does, what rating would be assigned by any such other rating agency. A security rating is not a recommendation to buy, sell or hold securities. 9. Book-Entry Registration. The Notes will be offered for purchase in book-entry form only and will be initially registered in the name of the nominee of The Depository Trust Company ("DTC" and, together with any successor depository selected by the Company, the "Depository"). No person acquiring an interest in the Notes through the facilities of DTC (a "Note Owner") will be entitled to receive a Definitive Note representing such person's interest in the Notes, except as set forth under "Certain Information Regarding the Securities--Definitive Securities" in the Prospectus, and such persons will hold their interests in the Notes through DTC in the United States or Cedel Bank, societe anonyme ("Cedel") or Euroclear in Europe. Unless and until Definitive Notes are issued under the limited circumstances described herein and in the related Prospectus, all references to actions by Noteholders shall refer to actions taken by DTC upon instructions from its Participants (as defined in the Prospectus), and all references herein to distributions, notices, reports and statements to Noteholders shall refer to distributions, notices, reports and statements to DTC in accordance with DTC procedures. See "Certain Information Regarding The Securities--Definitive Securities" in the Prospectus and Annex I hereto. 10. Risk of Commingling. At any time that the requirements as specified under "The Purchase Agreements and the Trust Documents--Collections" in the Prospectus are met, the Servicer may deposit payments on or with respect to the Contracts and proceeds of Contracts in the Collection Account monthly on the Business Day immediately preceding the next Distribution Date (the "Deposit Date"). Pending such a monthly deposit into the Collection Account, collections on the Contracts may be invested by the Servicer at its own risk and for its own benefit and will not be segregated from its own funds. If the Servicer were unable to remit such funds or if the Servicer became insolvent, the holders of the Securities could incur a loss with respect to collections not deposited in the Collection Account. As of the Closing Date, the Servicer meets such requirements. 11. Rights of Noteholders and Certificateholders. In general, the Certificateholders may direct the Owner Trustee in the administration of the Trust. However, because the Trust will pledge the Trust property (other than the Certificate Distribution Account) to the Indenture Trustee to secure the payment of the Notes, including in such pledge the rights of the Trust under the Sale and Servicing Agreement, the Indenture Trustee and not the Certificateholders will have the power to direct the Owner Trustee to take certain actions in connection with the administration of the Trust property until the Notes have been paid in full and the Indenture has been discharged in S-23 accordance with its terms. In addition, the Certificateholders will not be allowed to direct the Owner Trustee to take any action that conflicts with the provisions of the Sale and Servicing Agreement. The Indenture will specifically prohibit the Owner Trustee from taking any action that would impair the Indenture Trustee's security interest in the Trust property and will require the Owner Trustee to obtain the consent of the Indenture Trustee or Noteholders representing not less than a majority of the aggregate principal amount of the Notes then outstanding before modifying, amending, supplementing, waiving or terminating any provision of the Sale and Servicing Agreement. Therefore, except as described herein, until the Notes have been paid in full, the ability to direct the Trust with respect to certain actions permitted to be taken under the Sale and Servicing Agreement rests with the Indenture Trustee and the Noteholders. If an Event of Default under the Indenture occurs and the Notes are accelerated, the Indenture Trustee will have the right or will be required in certain circumstances to exercise remedies as a secured party, including selling the Contracts, in order to pay the principal of, and accrued interest on, the Notes. Except as described herein, upon the occurrence of an Event of Default, the Class B Noteholders and the Certificateholders will not have any right to direct or to consent to any action by the Indenture Trustee, including acceleration of the Notes or the sale of Contracts, until the Class A Noteholders have been paid in full (and in the case of the Certificateholders, until the Class B Noteholders have been paid in full). There is no assurance that the proceeds of any sale of the Contracts would be equal to or greater than the aggregate outstanding principal amount of the Notes and the Certificate Balance plus, in each case, accrued interest thereon. Because neither interest nor principal is distributed to the Class B Noteholders or the Certificateholders following an Event of Default and acceleration of the Notes until the full principal amount of the Class A Notes and interest accrued thereon have been paid in full (and in the case of the Certificateholders, until the full principal amount of the Class B Notes and interest accrued thereon have been paid in full), the interests of the Class A Noteholders, the Class B Noteholders and the Certificateholders may conflict, and the exercise by the Indenture Trustee of its right to sell the Contracts or exercise other remedies may cause the Class B Noteholders and the Certificateholders to suffer a loss of all or part of their investment. See "The Notes--Rights of Noteholders; Indenture." In the event that an Event of Termination occurs, the Indenture Trustee or the Class A Noteholders representing not less than a majority of the aggregate principal amount of the Class A Notes then outstanding may remove the Servicer without the consent of any of the Class B Noteholders or the Certificateholders. None of the Class B Noteholders or the Certificateholders will have the ability, with certain specified exceptions, to waive defaults by the Servicer, including defaults that could materially adversely affect the Class B Noteholders and the Certificateholders. See "The Notes--Rights of Noteholders; Indenture." 12. Insurance. Each Contract requires the Obligor to obtain physical damage insurance with respect to the related Financed Boat. Since Obligors may choose their own insurers to provide the required coverage, the specific terms and conditions of their policies vary. Although insurance will continue to be required pursuant to the terms of the Contracts, CITSF as Servicer will not be obligated to purchase physical damage insurance on behalf of any Obligor, verify if any insurance required under a Contract is being maintained by an Obligor or be obligated to pursue any remedies under any Contract or applicable law as a result of any failure of an Obligor to maintain any such insurance. As a result, any damage to an uninsured boat securing a Contract may result in a reduction of Liquidation Proceeds available to pay the Securityholders. As of the Cut-off Date, force-placed insurance has not been obtained on any of the Contracts. Historically, CITSF has force-placed insurance on a relatively small percentage of its marine installment sale contracts and direct loans. See "The Purchase Agreements and the Trust Documents--Physical Damage Insurance" in the Prospectus. STRUCTURE OF THE TRANSACTION The Issuer, CIT Marine Trust ____-_ (the "Issuer" or the "Trust"), is a business trust formed under the laws of the State of Delaware pursuant to a Trust Agreement (as amended and supplemented from time to time, the "Trust Agreement"), to be dated as of __________ 1, ____ between the Seller and _______________, acting thereunder not in its individual capacity but solely as trustee of the Trust (the "Owner Trustee"). Prior to the sale and assignment of the Contracts pursuant to the Sale and Servicing Agreement, the Trust will have no assets or obligations. After its formation, the Trust will not engage in any activity other than (i) acquiring, holding and managing the Contracts and the other assets of the Trust and proceeds therefrom, (ii) issuing the Notes and the Certificates, (iii) making payments on the Notes and the Certificates and (iv) engaging in other activities that are necessary, suitable or convenient to accomplish the foregoing or are incidental thereto or connected therewith. S-24 Each Certificate will represent a fractional undivided interest in, and each Note, will represent an obligation of, the Trust. The Trust will initially be capitalized with equity equal to approximately $__________ (the "Original Certificate Balance"). Certificates with an aggregate original face amount of approximately $_______ will be owned by the Affiliated Owner and Certificates representing the remainder of the Original Certificate Balance will be sold to third party investors that are expected to be unaffiliated with the Affiliated Owner, the Seller, the Servicer or their affiliates. The equity in the Trust, together with the proceeds of the initial sale of the Notes, will be used by the Trust to purchase the Contracts from the Seller pursuant to the Sale and Servicing Agreement. The Servicer will service the Contracts held by the Trust and will receive fees for such services. CITSF will be appointed as custodian on behalf of the Trust, and will hold the original marine installment sale contract or promissory note as well as the originals or copies of documents and instruments relating to each Contract and evidencing the security interest in the Financed Boat securing each Contract (the "Contract Files"). The Trust's principal offices are in _______________ in care of _______________, as Owner Trustee, at the address listed in "--The Owner Trustee" below. Capitalization of the Trust The following table illustrates the capitalization of the Trust as of the Cut-off Date, as if the issuance and sale of the Notes and the Certificates offered hereby had taken place on such date: Class A-1 ____% Asset-Backed Notes........... $__________ Class A-2 ____% Asset-Backed Notes........... $__________ Class A-3 ____% Asset-Backed Notes........... $__________ Class A-4 ____% Asset-Backed Notes........... $__________ Class A-5 ____% Asset-Backed Notes........... $__________ Class A-6 ____% Asset-Backed Notes........... $__________ Class A-7 ____% Asset-Backed Notes........... $__________ Class B ____% Asset-Backed Notes.......... $__________ ____% Asset-Backed Certificates.............. $__________ Total........................................ $ ========== The Owner Trustee _______________ is the Owner Trustee under the Trust Agreement. _______________ is a [national] banking association formed under the laws of [the United States]. The principal offices of _______________ are located at ____________________. The Owner Trustee will perform limited administrative functions under the Trust Agreement, including making distributions from the Certificate Distribution Account. The Owner Trustee's liability in connection with the issuance and sale of the Certificates and the Notes is limited solely to the express obligations of the Owner Trustee as set forth in the Trust Agreement and the Sale and Servicing Agreement. The Owner Trustee may appoint a co-trustee to act as co-trustee pursuant to a co-trustee agreement with the Owner Trustee. The Owner Trustee may resign at any time, in which event the Servicer will be obligated to appoint a successor trustee. The Servicer may also remove the Owner Trustee if the Owner Trustee ceases to be eligible to continue as Owner Trustee under the Sale and Servicing Agreement or if the Owner Trustee becomes insolvent. In such circumstances, the Servicer will be obligated to appoint a successor trustee. Any resignation or removal of the Owner Trustee and appointment of a successor trustee will not become effective until acceptance of the appointment by the successor trustee. The Sale and Servicing Agreement will provide that the Servicer will pay the Owner Trustee's fees. The Sale and Servicing Agreement will further provide that the Owner Trustee will be entitled to indemnification by the Servicer for, and will be held harmless against, any loss, liability or expense incurred by the Owner Trustee not resulting from its own willful misfeasance, bad faith or negligence (other than by reason of a breach of any of its representations or warranties set forth in the Sale and Servicing Agreement). S-25 THE TRUST PROPERTY The Notes are an obligation of the Trust and will be secured by assets of the Trust (other than the Certificate Distribution Account). Each Certificate represents a fractional undivided interest in the Trust. The Trust property will include, among other things, (i) a pool (the "Contract Pool") of marine installment sale contracts, direct loans and U.S. preferred ship mortgages secured by the new and used boats financed thereby, consisting of the Contracts; (ii) all monies received under the Contracts on and after the Cut-off Date; (iii) such amounts as from time to time may be held in one or more accounts established and maintained by the Servicer pursuant to the Sale and Servicing Agreement (including all investments in such accounts and all income from the funds therein and all proceeds thereof); (iv) all monies on deposit in the Reserve Account (including all investments in such accounts and all income from the funds therein and all proceeds thereof); (v) assignments of the security interests in the Financed Boats and any accessions thereto; (vi) the right to proceeds from physical damage, credit life and disability insurance policies, if any, covering individual Financed Boats or Obligors, as the case may be; (vii) the rights of the Trust under the Sale and Servicing Agreement and (viii) any and all proceeds of the foregoing. THE CONTRACT POOL General CITCF-NY will sell certain contracts that will constitute a portion of the Contracts to CITSF pursuant to a purchase agreement, to be dated as of __________ 1, ____, and CITSF will sell the Contracts to the Company pursuant to a Purchase Agreement to be dated as of __________ 1, ____ (the "Purchase Agreement") and the Company will sell the Contracts to the Trust pursuant to the Sale and Servicing Agreement to be dated as of __________ 1, ____ (the "Sale and Servicing Agreement"), among the Seller, the Servicer and the Trust. CITSF or CITCF-NY purchased the Contracts from Dealers, or originated the Contracts directly using the underwriting standards described under "The CIT Group/Sales Financing, Inc., Servicer--CITSF's Underwriting Guidelines" in the Prospectus, or acquired the Contracts from unaffiliated third parties (in which event CITSF reviewed such Contracts to confirm that they conformed to such underwriting standards). [All of the Contracts are Simple Interest Contracts. A "Simple Interest Contract" is a Contract as to which interest accrues under the simple interest method (i.e., the interest portion of each monthly payment equals the interest on the outstanding principal balance of the related Contract for the number of days since the most recent payment made on such Contract and the balance, if any, of such monthly payment is applied to principal).] The Contracts were first entered onto CITSF's or CITCF-NY's servicing system (which, typically, represents the date on which CITSF or CITCF-NY funds the purchase of such Contracts from Dealers) between __________ and __________. All Contracts are U.S. preferred ship mortgages or direct loans secured by boats or marine installment sale contracts secured by boats originated by a Dealer and purchased by CITCF-NY or CITSF, originated directly by CITSF or one of its affiliates, or acquired by CITSF or one of its affiliates from unaffiliated third parties. Characteristics of Contracts The Contract Pool consists of contracts having an aggregate unpaid principal balance as of the Cut-off Date of $__________. For the purposes of the discussion of the characteristics of the Contracts on the Cut-off Date contained herein, the principal balance of each Contract is the unpaid principal balance as of the Cut-off Date. The Contracts were selected from CITSF's portfolio of U.S. preferred ship mortgages, marine installment sale contracts and direct loans based on several criteria, including the following: (i) each Contract was originated in the United States of America, [except that _____ Contract(s) were originated in Puerto Rico]; (ii) each Contract has a Contract Rate equal to or greater than _____%; (iii) each Contract provides for level monthly payments which include interest at the related Contract Rate and, if paid in accordance with its schedule, fully amortizes the amount financed over an original term of no greater than [240] months; (iv) as of the Cut-off Date the most recent scheduled payment of principal and interest, if any, on each Contract was made by or on behalf of the related Obligor or was not delinquent more than [29] days; (v) no Financed Boat has been repossessed without reinstatement as of the Cut- S-26 off Date; (vi) as of the Cut-off Date no Obligor on any Contract was the subject of a bankruptcy proceeding and (vii) as of the Cut-off Date each Contract has a remaining principal balance of not less than $__________ and not more than $__________. The Financed Boats consist of boats, boat trailers and boat motors. Approximately _____%, _____% and _____% of the Pool Balance as of the Cut-off Date represented Contracts secured by boats, boat trailers and boat motors, respectively. Approximately _____% of the Contracts, by Pool Balance as of the Cut-off Date, represented financing of boats which were new and approximately _____% represented financing of boats which were used at the time the related Contracts were originated. As of the Cut-off Date, the average outstanding principal balances of the Contracts secured by boats, boat motors and boat trailers were $__________, $__________ and $__________, respectively. The Obligors under the Contracts have mailing addresses in 50 states, [Puerto Rico] and Washington D.C. As of the Cut-off Date, approximately _____% of the Contracts, based upon Pool Balance as of the Cut-off Date, had Obligors with mailing addresses in the State of __________, approximately _____% had Obligors with mailing addresses in the State of __________ and approximately _____% had Obligors with mailing addresses in the State of __________. Each other state accounts for less than 5.00% of the Contracts based upon Pool Balance as of the Cut-off Date. As of the Cut-off Date, all Contracts have an interest rate specified in such Contract (the "Contract Rate") of at least _____%. As of the Cut-off Date, the Contracts have remaining maturities of at least [9] months but not more than [240] months, original maturities of at least [12] months but not more than [240] months, and a weighted average remaining term to stated maturity of _____ months. The weighted average original term to maturity of the Contracts was _____ months. As of the Cut-off Date, the weighted average Contract Rate of the Contracts was _____%. The final scheduled payment dates on the Contracts range from __________ to __________. The average remaining principal balance per contract, as of the Cut-off Date, was $__________ and the outstanding principal balances of the Contracts, as of the Cut-off Date, ranged from $__________ to $__________. S-27 Set forth below is a description of certain characteristics of the Contracts. Geographical Distribution of Contracts (1)
% of Contract % of Contract Aggregate Principal Pool by Principal Number of Pool by Number Balance Outstanding Balance Contracts As of of Contracts As of As of Outstanding As of State Cut-off Date Cut-off Date Cut-off Date Cut-off Date - ----- ------------ ------------- ------------ ------------ Alabama............... Alaska................ Arizona............... Arkansas.............. California............ Colorado.............. Connecticut........... Delaware.............. District of Columbia.. Florida............... Georgia............... Hawaii................ Idaho................. Illinois.............. Indiana............... Iowa.................. Kansas................ Kentucky.............. Louisiana............. Maine................. Maryland.............. Massachusetts......... Michigan.............. Minnesota............. Mississippi........... Missouri.............. Montana............... Nebraska.............. Nevada................ New Hampshire......... New Jersey............ New Mexico............ New York.............. North Carolina........ North Dakota.......... Ohio.................. Oklahoma.............. Oregon................ Pennsylvania.......... [Puerto Rico]......... Rhode Island.......... South Carolina........ South Dakota.......... Tennessee............. Texas................. Utah.................. Vermont............... Virginia.............. Washington............ West Virginia......... Wisconsin............. Wyoming............... Total................. 100% $ 100% ==== = ====
(1) In most cases, based on the mailing addresses of the Obligors as of the Cut-off Date. S-28 Range of Contract Rates
% of Contract % of Contract Pool Number of Pool by Number Aggregate Principal By Principal Range of Contracts As of of Contracts As of Balance Outstanding Balance Outstanding Contract Rates Cut-off Date Cut-off Date As of Cut-off Date As of Cut-off Date - -------------- ------------ ------------ ------------------ ------------------ Total 100% 100% ==== ====
Range of Remaining Maturities
Aggregate % of Contract Pool Principal By Principal Number of % of Contract Pool Balance Balance Contracts by Number of Outstanding Outstanding Range of Remaining As of Contracts As of As of As of Maturity in Months Cut-off Date Cut-off Date Cut-off Date Cut-off Date - ------------------ ------------ ------------ ------------ ------------ 9 - 49 50 - 59 60 - 69 70 - 79 80 - 89 90 - 99 100 - 109 110 - 119 120 - 129 130 - 139 140 - 149 150 - 159 160 - 169 170 - 179 180 - 189 190 - 199 200 - 209 210 - 219 220 - 229 230 - 239 240 Total 100% 100% ==== ====
S-29 MATURITY AND PREPAYMENT CONSIDERATIONS All of the Contracts are prepayable at any time without any penalty. If prepayments are received on the Contracts, the actual weighted average life of the Contracts will be shorter than the scheduled weighted average life, which is based on the assumption that payments will be made as scheduled and that no prepayments will be made. For this purpose the term "prepayments" includes, among other items, voluntary prepayments by Obligors, regular installment payments made in advance of their scheduled due dates, liquidations due to default, proceeds from physical damage, credit life and credit disability insurance policies, if any, and purchases by CITSF or the Servicer of certain Contracts as described herein. Weighted average life means the average amount of time during which each dollar of principal on a Contract is outstanding. The rate of prepayments on the Contracts may be influenced by a variety of economic, social and other factors, including the fact that an Obligor may not sell or transfer a Financed Boat without the consent of CITSF. Any reinvestment risk resulting from the rate of prepayment of the Contracts and the distribution of such prepayments to Securityholders will be borne entirely by the Securityholders. In addition, early retirement of the Securities may be effected by (i) the exercise of the option of CITSF to purchase all of the Contracts remaining in the Trust when the aggregate principal balance of the Contracts (the "Pool Balance") is __% or less of the Initial Pool Balance, (ii) the sale by the applicable Trustee of all of the Contracts remaining in the Trust when the Pool Balance is __% or less of the Initial Pool Balance or (iii) an Event of Default. See "The Purchase Agreements and The Trust Documents--Termination" herein and in the Prospectus. The rate of principal payments (including prepayments) on pools of marine installment sale contracts and direct loans may be influenced by a variety of economic, geographic, social and other factors. In general, if prevailing interest rates were to fall significantly below the Contract Rates on the Contracts, the Contracts could be subject to higher prepayment rates than if prevailing interest rates were to remain at or above the Contract Rates on the Contracts. Conversely, if prevailing interest rates were to rise significantly, the rate of prepayments on the Contracts would generally be expected to decrease. No assurance can be given as to the influence of these factors on the actual prepayment experience of the Contracts. CITSF is not aware of any publicly available industry statistics that set forth principal prepayment experience for marine installment sale contracts and direct loans similar to the Contracts over an extended period of time, and its experience with respect to marine receivables included in its portfolio is insufficient to draw any specific conclusions with respect to the expected prepayment rates on the Contracts. Certain Payment Data Certain statistical information relating to the payment behavior of marine installment sale contracts and direct loans originated by CITSF directly or through Dealers is set forth below. In evaluating the information contained in this table and its relationship to the expected prepayment behavior of the Contracts, prospective Securityholders should consider that the information set forth below reflects, with respect to contracts originated in a given year, all principal payments made in respect of such contracts in a given year, including regularly scheduled payments, liquidation or insurance proceeds applied to principal of such contracts, as well as principal prepayments made by or on behalf of the obligors on the contracts in advance of the date on which such principal payment was scheduled to be made. The information set forth below also reflects charge-offs of the contracts during a given year. In addition, the Company has not performed any statistical analysis to determine whether the contracts to which the table relates constitute a statistically significant sample of marine installment sale contracts and direct loans for purposes of determining expected payment behavior. Payment rates on the contracts are influenced by a number of economic, social and other factors. Certain of the contracts included in the table below were originated with underwriting criteria that differ from the underwriting criteria under which the Contracts were originated. Furthermore, the prepayment experience of the Contracts may not exhibit payment behavior similar to the behavior summarized in the following table. In addition to the foregoing, prospective Securityholders should consider that the table set forth below is limited to the period covered therein and thus cannot reflect the effects, if any, of aging on the payment behavior of marine installment sale contracts beyond such periods. As a result, investors should not draw any conclusions regarding the prepayment rate of the Contracts from the information presented in the table below. Each investor must make its own assumptions regarding the prepayment rate of the Contracts. The following table sets forth, with respect to all of the marine installment sale contracts and direct loans originated by CITSF directly or through Dealers (excluding contracts purchased in bulk) in each year since ____, the aggregate initial principal balance of the contracts originated in such year, the approximate aggregate principal S-30 balance outstanding on the contracts originated in such year as of the last day of such year and the approximate aggregate principal balance outstanding on the contracts originated in such year as of the end of each subsequent year. Information Regarding Principal Reduction on Marine Installment Sale Contracts and Direct Loans Originated by CITSF (Dollars in Thousands) 1992 1993(3) 1994(3) 1995(3) 1996(3) 1997(3) ---- ------- ------- ------- ------- ------- Approximate Volume(1)....... Approximate Aggregate Principal Balance(2): December 31, 1992...... December 31, 1993...... December 31, 1994...... December 31, 1995...... December 31, 1996...... December 31, 1997...... (1) Volume represents aggregate initial principal balance of each contract originated in a particular year [or nine-month period]. (2) Approximate aggregate principal balance as of any date represents the approximate aggregate principal balance outstanding at the end of the indicated year [or nine-month period] on each contract originated in a particular year. (3) Includes contracts sold by CITSF in previous securitizations which CITSF is servicing. Paid-Ahead Simple Interest Contracts If an Obligor, in addition to making his regularly scheduled payment, makes one or more additional scheduled payments in any Due Period (for example, because the Obligor intends to be on vacation the following month), the additional scheduled payments made in such Due Period will be treated as a principal prepayment and applied to reduce the principal balance of the related Contract in such Due Period and, unless otherwise requested by the Obligor, the Obligor will not be required to make any scheduled payment in respect of such Contract (a "Paid-Ahead Simple Interest Contract") for the number of due dates corresponding to the number of such additional scheduled payments (the "Paid-Ahead Period"). During the Paid-Ahead Period, interest will continue to accrue on the principal balance of the Contract, as reduced by the application of the additional scheduled payments made in the Due Period in which such Contract became a Paid-Ahead Simple Interest Contract. The Obligor's Contract would not be considered delinquent during the Paid-Ahead Period. A Payment Shortfall with respect to such Contract will exist during each Due Period occurring during the Paid-Ahead Period and the Servicer may be required to make a Monthly Advance in respect of such Payment Shortfall, as described under "The Purchase Agreements and The Trust Documents--Monthly Advances" in the Prospectus; however, no Monthly Advances will be made in respect of principal in respect of a Paid-Ahead Simple Interest Contract. See "Yield and Prepayment Considerations." When the Obligor resumes his required payments following the Paid-Ahead Period, the payments so paid may be insufficient to cover the interest that has accrued since the last payment by the Obligor. Notwithstanding such insufficiency, the Obligor's Contract would be considered current. This situation will continue until the regularly scheduled payments are once again sufficient to cover all accrued interest and to reduce the principal balance of the Contract. Depending on the principal balance and Contract Rate of the related Contract, and on the number of payments that were paid-ahead, there may be extended periods of time during which Contracts that are current are not amortizing. During such periods, no distributions in respect of principal will be made to the Securityholders with respect to such Contracts. Paid-Ahead Simple Interest Contracts will affect the weighted average life of the Securities. The distribution of the paid-ahead amount on the Distribution Date following the Due Period in which such amount was received will generally shorten the weighted average life of the Securities. However, depending on the length of time during S-31 which a Paid-Ahead Simple Interest Contract is not amortizing as described above, the weighted average life of the Securities may be extended. In addition, to the extent the Servicer makes Monthly Advances with respect to a Paid-Ahead Simple Interest Contract which subsequently goes into default, because Liquidation Proceeds with respect to such Contract will be applied first to reimburse the Servicer for such Monthly Advances, the loss with respect to such Contract may be larger than would have been the case had such Monthly Advances not been made. As of the Cut-off Date, approximately _____% of the number of Contracts in the Contract Pool were Paid-Ahead Simple Interest Contracts, with at least one paid-ahead scheduled monthly payment. CITSF's portfolio of marine installment sale contracts and direct loans has historically included contracts which have been paid-ahead by one or more scheduled monthly payments. There can be no assurance as to the number of Contracts which may become Paid-Ahead Simple Interest Contracts or the number or the principal amount of the scheduled payments which may be paid-ahead. Weighted Average Life of the Securities Prepayments on marine installment sale contracts and direct loans can be measured relative to a prepayment standard or model. The model used in this Prospectus Supplement, the Absolute Prepayment Model ("ABS"), represents an assumed rate of prepayment each month relative to the original number of contracts in a pool of contracts. ABS further assumes that all the Contracts are the same size and amortize at the same rate and that each Contract in each month of its life will either be paid as scheduled or be prepaid in full. For example, in a pool of contracts originally containing 10,000 contracts, a 1.0% ABS rate means that 100 contracts prepay each month. ABS does not purport to be a historical description of prepayment experience or a prediction of the anticipated rate of prepayment of any pool of contracts including the Contracts. As the rate of payments of principal of the Notes and in respect of the Certificate Balance will depend on the rate of payment (including prepayments) of the principal balance of the Contracts and the rate at which Contracts become Liquidated Contracts, final payment of each class of the Notes could occur significantly earlier than their respective Note Final Scheduled Distribution Dates. The final distribution in respect of the Certificates also could occur prior to the Certificate Final Scheduled Distribution Date. Reinvestment risk associated with early payment of the Securities will be borne exclusively by the Securityholders. The tables captioned "Percent of Initial Note Principal Balance at Various ABS Percentages" and "Percent of Initial Certificate Balance at Various ABS Percentages" (the "ABS Table") have been prepared on the basis of certain characteristics of the Contracts. The ABS Table was prepared assuming that (i) the Contracts prepay in full at the specified constant percentage of ABS monthly, with no defaults, losses or repurchases, (ii) each scheduled monthly payment on the Contracts is made on the last day of each month and each Contract accrues to 30 days each month, (iii) payments on the Notes and distributions on the Certificates are made on each Distribution Date (and each such date is assumed to be the fifteenth day of each applicable month), (iv) the Closing Date occurs on __________, ____ and (v) CITSF exercises its option to purchase the Contracts as specified under "The Purchase Agreements and The Trust Documents--Termination" herein and in the Prospectus. The ABS Table indicates the projected weighted average life of each class of the Notes and the Certificates and sets forth the percent of the initial principal amount of each class of the Notes and the percent of the Original Certificate Balance that is projected to be outstanding after each of the Distribution Dates shown at various constant ABS percentages. The ABS Table also assumes that the Contracts have been aggregated into three hypothetical pools with all of the Contracts within each such pool having the following characteristics and that the level scheduled monthly payment for each of the pools (which is based on its aggregate principal balance, weighted average APR, weighted average original term to maturity and weighted average remaining term to maturity as of the Cut-off Date) will be such that each pool will be fully amortized by the end of its remaining term to maturity.
Weighted Average Weighted Average Aggregate Weighted Original Term Remaining Term Weighted Average Principal Average to Maturity to Maturity Seasoning Balance Contract Rate (Months) (Months) (Months) ------- ------------- -------- -------- -------- Pool 1.............................. $ % Pool 2.............................. $ % Pool 3.............................. $ %
S-32 The actual characteristics and performance of the Contracts will differ from the assumptions used in constructing the ABS Table. The assumptions used are hypothetical and have been provided only to give a general sense of how the principal cash flows might behave under varying prepayment scenarios. For example, it is very unlikely that the Contracts will prepay at a constant level of ABS until maturity or that all of the Contracts will prepay at the same level of ABS. Moreover, the diverse terms of Contracts within each of the hypothetical pools could produce slower or faster principal distributions than indicated in the ABS Table at the various constant percentages of ABS specified, even if the original and remaining terms to maturity of the Contracts are as assumed. Any difference between such assumptions and actual characteristics and performance of the Contracts or actual prepayment experience will affect the percentages of initial balances outstanding over time and weighted average lives of the Notes and the Certificates. S-33 Percent of Initial Note Principal Balance at Various ABS Percentages (1) Class A-1 --------- Distribution Date 0.0% 0.5% 1.0% 1.2% 1.4% 1.6% 1.8% 2.0% - ----------------- ---- ---- ---- ---- ---- ---- ---- ---- Initial Percent.......... % % % % % % % % 8/15/97.................. % % % % % % % % 8/15/98.................. % % % % % % % % 8/15/99.................. % % % % % % % % 8/15/00.................. % % % % % % % % 8/15/01.................. % % % % % % % % 8/15/02.................. % % % % % % % % 8/15/03.................. % % % % % % % % 8/15/04.................. % % % % % % % % 8/15/05.................. % % % % % % % % 8/15/06.................. % % % % % % % % 8/15/07.................. % % % % % % % % 8/15/08.................. % % % % % % % % 8/15/09.................. % % % % % % % % Weighted Average Life..(years)(2): Class A-2 --------- Distribution Date 0.0% 0.5% 1.0% 1.2% 1.4% 1.6% 1.8% 2.0% - ----------------- ---- ---- ---- ---- ---- ---- ---- ---- Initial Percent.......... % % % % % % % 8/15/97.................. % % % % % % % % 8/15/98.................. % % % % % % % % 8/15/99.................. % % % % % % % % 8/15/00.................. % % % % % % % % 8/15/01.................. % % % % % % % % 8/15/02.................. % % % % % % % % 8/15/03.................. % % % % % % % % 8/15/04.................. % % % % % % % % 8/15/05.................. % % % % % % % % 8/15/06.................. % % % % % % % % 8/15/07.................. % % % % % % % % 8/15/08.................. % % % % % % % % 8/15/09.................. % % % % % % % % Weighted Average Life..(years)(2): Class A-3 --------- Distribution Date 0.0% 0.5% 1.0% 1.2% 1.4% 1.6% 1.8% 2.0% - ----------------- ---- ---- ---- ---- ---- ---- ---- ---- Initial Percent.......... % % % % % % % % 8/15/97.................. % % % % % % % % 8/15/98.................. % % % % % % % % 8/15/99.................. % % % % % % % % 8/15/00.................. % % % % % % % % 8/15/01.................. % % % % % % % % 8/15/02.................. % % % % % % % % 8/15/03.................. % % % % % % % % 8/15/04.................. % % % % % % % % 8/15/05.................. % % % % % % % % 8/15/06.................. % % % % % % % % 8/15/07.................. % % % % % % % % 8/15/08.................. % % % % % % % % 8/15/09.................. % % % % % % % % Weighted Average Life..(years)(2): S-34 Class A-4 --------- Distribution Date 0.0% 0.5% 1.0% 1.2% 1.4% 1.6% 1.8% 2.0% - ----------------- ---- ---- ---- ---- ---- ---- ---- ---- Initial Percent.......... % % % % % % % % 8/15/97.................. % % % % % % % % 8/15/98.................. % % % % % % % % 8/15/99.................. % % % % % % % % 8/15/00.................. % % % % % % % % 8/15/01.................. % % % % % % % % 8/15/02.................. % % % % % % % % 8/15/03.................. % % % % % % % % 8/15/04.................. % % % % % % % % 8/15/05.................. % % % % % % % % 8/15/06.................. % % % % % % % % 8/15/07.................. % % % % % % % % 8/15/08.................. % % % % % % % % 8/15/09.................. % % % % % % % % Weighted Average Life..(years)(2): Class A-5 --------- Distribution Date 0.0% 0.5% 1.0% 1.2% 1.4% 1.6% 1.8% 2.0% - ----------------- ---- ---- ---- ---- ---- ---- ---- ---- Initial Percent.......... % % % % % % % % 8/15/97.................. % % % % % % % % 8/15/98.................. % % % % % % % % 8/15/99.................. % % % % % % % % 8/15/00.................. % % % % % % % % 8/15/01.................. % % % % % % % % 8/15/02.................. % % % % % % % % 8/15/03.................. % % % % % % % % 8/15/04.................. % % % % % % % % 8/15/05.................. % % % % % % % % 8/15/06.................. % % % % % % % % 8/15/07.................. % % % % % % % % 8/15/08.................. % % % % % % % % 8/15/09.................. % % % % % % % % Weighted Average Life..(years)(2): Class A-6 --------- Distribution Date 0.0% 0.5% 1.0% 1.2% 1.4% 1.6% 1.8% 2.0% - ----------------- ---- ---- ---- ---- ---- ---- ---- ---- Initial Percent.......... % % % % % % % % 8/15/97.................. % % % % % % % % 8/15/98.................. % % % % % % % % 8/15/99.................. % % % % % % % % 8/15/00.................. % % % % % % % % 8/15/01.................. % % % % % % % % 8/15/02.................. % % % % % % % % 8/15/03.................. % % % % % % % % 8/15/04.................. % % % % % % % % 8/15/05.................. % % % % % % % % 8/15/06.................. % % % % % % % % 8/15/07.................. % % % % % % % % 8/15/08.................. % % % % % % % % 8/15/09.................. % % % % % % % % Weighted Average Life..(years)(2): S-35 Class A-7 --------- Distribution Date 0.0% 0.5% 1.0% 1.2% 1.4% 1.6% 1.8% 2.0% - ----------------- ---- ---- ---- ---- ---- ---- ---- ---- Initial Percent.......... % % % % % % % % 8/15/97.................. % % % % % % % % 8/15/98.................. % % % % % % % % 8/15/99.................. % % % % % % % % 8/15/00.................. % % % % % % % % 8/15/01.................. % % % % % % % % 8/15/02.................. % % % % % % % % 8/15/03.................. % % % % % % % % 8/15/04.................. % % % % % % % % 8/15/05.................. % % % % % % % % 8/15/06.................. % % % % % % % % 8/15/07.................. % % % % % % % % 8/15/08.................. % % % % % % % % 8/15/09.................. % % % % % % % % Weighted Average Life..(years)(2): Class B ------- Distribution Date 0.0% 0.5% 1.0% 1.2% 1.4% 1.6% 1.8% 2.0% - ----------------- ---- ---- ---- ---- ---- ---- ---- ---- Initial Percent.......... % % % % % % % % 8/15/97.................. % % % % % % % % 8/15/98.................. % % % % % % % % 8/15/99.................. % % % % % % % % 8/15/00.................. % % % % % % % % 8/15/01.................. % % % % % % % % 8/15/02.................. % % % % % % % % 8/15/03.................. % % % % % % % % 8/15/04.................. % % % % % % % % 8/15/05.................. % % % % % % % % 8/15/06.................. % % % % % % % % 8/15/07.................. % % % % % % % % 8/15/08.................. % % % % % % % % 8/15/09.................. % % % % % % % % Weighted Average Life..(years)(2): (1) Assumes the exercise by CITSF of its option to purchase all of the Contracts on the Distribution Date on which the Pool Balance as of the last day of the related Due Period is __% or less of the Initial Pool Balance. (2) The weighted average life of a Note is determined by (i) multiplying the amount of each principal payment of the Note by the number of years from the date of the issuance of the Note to the related Distribution Date, (ii) adding the results and (iii) dividing the sum by the related initial principal amount of the Note. The ABS Table has been prepared based on the assumptions described above (including the assumptions regarding the characteristics and performance of the Contracts which will differ from the actual characteristics and performance thereof) and should be read in conjunction therewith. S-36 Percent of Original Certificate Balance at Various ABS Percentages(1) Distribution Date 0.0% 0.5% 1.0% 1.2% 1.4% 1.6% 1.8% 2.0% - ----------------- ---- ---- ---- ---- ---- ---- ---- ---- Initial Percent.......... % % % % % % % % _/15/97.................. % % % % % % % % _/15/98.................. % % % % % % % % _/15/99.................. % % % % % % % % _/15/00.................. % % % % % % % % _/15/01.................. % % % % % % % % _/15/02.................. % % % % % % % % _/15/03.................. % % % % % % % % _/15/04.................. % % % % % % % % _/15/05.................. % % % % % % % % _/15/06.................. % % % % % % % % _/15/07.................. % % % % % % % % _/15/08.................. % % % % % % % % _/15/09.................. % % % % % % % % Weighted Average Life..(years)(2): (1) Assumes the exercise by CITSF of its option to purchase all of the Contracts on the Distribution Date on which the Pool Balance as of the last day of the related Due Period is __% or less of the Initial Pool Balance. (2) The weighted average life of a Certificate is determined by (i) multiplying in the amount of each principal payment on the Certificate by the number of years from the date of the issuance of the Certificate to the related Distribution Date, (ii) adding the results and (iii) dividing the sum by the related initial face amount of the Certificate. The ABS Table has been prepared based on the assumptions described above (including the assumptions regarding the characteristics and performance of the Contracts which will differ from the actual characteristics and performance thereof) and should be read in conjunction therewith. YIELD AND PREPAYMENT CONSIDERATIONS Thirty days of interest will be paid to the Noteholders (other than the Class A-1 Noteholders who will receive interest for the actual number of days elapsed in the related Interest Accrual Period) on each Distribution Date (except the first Distribution Date) to the extent of the remaining Available Amount and the remaining Available Reserve Amount, in an amount equal to one-twelfth of the product of the applicable Interest Rate and the outstanding principal balance of each class of the Notes as of the preceding Distribution Date (after giving effect to any distributions of principal to be made on such Distribution Date). See "The Notes--Payments of Principal." Thirty days of interest will be passed through to Certificateholders on each Distribution Date (except the first Distribution Date) to the extent of the remaining Available Amount and the remaining Available Reserve Amount, in an amount equal to one-twelfth of the product of the Pass-Through Rate and the Certificate Balance immediately preceding such Distribution Date. The "Certificate Balance" means the Original Certificate Balance reduced by all distributions allocable to principal actually made to Certificateholders. See "The Certificates--Distributions of Principal." Payment Shortfalls, to the extent not covered by Monthly Advances and amounts on deposit in the Collection Account, will adversely affect the yield on the Securities. If an Event of Default occurs and the Notes are accelerated, payments of interest on and principal of the Class B Notes will not be paid until the Class A Notes have been paid in full. Generally, the excess of the amount of interest at the Contract Rate over the amount of interest payable under such Contract and allocable to pay such Contract's share of interest on the Securities and the Servicing Fee would be available to cover losses on Liquidated Contracts or to fund the Reserve Account. The Trust will not receive a full month's interest at the Contract Rate on any Contract which is prepaid in full or which is subject to a Relief Act Reduction (as defined in the Prospectus), nor will the Servicer make Monthly Advances for any Payment Shortfall which results from a Relief Act Reduction or a prepayment in full of a Contract. The Servicer will not make Non- S-37 Reimbursable Payments. As a result, there will be less interest available to the Trust to pay interest on the Securities, to cover losses on the Liquidated Contracts and to fund the Reserve Account. POOL FACTORS The "Certificate Pool Factor" is a seven-digit decimal which the Servicer will compute each month indicating the remaining Certificate Balance as of the Distribution Date, as a fraction of the Original Certificate Balance. The Certificate Pool Factor will be 1.0000000 as of the Cut-off Date, and thereafter will decline to reflect reductions in the outstanding principal balance of the Certificates. A Certificateholder's portion of the aggregate outstanding Certificate Balance is the product of (i) the original denomination of the Certificateholder's Certificate and (ii) the Certificate Pool Factor. The "Note Pool Factor" with respect to a class of Notes, is a seven-digit decimal which the Servicer will compute each month indicating the remaining outstanding principal balance of each class of Notes as of the Distribution Date, as a fraction of the initial outstanding principal balance of such class of Notes. The Note Pool Factor will be 1.0000000 as of the Cut-off Date, and thereafter will decline to reflect reductions in the outstanding principal balance of the applicable class of Notes. A Noteholder's portion of the aggregate outstanding principal balance of the related class of Notes is the product of (i) the original denomination of the Noteholder's Note and (ii) the applicable Note Pool Factor. On each Distribution Date the Certificateholders and the Noteholders will receive monthly reports concerning the payments received on the Contracts, the Pool Balance, the Note Pool Factor and various other items of information. Pursuant to the Trust Agreement, the Certificateholders will receive monthly reports concerning the payments received on the Contracts, the Pool Balance, Certificate Pool Factor and various other items of information. Securityholders of record (which in the case of the Notes in most cases will be Cede & Co.) during any calendar year will be furnished information for tax reporting purposes not later than the latest date permitted by law. Certificateholders and Note Owners may receive such reports, upon written request, together with a certification that they are Certificateholders or Note Owners, as the case may be, and payment of any expenses associated with the distribution of such reports, from the Trustee (at the address listed in "Structure of the Transaction--The Owner Trustee") and the Indenture Trustee at ____________________. See "Certain Information Regarding the Securities--Statements to Securityholders" in the Prospectus. USE OF PROCEEDS The Company will sell the Contracts to the Trust concurrently with the sale of the Securities and the net proceeds from the sale of the Securities will be applied by the Trust to the purchase of the Contracts and to the payment of certain expenses connected with pooling the Contracts and issuing the Securities. Such net proceeds less the payment of such expenses represent the cash purchase price paid by the Trust to the Company for the sale of the Contracts to the Trust. Such amount will be determined as a result of the pricing of the Securities, through the offering described in this Prospectus Supplement. The purchase price paid to CITSF for the Contracts will be added to CITSF's general funds and will be available for general corporate purposes, including the purchase of new marine installment sale contracts and direct loans and the payment of the purchase price to CITCF-NY for those Contracts acquired by CITSF from CITCF-NY. THE CIT GROUP/SALES FINANCING, INC., SERVICER General As of December 31, 1997, CITSF serviced for itself and others approximately _____ contracts (consisting primarily of recreation vehicle, home equity, recreational boat and manufactured housing contracts), representing an outstanding balance of approximately $___ billion. Of this portfolio, approximately _____ contracts (representing approximately $___ billion outstanding balance) consisted of marine installment sale contracts and direct loans. CITSF entered into an agreement in 1996 to service additional manufactured housing contracts for an unaffiliated third party, which increased substantially the total number of contracts serviced by CITSF. In addition to expected growth in its serviced portfolio, in 1997 CITSF entered into an agreement to provide servicing for approximately S-38 43,000 additional recreation vehicle and recreational boat consumer contracts for another financial institution, which CITSF is also servicing at its Asset Service Center. The addition of these contracts to its servicing portfolio required CITSF to increase staffing levels at the Asset Service Center to support these contracts. The effect of this increase on CITSF's performance as a servicer or subservicer cannot be determined at this time. Servicing The following table shows the composition of CITSF's servicing portfolio, including marine installment sale contracts and direct loans serviced by CITSF on the dates indicated: THE CIT GROUP/SALES FINANCING, INC. Contracts Being Serviced By Product Line
At December 31, --------------- 1992 1993 1994 1995 1996 1997 ---- ---- ---- ---- ---- ---- (Number) (Dollars) (Number) (Dollars) (Number) (Dollars) (Number) (Dollars) (Number) (Dollars) (Number) (Dollars) -------- --------- -------- --------- -------- --------- -------- --------- -------- --------- -------- --------- (Dollars in thousands) RV--Owned...... RV--Bulk Purchases... RV--Servicing(1) Total RV...... Total MH...... Home Equity... Other(2)...... Total Contracts Serviced....
MH = Manufactured Housing RV = Recreation Vehicle (1) Includes contracts sold by CITSF in previous securitizations which CITSF is servicing and a third party servicing arrangement entered into in 1997. (2) Includes inventory financing receivables. Delinquency and Loan Loss Experience The following Delinquency Experience and Loan Loss Experience tables set forth data for CITSF's marine loan portfolio. The following table sets forth the delinquency experience for the five years ended December 31, 1997 of the portfolio of marine installment sale contracts and direct loans originated and serviced by CITSF, excluding contracts acquired by CITSF through portfolio purchases and contracts in repossession. Delinquency and loan loss experience for the serviced portfolio was obtained from the monthly servicer reports for prior securitization trusts. S-39 Delinquency Experience (Dollars in thousands) Year Ended December 31, ----------------------- 1992 1993 1994(3) 1995(3) 1996(3) 1997(3) ---- ---- ------- ------- ------- ------- Number of Contracts............ Principal Balance of Con- tracts Serviced............. Principal Balance of Delin- quent Contracts(1): 30-59 Days................ 60-89 Days................ 90 Days or More........... Total Principal Balance of Delinquent Contracts........ Delinquencies as a Percent of Principal Balances(2)........ (1) The period of delinquency is based on the number of days payments are contractually past due (assuming 30-day months). Consequently, a contract due on the first day of a month is not 30 days delinquent until the first day of the next month. A Contract is deemed delinquent only if payments exceeding $65 are contractually past due 30 days or more. (2) Based on dollar percent delinquent calculated by dividing Total Principal Balance of Delinquent Contracts by Principal Balance of Contracts Serviced. (3) Includes marine installment contracts and direct loans sold by CITSF in previous securitizations which CITSF is servicing. S-40 The following table sets forth the loan loss experience for the five years ended December 31, 1997 of the portfolio of marine installment sale contracts and direct loans originated and serviced by CITSF, excluding contracts acquired by CITSF through portfolio purchases. "Net Losses" are equal to the aggregate balance of all contracts which are determined to be uncollectible in the period less any recoveries and liquidation proceeds on contracts charged-off in the period or any prior periods. Net Losses include outside collection, repossession and liquidation expenses . Loan Loss/Liquidation Experience (Dollars in thousands) Year Ended December 31, ----------------------- 1992 1993 1994(4) 1995(4) 1996(4) 1997(4) ---- ---- ------- ------- ------- ------- Number of Contracts(1)...... Principal Balance of Contracts Serviced(1).... Net Losses: Dollars(2)............. Percentage(3).......... Notes: (1) As of period end and excludes contracts in repossession. (2) The calculation of net loss includes outside collection, repossession and liquidation expenses. (3) As a percentage of the principal balance of contracts as of period end. (4) Includes marine installment sale contracts and direct loans sold by CITSF in previous securitizations which CITSF is servicing. (5) Annualized. The data presented in the foregoing tables is for illustrative purposes only. Such data relates to the performance of CITSF's entire portfolio of marine installment sale contracts and direct loans and is not historical data regarding solely the portion of CITSF's portfolio constituting the Contracts. [Most] of CITSF's portfolio of marine installment sale contracts and direct loans secured by boats was originated under underwriting guidelines in effect prior to August 1994. However, in August 1994 CITSF adopted a risk-adjusted pricing policy and changed its credit criteria and underwriting guidelines in effect prior to August 1994 as described under "The CIT Group/Sales Financing, Inc., Servicer-- CITSF's Underwriting Guidelines" in the Prospectus. In connection with this change, CITSF reduced the minimum credit score for approval of a new credit in order to extend credit to less creditworthy borrowers than under the credit criteria previously in effect. The interest rates charged on marine installment sale contracts and direct loans originated since August 1994 reflect CITSF's evaluation of the relative risk associated with an individual's application. In addition to the effects of seasoning, the changes in CITSF's underwriting standards have resulted and will result in higher delinquency and loan loss experience than is shown in the above tables since the marine installment sale contracts and direct loans included in such tables include contracts which were originated using CITSF's former underwriting guidelines. All of the Contracts were originated under these new credit criteria adopted by CITSF in August 1994. Accordingly, the data presented in the foregoing tables should not necessarily be considered as a basis for assessing the likelihood, amount or severity of delinquency or losses on the Contracts, and the delinquency and loan loss experience presented in the preceding tables may not be indicative of the experience on the Contracts. During 1997, CITSF experienced a higher rate of delinquencies and loan losses on marine installment sale contracts and direct loans. [CITSF attributes the higher rate of delinquencies to _______________.] CITSF attributes the higher loss experience to the combined effect of current economic conditions and a business decision by CITSF to change the credit mix of receivables originated since August 1994. This has resulted in an increase in delinquency and losses. CITSF expects that the upward trend in credit losses will continue through the remainder of 1997. However, no assurance as to future delinquencies, losses or results of repossessions and sales of boats can be given. S-41 THE NOTES General The CIT Marine Trust ____-_ Class A-1 ____% Asset-Backed Notes (the "Class A-1 Notes"), Class A-2 ___% Asset-Backed Notes (the "Class A-2 Notes"), Class A-3 ___% Asset-Backed Notes (the "Class A-3 Notes"), Class A-4 ___% Asset-Backed Notes (the "Class A-4 Notes"), Class A-5 ____% Asset-Backed Notes (the "Class A-5 Notes"), Class A-6 ____% Asset-Backed Notes (the "Class A-6 Notes"), Class A-7 ____% Asset-Backed Notes (the "Class A-7 Notes" and, together with the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes and the Class A-6 Notes, the "Class A Notes") and Class B ___% Asset-Backed Notes (the "Class B Notes" and, together with the Class A Notes, the "Notes" and, together with the Certificates, the "Securities") will represent obligations of the Trust secured by assets of the Trust (other than the Certificate Distribution Account). Payments in respect of the Class B Notes will be subordinated to payments on the Class A Notes to the extent described herein. The Trust will issue $___________ aggregate principal amount of Class A-1 Notes, $____________ aggregate principal amount of Class A-2 Notes, $__________ aggregate principal amount of Class A-3 Notes, $_______ aggregate principal amount of Class A-4 Notes, $__________ aggregate principal amount of Class A-5 Notes, $__________ aggregate principal amount of Class A-6 Notes, $__________ aggregate principal amount of Class A-7 Notes and $______ aggregate principal amount of Class B Notes pursuant to the terms of an Indenture, to be dated as of __________ 1, ____ (as amended and supplemented from time to time, the "Indenture") between _______________, as trustee (the "Indenture Trustee"), a form of which was filed as an exhibit to the Registration Statement of which this Prospectus Supplement forms a part. A copy of the Indenture will be available from the Company, upon request, to the holders of the Notes or Certificates and will be filed with the Securities and Exchange Commission (the "Commission") following the issuance of the Notes and Certificates. The following summary describes certain terms of the Notes and the Indenture. The summary does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all of the provisions of the Notes and the Indenture. Where particular provisions or terms used in the Indenture are referred to, the actual provisions (including definitions of terms) are incorporated by reference as part of such summary. The Notes will be issued in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof and will be available in book-entry form only. Each class of the Notes will initially be represented by a single Note registered in the name of Cede, the nominee of DTC. No person acquiring an interest in the Notes through the facilities of DTC (a "Note Owner") will be entitled to receive a Note representing such person's interest in the Notes, except as set forth under "Certain Information Regarding the Securities--Definitive Securities" in the Prospectus, and such persons will hold their interests in the Notes through DTC in the United States or Cedel or Euroclear in Europe. Unless and until Definitive Notes are issued under the limited circumstances described herein, all references to actions by Noteholders shall refer to actions taken by DTC upon instructions from its Participants, and all references herein to distributions, notices, reports and statements to Noteholders shall refer to distributions, notices, reports and statements to DTC in accordance with DTC procedures. See "Certain Information Regarding The Securities--Definitive Securities" in the Prospectus and Annex I hereto. Payments of interest and principal on the Notes with respect to each Due Period will be made on the fifteenth day of each month or, if any such day is not a Business Day, on the next succeeding Business Day (each, a "Distribution Date"), commencing __________ 15, ____. Payments on the Notes on each Distribution Date will be made to the holders of record of the related Notes on the related Record Date. A "Business Day" is any day other than a Saturday, Sunday or any day on which banking institutions or trust companies in the states of New York, __________, __________ or Oklahoma are authorized or required by law, regulation or executive order to be closed. Payments of Interest The Class A-1 Notes will bear interest at the rate of ____% per annum (the "Class A-1 Interest Rate"), the Class A-2 Notes will bear interest at the rate of ___% per annum (the "Class A-2 Interest Rate"), the Class A-3 Notes will bear interest at the rate of ____% per annum (the "Class A-3 Interest Rate"), the Class A-4 Notes will bear interest at the rate of ____% per annum (the "Class A-4 Interest S-42 Rate"), the Class A-5 Notes will bear interest at the rate of ____% per annum (the "Class A-5 Interest Rate"), the Class A-6 Notes will bear interest at the rate of ____% per annum (the "Class A-6 Interest Rate"), the Class A-7 Notes will bear interest at the rate of ____% per annum (the "Class A-7 Interest Rate") and the Class B Notes will bear interest at the rate of ___% per annum (the "Class B Interest Rate"). The interest rates for the various classes of Notes are referred to herein collectively as "Interest Rates." Interest on the outstanding principal amount of each class of Notes will accrue at the applicable Interest Rate from and including the Closing Date (in the case of the first Distribution Date) or from and including the preceding Distribution Date to but excluding the Distribution Date (each, an "Interest Accrual Period"). On each Distribution Date, the Indenture Trustee will distribute to the Noteholders of each class accrued interest at the applicable Interest Rate on the outstanding principal amount of such class to the extent of the Available Amount remaining after payment of the Servicer Payment. To the extent the remaining Available Amount on a Distribution Date is insufficient to pay Noteholders the entire amount of interest due on such Distribution Date, such shortfall will be funded from the Reserve Account, subject to the Available Reserve Amount, under the circumstances described herein. Interest on the Class A-1 Notes will be calculated on the basis of a 360-day year and the actual number of days elapsed in the related Interest Accrual Period. Interest on each other class of Notes will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Interest on the Notes of any class for any Distribution Date due but not paid on such Distribution Date will be due on the next Distribution Date in addition to an amount equal to interest on such amount at the applicable Interest Rate (to the extent lawful). Interest payments to all classes of Class A Noteholders will have the same priority. Under certain circumstances, the amount available for interest payments could be less than the amount of interest payable on the Class A Notes on any Distribution Date, in which case each class of Class A Noteholders will receive their ratable share (based upon the aggregate amount of interest due to such class of Class A Noteholders) of the aggregate amount available to be distributed in respect of interest on the Class A Notes. Interest on the Class B Notes will not be paid on any Distribution Date until interest on the Class A Notes for such Distribution Date has been paid in full. In addition, notwithstanding the foregoing, if an Event of Default has occurred and the Notes have been accelerated, payments of interest on and principal of the Class B Notes will not be paid until the Class A Notes have been paid in full. Payments of Principal Principal of the Class A Notes will be payable on each Distribution Date in an amount equal to the Class A Noteholders' Principal Distribution Amount, to the extent of the Available Amount remaining after payment of the Servicer Payment and interest due on the Notes on such Distribution Date. To the extent the remaining Available Amount on a Distribution Date is insufficient to fund the entire Class A Noteholders' Principal Distribution Amount due on such Distribution Date, such shortfall will be funded from the Reserve Account, subject to the Available Reserve Amount remaining after any withdrawals from the Reserve Account to make payments of interest due on the Notes on such Distribution Date, under the circumstances described herein. Principal of the Class B Notes will be payable on each Distribution Date in an amount equal to the Class B Noteholders' Principal Distribution Amount, to the extent of the Available Amount remaining after payment of the Servicer Payment and interest due on the Notes and principal due on the Class A Notes on such Distribution Date. To the extent the remaining Available Amount on a Distribution Date is insufficient to fund the entire Class B Noteholders' Principal Distribution Amount due on such Distribution Date, such shortfall will be funded from the Reserve Account, subject to the Available Reserve Amount remaining after any withdrawals from the Reserve Account to make payments of interest due on the Notes and principal due on the Class A Notes on such Distribution Date, under the circumstances described herein. Notwithstanding the foregoing, if an Event of Default has occurred and the Notes have been accelerated, payments of interest on and principal of the Class B Notes will not be paid until the Class A Notes have been paid in full. On each Distribution Date prior to the Distribution Date on which the Class A-1 Notes have been paid in full, principal of the Class A-1 Notes will be payable in an amount equal to 100% of the Class A Noteholders' Principal Distribution Amount. On each Distribution Date on and after the Distribution Date on which the Class A-1 Notes have been paid in full, principal of the Class A-2 Notes will be payable, until S-43 the Class A-2 Notes have been paid in full, in an amount equal to 100% of the Class A Noteholders' Principal Distribution Amount (less any portion of the Class A Noteholders' Principal Distribution Amount applied on such Distribution Date to reduce the outstanding principal amount of the Class A-1 Notes to zero). On each Distribution Date on and after the Distribution Date on which the Class A-2 Notes have been paid in full, principal of the Class A-3 Notes will be payable, until the Class A-3 Notes have been paid in full, in an amount equal to 100% of the Class A Noteholders' Principal Distribution Amount (less any portion of the Class A Noteholders' Principal Distribution Amount applied on such Distribution Date to reduce the outstanding principal amount of the Class A-1 Notes and the Class A-2 Notes to zero). On each Distribution Date on and after the Distribution Date on which the Class A-3 Notes have been paid in full, principal of the Class A-4 Notes will be payable, until the Class A-4 Notes have been paid in full, in an amount equal to 100% of the Class A Noteholders' Principal Distribution Amount (less any portion of the Class A Noteholders' Principal Distribution Amount applied on such Distribution Date to reduce the outstanding principal amount of the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes to zero). On each Distribution Date on and after the Distribution Date on which the Class A-4 Notes have been paid in full, principal of the Class A-5 Notes will be payable, until the Class A-5 Notes have been paid in full, in an amount equal to 100% of the Class A Noteholders' Principal Distribution Amount (less any portion of the Class A Noteholders' Principal Distribution Amount applied on such Distribution Date to reduce the outstanding principal amount of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes to zero). On each Distribution Date on and after the Distribution Date on which the Class A-5 Notes have been paid in full, principal of the Class A-6 Notes will be payable, until the Class A-6 Notes have been paid in full, in an amount equal to 100% of the Class A Noteholders' Principal Distribution Amount (less any portion of the Class A Noteholders' Principal Distribution Amount applied on such Distribution Date to reduce the outstanding principal amount of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes and the Class A-5 Notes to zero). On each Distribution Date on and after the Distribution Date on which the Class A-6 Notes have been paid in full, principal of the Class A-7 Notes will be payable, until the Class A-7 Notes have been paid in full, in an amount equal to 100% of the Class A Noteholders' Principal Distribution Amount (less any portion of the Class A Noteholders' Principal Distribution Amount applied on such Distribution Date to reduce the outstanding principal amount of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes and the Class A-6 Notes to zero). On each Distribution Date, principal of the Class B Notes will be payable, until the Class B Notes have been paid in full, in an amount equal to 100% of the Class B Noteholders' Principal Distribution Amount. No principal payments will be made (i) on the Class A-2 Notes until the Class A-1 Notes have been paid in full, (ii) on the Class A-3 Notes until the Class A-2 Notes have been paid in full, (iii) on the Class A-4 Notes until the Class A-3 Notes have been paid in full (iv) on the Class A-5 Notes until the Class A-4 Notes have been paid in full, (v) on the Class A-6 Notes until the Class A-5 Notes have been paid in full or (vi) on the Class A-7 Notes until the Class A-6 Notes have been paid in full. Notwithstanding the foregoing, if an Event of Default has occurred and the Notes have been accelerated, principal payments will be made on each class of Class A Notes pro rata on the basis of their respective unpaid principal amounts. The outstanding principal amount of the Class A-1 Notes, to the extent not previously paid, will be payable on the _______ Distribution Date (the "Class A-1 Note Final Scheduled Distribution Date"); the outstanding principal amount of the Class A-2 Notes, to the extent not previously paid, will be payable on the ___________ Distribution Date (the "Class A-2 Note Final Scheduled Distribution Date"); the outstanding principal amount of the Class A-3 Notes, to the extent not previously paid, will be payable on the __________ Distribution Date (the "Class A-3 Final Scheduled Distribution Date"); the outstanding principal amount of the Class A-4 Notes, to the extent not previously paid, will be payable on the _________ Distribution Date (the "Class A-4 Final Scheduled Distribution Date"); the outstanding principal amount of the Class A-5 Notes, to the extent not previously paid, will be payable on the _________ Distribution Date (the "Class A-5 Final Scheduled Distribution Date"); the outstanding principal amount of the Class A-6 Notes, to the extent not previously paid, will be payable on the _________ Distribution Date (the "Class A-6 Final Scheduled Distribution Date"); the outstanding principal amount of the Class A-7 Notes, to the extent not previously paid, will be payable on the _________ Distribution Date (the "Class A-7 Final Scheduled Distribution Date"); and the outstanding principal amount of the Class B Notes, to the extent not previously paid, will be payable on the ______ Distribution Date (the "Class B Final Scheduled Distribution Date"). The actual date on which the S-44 aggregate outstanding principal amount of each class of Notes is paid may be earlier than its respective Note Final Scheduled Distribution Date based on a variety of factors including an Optional Purchase or Auction Sale. Redemption In the event of an Optional Purchase or Auction Sale, the outstanding Notes will be redeemed in whole, but not in part, at a redemption price equal to the unpaid principal amount of the Notes plus accrued and unpaid interest thereon at the applicable Interest Rates. An Optional Purchase of all the Contracts by CITSF may occur at CITSF's option on any Distribution Date on which the Pool Balance as of the last day of the related Due Period is __% or less of the Initial Pool Balance. An Auction Sale may occur, and may result in the sale of the Contracts remaining in the Trust, within ten days following the first Distribution Date on which the Pool Balance as of the last day of the related Due Period is __% or less of the Initial Pool Balance. Rights of Noteholders; Indenture The Indenture Trustee will have the power to direct the Owner Trustee to take certain actions in connection with the administration of the Trust property until the Notes have been paid in full and the Indenture has been discharged in accordance with its terms. The Indenture will specifically prohibit the Owner Trustee from taking any action that would impair the Indenture Trustee's security interest in the Trust property and will require the Owner Trustee to obtain the consent of the Indenture Trustee or Noteholders representing not less than a majority of the aggregate principal amount of the Notes then outstanding before modifying, amending, supplementing, waiving or terminating any provision of the Sale and Servicing Agreement. Therefore, except as described herein, until the Notes have been paid in full, the ability to direct the Trust with respect to certain actions permitted to be taken under the Sale and Servicing Agreement rests with the Indenture Trustee and the Noteholders. If an Event of Default under the Indenture occurs and the Notes are accelerated, the Indenture Trustee will have the right or will be required in certain circumstances to exercise remedies as a secured party, including selling the Contracts, in order to pay the principal of, and accrued interest on, the Notes. Except as described herein, upon the occurrence of an Event of Default, the Class B Noteholders will not have any right to direct or to consent to any action by the Indenture Trustee, including acceleration of the Notes or the sale of Contracts, until the Class A Noteholders have been paid in full. The proceeds of any sale of the Contracts may not be equal to or greater than the aggregate outstanding principal amount of the Notes plus, in each case, accrued interest thereon. Because neither interest nor principal is distributed to Class B Noteholders following an Event of Default and acceleration of the Notes until the Class A Notes have been paid in full, the interests of the Class A Noteholders and the Class B Noteholders may conflict, and the exercise by the Indenture Trustee of its right to sell the Contracts or exercise other remedies may cause the Class B Noteholders to suffer a loss of all or part of their investment. Upon the occurrence of an Event of Default under the Indenture, the assets of the Trust may be sold which may result in early retirement of the Notes. If the net proceeds from the liquidation of the Contracts (after payment of the Servicer Payment) and any amounts on deposit in the Note Distribution Account are not sufficient to pay the principal amount of and accrued interest on the Notes in full, holders of the Notes will incur a loss. Such net proceeds together with amounts on deposit in the Note Distribution Account will be distributed to Securityholders (after payment of the fees and expenses of the Indenture Trustee and the Servicer Payment) in the following order of priority: (i) to the Class A Noteholders for amounts due and unpaid on the Class A Notes for interest, ratably, without preference or priority of any kind, according to the amounts due and payable on each class of the Class A Notes for interest, (ii) to the Class A Noteholders for amounts due and unpaid on the Class A Notes for principal, ratably, without preference or priority of any kind, according to the amounts due and payable on the Class A Notes for principal, until the principal amount of the Class A Notes is reduced to zero, (iii) to the Class B Noteholders for amounts due and unpaid on the Class B Notes for interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Class B Notes for interest, (iv) to the Class B Noteholders for amounts due and unpaid on the Class B Notes for principal, ratably, without preference or priority of any kind, according to the amounts due and payable on the Class B Notes for principal, until the principal amount of S-45 the Class B Notes is reduced to zero, (v) to the Certificateholders for amounts due and unpaid on the Certificates for interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Certificates for interest and (vi) to the Certificateholders for amounts due and unpaid on the Certificates for the Certificate Balance, ratably, without preference or priority of any kind, according to the amounts due and payable on the Certificates for the Certificate Balance. Pursuant to the Trust Indenture Act of 1939, as amended, the Indenture Trustee will be deemed to have a conflict of interest and be required to resign as trustee for either the Class A Notes or the Class B Notes if an Event of Default occurs under the Indenture. In these circumstances, the Indenture will require that, within 90 days of ascertaining such Event of Default, the Indenture Trustee will resign as Indenture Trustee for the Class A Notes or the Class B Notes and provide for a successor indenture trustee to be appointed for one or both of the Class A Notes and Class B Notes as applicable, in order that there be separate trustees for each of the Class A Notes and Class B Notes. So long as any amounts remain unpaid with respect to the Class A Notes, only the indenture trustee for the Class A Noteholders will have the right to exercise remedies under the Indenture (but the Class B Noteholders will be entitled to their share of any proceeds of enforcement, subject to the subordination of the Class B Notes to the Class A Notes as described herein), and only the Class A Noteholders will have the right to direct or consent to any action to be taken, including sale of the Contracts, until the Class A Noteholders are paid in full. Upon repayment of the Class A Noteholders in full, all rights to exercise remedies under the Indenture will transfer to the indenture trustee for the Class B Noteholders. Any resignation of the original Indenture Trustee as described above with respect to any class of Notes will become effective only upon the appointment of a successor trustee for such a class of Notes and such successor's acceptance of such appointment. In the event that an Event of Termination occurs, the Indenture Trustee or Class A Noteholders representing not less than a majority of the aggregate principal amount of the Class A Notes then outstanding may remove the Servicer without the consent of any of the Class B Noteholders. None of the Class B Noteholders will have the ability, with certain specified exceptions, to waive defaults by the Servicer, including defaults that could materially adversely affect the Class B Noteholders. THE CERTIFICATES The Certificates offered hereby will be issued pursuant to the Trust Agreement, a form of which has been filed as an exhibit to the Registration Statement of which this Prospectus Supplement is a part. The following summary does not purport to be complete and is subject to, and qualified in its entirety by reference to, the Trust Agreement. General The CIT Marine Trust ____-_ ____% Asset-Backed Certificates (the "Certificates") will represent fractional undivided interests in the Trust. The Trust will issue $____________ aggregate face amount of Certificates pursuant to a Trust Agreement, to be dated as of __________ 1, ____ between the Seller and the Owner Trustee (the "Trust Agreement"), a form of which was filed as an exhibit to the Registration Statement of which this Prospectus Supplement forms a part. A copy of the Trust Agreement will be available from the Company, upon request, to holders of the Notes or Certificates and will be filed with the Commission following the issuance of the Notes and the Certificates. Payments in respect of the Certificates will be subordinated to payments on the Notes to the extent described herein. The following summary describes certain terms of the Certificates and the Trust Agreement. The summary does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all of the provisions of the Certificates and the Trust Agreement. Where particular provisions or terms used in the Trust Agreement are referred to, the actual provisions (including definitions of terms) are incorporated by reference as part of such summary. The Certificates will be offered for purchase in minimum denominations of $20,000 and integral multiples of $1,000 in excess thereof; provided, however, that one Certificate may be issued in a denomination other than an integral multiple of $1,000 such that The CIT GP Corporation III, a Delaware corporation and a wholly owned subsidiary of CIT (the "Affiliated Owner") may be issued at least 1% of S-46 the Original Certificate Balance. The Certificates will be issued in fully registered, certificated form ("Definitive Certificates") to Certificateholders or their nominees. See "Certain Information Regarding the Securities--Definitive Securities" in the Prospectus. Purchasers of Certificates and their assignees (i) must represent that they are United States persons (as defined in Section 7701(a) of the Code) and provide a certification of non-foreign status under penalties of perjury and (ii) must represent and certify that they are not (a) an employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA, (b) a plan described in Section 4975(e)(1) of the Code, or (c) any entity whose underlying assets include plan assets by reason of a plan's investment in the entity. Payments of interest and principal on the Certificates with respect to each Due Period will be made on each Distribution Date, commencing __________ 15, ____. With respect to any Distribution Date, the "Due Period" will be the calendar month preceding the month of such Distribution Date. The first Due Period will commence on and include __________ 1, ____ and will end on and include __________, ____. Payments on the Certificates on each Distribution Date will be made to the holders of record of the Certificates on the related Record Date. Distribution of Interest The Certificates will bear interest at the rate of ____% per annum (the "Pass-Through Rate"). Interest in respect of a Distribution Date will accrue at the Pass-Through Rate during the related Interest Accrual Period. On each Distribution Date, the Owner Trustee will distribute pro rata to Certificateholders accrued interest at the Pass-Through Rate on the outstanding Certificate Balance to the extent of the Available Amount remaining after payment of the Servicer Payment and interest and principal due on the Notes on such Distribution Date. To the extent the remaining Available Amount on a Distribution Date is insufficient to pay Certificateholders the entire amount of interest due on such Distribution Date, such shortfall will be funded from the Reserve Account, subject to the Available Reserve Amount remaining after any withdrawals from the Reserve Account to make payments of interest and principal due on the Notes on such Distribution Date, under the circumstances described herein. Interest on the Certificates for any Distribution Date due but not paid on such Distribution Date will be due on the next Distribution Date in addition to an amount equal to interest on such amount at the Pass-Through Rate (to the extent lawful). Interest on the Certificates will be calculated on the basis of a 360-day year consisting of twelve 30-day months. The rights of Certificateholders to receive distributions of interest will be subordinated to the rights of the Noteholders to receive payment in full of all amounts of interest and principal which the Noteholders are entitled to be paid on such Distribution Date. If an Event of Default has occurred and the Notes have been accelerated, Certificateholders will not be entitled to receive any distributions of interest or principal until the Notes have been paid in full. Distribution of Principal On each Distribution Date prior to the Cross-Over Date, the Certificateholders will not be entitled to any payments of principal. On each Distribution Date on or after the Cross-Over Date, principal of the Certificates will be payable, subject to the remaining Available Amount and the remaining Available Reserve Amount, in an amount equal to the Certificateholders' Principal Distribution Amount with respect to such Distribution Date. Such principal payments will be funded to the extent of the Available Amount remaining after payment of the Servicer Payment, payment of interest and principal in respect of the Notes on the Cross-Over Date, and payment of interest due on the Certificates on such Distribution Date. To the extent the remaining Available Amount on a Distribution Date is insufficient to fund the entire Certificateholders' Principal Distribution Amount due on such Distribution Date, such shortfall will be funded from the Reserve Account, subject to the Available Reserve Amount remaining after any withdrawals from the Reserve Account to make payments of interest and principal due on the Notes and interest due on the Certificates on such Distribution Date, under the circumstances described herein. The rights of Certificateholders to receive distributions of principal (following the payment of interest on the Certificates) will be subordinated to the rights of Noteholders to receive distributions of interest and S-47 principal to the extent described herein. The Certificate Balance of the Certificates, to the extent not previously paid, will be payable on the Distribution Date occurring in __________ (the "Certificate Final Scheduled Distribution Date"). In the event that the Certificates are outstanding on the Certificate Final Scheduled Distribution Date (after taking into account distributions on such date), the Indenture Trustee will withdraw (or cause to be withdrawn) from the Reserve Account (to the extent funds are available therefor in the Reserve Account), and will deposit in the Certificate Distribution Account for distribution to the Certificateholders to retire the Certificates, an amount equal to the Certificate Balance. The actual date on which the aggregate outstanding principal amount of the Certificates is paid may be earlier than the Certificate Final Scheduled Distribution Date based on a variety of factors including an Optional Purchase or Auction Sale. Redemption In the event of an Optional Purchase or Auction Sale, the Certificates will be redeemed at a redemption price equal to the Certificate Balance plus accrued and unpaid interest thereon at the Pass-Through Rate. An Optional Purchase of all the Contracts by CITSF may occur at CITSF's option on any Distribution Date on which the Pool Balance as of the last day of the related Due Period is __% or less of the Initial Pool Balance. An Auction Sale may occur, and may result in the sale of the Contracts remaining in the Trust, within ten days following the first Distribution Date on which the Pool Balance as of the last day of the related Due Period is __% or less of the Initial Pool Balance. The "Initial Pool Balance" equals the Pool Balance as of the Cut-off Date. Limited Rights Except as described herein, if an Event of Default occurs under the Indenture, the Certificateholders will not have any right to direct or to consent to any remedies therefor exercisable by the Indenture Trustee, including the sale of the Contracts, until the Notes have been paid in full. If an Event of Termination occurs, the Certificateholders will not have any right to direct or consent to removal of the Servicer or the waiver of such Event of Termination until the Notes have been paid in full. See "Risk Factors--Rights of Noteholders and Certificateholders" herein and "The Purchase Agreements and the Trust Documents--Event of Termination," "--Rights Upon Event of Termination" and "--Waiver of Past Defaults" in the Prospectus. ENHANCEMENT Subordination. To the extent described herein, the rights of the Certificateholders to receive distributions with respect to the Contracts will be subordinated to the rights of the Noteholders, and the rights of the Class B Noteholders to receive distributions with respect to the Contracts will be subordinated to the rights of the Class A Noteholders. This subordination is intended to enhance the likelihood of timely receipt by the Class A Noteholders (and to a lesser extent the Class B Noteholders) of the full amount of interest and principal required to be paid to them, and to afford the Class A Noteholders (and to a lesser extent the Class B Noteholders) limited protection against losses in respect of the Contracts. No distribution will be made to the Certificateholders on any Distribution Date in respect of (i) interest until the full amount of interest and principal on the Notes payable on such Distribution Date has been distributed to the Noteholders, and (ii) principal until the Notes have been paid in full. No distribution will be made to the Class B Noteholders on any Distribution Date in respect of (i) interest until the full amount of interest on the Class A Notes payable on such Distribution Date has been distributed to the Class A Noteholders, and (ii) principal until the full amount of principal on the Class A Notes payable on such Distribution Date has been distributed to the Class A Noteholders. The Class A Noteholders will be entitled to receive current distributions of interest prior to the Class B Noteholders receiving any current distributions of interest. In addition, the Class A Noteholders will be entitled to receive their share of the current distribution of principal prior to the Class B Noteholders receiving their share of the current distribution of principal. S-48 Reserve Account. On the Closing Date, an account (the "Reserve Account") will be established pursuant to the Sale and Servicing Agreement. The Indenture Trustee will have the right to withdraw (or cause to be withdrawn) payments from the Reserve Account under certain circumstances specified below. The Reserve Account will not be funded on the Closing Date. After the Closing Date, the Reserve Account will be funded with the Excess Collections, if any, and certain investment earnings on funds deposited in the Reserve Account. The Reserve Account will be an Eligible Account (as defined in the Prospectus). Funds on deposit in the Reserve Account will be invested in certain investments which satisfy the criteria established by each of the Ratings Agencies (which may include obligations of CIT). The Reserve Account and any amounts therein shall be held by or on behalf of the Indenture Trustee in accordance with the Sale and Servicing Agreement for the benefit of the Securityholders and the Trust. The Reserve Account will be terminated following the earlier to occur of (a) the date on which the Certificate Balance is paid in full and any funds remaining therein have been paid to the Affiliated Owner or (b) the Certificate Final Scheduled Distribution Date. On each Distribution Date, the amount available to be withdrawn from the Reserve Account for the benefit of the Securityholders (the "Available Reserve Amount") will be equal to the lesser of (i) the Specified Reserve Amount and (ii) the amount on deposit in the Reserve Account, before giving effect to any deposit to be made to the Reserve Account on such Distribution Date. On each Determination Date, the Servicer will determine the amounts, if any, required to be withdrawn from the Reserve Account on the related Distribution Date for payment to the Securityholders. If the Available Amount on any Distribution Date is insufficient (after payment of the Servicer Payment) to pay the interest and principal required to be distributed on the Securities on such Distribution Date, the Indenture Trustee will withdraw (or cause to be withdrawn) from the Reserve Account an amount equal to the lesser of the amount of such deficiency or the Available Reserve Amount. The Indenture Trustee will withdraw (or cause to be withdrawn) such amount from the Reserve Account and will deposit (or cause to be deposited) such amount into the Note Distribution Account and/or Certificate Distribution Account on the Business Day before the Distribution Date with respect to which such withdrawal was made. Any amounts withdrawn from the Reserve Account will be distributed to the Securityholders in the same order of priority as distributions of the Available Amount. If the Available Reserve Amount is zero (which will be the case on the Closing Date), Securityholders will bear the risk of loss resulting from default by Obligors and will have to look primarily to the value of the related Financed Boats for recovery of the outstanding principal and unpaid interest on the defaulted Contracts. On each Distribution Date, the Servicer will deposit Excess Collections, if any, into the Reserve Account in an amount sufficient to increase the amount on deposit in the Reserve Account to the Specified Reserve Amount for the next Distribution Date. Excess Collections, if any, not so required to be deposited in the Reserve Account will be paid to the Affiliated Owner. "Excess Collections" for any Distribution Date will equal the amounts collected or deposited in respect of the Contracts in the related Due Period and which remain in the Collection Account on such Distribution Date after taking into account distributions to be made on the Securities, the Servicer Payment made to the Servicer on such Distribution Date, and the Servicing Fee (including any unpaid Servicing Fees for past Distribution Dates) paid on such Distribution Date. The Specified Reserve Amount with respect to any Distribution Date will equal ___% of the Pool Balance as of the first day of the related Due Period, but in no event less than $___________. If, with respect to any Distribution Date, (a) the average of the principal balance of Contracts 60 days or more delinquent (including Contracts relating to Financed Boats that have been repossessed) as a percentage of the Pool Balance for the three preceding Due Periods exceeds ____% or (b) the average of the principal balances of all Contracts which became Liquidated Contracts in the three preceding Due Periods, less any Net Liquidation Proceeds on Liquidated Contracts, expressed as an annualized percentage of the average outstanding Pool Balance of the three preceding Due Periods exceeds ____%, then the Specified Reserve Amount with respect to such Distribution Date shall be ____% of the Pool Balance as of the first day of the related Due Period, but in no event (i) less than $___________ or (ii) greater than $__________. The S-49 Specified Reserve Amount shall never be greater than the sum of the aggregate principal amount of the Notes and the outstanding Certificate Balance. The Specified Reserve Amount may be reduced from time to time to amounts less than the Specified Reserve Amount as described herein if the Rating Agencies shall have given prior written notice to the Seller, the Servicer and the Issuer that such reduction will not result in a downgrade or withdrawal of the then current rating of the Notes or the Certificates. In several circumstances the Servicer must determine on a Distribution Date the Specified Reserve Amount for the next Distribution Date; in order to make the calculations required, the Servicer will use the data for the three Due Periods preceding the Due Period related to such next Distribution Date. On each Distribution Date, the Indenture Trustee will withdraw (or cause to be withdrawn) from the Reserve Account an amount equal to the amount by which the Available Reserve Amount (after taking into account any deposits to and withdrawals from the Reserve Account pursuant to the Sale and Servicing Agreement on such Distribution Date) exceeds the Specified Reserve Amount for the next Distribution Date and pay such amount to the Affiliated Owner. Any such amounts paid to the Affiliated Owner will not be available for distribution to Securityholders. The sole source of funding for the Reserve Account will be the Excess Collections, and the Excess Collections may not be sufficient to fund the Reserve Account in an amount equal to the Specified Reserve Amount or to replenish the Reserve Account after funds are withdrawn to make payments on the Securities. Neither the Seller nor the Servicer will be obligated to deposit any of their own funds into the Reserve Account in the event that the Excess Collections are not sufficient to fund the Reserve Account in an amount equal to the Specified Reserve Amount. Accordingly, the Distribution Date by which the Reserve Account will be funded in an amount equal to the Specified Reserve Amount for such Distribution Date cannot be predicted. In the event that the Certificates are outstanding on the Certificate Final Scheduled Distribution Date (after taking into account distributions on such date), the Indenture Trustee will withdraw (or cause to be withdrawn) from the Reserve Account an amount equal to the Certificate Balance, and will distribute such amount to the Certificateholders to retire the Certificates, to the extent funds are available therefor in the Reserve Account. THE PURCHASE AGREEMENTS AND THE TRUST DOCUMENTS Distributions On each Determination Date, the Servicer will determine the amount in the Collection Account available for distribution on the related Distribution Date and inform the Indenture Trustee, who shall allocate such amounts between the Notes and the Certificates and make distributions to Securityholders, all as described below. On each Distribution Date, the Indenture Trustee will withdraw the Available Amount from the Collection Account to make the following payments (to the extent sufficient funds are available therefor) in the following order: (a) the Servicer Payment will (to the extent not previously retained by the Servicer) be paid to the Servicer; (b) on and prior to the Cross-Over Date, the Class A Noteholders' Interest Distribution Amount will be deposited into the Note Distribution Account, for payment to the Class A Noteholders for amounts due and unpaid on the Class A Notes for interest, ratably, without preference or priority of any kind, according to the amounts due and payable on each class of the Class A Notes for interest; (c) on and prior to the Cross-Over Date, the Class B Noteholders' Interest Distribution Amount will be deposited into the Note Distribution Account, for payment to the Class B Noteholders for amounts due and unpaid on the Class B Notes for interest, ratably, without S-50 preference or priority of any kind, according to the amounts due and payable on the Class B Notes for interest; (d) on and prior to the Cross-Over Date, the Class A Noteholders' Principal Distribution Amount will be deposited into the Note Distribution Account, for payment to the Class A Noteholders in the following order of priority: (i) to the principal balance of the Class A-1 Notes until the principal balance of the Class A-1 Notes is reduced to zero; (ii) to the principal balance of the Class A-2 Notes until the principal balance of the Class A-2 Notes is reduced to zero; (iii) to the principal balance of the Class A-3 Notes until the principal balance of the Class A-3 Notes is reduced to zero, (iv) to the principal balance of the Class A-4 Notes until the principal balance of the Class A-4 Notes is reduced to zero; (v) to the principal balance of the Class A-5 Notes until the principal balance of the Class A-5 Notes is reduced to zero; (vi) to the principal balance of the Class A-6 Notes until the principal balance of the Class A-6 Notes is reduced to zero; and (vii) to the principal balance of the Class A-7 Notes until the principal balance of the Class A-7 Notes is reduced to zero; (e) on and prior to the Cross-Over Date, the Class B Noteholders' Principal Distribution Amount will be deposited into the Note Distribution Account, for payment to the Class B Noteholders until the principal balance of the Class B Notes is reduced to zero; (f) the Certificateholders' Interest Distribution Amount will be deposited into the Certificate Distribution Account, for payment to the Certificateholders for interest; (g) on and after the Cross-Over Date, the Certificateholders' Principal Distribution Amount will be deposited into the Certificate Distribution Account, for payment to the Certificateholders for principal; (h) if CITSF or one of its affiliates is the Servicer, the Servicing Fee (including any unpaid Servicing Fees for past Distribution Dates) will (to the extent not previously paid to the Servicer) be paid to the Servicer; (i) the amount by which the Specified Reserve Amount for the next Distribution Date exceeds the amount on deposit in the Reserve Account will be deposited into the Reserve Account; and (j) the balance, if any, will be distributed to the Affiliated Owner. For purposes hereof, the following terms shall have the following meanings: The "Principal Distribution Amount" on each Distribution Date is equal to the sum of the following amounts with respect to the related Due Period, in each case calculated in accordance with the method specified in each Contract: (i) all payments of principal (including all Principal Prepayments applied during the related Due Period) made on each Contract during the related Due Period, (ii) the Stated Principal Balance of each Contract which, as of the related Deposit Date, was purchased by CITSF or the Servicer pursuant to the Sale and Servicing Agreement, and (iii) the Stated Principal Balance of each Contract which became a Liquidated Contract during the related Due Period; provided, however, that (x) payments of principal (including Principal Prepayments) with respect to a Liquidated Contract or a Repurchased Contract received after the last day of the Due Period in which the Contract became a Liquidated Contract or a Repurchased Contract shall not be included in the Principal Distribution Amount, and (y) if a Liquidated Contract is purchased by CITSF or the Servicer pursuant to the Sale and Servicing Agreement on the Deposit Date immediately following the Due Period in which it became a Liquidated Contract, no amount will be included with respect to such Contract in the Principal Distribution Amount pursuant to clause (iii) of the definition thereof. The Principal Distribution Amount on the Note Final Scheduled Distribution Date of a class will equal the outstanding principal balance of such class of Notes as of such date, and the Principal Distribution Amount on the Certificate Final Scheduled Distribution Date will equal the Certificate Balance on such date. The Principal Distribution Amount will not exceed the outstanding principal balance of the Notes or, after the Cross-Over Date, the Certificate Balance (or, on the Cross-Over Date, the sum of the principal balance of the Notes and the Certificate Balance). S-51 The "Stated Principal Balance" of a Contract for any Due Period is its unpaid principal balance at the end of the related Due Period, but without giving effect to any adjustments due to bankruptcy or similar proceedings. A "Liquidated Contract" is a defaulted Contract as to which the Servicer has recovered all amounts that it expects to recover either by sale or disposition of the related Financed Boat or otherwise, but in any event a Contract shall be deemed to become a Liquidated Contract no later than the date on which the Servicer has received proceeds from the sale or disposition of such Financed Boat. "Principal Prepayment" means a payment or other recovery of principal on a Contract (including insurance proceeds and Net Liquidation Proceeds applied to principal on a Contract) which is received in advance of its due date and applied upon receipt to reduce the outstanding principal amount of such Contract prior to the date or dates on which such principal amount is scheduled to be paid. "Net Liquidation Proceeds" means the monies collected (from whatever source) during a Due Period on a Liquidated Contract, net of the sum of (a) Liquidation Expenses, plus (b) any payments required by law to be remitted to the Obligor. "Liquidation Expenses" means all reasonable fees of third parties and other expenses incurred by the Servicer in the course of converting any defaulted Contract or Financed Boat into cash proceeds (including, without limitation, expenses relating to recovery, repossession and sale of such Financed Boat). The "Available Amount" on any Distribution Date is equal to the excess of (A) the sum of (i) all amounts on deposit in the Collection Account attributable to collections or deposits made in respect of the Contracts (including any Late Fees (as defined in the Prospectus)) in the related Due Period and (ii) the Purchase Price for any Contract repurchased by CITSF as a result of breaches of certain representations and warranties or purchased by the Servicer as a result of breaches of certain covenants and any Monthly Advances made by the Servicer, if such Purchase Price or Monthly Advance is paid on the Deposit Date immediately preceding such Distribution Date, over (B) the sum of the following amounts (to the extent that the Servicer has not already withheld such amounts from collections on the Contracts): (i) any repossession profits on Liquidated Contracts, Liquidation Expenses incurred and taxes and insurance advanced by the Servicer in respect of Financed Boats that are reimbursable to the Servicer under the Sale and Servicing Agreement, (ii) any amounts incorrectly deposited in the Collection Account, (iii) net investment earnings on the funds in the Collection Account, and (iv) any other amounts permitted to be withdrawn from the Collection Account by the Servicer (or to be retained by the Servicer from collections on the Contracts) pursuant to the Sale and Servicing Agreement. The "Purchase Price" for any Contract will be the remaining principal amount outstanding on such Contract on the date of repurchase, plus thirty days' interest thereon at the Contract Rate plus the reimbursement then due to the Servicer for outstanding Monthly Advances on such Contract. "Certificateholders' Distribution Amount" means, for any Distribution Date, the sum of the Certificateholders' Principal Distribution Amount and the Certificateholders' Interest Distribution Amount. "Certificateholders' Interest Carryover Shortfall" means, for any Distribution Date, the excess of the Certificateholders' Interest Distribution Amount for the preceding Distribution Date over the amount in respect of interest at the Pass-Through Rate that was actually deposited into the Certificate Distribution Account on such preceding Distribution Date, plus interest on such excess, to the extent permitted by law, at the Pass-Through Rate from and including such preceding Distribution Date to but excluding the current Distribution Date. "Certificateholders' Interest Distribution Amount" means, for any Distribution Date, the sum of the Certificateholders' Monthly Interest Amount for such Distribution Date and the Certificateholders' Interest Carryover Shortfall for such Distribution Date. "Certificateholders' Monthly Interest Amount" means, for any Distribution Date, one month's interest (or, in the case of the first Distribution Date, interest accrued from and including the Closing Date to but excluding such Distribution Date) at the Pass-Through Rate on the Certificate Balance on such Distribution S-52 Date (or, in the case of the first Distribution Date, the Original Certificate Balance), before giving effect to all distributions of principal to the Certificateholders on such Distribution Date. "Certificateholders' Monthly Principal Amount" means, for any Distribution Date prior to the Cross-Over Date, zero; and for any Distribution Date commencing on and after the Cross-Over Date, 100% of the Principal Distribution Amount (less the portion of the Principal Distribution Amount required on the first such Distribution Date to pay the Notes in full). "Certificateholders' Principal Carryover Shortfall" means, for any Distribution Date, (a) the excess of (i) the Certificateholders' Principal Distribution Amount for the preceding Distribution Date, over (ii) the amount in respect of principal that was actually deposited into the Certificate Distribution Account on such Distribution Date. "Certificateholders' Principal Distribution Amount" means, for any Distribution Date, the sum of (i) the Certificateholders' Monthly Principal Amount for such Distribution Date and (ii) the Certificateholders' Principal Carryover Shortfall for such Distribution Date; provided, that the Certificateholders' Principal Distribution Amount shall not exceed the Certificate Balance. In addition, on the Certificate Final Scheduled Distribution Date, the amount required to be distributed to Certificateholders will be the lesser of (a) any payments of principal due and remaining unpaid on each Contract owned by the Trust as of the last day of the immediately preceding Due Period plus any amounts on deposit in the Reserve Account, or (b) the amount that is necessary (after giving effect to the other amounts to be deposited in the Certificate Distribution Account on such Distribution Date and allocable to principal) to reduce the Certificate Balance to zero. "Noteholders' Distribution Amount" means, for any Distribution Date, the sum of the Class A Noteholders' Principal Distribution Amount, the Class B Noteholders' Principal Distribution Amount, the Class A Noteholders' Interest Distribution Amount and the Class B Noteholders' Interest Distribution Amount. "Class A Noteholders' Interest Carryover Shortfall" means, for any Distribution Date for each class of Class A Notes (other than the initial Distribution Date), the excess of (i) the Class A Noteholders' Interest Distribution Amount for the preceding Distribution Date for such class of Class A Notes, over (ii) the amount in respect of interest that was actually deposited into the Note Distribution Account in respect of such class of Class A Notes on such preceding Distribution Date, plus interest on the amount of interest due but not paid to the Class A Noteholders of such class on the preceding Distribution Date, to the extent permitted by law, at the applicable Interest Rates borne by such class of Class A Notes. "Class A Noteholders' Interest Distribution Amount" means, for any Distribution Date for any class of Class A Notes, the sum of (x) the Class A Noteholders' Monthly Interest Amount for such Distribution Date for such class of Class A Notes and (y) the Class A Noteholders' Interest Carryover Shortfall for such Distribution Date for such class of Class A Notes. "Class A Noteholders' Monthly Interest Amount" means, for any Distribution Date for any class of Class A Notes, interest accrued during the related Interest Accrual Period at the applicable Interest Rate on the outstanding principal balance of such class of Class A Notes on such Distribution Date (or, in the case of the first Distribution Date, on the Closing Date) before giving effect to all distributions of principal to the Class A Noteholders on such Distribution Date, calculated on the basis of a 360-day year and (a) the actual number of days elapsed, in the case of the Class A Notes and (b) twelve 30-day months in the case of each other class of Class A Notes. "Class A Noteholders' Monthly Principal Amount" means, for any Distribution Date, prior to the Distribution Date on which the Class A Notes have been paid in full, an amount equal to _____% of the Principal Distribution Amount. "Class A Noteholders' Principal Carryover Shortfall" means, for any Distribution Date, the excess of (x) the Class A Noteholders' Principal Distribution Amount for the preceding Distribution Date over (y) the amount in respect of principal that was actually deposited into the Note Distribution Account for the Class A Notes on such preceding Distribution Date. S-53 "Class A Noteholders' Principal Distribution Amount" means, for any Distribution Date, the sum of (i) the Class A Noteholders' Monthly Principal Amount for such Distribution Date and (ii) the Class A Noteholders' Principal Carryover Shortfall for such Distribution Date; provided, that the Class A Noteholders' Principal Distribution Amount shall not exceed the outstanding principal balance of the Class A Notes. In addition, on the Note Final Scheduled Distribution Date of each class of Class A Notes, the principal required to be deposited in the Note Distribution Account will include the amount necessary (after giving effect to other amounts to be deposited in the Note Distribution Account on such Distribution Date and allocable to principal) to reduce the outstanding principal balance of the related class of Class A Notes to zero. "Class B Noteholders' Interest Carryover Shortfall" means, for any Distribution Date for the Class B Notes (other than the initial Distribution Date), the excess of (i) the Class B Noteholders' Interest Distribution Amount for the preceding Distribution Date for the Class B Notes, over (ii) the amount in respect of interest that was actually deposited into the Note Distribution Account in respect of such Class B Notes on such preceding Distribution Date, plus interest on the amount of interest due but not paid to the Class B Noteholders on the preceding Distribution Date, to the extent permitted by law, at the Class B Interest Rate. "Class B Noteholders' Interest Distribution Amount" means, for any Distribution Date for the Class B Notes, the sum of (x) the Class B Noteholders' Monthly Interest Amount for such Distribution Date and (y) the Class B Noteholders' Interest Carryover Shortfall for such Distribution Date. "Class B Noteholders' Monthly Interest Amount" means, for any Distribution Date for the Class B Notes, interest accrued during the related Interest Accrual Period at the applicable Interest Rate on the outstanding principal balance of the Class B Notes on such Distribution Date (or, in the case of the first Distribution Date, on the Closing Date) before giving effect to all distributions of principal to the Class B Noteholders on such Distribution Date. "Class B Noteholders' Monthly Principal Amount" means, for any Distribution Date, prior to the Distribution Date on which the Class A Notes have been paid in full, an amount equal to _____% of the Principal Distribution Amount, and on and after the Distribution Date on which the Class A Notes have been paid in full, 100% of the Principal Distribution Amount (less the portion of the Principal Distribution Amount required on the first such Distribution Date to pay the Class A Notes in full). "Class B Noteholders' Principal Carryover Shortfall" means, for any Distribution Date, the excess of (x) the Class B Noteholders' Principal Distribution Amount for the preceding Distribution Date over (y) the amount in respect of principal that was actually deposited into the Note Distribution Account for the Class B Notes on such preceding Distribution Date. "Class B Noteholders' Principal Distribution Amount" means, for any Distribution Date, the sum of (i) the Class B Noteholders' Monthly Principal Amount for such Distribution Date and (ii) the Class B Noteholders' Principal Carryover Shortfall for such Distribution Date; provided, that the Class B Noteholders' Principal Distribution Amount shall not exceed the outstanding principal balance of the Class B Notes. In addition, on the Class B Note Final Scheduled Distribution Date, the principal required to be deposited in the Note Distribution Account will include the amount necessary (after giving effect to other amounts to be deposited in the Note Distribution Account on such Distribution Date and allocable to principal) to reduce the outstanding principal balance of the Class B Notes to zero. To the extent that the Available Amount is insufficient to pay the Certificateholders' Distribution Amount and the Noteholders' Distribution Amount on any Distribution Date, the Indenture Trustee will withdraw (or cause to be withdrawn) from the Reserve Account, to the extent available, the excess of the sum of the Certificateholders' Distribution Amount and the Noteholders' Distribution Amount over the Available Amount remaining after payment of the Servicer Payment. Any amount so withdrawn from the Reserve Account by or on behalf of the Indenture Trustee will be deposited first into the Note Distribution Account for distribution to the Noteholders in the same order of priority as described above and second into the Certificate Distribution Account for distribution to the Certificateholders in the same order of priority as described above. S-54 The principal balance of the Class A-1 Notes, to the extent not previously paid, will be due on the Class A-1 Note Final Scheduled Distribution Date; the principal balance of the Class A-2 Notes, to the extent not previously paid, will be due on the Class A-2 Note Final Scheduled Distribution Date; the principal balance of the Class A-3 Notes, to the extent not previously paid, will be due on the Class A-3 Note Final Scheduled Distribution Date; the principal balance of the Class A-4 Notes, to the extent not previously paid, will be due on the Class A-4 Note Final Scheduled Distribution Date; the principal balance of the Class B Notes, to the extent not previously paid, will be due on the Class B Note Final Scheduled Distribution Date. The actual date on which the aggregate outstanding principal amount of any class of Notes is paid may be earlier than the respective Note Final Scheduled Distribution Dates set forth above based on a variety of factors, including those described under "Maturity and Prepayment Considerations--Weighted Average Life of the Securities" herein. Modification of Contracts Consistent with its customary servicing practices and procedures, the Servicer may, in its discretion, arrange with an Obligor to defer, reschedule, extend or modify the payment schedule of a Contract or otherwise to modify the terms of a Contract provided that (i) the maturity of such Contract would not extend beyond the 180th day prior to the Certificate Final Scheduled Distribution Date and (ii) the deferral, rescheduling, extension or other modification of the terms of the Contract would not constitute a cancellation of such Contract and the creation of a new installment sale contract or direct loan. The Servicer may, in accordance with its customary servicing procedures, in its good faith judgment, waive any Late Fees that may be due and payable under any Contract. Notwithstanding the foregoing, in connection with the settlement by the Servicer of a defaulted Contract, the Servicer may forgive a portion of such Contract, if in its discretion it believes that the acceptance of the settlement proceeds from the related Obligor would result in the Trust's receiving a greater amount of collections than the Net Liquidation Proceeds that would result from repossessing and liquidating the related Financed Boat. Monthly Advances With respect to each Contract as to which there has been a Payment Shortfall during the related Due Period (other than a Payment Shortfall arising from a Contract which has been prepaid in full or which has been subject to a Relief Act reduction during the related Due Period), the Servicer shall advance funds in the amount of such Payment Shortfall (each, a "Monthly Advance"), but only to the extent that the Servicer, in its good faith judgment, expects to recover such Monthly Advance from subsequent interest collections on such Contract made by or on behalf of the Obligor thereunder, or from Net Liquidation Proceeds or insurance proceeds with respect to such Contract. The Servicer shall be reimbursed for any Monthly Advance from subsequent interest collections with respect to such Contract. If the Servicer determines in its good faith judgment that an unreimbursed Monthly Advance shall not ultimately be recoverable from subsequent interest collections, the Servicer shall be reimbursed for such Monthly Advance from collections on all Contracts. In determining whether an advance is or will be nonrecoverable, the Servicer need not take into account that it might receive any amounts in a deficiency judgment against an Obligor. The Servicer will not make a Monthly Advance in respect of (i) the principal component of any scheduled payment or (ii) a Payment Shortfall arising from a Contract which has been prepaid in full or which has been subject to a Relief Act Reduction during the related Due Period. Non-Reimbursable Payments The Servicer will not be obligated to make any Non-Reimbursable Payments (as defined in the Prospectus). Servicing Compensation The Servicer will be entitled to receive, out of collections on the Contracts, a monthly fee (the "Servicing Fee") for each Due Period, payable on the following Distribution Date, equal to the sum of (i) one-twelfth of the product of _____% (the "Servicing Fee Rate") and the Pool Balance as of the last day of the second preceding Due Period (or, in the case of the first Distribution Date, as of the Cut-off Date) and S-55 (ii) any investment earnings (net of investment expenses and losses) on amounts on deposit in the Collection Account, the Note Distribution Account and the Certificate Distribution Account; provided, however, if CITSF or an affiliate thereof is not the Servicer, the Servicing Fee Rate shall be a rate determined at the time of the appointment of a successor Servicer but not to exceed _____%. If CITSF or one of its affiliates is the Servicer, the Servicing Fee (including any unpaid Servicing Fees for past Distribution Dates) shall not be included in the Servicer Payment but instead shall be payable to the Servicer on each Distribution Date only from the Available Amount, if any, remaining after the principal and interest payable on the Securities on such Distribution Date have been paid. Payment of Notes Upon the payment in full of all outstanding Notes and the satisfaction and discharge of the Indenture, the Owner Trustee will succeed to all the rights of the Indenture Trustee, and the Certificateholders will succeed to all the rights of the Noteholders under the Sale and Servicing Agreement, except as otherwise provided therein. Termination In order to avoid excessive administrative expenses, CITSF will be permitted at its option to purchase from the Trust, on any Distribution Date on which the Pool Balance as of the last day of the related Due Period is __% or less of the Initial Pool Balance, all remaining Contracts at a price equal to the aggregate Purchase Price for the Contracts (including defaulted Contracts), plus the appraised value of any other property held by the Trust (less Liquidation Expenses) (the "Optional Purchase"). Exercise of such right will effect early retirement of the Securities. Within ten days after the first Distribution Date on which the Pool Balance as of the last day of the related Due Period is __% or less of the Initial Pool Balance, the Indenture Trustee (or, if the Notes have been paid in full and the Indenture has been discharged in accordance with its terms, the Owner Trustee) shall solicit bids for the purchase of the Contracts remaining in the Trust (the "Auction Sale"). In the event that satisfactory bids are received as described in the Prospectus, the net sale proceeds (after paying the Servicer Payment) will be distributed to Securityholders on the second Distribution Date succeeding such Due Period. Any purchaser of the Contracts must agree to the continuation of CITSF as Servicer on terms substantially similar to those in the Trust Documents. Any such sale will effect early retirement of the Securities. See "The Certificates--Redemption," "The Notes--Redemption" and "The Purchase Agreements and The Trust Documents--Termination" in the Prospectus. CERTAIN FEDERAL INCOME TAX CONSEQUENCES Certain Federal Tax Consequences with Respect to the Notes Tax Characterization of the Notes and the Trust. Schulte Roth & Zabel LLP has advised the Trust that, based on the terms of the Notes and the transactions relating to the Contracts as set forth herein, the Notes will be treated as debt for Federal income tax purposes. However, there is no specific authority with respect to the characterization for Federal income tax purposes of securities having the same terms as the Notes. Schulte Roth & Zabel LLP is also of the opinion that, based on the applicable provisions of the Trust Documents and related documents, for Federal income tax purposes, (i) the Trust will not be classified as an association taxable as a corporation and (ii) the Trust will not be treated as a publicly traded partnership taxable as a corporation. If the IRS were to successfully characterize the Trust as an entity taxable as a corporation for Federal income tax purposes, the income from the Contracts (reduced by deductions, possibly including interest on the Notes) would be subject to Federal income tax at corporate rates, which could reduce the amounts available to make payments on the Notes. Likewise, if the Trust were subject to state or local income or franchise tax, the amount of cash available to make payment on the Notes could be reduced. S-56 If, contrary to the opinion of Schulte Roth & Zabel LLP, the IRS successfully asserted that the Notes were not debt for Federal income tax purposes, the Notes might be treated as equity interests in the Trust. If so, and if the Trust were taxable as a corporation with the adverse consequences described above, the taxable corporation would not be able to deduct interest on the Notes. The remainder of this discussion assumes that the Notes will be treated as debt and that the Trust will not be taxable as a corporation. Interest Income on the Notes. The stated interest on the Notes will be taxable to a Noteholder as ordinary income when received or accrued in accordance with such Noteholder's method of tax accounting. [Some or all of the Notes may be issued with "original issue discount" within the meaning of Section 1273 of the Code ("OID"). The amount of OID on the Notes will equal the difference between the issue price and the principal amount of the Notes unless the OID is less then a statutorily defined de minimis amount.] [OID will accrue to the Noteholders over the life of the Notes, taking account of a reasonable prepayment assumption, based on a constant yield to maturity method, using semi-annual compounding, and properly adjusted for actual prepayments on the Contracts. The portion of OID that accrues during the time a Noteholder owns the Notes (i) constitutes interest includable in the Noteholder's gross income for federal income tax purposes and (ii) is added to the Noteholder's tax basis for purposes of determining gain or loss on the maturity, redemption, prior sale, or other disposition of the Notes. Thus, the effect of OID is to increase the amount of taxable income above the actual interest payments during the life of the Notes.] Sale or Other Disposition. If a Noteholder sells a Note, the holder will recognize gain or loss in an amount equal to the difference between the amount realized on the sale and the holder's adjusted tax basis in the Note. The adjusted tax basis of a Note to a particular Noteholder will equal the holder's cost for the Note, increased by any [OID,] market discount and gain previously included by such Noteholder in income with respect to the Note and decreased by the amount of any bond premium previously amortized and by the amount of principal payments previously received by such Noteholder with respect to such Note. Subject to the rules of the Code concerning market discount on the Notes, any such gain or loss will be capital gain or loss if the Note was held as a capital asset. Capital losses generally may be deducted to the extent the Noteholder has capital gains for the taxable year, and non-corporate Noteholders can deduct a limited amount of such losses in excess of available capital gains. Foreign Holders. If interest paid (or accrued) to a Noteholder who is a nonresident alien, foreign corporation or other non-United States person (a "foreign person") is not effectively connected with the conduct of a trade or business within the United States by the foreign person, the interest generally will be considered "portfolio interest," and generally will not be subject to United States Federal income tax and withholding tax, if the foreign person (i) is not actually or constructively a "10 percent shareholder" of the Trust (in this case, a holder of 10% of the capital or profits of the Trust) nor a "controlled foreign corporation" with respect to which the Trust or the Affiliated Owner is a "related person" within the meaning of the Code and (ii) provides the person otherwise required to withhold U.S. tax with an appropriate statement, signed under penalties of perjury, certifying that the beneficial owner of the Note is a foreign person and providing the foreign person's name and address. If the information provided in the statement changes, the foreign person must so inform the person otherwise required to withhold U.S. tax within 30 days of such change. The statement generally must be provided in the year a payment occurs or in either of the two preceding years. If a Note is held through a securities clearing organization or certain other financial institutions, the organization or institution may provide a signed statement to the withholding agent. However, in that case, unless, in the case of payments made after December 31, 1998, the clearing organization or financial institution is a foreign entity that has entered into a withholding agreement with the IRS, the signed statement must be accompanied by a Form W-8 or substitute form provided by the foreign person that owns the Note. If such interest is not portfolio interest, then any payment of such interest will be subject to United States Federal withholding tax at a rate of 30%, unless reduced or eliminated pursuant to an applicable income tax treaty. Any capital gain realized on the sale, redemption, retirement or other taxable disposition of a Note by a foreign person will be exempt from United States Federal income and withholding tax, provided that (i) the gain is not effectively connected with the conduct of a trade or business in the United States by the foreign person and (ii) in the case of an individual foreign person, the foreign individual is not present in the United States for 183 days or more in the taxable year or does not have a tax home in the United States. S-57 If the interest, gain or income on a Note held by a foreign person is effectively connected with the conduct of a trade or business in the United States by the foreign person, the holder generally will be subject to United States Federal income tax on the interest, gain or income at regular Federal income tax rates. If a holder provides a Form 4224 indicating that interest, gain or income is effectively connected with the conduct of a trade or business in the United States, the interest, gain or income will be exempt from the withholding tax previously discussed. In addition, if the foreign person is a foreign corporation, it may be subject to a branch profits tax equal to 30% of its "effectively connected earnings and profits" within the meaning of the Code for the taxable year, as adjusted for certain items, unless it qualifies for a lower rate under an applicable income tax treaty (as modified by the branch profits tax rules). Under recently issued Treasury Regulations that apply to payments made after December 31, 1998, current IRS Forms W-8 and 4224 will be replaced by a single form called Form W-8. Information Reporting and Backup Withholding. The Trust will be required to report annually to the IRS, and to each Noteholder of record, the amount of interest paid on the Notes (and the amount [of accrued OID, if any, and interest] withheld for Federal income taxes, if any) for each calendar year, except as to exempt holders (generally, holders that are corporations, tax-exempt organizations, qualified pension and profit-sharing trusts, individual retirement accounts, or nonresident aliens who provide certification as to their status as nonresidents). Accordingly, each holder (other than exempt holders who are not subject to the reporting requirements) will be required to provide, under penalties of perjury, a certificate containing the holder's name, address, correct Federal taxpayer identification number and a statement that the holder is not subject to backup withholding. Should a non-exempt Noteholder fail to provide the required certification, the Trust will be required to withhold 31% of the amount otherwise payable to the holder, and remit the withheld amount to the IRS as a credit against the holder's Federal income tax liability. Certain Federal Tax Consequences with Respect to the Certificates Tax Characterization of the Trust. The Affiliated Owner and the Servicer have agreed, and the other Certificateholders will agree by their purchase of Certificates, to treat the Trust as a partnership for purposes of Federal income tax, with the assets of the partnership being the assets held by the Trust, the partners of the partnership being the Certificateholders and the Notes being debt of the partnership. However, the proper characterization of the arrangement involving the Trust, the Certificates, the Notes, the Affiliated Owner, and the Servicer is not clear because there is no authority on transactions closely comparable to that contemplated herein. If the Trust were held to be taxable as a corporation for Federal income tax purposes, rather than a partnership, the Trust would be subject to a corporate level income tax. Any such corporate income tax could materially reduce or eliminate cash that would otherwise be distributable with respect to the Certificates (and Certificateholders could be liable for any such tax that is unpaid by the Trust). See also the discussion above under "--Certain Federal Tax Consequences with Respect to the Notes--Tax Characterization of the Notes and the Trust." However, in the opinion of Schulte Roth & Zabel LLP, the Trust will not be taxable as a corporation. Nonetheless, because of the lack of cases or rulings on similar transactions, a variety of alternative characterizations are possible in addition to the position to be taken by Certificateholders that the Certificates represent equity interests in a partnership. For example, because the Certificates have certain features characteristic of debt, the Certificates might be considered debt of the Trust or of the Seller. The remainder of this summary assumes that the Certificates represent equity interests in a partnership that owns the Contracts. Partnership Taxation. As a partnership, the Trust will not be subject to Federal income tax, but each Certificateholder will be required to separately take into account such holder's allocated share of income, gains, losses, deductions and credits of the Trust. In certain instances, however, the Trust could have an obligation to make payments of withholding tax on behalf of a Certificateholder. See "--Backup Withholding" and "--Tax Consequences to Foreign Owners of Certificates." The Trust's income will consist primarily of interest accrued on the Contracts (including appropriate adjustments for market discount (as discussed below), and any original issue discount and bond premium), investment income S-58 from investments in the Collection Account, Note Distribution Account, Reserve Account and Certificate Distribution Account and any gain upon collection or disposition of the Contracts. The Trust's deductions will consist primarily of interest accruing with respect to the Notes, servicing and other fees and losses or deductions upon collection or disposition of the Contracts. The tax items of a partnership are allocable to the partners in accordance with the Code, Treasury regulations and the partnership agreement (here, the Trust Agreement and Related Documents). The Trust Agreement will provide that the Certificateholders will be allocated taxable income, if any, of the Trust for each interest accrual period equal to the sum of (i) the amount of any interest that accrues on the Certificates for such interest accrual period based on the Pass-Through Rate; (ii) an amount equivalent to any overdue interest on the Certificates that accrued during a prior interest accrual period (to the extent that no allocation of taxable income has previously been made for such amount under clause (i) or this clause (ii)); and (iii) any Trust income attributable to discount on the Contracts that corresponds to any excess of the principal amount of the Certificates over their initial issue price. All remaining taxable income of the Trust will be allocated to the Affiliated Owner. It is believed that this allocation will be valid under applicable Treasury regulations, although no assurance can be given that the IRS would not require a greater amount of income to be allocated to Certificateholders. Moreover, under the foregoing method of allocation, holders may be allocated income greater than the amount of interest accruing on the Certificates based on the Pass-Through Rate or may be allocated income greater than the amount of cash distributed to them. An individual taxpayer may generally deduct miscellaneous itemized deductions (which do not include interest expenses) only to the extent they exceed two percent of the individual's adjusted gross income. Those limitations would apply to an individual Certificateholder's share of expenses of the Trust (including fees paid to the Servicer) and might result in such holder having net taxable income that exceeds the amount of cash actually distributed to such holder over the life of the Trust. In addition, Section 68 of the Code provides that the amount of certain itemized deductions otherwise allowable for the taxable year of an individual whose adjusted gross income exceeds an inflation-adjusted threshold amount specified in the Code ($121,200 for taxable years beginning in 1997, in the case of a joint return) will be reduced by the lesser of (i) 3% of the excess of adjusted gross income over the specified threshold amount or (ii) 80% of the amount of itemized deductions otherwise allowable for such taxable year. The Trust intends to make all tax calculations relating to income and allocations to Certificateholders on an aggregate basis. If the IRS were to require that such calculations be made separately for each of the Contracts, the Trust might be required to incur additional expense, but it is believed that there would not be a material adverse effect on Certificateholders. Market Discount. To the extent that the Contracts are purchased by the Trust for a price that is less than the aggregate stated redemption price at maturity of the Contracts, the Trust must account for "market discount" on the Contracts pursuant to Section 1276 of the Code. Any market discount will be accounted for each of the Contracts on an individual basis, and the Trust will make an election to calculate such market discount as it economically accrues. Any income resulting from the accrual of market discount will be allocated to the Certificateholders as described above. Original Issue Discount and Bond Premium. It is believed that the Contracts were not and will not be issued with original issue discount or at a premium, and, therefore, the Trust should not have original issue discount income or amortizable bond premium. Disposition of Certificates. Generally, capital gain or loss will be recognized on a sale of a Certificate in an amount equal to the difference between the amount realized and the seller's tax basis in the Certificate sold. A Certificateholder's tax basis in a Certificate will generally equal his cost increased by his share of Trust income that is includable in his gross income and decreased by any distributions received with respect to such Certificate. In addition, both the tax basis in the Certificate and the amount realized on a sale of a Certificate would include the holder's share of the Notes and other liabilities of the Trust. A holder acquiring Certificates at different prices may be required to maintain a single aggregate adjusted tax basis in such Certificates, and, upon sale or other disposition of some of the Certificates, allocate a pro rata portion of such aggregate tax basis to the Certificates sold (rather than maintaining a separate tax basis in each Certificate for purposes of computing gain or loss on a sale of that Certificate). S-59 Any gain on the sale of a Certificate attributable to the holder's share of unrecognized accrued market discount on the Contracts would generally be treated as ordinary income to the holder and would give rise to special tax reporting requirements. The Trust does not expect to have any other assets that would give rise to such special reporting requirements. Thus, to avoid these special reporting requirements, the Trust will elect to include any such market discount in income as it accrues. If a Certificateholder is required to recognize an aggregate amount of income (not including income attributable to disallowed miscellaneous itemized deductions described above) over the life of the Certificates that exceeds the aggregate cash distributions with respect thereto, such excess will generally give rise to a capital loss upon the retirement of the Certificates. Allocations Between Transferor and Transferee. In general, the Trust's taxable income and losses will be determined monthly and the tax items for a particular calendar month will be apportioned among the Certificateholders in proportion to the principal amount of Certificates owned by them as of the close of the last day of such month. As a result, a holder purchasing Certificates may be allocated tax items (which will affect the tax liability and tax basis of the holder) attributable to periods before the actual purchase takes place. The use of such a monthly convention may not be permitted by existing regulations. If a monthly convention is not allowed (or is allowed only for transfers of less than all of the partner's interest), taxable income or losses of the Trust might be reallocated among the Certificateholders. The Affiliated Owner is authorized to revise the Trust's method of allocation between transferors and transferees to conform to a method permitted by any future authority. Section 754 Election. In the event that a Certificateholder sells a Certificate at a profit (or loss), the purchasing Certificateholder will have a higher (or lower) basis in the Certificate than the selling Certificateholder had. The tax basis of the Trust's assets will not be adjusted to reflect that higher (or lower) basis unless the Trust files an election under Section 754 of the Code. In order to avoid the administrative complexities that would be involved in keeping accurate accounting records, as well as potentially onerous information reporting requirements, the Trust will not make such an election. As a result, Certificateholders might be allocated a greater or lesser amount of Trust income than would be appropriate based on their own purchase price for Certificates. Administrative Matters. The Servicer, on behalf of the Trust, is required to keep or cause to be kept complete and accurate books of the Trust. Such books will be maintained for financial reporting and tax purposes on an accrual basis and the taxable year of the Trust will be the calendar year. The Affiliated Owner will file a partnership information return (IRS Form 1065) with the IRS for each taxable year of the Trust and will report to holders (and to the IRS) each Certificateholder's allocable share of items of Trust income and expense on Schedule K-1. The Trust will provide the Schedule K-1 information to nominees that fail to provide the Trust with the information statement described below and such nominees will be required to forward such information to the beneficial owners of the Certificates. Generally, holders must file tax returns that are consistent with the information returns filed by the Trust or be subject to penalties unless the holder notifies the IRS of all such inconsistencies. Under Section 6031 of the Code, any person that holds Certificates as a nominee on behalf of another person at any time during a calendar year is required to furnish the Trust with a statement containing certain information on the nominee, the beneficial owners and the Certificates so held. Such information includes (i) the name, address and taxpayer identification number of the nominee and (ii) as to each beneficial owner (x) the name, address and taxpayer identification number of such person, (y) whether such person is a United States person, a tax-exempt entity or a foreign government, an international organization, or any wholly-owned agency or instrumentality of either of the foregoing and (z) certain information concerning Certificates that were held, acquired or transferred on behalf of such person throughout the year. In addition, brokers and financial institutions that hold Certificates through a nominee are required to furnish directly to the Trust information as to themselves and their ownership of Certificates. A clearing agency registered under Section 17A of the Exchange Act that holds Certificates as a nominee is not required to furnish any such information statement to the Trust. The information referred to above for any calendar year must be furnished to the Trust on or before the following January 31. Nominees, brokers and financial institutions that fail to provide the Trust with the information described S-60 above may be subject to penalties. The Trust will provide the Schedule K-1 information to nominees that fail to provide the Trust with the information described above and such nominees will be required to forward such information to the beneficial owners of the Certificates. The Affiliated Owner, as the "tax matters partner," will be responsible for representing the Certificateholders in any dispute with the IRS with respect to partnership items. The Code provides for administrative examination of a partnership as if the partnership were a separate and distinct taxpayer. Generally, the statute of limitations for partnership items does not expire before three years after the date on which the partnership information return is filed. Any adverse determination following an audit of the return of the Trust by the appropriate taxing authorities could result in an adjustment of the returns of the Certificateholders, and, under certain circumstances, a Certificateholder may be precluded from separately litigating a proposed adjustment to the items of the Trust. An adjustment could also result in an audit of a Certificateholder's returns and adjustments of items not related to the income and losses of the Trust. Backup Withholding. Distributions made on the Certificates and proceeds from the sale of the Certificates may be subject to a "backup" withholding tax of 31% if, in general, the Certificateholder fails to comply with certain identification procedures, unless the holder is an exempt recipient under applicable provisions of the Code. Tax Consequences to Foreign Owners of Certificates. As discussed below, an investment in a Certificate is not suitable for any non-U.S. person which is not eligible for a complete exemption from U.S. withholding tax on interest under a tax treaty with the United States. Accordingly, no interest in a Certificate should be acquired by or on behalf of any such non-U.S. person. No regulations, published rulings or judicial decisions exist that would discuss the characterization for Federal withholding tax purposes with respect to non-U.S. persons of a partnership with activities substantially the same as the Trust. However, it is not expected that the Trust would be considered to be engaged in a trade or business in the United States for purposes of Federal withholding taxes with respect to non-U.S. persons. If the Trust were considered to be engaged in a trade or business in the United States for such purposes, the income of the Trust allocable to a non-U.S. person would be subject to Federal withholding tax at a rate of 35% for persons taxable as a corporation and 39.6% for all other non-U.S. persons. Also, in such cases, a non-U.S. owner of a Certificate that is a corporation may be subject to the branch profits tax. If the Trust is notified that an owner of a Certificate is a foreign person, the Trust may withhold as if it were engaged in a trade or business in the United States in order to protect the Trust from possible adverse consequences of a failure to withhold. Subsequent adoption of Treasury regulations or the issuance of other administrative pronouncements may require the Trust to change its withholding procedures. Each foreign owner of a Certificate might be required to file a U.S. individual or corporate income tax return (including in the case of a corporation, the branch profits tax) on its share of the Trust's income. Each foreign owner of a Certificate must obtain a taxpayer identification number from the IRS and submit that number to the withholding agent on Form W-8 in order to assure appropriate crediting of any taxes withheld. A foreign owner of a Certificate generally would be entitled to file with the IRS a claim for refund with respect to withheld taxes, taking the position that no taxes were due because the Trust was not engaged in a U.S. trade or business. However, interest payments made to (or accrued by) an owner of a Certificate who is a foreign person may be considered guaranteed payments to the extent such payments are determined without regard to the income of the Trust and for that reason or because of the nature of the Contracts, the interest will likely not be considered "portfolio interest." As a result, even if the Trust is not considered to be engaged in a U.S. trade or business, foreign owners of Certificates will likely be subject to United States Federal income tax which must be withheld at a rate of 30 percent on their share of the Trust's income (without reduction for interest expense), unless reduced or eliminated pursuant to an applicable income tax treaty. If the Trust is notified that an owner of a Certificate is a foreign person, the Trust may be required to withhold and pay over such tax, which can exceed the amounts otherwise available for distribution to such owner. A foreign owner would generally be entitled to file with the IRS a refund claim for such withheld taxes, taking the position that the interest was portfolio interest and therefore not subject to U.S. tax. However, the IRS may disagree and no assurance can be given as to the appropriate amount of tax liability. As a result, each potential foreign owner of a Certificate should consult its tax advisor as to whether the tax consequences of holding an interest in a Certificate make it an S-61 unsuitable investment. For additional information concerning proposed regulations which would modify the procedures that a beneficial owner of a Certificate must comply with to avoid United States withholding tax on payments to such owner, see the discussion above under "Certain Federal Tax Consequences with Respect to the Notes--Foreign Holders." CERTAIN STATE TAX CONSEQUENCES The activities to be undertaken by the Servicer in servicing and collecting the Contracts will take place in Oklahoma. The State of Oklahoma imposes a state income tax on individuals, nonresident aliens (with respect to Oklahoma taxable income), corporations, certain foreign corporations, and trusts and estates with Oklahoma taxable income. No ruling on any of the issues discussed below will be sought from the Oklahoma Tax Commission. Because of the variation in each state's tax laws based in whole or in part upon income, it is impossible to predict tax consequences to holders of Notes and Certificates in all of the state taxing jurisdictions in which they are already subject to tax. Noteholders and Certificateholders are urged to consult their own tax advisors with respect to state tax consequences arising out of the purchase, ownership and disposition of Notes and Certificates. Tax Consequences With Respect to the Notes Crowe & Dunlevy, P.C., Oklahoma Tax Counsel to the Seller ("Oklahoma Tax Counsel") will advise the Trust that, assuming the Notes will be treated as debt for federal income tax purposes, the Notes will be treated as debt for Oklahoma income tax purposes, and the Noteholders not otherwise subject to taxation in Oklahoma should not become subject to taxation in Oklahoma solely because of a holder's ownership of Notes. However, a Noteholder already subject to Oklahoma's income tax could be required to pay additional Oklahoma tax as a result of the holder's ownership or disposition of Notes. Tax Consequences With Respect to the Certificates Issued by a Trust Treated as a Partnership Oklahoma Tax Counsel will deliver its opinion that if the arrangement created by the Trust Agreement is treated as a partnership (not taxable as a corporation) for federal income tax purposes, the same treatment should also apply for Oklahoma income tax purposes. Under current law, Certificateholders that are nonresidents of Oklahoma and are not otherwise subject to Oklahoma income tax should not be subject to Oklahoma income tax on the income from the Trust because it is unlikely that the Trust has established a nonunitary business or commercial situs in Oklahoma. In any event, classification of the arrangement as a "partnership" would not cause a Certificateholder not otherwise subject to taxation in Oklahoma to pay Oklahoma income tax on income beyond that derived from the Certificates. ERISA CONSIDERATIONS Section 406 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and Section 4975 of the Code prohibit a pension, profit sharing or other employee benefit plan, as well as individual retirement accounts and certain types of Keogh Plans (each, a "Benefit Plan"), from engaging in certain transactions with persons that are "parties in interest" under ERISA or "disqualified persons" under the Code with respect to such Benefit Plan. A violation of these "prohibited transaction" rules may generate excise tax and other liabilities under ERISA and the Code for such persons. The Certificates An interest in the Certificates may not be acquired by (i) an employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA, (ii) a plan described in Section S-62 4975(e)(1) of the Code, or (iii) any entity whose underlying assets include plan assets by reason of a plan's investment in the entity. Each Certificateholder must represent and warrant that it is not subject to the foregoing limitation. The Notes The acquisition or holding of Notes by or on behalf of a Benefit Plan could be considered to give rise to a prohibited transaction if the Seller, the Trust or any of their respective affiliates is or becomes a party in interest or a disqualified person with respect to such Benefit Plan. Certain exemptions from the prohibited transaction rules could be applicable to the purchase and holding of Notes by a Benefit Plan depending on the type and circumstances of the plan fiduciary making the decision to acquire such Notes. Included among these exemptions are: Prohibited Transaction Class Exemption ("PTCE") 90-1, regarding investments by insurance company pooled separate accounts; PTCE 91-38 regarding investments by bank collective investment funds; PTCE 95-60 regarding investments by life insurance company general accounts; PTCE 96-23 regarding transactions effected by "in-house asset managers"; and PTCE 84-14, regarding transactions effected by "qualified professional asset managers." Any purchaser or holder of the Notes will be deemed to have represented by its purchase and holding thereof that it either (a) is not a Benefit Plan and is not purchasing such Notes on behalf of or with plan assets of any Benefit Plan or (b) is eligible for the exemptive relief available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 with respect to such purchase or holding. A plan fiduciary considering the purchase of the Notes should consult its tax and/or legal advisors regarding whether the assets of the Trust would be considered plan assets, the possibility of exemptive relief from the prohibited transaction rules and other issues and their potential consequences. PLAN OF DISTRIBUTION Subject to the terms and conditions set forth in the Underwriting Agreement (the "Underwriting Agreement") among CITSF, the Company and [underwriters] (the "Underwriters"), the Company has agreed to sell to the Underwriters, and the Underwriters have severally agreed to purchase, the respective principal amount of the Certificates and the Notes offered hereby, as set forth opposite their respective names below: Class A-1 Notes Principal Amount ---------------- ___________............................. $ ___________............................. $ ___________............................. $ -------- Total............................ $ ======== Class A-2 Notes Principal Amount ---------------- ___________............................. $ ___________............................. $ ___________............................. $ -------- Total............................ $ ======== S-63 Class A-3 Notes Principal Amount ---------------- ___________............................. $ ___________............................. $ ___________............................. $ -------- Total............................ $ ======== Class A-4 Notes Principal Amount ---------------- ___________............................. $ ___________............................. $ ___________............................. $ -------- Total............................ $ ======== Class A-5 Notes Principal Amount ---------------- ___________............................. $ ___________............................. $ ___________............................. $ -------- Total............................ $ ======== Class A-6 Notes Principal Amount ---------------- ___________............................. $ ___________............................. $ ___________............................. $ -------- Total............................ $ ======== Class A-7 Notes Principal Amount ---------------- ___________............................. $ ___________............................. $ ___________............................. $ -------- Total............................ $ ======== Class B Notes Principal Amount ---------------- ___________............................. $ ___________............................. $ ___________............................. $ -------- Total............................ $ ======== S-64 Certificates Principal Amount ---------------- ___________............................. $ ___________............................. $ ___________............................. $ -------- Total............................ $ ======== The Underwriting Agreement provides that the obligation of the Underwriters to pay for and accept delivery of the Certificates or Notes is subject to the approval of certain legal matters by their counsel and to certain other conditions. The Underwriters are obligated to take and pay for all of the Certificates and Notes if any are taken. The Underwriters have advised the Company that they propose to offer the Certificates and Notes directly to the public at the public offering price set forth on the cover page hereof and to certain dealers at a price that represents a concession not in excess of ___% of the principal balance of the Certificates and not in excess of ____% of the principal amount of the Class A-1 Notes, ___% of the principal amount of the Class A-2 Notes, ____% of the principal amount of the Class A-3 Notes, ____% of the principal amount of the Class A-4 Notes, ____% of the principal amount of the Class A-5 Notes, ____% of the principal amount of the Class A-6 Notes, ____% of the principal amount of the Class A-7 Notes and ____% of the principal amount of the Class B Notes. The Underwriters may allow, and such dealers may reallow, a concession not in excess of ____% of the principal balance of the Certificates and not in excess of ___% of the principal amount of the Class A-1 Notes, ____% of the principal amount of the Class A-2 Notes, ____% of the principal amount of the Class A-3 Notes, ____% of the principal amount of the Class A-4 Notes, ____% of the principal amount of the Class A-5 Notes, ____% of the principal amount of the Class A-6 Notes, ____% of the principal amount of the Class A-7 Notes and ____% of the principal amount of the Class B Notes to certain other dealers. After the initial public offering, the public offering price and concessions and discounts to dealers may be changed by the Underwriters. CITSF has agreed to indemnify the Underwriters against certain liabilities, including civil liabilities under the Securities Act or to contribute to payments which the Underwriters may be required to make in respect thereof. The Trust may, from time to time, invest the funds of the Trust in Eligible Investments acquired from the Underwriters. The closing of the sale of the Notes is conditioned on the closing of the sale of the Certificates, and the closing of the sale of the Certificates is conditioned on the closing of the sale of the Notes. RATINGS It is a condition to the issuance of the Class A Notes that the Class A-1 Notes be rated "A-1+" by Standard & Poor's Ratings Service, a division of The McGraw-Hill Companies, Inc. ("S&P") and "P-1" by Moody's Investors Service, Inc. ("Moody's") (each, a "Rating Agency") and that the Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class A-5 Notes, Class A-6 Notes and the Class A-7 Notes be rated "AAA" by S&P and "Aaa" by Moody's . It is a condition to the issuance of the Class B Notes that the Class B Notes be rated at least "A" by S&P and "A2" by Moody's. It is a condition to the issuance of the Certificates that the Certificates be rated at least "BBB" by S&P and "Baa2" by Moody's. The ratings of the Class A Notes will be based primarily on the Contracts, the Reserve Account, and the terms of the Securities, including the subordination provided by the Class B Notes and the Certificates. The ratings of the Class B Notes will be based primarily on the Contracts, the Reserve Account and the terms of the Securities, including the subordination provided by the Certificates. The ratings of the Certificates will be based primarily on the Contracts and the Reserve Account. The ratings of the Securities should be evaluated independently from similar ratings on other types of securities. The ratings do not address the possibility that Securityholders may suffer a lower than anticipated yield. The ratings do not address the likelihood that the Securities will S-65 be retired following the sale of the Contracts by the Trustee as described above under "Auction Sale" or "Optional Purchase of the Contracts." There can be no assurance that any rating will remain in effect for any given period of time or that a rating will not be lowered or withdrawn by the assigning Rating Agency if, in its judgment, circumstances so warrant. In the event that the rating initially assigned to any of the Securities is subsequently lowered or withdrawn for any reason, no person or entity will be obligated to provide any additional credit enhancement with respect to such Securities. There can be no assurance whether any other rating agency will rate any of the Securities, or if one does, what rating would be assigned by any such other rating agency. A security rating is not a recommendation to buy, sell or hold securities. LEGAL MATTERS Certain legal matters will be passed upon for the Company by Schulte Roth & Zabel LLP, New York, New York, for the Trust by ____________________, ____________________, and for the Underwriters by ____________________, ____________________. The material federal income tax consequences of the Securities will be passed upon for the Company by Schulte Roth & Zabel LLP. The material Oklahoma state income tax consequences of the Securities will be passed upon for the Company by Crowe & Dunlevy, P.C. Certain legal matters will be passed upon for CITSF by its Senior Vice President and General Counsel, Norman H. Rosen, Esq. S-66 ANNEX I GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES Except in certain limited circumstances, the globally offered Notes of CIT Marine Trust ____-_ (the "Global Securities") will be available only in book-entry form. Investors in the Global Securities may hold such Global Securities through any of DTC, Cedel or Euroclear. The Global Securities will be tradable as home market instruments in both the European and U.S. domestic markets. Initial settlement and all secondary trades will settle in same-day funds. Secondary market trading between investors holding Global Securities through Cedel and Euroclear will be conducted in the ordinary way in accordance with their normal rules and operating procedures and in accordance with conventional eurobond practice (i.e., seven calendar day settlement). Secondary market trading between investors holding Global Securities through DTC will be conducted according to the rules and procedures applicable to U.S. corporate debt obligations. Secondary cross-market trading between Cedel or Euroclear and DTC Participants holding Notes will be effected on a delivery-against payment basis through the respective Depositories of Cedel and Euroclear (in such capacity) and as DTC Participants. Non-U.S. holders (as described below) of Global Securities will be subject to U.S. withholding taxes unless such holders meet certain requirements and deliver appropriate U.S. tax documents to the securities clearing organizations or their Participants. Initial Settlement All Global Securities will be held in book-entry form by DTC in the name of Cede as nominee of DTC. Investors' interests in the Global Securities will be represented through financial institutions acting on their behalf as direct and indirect Participants in DTC. As a result, Cedel and Euroclear will hold positions on behalf of their Participants through their respective Depositories, which in turn will hold such positions in accounts as DTC Participants. Investors electing to hold their Global Securities through DTC will follow the settlement practices specified by the Underwriters. Investor securities custody accounts will be credited with their holdings against payment in same-day funds on the settlement date. Investors electing to hold their Global Securities through Cedel or Euroclear accounts will follow the settlement procedures applicable to conventional eurobonds, except that there will be no temporary global securities and no "lock-up" or restricted period. Global Securities will be credited to the securities custody accounts on the settlement date against payment in same-day funds. Secondary Market Trading Since the purchaser determines the place of delivery, it is important to establish at the time of the trade where both the purchaser's and seller's accounts are located to insure that settlement can be made on the desired value date. Trading between DTC Participants. Secondary market trading between DTC Participants will be settled in same-day funds. Trading between Cedel and/or Euroclear Participants. Secondary market trading between Cedel Participants or Euroclear Participants will be settled using the procedures applicable to conventional eurobonds in same-day funds. S-67 Trading between DTC Seller and Cedel or Euroclear Purchaser. When Global Securities are to be transferred from the account of a DTC Participant to the account of a Cedel Participant or a Euroclear Participant, the purchaser will send instructions to Cedel or Euroclear through a Cedel Participant or Euroclear Participant at least one business day prior to settlement. Cedel or Euroclear will instruct the respective Depository, as the case may be, to receive the Global Securities against payment. Payment will include interest accrued on the Global Securities from and including the last coupon payment date to and excluding the settlement date, on the basis of the actual number of days in such accrual period and year assumed to consist of 360 days. For transactions settling on the 31st of the month, payment will include interest accrued to and excluding the first day of the following month. Payment will then be made by the respective Depository of the DTC Participant's account against delivery of the Global Securities. After settlement has been completed, the Global Securities will be credited to the respective clearing system and by the clearing system, in accordance with its usual procedures, to the Cedel Participant's or Euroclear Participant's account. The securities credit will appear the next day (European time) and the cash debt will be back-valued to, and the interest on the Global Securities will accrue from, the value date (which would be the preceding day when settlement occurred in New York). If settlement is not completed on the intended value date (i.e., the trade fails), the Cedel or Euroclear cash debt will be valued instead as of the actual settlement date. Cedel Participants and Euroclear Participants will need to make available to the respective clearing systems the funds necessary to process same-day funds settlement. The most direct means of doing so is to preposition funds for settlement, either from cash on hand or existing lines of credit, as they would for any settlement occurring within Cedel or Euroclear. Under this approach, they may take on credit exposure to Cedel or Euroclear until the Global Securities are credited to their accounts one day later. As an alternative, if Cedel or Euroclear has extended a line of credit to them, Cedel Participants or Euroclear Participants can elect not to preposition funds and allow that credit line to be drawn upon the finance settlement. Under this procedure, Cedel Participants or Euroclear Participants purchasing Global Securities would incur overdraft charges for one day, assuming they cleared the overdraft when the Global Securities were credited to their accounts. However, interest on the Global Securities would accrue from the value date. Therefore, in many cases the investment income on the Global Securities earned during that one-day period may substantially reduce or offset the amount of such overdraft charges, although this result will depend on each Cedel Participant's or Euroclear Participant's particular cost of funds. Since the settlement is taking place during New York business hours, DTC Participants can employ their usual procedures for sending Global Securities to the respective European Depository for the benefit of Cedel Participants or Euroclear Participants. The sale proceeds will be available to the DTC seller on the settlement date. Thus, to the DTC Participants a cross-market transaction will settle no differently than a trade between two DTC Participants. Trading between Cedel or Euroclear Seller and DTC Purchaser. Due to time zone differences in their favor, Cedel Participants and Euroclear Participants may employ their customary procedures for transactions in which Global Securities are to be transferred by the respective clearing system, through the respective Depository, to a DTC Participant. The seller will send instructions to Cedel or Euroclear through a Cedel Participant or Euroclear Participant at least one business day prior to settlement. In these cases Cedel or Euroclear will instruct the respective Depository, as appropriate, to deliver the Global Securities to the DTC Participant's account against payment. Payment will include interest accrued on the Global Securities from and including the last payment to and excluding the settlement date on the basis of the actual number of days in such accrual period and a year assumed to consist of 360 days. For transactions settling on the 31st of the month, payment will include interest accrued to and excluding the first day of the following month. The payment will then be reflected in the account of the Cedel Participant or Euroclear Participant the following day, and receipt of the cash proceeds in the Cedel Participant's or Euroclear Participant's account would be back-valued to the value date (which would be the preceding day, when settlement occurred in New York). Should the Cedel Participant or Euroclear Participant have a line of credit with its respective clearing system and elect to be in debt in anticipation of receipt of the sale proceeds in its account, the back-valuation will extinguish any overdraft incurred over that one-day period. If settlement is not completed on the intended value date (i.e., the trade fails), receipt of the cash proceeds in the Cedel Participant's or Euroclear Participant's account would instead be valued as of the actual settlement date. S-68 Finally, day traders that use Cedel or Euroclear and that purchase Global Securities from DTC Participants for delivery to Cedel Participants or Euroclear Participants should note that these trades would automatically fail on the sale side unless affirmative action were taken. At least three techniques should be readily available to eliminate this potential problem: (i) borrowing through Cedel or Euroclear for one day (until the purchase side of the day trade is reflected in their Cedel or Euroclear accounts) in accordance with the clearing system's customary procedures; (ii) borrowing the Global Securities in the U.S. from a DTC Participant no later than one day prior to settlement, which would give the Global Securities sufficient time to be reflected in their Cedel or Euroclear account in order to settle the sale side of the trade; or (iii) staggering the value dates for the buy and sell sides of the trade so that the value date for the purchase from the DTC Participant is at least one day prior to the value date for the sale to the Cedel Participant or Euroclear Participant. Certain U.S. Federal Withholding Taxes and Documentation Requirements A beneficial owner of Global Securities through Cedel or Euroclear (or through DTC if the holder has an address outside the U.S.) will be subject to 30% U.S. withholding tax that generally applies to payments of interest (including original issue discount) on registered debt issued by U.S. Persons, unless (i) each clearing system, bank or other financial institution that holds customer's securities in the ordinary course of its trade or business in the chain of intermediaries between such beneficial owner and the U.S. entity required to withhold tax complies with applicable certification requirements and (ii) such beneficial owners take one of the following steps to obtain an exemption or reduced tax rate: Exemption for non-U.S. Persons (Form W-8). Beneficial owners of Global Securities that are non-U.S. Persons can obtain a complete exemption from the withholding tax by filing a signed Form W-8 (Certificate of Foreign Status). If the information shown on Form W-8 changes, a new Form W-8 must be filed within 30 days of such change. Exemption for non-U.S. Persons with effectively connected income (Form 4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S. branch, for which the interest income is effectively connected with its conduct of a trade or business in the United States, can obtain an exemption from the withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income Effectively Connected with the Conduct of a Trade or Business in the United States). Exemption or reduced rate for non-U.S. Persons resident in treaty countries (Form 1001). Non-U.S. Persons that are beneficial owners of Global Securities residing in a country that has a tax treaty with the United States can obtain an exemption or reduced tax rate (depending on the treaty terms) by filing Form 1001 (Ownership, Exemption or Reduced Rate Certificate). If the treaty provides for a reduced rate, withholding tax will be imposed at that rate unless the filer alternatively files Form W-8. Form 1001 may be filed by the Noteholder or his agent. Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete exemption from the withholding tax by filing Form W-9 (Payer's Request for Taxpayer Identification Number and Certification). U.S. Federal Income Tax Reporting Procedure. The holder of a Global Securities or, in the case of a Form 1001 or a Form 4224 filer, his agent, files by submitting the appropriate form to the person through whom it holds (the clearing agency, in the case of persons holding directly on the books of the clearing agency). Form W-8 and Form 1001 are effective for three calendar years and Form 4224 is effective for one calendar year. Treasury regulations issued on October 14, 1997, which will be applicable to payments made after December 31, 1998 (with certain transition rules), provide for the unification and simplification of certain S-69 current certification procedures. Under these regulations, a new Form W-8 will replace current Forms W-8, 1001 and 4224. Further, pursuant to the new regulations, while a beneficial owner will still be required to submit a Form W-8 to a "qualified intermediary" through which it holds a Global Security, such qualified intermediary (i.e., a foreign clearing organization or financial institution that enters into a withholding agreement with the IRS) generally will not be required to forward the Form W-8 to the withholding agent. Investors are urged to consult their own tax advisors with respect to the application of these new regulations. The term "U.S. Person" means (i) a citizen or resident of the United States, (ii) a corporation or partnership organized in or under the laws of the United States or any political subdivision thereof or (iii) an estate or trust the income of which is includable in gross income for United States tax purposes, regardless of its source. This summary of documentation requirements does not deal with all aspects of U.S. Federal income tax withholding that may be relevant to foreign holders of the Global Securities. Investors are advised to consult their own tax advisors for specific tax advice concerning their holding and disposing of the Global Securities. S-70 INDEX OF PRINCIPAL TERMS ABS...........................................................................36 ABS Table.....................................................................36 Affiliated Owner..............................................................51 Auction Sale..................................................................60 Available Amount...........................................................9, 56 Available Reserve Amount..................................................19, 53 Bankruptcy Code...............................................................24 Benefit Plan..................................................................67 Business Day...............................................................9, 46 Cedel...................................................................1, 6, 26 Certificate Balance.......................................................16, 41 Certificate Final Scheduled Distribution Date..............................8, 52 Certificate Pool Factor.......................................................41 Certificateholders' Distribution Amount.......................................56 Certificateholders' Interest Carryover Shortfall..............................56 Certificateholders' Interest Distribution Amount..............................57 Certificateholders' Monthly Interest Amount...................................57 Certificateholders' Monthly Principal Amount..................................57 Certificateholders' Principal Carryover Shortfall.............................57 Certificateholders' Principal Distribution Amount.............................57 Certificates............................................................1, 6, 50 CIT........................................................................5, 24 CITCF-NY...................................................................7, 24 CITSF......................................................................5, 24 Class A Noteholders' Interest Carryover Shortfall.............................57 Class A Noteholders' Interest Distribution Amount.............................57 Class A Noteholders' Monthly Interest Amount..................................57 Class A Noteholders' Monthly Principal Amount.................................58 Class A Noteholders' Principal Carryover Shortfall............................58 Class A Noteholders' Principal Distribution Amount........................14, 58 Class A Notes...........................................................1, 5, 46 Class A-1 Interest Rate...................................................10, 47 Class A-1 Note Final Scheduled Distribution Date...........................9, 48 Class A-1 Notes.........................................................1, 5, 46 Class A-2 Interest Rate...................................................10, 47 Class A-2 Note Final Scheduled Distribution Date...........................9, 48 Class A-2 Notes.........................................................1, 5, 46 Class A-3 Final Scheduled Distribution Date...................................48 Class A-3 Interest Rate...................................................10, 47 Class A-3 Note Final Scheduled Distribution Date...............................9 Class A-3 Notes.........................................................1, 5, 46 Class A-4 Final Scheduled Distribution Date...................................48 Class A-4 Interest Rate...................................................10, 47 Class A-4 Note Final Scheduled Distribution Date...............................9 Class A-4 Notes.........................................................1, 5, 46 Class A-5 Final Scheduled Distribution Date...................................49 Class A-5 Interest Rate...................................................10, 47 Class A-5 Note Final Scheduled Distribution Date...............................9 Class A-5 Notes.........................................................1, 5, 46 Class A-6 Final Scheduled Distribution Date...................................49 Class A-6 Interest Rate...................................................10, 47 Class A-6 Note Final Scheduled Distribution Date...............................9 Class A-6 Notes.........................................................1, 5, 46 Class A-7 Final Scheduled Distribution Date...................................49 Class A-7 Interest Rate...................................................10, 47 S-71 Class A-7 Note Final Scheduled Distribution Date...............................9 Class A-7 Notes.........................................................1, 5, 46 Class B Final Scheduled Distribution Date.....................................49 Class B Interest Rate.....................................................10, 47 Class B Note Final Scheduled Distribution Date.................................9 Class B Noteholders' Interest Carryover Shortfall.............................58 Class B Noteholders' Interest Distribution Amount.............................58 Class B Noteholders' Monthly Interest Amount..................................58 Class B Noteholders' Monthly Principal Amount.................................58 Class B Noteholders' Principal Carryover Shortfall............................58 Class B Noteholders' Principal Distribution Amount........................14, 58 Class B Notes...........................................................1, 5, 46 Closing Date...................................................................7 Code..........................................................................23 Commission....................................................................46 Company.................................................................1, 5, 24 Contract Files................................................................28 Contract Pool.................................................................29 Contract Rate.................................................................30 Contracts...................................................................3, 7 Cross-Over Date...............................................................16 Cut-off Date................................................................3, 7 Dealers........................................................................7 Definitive Certificates....................................................7, 51 Deposit Date..................................................................27 Depository....................................................................26 Determination Date.............................................................9 Distribution Date.......................................................3, 8, 46 DTC........................................................................1, 26 Due Period.....................................................................9 ERISA.....................................................................23, 67 Euroclear...................................................................2, 6 Excess Collections........................................................19, 53 Financed Boats..............................................................3, 7 Global Securities.............................................................71 Indenture..................................................................6, 46 Indenture Trustee.......................................................1, 5, 46 Initial Pool Balance......................................................21, 52 Interest Accrual Period...................................................10, 47 Interest Rate..................................................................3 Interest Rates............................................................10, 47 Issuer..................................................................1, 5, 28 Liquidated Contract...........................................................56 Liquidation Expenses..........................................................56 Monthly Advance...........................................................20, 59 Moody's...................................................................22, 69 Net Liquidation Proceeds......................................................56 Net Losses....................................................................45 Note Owner................................................................26, 46 Note Owners....................................................................6 Note Pool Factor..............................................................41 Noteholders' Distribution Amount..............................................57 Notes...................................................................1, 5, 46 Obligor........................................................................8 OID...........................................................................61 Oklahoma Tax Counsel..........................................................66 Optional Purchase.............................................................60 Original Certificate Balance...............................................6, 28 S-72 Owner Trustee...........................................................1, 5, 28 Paid-Ahead Period.............................................................35 Paid-Ahead Simple Interest Contract...........................................35 Pass-Through Rate......................................................3, 16, 51 Payment Shortfall.............................................................21 Pool Balance..................................................................34 Principal Distribution Amount.............................................13, 55 Principal Prepayment..........................................................56 Prospectus.....................................................................4 PTCE..........................................................................67 Purchase Agreement.........................................................8, 29 Purchase Price................................................................56 Rating Agency.............................................................22, 69 Record Date....................................................................8 Repurchase Event...............................................................7 Repurchased Contract...........................................................7 Reserve Account...........................................................18, 53 S&P...................................................................22, 26, 69 Sale and Servicing Agreement............................................3, 7, 29 Securities..............................................................1, 5, 46 Seller.........................................................................1 Servicer.......................................................................5 Servicer Payment..............................................................11 Servicing Fee.............................................................21, 60 Servicing Fee Rate........................................................21, 60 Simple Interest Contract......................................................30 Specified Reserve Amount......................................................19 Stated Principal Balance......................................................56 Trust...................................................................1, 5, 28 Trust Agreement........................................................5, 28, 50 Trustees.......................................................................5 Underwriters..................................................................67 Underwriting Agreement........................................................67 S-73 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION: DATED JANUARY 27, 1998 CIT MARINE TRUSTS ASSET-BACKED NOTES ASSET-BACKED CERTIFICATES THE CIT GROUP SECURITIZATION CORPORATION II, SELLER THE CIT GROUP/SALES FINANCING, INC., SERVICER The Asset-Backed Certificates (the "Certificates") and the Asset-Backed Notes (the "Notes" and, collectively with the Certificates, the "Securities") described herein may be sold from time to time in one or more series, in amounts, at prices and on the terms to be determined at the time of sale and to be set forth in a supplement to this Prospectus (a "Prospectus Supplement"). Each series of Securities will include either (i) one or more classes of Certificates, (ii) one or more classes of Notes or (iii) one or more classes of Certificates and one or more classes of Notes, as set forth in the related Prospectus Supplement. Each series of Securities will be issued by a trust (a "Trust") to be formed with respect to such series by The CIT Group Securitization Corporation II (the "Company" or the "Seller"). The assets of each Trust will primarily include a pool of marine installment sale contracts and direct loans (the "Initial Contracts") secured by the new and used boats, boat motors and boat trailers financed thereby (the "Initial Financed Boats"), certain monies received under the Initial Contracts on and after the Initial Cut-off Date specified in the related Prospectus Supplement (the "Initial Cut-off Date"), an assignment of the security interests in the Initial Financed Boats, the proceeds from claims under certain insurance policies in respect of individual Initial Financed Boats or the related Obligors and certain other property, as more fully described herein and in the related Prospectus Supplement. In addition, if so specified in the related Prospectus Supplement, the assets of each Trust will include specified credit or cash flow enhancement and monies on deposit in one or more trust accounts, which may include a Pre-Funding Account which would be used to purchase from time to time additional marine installment sale contracts and direct loans (the "Subsequent Contracts" and, together with the Initial Contracts, the "Contracts") secured by the new and used boats, boat motors and boat trailers financed thereby (the "Subsequent Financed Boats" and, together with the Initial Financed Boats, the "Financed Boats"), certain monies received under the Subsequent Contracts on and after the related subsequent cut-off dates (each, a "Subsequent Cut-off Date"), an assignment of the security interests in the Subsequent Financed Boats and proceeds from claims under certain insurance policies in respect of individual Subsequent Financed Boats or the related Obligors, to the extent specified in the related Prospectus Supplement. (Continued on following page) A DISCUSSION OF CERTAIN RISK FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SECURITIES OFFERED HEREBY CAN BE FOUND ON PAGE 23 HEREIN AND IN THE RELATED PROSPECTUS SUPPLEMENT. THE SECURITIES WILL REPRESENT INTERESTS IN OR OBLIGATIONS OF A TRUST AND WILL NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF THE CIT GROUP SECURITIZATION CORPORATION II, THE CIT GROUP/SALES FINANCING, INC., THE CIT GROUP, INC. OR ANY OF THEIR RESPECTIVE 1 AFFILIATES (EXCEPT TO THE LIMITED EXTENT, IF ANY, DESCRIBED HEREIN AND IN THE RELATED PROSPECTUS SUPPLEMENT). THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. Retain this Prospectus for future reference. This Prospectus may not be used to consummate sales of securities offered hereby unless accompanied by a Prospectus Supplement. The date of this Prospectus is _______, 1998. 2 (continued from preceding page) Each Trust will be formed pursuant to either (i) a Pooling and Servicing Agreement (the "Pooling and Servicing Agreement") to be entered into among the Seller, The CIT Group/Sales Financing, Inc. (the "Servicer") and the trustee specified in the related Prospectus Supplement (the "Trustee") or (ii) a Trust Agreement (the "Trust Agreement") to be entered into among the Seller, the trustee specified in the related Prospectus Supplement (the "Owner Trustee") and certain other parties as specified in the related Prospectus Supplement. If the Trust is formed pursuant to a Trust Agreement, a Sale and Servicing Agreement (the "Sale and Servicing Agreement") will be entered into among the Seller, the Servicer and such Owner Trustee. The Trustee or Owner Trustee for any Trust will be referred to in this Prospectus as the "Owner Trustee." The Notes, if any, of a series of Securities will be issued and secured pursuant to an Indenture (the "Indenture") between the Trust and the indenture trustee specified in the related Prospectus Supplement (the "Indenture Trustee"). The Certificates, if any, of a series of Securities will represent fractional undivided interests in the related Trust and/or the residual interest in the Trust. Except as otherwise provided in the related Prospectus Supplement, each class of Securities of any series will represent the right to receive a specified amount of payments of principal and interest on the related Contracts, in the amounts, at the rates, on the dates and in the manner described herein and in the related Prospectus Supplement. The right of each class of Securities to receive payments may be senior or subordinate to the rights of one or more of the other classes of such series. A series may include two or more classes of Certificates or Notes which differ as to the timing and priority of payment, interest rate or amount of distributions in respect of principal or interest or both. A series may include one or more classes of Certificates or Notes entitled to distributions in respect of principal, with disproportionate, nominal or no interest distributions, or to distributions of interest, with disproportionate, nominal or no distributions in respect of principal. Distributions on Certificates of any series will be subordinated in priority to payments due on the related Notes, if any, to the extent described herein and in the related Prospectus Supplement. The rate of distributions in respect of principal on the Securities of any class will depend on the priority of payment of such class and the rate and timing of payments (including prepayments, liquidations and repurchases of Contracts) on the related Contracts. If specified in the related Prospectus Supplement, a financial guaranty insurance policy, letter of credit, surety bond, limited guarantee by The CIT Group, Inc. ("CIT"), reserve fund, or other form of credit enhancement, or any combination thereof, may be provided with respect to a Trust or any class of Securities. Unless otherwise provided in the related Prospectus Supplement, the Certificates, if any, and the Notes, if any, of any series initially will be represented by certificates and notes registered in the name of Cede & Co. ("Cede"), the nominee of The Depository Trust Company ("DTC"). The interests of beneficial owners of the Securities will be represented by book entries on the records of the participating members of DTC and, in the case of the Notes, Cedel Bank, societe anonyme ("Cedel") and the Euroclear System ("Euroclear"). Definitive Securities will be available only under limited circumstances to the extent described herein and in the related Prospectus Supplement. There currently is no secondary market for the Securities and there is no assurance that one will develop. The Underwriters expect, but are not obligated, to make a market in the Securities. There is no assurance that any such market will develop or, if one does develop, that it will continue or provide sufficient liquidity. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE SECURITIES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. 3 AVAILABLE INFORMATION The Company has filed with the Securities and Exchange Commission (the "Commission") on behalf of each Trust a Registration Statement (together with all amendments and exhibits thereto, the "Registration Statement"), of which this Prospectus is a part, under the Securities Act of 1933, as amended, with respect to the Securities offered pursuant to this Prospectus. This Prospectus does not contain all of the information set forth in the Registration Statement, certain parts of which have been omitted in accordance with the rules and regulations of the Commission. For further information, reference is made to the Registration Statement, including exhibits filed as part thereof, which is available for inspection without charge at the public reference facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and the regional offices of the Commission at Suite 1400 Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois 60661, and Seven World Trade Center, New York, New York 10048. Copies of such information can be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Both registrants also file electronically. The Commission maintains a Web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission. The address of the Commission's Web site is http://www.sec.gov. Statements made in this Prospectus as to the contents of any contract, agreement or other document filed as an exhibit to the Registration Statement, while complete in all material respects, do not necessarily describe all terms or provisions of such contract, agreement or other document. For a complete description, reference is made to each such contract, agreement or other document filed as an exhibit to the Registration Statement. The Servicer, on behalf of each Trust, will also file or cause to be filed with the Commission such periodic reports as are required under The Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder. However, in accordance with the Exchange Act and the rules and regulations of the Commission thereunder, the Company expects that each Trust's obligation to file such reports will be terminated following the end of the year in which such Trust is formed. Such reports and other information filed on behalf of each Trust will be available for inspection as set forth above. REPORTS TO SECURITYHOLDERS Unless otherwise provided in the related Prospectus Supplement, unless and until Definitive Securities are issued, monthly and annual unaudited reports containing information concerning each Trust will be prepared by the Servicer and sent on behalf of each Trust only to the Owner Trustee for the Certificateholders, the Indenture Trustee for the Noteholders and Cede, as nominee of DTC and registered holder of the Notes and the Certificates. Securityholders may elect to hold their securities through any of DTC (in the United States) and, in the case of Noteholders, Cedel or Euroclear (in Europe). DTC will forward such reports to Participants, Indirect Participants, Cedel Participants and Euroclear Participants. See "Certain Information Regarding the Securities--Book-Entry Registration" and "--Statements to Securityholders." Certificateholders and Noteholders are collectively referred to herein as the "Securityholders." Certificate Owners or Note Owners may receive such reports, upon written request, together with a certification that they are Certificate Owners or Note Owners and payment of reproduction and postage expenses associated with the distribution of such reports, from the Owner Trustee, with respect to Certificate Owners, or the Indenture Trustee, with respect to Note Owners, at the addresses specified in the related Prospectus Supplement. Such reports will not constitute financial statements prepared in accordance with generally accepted accounting principles. Neither the Seller, the Servicer nor CIT intends to send any of its financial statements to Securityholders. 4 DOCUMENTS INCORPORATED BY REFERENCE The following documents filed with the Commission by CIT are incorporated by reference in this Prospectus: (a) CIT's Annual Report on Form 10-K for the year ended December 31, 1996 together with the report of KPMG Peat Marwick LLP, independent certified public accountants; (b) CIT's Quarterly Report on Form 10-Q for the quarters ended March 31, 1997, June 30, 1997 and September 30, 1997; (c) CIT's Current Reports on Form 8-K dated January 23, 1997 (as amended by a Form 8-K/A dated February 14, 1997), February 13, 1997, April 17, 1997, July 14, 1997, July 17, 1997, July 23, 1997, September 26, 1997, October 14, 1997, November 12, 1997 and January 15, 1998; and (d) CIT's Amendment No. 2 to the Registration Statement on Form S-2 (333-36435) filed on November 12, 1997. All documents filed by CIT pursuant to Sections 13(a) and (c), 14, or 15(d) of the Exchange Act after the date hereof and prior to the termination of the offering of the securities offered hereby shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute part of this Prospectus. CIT WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS PROSPECTUS IS DELIVERED, UPON REQUEST, A COPY OF ANY OR ALL OF THE FOREGOING DOCUMENTS DESCRIBED ABOVE WHICH HAVE BEEN OR MAY BE INCORPORATED BY REFERENCE IN THIS PROSPECTUS OTHER THAN EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS). SUCH REQUEST SHOULD BE DIRECTED TO: CORPORATE SECRETARY THE CIT GROUP, INC. 1211 AVENUE OF THE AMERICAS NEW YORK, NEW YORK 10036 (212) 536-1950 5 SUMMARY This Summary is qualified in its entirety by reference to the detailed information appearing elsewhere in this Prospectus and by reference to the information with respect to the Securities contained in the related Prospectus Supplement to be prepared and delivered in connection with the offering of each series of Securities. Certain capitalized terms used in the Summary are defined elsewhere in this Prospectus and in the related Prospectus Supplement. Reference is made to the "Index of Principal Terms" for the location herein of defined terms. - -------------------------------------------------------------------------------- Issuer.......................... With respect to each series of Securities, a trust (the "Trust" or the "Issuer"), will be formed by the Seller pursuant to either a Pooling and Servicing Agreement among the Seller, the Servicer and the trustee specified in the related Prospectus Supplement, or a Trust Agreement among the Seller, the owner trustee specified in the related Prospectus Supplement and certain other parties as specified in the related Prospectus Supplement. Seller.......................... The CIT Group Securitization Corporation II (the "Company" or the "Seller"), a wholly-owned, limited purpose subsidiary of The CIT Group, Inc. ("CIT"). If and to the extent specified in the related Prospectus Supplement, a trust of which a special purpose affiliate of CIT is the depositor (a "Selling Trust") may also be a "Seller." Except if and to the extent specified in the related Prospectus Supplement, neither CIT nor any of its affiliates, including the Company, The CIT Group/Sales Financing, Inc. ("CITSF") and any Selling Trust, has guaranteed, insured or is otherwise obligated with respect to the Securities. See "Risk Factors--Limited Obligations." Servicer........................ The CIT Group/Sales Financing, Inc. (in such capacity referred to herein as the "Servicer"), a wholly-owned subsidiary of CIT. The Servicer will be responsible for managing, administering, servicing and making collections on the Contracts held by each Trust. Owner Trustee................... The Trustee pursuant to a Pooling and Servicing Agreement or the Owner Trustee pursuant to a Trust Agreement, in each case as specified in the related Prospectus Supplement. The Trustee or Owner Trustee for any Trust will be referred to in this Prospectus as the "Owner Trustee." See "The Trusts--The Trustee(s)." Indenture Trustee............... With respect to any series of Securities including one or more classes of Notes, the Indenture Trustee specified in the related Prospectus Supplement (the "Indenture Trustee"). The Owner Trustee and the Indenture Trustee for a series are referred to herein collectively as the "Trustees." - -------------------------------------------------------------------------------- 6 - -------------------------------------------------------------------------------- Risk Factors................... Certain potential risks and other considerations are particularly relevant to a decision to invest in any securities sold hereunder. See "Risk Factors." The Certificates................ Each series of Asset-Backed Certificates (the "Certificates") will be issued pursuant to the related Trust Documents. The Certificates will represent fractional undivided interests in the related Trust and/or the residual interest in the related Trust, and will have the Original Certificate Balance, if any, specified in the related Prospectus Supplement. If specified in the related Prospectus Supplement, the Company or one of its affiliates will own the entire beneficial interest in the Trust. See "The Certificates--General." Payments in respect of the Certificates will be subordinated to payments on the Notes of the same series to the extent described in the related Prospectus Supplement. See "The Certificates--General." The Certificates will be issued in the minimum denominations and integral multiples in excess thereof specified in the related Prospectus Supplement; provided, however, that one Certificate of each series may be issued in a denomination other than such integral multiple such that the applicable Affiliated Owner, if any, specified in the related Prospectus Supplement (the "Affiliated Owner") may be issued at least the portion of the Original Certificate Balance specified in the related Prospectus Supplement. Unless otherwise specified in the related Prospectus Supplement, the Certificates will be issued in book-entry form only. Unless otherwise specified in the related Prospectus Supplement, persons ("Certificate Owners") acquiring beneficial interests in the Certificates will hold their interests through The Depository Trust Company ("DTC"). Definitive Certificates will be issued only under the limited circumstances described herein or in the related Prospectus Supplement. Unless and until Certificates of a class are issued in definitive form, all references herein to distributions, notices, reports and statements to and to actions by and effects upon the related Certificateholders will refer to the same actions and effects with respect to DTC or Cede & Co. ("Cede"), as the case may be, for the benefit of the related Certificate Owners in accordance with the DTC procedures. See "Certain Information Regarding the Securities--Book-Entry Registration" and "--Definitive Securities." Unless otherwise specified in the related Prospectus Supplement, each class of Certificates will have a stated - -------------------------------------------------------------------------------- 7 - -------------------------------------------------------------------------------- Certificate Balance (as defined in the related Prospectus Supplement) and will accrue interest on such Certificate Balance at a specified rate (with respect to each class of Certificates, the "Pass-Through Rate"). Each class of Certificates may have a different Pass-Through Rate, which may be a fixed, variable or adjustable Pass-Through Rate, or any combination of the foregoing. The related Prospectus Supplement will specify the Pass-Through Rate for each class of Certificates, or the initial Pass-Through Rate and the method for determining subsequent changes to the Pass-Through Rate. A series may include two or more classes of Certificates which differ as to timing of distributions, sequential order, priority of payment, seniority, allocation of losses, Pass-Through Rate or amount of distributions in respect of principal or interest, or as to which distributions in respect of principal or interest on any class may or may not be made upon the occurrence of specified events or on the basis of collections from designated portions of the Contract Pool. In addition, a series may include one or more classes of Certificates ("Stripped Certificates") entitled to (i) distributions in respect of principal with disproportionate, nominal or no interest distributions, or (ii) interest distributions, with disproportionate, nominal or no distributions in respect of principal. If CITSF exercises its option to purchase the Contracts of a Trust or if the Contracts are sold by the Indenture Trustee (or, if the series did not include Notes or the Notes have been paid in full and the Indenture has been discharged in accordance with its terms, the Owner Trustee) on the terms and conditions described under "The Purchase Agreements and the Trust Documents--Termination," Certificate Owners may receive an amount in respect of the Certificates as specified in the related Prospectus Supplement. In addition, if the related Prospectus Supplement provides that the property of a Trust will include a Pre-Funding Account (as such term is defined in the related Prospectus Supplement, the "Pre-Funding Account"), Certificate Owners may receive a distribution in respect of principal on or immediately following the end of the funding period specified in the related Prospectus Supplement (the "Funding Period") in an amount and manner specified in the related Prospectus Supplement. The Notes....................... Each series of Asset-Backed Notes (the "Notes" and, together with the Certificates, the "Securities") will represent obligations of a Trust secured by assets of such Trust (other than the accounts or other property specified in the related Prospectus Supplement). See - -------------------------------------------------------------------------------- 8 - -------------------------------------------------------------------------------- "The Notes--General." The Notes will be issued pursuant to an Indenture between the Issuer and the Indenture Trustee (the "Indenture"). See "The Notes--General." The Notes will be issued in the minimum denominations and integral multiples in excess thereof specified in the related Prospectus Supplement; provided, however, that one Note of each class of each series may be issued in a denomination other than such integral multiple. Unless otherwise specified in the related Prospectus Supplement, the Notes will be issued in book-entry form only. Unless otherwise specified in the related Prospectus Supplement, persons ("Note Owners") acquiring beneficial interests in the Notes will hold their interests through DTC in the United States or Cedel Bank, societe anonyme ("Cedel") or the Euroclear System ("Euroclear") in Europe, and Definitive Notes will be issued only under the limited circumstances described herein or in the related Prospectus Supplement. Unless and until Notes of a class are issued in definitive form, all references herein to distributions, notices, reports and statements to and to actions by and effects upon the related Noteholders will refer to the same actions and effects with respect to DTC or Cede, as the case may be, for the benefit of the related Note Owners in accordance with the DTC procedures. See "Certain Information Regarding the Securities--Book-Entry Registration" and "--Definitive Securities." Unless otherwise specified in the related Prospectus Supplement, each class of Notes will have a stated principal amount and will bear interest at a specified rate or rates (with respect to each class of Notes, the "Interest Rate"). Each class of Notes may have a different Interest Rate, which may be a fixed, variable or adjustable Interest Rate, or any combination of the foregoing. The related Prospectus Supplement will specify the Interest Rate and the method for determining subsequent changes to the Interest Rate. A series may include two or more classes of Notes which differ as to the timing and priority of payment, seniority, allocations of loss, Interest Rate or amount of payments of principal or interest, or as to which payments of principal may or may not be made upon the occurrence of specified events or on the basis of collections from designated portions of the Contract Pool. In addition, a series may include one or more classes of Notes ("Stripped Notes") entitled to (i) principal payments with disproportionate, nominal or no interest payments or (ii) interest payments with - -------------------------------------------------------------------------------- 9 - -------------------------------------------------------------------------------- disproportionate, nominal or no principal payments. If CITSF exercises its option to purchase the Contracts of a Trust or if the Contracts are sold by the Indenture Trustee (or, if the series did not include Notes or the Notes have been paid in full and the Indenture has been discharged in accordance with its terms, the Owner Trustee) on the terms and conditions described under "The Purchase Agreements and the Trust Documents--Termination," the outstanding Notes, if any, of such series will be redeemed as set forth in the related Prospectus Supplement. In addition, if the related Prospectus Supplement provides that the property of a Trust will include a Pre-Funding Account, all or certain classes of the outstanding Notes, if any, of such series will be subject to partial redemption on or immediately following the end of the Funding Period in an amount and manner specified in the related Prospectus Supplement. Property of a Trust............ The property of a Trust will primarily include (i) a pool (the "Contract Pool") of marine installment sale contracts and direct loans (the "Initial Contracts") secured by the new and used boats, boat motors and boat trailers financed thereby (the "Initial Financed Boats"), (ii) certain monies received under the Initial Contracts on and after the Initial Cut-off Date specified in the related Prospectus Supplement (the "Initial Cut-off Date"), (iii) an assignment of the security interests in the Initial Financed Boats, (iv) the Collection Account and the Paid-Ahead Account, if any, including all investments therein, all income from the investment of funds therein and all proceeds thereof, certain other accounts and the proceeds thereof and certain other rights under the Trust Documents specified in the related Prospectus Supplement, and (v) the proceeds from claims under certain insurance policies in respect of individual Initial Financed Boats or the related Obligors. In addition, if so specified in the related Prospectus Supplement, the property of a Trust will include specified credit or cash flow enhancement and monies on deposit in a Pre-Funding Account to be established with the Indenture Trustee or the Owner Trustee, which will be used to purchase Subsequent Contracts from the Seller from time to time during the Funding Period, as well as any Subsequent Contracts so purchased. See "The Trust Property." If and to the extent provided in the related Prospectus Supplement, a Trust will be obligated to purchase from the Seller (subject to the satisfaction of certain conditions described in the applicable Trust Documents) from time to time during the Funding Period, from - -------------------------------------------------------------------------------- 10 - -------------------------------------------------------------------------------- monies on deposit in the Pre-Funding Account, additional marine installment sale contracts and direct loans (the "Subsequent Contracts" and, together with the Initial Contracts, the "Contracts") secured by the new and used boats, boat motors and boat trailers financed thereby (the "Subsequent Financed Boats" and, together with the Initial Financed Boats, the "Financed Boats"), certain monies received under the Subsequent Contracts on and after the related Subsequent Cut-off Dates (specified in the related Prospectus Supplement), an assignment of the security interests in the Subsequent Financed Boats, and proceeds from claims under certain insurance policies in respect of individual Subsequent Financed Boats or the related Obligors. It is expected that the Subsequent Contracts will have an aggregate principal balance approximately equal to the Pre-Funded Amount on the related Closing Date. CITSF will be obligated to repurchase Contracts (a "Repurchased Contract") upon the occurrence of certain breaches of representations and warranties (a "Repurchase Event"). See "The Purchase Agreements and the Trust Documents--Sale and Assignment of the Contracts" and "--Servicing Procedures." The Contracts................... The property of a Trust will consist primarily of marine installment sale contracts for boats originated by boat dealers ("Dealers") and acquired by CITSF or The CIT Group/Consumer Finance, Inc. (NY) ("CITCF-NY") or other affiliates of CITSF and marine loans originated directly by CITSF or one of its affiliates or acquired by CITSF or one of its affiliates from unaffiliated third parties. On or prior to the date of issuance of a series of the Securities (the "Closing Date"), CITCF-NY will sell certain contracts that will constitute a portion of the Initial Contracts to CITSF pursuant to a purchase agreement, and CITSF will sell the Initial Contracts to the Company pursuant to a purchase agreement (the "Purchase Agreement"), and the Company (and, if and to the extent specified in the related Prospectus Supplement, a Selling Trust) will sell the Initial Contracts to a Trust pursuant to the Trust Documents. If and to the extent specified in the related Prospectus Supplement, CITSF or the Seller or one of their respective affiliates may retain the right to receive a portion of the interest accruing on some or all of the Contracts sold to a Trust. See "The Purchase Agreements and the Trust Documents--Sale and Assignment of the Contracts." The Contracts will generally be prepayable at any time without penalty to the purchaser of the related Financed Boats, the borrower under a loan contract or other - -------------------------------------------------------------------------------- 11 - -------------------------------------------------------------------------------- person or persons who are obligated to make payments under the Contract (each, an "Obligor"). The related Prospectus Supplement will contain certain information with respect to each Contract Pool as of the Initial Cut-off Date or such other date specified therein, including the proportions of each type of Financed Boats, the weighted average annual percentage rate and the weighted average remaining maturity of the Contracts. If and to the extent specified in the related Prospectus Supplement, from time to time during the Funding Period, CITSF will be obligated to sell, and the Company will be obligated to purchase, pursuant to a purchase agreement (the "Subsequent Purchase Agreement") subject to the satisfaction of certain conditions described therein, Subsequent Contracts at a purchase price which, unless otherwise specified in the related Prospectus Supplement, will be equal to the aggregate principal amounts thereof as of the first day in the related month of transfer designated by CITSF and the Company (each, a "Subsequent Cut-off Date"). A portion of such Subsequent Contracts may be acquired by CITSF from CITCF-NY or other affiliates of CITSF. Pursuant to one or more subsequent transfer agreements (each, a "Subsequent Transfer Agreement") between the Company and the related Trust, and subject to the satisfaction of certain conditions described therein, the Company will in turn sell the Subsequent Contracts to such Trust at a purchase price equal to the amount paid by the Company to CITSF for such Subsequent Contracts, which purchase price shall be paid from monies on deposit in the Pre-Funding Account. Subsequent Contracts will be transferred from CITSF to the Company and from the Company to such Trust on the Business Day specified by CITSF and the Company during the month in which the related Subsequent Cut-off Date occurs (each, a "Subsequent Transfer Date"). Pre-Funding Account............. If the Prospectus Supplement for a series of Securities specifies that a portion of the proceeds of the offering will be deposited in a Pre-Funding Account, the Pre-Funding Account will be maintained as an Eligible Account, which account may be maintained with the Owner Trustee or the Indenture Trustee, and the funds on deposit therein will be invested solely in Permitted Investments (as defined in the related Prospectus Supplement) that mature not later than one Business Day prior to the next succeeding Distribution Date, until such funds are applied during the Funding Period to pay to the Company the purchase price for Subsequent Contracts. See "The Purchase Agreements and the Trust Documents--Accounts." Monies on deposit in the Pre-Funding Account will not be available to cover losses on - -------------------------------------------------------------------------------- 12 - -------------------------------------------------------------------------------- or in respect of the Contracts. On the Closing Date, the Pre-Funding Account will be created with an initial deposit, from the proceeds of the Securities, in the amount, if any, specified in the related Prospectus Supplement (the "Pre-Funded Amount"). The Pre-Funded Amount will not exceed one-third of the sum of the Original Certificate Balance and the initial principal amount of the Notes. Unless otherwise specified in the related Prospectus Supplement, the "Funding Period" will be the period from the Closing Date until the earliest to occur of (i) the date on which the amount on deposit in the Pre-Funding Account (exclusive of investment earnings) is less than $100,000, (ii) the date on which an Event of Default occurs under the Indenture (if any), (iii) the date on which an Event of Termination occurs under the Trust Documents, (iv) the insolvency of the Company, CITSF, CITCF-NY or CIT, or (v) the close of business on the date specified in the related Prospectus Supplement (which date will occur in the third calendar month after the month in which the Closing Date occurred). Unless otherwise specified in the related Prospectus Supplement, during the Funding Period, on one or more Subsequent Transfer Dates, the Pre-Funded Amount will be applied to purchase Subsequent Contracts from the Company. Unless otherwise specified in the related Prospectus Supplement, the Company expects that the Pre-Funded Amount will be reduced to less than $100,000 by the end of the Funding Period, although no assurance can be given that this will in fact occur. Unless otherwise specified in the related Prospectus Supplement, any portion of the Pre-Funded Amount remaining on deposit in the Pre-Funding Account at the end of the Funding Period will be payable as principal to Noteholders and Certificateholders in accordance with the Pre-Funded Percentage on the first Distribution Date thereafter or, if the end of the Funding Period is on a Distribution Date, then on such date. Capitalized Interest Account.... If the Prospectus Supplement for a series of Securities specifies that a portion of the proceeds of the offering will be deposited in a Capitalized Interest Account, on the Closing Date a portion of the proceeds from the sale of the Securities (in an amount specified in the related Prospectus Supplement) will be deposited into an account (the "Capitalized Interest Account") maintained as an Eligible Account, which account may be maintained with the Owner Trustee or the Indenture Trustee, and the funds on deposit therein will be invested solely in Permitted Investments that mature no later than one Business Day prior to the next Distribution Date. Amounts deposited in the Capitalized - -------------------------------------------------------------------------------- 13 - -------------------------------------------------------------------------------- Interest Account will be used on each Distribution Date to pay interest on the Securities, in the amount or in accordance with the formula specified in the related Prospectus Supplement. Monies on deposit in the Capitalized Interest Account will not be available to cover losses on or in respect of the Contracts. On each Distribution Date any amount remaining in the Capitalized Interest Account in excess of the Required Capitalized Interest Amount (as defined in the related Prospectus Supplement) shall be released to the Affiliated Owner, if any, or other person specified in the related Prospectus Supplement. Unless otherwise specified in the related Prospectus Supplement, any amounts remaining in the Capitalized Interest Account on the last day of the Funding Period and not used for such purposes will be deposited in the Collection Account and will be available for distributions, as described herein or in the related Prospectus Supplement, on the first Distribution Date thereafter or, if the end of the Funding Period is on a Distribution Date, then on such date. Distribution Dates.............. Unless otherwise specified in the related Prospectus Supplement, payments of interest and principal on the Securities will be made on the fifteenth day of each month or, if any such day is not a Business Day, on the next succeeding Business Day (each, a "Distribution Date"), commencing on the date specified in the related Prospectus Supplement. Unless otherwise specified in the related Prospectus Supplement, payments on the Securities on each Distribution Date will be made to the holders of record of the related Securities at the close of business on the Business Day immediately preceding such Distribution Date or, in the event Definitive Securities have been issued, at the close of business on the last Business Day of the month immediately preceding the month in which such Distribution Date occurs (each, a "Record Date"). To the extent not previously paid in full prior to such time, the outstanding principal amount of the Notes and the Certificates will be payable on the Distribution Date occurring in the month or months specified in the related Prospectus Supplement (the "Note Final Scheduled Distribution Date" and the "Certificate Final Scheduled Distribution Date"). A "Business Day" is any day other than a Saturday, Sunday or any day on which banking institutions or trust companies in the states of New York, Oklahoma and such other states (if any) specified in the related Prospectus Supplement are authorized by law, regulation - -------------------------------------------------------------------------------- 14 - -------------------------------------------------------------------------------- or executive order to be closed. Interest Accrual Period......... Unless otherwise specified in the related Prospectus Supplement, the period for which interest is payable on a Distribution Date on the Securities shall be the one-month period from the most recent Distribution Date to but excluding the following Distribution Date, or in the case of the initial Distribution Date from the date specified in the related Prospectus Supplement to but excluding the initial Distribution Date (each, an "Interest Accrual Period"). Due Period...................... With respect to any Distribution Date, the "Due Period" is the period during which principal, interest and other amounts will be collected on the Contracts for application towards the payment of principal and interest to the Securityholders and the payment of fees on such Distribution Date. Unless otherwise specified in the related Prospectus Supplement, the "Due Period" will be the calendar month immediately preceding the Distribution Date. Determination Date.............. Unless otherwise specified in the related Prospectus Supplement, the "Determination Date" is the third Business Day prior to each Distribution Date. On each Determination Date, the Servicer will determine the Available Amount for distribution on the related Distribution Date, allocate such amounts between the Notes, the Certificates and the Servicer Payment, and advise the Trustees (or the paying agent appointed pursuant to the Trust Documents) of the amounts of the payments to be made to Securityholders, all as described under "The Purchase Agreements and the Trust Documents--Distributions." The "Servicer Payment" is equal on each Distribution Date to the sum of the reimbursement then due to the Servicer for outstanding Monthly Advances and the Servicing Fee (including any unpaid Servicing Fees for past Distribution Dates). Unless otherwise specified in the related Prospectus Supplement, the "Available Amount" with respect to each Trust on any Distribution Date is equal to the excess of (A) the sum of (i) all amounts on deposit in the Collection Account attributable to collections or deposits made in respect of such Contracts in the related Due Period (including any late fees, prepayment charges, extension fees or other administrative fees or similar charges allowed by applicable law with respect to the Contracts ("Late Fees"), and (ii) the Purchase Price for any Contract repurchased by CITSF as a result of breaches of certain representations and warranties or purchased by the Servicer as a result of breaches of certain covenants and any Monthly Advances and any - -------------------------------------------------------------------------------- 15 - -------------------------------------------------------------------------------- Non-Reimbursable Payments made by the Servicer, if such Purchase Price, Monthly Advance or Non-Reimbursable Payment is paid on or prior to the Deposit Date immediately preceding such Distribution Date, over (B) the sum of the following amounts (to the extent that the Servicer has not already withheld such amounts from collections on the Contracts): (i) any repossession profits on liquidated Contracts, Liquidation Expenses (as defined in the Trust Documents) incurred and taxes and insurance advanced by the Servicer in respect of Financed Boats that are reimbursable to the Servicer under the Trust Documents, (ii) any amounts incorrectly deposited in the Collection Account, (iii) any amounts deposited in the Paid-Ahead Account, if any, during the related Due Period, (iv) net investment earnings on the funds in the Collection Account and the Paid-Ahead Account, if any, and (v) any other amounts permitted to be withdrawn from the Collection Account and the Paid-Ahead Account, if any, by the Servicer (or to be retained by the Servicer from collections on the Contracts) pursuant to the Trust Documents. Subordination................... The rights of the Certificateholders to receive distributions with respect to the Contracts will be subordinated to the rights of the Noteholders of the same series, to the extent described in the related Prospectus Supplement. This subordination is intended to enhance the likelihood of timely receipt by Noteholders of the full amount of interest and principal required to be paid to them, and to afford the Noteholders limited protection against losses in respect of the Contracts. If and to the extent specified in the related Prospectus Supplement, one or more classes of Notes of a series may be subordinated to the rights of one or more other classes of Notes of the same series. The protection afforded to the Noteholders by the subordination feature described above will be effected by the preferential right of the Noteholders to receive, to the extent described in the related Prospectus Supplement, current distributions from collections on or in respect of the Contracts prior to the application of such collections to payments in respect of the Certificates or any subordinated Notes. Enhancement..................... If and to the extent specified in the related Prospectus Supplement with respect to a Trust, the enhancement applicable to a class of Securities may include any one or more of the following: a financial guaranty insurance policy, a letter of credit, a CIT Limited Guarantee, a reserve fund, a third party guarantee, a cash collateral account, a derivative product, a credit facility, a liquidity - -------------------------------------------------------------------------------- 16 - -------------------------------------------------------------------------------- facility, another form of credit enhancement, overcollateralization, or any combination thereof. A financial guaranty insurance policy may be obtained and maintained for one or more classes of Certificates or Notes of a series of Securities. Such policies generally unconditionally and irrevocably guarantee to Securityholders that the full amount of the distributions of principal and interest, as well as any other amounts specified in the related Prospectus Supplement, will be received by an agent of the Trustee on behalf of Securityholders for distribution by the Trustee to Securityholders. Such policies may have certain limitations set forth in the related Prospectus Supplement, including (but not limited to) limitations on the insurer's obligation to guarantee the Seller's or the Servicer's obligation to repurchase or substitute for any Contracts, to guarantee any specified rate of prepayments or to provide funds to redeem Securities on any specified date. The enhancement with respect to any class of Securities may be structured to provide protection against delinquencies and/or losses on the Contracts, against changes in interest rates, or other risks, or to supplement the interest rate on specified Contracts, in each case to the extent and under the conditions specified in the related Prospectus Supplement. Unless otherwise specified in the related Prospectus Supplement, any form of enhancement will have certain limitations and exclusions from coverage thereunder, which will be described in the related Prospectus Supplement. Further information regarding any provider of credit enhancement, including financial information when material, will be included (or incorporated by reference) in the related Prospectus Supplement. See "The Certificates--Enhancement." Monthly Advances................ Unless otherwise specified in the related Prospectus Supplement, with respect to each Contract as to which there has been a Payment Shortfall during the related Due Period, the Servicer shall advance funds in the amount of such Payment Shortfall (each, a "Monthly Advance"), but only to the extent that the Servicer, in its good faith judgment, expects to recover such Monthly Advance from subsequent collections on such Contract made by or on behalf of the Obligor thereunder (but only to the extent of expected interest collections in the case of a Simple Interest Contract) or from net liquidation proceeds or insurance proceeds with respect to such Contract. The Servicer shall be reimbursed for any Monthly Advance from subsequent collections with respect to such Contract. If the Servicer determines in its - -------------------------------------------------------------------------------- 17 - -------------------------------------------------------------------------------- good faith judgment that an unreimbursed Monthly Advance shall not ultimately be recoverable from subsequent collections, the Servicer shall be reimbursed for such Monthly Advance from collections on all Contracts. In determining whether an advance is or will be nonrecoverable, the Servicer need not take into account that it might receive any amounts in a deficiency judgment against an Obligor. Unless otherwise specified in the related Prospectus Supplement, the Servicer will not make a Monthly Advance in respect of (i) the principal component of any scheduled payment on a Simple Interest Contract, or (ii) a Payment Shortfall arising from a Contract which has been prepaid in full or which has been subject to a Relief Act Reduction during the related Due Period. See "The Purchase Agreements and the Trust Documents--Monthly Advances." Unless otherwise specified in the related Prospectus Supplement, "Payment Shortfall" means (i) with respect to any Simple Interest Contract and any Distribution Date, the excess of (A) the product of (1) one-twelfth of the Contract Rate of such Contract and (2) the outstanding principal amount of such Contract as of the last day of the second preceding Due Period (or, in the case of the first Due Period ending after the Contract was acquired by the related Trust, as of the Initial Cut-off Date or the Subsequent Cut-off Date, as the case may be), over (B) the amount of interest, if any, collected on such Contract during the related Due Period and (ii) with respect to any Precomputed Contract and any Distribution Date, the excess of (A) the scheduled payment due on such Contract during the related Due Period, over (B) the amount collected on such Contract (including any amounts allocated from the Paid-Ahead Account with respect to such Due Period) during the related Due Period. Non-Reimbursable Payments....... If and to the extent specified in the related Prospectus Supplement, with respect to each Contract as to which there has been a Payment Shortfall with respect to interest in the related Due Period arising from either a prepayment in full of such Contract or a Relief Act Reduction in respect of such Contract during such Due Period, the Trust Documents may require the Servicer to deposit into the Collection Account on the Business Day immediately preceding the following Distribution Date, without the right of subsequent reimbursement, an amount equal to such Payment Shortfall (a "Non-Reimbursable Payment"). If the related Prospectus Supplement does not specify that the Servicer will make Non-Reimbursable Payments, the Servicer will not be obligated to make such payments with respect to the Trust. - -------------------------------------------------------------------------------- 18 - -------------------------------------------------------------------------------- Paid-Ahead Account.............. Early payments by or on behalf of Obligors on Precomputed Contracts that do not constitute scheduled payments, full prepayments or certain partial prepayments which result in a reduction of an Obligor's periodic payment below the scheduled payment as of the Initial Cut-off Date or Subsequent Cut-off Date, as the case may be, will be deposited into the Paid-Ahead Account until such time as the paid-ahead amount becomes due. See "The Contract Pool" and "The Purchase Agreements and the Trust Documents--Paid-Ahead Precomputed Contracts." Servicing Fees.................. Unless otherwise specified in the related Prospectus Supplement, with respect to each series of Securities, the Servicer shall receive a monthly fee (the "Servicing Fee"), payable on each Distribution Date, equal to the sum of (i) one-twelfth of the product of the percentage specified in the related Prospectus Supplement as the "Servicing Fee Rate" and the Pool Balance as of the last day of the second preceding Due Period (or, in the case of the first Distribution Date, as of the Initial Cut-off Date) and (ii) any investment earnings on amounts on deposit in the Collection Account, the Paid-Ahead Account, if any, the Certificate Distribution Account, if any, and the Note Distribution Account, if any; provided, however, that the Servicing Fee Rate applicable to a Trust may be increased to a rate (or maximum rate) specified in the related Prospectus Supplement if CITSF or an affiliate thereof is not the Servicer. See "The Purchase Agreements and the Trust Documents--Servicing Compensation." Optional Purchase of the Contracts .................... Unless otherwise specified in the related Prospectus Supplement, with respect to each series of Securities, at its option, CITSF may purchase all the Contracts in the related Trust on any Distribution Date on which the aggregate principal balance of the Contracts (the "Pool Balance") as of the last day of the related Due Period is equal to or less than a percentage specified in the related Prospectus Supplement of the Initial Pool Balance, at a purchase price determined as described under "The Purchase Agreements and the Trust Documents--Termination." Unless otherwise specified in the related Prospectus Supplement, the "Initial Pool Balance" equals the sum of (i) the Pool Balance as of the Initial Cut-off Date and (ii) the aggregate principal balance of all Subsequent Contracts added to the related Trust as of their respective Subsequent Cut-off Dates. Auction Sale.................... Unless otherwise specified in the related Prospectus Supplement, with respect to each series of Securities, within ten days after the first Distribution Date on which - -------------------------------------------------------------------------------- 19 - -------------------------------------------------------------------------------- the Pool Balance as of the last day of the related Due Period is equal to or less than a percentage specified in the related Prospectus Supplement of the Initial Pool Balance, the Indenture Trustee (or, if the series did not include Notes or the Notes have been paid in full and the Indenture has been discharged in accordance with its terms, the Owner Trustee) shall solicit bids for the purchase of the Contracts remaining in the related Trust. In the event that satisfactory bids are received as described in "The Purchase Agreements and the Trust Documents--Termination," the net sale proceeds will be distributed to Securityholders, in the same order of priority as collections received in respect of the Contracts, on the second Distribution Date succeeding such Due Period. If satisfactory bids are not received, such Trustee shall decline to sell the Contracts and shall not be under any obligation to solicit any further bids or otherwise negotiate any further sale of the Contracts. See "The Purchase Agreements and the Trust Documents--Termination." Ratings......................... As a condition of issuance, the Securities of each series offered pursuant to this Prospectus will be rated in one of the four highest rating categories by at least one nationally recognized statistical rating organization specified in the related Prospectus Supplement (each, a "Rating Agency"). The ratings of the Securities should be evaluated independently from similar ratings on other types of securities. The ratings do not address the possibility that Securityholders may suffer a lower than anticipated yield. The ratings do not address the likelihood that the Securities will be retired following the sale of the Contracts by the Trustee as described above under "--Auction Sale" or "--Optional Purchase of the Contracts." See "Ratings." There can be no assurance that any rating will remain in effect for any given period of time or that a rating will not be lowered or withdrawn by the assigning Rating Agency if, in its judgment, circumstances so warrant. In the event that the rating initially assigned to any of the Securities is subsequently lowered or withdrawn for any reason, no person or entity will be obligated to provide any additional credit enhancement with respect to such Securities. There can be no assurance whether any other rating agency will rate any of the Securities or, if one does, what rating would be assigned by any such other rating agency. A security rating is not a recommendation to buy, sell or hold securities. Certain Federal Income Tax Considerations .............. If the related Prospectus Supplement states that a Trust will be treated as a grantor trust, in the opinion of counsel to the Seller, for federal income tax purposes, - -------------------------------------------------------------------------------- 20 - -------------------------------------------------------------------------------- the Trust will be treated as a grantor trust. In such event, each Certificateholder, by acceptance of a Certificate, will be treated as the owner of an undivided interest in the Contracts included in the Contract Pool and any other assets held by the Trust. If the related Prospectus Supplement does not state that a Trust will be treated as a grantor trust, in the opinion of counsel to the Seller, for federal income tax purposes: (1) the Notes will constitute indebtedness; and (2) the Certificates will constitute interests in a trust fund that will not be treated as an association taxable as a corporation (or a publicly traded partnership). Each Noteholder, by acceptance of a Note, will agree to treat the Notes as indebtedness, and each Certificateholder, by acceptance of a Certificate, will agree to treat the Trust as a partnership in which the Certificateholders are partners for federal income tax purposes. Alternative characterizations of the Notes and the Certificates are possible, but would not result in materially adverse tax consequences to Noteholders or Certificateholders. See "Certain Federal Income Tax Consequences." ERISA Considerations............ Fiduciaries of employee benefit plans subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or plans subject to Section 4975 of the Internal Revenue Code of 1986 (the "Code") should carefully review with their legal advisors whether the purchase or holding of the Certificates offered hereby could give rise to a transaction prohibited or not otherwise permissible under ERISA or the Code. See "ERISA Considerations." The related Prospectus Supplement will provide further information with respect to the eligibility of a class of Securities for purchase by employee benefit plans. See "ERISA Considerations" herein and in the related Prospectus Supplement. Subject to certain considerations discussed under "ERISA Considerations" herein and in the related Prospectus Supplement, and unless otherwise specified in the related Prospectus Supplement, the Securities will be eligible for purchase by employee benefit plans that are subject to ERISA. Legal Investment................ The appropriate characterization of the Certificates and the Notes under various legal investment restrictions applicable to the investment activities of certain institutions, and thus the ability of investors subject to these restrictions to purchase the Certificates and the - -------------------------------------------------------------------------------- 21 - -------------------------------------------------------------------------------- Notes, may be subject to significant interpretive uncertainties. All investors whose investment authority is subject to legal restrictions should consult their own legal advisors to determine whether, and to what extent, the Certificates and the Notes will constitute legal investments for them. - -------------------------------------------------------------------------------- 22 RISK FACTORS Prospective Securityholders should consider the following risk factors in connection with the purchase of the Securities: 1. Limited Obligations. The Securities will not represent an interest in or an obligation of The CIT Group, Inc. ("CIT"), The CIT Group Securitization Corporation II (the "Company"), any Affiliated Owner specified in the related Prospectus Supplement, or any Servicer (including The CIT Group/Sales Financing, Inc. ("CITSF")) or any of their respective affiliates. Unless and to the extent otherwise specified in the related Prospectus Supplement, the Securities will not be insured or guaranteed by any government agency or instrumentality, CIT or any of its affiliates (including the Company, any Affiliated Owner, and CITSF), the Underwriters or any of their affiliates, or any other Servicer or any of its affiliates. 2. Risk of Loss. An investment in the Securities may be affected by, among other things, a downturn in regional or local economic conditions. These regional or local economic conditions are often volatile and historically have affected the delinquency, loan loss and liquidation experience of pools of marine installment sale contracts and direct loans secured by recreational boats. Since the market value of boats generally declines with age and since in certain states the Trustees may not have a first perfected security interest in the Financed Boats, the Servicer may not recover the entire amount owing under a defaulted Contract. See "Certain Legal Aspects of the Contracts." In such a case, the Securityholders may suffer a corresponding loss. The market value of the Financed Boats could be or could become lower than the outstanding principal balances of the related Contracts. Sufficiently high liquidation losses on the Contracts will have the effect of reducing, and could eliminate (a) the protection against loss afforded to the Noteholders by the subordination of the Certificates, if any, or by the Enhancement, if any, applicable to the Notes and (b) the protection against loss afforded to the Certificateholders by the Enhancement (as specified in the related Prospectus Supplement), if any. If the amount available under the Enhancement, if any, is reduced to zero, holders of the Certificates will bear the risk of loss resulting from default by Obligors and will have to look primarily to the value of the related Financed Boats for recovery of the outstanding principal and unpaid interest on the defaulted Contracts. If the Certificate Balance is reduced to zero, the holders of the Notes will bear the risk of loss resulting from default by Obligors and will have to look primarily to the value of the related Financed Boats for recovery of the outstanding principal and unpaid interest on the defaulted Contracts. 3. Security Interests and Certain Other Aspects of the Contracts. When originated, each Contract was secured by a security interest in the Financed Boat financed thereby. Each such security interest was required to be perfected under applicable state law and, in the case of certain Financed Boats eligible for federal documentation, under applicable federal law. In connection with the sale of the Contracts to the Trust, the Seller will assign its security interest in each Financed Boat to the Trust. However, due to administrative burden and expense, none of the Seller, the Servicer or the Owner Trustee will amend the certificates of title or file assignments of the UCC-1 financing statements, if any, with respect to the Financed Boats to identify the Trust or the Indenture Trustee as the new secured party, nor has any such amendment of filing been made to identify any Selling Trust as a secured party. Neither of the Seller or the Owner Trustee will file an assignment to the Trust or the Indenture Trustee of the Preferred Mortgages with respect to any Financed Boats documented or to be documented under federal law unless and to the extent provided in the related Prospectus Supplement, nor has any such assignment of any Preferred Mortgages to a Selling Trust has been filed. In addition, the certificates of title have not and will not be amended and the UCC-1 financing statements have not and will not be assigned with respect to the Financed Boats relating to the Contracts not originated by the Seller to reflect any interim transfers of ownership of the security interest in such Financed Boats. Furthermore, those Preferred Mortgages that will be assigned to the Trust will not have been previously assigned to reflect any interim transfers of ownership of the security interest in such Financed Boats. In a majority of states, the assignment of a Contract together with the related security interest is, as a matter of state law, an effective conveyance of such security interest without amendment of any lien noted on the related certificate of title or any assignment of any UCC-1 financing statements, and the new owner of the Contracts succeeds to the original secured party's rights in the related Financed Boat as against creditors of the Obligor. In certain title states, in the absence of such certificate of title amendment or assignment of record to reflect the successive assignments of the security interest in such Financed Boat, the Seller (if not the secured party of record), the Trust and/or the 23 Indenture Trustee may not have a perfected security interest in the related Financed Boat. Under the Ship Mortgage Act of 1920 (1988 Recodification) ss. 30101 et seq. (the "Ship Mortgage Statutes"), in the absence of an assignment of record of a Preferred Mortgage, the assignment of the related Contract by itself will not convey the perfected preferred mortgage lien on the Financed Boat subject to such Preferred Mortgage, and neither the Seller (if not the secured party of record) nor the Trust and/or the Indenture Trustee will have a perfected preferred mortgage lien on such Financed Boat. The priority of the Preferred Mortgages and state security interests in the Financed Boats may be subject to: (i) maritime liens arising under federal statutory or common-law for captain's or crew's wages, tort claims (so-called "general average" claims) and salvage claims, all of which take priority over even a Preferred Mortgage or a state security interest, and (ii) maritime liens arising under federal law or state laws for repair, storage or supplies which are subordinate to a Preferred Mortgage but typically have priority over state security interests under federal law under applicable law of the state where the Contract was originated or under applicable law of the state to which the related Financed Boats may have been relocated. CITSF will be obligated to repurchase any Contract as to which the Seller has represented that the originator of such Contract has a first perfected security interest in the Financed Boat securing such Contract if a breach of such representation shall materially adversely affect the interest of the Trust in such Contract. If the Trust does not have a perfected security interest in a Financed Boat, it will not be effective as against third parties. In such case, if third party liens equal or exceed the value of the Financed Boat, the only recourse of the Trust would be against the related Obligor on an unsecured basis or (if CITSF, CITCF-NY or, in those Contracts described above, the Trust did not have a perfected security interest in such Financed Boat) against CITSF pursuant to its repurchase obligation. To the extent that the Trust's security interest in a Financed Boat is perfected, the Trust will have a prior claim over subsequent purchasers of such Financed Boat and holders of subsequently perfected security interests in such Financed Boat. Under the laws of many states, certain possessory liens for repairs on a boat and storage, as well as certain rights in favor of federal and state governmental authorities arising from the use of a boat in connection with illegal activities, may take priority even over a perfected security interest. Under the Ship Mortgage Statutes, certain preferred maritime liens will have priority over security interests in Financed Boats perfected under federal law. Certain federal tax liens may have priority over the lien of a secured party. In addition, through fraud or negligence, the Trust could lose its security interest or the priority of its security interest in a Financed Boat. If a security interest in a Financed Boat is initially perfected (by titling or UCC filing) under applicable state law and the Financed Boat subsequently is federally documented, the Trust could lose the priority of its security interest in such Financed Boat to a purchaser thereof or to the holder of a subsequently perfected Preferred Mortgage covering such Financed Boat. See "Certain Legal Aspects of the Contracts--Security Interests in the Financed Boats" for a description of CITSF's policies with respect to federal documentation. CITSF shall not have an obligation to repurchase a Contract as to which any of the aforementioned occurrences result in the Trust's losing the priority of its security interest or its security interest in such Financed Boat after the date such security interest was conveyed to the Trust (other than through fraud or negligence of the Seller or the Servicer). See "Certain Legal Aspects of the Contracts--Security Interests in the Financed Boats." In addition, numerous federal and state consumer protection laws impose requirements on sellers under marine installment sale contracts and marine installment loan contracts or notes, such as the Contracts, and the failure by the seller of goods to comply with such requirements could give rise to liabilities of assignees for amounts due or paid under such agreements and the right to set-off against claims by such assignees. These laws would apply to a Trust as assignee of the Contracts. From time to time, CITSF has been involved in litigation under consumer or debtor protection laws, some of which have been class actions. The Trust is subject to the risk of similar litigation. With respect to each series of Securities, pursuant to the Trust Documents, CITSF will represent and warrant as of the Initial Cut-off Date with respect to each Initial Contract, and as of the related Subsequent Cut-off Date with respect to each Subsequent Contract, that each Contract complies with all requirements of law and CITSF will provide certain warranties relating to the validity, perfection and priority of the security interest in each Financed Boat securing a Contract. A breach by CITSF of any such warranty that materially and adversely affects the related Trust's interest in any Contract would require CITSF to repurchase such Contract unless such breach is cured. If CITSF does not honor its purchase obligation in respect of a Contract and the Obligor for such Contract were to default, recovery of amounts due on such Contract would be primarily dependent on repossession and resale of the Financed Boat securing such Contract. Certain other factors may limit the ability of the Securityholders to realize 24 upon the Financed Boats or may limit the amount realized to less than the amount due. See "Certain Legal Aspects of the Contracts." Under California law and most state vehicle dealer licensing laws, sellers of boats are required to be licensed to sell boats at retail sale. Numerous other federal and state consumer protection laws impose requirements applicable to the origination and assignment of marine installment sale contracts and marine installment loan contracts or notes, including the Truth in Lending Act, the Federal Trade Commission Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Equal Credit Opportunity Act, the Fair Debt Collection Practices Act and the Uniform Consumer Credit Code. In the case of some of these laws, the failure to comply with the provisions of these laws may affect the enforceability of the related Contract. A Trust and the Company may not have obtained the licenses required under any federal or state consumer laws or regulations, and the absence of such licenses may impede the enforcement of certain rights or give rise to certain defenses in actions seeking enforcement of such rights which may prevent a Trust from collecting amounts due under the Contracts. See "Certain Legal Aspects of the Contracts." Any shortfall in payments on or in respect of Contracts, or any liability of a Trust to Obligors, as a result of noncompliance with the laws summarized above and under "Certain Legal Aspects of the Contracts" could result in losses to the Securityholders. 4. Foreclosure. Applicable law also imposes requirements and restrictions relating to foreclosure sales of boats and on the obtaining of deficiency judgments following such sales. Even if the Financed Boat securing a Contract is successfully repossessed or arrested and sold, the full amount due on the Contract may not be realized because of depreciation, damage or loss of or to the Financed Boat and because the resale value of the Financed Boat may vary significantly due to the limited market for used boats, seasonal factors and other economic and social factors. In sum, the Trust may not realize the full amount due on a Contract because of (i) the failure to endorse the certificate of title, failure to file a UCC-1 financing statement or failure to record the assignment of the Preferred Mortgage, as the case may be, (ii) the application of requirements and restrictions on foreclosure and deficiency judgments, (iii) depreciation, damage or loss of or to a Financed Boat, or (iv) the application of federal and state bankruptcy and insolvency laws, or other factors. As a result, the Securityholders will be subject to delays in payments and losses. 5. Certain Matters Relating to Insolvency. CITCF-NY, CITSF and the Company intend that transfers of Contracts from CITCF-NY to CITSF, from CITSF to the Company and from the Company to the related Trust (and, if and to the extent specified in the related Prospectus Supplement, from CITCF-NY to CITSF, from CITSF to a special purpose affiliate of CIT ("SPV"), from SPV to a Selling Trust and from the Selling Trust to the Trust) constitute sales, rather than pledges, of the Contracts to secure indebtedness. However, if CITCF-NY, CITSF or the Company (or, if and to the extent specified in the related Prospectus Supplement, a Selling Trust) were to become a debtor under Title 11 of the United States Code, 11 U.S.C. ss.101 et seq. (the "Bankruptcy Code"), it is possible that a creditor, receiver, other party in interest or trustee in bankruptcy of such debtor, or such debtor as debtor-in-possession, may contend that the sales of the Contracts by CITCF-NY to CITSF, by CITSF to the Company, or by the Company to the related Trust (or, if and to the extent specified in the related Prospectus Supplement, from CITCF-NY to CITSF, from CITSF to SPV, from SPV to a Selling Trust and from the Selling Trust to the Trust), respectively, were pledges of the Contracts rather than sales and that, accordingly, such Contracts should be part of such assigning entity's bankruptcy estate. Such a position, if presented to a court, even if ultimately unsuccessful, could result in a delay in or reduction of distributions to the Securityholders. See "Certain Legal Aspects of the Contracts--Certain Matters Relating to Insolvency." 6. Limited Liquidity. There is currently no market for the Securities of any series. Although the Company expects that the underwriters of any particular series will make a secondary market for such Securities, they will have no obligation to do so. There can be no assurance that a secondary market will develop for the Securities of any series or, if it does develop, that it will provide any of the Securityholders with liquidity of investment or that it will continue for the term of any series of Securities. Unless otherwise specified in the related Prospectus Supplement, the Securities will be issued in book-entry, rather than physical, form which may adversely affect the 25 liquidity of the Securities in the secondary market and the ability of the Certificate Owners and Note Owners to pledge the Securities. 7. The Subsequent Contracts and the Pre-Funding Account. If and to the extent specified in the related Prospectus Supplement, the conveyance of Subsequent Contracts by CITSF during the Funding Period will be subject to the conditions described in the related Prospectus Supplement under "The Contract Pool." If CITSF does not originate contracts satisfying such criteria during the Funding Period, CITSF will have insufficient contracts to sell to the related Trust on Subsequent Transfer Dates, thereby resulting in prepayments of principal to Noteholders and Certificateholders as described below. Unless otherwise specified in the related Prospectus Supplement, to the extent that amounts on deposit in the Pre-Funding Account have not been fully applied to the purchase of Subsequent Contracts by the related Trust by the end of the Funding Period, Noteholders and Certificateholders will receive a prepayment of principal in an amount equal to the Pre-Funded Percentage allocable to the Noteholders and the Certificateholders, respectively, of the Pre-Funded Amount remaining in the Pre-Funding Account at such time, which prepayment will be made on the first Distribution Date following the end of the Funding Period or, if the Funding Period ends on a Distribution Date, on such date. Unless otherwise specified in the related Prospectus Supplement, the "Pre-Funded Percentage" with respect to the Notes or the Certificates is the percentage derived from the fraction, the numerator of which is the initial principal balance of the Notes or the Original Certificate Balance, as the case may be, and the denominator of which is the sum of the initial principal balance of the Notes and the Original Certificate Balance. It is anticipated that the principal amount of Subsequent Contracts purchased by the Trust will not be exactly equal to the amount on deposit in the Pre-Funding Account and that therefore there will be at least a nominal amount of principal prepaid to the Noteholders and the Certificateholders at the end of the Funding Period. Each Subsequent Contract must satisfy the eligibility criteria specified in the related Prospectus Supplement and the Trust Documents at the time of its sale to the Trust. Unless otherwise specified in the related Prospectus Supplement, the Company (the seller of any Subsequent Contracts to the related Trust) will certify that all such eligibility criteria have been satisfied and CITSF (the seller of any Subsequent Contracts to the Company) will certify that all conditions precedent to the sale of the Subsequent Contracts to the Trust have been satisfied. Unless otherwise specified in the related Prospectus Supplement, it is a condition to the sale of any Subsequent Contracts to the Trust that each Rating Agency, after receiving prior notice of the proposed transfer of Subsequent Contracts to the Trust, shall not have advised the Seller or the Trustees that the conveyance of such Subsequent Contracts will result in a qualification, modification or withdrawal of its then current rating of either the Notes or the Certificates. Following the transfer of Subsequent Contracts to the Contract Pool the aggregate characteristics of the Contracts then held in the Contract Pool may vary from those of the Initial Contracts included therein. The ability of a Trust to invest in Subsequent Contracts is entirely dependent upon whether CITSF is able to originate boat contracts that meet the requirements for transfer on a Subsequent Transfer Date under the Trust Documents. The ability of CITSF to originate such contracts may be affected by a variety of economic and social factors. Moreover, such factors may affect the ability of the Obligors thereunder to perform their obligations thereunder, which may cause contracts originated by CITSF or its affiliates to fail to meet the requirements for transfer under the Trust Documents. Economic factors include interest rates, unemployment levels, the rate of inflation and consumer perception of economic conditions generally. However, CITSF is unable to determine and has no basis to predict whether or to what extent economic or social factors will affect CITSF's ability to originate Subsequent Contracts. 8. Prepayment from the Pre-Funding Account. To the extent specified in the related Prospectus Supplement, if the Pre-Funded Amount has not been fully applied by the related Trust to purchase Subsequent Contracts by the end of the Funding Period, then the Pre-Funded Amount will be payable as principal to Noteholders and Certificateholders in accordance with the Pre-Funded Percentage on the first Distribution Date following the end of the Funding Period, or, if the end of the Funding Period is on a Distribution Date, on such date. In the event that amounts remain on deposit in the Pre-Funding Account at the end of the Funding Period and are applied to the payment of principal to the Noteholders and Certificateholders, such partial retirement of the 26 Notes and Certificates may shorten the average life of the Securities and may cause the Noteholders and Certificateholders to experience a lower yield on the Securities. In addition, any reinvestment risk resulting from such partial retirement will be borne by the holders of such Securities. 9. Limited Assets. Unless otherwise specified in the related Prospectus Supplement, each Trust will covenant to sell the Contracts (a) if directed to do so by the related Indenture Trustee in accordance with the related Indenture following an acceleration of a series of Notes upon an Event of Default, and (b) in other circumstances specified in the related Prospectus Supplement. However, there is no assurance that the market value of the related Contracts will at any time be equal to or greater than the aggregate outstanding principal balance of such Notes. Therefore, upon an Event of Default with respect to such Notes, there can be no assurance that sufficient funds will be available to repay Noteholders in full. In addition, the amount of principal required to be distributed to Noteholders under the Indenture is generally limited to amounts available to be deposited in the Note Distribution Account. Therefore, the failure to pay principal on the Notes may not result in the occurrence of an Event of Default until the Note Final Scheduled Distribution Date. Furthermore, upon a sale by the Trust of the Contracts, the net proceeds from such sale remaining after payment of all amounts due to the Servicer and the Noteholders may not be sufficient to pay the Certificate Balance and interest accrued thereon. If and to the extent specified in the related Prospectus Supplement, one or more Enhancements will be available to pay principal and/or interest on the Notes and/or the Certificates on any Distribution Date. However, unless otherwise specified in the related Prospectus Supplement, the amount of any Enhancement will be limited and will be reduced as the Pool Balance is reduced. If the amounts available under the applicable Enhancement are exhausted, a Trust will depend solely on payments on or with respect to the Contracts, Monthly Advances and Non-Reimbursable Payments to make distributions to the Securityholders. 10. Ratings of the Securities. It is a condition to the issuance of a series of Securities offered pursuant to this Prospectus that the Securities be rated in one of the four highest rating categories by at least one Rating Agency. The ratings do not address the likelihood that the Securities will be retired following the sale of the Contracts by a Trustee as described under "The Purchase Agreement and the Trust Documents--Termination." There can be no assurance that any rating will remain in effect for any given period of time or that a rating will not be lowered or withdrawn by the Rating Agency if, in its judgment, circumstances so warrant. In the event that the rating initially assigned to the Securities is subsequently lowered or withdrawn for any reason, no person or entity will be obligated to provide any additional credit enhancement with respect to such Securities. There can be no assurance that any other rating agency will rate the Notes or the Certificates or, if one does, what rating would be assigned by any such other rating agency. A security rating is not a recommendation to buy, sell or hold securities. 11. Book Entry Registration. Unless otherwise specified in the related Prospectus Supplement, the Securities will be offered for purchase in book-entry form only and will be initially registered in the name of the nominee of The Depository Trust Company ("DTC" and, together with any successor depository selected by the Company, the "Depository"). No person acquiring an interest in the Notes through the facilities of DTC (a "Note Owner") will be entitled to receive a Definitive Note representing such person's interest in the Notes, except as set forth under "Certain Information Regarding the Securities--Definitive Securities," and such persons will hold their interests in the Notes through DTC in the United States or Cedel Bank, societe anonyme ("Cedel") or Euroclear in Europe. No person acquiring an interest in the Certificates through the facilities of DTC (a "Certificate Owner") will be entitled to receive a Definitive Certificate representing such person's interest in the Certificates, except as set forth under "Certain Information Regarding the Securities--Definitive Securities," and such persons will hold their interests in the Certificates through DTC. Unless and until Definitive Securities are issued under the limited circumstances described herein and in the related Prospectus Supplement, all references to actions by Securityholders shall refer to actions taken by DTC upon instructions from its Participants, and all references herein to distributions, notices, reports and statements to Securityholders shall refer to distributions, notices, reports and statements to DTC in accordance with DTC procedures. See "Certain Information Regarding The Securities--Definitive Securities." 12. Risk of Commingling. At any time that the requirements as specified under "The Purchase Agreements and the Trust Documents--Collections," are met, the Servicer may deposit payments on or with respect to the Contracts and proceeds of Contracts into the Collection Account or the Paid-Ahead Account, as applicable, monthly on the 27 Business Day immediately preceding the next Distribution Date (the "Deposit Date"). Pending such a monthly deposit into the Collection Account or the Paid-Ahead Account, as applicable, collections on the Contracts may be invested by the Servicer at its own risk and for its own benefit and will not be segregated from its own funds. If the Servicer were unable to remit such funds or if the Servicer became insolvent, the holders of the Securities could incur a loss with respect to collections not deposited in the Collection Account or the Paid-Ahead Account. THE TRUSTS With respect to each series of Securities, the Seller will establish a Trust pursuant to the related Trust Documents. Prior to the sale and assignment of the related Contracts pursuant to the related Trust Documents, the Trust will have no assets or obligations. After its formation, the related Trust will not engage in any activity other than (i) acquiring, holding and managing the Contracts and the other assets of such Trust and proceeds therefrom, (ii) issuing the Securities of the related series, (iii) making payments on the Securities of the related series, (iv) entering into agreements and transactions in connection with the Enhancement, if any, for the related series of Securities, and (v) engaging in other activities that are necessary, suitable or convenient to accomplish the foregoing or are incidental thereto or connected therewith. Each Certificate, if any, will represent a fractional undivided interest and/or residual interest in the related Trust. Each Note, if any, will represent an obligation of the related Trust. If specified in the related Prospectus Supplement, the related Trust will initially be capitalized with equity equal to the "Original Certificate Balance" specified in the related Prospectus Supplement. If specified in the related Prospectus Supplement, Certificates with an aggregate original principal balance of at least the amount specified in the related Prospectus Supplement will be owned by the Affiliated Owner specified in the related Prospectus Supplement (the "Affiliated Owner") and Certificates representing the remainder of the Original Certificate Balance will be sold to third party investors that are expected to be unaffiliated with the Affiliated Owner, the Seller, the Servicer or their affiliates. If specified in the related Prospectus Supplement, the Company or one of its affiliates will own the entire beneficial interest in the Trust. The equity in a Trust, together with the proceeds of the initial sale of the Notes, if any, will be used by the Trust to purchase the Initial Contracts from the Seller pursuant to the Trust Documents and, if specified in the related Prospectus Supplement, to fund the deposit of the Pre-Funded Amount and the deposit to the Capitalized Interest Account and for such other purposes as are specified in the related Prospectus Supplement. The Servicer will service the Contracts held by each Trust and will receive fees for such services. See "The Purchase Agreement and the Trust Documents--Servicing Compensation." Unless otherwise specified in the related Prospectus Supplement, CITSF will be appointed as custodian on behalf of each Trust, and will hold the original marine installment sale contracts, marine installment loan contracts (or promissory notes) and Preferred Mortgages as well as copies of documents and instruments relating to each Contract and evidencing the security interest in the Financed Boat securing each Contract (the "Contract Files"). The Trustee(s) The Trustee(s) for each Trust will be specified in the related Prospectus Supplement. The Trustee(s) will perform limited administrative functions, including making distributions from the Certificate Distribution Account and/or the Note Distribution Account. A Trustee's liability in connection with the issuance and sale of the Securities is limited solely to the express obligations of such Trustee as set forth in the Trust Documents. A Trustee may appoint a co-trustee to act as co-trustee pursuant to a co-trustee agreement with such Trustee. A Trustee may resign at any time, in which event the Servicer will be obligated to appoint a successor trustee. The Servicer may also remove a Trustee if such Trustee ceases to be eligible to continue as Trustee under the related Trust Documents or if such Trustee becomes insolvent. In such circumstances, the Servicer will be obligated to appoint a successor trustee. Any resignation or removal of a Trustee and appointment of a successor trustee will be 28 subject to any conditions or approvals specified in the related Prospectus Supplement and will not become effective until acceptance of the appointment by the successor trustee. Unless otherwise specified in the related Prospectus Supplement, the Trust Documents will provide that the Servicer will pay each Trustee's fees. The Trust Documents will further provide that each Trustee will be entitled to indemnification by the Servicer for, and will be held harmless against, any loss, liability or expense incurred by such Trustee not resulting from its own willful misfeasance, bad faith or gross negligence (other than by reason of a breach of any of its representations or warranties set forth in the Trust Documents). THE TRUST PROPERTY Each Certificate, if any, will represent a fractional undivided interest and/or residual interest in the related Trust. Each Note, if any, will be an obligation of the related Trust and will be secured by assets of the Trust (other than the Certificate Distribution Account, if any, and other accounts or property specified in the related Prospectus Supplement). The property of each Trust will include, among other things, (i) a pool (the "Contract Pool") of marine installment sale contracts, direct loans and Preferred Mortgages secured by new and used boats, boat motors and boat trailers, consisting of the Initial Contracts and the Subsequent Contracts (if any); (ii) certain monies received under the Initial Contracts on or after the Initial Cut-off Date and the Subsequent Contracts (if any) on or after the related Subsequent Cut-off Date; (iii) such amounts as from time to time may be held in one or more accounts established and maintained by the Servicer pursuant to the Trust Documents (including all investments in such accounts and all income from the funds therein and all proceeds thereof, other than investment earnings on any account so specified in the related Prospectus Supplement) as described herein; (iv) if specified in the related Prospectus Supplement, specified credit or cash flow enhancement and all monies on deposit in the Pre-Funding Account, the Capitalized Interest Account and any other account specified in the related Prospectus Supplement (including, unless otherwise specified in the related Prospectus Supplement, all investments in such accounts and all income from the funds therein and all proceeds thereof, other than investment earnings on any account so specified in the related Prospectus Supplement); (v) assignments of the security interests in the Financed Boats and any accessions thereto; (vi) the right to proceeds from physical damage, credit life and disability insurance policies, if any, covering individual Financed Boats or Obligors, as the case may be; (vii) the rights of the Trust under the Trust Documents; and (viii) any and all proceeds of the foregoing. Pursuant to agreements between CITSF or CITCF-NY and many of the Dealers, the Dealer is obligated after origination to repurchase from CITSF boat contracts which do not meet certain representations and warranties made by such Dealer. Such representations and warranties relate primarily to the origination of the contracts and the perfection of the security interests in the related boats, and do not typically relate to the creditworthiness of the related Obligors or the collectability of such Contracts. Unless otherwise specified in the related Prospectus Supplement, any Dealer agreement with respect to the Contracts will not be assigned by CITSF or CITCF-NY to the Company or by the Company to the Trust. However, unless otherwise specified in the related Prospectus Supplement, the Trust Documents will authorize CITSF or CITCF-NY to transfer a Contract to a Dealer upon a repurchase by a Dealer pursuant to a Dealer agreement and will require that any recovery of amounts with respect to a Contract by CITSF or CITCF-NY pursuant to Dealer repurchase obligations be deposited in the Collection Account for the related Trust in satisfaction of CITSF's repurchase obligations under the Trust Documents to the extent, if any, that CITSF or CITCF-NY has not already satisfied that obligation. In accordance with its customary servicing practices and procedures, in determining whether to exercise any right of recourse against a Dealer, CITSF and CITCF-NY consider the prior performance of the Dealer and other business and commercial factors, including its own commercial relationship with such Dealer. The assignments by the Dealers of Contracts to CITSF or CITCF-NY do not generally provide for recourse to the Dealer for unpaid amounts in the event of a default by an Obligor, other than in connection with the breach of the Dealer's representations and warranties. 29 THE CONTRACT POOL Each pool of Contracts with respect to a Trust (a "Contract Pool") will consist of marine installment sale contracts, direct loans and Preferred Mortgages (collectively, the "Contracts") to finance the purchase or ownership of new and used boats, boat motors and boat trailers. The Contracts will be originated or acquired by CITSF or its affiliates (including CITCF-NY). Except as otherwise specified in the related Prospectus Supplement, the Contracts will (i) be fully amortizing, (ii) bear interest at a fixed or variable rate (the "Contract Rate") and (iii) be Simple Interest Contracts or Precomputed Contracts. Certain detailed information regarding the Contract Pool as of the Initial Cut-off Date or such other date specified therein for each Trust will be set forth in the related Prospectus Supplement. If specific information with respect to the Contract Pool is not known at the time the related series of Securities initially is offered, more general information will be provided in the related Prospectus Supplement, and specific information will be set forth in a report on a Current Report on Form 8-K to be filed with the Commission within fifteen days after the initial issuance of such Securities. A copy of the Trust Documents with respect to each series of Securities will be attached to the Current Report on Form 8-K and will be available for inspection at the corporate trust office of the Owner Trustee specified in the related Prospectus Supplement. A schedule of the Contract Pool relating to such series will be attached to the Trust Documents delivered to the Owner Trustee upon delivery of the Securities. Description of Contract Computations "Simple Interest Contracts" provide for the allocation of each payment made thereunder to principal and interest in accordance with the "simple interest" method. For Simple Interest Contracts, the principal balance of the Contract is amortized over a series of equal monthly payments. Each monthly interest payment is calculated by multiplying the outstanding principal balance of the loan by the Contract Rate. Such product is then multiplied by a fraction, the numerator of which is the number of days elapsed since the preceding payment of interest was made and the denominator of which is either 365 or 360, depending on applicable state law. Payments received on a Simple Interest Contract are applied first to interest accrued to the date payment is received and second to reduce the unpaid principal balance of the Contract. Accordingly, if an Obligor makes a payment on the Contract less than 30 days after the previous payment, the interest collected for the period since the preceding payment was made will be less than 30 days' interest, and the amount of principal repaid in such month will be correspondingly greater. Conversely, if an Obligor makes a payment on the Contract more than 30 days after the previous payment, the interest collected for the period since the preceding payment was made will be greater than 30 days' interest, and the amount of principal repaid in the month will be correspondingly reduced. As a result, based on the payment characteristics of a particular Obligor, the principal due on the final due date of a Simple Interest Contract may vary from the principal payment that would be made if payments for such Contract were always made on their due dates. If an Obligor pays more than one installment on a Simple Interest Contract at a time, the regular installment will be treated as described above. However, the entire amount of the additional installment or installments will be treated as a principal payment and applied to reduce the principal balance of the related Contract. The Obligor will not be required to make any payments on such a Contract (a "Paid-Ahead Simple Interest Contract"), for the number of due dates (the "Paid-Ahead Period") for which it has paid in advance the full installment. However, during the Paid-Ahead Period interest will continue to accrue on the principal balance of such Paid-Ahead Simple Interest Contract, as reduced by the application of the early installment. As a result, when the Paid-Ahead Period ends and the Obligor pays the next required installment, such payment may be insufficient to cover the interest that has accrued since the last payment by the Obligor. Notwithstanding such insufficiency, such Paid-Ahead Simple Interest Contract would be considered to be current. This situation would continue until the monthly installments are once again sufficient to cover all accrued interest and to reduce the principal balance of the Contract. Depending on the principal balance and Contract Rate of the related Contract and on the number of installments paid in advance of their due dates, there may be extended periods of time during which Simple Interest Contracts that are not amortizing are considered current. 30 "Precomputed Contracts" consist of actuarial obligations and Rule of 78's obligations. Actuarial obligations provide for amortization of the loan over a series of fixed level payment monthly installments. Each monthly installment, including the monthly installment representing the final payment on the Contract, consists of an amount of interest equal to 1/12th of the related Contract Rate multiplied by the unpaid principal balance of the Contract, and an amount of principal equal to the remainder of the monthly payment. If an actuarial obligation is prepaid in full, the Obligor receives a rebate calculated on the basis of a constant interest rate. Rule of 78's obligations provide for the payment by the related Obligor of a specified total amount of payments, payable in equal monthly installments, which total represents the principal amount financed and add-on interest in an amount calculated based on the Contract Rate. The rate at which such amount of add-on interest is earned and, correspondingly, the amount of each fixed monthly payment allocated to reduction of the outstanding principal are calculated in accordance with the "Rule of 78's". Unless otherwise specified in the related Prospectus Supplement, with respect to any Rule of 78's obligation included as a Contract, the Servicer will calculate the amount of interest paid on a Rule of 78's obligation in the same manner that it calculates such amounts on actuarial obligations. If an Obligor with respect to any Precomputed Contract, in addition to making his or her regularly scheduled payment, makes one or more additional scheduled payments in any Due Period (such Contract being a "Paid-Ahead Precomputed Contract"), the additional scheduled payments made in such Due Period will be deposited into the Paid-Ahead Account and applied on subsequent Deposit Dates as described under "The Purchase Agreements and the Trust Documents--Paid-Ahead Precomputed Contracts." Since the Servicer will deposit paid-ahead amounts on Paid-Ahead Precomputed Contracts into the Paid-Ahead Account, these additional payments will not cause shortfalls of interest or principal payments in the Contract Pool. Unless otherwise specified in the related Prospectus Supplement, each Contract provides that an Obligor may prepay its Contract, in whole or in part, at any time, without a prepayment premium. Description of the Financed Boats The Financed Boats will consist of runabouts (together with boat motors and boat trailers), motor yachts, bass boats, pontoon boats, fishing skiffs, sport fishing boats, cabin cruisers, sailboats, and personal watercraft. Runabouts typically range from 12 to 27 feet in length and are equipped primarily for fishing. Motor yachts typically range from 40 to 70 feet in length and are used for cruising and fishing in large bodies of water. Bass boats are powered with outboard engines, range from 17 to 21 feet in length and are primarily used for fresh water fishing on inland waters. Pontoon boats range from 16 to 22 feet in length. They provide a smooth ride and are used for sight seeing. Fishing skiffs range from 16 to 22 feet in length and can accommodate two to three people. In a fishing skiff, the fisherman can walk from side to side without rocking the boat. Sporting boats range from 25 to 50 feet in length, and have longer cruising range than the bass boats or fishing skiffs. Sporting boats are generally used in salt water for larger game fishing. Cabin cruisers are motor boats that typically range from 25 to 50 feet in length which include sleeping and galley accommodations. Sailboats are wind powered crafts that typically range from 27 to 50 feet in length which can accommodate more than one person. 31 Personal watercraft are water-jet propelled vehicles seating one to three people, which are used for entertainment and short distance travel. The Financed Boats do not include houseboats used as primary residences, competitive racing boats, or commercial fishing boats. YIELD AND PREPAYMENT CONSIDERATIONS Unless otherwise specified in the related Prospectus Supplement, each Contract provides that it is prepayable, without premium, by the Obligor at any time. Prepayments (or, for this purpose, equivalent payments to a Trust) also may result from liquidations due to default, receipt of proceeds from insurance policies, repurchases by CITSF due to breach of a representation or warranty or breach of a covenant in the Trust Documents, or as a result of CITSF exercising its option to purchase the Contract Pool. See "The Purchase Agreements and the Trust Documents." The rate of prepayments on the Contracts may be influenced by a variety of economic, social and other factors. No assurance can be given that prepayments on the Contracts will conform to any estimated or actual historical experience, and no prediction can be made as to the actual prepayment rates which will be experienced on the Contracts. Unless otherwise specified in the related Prospectus Supplement, Certificateholders and Noteholders will bear all reinvestment risk resulting from the timing of payments of principal on the Certificates or the Notes, as the case may be. POOL FACTORS Unless otherwise specified in the related Prospectus Supplement, the "Certificate Pool Factor" for each class of Certificates, if any, is a seven-digit decimal which the Servicer will compute each month indicating the remaining Certificate Balance as of the Distribution Date, as a fraction of the Original Certificate Balance. The Certificate Pool Factor will be 1.0000000 as of the Initial Cut-off Date, and thereafter will decline to reflect reductions in the outstanding principal balance of the Certificates. A Certificateholder's portion of the aggregate outstanding Certificate Balance is the product of (i) the original denomination of the Certificateholder's Certificate and (ii) the Certificate Pool Factor. Unless otherwise specified in the related Prospectus Supplement, the "Note Pool Factor" for each class of Notes, if any, is a seven-digit decimal which the Servicer will compute each month indicating the remaining outstanding principal balance of the Notes as of the Distribution Date, as a fraction of the initial outstanding principal balance of the Notes. The Note Pool Factor will be 1.0000000 as of the Initial Cut-off Date, and thereafter will decline to reflect reductions in the outstanding principal balance of the Notes. A Noteholder's portion of the aggregate outstanding principal balance of the Notes is the product of (i) the original denomination of the Noteholder's Note, and (ii) the Note Pool Factor. With respect to each Trust and pursuant to the related Trust Documents, unless otherwise specified in the related Prospectus Supplement, on each Distribution Date, the Securityholders will receive monthly reports concerning the payments received on the Contracts, the Pool Balance, the Certificate Pool Factor, if any, the Note Pool Factor, if any, and various other items of information. Securityholders of record (which in most cases will be Cede) during any calendar year will be furnished information for tax reporting purposes not later than the latest date permitted by law. Certificate Owners, if any, and Note Owners, if any, may receive such reports, upon written request, together with a certification that they are Certificate Owners or Note Owners, as the case may be, and payment of any expenses associated with the distribution of such reports, from the Owner Trustee and the Indenture Trustee (if any) at the addresses specified in the related Prospectus Supplement. See "Certain Information Regarding the Securities--Statements to Securityholders." 32 USE OF PROCEEDS Unless otherwise specified in the related Prospectus Supplement, each Seller will sell the Initial Contracts to a Trust concurrently with the sale of the Securities and the net proceeds from the sale of the Securities will be applied by such Trust to the purchase of the Initial Contracts, to the payment of certain expenses connected with pooling the Contracts and issuing the Securities, to the deposit of the Pre-Funded Amount in the Pre-Funding Account, if any, to the deposit of the initial amount into the Capitalized Interest Account, if any, and to the deposit of the initial amount, if any, into a Reserve Fund, if any. Such net proceeds less the payment of such expenses, the Pre-Funded Amount, if any, the initial deposit into the Capitalized Interest Account, if any, and the Reserve Fund, if any, represent the purchase price paid by a Trust to the Company for the sale of the Initial Contracts to such Trust. Such amount will be determined as a result of the pricing of the Securities, through the offering described in the related Prospectus Supplement. The net proceeds to be received by the Company from the sale of the Initial Contracts to a Trust will be paid by the Company to CITSF as the purchase price for the Contracts and will be added to CITSF's general funds and will be available for general corporate purposes, including the purchase of new marine installment sale contracts and the payment of the purchase price to CITCF-NY for any Contracts acquired by CITSF from CITCF-NY. The net proceeds to be received by a Selling Trust from the sale of the Initial Contracts to a Trust will be applied to pay indebtedness and other obligations of such Selling Trust. THE CIT GROUP, INC. CIT, a Delaware corporation, is a leading diversified finance organization offering secured commercial and consumer financing primarily in the United States to smaller, middle-market and larger businesses and to individuals through a nationwide distribution network. CIT commenced operations in 1908. CIT has developed a broad array of "franchise" and strategic business units that focus on specific industries, asset types and markets which are balanced by client, industry and geographic diversification. The Dai-Ichi Kangyo Bank, Limited ("DKB") owns eighty percent (80%) of the issued and outstanding shares of common stock of CIT. DKB purchased a sixty percent (60%) common stock interest in CIT from Manufacturers Hanover Corporation ("MHC") at year-end 1989 and acquired an additional twenty percent (20%) common stock interest in CIT on December 15, 1995 from CBC Holding (Delaware) Inc. ("CBC Holding"), a wholly-owned subsidiary of The Chase Manhattan Corporation ("CMC"). DKB had an option to purchase the remaining twenty percent (20%) common stock interest from CBC Holding. On November 18, 1997, CIT completed its initial public offering of 36,225,000 shares of its common stock. The proceeds from the offering (other than the proceeds received from the exercise of the over-allotment option of the underwriters) were used to acquire DKB's option to purchase the 20% interest in CIT owned by CBC Holding, and to exercise such option. The proceeds received from the exercise of the underwriters' over-allotment option will be used for general corporate purposes and for potential acquisitions. As a consequence of the completion of the offering, DKB will continue to own a majority of the issued and outstanding shares of common stock of CIT. CMC is no longer a stockholder. CIT is subject to the informational requirements of the Exchange Act and, in accordance therewith, files reports and other information with the Commission. Such reports and other information can be inspected and copied at the offices of the Commission and at the offices of the New York Stock Exchange, Inc. See "Additional Information." THE CIT GROUP SECURITIZATION CORPORATION II, SELLER The Company was incorporated in the State of Delaware on June 24, 1994, and is a wholly-owned, limited purpose finance subsidiary of CIT. The Company maintains its principal office at 650 CIT Drive, Livingston, New Jersey 07039. Its telephone number is (973) 535-3514. As described herein, the obligations of the Company with respect to the Securities are limited. The Company will make no representations or warranties with respect to the Contracts and will have no ongoing servicing 33 obligations or responsibilities with respect to the Contract Pool. CITSF is an affiliate of the Company. The Company will acquire the contracts which it will sell to a Trust in a privately negotiated transaction from CITSF. Unless otherwise specified in the related Prospectus Supplement, neither CIT nor any of its affiliates, including the Company and CITSF, will be obligated with respect to the Securities. Accordingly, the Company has determined that financial statements of CITSF and the Company are not material to the offering of the Securities. THE CIT GROUP/SALES FINANCING, INC., SERVICER General CITSF, a Delaware corporation, is a wholly-owned subsidiary of CIT. It has its principal executive office at 650 CIT Drive, Livingston, New Jersey 07039, and its telephone number is (973) 740-5000. CITSF originates, purchases, sells and services retail installment sale contracts for recreation vehicles, manufactured housing, recreational boat products and other consumer goods throughout the United States. CITSF has been a lender to the recreational marine industry for more than five years. CITSF has a centralized asset service facility (the "Asset Service Center") in Oklahoma City, Oklahoma. Working through marine dealers and manufacturers, CITSF offers retail installment credit. CITSF also originates marine loans directly. In addition to purchasing marine contracts from dealers on an individual basis, CITSF makes bulk purchases of marine contracts. These bulk purchases may be from the portfolios of other lending institutions or finance companies or the portfolios of other entities that purchase and hold marine contracts. The Asset Service Center of CITSF services consumer credit transactions in 50 states and the District of Columbia. It provides full servicing for recreation vehicle, home equity, recreational boat and manufactured housing retail installment contracts. The servicing portfolio includes both loans originated or purchased by CITSF, as well as loans originated or purchased by CITSF and subsequently securitized with servicing retained. The servicing portfolio also includes loans owned by third parties that are serviced by CITSF for a fee on a "contract" basis. The Asset Service Center is supplemented by outside collectors and field remarketers located throughout the United States. In addition to expected growth in its serviced portfolio, in 1997 CITSF entered into an agreement to provide servicing for approximately 42,000 recreation vehicle and recreational boat consumer contracts for another financial institution, which CITSF is also servicing at its Asset Service Center. The addition of these contracts to its servicing portfolio required CITSF to increase staffing levels at the Asset Service Center to support these contracts. The effect of this increase on CITSF's performance as a servicer or subservicer cannot be determined at this time. CITSF's general policies with regard to the origination of marine installment sale contracts are described under "--Contract Origination" and "--CITSF's Underwriting Guidelines." See "--Servicing" for a description of certain of CITSF's servicing policies. Contract Origination In accordance with CITSF's marine underwriting criteria, CITSF purchases marine retail installment sale contracts and loans to finance the purchases of new and used boats and motors and trailers for boats from boat dealers, manufacturers and financial intermediaries who regularly originates and sells such contracts to CITSF pursuant to the terms of approved dealer agreements. CITSF also makes direct marine loans to obligors secured by recreational boats. Although CITSF does purchase marine installment sale contracts and marine installment loans or notes in bulk from other lenders, unless otherwise specified in the related Prospectus Supplement, all of the Contracts have been originated by CITSF or CITCF-NY through the purchase of such Contracts from dealers, manufacturers and intermediaries or through direct loan originations by CITSF or CITCF-NY. Through their Regional Business Centers, CITSF and CITCF-NY arrange to purchase marine installment sale contracts and marine installment loans or notes from marine dealers located throughout the United States. Regional 34 Business Center personnel contact the dealers located in their territories and explain CITSF's available financing plans, terms, prevailing rates and credit and financing policies. If the dealer wishes to use CITSF's available customer financing, the dealer must make an application for dealer approval. Upon satisfactory results of the investigation of the dealer's creditworthiness and general business reputation, CITSF or CITCF-NY and the dealer execute a dealer agreement. In the assignment agreement relating to any contracts which a dealer sold to CITSF or CITCF-NY, each dealer makes representations and warranties concerning the obligors on such contracts and the security interests in the financed boats relating thereto. These representations and warranties typically include, among others, that (i) the obligor was of legal age and competent to execute the contract; (ii) the documentation submitted by the dealer evidenced a bona fide sale contract; (iii) the contract was genuine, legally valid and enforceable for the sale price; (iv) the financed boat was fully and correctly described in the contract and had been delivered to and accepted by the obligor; (v) the dealer had clear title to the financed boat and to the contract; (vi) the dealer had complied with all applicable laws, regulations and rules in connection with the contract; (vii) the obligor had not asserted a right of rescission, cancellation, claim, defense, set-off or counterclaim of any kind relating to the contract; (viii) any down payment was paid in cash and the dealer received in trade any property shown for the allowance stated in the contract; (ix) the dealer had fully performed the terms of any purchase agreement with the obligor at the time CITSF or CITCF-NY funded the transaction; and (x) application had been made for a certificate of title or other ownership documents in the name of the obligor with the security interest of the CITSF or CITCF-NY noted as a lien thereon, or appropriate UCC financing statements had been filed, or the dealer had followed the assignee's instructions with respect to financed boats subject to federal documentation, to the extent applicable. CITSF and CITCF-NY may enter into assignment agreements in which dealers do not make such representations. CITSF and CITCF-NY also purchase marine loan agreements from certain financial intermediaries who originate and fund such transactions within CITSF's marine underwriting guidelines. These financial intermediaries operate under agreements with CITSF or CITCF-NY under which the intermediary generally makes many of the representations and warranties concerning the documentation and the obligor made by an assigning dealer. Material breaches of any such representation or warranty generally will also trigger a right of CITSF or CITCF-NY to demand the repurchase of the contract. Upon material breach of any representation or warranty with respect to a contract made by a dealer or financial intermediary, CITSF or CITCF-NY will have a right of recourse against such dealer or intermediary to require it to purchase or repurchase such contract. Historically, in determining whether to exercise any right of recourse, CITSF and CITCF-NY have considered the prior performance of the dealer or intermediary and other business and commercial factors. The Servicer will be obligated to determine whether or not to enforce such rights under the dealer or intermediary agreements relating to the Contracts in accordance with its customary practices, and the right to any proceeds received upon such enforcement will be conveyed to the Trust pursuant to the Sale and Servicing Agreement. The Seller, CITSF and CITCF-NY will make no representations as to the financial condition of any dealer or intermediary to which any of them may have recourse, and there can be no assurance as to the ability of any such dealer or intermediary to perform its obligations under a dealer agreement, an intermediary agreement or an assignment agreement. CITSF solicits potential direct marine loan borrowers through targeted direct marketing programs. CITSF also solicits potential marine loan borrowers through leads generated by a nationwide network of referral brokers. These referral brokers usually do not have a written contract with CITSF. If their referral results in the closing of a direct marine loan transaction with CITSF and a customer located by the referral broker, CITSF pays the referral broker a commission after the loan transaction occurs. Generally, the obligor under such a direct loan transaction will submit his or her application directly to CITSF or CITCF-NY. Accordingly, dealer or intermediary warranties on documentation will not apply to these direct loan transactions. CITSF or CITCF-NY underwrites on an individual basis each contract which it purchases from dealers or originates directly in accordance with CITSF's marine underwriting guidelines. CITSF may not individually underwrite each transaction in a portfolio of contracts which it purchases from other lenders. Unless otherwise specified in the related Prospectus Supplement, all Contracts were individually underwritten by CITSF. 35 If CITSF believes that an obligor on a marine contract is likely to refinance the contract as a result of interest rate changes or other reasons, CITSF may in its discretion attempt to retain such obligor as a customer by soliciting the obligor to refinance the contract with CITSF. CITSF may continue to apply this practice with respect to the Contracts. CITSF's Underwriting Guidelines All marine contracts that are purchased by CITSF from dealers are written on forms provided or approved by CITSF and are purchased on an individually approved basis. With respect to each marine contract to be purchased from a dealer or financial intermediary, CITSF's general practice is to have the dealer or financial intermediary submit the customer's credit application, manufacturer's invoice (if the contract is for a new boat) and certain other information relating to the contract to the applicable Regional Business Center. Personnel at the Regional Business Center analyze the creditworthiness of the customer and other aspects of the proposed transaction. With respect to marine loan contracts originated directly, the customer will submit his or her credit application, verification of the boat's value and certain other information directly to the National Business Center at the Asset Service Center. Generally, personnel at the National Business Center will analyze the creditworthiness of the customer and the value of the financed boat. If the amount financed is $35,000 or higher and the financed boat is used, CITSF's marine underwriting guidelines require that the customer supply a survey appraising the value of the financed boat. This guideline applies to direct loan business and to contracts originated by dealers or financial intermediaries. CITSF will determine the acceptability of the survey and will usually check a published valuation guide to confirm the accuracy of its valuation. Credit underwriters at the National Business Center may waive or apply stricter standards to valuation guidelines based upon the applicant's credit score and the amount financed. On direct marine loan transactions, CITSF underwrite, prepare documentation and close such transactions directly, either in person, by mail or through a third party closing agent. All credit applications are entered into an application processing system. During 1997, CITSF installed a new application processing system designed to enhance productivity and provide greater control over the quality of credits approved through the use of "decision rules" that alert analysts to further investigate certain conditions. The new system also requires the proper level of authority to approve transactions over an individual's dollar limits or transactions which involve exceptions to underwriting policy. CITSF's underwriting guidelines require that a credit officer at a Regional Business Center with the appropriate level of credit authority examine each applicant's credit history, residence history, employment history and debt-to-income payment ratio. Although CITSF has certain minimum requirements with respect to these criteria, as described below, CITSF's management does not believe that these minimum requirements are sufficient to warrant automatic credit approval of an applicant. Thus, CITSF will not approve a credit application for a marine transaction without review by a credit officer. Based on credit score and other risk factors, each applicant is either approved, declined or, if appropriate, referred to a credit officer with a higher credit authority. The retail customer generally has had a five year history of residence, employment and credit history, with no less than two years at the current residence and at least three years in his or her present job, a debt ratio (the ratio of total installment debt and housing expenses to gross monthly income) of 40% or less, a down payment of at least 10% and an overall satisfactory credit profile. Self-employed applicants should be established in business for a minimum of five years. The appropriate level credit officer may approve, on a case by case basis, applications of customers which do not meet the above-described retail customer profile. Such approval, if granted, is based on the applicant's length and likelihood of continued employment, ability to pay, and a review of the applicants' paying habits. No guarantors, endorsers or co-signers are considered in determining whether to accept or reject an application. The maximum amount CITSF will advance to such customers is (i) in the case of a new boat, 110% of the invoice if the amount financed is less than $100,000 and 100% of the invoice if the amount financed is $100,000 or more, and (ii) in the case of a used boat (a) 85% of the B.U.C. Book "low retail" value or 110% of NADA wholesale book value for amounts financed up to $35,000, and (b) 85% of the assessed marine survey value plus freight, tax, license, insurance, warranty, and dealer installed options if the amount financed is over $35,000. CITSF may waive certain credit requirements, including income verification, job verification or valuation, in certain 36 specialized underwriting programs or if a credit score, balance or other factors provide sufficient support to underwrite the transaction. Funding of a transaction is authorized after verification of the conditions of approval of the application and satisfactory delivery of the related boat or other proof of ownership and condition of the collateral. In 1992, CITSF's credit criteria were changed to permit greater reliance on credit scores and overall evaluation instead of using specific disqualifying criteria (e.g., a minimum of two years of employment). In August 1994, CITSF initiated an underwriting program to provide for the approval of a broader range of credit scores with appropriate pricing intended to compensate for the risk in customers with lower credit profiles. Accordingly, the interest rate charged on each marine contract originated since August 1994 reflects CITSF's evaluation of the relative risk associated with an individual's application. The credit review and approval practices of each Regional Business Center are subject to internal reviews and internal audits that, through sampling, examine the quality of the underwriting; the verification of key data such as income and employment, if required; and the accuracy and completeness of the documentation. Unless otherwise specified in the related Prospectus Supplement, almost all of the Contracts are marine installment sale contracts and direct loans originated in accordance with CITSF's marine underwriting criteria. In substantially all cases, CITSF or CITCF-NY did not fund or purchase a Contract until CITSF or CITCF-NY had reviewed and approved a completed customer file, including the credit application of the customer, in accordance with CITSF's underwriting procedures. The underwriting guidelines of CITSF described above may change in the future. Servicing Through its Asset Service Center, CITSF services recreation vehicle, manufactured housing, recreational boat, home equity and other consumer loans. CITSF services all of the marine contracts it originates or purchases, whether on an individual basis or in bulk (except those it has sold to third parties on a servicing released basis). CITSF is actively seeking arrangements pursuant to which it will service marine contracts held by other entities, including contracts which were not purchased by CITSF or sold to such other entities by CITSF. Generally, such servicing responsibilities are, and would be, also carried out through the Asset Service Center. Servicing responsibilities include collecting principal and interest payments, taxes, insurance premiums, where applicable, and other payments from obligors and, where such contracts have been sold, remitting principal and interest payments to the holders thereof, to the extent such holders are entitled thereto. Collection procedures include repossession and resale of boats securing defaulted contracts and, if deemed advisable by CITSF, entering into workout arrangements with obligors under certain defaulted contracts. Although decisions as to whether to repossess any boat are made on an individual basis, CITSF's general policy is to institute repossession procedures promptly after Asset Service Center personnel determine that it is unlikely that a defaulted contract will be brought current, and thereafter to diligently pursue the resale of such boat if the market is favorable. Geographic location, condition and market govern the method of sale used to sell collateral. CIT uses site auctions, pool auctions, individual bids on site, brokers, retail sale outlets, newspaper advertisements and telemarketing. The liquidation team uses computer generated data bases to maximize their effectiveness in the correct method of sale. The sales strategies are reviewed at regular staff meetings, and potential markets for the collateral and the sales plan for each unit are designed. Field personnel recommend to the internal remarketers and managers the most effective disposition method of the collateral i.e., move to consignment dealer for retail, move to storage facility for wholesale, obtain as is/where is bids, or move to auction facility. The remarketer and/or manager review the recommendation and based on product knowledge and economic conditions make the decision in the resale of the collateral. 37 Insurance Procedures Each Contract requires the Obligor to obtain insurance against loss by fire, theft, comprehensive and collision or full boat damage with respect to the related Financed Boat. The dealer agreements include a representation and warranty that each Financed Boat was subject to such insurance at the time of origination of the Contract. Since Obligors may choose their own insurers to provide the required coverage, the specific terms and conditions of their policies vary. The Servicer does not, under its customary servicing practices and procedures, obtain Force-Placed Insurance when the principal balance of the related Contract falls below the level or levels periodically established in accordance with such customary servicing practices and procedures. In accordance with such customary servicing practices and procedures, the Servicer may periodically readjust such levels, suspend Force-Placed Insurance or arrange other methods of protection of the Financed Boats that it deems necessary or advisable, provided that the Servicer determines that such actions do not materially and adversely affect the interests of the Securityholders. Historically, CITSF has force-placed insurance on a relatively small percentage of its marine contracts. Unless otherwise specified in the related Prospectus Supplement, the Servicer may, but will not be obligated to, enforce its rights under the Contracts to require the Obligors to maintain physical damage insurance, in accordance with the Servicer's customary practices and procedures with respect to comparable new or used boats financed by installment sale contracts or loans that it services for itself or others. If CITSF purchases physical damage insurance on behalf of an Obligor, the Obligor's premium payment obligations will not be included in the Principal Balance of the related Contracts and will not be the property of the Trust. The historical delinquency and loss experience included in a Prospectus Supplement will include Contracts as to which CITSF has force-placed insurance. Unless otherwise specified in the related Prospectus Supplement, the Trust Documents will permit the Servicer or any affiliate of the Servicer, to the extent permitted by law, to (i) enter into agreements with one or more insurers or other persons pursuant to which the Servicer or such affiliate will earn commissions and fees in connection with any insurance policy purchased by an Obligor including, without limitation, any physical damage insurance policy (whether or not such physical damage insurance policy is force-placed pursuant to the provisions of any Contract), or any other insurance policy whatsoever, and (ii) in connection with the foregoing, to solicit, or permit and assist any insurer or any agent thereof to solicit (including, without limitation, providing such insurer or agent a list of Obligors including name, address or other information) any Obligor. Delinquency and Loan Loss Experience Each Prospectus Supplement will include information on CITSF's loss and delinquency experience with respect to its servicing portfolio of marine contracts. However, there can be no assurance that such experience will be indicative of the performance of the Contracts included in a particular Contract Pool. Unless otherwise specified in the related Prospectus Supplement, the tables setting forth the delinquency experience for the portfolio of marine contracts originated and serviced by CITSF will exclude contracts acquired by CITSF through portfolio purchases and contracts in repossession. THE CERTIFICATES General A series of Securities may include one or more classes of Asset-Backed Certificates (the "Certificates") issued pursuant to the Trust Documents to be entered into among the Seller, the Servicer and the Owner Trustee, forms of which have been filed as exhibits to the Registration Statement of which this Prospectus forms a part. Payments in respect of the Certificates will be subordinated to payments on the Notes, if any, to the extent described in the related Prospectus Supplement. The following summary describes certain terms of the Certificates and the Trust Documents. The summary does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all of the provisions of the Certificates and the Trust Documents, and the following summary will be 38 supplemented in whole or in part by the related Prospectus Supplement. Where this summary refers to particular provisions or terms used in the Trust Documents, the actual provisions (including definitions of terms) are incorporated by reference as part of such summary. The Certificates will be issued in the minimum denominations and integral multiples in excess thereof specified in the related Prospectus Supplement; provided, however, that one Certificate of each series may be issued in a denomination other than such integral multiple such that the applicable Affiliated Owner specified in the related Prospectus Supplement, if any, may be issued at least the portion of the Original Certificate Balance specified in the related Prospectus Supplement. If specified in the related Prospectus Supplement, the Company or one of its affiliates will own the entire beneficial interest in the Trust. Unless otherwise specified in the related Prospectus Supplement, the Certificates will be issued in book-entry form only. Unless otherwise specified in the related Prospectus Supplement, each class of the Certificates will initially be represented by a single Certificate registered in the name of the nominee of DTC, except as provided below. Unless otherwise specified in the related Prospectus Supplement, DTC's nominee will be Cede & Co. ("Cede"). No person acquiring an interest in the Certificates through the facilities of DTC (a "Certificate Owner") will be entitled to receive a Certificate representing such person's interest in the Certificates, except as set forth under "Certain Information Regarding The Securities--Definitive Securities." Unless and until Definitive Certificates are issued under the limited circumstances described in the related Prospectus Supplement and herein, all references to actions by Certificateholders shall refer to actions taken by DTC upon instructions from its Participants, and all references herein to distributions, notices, reports and statements to Certificateholders shall refer to distributions, notices, reports and statements to DTC in accordance with DTC procedures. See "Certain Information Regarding The Securities--Definitive Securities." If specified in the related Prospectus Supplement, one or more classes of Certificates will be issued and sold privately. Distribution of Principal and Interest on the Certificates The Certificates will bear interest at the rate specified in the related Prospectus Supplement (the "Pass-Through Rate"). The timing and priority of distributions, seniority, allocations of loss, Pass-Through Rate and amount of or method of determining distributions with respect to principal and interest (or, where applicable, with respect to principal only or interest only) on the Certificates of any series will be described in the related Prospectus Supplement. Distributions of interest on the Certificates will be made on the dates specified in the related Prospectus Supplement (each, a "Distribution Date") and, unless otherwise specified in the related Prospectus Supplement, will be made prior to distributions with respect to principal. A series may include one or more classes of Stripped Certificates entitled to (i) distributions in respect of principal with disproportionate, nominal or no interest distributions, or (ii) interest distributions, with disproportionate, nominal or no distributions in respect of principal. Each class of Certificates may have a different Pass-Through Rate, which may be a fixed, variable or adjustable Pass-Through Rate (and which may be zero for certain classes of Stripped Certificates), or any combination of the foregoing. The related Prospectus Supplement will specify the Pass-Through Rate for each class of Certificates, or the initial Pass-Through Rate and the method for determining the Pass-Through Rate. Unless otherwise specified in the related Prospectus Supplement, interest on the Certificates will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Unless otherwise specified in the related Prospectus Supplement, distributions in respect of the Certificates will be subordinate to payments in respect of the Notes, if any, as more fully described in the related Prospectus Supplement. Distributions in respect of principal of any class of Certificates will be made on a pro rata basis among all of the Certificateholders of such class. In the case of a series of Certificates which includes two or more classes of Certificates, the timing, sequential order, priority of payment or amount of distributions in respect of principal, and any schedule or formula or other provisions applicable to the determination thereof, of each such class shall be as set forth in the related Prospectus Supplement. Unless otherwise specified in the related Prospectus Supplement, payments of interest and principal on the Certificates will be made on the fifteenth day of each month or, if any such day is not a Business Day, on the next succeeding Business Day (each, a "Distribution Date"), commencing on the date specified in the related Prospectus Supplement. Unless otherwise specified in the related Prospectus Supplement, with respect to any Distribution Date, 39 the Due Period will be the calendar month preceding the month of such Distribution Date. Unless otherwise specified in the related Prospectus Supplement, payments on the Certificates on each Distribution Date will be made to the holders of record of the related Certificates on the day immediately preceding such Distribution Date or, in the event Definitive Certificates have been issued, at the close of business of the last day of the month immediately preceding the month in which such Distribution Date occurs (each, a "Record Date"). A "Business Day" is any day other than a Saturday, Sunday or any day on which banking institutions or trust companies in the states of New York, Oklahoma and such other states (if any) specified in the related Prospectus Supplement are authorized or required by law, regulation or executive order to be closed. THE NOTES General A series of Securities may include one or more classes of Asset-Backed Notes (the "Notes" and, together with the Certificates, the "Securities") issued pursuant to an Indenture (as amended and supplemented from time to time, the "Indenture") between a Trust and an Indenture Trustee specified in the related Prospectus Supplement (the "Indenture Trustee"), a form of which has been filed as an exhibit to the Registration Statement of which this Prospectus forms a part. The following summary does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all of the provisions of the Notes and the Indenture, and the following summary will be supplemented in whole or in part by the related Prospectus Supplement. Where this summary refers to particular provisions or terms used in the Indenture, the actual provisions (including definitions of terms) are incorporated by reference as part of such summary. The Notes will be issued in the minimum denominations and integral multiples in excess thereof specified in the related Prospectus Supplement; provided, however, that one Note of each class of each series may be issued in a denomination other than such integral multiple. Unless otherwise specified in the related Prospectus Supplement, the Notes will be issued in book-entry form only. Unless otherwise specified in the related Prospectus Supplement, each class of Notes will initially be represented by a single Note registered in the name of Cede, the nominee of DTC, except as provided below. No person acquiring an interest in the Notes through the facilities of DTC (a "Note Owner" and, together with a Certificate Owner, a "Security Owner") will be entitled to receive a Note representing such person's interest in the Notes, except as set forth under "Certain Information Regarding The Securities--Definitive Securities" and such persons will hold their interests in the Notes through DTC in the United States or Cedel or Euroclear in Europe. Unless and until Definitive Notes are issued under the limited circumstances described in the related Prospectus Supplement and herein, all references to actions by Noteholders shall refer to actions taken by DTC upon instructions from its Participants, and all references in the related Prospectus Supplement and herein to distributions, notices, reports and statements to Noteholders shall refer to distributions, notices, reports and statements to DTC in accordance with DTC procedures. See "Certain Information Regarding The Securities--Definitive Securities." If specified in the related Prospectus Supplement, one or more classes of Notes will be issued and sold privately. Payment of Principal and Interest on the Notes The timing and priority of payment, seniority, allocations of loss, Interest Rate and amount of or method of determining payments of principal and interest on each class of Notes will be described in the related Prospectus Supplement. The right of holders of any class of Notes to receive payments of principal and interest may be senior or subordinate to the rights of holders of any class or classes of Notes of such series, or any class of Certificates, as described in the related Prospectus Supplement. Unless otherwise provided in the related Prospectus Supplement, payments of interest on the Notes will be made prior to payments of principal thereon. A series may include one or more classes of Stripped Notes entitled to (i) principal payments with disproportionate, nominal or no interest payment, or (ii) interest payments with disproportionate, nominal or no principal payments. Each class of Notes may have a different Interest Rate, which may be a fixed, variable or adjustable Interest Rate (and which may be zero for certain classes of Stripped Notes), or any combination of the foregoing. The related Prospectus Supplement 40 will specify the Interest Rate for each class of Notes, or the initial Interest Rate and the method for determining the Interest Rate. One or more classes of Notes of a series may be redeemable under the circumstances specified herein and in the related Prospectus Supplement. Unless otherwise specified in the related Prospectus Supplement, payments in respect of interest to Noteholders of all classes within a series will have the same priority. Under certain circumstances, the amount available for such payments could be less than the aggregate amount of interest payable on the Notes on any of the dates specified for payments in the related Prospectus Supplement, in which case each class of Noteholders will receive its ratable share (based upon the aggregate amount of interest due to such class of Noteholders) of the aggregate amount then available to be distributed in respect of interest on the Notes. In the case of a series of Securities which includes two or more classes of Notes, the sequential order and priority of payment in respect of principal and interest, and any schedule or formula or other provisions applicable to the determination thereof, of each such class will be set forth in the related Prospectus Supplement. Unless otherwise specified in the related Prospectus Supplement, payments of interest and principal on the Notes will be made on each Distribution Date, commencing on the date specified in the related Prospectus Supplement. Unless otherwise specified in the related Prospectus Supplement, with respect to any Distribution Date, the Due Period will be the calendar month preceding the month of such Distribution Date. Unless otherwise specified in the related Prospectus Supplement, payments on the Notes on each Distribution Date will be made to the holders of record of the related Notes on the related Record Date. The Indenture A form of Indenture has been filed as an exhibit to the Registration Statement of which this Prospectus forms a part. CITSF will provide a copy of the applicable Indenture (without exhibits) upon request to a holder of Notes issued thereunder. Modification of Indenture without Noteholder Consent. With respect to each Trust, the Issuer and the related Indenture Trustee may, without consent of the Noteholders, enter into one or more supplemental indentures for any of the following purposes: (i) to correct or amplify the description of the collateral or add additional collateral; (ii) to provide for the assumption of the Notes and the Indenture obligations by a permitted successor to the Trust; (iii) to add additional covenants for the benefit of the related Noteholders, or for the Trust to surrender any rights or power conferred upon it; (iv) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee; (v) to cure any ambiguity or correct or supplement any provision which may be inconsistent with any other provision; (vi) to provide for the acceptance of the appointment of a successor Indenture Trustee or to add to or change any provision as shall be necessary and permitted to facilitate the administration by more than one trustee; (vii) to modify, eliminate or add any provision in order to comply with the Trust Indenture Act of 1939, as amended; or (viii) to add, change in any manner, or eliminate any provision, or modify in any manner the rights of Noteholders; provided that any action specified in this clause (viii) shall not, as evidenced by an opinion of counsel, adversely affect in any material respect the interests of any Noteholder unless Noteholder consent is otherwise obtained as described in the Indenture. Any action specified in clause (viii) shall be taken only upon satisfaction of the Rating Agency Condition. "Rating Agency Condition" with respect to any action means the condition that the Rating Agency or Agencies specified in the related Prospectus Supplement shall have notified the Seller, the Servicer and the Issuer in writing that such action will not result in the downgrade or withdrawal of the then current ratings of the Securities. Modification of Indenture with Noteholder Consent. With respect to each Trust, with the consent of the holders of not less than a majority of the aggregate outstanding principal amount of the Notes, and with prior notice to the Rating Agencies, the Issuer and the Indenture Trustee may execute a supplemental indenture to add provisions to, change in any manner or eliminate any provisions of, the Indenture, or modify in any manner the rights of the related Noteholders. 41 Without the consent of the holder of each outstanding related Note affected thereby, however, no supplemental indenture may: (i) change the due date of any installment of principal of or interest on any Note or reduce the principal amount thereof, the interest rate specified thereon or the redemption price with respect thereto or change any place of payment where or the coin or currency in which any Note or any interest thereon is payable; (ii) impair the right to institute suit for the enforcement of certain provisions of the Indenture regarding payment; (iii) reduce the percentage of the aggregate principal amount of the outstanding Notes the consent of the holders of which is required for any such supplemental indenture or the consent of the holders of which is required for any waiver of compliance with certain provisions of the Indenture or of certain defaults thereunder and their consequences as provided for in the Indenture; (iv) modify or alter the provisions of the Indenture regarding the voting of Notes held by the related Trust, any other obligor on the Notes, the Seller or an affiliate of any of them; (v) reduce the percentage of the aggregate outstanding amount of the Notes the consent of the holders of which is required to direct the Indenture Trustee to sell or liquidate the Contracts if the proceeds of such sale would be insufficient to pay the principal amount and accrued but unpaid interest on the outstanding Notes; (vi) decrease the percentage of the aggregate principal amount of the Notes required to amend the sections of the Indenture which specify the applicable percentage of aggregate principal amount of the Notes necessary to amend the Indenture or certain other related agreements; or (vii) permit the creation of any lien ranking prior to or on a parity with the lien of the Indenture with respect to any of the collateral for the Notes or, except as otherwise permitted or contemplated in the Indenture, terminate the lien of the Indenture on any such collateral or deprive the holder of any Note of the security afforded by the lien of the Indenture. Events of Default; Rights Upon Event of Default. With respect to each Trust, unless otherwise specified in the related Prospectus Supplement, "Events of Default" under the Indenture will consist of: (i) any failure to pay interest on any Note as and when the same becomes due and payable, which failure continues unremedied for five days; (ii) except as set forth in (iv) below, any failure to make any installment of the principal of any Note as and when the same becomes due and payable which failure continues unremedied for thirty days after the giving of written notice of such failure to the Issuer and the Seller (or the Servicer, as applicable) by the Indenture Trustee or to the Issuer and the Seller (or the Servicer, as applicable) and the Indenture Trustee by the holders of not less than 25% of the aggregate outstanding principal amount of the Notes; (iii) any default in the observance or performance in any material respect of any other covenants or agreements in the Indenture, which failure materially and adversely affects the rights of Noteholders, and which failure continues unremedied for thirty days after the giving of written notice of such failure to the Issuer and the Seller (or the Servicer, as applicable) by the Indenture Trustee or to the Issuer and the Seller (or the Servicer, as applicable) and the Indenture Trustee by the holders of not less than 25% of the aggregate outstanding principal amount of the Notes; (iv) any failure to pay in full the outstanding principal balance of any Notes on or prior to the applicable Note Final Scheduled Distribution Date; and (v) certain events of insolvency, readjustment of debt, marshaling of assets and liabilities or similar proceedings and certain actions by the Trust indicating its insolvency, reorganization pursuant to bankruptcy proceedings or inability to pay its obligations. However, unless otherwise specified in the related Prospectus Supplement, the amount of principal required to be paid to Noteholders under the Indenture will generally be limited to amounts available to be deposited in the Note Distribution Account. Therefore, unless otherwise specified in the related Prospectus Supplement, the failure to pay principal on a class of Notes generally will not result in the occurrence of an Event of Default until the Note Final Scheduled Distribution Date for such class of Notes. Unless otherwise specified in the related Prospectus Supplement, if an Event of Default should occur and be continuing with respect to the Notes of any series, the related Indenture Trustee or holders of not less than a majority in aggregate outstanding principal amount of the Controlling Notes may declare the principal of the Notes to be immediately due and payable. Such declaration may, under certain circumstances, be rescinded by the holders of not less than a majority of the aggregate outstanding principal amount of such Controlling Notes. Unless otherwise specified in the related Prospectus Supplement, "Controlling Notes" means (i) if there is only one class of Notes, such class of Notes and (ii) if there is more than one class of Notes (a) all Notes of the most senior class of Notes then outstanding voting together as a single class until such class of Notes have been paid in full, and (b) from and after the payment in full of such senior class of Notes then outstanding, all Notes of the next most senior class of Notes voting together as a single class until such class of Notes have been paid in full. 42 Unless otherwise specified in the related Prospectus Supplement, if the Notes of any series are due and payable following an Event of Default with respect thereto, the related Indenture Trustee may institute proceedings to collect amounts due or foreclose on Trust property, exercise remedies as a secured party under the related Contracts, sell the related Contracts or elect to have the Trust maintain possession of such Contracts and continue to apply collections on such Contracts as if there had been no declaration of acceleration. Unless otherwise specified in the related Prospectus Supplement, the Indenture Trustee, however, is prohibited from selling the related Contracts following an Event of Default unless (i) the holders of all the outstanding related Notes consent to such sale, (ii) the proceeds of such sale are sufficient to pay in full the principal of and the accrued interest on such outstanding related Notes at the date of such sale, or (iii) the Indenture Trustee determines that the proceeds of the Contracts would not be sufficient on an ongoing basis to make all payments on the Notes as such payments would have become due if such obligations had not been declared due and payable, and the Indenture Trustee obtains the consent of the holders of not less than 66 2/3% of the aggregate outstanding principal amount of the Controlling Notes. Unless otherwise specified in the related Prospectus Supplement, following a declaration upon an Event of Default that the Notes are immediately due and payable, (i) Noteholders will be entitled to ratable repayment of principal on the basis of their respective unpaid principal balances, and (ii) repayment in full of the accrued interest on and unpaid principal balances of the Notes will be made prior to any further payment of interest on the Certificates or in respect of the Certificate Balance (other than payments of the "Principal Liquidation Loss Amount" (as defined in the related Prospectus Supplement) and other payments from the Enhancement (if any) applicable to the Certificates). Subject to the provisions of the Indenture relating to the duties of the Indenture Trustee, if an Event of Default occurs and is continuing with respect to a series of Notes, the Indenture Trustee will be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the holders of such Notes, if the Indenture Trustee reasonably believes it will not be adequately indemnified against the costs, expenses and liabilities which might be incurred by it in complying with such request. Subject to the provisions for indemnification and certain limitations contained in the Indenture, the holders of not less than a majority in aggregate outstanding principal amount of the Controlling Notes will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee and the holders of not less than a majority in aggregate outstanding principal amount of such Controlling Notes may, in certain cases, waive any past default with respect thereto, except a default (i) in the payment of principal of or interest on any of the Notes or (ii) in respect of a covenant or provision of the Indenture that cannot be modified or amended without the consent of the holder of each Note. No holder of a Note of any series will have the right to institute any proceeding with respect to the related Indenture unless (i) such holder previously has given to the Indenture Trustee written notice of a continuing Event of Default, (ii) the holders of not less than 25% in aggregate outstanding principal amount of the Controlling Notes have made written request of the Indenture Trustee to institute such proceeding, (iii) such holder or holders have offered the Indenture Trustee reasonable indemnity, (iv) the Indenture Trustee has for sixty days after its receipt of such notice, request and offer of indemnity failed to institute such proceeding, and (v) no direction inconsistent with such written request has been given to the Indenture Trustee during such sixty-day period by the holders of not less than a majority in aggregate outstanding principal amount of such Controlling Notes. If an Event of Default occurs and is continuing and if it is known to the Indenture Trustee, the Indenture Trustee will mail to each Noteholder notice of the Event of Default within ninety days after it occurs. Except in the case of a failure to pay principal of or interest on any Note, the Indenture Trustee may withhold the notice if and so long as it determines in good faith that withholding the notice is in the interests of Noteholders. In addition, each Indenture Trustee and the related Noteholders, by accepting the related Notes, will covenant that they will not, for a period of one year and one day after the termination of the Indenture, institute against the Affiliated Owner, if any, the Company or the related Trust any bankruptcy, reorganization or other proceeding under any federal or state bankruptcy or similar law. Neither the Indenture Trustee in its individual capacity nor the Owner Trustee in its individual capacity, nor any holder of a Certificate including, without limitation, the Affiliated Owner (if any) or the Company, nor any of 43 their respective owners, beneficiaries, agents, officers, directors, employees, affiliates, successors or assigns will, in the absence of an express agreement to the contrary, be personally liable for the payment of the principal of or interest on the related Notes or for the agreements of the related Trust contained in the Indenture. Certain Covenants. Unless otherwise specified in the related Prospectus Supplement, each Indenture will provide that the related Trust may not consolidate with or merge with or into any other entity, unless (i) the entity formed by or surviving such consolidation or merger is organized under the laws of the United States, any state or the District of Columbia, (ii) such entity expressly assumes the Trust's obligation to make due and timely payments upon the Notes and the performance or observance of every agreement and covenant of the Trust under the Indenture, (iii) no Event of Default shall have occurred and be continuing immediately after such merger or consolidation, (iv) the Trust has been advised that the rating of the related Notes or Certificates then in effect would not be reduced or withdrawn by the Rating Agencies as a result of such merger or consolidation, (v) any action as is necessary to maintain the lien and security interest created by the Indenture shall have been taken, and (vi) the Trust has received an opinion of counsel to the effect that such consolidation or merger will have no material adverse tax consequences to the Trust or to any related Noteholder or Certificateholder. Unless otherwise specified in the related Prospectus Supplement, each Trust will covenant that it will not, among other things, (i) except as expressly permitted by the Indenture, the Purchase Agreements or the Trust Documents (collectively, the "Related Documents"), sell, convey, transfer, exchange or otherwise dispose of any of the assets of the Trust, (ii) claim any credit on or make any deduction from the principal or interest payable in respect of the related Notes (other than amounts withheld under the Code or applicable state law) or assert any claim against any present or former holder of such Notes because of the payment of taxes levied or assessed upon the Trust, (iii) dissolve or liquidate in whole or in part, (iv) permit the validity or effectiveness of the related Indenture to be impaired or permit the lien of the Indenture to be amended, hypothecated, subordinated, terminated or discharged, or permit any person to be released from any covenants or obligations with respect to the related Notes under such Indenture except as may be expressly permitted thereby or (v) permit any lien, charge, excise, claim, security interest, mortgage or other encumbrance (other than the lien of the Indenture) to be created on or extend to or otherwise arise upon or burden the assets of the Trust or any part thereof, or any interest therein or the proceeds thereof. No Trust will incur, assume or guarantee any indebtedness other than indebtedness incurred pursuant to the related Notes and the related Indenture or otherwise in accordance with the Related Documents. Annual Compliance Statement. Each Trust will be required to file annually with the related Indenture Trustee a written statement as to the fulfillment of its obligations under the Indenture. Indenture Trustee's Annual Report. The Indenture Trustee will be required to mail each year to all related Noteholders a brief report relating to its eligibility and qualification to continue as Indenture Trustee under the related Indenture, any amounts advanced by it under the Indenture, the amount, interest rate and maturity date of certain indebtedness owing by the Trust to the Indenture Trustee in its individual capacity, the property and funds physically held by the Indenture Trustee as such and any action taken by it that materially affects the Notes and that has not been previously reported. Satisfaction and Discharge of Indenture. An Indenture will be discharged with respect to the assets of the Trust securing the related Notes upon the delivery to the related Indenture Trustee for cancellation of all such Notes or, with certain limitations, upon deposit with the Indenture Trustee of funds sufficient for the payment in full of all of such Notes. The Indenture Trustee. The Indenture Trustee for a series of Notes will be specified in the related Prospectus Supplement. The Indenture Trustee may resign at any time, in which event the Servicer, or its successor, will be obligated to appoint a successor trustee. The Servicer may also remove the Indenture Trustee if the Indenture Trustee ceases to be eligible to continue as such under the Indenture or if the Indenture Trustee becomes insolvent. In such circumstances, the Servicer will be obligated to appoint a successor trustee. Any resignation or removal of the Indenture Trustee and appointment of a successor trustee will not become effective until acceptance of the 44 appointment by the successor trustee and will be subject to any conditions or approvals, if any, specified in the related Prospectus Supplement. The Trust Documents will provide that the Servicer will pay the Indenture Trustee's fees. The Trust Documents will further provide that the Indenture Trustee will be entitled to indemnification by the Servicer for, and will be held harmless against, any cost, loss, liability, claim, damage or expense incurred by the Indenture Trustee in connection with the acceptance or performance of the trusts and duties contained in the Indenture in accordance with the terms and conditions therein, not resulting from its own willful misfeasance, bad faith or gross negligence (other than by reason of a breach of any of its representations or warranties set forth in the Indenture). Trust Indenture Act. Each Indenture will comply with all applicable provisions of the Trust Indenture Act of 1939, as amended. ENHANCEMENT General. The Prospectus Supplement for a series of Securities will specify whether there is Enhancement for any class of the Securities of a series and, if so, the material terms of such Enhancement. Any Enhancement may be intended (i) to enhance the likelihood of receipt by the Certificateholders, if any, and/or the Noteholders, if any, of the full amount of principal and interest due thereon, and to decrease the likelihood that the Certificateholders, if any, and/or the Noteholders, if any, will experience losses, or (ii) to provide protection against changes in interest rates or against other risks, or (iii) to supplement the interest rate on the Contracts, in each case to the extent and under the conditions specified in the related Prospectus Supplement. Unless otherwise specified in the related Prospectus Supplement, any Enhancement for a class of Securities will not provide protection against all risks of loss and will not guarantee repayment of the entire principal and interest thereon. If losses occur which exceed the amount covered by any Enhancement or which are not covered by any Enhancement, Securityholders will bear their allocable share of such losses. In addition, if a form of Enhancement covers more than one class of Securities of a series, Securityholders of any such class will be subject to the risk that such Enhancement will be exhausted by the claims of Securityholders of other classes. Subordination. Unless otherwise specified in the related Prospectus Supplement, the rights of Certificateholders to receive distributions of interest and principal are subordinated to the rights of Noteholders to receive payment in full of all amounts of interest and principal which the Noteholders are entitled to receive on the related Distribution Date. Consequently, unless otherwise specified in the related Prospectus Supplement, no distribution will be made to the Certificateholders on any Distribution Date in respect of (i) interest until the full amount of interest and principal on the Notes payable on such Distribution Date has been distributed to the Noteholders, other than payments from the applicable Enhancement, if any, and (ii) principal until the Notes have been paid in full, other than distributions in respect of the Principal Liquidation Loss Amount to the extent, if any, set forth in the related Prospectus Supplement. If and to the extent specified in the related Prospectus Supplement, the rights of one or more classes of Notes of a series to receive distributions of interest and principal may be subordinated to the rights of one or more other classes of Notes of the same series to receive payment in full of all amounts of interest and principal which are payable thereon on each Distribution Date. Other Enhancement. The amounts and types of credit or cash flow enhancement arrangements (each, an "Enhancement"), if any, with respect to each class of Securities will be set forth in the related Prospectus Supplement. If and to the extent provided in the related Prospectus Supplement, Enhancement may be in the form of a financial guaranty insurance policy, letter of credit, CIT Limited Guarantee, reserve fund, third party guarantee, cash collateral account, derivative product, credit facility, yield supplement agreement, overcollateralization, guaranteed investment contract, guaranteed rate agreement, other agreements with respect to third party payments or other support, or other form of credit or cash flow enhancement, or any combination thereof, as may be described in the related Prospectus Supplement. If specified in the related Prospectus Supplement, Enhancement for a class of Securities of a series may cover one or more other classes of Securities in such series. Further information regarding 45 providers of Enhancement, including financial information when material, will be included in the related Prospectus Supplement. Financial Guaranty Insurance Policy. If so specified in the related Prospectus Supplement, a financial guaranty insurance policy (each, a "Financial Guaranty Insurance Policy") may be obtained and maintained for one or more classes of Certificates or Notes of a series. The issuer of any Financial Guaranty Insurance Policy (a "Financial Guaranty Insurer") will be described in the related Prospectus Supplement. A copy of any such Financial Guaranty Insurance Policy will be attached as an exhibit to the related Prospectus Supplement. Unless otherwise specified in the related Prospectus Supplement, Financial Guaranty Insurance Policies generally unconditionally and irrevocably guarantee to Securityholders that an amount equal to each full and complete Insured Payment will be received by an agent of the Trustee on behalf of Securityholders, for distribution by the Trustee to each Securityholder. The "Insured Payment" will equal the full amount of the distributions of principal and interest to which Securityholders are entitled plus any other amounts specified in the related Prospectus Supplement. The specific terms of any Financial Guaranty Insurance Policy will be as set forth in the related Prospectus Supplement. Financial Guaranty Insurance Policies may have limitations including (but not limited to) limitations on the Financial Guaranty Insurer's obligation to guarantee the Seller's or the Servicer's obligation to repurchase or substitute for any Contracts, to guarantee any specified rate of prepayments or to provide funds to redeem Securities on any specified date. The Financial Guaranty Insurer may be subrogated to the rights of each Securityholder to receive payments under the Securities to the extent of any payments by such Financial Guaranty Insurer under the related Financial Guaranty Insurance Policy. Reserve Fund or Reserve Account. If so specified in the related Prospectus Supplement, an account (a "Reserve Fund" or "Reserve Account") may be established and funded by any combination of cash, one or more irrevocable letters of credit, Eligible Investments, one or more derivative products, amounts otherwise distributable to one or more classes of Securityholders or to the owners of any Retained Yield, or any other instrument satisfactory to the Rating Agency or Agencies. A Reserve Fund may be funded from the Available Amount remaining on each Distribution Date after all amounts then due have been paid to the Securityholders, the Servicer, and any provider of Enhancement. In addition, with respect to any series of Securities as to which Enhancement includes a letter of credit or a derivative product, if so specified in the related Prospectus Supplement, under certain circumstances the remaining amount of the letter of credit may be drawn by the Owner Trustee or the termination payment under a derivative product may be demanded by the Owner Trustee, and in each case deposited in a Reserve Fund. Funds in a Reserve Fund will be applied, invested and maintained in the manner and under the conditions specified in such Prospectus Supplement. Amounts in a Reserve Fund may be distributed to Securityholders, applied to reimburse the Servicer for outstanding advances, or may be used for other purposes, in the manner and to the extent specified in the related Prospectus Supplement. In the event that a Reserve Fund is funded through the application of the Available Amount remaining on each Distribution Date after all amounts then due have been paid to the Securityholders, the Servicer and any provider of Enhancement, it may be referred to as a "Spread Account" or "Reserve Account." In the event that a Reserve Fund is applied to supplement the monthly interest payments on certain Contracts, it may be referred to as a "Yield Supplement Account." In the event that the Reserve Fund is funded through the proceeds of a loan to the Trust by a third party lender, it may be referred to as a "Cash Collateral Account." The related Prospectus Supplement will specify whether any Reserve Fund will be established as part of the Trust or held outside the Trust by a collateral agent or similar third party (who may be a Trustee acting in a different capacity). The related Prospectus Supplement will describe the required levels of funding of a Reserve Fund, the circumstances under which a Reserve Fund may be applied to make distributions on a class of Securities, and the circumstances in which funds in a Reserve Fund may be released to persons other than Securityholders. A Trust may contain more than one Reserve Fund, each of which may apply only to a specified class of Securities or to specified Contracts. 46 The Seller or the Affiliated Owner, if any, may at any time, without consent of the Securityholders, sell, transfer, convey or assign in any manner its rights to and interests in distributions from the Reserve Fund provided that (i) the Rating Agency Condition is satisfied, (ii) the Seller or the Affiliated Owner, as the case may be, provides to the Trustees an opinion from independent counsel that such action will not cause the related Trust to be classified as an association (or publicly traded partnership) taxable as a corporation for federal income tax purposes, and (iii) such transferee or assignee agrees in writing to take positions for federal income tax purposes consistent with the federal income tax positions agreed to be taken by the Seller or the Affiliated Owner, as the case may be. Limited Guarantee. If specified in the related Prospectus Supplement, certain payments on a class of the Securities of a series, certain deficiencies in principal or interest payments on the Contracts, or certain liquidation losses on the Contracts, may be covered by a limited guarantee or other similar instrument (the "Limited Guarantee"), limited in scope and amount, issued by CIT. If not so specified, the Securityholders will have no recourse to CIT for any amounts due on the Securities. If so specified, CIT may be obligated to take one or more of the following actions in the event the Company fails to do so: make deposits to an account, make advances, or purchase defaulted Contracts. Any such Limited Guarantee will be limited in amount and a portion of the coverage of any such Limited Guarantee may be separately allocated to certain events. The scope, amount and, if applicable, the allocation of any Limited Guarantee will be described in the related Prospectus Supplement. Credit Facility. With respect to a series of Securities, one or more classes may be entitled to the benefit of one or more letters of credit, guarantees, limited guarantees, surety bonds or similar credit facilities (each, a "Credit Facility"). Each such Credit Facility may be in an amount greater than, equal to or less than the Certificate Balance of the Certificates of each class (or the principal balance of the Notes of each class) entitled to the benefits thereof, and may be subject to reduction or be limited as to duration, all as described in the related Prospectus Supplement. To the extent specified in the related Prospectus Supplement, amounts realized under a Credit Facility supporting any class of Securities may be used for the same purposes as amounts on deposit in a Reserve Fund. A Credit Facility may be held by a Trustee as part of the related Trust or may be held by a collateral agent or other third party (who may be a Trustee acting in a different capacity). The related Prospectus Supplement will contain a description of the material terms of any Credit Facility and any arrangement pursuant to which the Credit Facility is held outside of the Trust and will state whether the Trust, the Seller, the Servicer or a third party will pay the fees of the provider of the Credit Facility (the "Credit Facility Provider"). Such Prospectus Supplement will also contain certain information concerning the Credit Facility Provider, which information will have been provided to the Seller by the Credit Facility Provider for use in such Prospectus Supplement. CIT, CITSF or an affiliate thereof may be a Credit Facility Provider. If specified in the related Prospectus Supplement, a Credit Facility, rather than guaranteeing distributions of particular amounts to the holders of Securities of particular classes, may instead guarantee certain collections on the related Contract Pool. These guaranteed collections may be attributable to all or a portion of the amounts due on Contracts in liquidation, all or a portion of the scheduled monthly payments due on the Contracts or other amounts. The extent to which any such collections are guaranteed under a Credit Facility which functions in this manner will be described in the related Prospectus Supplement. Liquidity Facility. With respect to a series of Securities, one or more classes may be entitled to the benefit of one or more purchase agreements or other liquidity facilities (each, a "Liquidity Facility"), pursuant to which the provider of such Liquidity Facility (the "Liquidity Facility Provider") will provide funds to be used to purchase some or all of such Securities. Unless otherwise specified in the related Prospectus Supplement, a Liquidity Facility will be held outside of the Trust by a third party (which may be a Trustee acting in another capacity). The related Prospectus Supplement will contain a description of the material terms of any such Liquidity Facility and any arrangement pursuant to which it is held outside of the Trust, and will contain certain information concerning the Liquidity Facility Provider, which information will have been provided to the Seller by the Liquidity Facility Provider for use in such Prospectus Supplement. CIT, CITSF or an affiliate thereof may be a Liquidity Facility Provider. If specified in the related Prospectus Supplement, a Reserve Fund or Credit Facility may also serve as a Liquidity Facility. 47 Replacement. If specified in the related Prospectus Supplement, the Seller may replace the Enhancement for any class of Securities with another form of Enhancement without the consent of Securityholders, provided the Rating Agency Condition is satisfied. CERTAIN INFORMATION REGARDING THE SECURITIES Book-Entry Registration Unless otherwise specified in the related Prospectus Supplement, persons acquiring beneficial ownership interests in the Notes may hold their interests through DTC in the United States or Cedel or Euroclear in Europe and persons acquiring beneficial ownership interests in the Certificates may hold their interests through DTC. Unless otherwise specified in the related Prospectus Supplement, Securities will be registered in the name of Cede as nominee for DTC. Cedel and Euroclear will hold omnibus positions with respect to the Notes on behalf of Cedel Participants and Euroclear Participants, respectively, through customers' securities accounts in Cedel's and Euroclear's name on the books of their respective depositories (collectively, the "Depositories") which in turn will hold such positions in customers' securities accounts in the Depositories' names on the books of DTC. DTC is a limited-purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended. DTC accepts securities for deposit from its participating organizations ("Participants") and facilitates the clearance and settlement of securities transactions between Participants in such securities through electronic book-entry changes in accounts of its Participants, thereby eliminating the need for physical movement of certificates. Participants include securities brokers and dealers, banks, trust companies and clearing corporations and may include certain other organizations. Indirect access to the DTC system is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly ("Indirect Participants"). Security Owners who are not Participants or Indirect Participants but desire to purchase, sell or otherwise transfer ownership of Securities may do so only through Participants or Indirect Participants (unless and until Definitive Securities are issued). In addition, Security Owners will receive all distributions of principal and interest on the Securities through DTC and its Participants. Under a book-entry format, Security Owners will receive payments after the related Distribution Date because such payments will be forwarded by the Trustees on the Distribution Date to Cede, as nominee for DTC. DTC will forward such payments to its Participants which thereafter will forward them to Indirect Participants or Security Owners. It is anticipated that the only "Holder" or "Securityholder," as such terms are used herein, will be Cede, as nominee of DTC. Security Owners will not be recognized by the Trustees as Securityholders, as such term will be used, in the Trust Documents. Security Owners will only be permitted to exercise the rights of Securityholders or to communicate with other Securityholders indirectly through DTC and its Participants which in turn will exercise their rights through DTC. Security Owners will not have access to the list of Security Owners of a series, which may impede the ability of Security Owners to communicate with each other. Security Owners will not receive or be entitled to receive Definitive Notes or Definitive Certificates representing their respective interests in the Securities, except under the limited circumstances described below and such other circumstances, if any, as may be specified in the related Prospectus Supplement. Transfers between Participants will occur in accordance with DTC Rules. Transfers between Cedel Participants and Euroclear Participants will occur in accordance with their respective rules and operating procedures. Due to time zone differences, credits of securities received in Cedel or Euroclear as a result of a transaction with a Participant will be made during subsequent securities settlement processing and dated the business day following the DTC settlement date. Such credits or any transactions in such securities settled during such processing will be reported to the relevant Euroclear or Cedel Participant on such business day. Cash received in Cedel or Euroclear as a result of sales of Securities by or through a Cedel Participant or Euroclear Participant to a DTC 48 Participant will be received with value on the DTC settlement date but will be available in the relevant Cedel or Euroclear cash account only as of the business day following settlement in DTC. Cross-market transfers between persons directly or indirectly holding Notes through DTC, on the one hand, and directly or indirectly through Cedel Participants or Euroclear Participants, on the other, will be effected in DTC in accordance with DTC Rules on behalf of the relevant European international clearing system by its Depository; however, such cross-market transactions will require delivery of instructions to the relevant European international clearing system by the counterparty in such system in accordance with its rules and procedures and within its established deadline (European time). The relevant European international clearing system will, if the transaction meets its settlement requirements, deliver instructions to its Depository to take action to effect final settlement on its behalf by delivering or receiving securities in DTC, and making or receiving payment in accordance with normal procedures for same day funds settlement applicable to DTC. Cedel Participants and Euroclear Participants may not deliver instructions directly to the Depositories. With respect to any series of Securities, while the Securities are outstanding (except under the circumstances described below), under the rules, regulations and procedures creating and affecting DTC and its operations (the "DTC Rules"), DTC will be required to make book-entry transfers among Participants on whose behalf it acts with respect to the Notes and Certificates and will be required to receive and transmit distributions of principal and interest on the Securities. Participants and Indirect Participants with which Security Owners have accounts with respect to the Securities will be similarly required to make book-entry transfers and receive and transmit such payments on behalf of their respective Security Owners. Since DTC can only act on behalf of Participants, who in turn act on behalf of Indirect Participants, the ability of a Security Owner to pledge Notes or Certificates to persons or entities that do not participate in the DTC system, or otherwise take actions in respect of such Securities, may be limited due to the lack of physical certificates for such Securities. Issuance of the Securities in book-entry form may reduce the liquidity of such Securities in the secondary market since certain potential investors may be unwilling to purchase Securities for which they cannot obtain physical certificates. Cedel is incorporated under the laws of Luxembourg as a professional depository. Cedel holds securities for its participating organizations ("Cedel Participants") and facilitates the clearance and settlement of securities transactions between Cedel Participants through electronic book-entry changes in accounts of Cedel Participants, thereby eliminating the need for physical movement of certificates. Transactions may be settled in Cedel in any of 28 currencies, including United States dollars. Cedel provides to its Cedel Participants, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Cedel interfaces with domestic markets in several countries. As a professional depository, Cedel is subject to regulation by the Luxembourg Monetary Institute. Cedel Participants are recognized financial institutions around the world, including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. Indirect access to Cedel is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Cedel Participant, either directly or indirectly. The Euroclear System was created in 1968 to hold securities for its participants ("Euroclear Participants") and to clear and settle transactions between Euroclear Participants through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of certificates and any risk from lack of simultaneous transfers of securities and cash. Transactions may be settled in any of 32 currencies, including United States dollars. The Euroclear System includes various other services, including securities lending and borrowing and interfaces with domestic markets in several countries generally similar to the arrangements for cross-market transfers with DTC described above. The Euroclear System is operated by the Brussels, Belgium Office of Morgan Guaranty Trust Company of New York (the "Euroclear Operator" or "Euroclear"), under contract with Euroclear Clearance Systems, S.C., a Belgian cooperative corporation (the "Cooperative"). All operations are conducted by the Euroclear Operator, and all Euroclear securities clearance accounts and Euroclear cash accounts are accounts with the Euroclear Operator, not the Cooperative. The Cooperative establishes policy for the Euroclear System on behalf of dealers and other professional financial intermediaries. Indirect access to Euroclear is also available to 49 other firms that clear through, or maintain a custodial relationship with, a Euroclear Participant, either directly or indirectly. The Euroclear Operator is the Belgian branch of a New York banking corporation which is a member bank of the Federal Reserve System. As such, it is regulated and examined by the Board of Governors of the Federal Reserve System and the New York State Banking Department, as well as the Belgian Banking Commission. Securities clearance accounts and cash accounts with the Euroclear Operator are governed by the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of the Euroclear System and applicable Belgian law (collectively, the "Terms and Conditions"). The Terms and Conditions govern transfers of securities and cash within the Euroclear System, withdrawals of securities and cash from the Euroclear System, and receipts of payments with respect to securities in Euroclear. All securities in Euroclear are held on a fungible basis without attribution of specific certificates to specific securities clearance accounts. The Euroclear Operator acts under the Terms and Conditions only on behalf of Euroclear Participants and has no record of or relationship with persons holding through Euroclear Participants. Distributions with respect to Notes held through Cedel or Euroclear will be credited to the cash accounts of Cedel Participants or Euroclear Participants in accordance with the relevant system's rules and procedures, to the extent received by its Depository. Such distributions will be subject to tax reporting in accordance with relevant United States tax laws and regulations. Cedel or the Euroclear Operator, as the case may be, will take any other action permitted to be taken by a beneficial holder of Notes under the Indenture on behalf of a Cedel Participant or Euroclear Participant only in accordance with its relevant rules and procedures and subject to its Depository's ability to effect such actions on its behalf through DTC. Unless and until Definitive Securities are issued, Security Owners who are not Participants may transfer ownership of Notes and Certificates only through Participants by instructing such Participants to transfer such Notes and Certificates, by book-entry transfer, through DTC for the account of the purchasers of such Securities, which account is maintained with their respective Participants. Under the DTC Rules and in accordance with DTC's normal procedures, transfers of ownership of Securities will be executed through DTC and the accounts of the respective Participants at DTC will be debited and credited. Similarly, the respective Participants will make debits or credits, as the case may be, on their records on behalf of the selling and purchasing Securities Owners. DTC has advised the Company that, unless and until Definitive Securities are issued, DTC will take any action permitted to be taken by a Securityholder under the Trust Documents only at the direction of one or more Participants to whose DTC accounts the Securities are credited. Additionally, DTC has advised the Company that it will take such actions with respect to specified percentages of a class of the Securities only at the direction of Participants whose holdings include principal amounts of the Securities that satisfy such percentages. DTC may take conflicting actions with respect to other principal amounts of the Securities to the extent that such actions are taken on behalf of Participants whose holdings include such principal amounts. NEITHER THE TRUST, THE SELLER, THE SERVICER, CIT, ANY AFFILIATED OWNER, THE OWNER TRUSTEE, THE INDENTURE TRUSTEE, NOR ANY OF THE UNDERWRITERS WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY PARTICIPANTS, CEDEL PARTICIPANTS OR EUROCLEAR PARTICIPANTS OR SECURITY OWNERS WITH RESPECT TO (1) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC, CEDEL, EUROCLEAR OR ANY PARTICIPANT, (2) THE PAYMENT BY DTC, CEDEL, EUROCLEAR OR ANY PARTICIPANT OF ANY AMOUNT DUE TO ANY SECURITY OWNER IN RESPECT OF THE PRINCIPAL AMOUNT OF, OR INTEREST ON, THE SECURITIES, (3) THE DELIVERY BY ANY PARTICIPANT, CEDEL PARTICIPANT OR EUROCLEAR PARTICIPANT OF ANY NOTICE TO ANY SECURITY OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE INDENTURE OR THE TRUST DOCUMENTS TO BE GIVEN TO SECURITYHOLDERS OR (4) ANY OTHER ACTION TAKEN BY DTC AS THE SECURITYHOLDER. 50 Definitive Securities With respect to any series of Securities, unless otherwise specified in the related Prospectus Supplement, the Notes and Certificates will be issued in fully registered, certificated form ("Definitive Notes" and "Definitive Certificates," respectively, and together, "Definitive Securities") to Security Owners or their nominees, rather than to DTC or its nominee, only if (i) the Servicer advises the Trustees in writing that DTC is no longer willing or able to discharge properly its responsibilities as Depository with respect to the Securities and the Servicer is unable to locate a qualified successor, (ii) the Servicer, at its option, elects to terminate the book-entry system through DTC or (iii) after the occurrence of an Event of Default or an Event of Termination, Note Owners or Certificate Owners representing in the aggregate not less than a majority of the outstanding principal balance of the Notes of a series or the Certificate Balance of the Certificates of a series advise DTC through Participants in writing that the continuation of a book-entry system through DTC (or a successor thereto) is no longer in the best interest of such Note Owners or Certificate Owners. Upon the occurrence of any of the events described in the immediately preceding paragraph, the related Trustees are required to notify DTC of the availability of Definitive Securities. Upon surrender by DTC of the global notes and global certificates representing the Notes and Certificates of a series and instructions for re-registration, the Trustees will issue the Notes of a series as Definitive Notes and the Certificates of a series as Definitive Certificates, and thereafter the Trustees will recognize the holders of such Definitive Notes and Definitive Certificates as Noteholders and Certificateholders, respectively, under the Trust Documents ("Noteholders" and "Certificateholders" respectively, and together, "Securityholders" or "Holders"). Unless otherwise specified in the related Prospectus Supplement, distributions of principal of the Securities and interest on the Securities thereafter will be made by the related Trustees directly to Holders in accordance with the procedures set forth herein and in the Trust Documents. Distributions of principal and interest on each Distribution Date will be made to Holders in whose names the Definitive Securities were registered on the Record Date. Such distributions will be made by check mailed to the address of such Holder as it appears on the register maintained by such Trustees or other person appointed pursuant to the Trust Documents. The final payment on any Securities, however, will be made only upon presentation and surrender of such Note or Certificate at the office or agency specified in the notice of final distribution to Holders. Unless otherwise specified in the related Prospectus Supplement, Definitive Securities will be transferable and exchangeable at the offices of the related Trustees. No service charge will be imposed for any registration of transfer or exchange, but such Trustees may require payment of a sum sufficient to cover any tax or other governmental charge imposed in connection therewith. List of Securityholders Unless otherwise specified in the related Prospectus Supplement, if Definitive Certificates have been issued, the related Owner Trustee will, upon written request by three or more Certificateholders or by holders of Certificates evidencing not less than 25% of the Certificate Balance, within five Business Days after receipt of such request, afford such Certificateholders access during normal business hours to the current list of Certificateholders for purposes of communicating with other Certificateholders with respect to their rights under the Purchase Agreements and the Trust Documents provided such Certificateholders (i) state that they wish to communicate with other Certificateholders with respect to their rights under the Purchase Agreements, the Trust Documents or the Certificates and (ii) provide the Owner Trustee and the Servicer with a copy of the proposed communication. The Purchase Agreements and Trust Documents will not provide for the holding of any annual or other meetings of Certificateholders. Unless otherwise specified in the related Prospectus Supplement, if Definitive Notes have been issued, the Indenture Trustee will, upon written request by three or more Noteholders within five Business Days after receipt of such request, afford such Noteholders access during business hours to the current list of Noteholders for purposes of communicating with other Noteholders with respect to their rights under the Indenture provided such Noteholders 51 (i) state that they wish to communicate with other Noteholders with respect to their rights under the Indenture and (ii) provide the Indenture Trustee and the Servicer with a copy of the proposed communication. The Indenture will not provide for the holding of any annual or other meetings of Noteholders. Statements to Securityholders On each Distribution Date, the Servicer will prepare and provide to the Trustees a statement, to be delivered on the Distribution Date to each Securityholder. Unless otherwise specified in the related Prospectus Supplement, the statement will set forth at least the following information for the related Due Period: (i) the amount of collections on the Contracts during the immediately preceding Due Period; (ii) the Available Amount for payment of all amounts distributable in respect of the Securities and the Servicer Payment; (iii) the amount of the distribution allocable to principal of the Notes (if applicable) and to the Certificate Balance of the Certificates (if applicable), including any overdue principal; (iv) the amount of the distribution allocable to interest on or with respect to each class of Securities, including any overdue interest; (v) the Pool Balance, the Note Pool Factor (if applicable) and the Certificate Pool Factor (if applicable) as of the end of the related Due Period; (vi) the Servicer Payment for such Distribution Date; (vii) the amount of Monthly Advances and Non-Reimbursable Payments, if any, on such date; (viii) the amount, if any, withdrawn from any Enhancement (if applicable) and distributed to the Securityholders with respect to such Distribution Date; (ix) the amount available under any Enhancement (if applicable), after giving effect to any deposit to or withdrawal from the Enhancement with respect to such Distribution Date, and such amount expressed as a percentage of the Pool Balance; (x) the aggregate principal balance of all Contracts which were delinquent 30, 60 and 90 days or more as of the last day of the related Due Period; (xi) the amount of investment earnings, net of losses and investment expenses, on amounts on deposit in the Collection Account; (xii) during the Funding Period, if any, the amount of funds on deposit in the Pre-Funding Account; (xiii) during the Funding Period, if any, the number and aggregate principal balance of Subsequent Contracts; (xiv) during the Funding Period, if any, the number and aggregate principal balance of Subsequent Contracts purchased by the Trust since the preceding Distribution Date; (xv) during the Funding Period, if any, the amount, if any, withdrawn from the Capitalized Interest Account, if any, to make payments of interest on the Securities; 52 (xvi) during the Funding Period, if any, the amount remaining on deposit in the Capitalized Interest Account, if any; (xvii) during the Funding Period, if any, the amount of investment earnings, net of losses and investment expenses, on amounts on deposit in the Pre-Funding Account; (xviii) during the Funding Period, if any, the amount of investment earnings, net of losses and investment expenses, on amounts on deposit in the Capitalized Interest Account, if any; (xix) on the Distribution Date immediately following the end of the Funding Period (or if the Funding Period ends on a Distribution Date on such Distribution Date), if any, the aggregate principal amount and percentage of each of the Notes, if any, and Certificates, if any, which are being redeemed; (xx) the aggregate principal balance of all Contracts which became either "Defaulted Contracts" or "Liquidated Contracts" (as defined in the related Prospectus Supplement) during the related Due Period (if the related Prospectus Supplement includes definitions of such term or terms); (xxi) the number and aggregate principal amount of Contracts which were prepaid, in part or in whole, during the related Due Period; (xxii) the aggregate outstanding principal balance of the Notes (if applicable) as of such Distribution Date (after giving effect to any distributions thereon and reductions thereto on such Distribution Date); (xxiii) the Certificate Balance (if applicable) as of such Distribution Date (after giving effect to any distributions thereon and reductions thereto on such Distribution Date); (xxiv) the amount, if any, by which the amount due to be distributed to Noteholders (if applicable) and Certificateholders (if applicable) exceeds the actual amount distributed on the related Distribution Date to Noteholders (if applicable) and Certificateholders (if applicable), respectively; (xxv) if applicable, the amount of surplus to be distributed to the Affiliated Owner, if any, after all payments have been made in respect of the Securities, the Servicer Payment has been paid and all deposits to any Reserve Fund and payments to a Credit Facility Provider have been made; (xxvi) if applicable, the balance of the Paid-Ahead Account; and (xxvii) such other information as may be specified in the related Prospectus Supplement. If a Limited Guarantee is issued by CIT with respect to a series of Securities, the monthly and annual reports will include a statement to the following effect: CIT is subject to the requirements of the Securities Exchange Act of 1934, as amended, and, in accordance therewith, files reports and other information with the Securities and Exchange Commission. As a result of the limited guarantee by CIT, information relating to CIT which is material will be available through such reports and other information. Within a reasonable period of time after the end of each calendar year, but not later than the latest date permitted by law (where applicable law specifies such date), the Trustee will mail to each person who at any time during such calendar year shall have been a Securityholder, and received any payment on its Security, a statement containing the relevant amounts described above for such calendar year for the purposes of such Securityholder's preparation of federal income tax returns. See "Certain Federal Income Tax Consequences." Unless and until Definitive Certificates or Definitive Notes are issued, such reports with respect to a series of Securities will be sent on behalf of the related Trust to the Trustees and Cede, as registered holder of the Certificates and the Notes and the nominee of DTC. Certificate Owners and Note Owners may receive copies of such reports upon written request, together with a certification that they are Certificate Owners or Note Owners, as the case may 53 be, and payment of reproduction and postage expenses associated with the distribution of such reports, from the Owner Trustee or the Indenture Trustee, as applicable. See "--Statements to Securityholders" and "--Book-Entry Registration" above. THE PURCHASE AGREEMENTS AND THE TRUST DOCUMENTS Unless otherwise specified in the related Prospectus Supplement, the following summary describes certain terms of the Purchase Agreement and any Subsequent Purchase Agreement (together, the "Purchase Agreements") and the Sale and Servicing Agreement, any Subsequent Transfer Agreements and the Trust Agreement or the Pooling and Servicing Agreement (collectively, the "Trust Documents"). Forms of the Purchase Agreements and the Trust Documents have been filed as exhibits to the Registration Statement of which this Prospectus forms a part. CITSF will provide a copy of such agreements (without exhibits) upon request to a holder of Securities described therein. This summary does not purport to be complete and is subject to, and qualified in its entirety by reference to, all of the provisions of the Purchase Agreements and the Trust Documents, and the following summary will be supplemented in whole or in part by the related Prospectus Supplement. Where this summary refers to particular provisions or terms used in the Purchase Agreements or Trust Documents, the actual provisions (including definitions of terms) are incorporated by reference as part of such summary. Sale and Assignment of the Contracts On or prior to the Closing Date for a series of Securities and on each Subsequent Transfer Date, if any, pursuant to the Purchase Agreement or a Subsequent Purchase Agreement, as the case may be, between CITSF and the Company, CITSF will sell and assign to the Company, without recourse, its entire interest in and to the Initial Contracts and Subsequent Contracts, respectively, including its security interests in the related Financed Boats. On the Closing Date and each Subsequent Transfer Date, the Seller will sell and assign to the Trust, without recourse, all of its right, title and interest in and to the Contracts, including its security interests in the Financed Boats. Unless otherwise specified in the related Prospectus Supplement, certain of the Contracts will be purchased by CITSF from CITCF-NY before they are sold to the Company. The Company established a Selling Trust in 1996, and the Company and its affiliates may in the future establish one or more additional Selling Trusts. The Company has sold and assigned Contracts to the existing Selling Trust, without recourse, which the Company purchased from CITSF, without recourse (and which, in some cases, CITSF purchased from CITCF-NY, without recourse). In the future, the Company may sell and assign Contracts, without recourse, to the existing Selling Trust and one or more additional Selling Trusts. The existing Selling Trust has funded its purchases of Contracts through its issuance of securities secured by a security interest in the Contracts. A Selling Trust will make no representations with respect to its Contracts, and will have no obligations with respect to the Securities. Each Contract will be identified in a schedule appearing as an exhibit to the relevant Purchase Agreement and the Trust Documents (the "List of Contracts") which includes, among other things, the Contract Rate, Initial Cut-off Date Principal Balance and date of the last scheduled payment for each Contract. The Owner Trustee or its designated agent will, concurrently with the sale and assignment of the Initial Contracts to the Trust, either (i) execute, authenticate and deliver the Securities to the Company in exchange for the Initial Contracts transferred by the Company and/or the Selling Trsut (or the Company on behalf of the Company and/or the Selling Trust) to the Trust, in which event the Company and/or the Selling Trust will sell all or a portion of the Securities to the Underwriters or (ii) execute, authenticate and deliver the Securities to the Underwriters in exchange for the price specified in the related Prospectus Supplement, and transfer to the Company and the Selling Trust the respective prices for the Initial Contracts transferred by the Company and the Selling Trust, respectively, to the Trust. CITSF will make certain representations and warranties in the Trust Documents with respect to each Initial Contract as of the Closing Date, including, unless otherwise specified in the related Prospectus Supplement, that (i) as of the Initial Cut-off Date, the most recent scheduled payment of principal and interest was made by or on behalf of the related Obligor or was not delinquent more than sixty days, unless otherwise specified in the related Prospectus Supplement; (ii) no provision of a Contract has been waived, altered or modified in any respect, except 54 by instruments or documents contained in the Contract File; (iii) each Contract is a legal, valid and binding obligation of the related Obligor and is enforceable in accordance with its terms (except as may be limited by laws affecting creditors' rights generally); (iv) no Contract is or will be subject to any right of rescission, set-off, counterclaim or defense, including the defense of usury, and, to the knowledge of CITSF, no such right has been asserted with respect to any Contract; (v) the Obligor on each Contract is required to maintain physical damage insurance covering the related Financed Boat in accordance with CITSF's normal requirements or, if the related Financed Boat is not so covered by an Obligor's insurance, it is covered by a blanket insurance policy maintained by CITSF or the Servicer; (vi) no Contract was originated in or is subject to the laws of any jurisdiction whose laws would prohibit (A) the transfer of the Contract to the Company under the Purchase Agreements, (B) the transfer of the Contract to the Trust pursuant to the Trust Documents, or (C) the ownership of the Contracts by the Trust; (vii) each Contract complies with all requirements of law in all material respects; (viii) no Contract has been satisfied, subordinated in whole or in part or rescinded, and no Financed Boat has been released from the security interest of the related Contract in whole or in part; (ix) each Contract creates a valid and enforceable first priority security interest in favor of CITSF, CITCF-NY, or the related Dealer or financial intermediary in the Financed Boat covered thereby (which security interest, if in favor of the related Dealer or CITCF-NY, has been assigned to CITSF), such security interest has been assigned by CITSF to the Company and by the Company to the Trust (and, if and to the extent specified in the related Prospectus Supplement, from CITSF to SPV, from SPV to a Selling Trust and from the Selling Trust to the Trust), and all necessary action with respect to such Contract has been taken to perfect the security interest in the related Financed Boat in favor of CITSF or CITCF-NY; (x) all parties to each Contract had capacity to execute such Contract; (xi) no Contract has been sold, assigned or pledged by CITSF to any person other than the Company (or by the Company (or, if and to the extent specified in the related Prospectus Supplement, a Selling Trust) to any person other than the Trust) and, prior to the transfer of the Contracts by CITSF to the Company and the transfer of the Contracts by the Company to the Trust (and, if and to the extent specified in the related Prospectus Supplement, by CITSF to SPV, by SPV to a Selling Trust and by the Selling Trust to the Trust), CITSF or the Company, respectively, had good and marketable title to each Contract, free and clear of any lien, encumbrance, equity, loan, pledge, charge, claim or security interest, and was the sole owner and had full right to transfer such Contract to the Company and the Trust, respectively; (xii) as of the Initial Cut-off Date, there was no default, breach, violation or event permitting acceleration under any Contract, and no event which with notice and/or the expiration of any grace or cure period would constitute a default, breach, violation or event permitting acceleration under such Contract (except for payment delinquencies permitted by clause (i) above), and CITSF has not waived any of the foregoing (except for payment delinquencies permitted by clause (i) above); (xiii) there are no liens or claims which have been filed for work, labor or materials affecting a Financed Boat securing a Contract, which are or may be liens prior to or equal or coordinate with the security interest of the Contract; (xiv) each Contract is a fully-amortizing loan with interest at the stated Contract Rate and provides for level payments over the term of such Contract; (xv) each Contract contains customary and enforceable provisions such as to render the rights and remedies of the holder thereof adequate for realization against the collateral of the benefits of the security (except as may be limited by creditors' rights generally); (xvi) the description of each Contract set forth in the List of Contracts is true and correct as of its date; (xvii) no Obligor is the United States of America or any state or any agency, department, instrumentality or political subdivision thereof; (xviii) if the Obligor is in the military (including an Obligor who is a member of the National Guard or is in the reserves) and the Contract is subject to the Soldiers' and Sailors' Civil Relief Act of 1940, as amended (the "Soldiers' and Sailors' Civil Relief Act"), or the California Military Reservist Relief Act of 1991 (the "Military Reservist Relief Act"), such Obligor has not made a claim to CITSF that (A) the amount of interest on the Contract should be limited to 6% pursuant to the Soldiers' and Sailors' Civil Relief Act during the period of such Obligor's active duty status, or (B) payments on the Contract should be delayed pursuant to the Military Reservist Relief Act, in either case unless a court has ordered otherwise upon application of CITSF; (xix) there is only one original executed copy of each Contract, which, immediately prior to the execution of the Trust Documents, was in the possession of CITSF; (xx) the Contract is "chattel paper" as defined in the New Jersey UCC; (xxi) the Contract satisfies the selection criteria set forth in the related Prospectus Supplement; (xxii) all of the right, title and interest of CITSF, the Company and, if applicable, CITCF-NY (and, if and to the extent specified in the related Prospectus Supplement, the Selling Trust), in the Contract has been validly sold, transferred and assigned to the Trust and all filings necessary to evidence such sale, transfer and conveyance have been made in all appropriate jurisdictions; and (xxiii) no adverse selection procedure was utilized in selecting the Contracts for sale by CITSF to the Company (and, if to the extent specified in the related Prospectus Supplement, by CITSF to SPV or by SPV to a Selling Trust). 55 Unless otherwise specified in the related Prospectus Supplement, the Trust Documents will require CITSF to make on each Subsequent Transfer Date the same representations and warranties with respect to each individual Subsequent Contract as it is required to make with respect to each Initial Contract sold to the Trust except that each such representation and warranty shall be made as of the Subsequent Cut-off Date relating to such Subsequent Contract. In addition, no Subsequent Contract will be sold to the Trust on a Subsequent Transfer Date unless such Subsequent Contract satisfies the criteria described in the related Prospectus Supplement. Unless otherwise specified in the related Prospectus Supplement, the Subsequent Financed Boats will consist of new and used boats, boat motors and boat trailers. Unless otherwise specified in the related Prospectus Supplement, under the terms of the Trust Documents and subject to certain conditions specified in the Trust Documents, CITSF will be obligated to repurchase from the Trust for the Purchase Price (as defined below) any Contract (a "Repurchased Contract") not later than ninety days after CITSF becomes aware, or eighty-five days after CITSF's receipt of written notice from a Trustee or the Servicer, of a breach of any representation or warranty by CITSF in the Trust Documents that materially and adversely affects the Trust's interest in such Contract if such breach has not been cured. CITSF shall effect such repurchase from the Trust by depositing the Purchase Price for such Contract in the Collection Account on the Deposit Date immediately following the determination that such Purchase Price is owed. Unless otherwise specified in the related Prospectus Supplement, the "Purchase Price" for any Contract will be the remaining principal amount outstanding on such Contract on the date of repurchase, plus thirty days' interest thereon at the Contract Rate on the Contract, and (ii) accrued and unpaid Servicing Fees thereon at the Servicing Fee Rate to the date of such repurchase. Upon such repurchase, the Trust shall transfer all right, title and interest in the Contract to CITSF, free and clear of the lien of the applicable Trust Documents. Unless otherwise specified in the related Prospectus Supplement, this repurchase obligation constitutes the sole remedy available to the Trust and the Securityholders for a breach of a representation and warranty under the Trust Documents with respect to the Contracts (but not with respect to any other breach by CITSF of its obligations under the Trust Documents). Unless otherwise specified in the related Prospectus Supplement, CITSF, the Company and the Trust will treat each of the transfers of the Contracts from CITSF to the Company and from the Company (and, if and to the extent specified in the related Prospectus Supplement, a Selling Trust) to the Trust as a sale. As a result of the sale of the Contracts by CITSF to the Company and by the Company (and, if and to the extent specified in the related Prospectus Supplement, a Selling Trust) to the Trust, the Contracts should not be part of the assets of either CITSF or the Company and should not be available to their respective creditors. However, in the event of the insolvency of CITSF or the Company, it is possible that a trustee in bankruptcy, conservator or receiver for, or a creditor of, CITSF or the Company, as the case may be, may assert that the transaction between CITSF and the Company or between the Company (and, if and to the extent specified in the related Prospectus Supplement, a Selling Trust) and the Trust, as the case may be, was a pledge of the Contracts to secure a loan, rather than a true sale. This position, if asserted, could prevent timely receipt by the Trust of payments of amounts due on the Contracts and, if accepted by a court, may result in delays or reductions in distributions of principal and interest on the Securities. Since the Contracts will remain in CITSF's possession and will not be stamped or otherwise marked to reflect the sale and assignment to the Trust, the Trust's interest in the Contracts could be defeated if a subsequent purchaser were to take physical possession of the Contracts without knowledge of the sale and assignment. See "Certain Legal Aspects of the Contracts." If specified in the related Prospectus Supplement, the terms of the sale of some or all of the Contracts from CITSF or the Seller or a Selling Trust or any of them to the related Trust may provide for the retention by CITSF or the Seller or such Selling Trust, as the case may be, of the right to receive a portion of the interest accruing thereon (the "Retained Yield"). Custody of Contract Files Unless otherwise specified in the related Prospectus Supplement, to reduce administrative costs, each Trust will appoint CITSF as initial custodian of the Contracts. Prior to the appointment of any custodian other than CITSF, the Trust and such proposed successor custodian specified in the related Prospectus Supplement shall enter into a 56 custodian agreement pursuant to which such successor custodian will agree to hold the Contract Files on behalf of the related Trust. Any such custodian agreement may be terminated by the Trust on thirty days' notice to such successor custodian. Unless otherwise specified in the related Prospectus Supplement, to facilitate servicing and reduce administrative costs, the documents will not be physically segregated from other similar documents which are in CITSF's possession. UCC financing statements will be filed in New Jersey and Oklahoma reflecting the sale and assignment of the Contracts to the Owner Trustee, and CITSF's accounting records and computer systems will also reflect such sale and assignment. The Contracts will not be stamped or otherwise marked to reflect the transfer of the Contracts by CITSF to the Company and by the Company to the Trust (and, if and to the extent specified in the related Prospectus Supplement, by CITSF to SPV, by SPV to a Selling Trust and by the Selling Trust to the Trust), and will not be segregated from the other installment sale contracts of CITSF. The Obligors under the Contracts will not be notified of the transfer of the Contracts to the Company or to the Trust. If, through inadvertence or otherwise, any of the Contracts were sold to another party (or a security interest therein were granted to another party) that purchased (or took such security interest in) any of such Contracts in the ordinary course of its business and took possession of such Contracts, the purchaser (or secured party) would acquire an interest in the Contracts superior to the interest of the related Trust if the purchaser (or secured party) acquired (or took a security interest in) the Contracts for new value and without actual knowledge of such Trust's interest. See "Certain Legal Aspects of the Contracts." Accounts For each Trust, the Servicer will establish and maintain with a Trustee one or more accounts, in the name of such Trustee on behalf of the Securityholders (the "Collection Account"), into which all payments made (after the Initial Cut-off Date or the Subsequent Cut-off Date, as applicable) on or with respect to the Contracts in the related Contract Pool will be deposited by the Servicer. See "--Collections." The Servicer will establish and maintain with a Trustee (or its designated agent) an account in the name of such Trustee on behalf of the Certificateholders, if any, into which amounts released from the Collection Account and any Enhancement for payment to the Certificateholders will be deposited and from which distributions to the Certificateholders will be made (the "Certificate Distribution Account"). The Servicer will establish and maintain with the Indenture Trustee (or its designated agent) an account in the name of the Indenture Trustee on behalf of the Noteholders, if any, into which amounts released from the Collection Account and from any Enhancement for payment to the Noteholders will be deposited and from which distributions to the Noteholders will be made (the "Note Distribution Account"). If the related Prospectus Supplement provides that the Contract Pool contains Precomputed Contracts, the Servicer will establish and maintain with a Trustee (or its designated agent) an account in the name of such Trustee on behalf of the Securityholders, into which early payments by or on behalf of Obligors on Precomputed Contracts which do not constitute scheduled payments, full prepayments or certain partial prepayments that result in a reduction of an Obligor's periodic payment below the scheduled payment as of the Initial Cut-off Date or Subsequent Cut-off Date, as the case may be, will be deposited (the "Paid-Ahead Account"). Amounts held in the Certificate Distribution Account and in such other accounts as may be specified in the related Prospectus Supplement will not be available to make payments of amounts due on the Notes, if any, and will not be pledged to the Indenture Trustee as collateral security for the Notes. Each Account will be an Eligible Account maintained with the Owner Trustee, the Indenture Trustee and/or other depository institutions. "Eligible Account" means any account which is (i) an account maintained with an Eligible Institution; (ii) an account or accounts the deposits in which are fully insured by either the Bank Insurance Fund or the Savings Association Insurance Fund of the FDIC; (iii) a "segregated trust account" maintained with the corporate trust department of a federal or state chartered depository institution or trust company with trust powers and acting in its fiduciary capacity for the benefit of a Trustee, which depository institution or trust company has capital and surplus (or, if such depository institution or trust company is a subsidiary of a bank holding company system, the capital and surplus of the bank holding company) of not less than $50,000,000 and the securities of such depository institution (or, if such depository institution is a subsidiary of a bank holding company system and such 57 depository institution's securities are not rated, the securities of the bank holding company) have a credit rating from each Rating Agency in one of its generic credit rating categories which signifies investment grade; or (iv) an account that will not cause any Rating Agency to downgrade or withdraw its then-current rating assigned to the Securities of such series, as confirmed in writing by each Rating Agency. "Eligible Institution" means any depository institution organized under the laws of the United States or any state, the deposits of which are insured to the full extent permitted by law by the Bank Insurance Fund (currently administered by the Federal Deposit Insurance Corporation), whose short-term deposits have been rated in one of the two highest rating categories or such other rating category as will not adversely affect the ratings assigned to the Securities of such series. Unless otherwise specified in the related Prospectus Supplement, all amounts held in each of the accounts established by the Servicer on behalf of a Trust shall be invested in Eligible Investments that mature not later than the Business Day preceding the Distribution Date next succeeding the date of investment. "Eligible Investments" are limited to investments, specified in the applicable Trust Documents, which meet the criteria of each Rating Agency from time to time as being consistent with their then-current ratings of the Securities. Investment earnings on amounts on deposit in the Collection Account, Paid-Ahead Account, if any, Certificate Distribution Account, if any, Note Distribution Account, if any, and any cash collateral account will not be available to make payments on the Securities, unless otherwise specified in the related Prospectus Supplement. Servicing Procedures The Servicer will make reasonable efforts, consistent with the customary servicing practices and procedures employed by the Servicer with respect to Contracts owned or serviced by it, to collect all payments due with respect to the Contracts and, in a manner consistent with the Trust Documents, will continue such normal collection practices and procedures as it follows with respect to comparable marine installment sale contracts that it services for itself and others. See "Certain Legal Aspects of the Contracts." The Servicer may sell the related Financed Boat securing a defaulted Contract at a public or private sale, or take any other action permitted by applicable law. See "Certain Legal Aspects of the Contracts." The proceeds of such realization (net of expenses) will be deposited in the Collection Account. Unless otherwise specified in the related Prospectus Supplement, the Servicer shall keep in force throughout the term of the Trust Documents a fidelity bond. Such fidelity bond shall have such deductibles, and be in such form and amount as is generally customary among persons which service a portfolio of marine contracts having an aggregate principal amount of $100,000,000 or more and which are generally regarded as servicers acceptable to institutional investors. Purchase by the Servicer A breach of certain covenants made by the Servicer in the Trust Documents that materially and adversely affects the Trust's interest in any Contract will require the Servicer to purchase such Contract for the Purchase Price, unless such breach is cured within the period specified in the Trust Documents. Unless otherwise specified in the related Prospectus Supplement, such covenants will obligate the Servicer not to, except as permitted by the Trust Documents and in accordance with the terms of such Contract and applicable law (i) release the Financed Boat securing such Contract from the security interest granted by such Contract, (ii) impair the rights of the Trust in such Contract or take any action inconsistent with the Trust's ownership of such Contract, (iii) increase the number of payments under such Contract, nor increase the principal amount of such Contract which is used to finance the purchase price of the related Financed Boat, nor extend or forgive payments on such Contract, and (iv) fail to comply with the provisions of any insurance policy covering such Contract, if the failure to comply would impair the protection or benefit to be afforded by such insurance policy. 58 Modification of Contracts Consistent with its customary servicing practices and procedures, the Servicer may, in its discretion, arrange with an Obligor to defer, reschedule, extend or modify the payment schedule of a Contract or otherwise to modify the terms of a Contract provided that (i) the maturity of such Contract would not extend beyond the 180th day prior to the Certificate Final Scheduled Distribution Date and (ii) the deferral, rescheduling, extension or other modification of the terms of the Contract would not constitute a cancellation of such Contract and the creation of a new installment sale contract or direct loan. The Servicer may, in accordance with its customary servicing procedures, in its good faith judgment, waive any Late Fees that may be due and payable under any Contract. Notwithstanding the foregoing, in connection with the settlement by the Servicer of a defaulted Contract, the Servicer may forgive a portion of such Contract if in its discretion it believes that the acceptance of the settlement proceeds from the related Obligor would result in the Trust's receiving a greater amount of collections than the Net Liquidation Proceed that would result from repossessing and liquidating the related Financed Boat. Removal of Contracts Except as otherwise specified herein or in the related Prospectus Supplement, neither the Seller nor the Servicer will have the right to remove any Contracts from the Contract Pool after the Closing Date. In certain circumstances, CITSF or the Servicer may have the obligation to repurchase, or CITSF may have the option to purchase, a Contract from the Trust, but all such repurchases or purchases will be made at the Purchase Price. Paid-Ahead Precomputed Contracts Early payments by or on behalf of Obligors on Paid-Ahead Precomputed Contracts which do not constitute scheduled payments, full prepayments, or certain partial prepayments that result in a reduction of the Obligor's periodic payment below the scheduled payment as of the Initial Cut-off Date or Subsequent Cut-off Date, as the case may be, will be deposited into the Paid-Ahead Account until such time as the paid-ahead payment becomes due. Until such time as payments are transferred from the Paid-Ahead Account to the Collection Account, they will not constitute collected interest or collected principal and will not be available for distribution to the Securityholders. Unless otherwise specified in the related Prospectus Supplement, paid-ahead amounts with respect to Paid-Ahead Precomputed Contracts may be retained by the Servicer until the applicable Deposit Date so long as the requirements for monthly deposits as described under "ACollections" are met. Servicing Compensation With respect to each series of the Securities, the Servicer will be entitled to receive, out of collections on the Contracts, a monthly fee (the "Servicing Fee") for each Due Period, payable on the following Distribution Date, equal, unless otherwise specified in the related Prospectus Supplement, to the sum of (i) one-twelfth of the product of the percentage specified in the related Prospectus Supplement (the "Servicing Fee Rate") and the Pool Balance as of the last day of the second preceding Due Period (or, in the case of the first Distribution Date, as of the Initial Cut-off Date) and (ii) any investment earnings (net of investment expenses and losses) on amounts on deposit in the Collection Account, the Paid-Ahead Account, if any, the Note Distribution Account, if any, and the Certificate Distribution Account, if any; provided, however, that the Servicing Fee Rate applicable to a Trust may be increased to a rate (or maximum rate) specified in the related Prospectus Supplement if CITSF or an affiliate thereof is not the Servicer. Payments to the Servicer of such amounts will compensate the Servicer for performing the functions of a third party servicer of marine contracts as an agent for the Trust, including collecting and posting all payments, responding to inquiries of Obligors, investigating delinquencies, reporting federal income tax information to Obligors, monitoring the collateral in cases of Obligor default and handling the foreclosure or other liquidation of the Financed Boat in appropriate instances (subject to reimbursement of its expenses incurred in connection with such foreclosure, liquidation or other realization on the Contracts). 59 The Servicing Fee also will compensate the Servicer for administering the Contracts, including reimbursing the Servicer for accounting for collections, furnishing monthly and annual statements to the Owner Trustee with respect to distributions and generating federal income tax information. The Servicing Fee also will compensate the Servicer for accounting fees, outside auditor fees and data processing costs incurred in connection with administering and servicing the Contracts. Collections With respect to each series of the Securities, the Servicer will deposit all payments on or with respect to the Contracts and all proceeds of Contracts collected during each Due Period into the Collection Account or the Paid- Ahead Account, as applicable, not later than two Business Days after receipt. Notwithstanding the foregoing, unless otherwise specified in the related Prospectus Supplement, the Servicer may make such deposits into the Collection Account or the Paid-Ahead Account, as applicable, monthly on the Deposit Date following the last day of each Due Period, provided that (i) the Servicer or the direct or indirect parent of the Servicer has and maintains a short-term debt rating of at least "A-1" by Standard & Poor's Ratings Group (if it is a Rating Agency for the series of Securities), and a short-term debt rating of at least "P-1" by Moody's Investors Service, Inc. (if it is a Rating Agency for the series of Securities) (the "Required Servicer Ratings"), or (ii) the Servicer obtains a letter of credit, surety bond or insurance policy (the "Servicer Letter of Credit") as will be provided for in the related Trust Documents, under which demands for payment may be made to secure timely remittance of monthly collections to the Collection Account or the Paid-Ahead Account, as applicable, and, in the case of clause (ii) above, the Trustees are provided with a letter from each Rating Agency to the effect that the utilization of such alternative remittance schedule will not result in a qualification, reduction or withdrawal of its then-current rating of the Securities. As of the date of this Prospectus, CITSF, as Servicer, will be permitted to remit collections to the Collection Account and the Paid-Ahead Account, as applicable, on a monthly basis by virtue of clause (i) above. In the event that the Servicer is permitted to make remittances of collections to the Collection Account and the Paid-Ahead Account, if any, on a monthly basis pursuant to satisfaction of clause (ii) above, the Trust Documents will be modified, to the extent necessary, without the consent of any Securityholder. Pending such a monthly deposit into the Collection Account and the Paid-Ahead Account, if any, collections on the Contracts may be invested by the Servicer at its own risk and for its own benefit and will not be segregated from its own funds. See "Risk Factors--Risk of Commingling." CITSF or the Servicer, as the case may be, will remit the aggregate Purchase Price of any Contracts to be purchased from the Trust into the Collection Account on or before the next succeeding Deposit Date. Unless otherwise specified in the related Prospectus Supplement, the Servicer will not be required to deposit in the Collection Account or the Paid-Ahead Account, as applicable, amounts relating to the Contracts attributable to the following: (a) amounts received with respect to each Contract (or property acquired in respect thereof) which has been purchased by CITSF or the Servicer pursuant to the Trust Documents, (b) net investment earnings on funds deposited in the Collection Account, the Paid-Ahead Account, if any, the Note Distribution Account, if any, and the Certificate Distribution Account, if any, (c) amounts to be reimbursed to the Servicer in respect of nonrecoverable Monthly Advances, (d) amounts received in respect of the amounts, if any, of insurance premiums added to the principal balance of a Contract after the Initial Cut-off Date for each such Initial Contract, or after the related Subsequent Cut-off Date for each such Subsequent Contract, (e) amounts received as liquidation proceeds, to the extent the Servicer is entitled to reimbursement of liquidation expenses related thereto, and (f) repossession profits on liquidated Contracts. Monthly Advances Unless otherwise specified in the related Prospectus Supplement, with respect to each Contract as to which there has been a Payment Shortfall during the related Due Period, the Servicer shall advance funds in the amount of such Payment Shortfall (each, a "Monthly Advance"), but only to the extent that the Servicer, in its good faith judgment, expects to recover such Monthly Advance from subsequent collections on such Contract made by or on behalf of the obligor thereunder (the "Obligor") (but only to the extent of expected interest collections in the case of 60 a Simple Interest Contract), or from net liquidation proceeds or insurance proceeds with respect to such Contract. The Servicer shall be reimbursed for any Monthly Advance from subsequent collections with respect to such Contract. If the Servicer determines in its good faith judgment that an unreimbursed Monthly Advance shall not ultimately be recoverable from such collections, the Servicer shall be reimbursed for such Monthly Advance from collections on all Contracts. In determining whether an advance is or will be nonrecoverable, the Servicer need not take into account that it might receive any amounts in a deficiency judgment. Unless otherwise specified in the related Prospectus Supplement, the Servicer will not make a Monthly Advance in respect of (i) the principal component of any scheduled payment on a Simple Interest Contract or (ii) a Payment Shortfall arising from a Contract which has been prepaid in full or which has been subject to a Relief Act Reduction during the related Due Period. Unless otherwise specified in the related Prospectus Supplement, "Payment Shortfall" means (i) with respect to any Simple Interest Contract and any Distribution Date, the excess of (A) the product of (1) one-twelfth of the Contract Rate of such Contract and (2) the outstanding principal amount of such Contract as of the last day of the second preceding Due Period (or, in the case of the first Due Period ending after the Contract was acquired by the related Trust, as of the Initial Cut-off Date or the Subsequent Cut-off Date, as the case may be) over (B) the amount of interest, if any, collected on such Contract during the related Due Period and (ii) with respect to any Precomputed Contract and any Distribution Date, the excess of (A) the scheduled payment due on such Contract during the related Due Period, over (B) the amount collected on such Contract (including any amounts allocated from the Paid-Ahead Account with respect to such Due Period) during the related Due Period. Unless otherwise specified in the related Prospectus Supplement, the Servicer will remit any Monthly Advance with respect to each Due Period into the Collection Account not later than the Deposit Date following the Due Period. Non-Reimbursable Payment When a payment of principal is made on or in respect of a Simple Interest Contract, interest is paid on the unpaid principal balance of such Contract only to the date of such payment. If and to the extent specified in the related Prospectus Supplement, with respect to each Contract as to which there has been a Payment Shortfall with respect to interest in the related Due Period arising from either a prepayment in full of such Contract or a Relief Act Reduction in respect of such Contract during such Due Period, the Trust Documents will require the Servicer to deposit into the Collection Account on the Business Day immediately preceding the following Distribution Date, without the right of subsequent reimbursement, an amount equal to such Payment Shortfall (a "Non-Reimbursable Payment"). If the related Prospectus Supplement does not specify that the Servicer will make Non-Reimbursable Payments, the Servicer will not be obligated to make such payments with respect to the Trust. Distributions With respect to each Trust, on or before each Determination Date, the Servicer will make a determination and inform the Trustees of the following amounts with respect to the preceding Due Period: (i) the aggregate amount of collections on the Contracts; (ii) the aggregate amount of Monthly Advances to be remitted by the Servicer (if any); (iii) the aggregate Purchase Price of Contracts to be purchased by CITSF or the Servicer (if any); (iv) if applicable, the aggregate amount to be distributed as principal and interest on the Notes on the related Distribution Date; (v) if applicable, the aggregate amount to be distributed as principal and interest on the Certificates on the related Distribution Date; (vi) the Servicing Fee; (vii) the aggregate amount of Non-Reimbursable Payments (if any); (viii) the amounts required to be withdrawn from the Enhancement (if any) for such Distribution Date; (ix) the amount which is payable to the provider of the Enhancement (if any) or the Affiliated Owner (if any); (x) the amounts to be deposited into the accounts established pursuant to the Trust Documents; and (xi) the aggregate amount of unreimbursed Monthly Advances to be reimbursed to the Servicer (if any). Unless otherwise specified in the related Prospectus Supplement, the "Available Amount" with respect to each Trust on any Distribution Date is equal to the excess of (A) the sum of (i) all amounts on deposit in the Collection 61 Account attributable to collections or deposits made in respect of such Contracts (including any late fees, prepayment charges, extension fees or other administrative fees or similar charges allowed by applicable law with respect to the Contracts ("Late Fees")) during the Due Period preceding the Distribution Date, and (ii) the Purchase Price for any Contract repurchased by CITSF as a result of breaches of certain representations and warranties or purchased by the Servicer as a result of breaches of certain covenants and any Monthly Advances and any Non-Reimbursable Payments made by the Servicer, if such Purchase Price, Monthly Advance or Non-Reimbursable Payment is paid on or prior to the Deposit Date immediately preceding such Distribution Date, over (B) the sum of the following amounts (to the extent that the Servicer has not already withheld such amounts from collections on the Contracts): (i) any repossession profits on liquidated Contracts, Liquidation Expenses (as defined in the Trust Documents) incurred and taxes and insurance advanced by the Servicer in respect of Financed Boats that are reimbursable to the Servicer under the Trust Documents; (ii) any amounts incorrectly deposited in the Collection Account; (iii) any amounts deposited in the Paid-Ahead Account, if any, during the related Due Period; (iv) net investment earnings on the funds in the Collection Account and the Paid-Ahead Account, if any; and (v) any other amounts permitted to be withdrawn from the Collection Account and the Paid-Ahead Account, if any, by the Servicer (or to be retained by the Servicer from collections on the Contracts) pursuant to the Trust Documents. With respect to each Trust, beginning on the Distribution Date specified in the related Prospectus Supplement, distributions of principal and interest (or, where applicable, of principal or interest only) on each class of Securities entitled thereto will be made by the Owner Trustee or the Indenture Trustee, as applicable, to the Certificateholders, if any, and the Noteholders, if any, from the Available Amount. Unless otherwise specified in the related Prospectus Supplement, the Servicing Fee and any additional servicing compensation will be paid from the Available Amount prior to distributions to the Securityholders. The timing, calculation, allocation, order, source, priorities of and requirements for all distributions to each class of Certificateholders, if any, and all payments to each class of Noteholders, if any, will be set forth in the related Prospectus Supplement. Net Deposits Unless otherwise specified in the related Prospectus Supplement, as an administrative convenience, the Servicer will be permitted to make deposits of collections, Monthly Advances, Non-Reimbursable Payments and the aggregate Purchase Price of Contracts for, or with respect to, a Due Period net of distributions to be made to the Servicer with respect to such Due Period (including, without limitation, the Servicing Fee, reimbursement of nonrecoverable Monthly Advances and amounts to be deducted in the definition of "Available Amount" set forth under "--Distributions" above). The Servicer, however, will account to the Trustees and to the Securityholders as if all such deposits and distributions were made on an aggregate basis for each type of payment or deposit. Statements to Trustees and Trust Unless otherwise specified in the related Prospectus Supplement, on or before each Determination Date, the Servicer will provide to the Trustees, any paying agent and the Affiliated Owner (if any) as of the close of business on the last day of the preceding Due Period, a statement setting forth substantially the same information as is required to be provided in the periodic reports provided to Securityholders described above under "Certain Information Regarding The Securities--Statements to Securityholders." Each such report will be accompanied by a statement from an appropriate officer of the Servicer certifying the accuracy of such report and stating that the Servicer has not defaulted in the performance of its obligations under the Trust Documents (or, if such default has occurred, describing each such default). Unless otherwise specified in the related Prospectus Supplement, the Trust Documents will require that on or before March 31 of each year, the Servicer will deliver to the Owner Trustee a report of independent public accountants which opines on, at a minimum, the servicing entity's compliance with the minimum servicing standards set forth in the Uniform Single Attestation Program for Mortgage Bankers (in accordance with the 1995 revisions made thereto). The Trust Documents will require that such examination and report of independent public accountants be prepared in accordance with the requirements set forth in the Uniform Single Attestation Program for Mortgage Bankers (in accordance with the 1995 revisions made thereto). 62 The Servicer, on request of the Trustees, will furnish to the Trustees such reasonably pertinent underlying data on the Contracts as can be generated by the Servicer's existing data processing system without undue modification or expense. Certain Matters Regarding the Servicer Unless otherwise specified in the related Prospectus Supplement, the Trust Documents will provide that the Servicer may not resign from its obligations and duties as Servicer thereunder, except upon a determination that the Servicer's performance of such duties is no longer permissible under applicable law. Such resignation will not become effective until the Owner Trustee or a successor Servicer has assumed the Servicer's servicing obligations and duties under the Trust Documents. Unless otherwise specified in the related Prospectus Supplement, the Trust Documents will further provide that neither the Servicer nor the Company nor any of their shareholders, affiliates, directors, officers, employees and agents shall be under any liability to the Trustees, the Trust or the Securityholders for taking any action or for refraining from taking any action pursuant to the Trust Documents or for errors in judgment; provided, however, that neither the Servicer nor any such person will be protected against any liability which otherwise would be imposed by reason of willful misfeasance, bad faith or gross negligence in the performance of duties or by reason or reckless disregard of obligations and duties thereunder. In addition, unless otherwise specified in the related Prospectus Supplement, the Trust Documents will provide that the Servicer is under no obligation to appear in, prosecute or defend any legal action which arises under the Trust Documents and that, in its opinion, may cause it to incur any expense or liability. The Servicer may, however, undertake any reasonable action that it may deem necessary or desirable in respect of the Trust Documents and the rights and duties of the parties thereto and the interests of the Securityholders thereunder. In the event that the Servicer or the Company, in its discretion, undertakes any action which it deems necessary or desirable in connection with its rights and duties under the Trust Documents or the interests of the Securityholders thereunder, the legal expenses and costs of such action and any liability resulting therefrom will be expenses, costs and liabilities of the Trust, and the Servicer and the Company will be entitled to be reimbursed therefor out of the Collection Account. Unless otherwise specified in the related Prospectus Supplement, any corporation or other entity into which the Servicer may be merged or consolidated, or any corporation or other entity resulting from any merger, conversion or consolidation to which the Servicer is a party, or any corporation or other entity succeeding to the business of the Servicer, which corporation or other entity assumes the obligations of the Servicer, will be the successor of the Servicer under the Trust Documents. The Servicer may sell, transfer, assign or convey its rights as Servicer to any entity qualified to act as servicer under the Trust Documents, upon written notice to the Trustees and the Rating Agencies, without the consent of the Securityholders, provided that the Rating Agency Condition is satisfied. Physical Damage Insurance Unless otherwise specified in the related Prospectus Supplement, the Servicer may, but will not be obligated to, enforce its rights under the Contracts to require the Obligors to maintain physical damage insurance, in accordance with the Servicer's customary practices and procedures with respect to comparable new or used boats financed by installment sale contracts or loans that it services for itself or others. Unless otherwise specified in the related Prospectus Supplement, if an Obligor fails to maintain such insurance, the Servicer will not be obligated to obtain such physical damage insurance and advance such premiums for such insurance on behalf of such Obligor. If the Servicer obtains such physical damage insurance and advances such premiums for such insurance on behalf of such Obligor, such insurance policy will name the Servicer as an additional insured and loss payee (such insurance being referred to herein as "Force-Placed Insurance"). Such Force-Placed Insurance and any commissions or finance charges collected by the Servicer in connection therewith shall be, to the extent permitted by law, in an amount in accordance with customary servicing practices and procedures, but in no event in an amount greater than the outstanding principal balance of the related Contract or, if such insurance also covers the interest of the related 63 Obligor in the Financed Boat, no greater than the greater of the outstanding principal balance of the related Contract and the value of the Financed Boat, or such lesser amount permitted by applicable law. The Servicer shall be required to disclose to the related Obligor all information with respect to such Force-Placed Insurance, commissions and finance charges as required by applicable law. The Servicer does not, under its customary servicing practices and procedures, obtain Force-Placed Insurance when the principal balance of the related Contract falls below the level or levels periodically established in accordance with such customary servicing practices and procedures. In accordance with such customary servicing practices and procedures, the Servicer may periodically readjust such levels, suspend Force-Placed Insurance or arrange other methods of protection of the Financed Boats that it deems necessary or advisable, provided that the Servicer determines that such actions do not materially and adversely affect the interests of the Securityholders. The Servicer may elect to make advances ("Insurance Advances") to an Obligor to finance insurance premiums related to the Financed Boat. Any such Insurance Advances may be secured by the related Financed Boat. Any portion of the principal balance of a Contract attributable to Insurance Advances or premiums for Force-Placed Insurance acquired after the Initial Cut-off Date or the Subsequent Cut-off Date, as the case may be, will not be owned by the Trust, and amounts allocable thereto will not be available for distribution in respect of the Securities. Unless otherwise designated by the Obligor, the Servicer will not allocate payments by the Obligor to pay Insurance Advances or Force-Placed Insurance premiums added to the Contracts after the Initial Cut-off Date or Subsequent Cut-off Date, as the case may be, if any amount of principal or interest is due but unpaid on the Contracts. The Servicer shall not deposit payments posted with respect to such Insurance Advances or Force-Placed Insurance in the Collection Account and shall instead promptly pay such amounts to an account of the Servicer maintained for that purpose. In the event that an Obligor under a Contract with respect to which the Servicer has made Insurance Advances or obtained Force-Placed Insurance makes scheduled payments under the Contract, but fails to make scheduled payments of such Insurance Advances or Force-Placed Insurance as due, and the Servicer has determined that eventual payment of such amount is unlikely, the Servicer may, but shall not be required to, take any action available to it, including determining that the related Contract is a defaulted Contract; provided, however, that any net liquidation proceeds with respect to such Contract shall be applied first to the accrued and unpaid interest at the Contract Rate, then to the principal amount outstanding, and the remainder, if any, to repayment of any such Insurance Advances or Force-Placed Insurance premiums added to the Initial Contracts after the Initial Cut-off Date or to any Subsequent Contracts after the related Subsequent Cut-off Date. Event of Termination Unless otherwise specified in the related Prospectus Supplement, an "Event of Termination" under the Trust Documents will consist of (i) any failure by the Servicer to make any deposit into an account required to be made under the Trust Documents which failure continues unremedied for five (5) Business Days after the Servicer becomes aware that such deposit was required; (ii) any failure by the Servicer duly to observe or perform in any material respect any other of its covenants or agreements in the Trust Documents (other than those described in clause (i)) which materially and adversely affects the rights of the Securityholders and which continues unremedied for 60 days after the giving of written notice of such failure; (iii) any assignment or delegation by the Servicer of its duties or rights under the Trust Documents, except as specifically permitted under the Trust Documents, or any attempt to make such an assignment or delegation; (iv) certain events of insolvency, readjustment of debt, marshaling of assets and liabilities or similar proceedings regarding the Servicer; or (v) any disqualification of the Servicer as an Eligible Servicer (as defined in the Trust Documents). "Notice" as used herein means notice to the Servicer by the Trustees or the Company, or to the Company, the Servicer and the Trustees by the Noteholders holding not less than 25% of the aggregate outstanding principal amount of the Controlling Notes issued by such Trust (or, if no Notes of such series are outstanding, the Certificateholders holding not less than 25% of the outstanding Certificate Balance of such Trust). 64 Rights Upon Event of Termination Unless otherwise specified in the related Prospectus Supplement, as long as an Event of Termination under the Trust Documents remains unremedied, the Indenture Trustee (or, if no Notes of the series are outstanding, the Owner Trustee) may, and at the written direction of the holders of related Notes evidencing not less than a majority of the aggregate outstanding principal amount of the Notes issued by such Trust (or, if no Notes of such series are outstanding, the holders of related Certificates evidencing not less than a majority of the Certificate Balance of such Trust), will, unless prohibited by applicable law, terminate all (but no less than all) of the rights and obligations of the Servicer with respect to a Trust under the Trust Documents and in and to the Contracts, and the proceeds thereof, whereupon (subject to applicable law) all authority and power of the Servicer under the Trust Documents, whether with respect to the Contracts, the Contract Files or otherwise, will pass to and be vested in the Indenture Trustee (or, if no Notes of the series are outstanding, such authority will pass to and be vested in the Owner Trustee); provided, however, that neither the Indenture Trustee (or, if no Notes of the series are outstanding, the Owner Trustee) nor any successor servicer will assume any obligation of CITSF to repurchase Contracts for breaches of representations or warranties, and the Indenture Trustee (or, if no Notes of the series are outstanding, the Owner Trustee) or the successor Servicer will not be liable for any acts or omissions of the Servicer occurring prior to a transfer of the Servicer's servicing and related functions or for any breach by the Servicer of any of its obligations contained in the Trust Documents. Notwithstanding such termination, the Servicer will be entitled to payment of certain amounts payable to it for services rendered prior to such termination. No such termination will affect in any manner CITSF's obligation to repurchase certain Contracts for breaches of representations or warranties under the Trust Documents. In the event that the Owner Trustee would be obligated to succeed the Servicer but is unwilling or unable so to act, it may appoint, or petition to a court of competent jurisdiction for the appointment of, a Servicer which meets the requirements for an Eligible Servicer under the Trust Documents. Pending such appointment, such Trustee is obligated to act in such capacity, unless it is prohibited by law from so acting. The Indenture Trustee (or, if no Notes of the series are outstanding, the Owner Trustee) and such successor may agree upon the servicing compensation to be paid, which in no event, without written consent of not less than 66 2/3% in principal amount of the related Securityholders, may be greater than the compensation to CITSF as Servicer under the Trust Documents. Waiver of Past Defaults With respect to any series of Securities, unless otherwise specified in the related Prospectus Supplement, the holders of Notes evidencing not less than a majority of the aggregate outstanding principal amount of the Controlling Notes (or the holders of the Certificates evidencing not less than a majority of the Certificate Balance of such series, in the case that all of the Notes have been paid in full and the Indenture has been discharged in accordance with its terms) may, on behalf of all such Noteholders and Certificateholders, waive any default by the Servicer in the performance of its obligations under the Trust Documents and its consequences, except an Event of Termination in making any required deposits to or payments from any of the accounts in accordance with the Trust Documents. No such waiver will impair such Noteholders' or Certificateholders' right with respect to subsequent defaults. Amendment Unless otherwise specified in the related Prospectus Supplement, the Trust Documents may be amended by the parties thereto and, in the event that such amendment affects the Indenture Trustee, the Indenture Trustee, without prior notice to or the consent of the related Securityholders (i) to correct manifest error or cure any ambiguity; (ii) to correct or supplement any provision therein which may be inconsistent with any other provision therein; (iii) to add or amend any provision as requested by the Rating Agencies to maintain or improve the rating of the Securities; (iv) to add to the covenants, restrictions or obligations of the Company, the Servicer or the Owner Trustee or to provide for the delivery of or substitution for an Enhancement or a Servicer Letter of Credit; (v) to evidence and provide for the acceptance of the appointment of a successor trustee with respect to the property owned by the related Trust and add to or change any provisions as shall be necessary to facilitate the administration of the trusts under the Trust Documents by more than one trustee; (vi) to add, change or amend any provision to maintain the related Trust as an 65 entity not subject to federal income tax; or (vii) to add, change or eliminate any other provisions, provided that an amendment pursuant to this clause (vii) will not, in the opinion of counsel (which may be internal counsel to the Company or the Servicer), adversely affect in any material respect the interests of the Trust or the Securityholders. Unless otherwise specified in the related Prospectus Supplement, the Trust Documents may also be amended by the parties thereto, with the consent of the holders of not less than a majority in principal amount of such then outstanding Notes and the holders of such Certificates evidencing not less than a majority of the Certificate Balance of such series for the purpose of adding any provisions to or changing in any manner or eliminating any provisions of the Trust Documents, or of modifying in any manner the rights of such Noteholders or Certificateholders, respectively; except that no such amendment may except as described above, increase or reduce in any manner the amount of, or accelerate or delay the timing of, distributions that are required to be made on any related Note or Certificate, the related Pass-Through Rate or the Interest Rate. Any action specified in clauses (v) and (vii) shall be taken only upon satisfaction of the Rating Agency Condition. Termination Unless otherwise specified in the related Prospectus Supplement, the obligations of the Servicer, the Company, the Affiliated Owner, if any, and the Trustees pursuant to the Trust Documents for a series of the Securities will terminate upon the earliest to occur of (i) the maturity or other liquidation of the last related Contract and the disposition of any amounts received upon liquidation of any property remaining in the related Trust, (ii) the payment to Securityholders of the series of all amounts required to be paid to them pursuant to the Trust Documents, (iii) the occurrence of either event described below, and (iv) as otherwise required by law, as described in the Trust Documents. Unless otherwise specified in the related Prospectus Supplement, with respect to each series of Securities, in order to avoid excessive administrative expenses, CITSF will be permitted at its option to purchase from the Trust, on any Distribution Date on which the Pool Balance as of the last day of the related Due Period is less than or equal to a percentage specified in the related Prospectus Supplement of the Initial Pool Balance, all remaining related Contracts at a price equal to the aggregate Purchase Price for the Contracts (including defaulted Contracts), plus the appraised value of any other property held by the Trust (less liquidation expenses). CITSF will give notice to the Trustees and the Depository of the exercise of such option no later than the Determination Date succeeding such Due Period and will deposit the amount required to purchase such Contracts on the Deposit Date succeeding such Due Period. Exercise of such right will effect early retirement of the Securities. Unless otherwise specified in the related Prospectus Supplement, the "Initial Pool Balance" equals the sum of (i) the Pool Balance as of the Initial Cut-off Date, and (ii) the aggregate principal balance of all Subsequent Contracts added to the Trust as of their respective Subsequent Cut-off Dates. Unless otherwise specified in the related Prospectus Supplement, within ten days after the first Distribution Date on which the Pool Balance as of the last day of the related Due Period is less than or equal to a percentage specified in the related Prospectus Supplement of the Initial Pool Balance, the Indenture Trustee (or, if the Notes have been paid in full and the Indenture has been discharged in accordance with its terms, the Owner Trustee) shall solicit bids for the purchase of the Contracts remaining in the Trust. In the event that satisfactory bids are received as described below, the sale proceeds will be distributed to Securityholders on the second Distribution Date succeeding such Due Period. Any purchaser of the Contracts must agree to the continuation of CITSF as Servicer on terms substantially similar to those in the Trust Documents. Any such sale will effect early retirement of the Securities. Unless otherwise specified in the related Prospectus Supplement, such Trustee must receive at least two bids from prospective purchasers that are considered at the time to be competitive participants in the market for marine installment sale contracts. The highest bid may not be less than the fair market value of such Contracts and must equal or exceed the sum of (i) the greater of (a) the aggregate Purchase Price for the Contracts (including defaulted Contracts) plus the appraised value of any other property held by the Trust (less liquidation expenses), or (b) an amount that when added to amounts on deposit in the Collection Account available for distribution to Securityholders for such second succeeding Distribution Date would result in proceeds sufficient to distribute to 66 Securityholders the amounts of interest due to Securityholders for such Distribution Date and any unpaid interest payable to the Securityholders with respect to one or more prior Distribution Dates and the outstanding principal amount of the Notes, if any, and the Certificate Balance, if any, and (ii) the sum of (a) an amount sufficient to reimburse the Servicer for any unreimbursed Monthly Advances for which it is entitled to reimbursement, and (b) the Servicing Fee payable on such final Distribution Date, including any unpaid Servicing Fees with respect to one or more prior Due Periods. Such Trustee may consult with financial advisors, including any Underwriter, to determine if a bid is equal to or greater than the fair market value of such Contracts. Upon the receipt of such bids, such Trustee shall sell and assign such Contracts to the highest bidder and the Securities shall be retired on such Distribution Date. If any of the foregoing conditions are not met, such Trustee shall decline to consummate such sale and shall not be under any obligation to solicit any further bids or otherwise negotiate any further sale of Contracts remaining in the Trust. In such event, however, such Trustee may from time to time solicit bids in the future for the purchase of such Contracts upon the same terms described above. Unless otherwise specified in the related Prospectus Supplement, such Trustee will give written notice of termination to each Securityholder of record. The final distribution to each Securityholder will be made only upon surrender and cancellation of such holder's Securities at any office or agency of such Trustee specified for such purpose. Any funds remaining in the Trust, after such Trustee has taken certain measures to locate a Securityholder and such measures have failed, will be distributed to the Affiliated Owner, if any, or as specified in the related Prospectus Supplement. CERTAIN LEGAL ASPECTS OF THE CONTRACTS The following discussion contains summaries of certain legal aspects of marine contracts, which are general in nature. Since such legal aspects are governed by applicable state law (which laws may differ substantially), the summaries do not purport to be complete nor to reflect the laws of any particular state, nor to encompass the laws of all states in which the security for the Contracts is situated. The summaries are qualified in their entirety by reference to the applicable federal and state laws governing the Contracts. General As a result of the assignment of the Contracts to the Trust, each Trust will succeed collectively to the rights (including the right to receive payment on the Contracts), and will assume the obligations, of CITSF under the related Contracts. Each Contract evidences both (a) the obligation of the obligor to repay the loan evidenced thereby, and (b) the grant of a security interest in the Financed Boat to secure repayment of such loan. Certain aspects of both features of the Contracts are described more fully below. The Contracts are "chattel paper" as defined in the Uniform Commercial Code (the "UCC") as in effect in the various states of origination of the Contracts. Pursuant to the UCC, the sale of chattel paper is treated in a manner similar to perfection of a security interest in chattel paper. Under the Trust Documents, the Servicer will retain possession of the Contracts as custodian for the Owner Trustee, and will make an appropriate filing of a UCC financing statement in New Jersey to perfect the sale of the Contracts by the Company (and, if and to the extent specified in the related Prospectus Supplement, a Selling Trust) to the Owner Trustee. The Contracts and the related certificates of title will not be stamped to reflect their assignment from CITCF-NY to CITSF, from CITSF to the Company or from the Company to the Trust (or, if and to the extent specified in the related Prospecus Supplement, from CITSF to SPV, from SPV to a Selling Trust and from the Selling Trust to the Trust). The Contract Files will not be physically segregated from the contract files for contracts owned by CITSF. If, through inadvertence or otherwise, another party in good faith purchases (or takes a security interest in) the Contracts for new value in the ordinary course of its business, without actual knowledge of the Trust's interest, and takes possession of the Contracts, such purchaser or secured party may acquire an interest in the Contracts superior to the interest of the Trust. 67 Under the Trust Documents, the Servicer will be obligated from time to time to take such actions as are necessary to continue the perfection of the Trust's interest in the Contracts and the proceeds thereof. CITSF will warrant in the Trust Documents, with respect to each Contract, as of the Closing Date for each Initial Contract, and as of the related Subsequent Transfer Date for each Subsequent Contract, if any, that the Contract has not been sold, assigned or pledged by CITSF to any person other than the Company (or, if and to the extent specified in the related Prospectus Supplement, SPV), that immediately prior to the transfer and assignment of the Contract to the Company (or, if and to the extent specified in the related Prospectus Supplement, SPV), CITSF had good and marketable title thereto, free and clear of any encumbrance, equity, loan, pledge, charge, claim or security interest and, immediately upon the transfer thereof, the Company (or, if and to the extent specified in the related Prospectus Supplement, SPV) will have good and marketable title to the Contract, free and clear of any encumbrance, equity, loan, pledge, charge, claim or security interest and that the transfer has been perfected under applicable law. In the event of an uncured breach of any such warranty that materially adversely affects the interest of the Trust in a Contract transferred by the Company (or, if and to the extent specified in the related Prospectus Supplement, SPV), to the Trust, the only recourse of the Certificateholders, the Trustees, or the Trust would be to require CITSF to repurchase such Contract. Security Interests in the Financed Boats General. The Contracts are installment sale contracts that evidence the credit sale of boats by Obligors. The Contracts also constitute personal property security agreements and include grants of security interests in the related boats under the UCC. Perfection rules relating to security interests in boats are governed in a majority of states under state boat certificate of title statutes. In states in which perfection of a security interest in a particular boat is not governed by a certificate of title statute, perfection is usually accomplished by filing pursuant to the provisions of the UCC. Each Contract prohibits the sale or transfer of the related Financed Boat without the consent of CITSF. Perfection of Sale. Pursuant to the Purchase Agreement, CITSF will sell and assign its interests in the Contracts, including the security interests in the Financed Boats granted thereunder, to the Company and, pursuant to the Trust Documents, the Company (and, if and to the extent specified in the related Prospectus Supplement, a Selling Trust) will sell and assign its interest in the Contracts, including the security interests in the Financed Boats granted thereunder, to the Owner Trustee. UCC financing statements will be filed to perfect the sale of (i) CITSF's interests in the Contracts to the Company and (ii) the Company's interests (and, if and to the extent specified in the related Prospectus Supplement, the interest of such Selling Trust) in the Contracts to the Trust. Perfection of CITSF's or CITCF-NY's Security Interest in the Financed Boats. The Contracts represent marine retail installment sale contracts and direct loans that finance the sale or ownership of Financed Boats. When originated, each Contract was secured by a security interest in the Financed Boat financed thereby. Each such security interest was required to be perfected under applicable state law and, in the case of certain Financed Boats described below, under applicable federal law. Generally, security interests in boats may be perfected in one of three ways: (i) in "title" states, by notation of the secured party's lien on the certificate of title issued by an applicable state motor vehicle or wildlife department or other appropriate state agency; (ii) in non-title states, by filing a UCC-1 financing statement; and (iii) in respect of a boat eligible for documentation under federal law, by filing all documents necessary to create a first preferred ship mortgage (a "Preferred Mortgage") under the Ship Mortgage Act of 1920 (1988 Recodification) ss. 30101 et seq. (the "Ship Mortgage Statutes"). Vessels that meet the federal five net ton standard (determined in a manner prescribed by 46 CFR Part 69 (Measurement of Vessels)) qualify for documentation under federal law ("U.S. Documentable Boats"). However, federal documentation of vessels used exclusively for recreational purposes is discretionary. CITSF has policies and procedures in place to ensure that all actions necessary under the laws of the states in which the Financed Boats were located at the time of origination of the Contracts were taken to perfect the originators' security interests in the Financed Boats. In addition, it is CITSF's practice to require that substantially all Financed Boats of 27 feet or more in length be federally documented and that a Preferred Mortgage on each such boat be filed. CITSF's policy also requires prior perfection of a security interest in any such boat under applicable state law in order to protect itself prior to completion of federal documentation. If a security interest in a boat is 68 initially perfected by a UCC-1 filing or notation on a title under state law and such boat subsequently becomes a federally documented vessel, the holder of such security interest could lose the priority of its security interest in such boat under state law to the holder of a subsequently perfected Preferred Mortgage covering such boat. In the event that the originator of a Contract failed to perfect the security interest in a Financed Boat (for example, by complying with the UCC rather than the applicable certificate of title statute, or by failing to comply with applicable state title law, or the Ship Mortgage Statutes or applicable United States Coast Guard (the "Coast Guard") regulations), such originator would not have a perfected first priority security interest in such Financed Boat. In this event, if third party liens equal or exceed the value of the Financed Boat, the only recourse of the Trust would be against the Obligor on an unsecured basis, if applicable, against a Dealer or financial intermediary pursuant to its repurchase obligation or against the Seller. Pursuant to the terms of the Sale and Servicing Agreement, the Seller will assign its security interest in the Financed Boat to the Trust and the Trust will pledge its security interest in the Financed Boats to the Indenture Trustee. However, due to administrative burden and expense, none of the Seller, the Servicer, the Trust or any previous owner of the Contract will amend the certificates of title or file assignments of the UCC-1 financing statements with respect to the Financed Boats to identify the Trust or the Indenture Trustee as the new secured party, nor will the Seller or the Owner Trustee execute or file any transfer instruments with the appropriate governmental authorities. In a majority of states, the assignment of a Contract together with the related security interest is, as a matter of state law, an effective conveyance of such security interest without amendment of any lien noted on the related certificates of title or of any UCC-1 financing statements or the filing of any transfer instruments with the appropriate governmental authorities, and the new owner of the Contract succeeds to the original secured party's rights as owner of the Contract against creditors of the Obligor. In certain title states, in the absence of such certificate of title amendment or assignment of record to reflect the successive assignments of the security interest in the Financed Boat, the related Seller (if not the secured party of record), the Trust and/or the Indenture Trustee may not have a perfected security interest in the related Financed Boat. Under the Ship Mortgage Statutes, in the absence of an assignment of record of a Preferred Mortgage, the assignment of the related Contract by itself will not convey the perfected preferred mortgage lien on the Financed Boat subject to such Preferred Mortgage and neither the Seller (if not the secured party of record) nor the Trust will have a perfected security interest in such Financed Boat. Due to administrative burden and expense, assignments will not be made of all Preferred Mortgages relating to the Contracts. Under the Ship Mortgage Statutes, in the absence of an assignment of a Preferred Mortgage, or in the event an assignment of a Preferred Mortgage is not effective, the Trust will not have a perfected security interest in the related Financed Boat. In such case, if third party liens equal or exceed the value of such Financed Boat, the only recourse of the Trust would be against the related Obligor on an unsecured basis. Except as described above, in the absence of fraud or forgery by a boat owner or administrative error by state recording officials or the Coast Guard, the notation of the lien of the originator of each Contract on the certificate of title with respect to the related Financed Boat, the filing of a UCC-1 financing statement against the Obligor or the filing of an assignment of the related Preferred Mortgage, if any, as described above will be sufficient to protect the Trust against the rights of subsequent purchasers of such Financed Boat or subsequent lenders who take a security interest in such Financed Boat. If there are any Financed Boats as to which the originator of the related Contract has failed to perfect the security interest assigned to the Trust, (i) such security interest would be subordinate to, among others, holders of perfected security interests in such Financed Boats and (ii) subsequent purchasers of such Financed Boats would take possession free and clear of such security interest. There is also a risk that, in not identifying the Trust as the new secured party on the certificates of title or executing and filing of transfer instruments with the Coast Guard or assignments of UCC-1 financing statements with state officials, the security interest of the Trust or Indenture Trustee could be released through fraud or negligence. A security interest perfected by a Preferred Mortgage has a nationwide scope and no further action is necessary when an obligor moves or the related boat is relocated. Actions must be taken to maintain the perfection of security interests in boats perfected under state law if the boat (in the case of a "title" state) or the Obligor (in the case of a "UCC" state) moves to a state other than the state in which such security interest was originally perfected. Under 69 the laws of most states, a perfected security interest in a Financed Boat continues for four months after the Financed Boat is relocated in a new state (from the state in which a financing statement was properly filed initially to perfect the security interest or in which the certificate of title was issued) and thereafter until the owner re-registers such Financed Boat in the new state. Many "title" states require surrender of a certificate of title to re-register a Financed Boat. Accordingly, to allow re-registration the Servicer must surrender possession if it holds the certificate of title to a Financed Boat or, in the case of a Financed Boat registered in a state which provides for notation of liens on certificates of title but not possession of the certificates of title by the lienholder, the Servicer would typically receive notice of surrender if the security interest in the Financed Boat is noted on the certificate of title. Accordingly, in such cases, the Servicer should have the opportunity to re-perfect the security interest in the Financed Boat in the state of relocation. In states that do not issue a certificate of title at registration of a Financed Boat, re-registration in a different state could defeat perfection. In the ordinary course of servicing its portfolio of marine loans, the Servicer takes steps to effect such re-perfection upon receipt of notice of re-registration or information from the Obligor as to relocation. Similarly, when an Obligor sells a titled Financed Boat showing a lienholder, unless the Servicer surrenders possession of the certificate of title, it generally will receive notice as a result of its lien noted thereon and accordingly will have an opportunity to require satisfaction of the related Contract before release of the lien. Under the Sale and Servicing Agreement, the Servicer is obligated to take such steps, at the Servicer's expense, as are necessary to maintain perfection of security interests in the Financed Boats. Under the laws of many states, certain possessory liens for repairs performed on a Financed Boat and storage, as well as certain rights in favor of federal and state governmental authorities arising from the use of a boat in connection with illegal activities, may take priority over a security interest perfected under state law. Certain U.S. federal tax liens may also have priority over the lien of a secured party. Under the Ship Mortgage Statutes, a Preferred Mortgage supersedes a perfected state law security interest, a state created lien or forfeiture rights (so long as the secured party is innocent of wrongdoing) but is subordinate to preferred maritime liens. The Seller will represent in the Sale and Servicing Agreement that, as of the Initial Cut-off Date or Subsequent Cut-off Date, as the case may be, it has no knowledge of any such liens with respect to any Financed Boat related to a Contract. However, such liens could arise at any time during the term of a Contract. No notice will be given to the Owner Trustee or the Indenture Trustee in the event such a lien arises. Possible Loss of Perfection or Priority of Trust's Security Interest in Financed Boats or Proceeds Thereof. The certificate of title names CITSF (or CITCF-NY) as the secured party. Because of the administrative burden and expense, neither CITCF-NY, CITSF, the Company nor the Trust will amend any certificate of title to note the lien of the Trust as the new secured party on the certificate of title relating to the Financed Boat nor will any such entity execute and file any transfer instruments (including, among other instruments, UCC-3 assignments). In some states, in the absence of such an amendment or execution, the assignment to the Trust of a security interest in Financed Boats may not be perfected, such assignment of the security interest to the Trust may not be effective against creditors or a trustee in bankruptcy of CITSF or CITCF-NY, which continue to be specified as lienholder on any certificates of title or as secured party of any UCC filing. (i) California. A security interest in a boat registered in the State of California (in which the greatest number of Financed Boats are currently registered) may be perfected only by depositing with the Department of Motor Vehicles a properly endorsed certificate of title for the boat showing the secured party as "legal owner" thereon or if the boat has not been previously registered, an application in usual form for an original registration together with an application for registration of the secured party as "legal owner." However, under the California Vehicle Code, a transferee of a security interest in a boat is not required to reapply to the Department of Motor Vehicles for a transfer of registration when the interest of the transferee arises from the transfer of a security agreement by the "legal owner" to secure payment or performance of an obligation. Accordingly, under California law, an assignment such as that under each of the Purchase Agreement and the Trust Documents is an effective conveyance of CITSF's and the Company's (or, if and to the extent specified in the related Prospectus Supplement, SPV's and the Selling Trust's), perfected security interest, as the case may be, without such re-registration, and under the Purchase Agreement the Company (or, if and to the extent specified in the related Prospectus Supplement, SPV's and the Selling Trust) will succeed to CITSF's, and under the Trust Documents the Trust will succeed to the Company's (or, if and to the extent specified in the related Prospectus Supplement, SPV's), rights as secured party. 70 (ii) Other States. In most states, assignments such as those under the Purchase Agreement and the Trust Documents are an effective conveyance of a security interest without amendment of any lien noted on a boat's certificate of title, and the assignee succeeds thereby to the assignor's rights as secured party. However, in some states the Trust's security interest will be unperfected because the Trust will not be noted as the secured party on the certificates of title to the Financed Boats, and therefore the Trust's security interest would be subordinate to, among others, subsequent purchasers of such Financed Boats and holders of prior perfected security interests therein. However, in the absence of fraud, forgery or administrative error, the notation of CITSF's or CITCF-NY's lien on the certificates of title will be sufficient in most states to protect the Trust against the rights of subsequent purchasers of a Financed Boat, judgment creditors or other creditors who take a security interest in a Financed Boat. Continuity of Perfection. Under the laws of most states, a perfected security interest in a boat continues for four months after the boat is moved to a new state (from the state in which a financing statement was properly filed initially to perfect the security interest or in which the certificate of title was issued) and thereafter until the owner re-registers such boat in the new state. A majority of states require surrender of a certificate of title to obtain a new certificate of title for the boat. In those states (including California) that call for return of the certificate of title to the holder of the first security interest noted thereon, the secured party would learn of the re-registration through the request from the obligor under the related marine installment sale contract to surrender possession of the certificate of title. In the case of boats registered in states providing for perfection of a lien by notation of the lien on the certificate of title without possession of the certificate of title by the secured party, the secured party would receive notice of surrender from the state of re-registration if the security interest were noted on the certificate of title. Thus, the secured party would have the opportunity to re-perfect its security interest in the boat in the state to which the boat is moved. However, these procedural safeguards will not protect the secured party if through fraud, forgery or administrative error, the debtor somehow procures a new certificate of title that does not note the secured party's lien. Additionally, in states that do not require a certificate of title for registration of a boat, re-registration could defeat perfection. In the ordinary course of servicing the Contracts, CITSF will take steps to effect re-perfection upon receipt of notice of re-registration or information from the Obligor as to relocation. Similarly, when an Obligor sells a Financed Boat, CITSF must surrender possession of the certificate of title or will receive notice as a result of its lien noted thereon and accordingly will have an opportunity to require satisfaction of the related Contract before release of the lien. Under the Trust Documents, the Servicer will be obligated to take appropriate steps, at its own expense, to maintain perfection of a security interest in the Financed Boats. In most states, CITSF, as Servicer, will hold certificates of title relating to the Financed Boats in its possession as custodian for the Trust pursuant to the Trust Documents. In some states, the certificate of title is held by the Obligor, but only after it is endorsed by the state motor vehicle department with a notation of CITSF's lien. In the Trust Documents, CITSF, as Servicer, will covenant that it will not release its security interest in the Financed Boat securing any Contract except as contemplated by the Trust Documents. CITSF, as Servicer, will also covenant that it will not impair the rights of the Trust in the Contacts or take any action inconsistent with the Trust's ownership of the Contracts, except as permitted by the Trust Documents. A breach of either such covenant that materially and adversely affects the Trust's interest in any Contract, would require the Servicer to purchase such Contract unless such breach is cured within the period specified in the Trust Documents. Priority of Certain Liens Arising by Operation of Law. Under the laws of California and of most states, liens for repairs performed on a boat and liens for certain unpaid taxes take priority over even a first perfected security interest in such boat. The Internal Revenue Code of 1986, as amended, also grants priority to certain federal tax liens over the lien of a secured party. The laws of certain states and federal law permit the confiscation of boats by governmental authorities under certain circumstances if used in unlawful activities, which may result in the loss of a secured party's perfected security interest in a confiscated boat. A Preferred Mortgage supersedes a perfected state law security interest. However, under the Ship Mortgage Act, a Preferred Mortgage is subordinate to preferred maritime liens. Therefore, certain preferred maritime liens will have priority over security interests in Boats perfected under state and federal law. CITSF will represent and warrant in the Trust Documents that, as of the Closing Date, there were no liens or claims which have been filed for work, labor or materials affecting a Financed Boat securing a Contract which are or may be liens prior or equal to the lien of the Contract. However, liens for repairs or taxes could arise at 71 any time during the term of a Contract. No notice will be given to the Trustees or Securityholders in the event such a lien or confiscation arises and any such lien or confiscation arising after the date of initial issuance of the Securities would not give rise to an obligation of CITSF to purchase the Contract under the Trust Documents. The priority of the Preferred Mortgages and state security interests in the Financed Boats may be subject to: (i) maritime liens arising under federal statutory or common-law for captain's or crew's wages, tort claims (so-called "general average" claims) and salvage claims, all of which take priority over even a preferred ship mortgage lien and a state security interest, and (ii) maritime liens arising under federal law or state laws for repair, storage or supplies which are subordinate to a preferred ship mortgage lien but typically have priority over state security interests under federal law or under applicable law of the state where the Contract was originated under applicable law of the state to which the related Financed Boats may have been relocated. Repossession In the event of default by an obligor, the holder of the related marine installment sale contract has all the remedies of a secured party under the UCC, except where specifically limited by other state laws. The UCC remedies of a secured party include the right to repossession by self-help means, unless such means would constitute a breach of the peace. Self-help repossession is the method employed by the Servicer in most cases and is accomplished simply by taking possession of the related boat. In cases where the obligor objects or raises a defense to repossession, or if otherwise required by applicable state law, a court order must be obtained from the appropriate state court, and the boat must then be recovered in accordance with that order. In some jurisdictions (not including California), the secured party is required to notify the debtor of the default and the intent to repossess the collateral and the debtor must be given a time period within which to cure the default prior to repossession. In most states (including California), under certain circumstances after the boat has been repossessed, the obligor may reinstate the related contract by paying the delinquent installments and other amounts due. Notice of Sale; Redemption Rights In the event of default by the Obligor, some jurisdictions (not including California) require that the Obligor be notified of the default and be given a time period within which to cure the default prior to repossession. Generally, this right of cure may only be exercised on a limited number of occasions during the term of the related Contract. The UCC and other state laws require the secured party to provide the obligor with reasonable notice of the date, time and place of any public sale and/or the date after which any private sale of the collateral may be held. The obligor has the right to redeem the collateral prior to actual sale by paying the secured party (i) the unpaid principal balance of the obligation, accrued interest thereon plus reasonable expenses for repossessing, holding and preparing the collateral for disposition and arranging for its sale, plus, in some jurisdictions, reasonable attorneys' fees or (ii) in some states, the delinquent installments or the unpaid principal balance of the related obligation. Under federal law, to transfer title in a non-judicial sale, a seller of a Financed Boat subject to a Preferred Mortgage must give prior notice of the sale to (i) the owner of a Financed Boat subject to a Preferred Mortgage, (ii) any other lienholders who have filed notice with the Coast Guard and (iii) the Coast Guard. Deficiency Judgments and Excess Proceeds The proceeds of resale of the Financed Boats generally will be applied first to the expenses of resale and repossession and then to the satisfaction of the related indebtedness. While some states impose prohibitions or limitations on deficiency judgments if the net proceeds from resale do not cover the full amount of the indebtedness, a deficiency judgment can be sought in California and certain other states that do not prohibit or limit such judgments. In addition to the notice requirement, the UCC requires that every aspect of the sale or other disposition, including the method, manner, time, place and terms, be "commercially reasonable." Some courts have held that when a sale is not "commercially reasonable," the secured party loses its right to a deficiency judgment and courts in 72 some other states have held that when a sale is not "commercially reasonable" there is a rebuttable presumption that there is no deficiency. In addition, the UCC permits the debtor or other interested party to recover for any loss caused by noncompliance with the provisions of the UCC. Also, prior to a sale, the UCC permits the debtor or other interested person to restrain the secured party from disposing of the collateral if it is established that the secured party is not proceeding in accordance with the "default" provisions under the UCC. A deficiency judgment is a judgment against the obligor or guarantor for the shortfall; however, a defaulting obligor or guarantor may have very little capital or sources of income available following repossession. Therefore, in many cases, it may not be useful to seek a deficiency judgment or, if one is obtained, it may be settled at a significant discount or be uncollectible. Occasionally, after resale of a boat and payment of all expenses and indebtedness, there is a surplus of funds. In that case, the UCC requires the creditor to remit the surplus to any holder of a subordinate lien with respect to such boat or, if no such lienholder exists, to the former owner of the boat. Certain Matters Relating to Insolvency CITSF, CITCF-NY and the Company intend that the transfers of Contracts from CITCF-NY to CITSF, from CITSF to the Company and from the Company to the Trust (and, if and to the extent specified in the related Prospectus Supplement, from CITCF-NY to CITSF, from CITSF to SPV, from SPV to a Selling Trust and from the Selling Trust to the Trust), constitute sales, rather than pledges, of the Contracts to secure indebtedness. However, if CITCF-NY, CITSF or the Company (or, if and to the extent specified in the related Prospectus Supplement, a Selling Trust) were to become a debtor under Title 11 of the United States Code, 11 U.S.C. ss.101 et seq. (the "Bankruptcy Code"), it is possible that a creditor, receiver, other party in interest or trustee in bankruptcy of such debtor, or such debtor as debtor-in-possession, may contend that the sales of the Contracts by CITCF-NY to CITSF, by CITSF to the Company, or by the Company to the Trust (and, if and to the extent specified in the related Prospectus Supplement, from CITCF-NY to CITSF, from CITSF to SPV, from SPV to a Selling Trust and from the Selling Trust to the Trust), respectively, were pledges of the Contracts rather than sales and that, accordingly, such Contracts should be part of such assigning entity's bankruptcy estate. Such a position, if presented to a court, even if ultimately unsuccessful, could result in a delay in or reduction of distributions to the Securityholders. The Company has taken steps in structuring the transactions described herein that are intended to make it unlikely that the voluntary or involuntary application for relief by or against CIT under the Bankruptcy Code or similar applicable state laws (collectively, "Insolvency Laws") would result in consolidation of the assets and liabilities of the Company with those of CIT. These steps include the creation of the Company as a wholly-owned, limited purpose subsidiary of CIT pursuant to a certificate of incorporation containing certain limitations (including a requirement that the Company have at least one "independent director" and restrictions on the nature of the Company's business). Additionally, the Company's certificate of incorporation prohibits merger, consolidation and the sale of all or substantially all of its assets in certain circumstances or the commencement of a voluntary case or proceeding under any insolvency law, without the prior affirmative unanimous vote of its directors including any independent director. Notwithstanding the foregoing, in the event that (i) a court concluded that the assets and liabilities of the Company should be consolidated with those of CIT (or one of its affiliates) in the event of the application of applicable insolvency laws to CIT (or one of its affiliates) or following the bankruptcy or insolvency of CIT (or one of its affiliates) the security interest in the Contracts granted by the Company to the Trust should be avoided; (ii) a filing were made under any insolvency law by or against the Company, or (iii) an attempt were made to litigate any of the foregoing issues, delays in payments on the Securities and possible reductions in the amount of such payments could occur. Consumer Protection Laws Numerous federal and state consumer protection laws and related regulations impose substantial requirements upon creditors and servicers involved in consumer finance. These laws include the Truth in Lending Act, the Equal Credit Opportunity Act, the Federal Trade Commission Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's 73 Regulations B and Z, the Soldiers' and Sailors' Civil Relief Act, the Military Reservist Relief Act, state adaptations of the National Consumer Act and of the Uniform Consumer Credit Code, state retail installment sales acts and other similar laws. Also, the laws of California and of certain other states impose finance charge ceilings and other restrictions on consumer transactions and require contract disclosures in addition to those required under federal law. These requirements impose specific statutory liabilities upon creditors which fail to comply with their provisions. In some cases, this liability could affect the ability of an assignee such as the Trust to enforce consumer finance contracts such as the Contracts. The so-called "Holder-in-Due-Course Rule" of the Federal Trade Commission (the "FTC Rule") has the effect of subjecting any assignee of the seller in a consumer credit transaction to all claims and defenses which the obligor in the transaction could assert against the seller of the goods. Liability under the FTC Rule is limited to the amounts paid by the obligor under the contract, and the holder of the contract may also be unable to collect any balance remaining due thereunder from the obligor. The FTC Rule is generally duplicated by the Uniform Consumer Credit Code, other state statutes or the common law in certain states. Most of the Contracts will be subject to the requirements of the FTC Rule. Accordingly, the Trust, as holder of the Contracts, will be subject to any claims or defenses that the purchaser of the related Financed Boat may assert against the seller of the Financed Boat. Such claims are limited to a maximum liability equal to the amounts paid by the Obligor under the related Contracts. Under California law and most state vehicle dealer licensing laws, sellers of boats are required to be licensed to sell boats at retail sale. Numerous other federal and state consumer protection laws impose requirements applicable to the origination and assignment of marine installment sale contracts and marine installment loan contracts or notes, including the Truth in Lending Act, the Federal Trade Commission Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Equal Credit Opportunity Act, the Fair Debt Collection Practices Act and the Uniform Consumer Credit Code. In the case of some of these laws, the failure to comply with the provisions of these laws may affect the enforceability of the related Contract. The Trust and the Company and, if specified in the Prospectus Supplement, the Selling Trust, may not have obtained all licenses required under any federal or state consumer laws or regulations, and the absence of such licenses may impede the enforcement of certain rights or give rise to certain defenses in enforcement actions. Courts have applied general equitable principles to secured parties pursuing repossession or litigation involving deficiency balances. These equitable principles may have the effect of relieving an obligor from some or all of the legal consequences of a default and be used as a defense to repayment of the obligation. In several cases, consumers have asserted that the self-help remedies of secured parties under the UCC and related laws violate the due process protections of the Fourteenth Amendment to the Constitution of the United States of America. Courts have generally either upheld the notice provisions of the UCC and related laws as reasonable or have found that the creditor's repossession and resale do not involve sufficient state action to afford constitutional protection to consumers. CITSF will represent and warrant under the Trust Documents that each Contract complies with all requirements of law in all material respects. A breach of such representation and warranty that materially adversely affects the interests of the Trust in any Contract will create an obligation of CITSF to purchase such Contract. See "The Purchase Agreements and the Trust Documents--Sale and Assignment of the Contracts." Other Limitations In addition to the laws limiting or prohibiting deficiency judgments, numerous other statutory provisions, including federal bankruptcy laws and related state laws, may interfere with or affect the ability of a creditor to realize upon collateral or enforce a deficiency judgment. For example, in a Chapter 13 proceeding under the federal bankruptcy law, a court may prevent a creditor from repossessing a boat, and, as part of the rehabilitation plan, reduce the amount of the secured indebtedness to the market value of the boat at the time of bankruptcy (as determined by the court), leaving the party providing financing as a general unsecured creditor for the remainder of 74 the indebtedness. A bankruptcy court may also reduce the monthly payments due under the related contract or change the rate of interest and time of repayment of the indebtedness. Under the terms of the Soldiers' and Sailors' Civil Relief Act, an Obligor who enters the military service after the origination of such Obligor's Contract (including an Obligor who is a member of the National Guard or is in reserve status at the time of the origination of the Obligor's contract and is later called to active duty) may not be charged interest above an annual rate of 6% during the period of such Obligor's active duty status, unless a court orders otherwise upon application of the lender. In addition, pursuant to the Military Reservist Relief Act, under certain circumstances California residents called into active duty with the reserves can delay payments on marine installment sale contracts, including the Contracts, for a period, not to exceed 180 days, beginning with the order to active duty and ending 30 days after release. It is possible that the foregoing could have an effect on the ability of the Servicer to collect full amounts of interest on certain of the Contracts. In addition, the Relief Acts impose limitations which would impair the ability of the Servicer to repossess a Financed Boat subject to an affected Contract during the Obligor's period of active duty status. Thus, in the event that such a Contract goes into default, there may be delays and losses caused by the inability to realize upon the related Financed Boat in a timely fashion. CERTAIN FEDERAL INCOME TAX CONSEQUENCES Set forth below and in the related Prospectus Supplement for each series of the Securities is a summary of certain federal income tax consequences of the purchase, ownership and disposition of the Securities, applicable to initial purchasers of the Securities. This summary does not deal with all aspects of federal income taxation applicable to all categories of holders of the Securities, some of which may be subject to special rules or special treatment under the federal income tax laws. For example, it does not discuss the specific tax treatment of Securityholders that are insurance companies, banks and certain other financial institutions, regulated investment companies, individual retirement accounts, tax-exempt organizations or dealers in securities. Furthermore, this summary is based upon present provisions of the Internal Revenue Code of 1986, as amended (the "Code"), the regulations promulgated thereunder, and judicial or ruling authority, all of which are subject to change, which change may be retroactive. Moreover, there are no cases or Internal Revenue Service ("IRS") rulings on similar transactions involving a trust that issues debt and equity interests with terms similar to those of the Notes and the Certificates. As a result, the IRS may disagree with all or part of the discussion below and in the related Prospectus Supplement. Prospective investors are advised to consult their own tax advisors with regard to the federal income tax consequences of the purchase, ownership and disposition of the Securities, as well as the tax consequences arising under the laws of any state, foreign country or other jurisdiction. Each Trust will be provided with an opinion of Schulte Roth & Zabel LLP, counsel for the Seller, regarding certain of the federal income tax matters discussed below and in the related Prospectus Supplement. An opinion of counsel, however, is not binding on the IRS, and no ruling on any of the issues discussed below will be sought from the IRS. For purposes of the following summary, references to the Trust, the Notes, the Certificates and related terms, parties and documents will be deemed to refer, unless otherwise specified herein, to each Trust and the Notes, Certificates and related terms, parties and documents applicable to such Trust. The federal income tax consequences to Certificateholders will vary depending on whether the Trust is intended to be treated as a grantor trust or a partnership under the Code or is intended to be given an alternative characterization for federal income tax purposes. The related Prospectus Supplement for each series of Certificates will specify whether the Trust is intended to be treated as a grantor trust or a partnership for federal income tax purposes or how the Trust is otherwise intended to be treated. Scope of the Tax Opinions If the related Prospectus Supplement states that a Trust will be treated as a grantor trust, it is expected that Schulte Roth & Zabel LLP will deliver its opinion that, for federal income tax purposes, the Trust will be treated as 75 a grantor trust. In such event, each Certificateholder, by acceptance of a Certificate, will be treated as the owner of an undivided interest in the Contracts included in the Contract Pool and any other assets held by the Trust. If the related Prospectus Supplement does not state that a Trust will be treated as grantor trust, it is expected that Schulte Roth & Zabel LLP will deliver its opinion that, for federal income tax purposes: (1) the Notes will constitute indebtedness; and (2) the Certificates will constitute interests in a trust fund that will not be treated as an association taxable as a corporation (or a publicly traded partnership). Each Noteholder, by acceptance of a Note, will agree to treat the Notes as indebtedness, and each Certificateholder, by acceptance of a Certificate, will agree to treat the Trust as a partnership in which the Certificateholders are partners for federal income tax purposes. In addition, Schulte Roth & Zabel LLP will render its opinion that it has reviewed the statements herein and in the related Prospectus Supplement under the heading "Certain Federal Income Tax Consequences," and is of the opinion that such statements are correct in all material respects. Such statements are intended as an explanatory discussion for the possible effects of the classification of the Trust as a partnership, as a grantor trust or other classification, as the case may be, for federal income tax purposes on investors generally and of related tax matters affecting investors generally, but do not purport to furnish information in the level of detail or with the attention to the investor's specific tax circumstances that would be provided by an investor's own tax adviser. Accordingly, each investor is advised to consult its own tax advisers with regard to the tax consequences to it of investing in the Securities. Other Tax Consequences No advice has been received as to local income, franchise, personal property, or other taxation in any state or locality, or as to the tax effect of ownership of the Securities in any state or locality. Securityholders are advised to consult their own tax advisors with respect to any state or local income, franchise, personal property, or other tax consequences arising out of their ownership of the Securities. Alternative Tax Treatment In the event that, as a result of a change in applicable laws or regulations or the interpretation thereof, the federal income tax characteristics of the Notes or the Certificates are not anticipated to be as described above, the related Prospectus Supplement will include a discussion of the anticipated federal income tax treatment of the Notes or Certificates. CERTAIN STATE TAX CONSEQUENCES The activities to be undertaken by the Servicer in servicing and collecting the Contracts will take place in Oklahoma. The State of Oklahoma imposes a state income tax on individuals, nonresident aliens (with respect to Oklahoma taxable income), corporations, certain foreign corporations, and trusts and estates with Oklahoma taxable income. No ruling on any of the issues discussed below will be sought from the Oklahoma Tax Commission. Because of the variation in each state's or locality's tax laws, it is impossible to predict tax consequences to Securityholders in all of the other state and local taxing jurisdictions. Securityholders are urged to consult their own tax advisors with respect to state and local tax consequences arising out of the purchase, ownership and disposition of Securities. Tax Consequences with Respect to the Notes Crowe and Dunlevy, P.C., Oklahoma tax counsel to the Sellers ("Oklahoma Tax Counsel") will advise the Trust that, assuming the Notes will be treated as debt for federal income tax purposes, the Notes will be treated as debt for Oklahoma income tax purposes, and the Noteholders not otherwise subject to taxation in Oklahoma should not become subject to taxation in Oklahoma solely because of a holder's ownership of Notes. However, a Noteholder 76 already subject to Oklahoma's income tax could be required to pay additional Oklahoma tax as a result of the holder's ownership or disposition of Notes. Tax Consequences with Respect to the Certificates Issued by a Trust Treated as a Partnership Oklahoma Tax Counsel will advise the Trust that if the arrangement created by the Trust Agreement is treated as a partnership (not taxable as a corporation) for U.S. federal income tax purposes, the same treatment should also apply for Oklahoma income tax purposes; under current law, Certificateholders that are nonresidents of Oklahoma and are not otherwise subject to Oklahoma income tax should not be subject to Oklahoma income tax on the income from the Trust because it is unlikely that the Trust has established a nonunitary business or commercial situs in Oklahoma. In any event, classification of the arrangement as a "partnership" would not cause a Certificateholder not otherwise subject to taxation in Oklahoma to pay Oklahoma income tax on income beyond that derived from the Certificates. ERISA CONSIDERATIONS Section 406 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and Section 4975 of the Code prohibit a pension, profit sharing or other employee benefit plan, as well as individual retirement accounts and certain types of Keogh Plans (each a "Benefit Plan"), from engaging in certain transactions with persons that are "parties in interest" under ERISA or "disqualified persons" under the Code with respect to such Benefit Plan. A violation of these "prohibited transaction" rules may generate excise tax and other liabilities under ERISA and the Code for such persons. The Certificates An interest in the Certificates may not be acquired by (a) an employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA, (b) a plan described in Section 4975(e)(1) of the Code, or (c) any entity whose underlying assets include plan assets by reason of a plan's investment in the entity (other than an insurance company purchasing the Certificates for its general accounts). By its acceptance of a Certificate or its acquisition of an interest in a Certificate through a Participant or DTC, each Certificateholder or Certificate Owner will be deemed to have represented and warranted that it is not subject to the foregoing limitation. A plan fiduciary considering the purchase of the Certificates should consult its tax and or legal advisors regarding whether the assets of the Trust would be considered plan assets, the possibility of exemptive relief from the prohibited transaction rules and other issues and their potential consequences. The Notes The acquisition or holding of Notes by or on behalf of a Benefit Plan could be considered to give rise to a prohibited transaction if the Seller, the Trust or any of their respective affiliates is or becomes a party in interest or a disqualified person with respect to such Benefit Plan. Certain exemptions from the prohibited transaction rules could be applicable to the purchase and holding of Notes by a Benefit Plan depending on the type and circumstances of the plan fiduciary making the decision to acquire such Notes. Included among these exemptions are: Prohibited Transaction Class Exemption ("PTCE") 90-1, regarding investments by insurance company pooled separate accounts; PTCE 91-38 regarding investments by bank collective investment funds; and PTCE 84-14, regarding transactions effected by "qualified professional asset managers." A plan fiduciary considering the purchase of the Notes should consult its tax and or legal advisors regarding whether the assets of the Trust would be considered plan assets, the possibility of exemptive relief from the prohibited transaction rules and other issues and their potential consequences. 77 PLAN OF DISTRIBUTION On the terms and conditions set forth in an underwriting agreement (the "Underwriting Agreement") with respect to each Trust, either the Company or the Trust will agree to sell to each of the underwriters (the "Underwriters") named therein and in the related Prospectus Supplement, and each of such Underwriters will severally agree to purchase from the Company or the Trust, as applicable, the principal amount of each class of Securities of the related series set forth therein and in the related Prospectus Supplement. In each Underwriting Agreement, the several Underwriters will agree, subject to the terms and conditions set forth therein, to purchase all the Securities described therein which are offered hereby and by the related Prospectus Supplement if any of such Securities are purchased. In the event of a default by any such underwriter, each Underwriting Agreement will provide that, in certain circumstances, purchase commitments of the nondefaulting Underwriters may be increased, or the Underwriting Agreement may be terminated. Each Prospectus Supplement will either (i) set forth the price at which each class of Securities being offered thereby will be offered to the public and any concessions that may be offered to certain dealers participating in the offering of such Securities or (ii) specify that the related Securities are to be resold by the Underwriters in negotiated transactions at varying prices to be determined at the time of such sale. After the initial public offering of any Securities, the public offering price and such concessions may be changed. Each Underwriting Agreement will provide that CIT, CITSF and/or the Company will indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act. A Trustee may, from time to time, invest the funds of the Trust in Eligible Investments acquired from the Underwriters. FINANCIAL INFORMATION The Company has determined that its financial statements are not material to the offering made hereby. Each Trust will be formed to own the related Contracts and the other Trust assets and to issue the related Securities. Each Trust will have had no assets or obligations prior to the issuance of the Securities and will not engage in any activities other than those described herein and in the related Prospectus Supplement. Accordingly, no financial statements with respect to each Trust are included in this Prospectus or in the related Prospectus Supplement. RATINGS It is a condition to the issuance of any class of Securities offered pursuant to this Prospectus that the Securities be rated in one of the four highest rating categories by at least one nationally recognized statistical rating organization rating such series of Securities (each, a "Rating Agency"). The foregoing ratings do not address the likelihood that the Securities will be retired following the sale of the Contracts by the Trust. A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the assigning rating agency. The security ratings of the Securities should be evaluated independently of similar security ratings assigned to other kinds of securities. LEGAL MATTERS Certain legal matters will be passed upon for the Company by Schulte Roth & Zabel LLP, New York, New York. The material federal income tax consequences of the Securities will be passed upon for the Company by Schulte Roth & Zabel LLP. Certain legal matters will be passed upon for CITSF, CITCF-NY and the Company by 78 Norman H. Rosen, Esq., Senior Vice President and General Counsel of CITSF. If the Enhancement for a class of Securities includes a CIT Limited Guarantee, certain legal matters will be passed upon for CIT by its Executive Vice President and General Counsel, Ernest D. Stein, Esq. If a Trust is formed pursuant to the laws of the State of Delaware, certain legal matters will be passed upon for the Trust by its special Delaware counsel named in the related Prospectus Supplement. EXPERTS The consolidated balance sheets of CIT as of December 31, 1996 and 1995 and the related consolidated statements of income, changes in stockholders' equity and cash flows for each of the years in the three-year period ended December 31, 1996 in CIT's Amendment No. 2 to the Registration Statement on Form S-2 have been incorporated by reference herein in reliance upon the report of KPMG Peat Marwick LLP, independent certified public accountants, also incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. 79 INDEX OF PRINCIPAL TERMS Affiliated Owner...........................................................6, 26 Asset Service Center..........................................................31 Available Amount..........................................................14, 56 Bankruptcy Code...........................................................23, 66 Benefit Plan..................................................................70 Business Day..............................................................13, 34 Capitalized Interest Account..................................................12 Cash Collateral Account.......................................................41 CBC...........................................................................30 CBC Holding...................................................................30 Cede.......................................................................6, 33 Cedel...................................................................3, 8, 25 Cedel Participants............................................................44 Certificate Distribution Account..............................................51 Certificate Final Scheduled Distribution Date.................................13 Certificate Owner.........................................................25, 33 Certificate Owners.............................................................6 Certificate Pool Factor.......................................................29 Certificateholders............................................................45 Certificates............................................................2, 6, 33 CIT.....................................................................3, 5, 21 CITCF-NY..................................................................10, 21 CITSF......................................................................5, 21 Closing Date..................................................................10 CMC...........................................................................30 Code......................................................................19, 68 Collection Account............................................................51 Commission.....................................................................3 Company.................................................................2, 5, 21 Contract Files................................................................26 Contract Pool..............................................................9, 27 Contract Rate.................................................................27 Contracts...............................................................2, 9, 27 Cooperative...................................................................44 Credit Facility...............................................................41 Credit Facility Provider......................................................42 Dealers...................................................................10, 21 Definitive Certificates.......................................................45 Definitive Notes..............................................................45 Definitive Securities.........................................................45 Deposit Date..................................................................25 Depositories..................................................................42 Depository....................................................................25 Determination Date............................................................14 Distribution Date.........................................................13, 34 DKB...........................................................................30 DTC.....................................................................3, 6, 25 DTC Rules.....................................................................43 Due Period....................................................................14 Eligible Account..............................................................52 Eligible Institution..........................................................52 80 Eligible Investments..........................................................52 Enhancement...................................................................40 ERISA.....................................................................19, 70 Euroclear...............................................................3, 8, 44 Euroclear Operator............................................................44 Euroclear Participants........................................................44 Event of Termination..........................................................59 Events of Default.............................................................36 Financed Boats..............................................................2, 9 Financial Guaranty Insurance Policy...........................................40 Financial Guaranty Insurer....................................................40 Force-Placed Insurance........................................................58 FTC Rule......................................................................67 Funding Period.........................................................7, 11, 12 Holder........................................................................43 Holders.......................................................................45 Indenture...............................................................3, 7, 34 Indenture Trustee....................................................3, 5, 6, 34 Indirect Participants.........................................................43 Initial Contracts...........................................................2, 9 Initial Cut-off Date........................................................2, 9 Initial Financed Boats......................................................2, 9 Initial Pool Balance......................................................18, 61 Insolvency Laws...............................................................66 Insurance Advances............................................................58 Insured Payment...............................................................40 Interest Accrual Period...................................................13, 14 Interest Rate..................................................................8 IRS...........................................................................68 Issuer.........................................................................5 Late Fees.................................................................14, 56 Limited Guarantee.............................................................41 Liquidity Facility............................................................42 Liquidity Facility Provider...................................................42 List of Contracts.............................................................49 MHC...........................................................................30 Military Reservist Relief Act.................................................50 Monthly Advance...........................................................16, 55 Non-Reimbursable Payment..................................................17, 55 Note Distribution Account.....................................................51 Note Final Scheduled Distribution Date........................................13 Note Owner................................................................25, 35 Note Owners....................................................................8 Note Pool Factor..............................................................29 Noteholders...................................................................45 Notes...................................................................2, 7, 34 Notice........................................................................59 Obligor...................................................................10, 55 Oklahoma Tax Counsel..........................................................70 Original Certificate Balance..................................................26 Owner Trustee..................................................................5 Paid-Ahead Account............................................................52 Paid-Ahead Period.............................................................28 Paid-Ahead Precomputed Contract...............................................28 81 Paid-Ahead Simple Interest Contract...........................................28 Participants..................................................................42 Pass-Through Rate.......................................................6, 7, 34 Payment Shortfall.....................................................16, 17, 55 Pool Balance..................................................................18 Pooling and Servicing Agreement................................................3 Precomputed Contracts.........................................................28 Preferred Mortgage........................................................22, 63 Pre-Funded Amount.............................................................11 Pre-Funded Percentage.........................................................23 Pre-Funding Account............................................................7 Prospectus Supplement..........................................................2 PTCE..........................................................................70 Purchase Agreement............................................................10 Purchase Agreements...........................................................48 Purchase Price................................................................50 Rating Agency.............................................................19, 71 Rating Agency Condition.......................................................36 Record Date...............................................................13, 34 Registration Statement.........................................................3 Related Documents.............................................................38 Repurchase Event..............................................................10 Repurchased Contract......................................................10, 50 Required Servicer Ratings.....................................................54 Reserve Account...............................................................41 Reserve Fund..................................................................41 Retained Yield................................................................51 Sale and Servicing Agreement...................................................3 Securities..............................................................2, 7, 34 Security Owner................................................................35 Securityholder................................................................43 Securityholders...............................................................45 Seller......................................................................2, 5 Selling Trust..................................................................5 Servicer....................................................................3, 5 Servicer Letter of Credit.....................................................54 Servicer Payment..............................................................14 Servicing Fee.........................................................17, 18, 53 Servicing Fee Rate....................................................17, 18, 54 Ship Mortgage Act.........................................................22, 63 Simple Interest Contracts.....................................................27 Soldiers' and Sailors' Civil Relief Act.......................................50 Spread Account................................................................41 Stockholders Agreement........................................................30 Stripped Certificates..........................................................7 Stripped Notes.................................................................8 Subsequent Contracts........................................................2, 9 Subsequent Cut-off Date....................................................2, 11 Subsequent Financed Boats...................................................2, 9 Subsequent Purchase Agreement.................................................11 Subsequent Transfer Agreement.................................................11 Subsequent Transfer Date......................................................11 Terms and Conditions..........................................................44 Trust.......................................................................2, 5 Trust Agreement................................................................3 Trust Documents...............................................................48 82 Trustee.....................................................................3, 5 Trustees....................................................................5, 6 UCC.......................................................................21, 62 Underwriters..................................................................71 Underwriting Agreement........................................................71 Yield Supplement Account......................................................41 83 No dealer, salesperson or other person has been authorized to give any information or to make any representation not contained in this Prospectus Supplement and the accompanying Prospectus and, if given or made, such information or representation must not be relied upon as having been authorized by the Company, CITSF or any Underwriter. This Prospectus Supplement and the accompanying Prospectus do not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered hereby in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation. Neither the delivery of this Prospectus Supplement or the accompanying Prospectus nor any sale made hereunder shall, under any circumstances, create any implication that the information herein is correct as of any time subsequent to the date hereof or that there has been no change in the affairs of the Company since such date. -------------- Table of Contents Prospectus Supplement Page ---- Summary ................................................................... S-3 Risk Factors .............................................................. S-19 Structure of the Transaction .............................................. S-23 The Trust Property ........................................................ S-24 The Contract Pool ......................................................... S-25 Maturity and Prepayment Considerations .................................... S-29 Yield and Prepayment Considerations ....................................... S-34 Pool Factors .............................................................. S-34 Use of Proceeds ........................................................... S-35 The CIT Group/Sales Financing, Inc., Servicer ............................. S-35 The Certificates .......................................................... S-39 The Notes ................................................................. S-41 Enhancement ............................................................... S-43 The Purchase Agreements and the Trust Documents ........................... S-45 Certain Federal Income Tax Consequences ................................... S-47 Plan of Distribution ...................................................... S-47 Ratings ................................................................... S-48 Legal Matters ............................................................. S-48 Annex I ................................................................... S-49 Index of Principal Terms .................................................. S-52 Prospectus Available Information ..................................................... 3 Reports to Securityholders ................................................ 3 Documents Incorporated by Reference ....................................... 4 Summary ................................................................... 5 Risk Factors .............................................................. 21 The Trusts ................................................................ 25 The Trust Property ........................................................ 26 The Contract Pool ......................................................... 26 Yield and Prepayment Considerations ....................................... 28 Pool Factors .............................................................. 29 Use of Proceeds ........................................................... 29 The CIT Group, Inc. ....................................................... 30 The CIT Group Securitization Corporation II, Seller ....................... 30 The CIT Group/Sales Financing, Inc., Servicer ............................. 31 The Certificates .......................................................... 33 The Notes ................................................................. 34 Enhancement ............................................................... 39 Certain Information Regarding the Securities .............................. 42 The Purchase Agreements and the Trust Documents ........................... 48 Certain Legal Aspects of the Contracts .................................... 61 Certain Federal Income Tax Consequences ................................... 67 Certain State Tax Consequences ............................................ 68 ERISA Considerations ...................................................... 68 Plan of Distribution ...................................................... 69 Financial Information ..................................................... 70 Ratings ................................................................... 70 Legal Matters ............................................................. 70 Experts ................................................................... 70 Index of Principal Terms .................................................. i Until ninety days after the date of this Prospectus Supplement, all dealers effecting transactions in the Securities, whether or not participating in this distribution, may be required to deliver a Prospectus Supplement and the Prospectus. This is in addition to the obligation of dealers to deliver a Prospectus Supplement and the Prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. $----------- (Approximate) CIT Marine Trust ____-_ $---------- --% Asset-Backed Notes $________ ___% Asset-Backed Certificates The CIT Group Securitization Corporation II, Seller The CIT Group/Sales Financing, Inc., Servicer [Underwriters] Prospectus Dated PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution. The following is an itemized list of the estimated expenses to be incurred in connection with the offering of the securities being offered hereunder other than underwriting discounts and commissions. SEC registration fee................................ $ 363,286.37 Attorney's fees and expenses ....................... 450,000.00 Accounting fees and expenses ....................... 120,000.00 Blue sky fees and expenses ......................... 60,000.00 Rating agency fees ................................. 370,000.00 Trustee's fees and expenses ........................ 40,000.00 Printing expenses .................................. 160,000.00 Miscellaneous fees and expenses .................... 50,000.00 ------------- Total........................................... $1,613,286.37 ============= Item 15. Indemnification of Directors and Officers. Subsection (a) of Section 145 of the General Corporation Law of Delaware empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee, or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses (including attorneys' fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit, or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Subsection (b) of Section 145 empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person acted in any of the capacities set forth above, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation except that no indemnification may be made in respect of any claim, issue, or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine that despite the adjudication of liability, but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper. Section 145 further provides that to the extent a director, officer, employee, or agent of a corporation has been successful in the defense of any action, suit, or proceeding referred to in subsections (a) and (b) or in the defense of any claim, issue, or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith; that indemnification provided for by Section 145 shall not be deemed exclusive of any other rights to which the indemnified party may be entitled; and empowers the corporation to purchase and maintain insurance on behalf of any person acting in any of the capacities set forth in the second preceding paragraph against any liability asserted against him or incurred by him in any such capacity or arising out of his status as such whether or not the corporation would have the power to indemnify him against such liabilities under Section 145. The Registrants' By-Laws provide for indemnification of directors and officers of each Registrant to the full extent permitted by Delaware law. Article X of the By-laws of CIT and Article VIII of the By-laws of the Company provide, in effect, that, in addition to any rights afforded to an officer, director or employee of such Registrant by contract or operation of law, II-2 such Registrant may indemnify any person who is or was a director, officer, employee, or agent of such Registrant, or of any other corporation which he served at the request of such Registrant, against any and all liability and reasonable expense incurred by him in connection with or resulting from any claim, action, suit, or proceeding (whether brought by or in the right of such Registrant or such other corporation or otherwise), civil or criminal, in which he may have become involved, as a party or otherwise, by reason of his being or having been such director, officer, employee, or agent of such Registrant or such other corporation, whether or not he continues to be such at the time such liability or expense is incurred, provided that such person acted in good faith and in what he reasonably believed to be the best interests of such Registrant or such other corporation, and, in connection with any criminal action proceeding, had no reasonable cause to believe his conduct was unlawful. Such Articles further provide that any person who is or was a director, officer, employee, or agent of each Registrant or any director or indirect wholly-owned subsidiary of each Registrant shall be entitled to indemnification as a matter of right if he has been wholly successful, on the merits or otherwise, with respect to any claim, action, suit, or proceeding of the type described in the foregoing paragraph. In addition, the Registrants maintain directors' and officers' reimbursement and liability insurance pursuant to standard form policies with aggregate limits of $90,000,000. The risks covered by such policies do not exclude liabilities under the Securities Act of 1933. Pursuant to the form of Underwriting Agreement, the Underwriters will agree, subject to certain conditions, to indemnify the Registrants, their directors, certain of their officers and persons who control the Registrants within the meaning of the Securities Act of 1933 against certain liabilities. Item 16. Exhibits and Financial Statement Schedules. a. Exhibits: 1.1* Form of Underwriting Agreement 3.1 Certificate of Incorporation, as amended, of The CIT Group Securitization Corporation II, incorporated by reference herein to Exhibit 3.1 to Registration Statement 33-65057 3.2 By-laws of The CIT Group Securitization Corporation II, incorporated by reference herein to Exhibit 3.2 to Registration Statement 333-07249 4.1* Form of Indenture between the Trust and the Indenture Trustee 4.2* Form of Trust Agreement between the Company and the Owner Trustee 4.3* Form of Sale and Servicing Agreement among the Company, CITSF and the Trust 4.4* Form of Pooling and Servicing Agreement 4.5* Form of Limited Guarantee 5.1* Opinion of Schulte Roth & Zabel LLP with respect to legality 5.2* Opinion of Richards, Layton & Finger with respect to legality 8.1* Opinion of Schulte Roth & Zabel LLP with respect to tax matters 8.2* Opinion of Crowe & Dunlevy PC with respect to Oklahoma tax matters 10.1* Form of Purchase Agreement 10.2* Form of Subsequent Purchase Agreement 23.1* Consent of Schulte Roth & Zabel LLP (included as part of Exhibit 5.1) 23.2* Consent of Richards, Layton & Finger (included as part of Exhibit 5.2) 23.3** Consent of KPMG Peat Marwick LLP 24.1** Powers of Attorney of The CIT Group Securitization Corporation II (included on page II-4) 23.4* Consent of Crowe and Dunlevy, P.C. (included as part of Exhibit 8.2) 24.2** Powers of Attorney of The CIT Group, Inc. - ------------ * To be filed by amendment. ** Previously filed. II-3 b. Financial Statement Schedules: Not applicable. Item 17. Undertakings. The Registrants hereby undertake: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement; (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the "Act"); (ii) To reflect in the prospectus any fact or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (2) That, for the purpose of determining any liability under the Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. The undersigned Registrants undertake that, for purposes of determining any liability under the Act, each filing of the Registrants' annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the Registration Statement shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. The undersigned Registrants hereby agree to provide to the underwriter at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser. Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of the Registrants pursuant to the foregoing provisions, or otherwise, the Registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrants of expenses incurred or paid by a director, officer or controlling person of the Registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrants will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. The undersigned Registrants hereby undertake to file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of the Act. II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the undersigned registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Town of Livingston, State of New Jersey, on January 27, 1998. THE CIT GROUP SECURITIZATION CORPORATION II By: /s/ JAMES J. EGAN, JR. -------------------------------------- Name: James J. Egan, Jr. Title: President POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date - --------- ----- ---- /s/ JAMES J. EGAN, JR. President and Director January 27, 1998 - --------------------------- (principal executive officer) * Executive Vice President January 27, 1998 - --------------------------- and Director * Director January 27, 1998 - --------------------------- /s/ FRANK GARCIA Vice President January 27, 1998 - --------------------------- (principal financial and accounting officer) By: /s/ JAMES J. EGAN, JR. January 27, 1998 ------------------------- James J. Egan, Jr. Attorney-in-fact Original powers of attorney authorizing Norman H. Rosen, James J. Egan, Jr. and Richard W. Bauerband and each of them to sign the Registration Statement and amendments thereto on behalf of the directors and officers of the Registrant indicated above are held by The CIT Group Securitization Corporation II and available for examination pursuant to Item 302(b) of Regulation S-T. II-5 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the undersigned Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York and State of New York, on January 27, 1998. THE CIT GROUP, INC. By: /s/ ERNEST D. STEIN --------------------------------- Ernest D. Stein Executive Vice President, General Counsel and Secretary Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated: Signature and Title Date ------------------- ---- Albert R. Gamper, Jr.* - ------------------------------------- President, Chief Executive Officer, and Director (Principal executive officer) Hisao Kobayashi* - ------------------------------------- Director Takasuke Kaneko* - ------------------------------------- Director Joseph A. Pollicino* *By /s/ ERNEST D. STEIN January 27, 1998 - ------------------------------------- ------------------- Director Ernest D. Stein Attorney-in-fact II-6 Paul N. Roth* - ------------------------------------- Director Peter J. Tobin* - ------------------------------------- Director Yukiharu Uno* - ------------------------------------- Director Yoshiro Aoki* - ------------------------------------- Director Keiji Torii* - ------------------------------------- Director Tohru Tonoike* - ------------------------------------- Director /s/ JOSEPH M. LEONE - ------------------------------------- Joseph M. Leone January 27, 1998 Executive Vice President and Chief Financial Officer principal financial and accounting officer) Original powers of attorney authorizing Albert R. Gamper, Jr., Ernest D. Stein, and Donald J. Rapson and each of them to sign the Registration Statement and amendments thereto on behalf of the directors and officers of the Registrant indicated above are held by The CIT Group, Inc. and available for examination pursuant to Item 302(b) of Regulation S-T. II-7 EX-1.1 2 UNDERWRITING AGREEMENT Exhibit 1.1 CIT MARINE TRUST ____-_ $___________ CLASS A ____% ASSET BACKED NOTES $___________ ____% ASSET BACKED CERTIFICATES THE CIT GROUP SECURITIZATION CORPORATION II (SELLER) ____________, ____ UNDERWRITING AGREEMENT [ ] as Representative of the Several Underwriters (the "Representative"), [address] Ladies and Gentlemen: 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") proposes to cause CIT Marine Trust ____-_ (the "Trust") to issue and sell $ ___________ principal amount of its Class A ____ % Asset Backed Notes (the "Notes") and $___________ principal amount of its ____ % Asset Backed Certificates (the "Certificates" and, together with the Notes, the "Securities"). The Securities are registered under the registration statement referred to in Section 2(a). The assets of the Trust include, among other things, a pool of receivables generated pursuant to marine installment sale contracts, marine installment loan contracts or notes and U.S. Preferred Ship Mortgages (the "Initial Contracts") secured by the new and used boats financed thereby (the "Initial Financed Boats") and certain monies received thereunder on or after ____________ , ____, [amounts deposited in the Pre-Funding Account and Capitalized Interest Account,] [the right to receive payments under certain circumstances from funds deposited in the Cash Collateral Account pursuant to the Cash Collateral Agreement to be dated as of ____________ , ____ (the "Cash Collateral Agreement") between the Trust, the Owner Trustee, the Servicer and ____________________ (the "Cash Collateral Depositor") and the Sale and Servicing Agreement (as defined below),] [additional receivables generated pursuant to marine installment sale contracts (the "Subsequent Contracts"; and together with the Initial Contracts, the "Contracts") secured by the new and used boats financed thereby (the "Subsequent Financed Boats;" and together with the Initial Financed Boats, the "Financed Boats") to be conveyed to the Trust subsequent to the date of issuance of the Securities and certain monies received thereunder on or after their respective subsequent cutoff dates,] and the other property and the proceeds thereof to be conveyed to the Trust pursuant to the Sale and Servicing Agreement to be dated as of ____________ , ____ (the "Sale and Servicing Agreement") among the Trust, the Seller, and The CIT Group/Sales Financing, Inc., a wholly-owned subsidiary of CIT, as servicer ("CITSF" or the "Servicer"). The Contracts and other assets of the Trust will be sold by CITSF to the Seller pursuant to a Purchase Agreement to be dated as of ____________ , ____ (the "Purchase Agreement") between CITSF and the Seller, and finally by the Seller to the Trust pursuant to the Sale and Servicing Agreement. Certain of the Contracts and other property sold by CITSF to the Seller will first be purchased by CITSF from The CIT Group/Consumer Finance, Inc. (NY) ("CITCF-NY") pursuant to a Purchase Agreement to be dated as of _____________ , ____ (the "CITCF-NY Sale Agreement") between CITCF-NY and CITSF. The Servicer will service the Contracts on behalf of the Trust pursuant to the Sale and Servicing Agreement. The Notes will be issued pursuant to the Indenture to be dated as of _____________ , ____ (as amended and supplemented from time to time, the "Indenture"), between the Trust and ____________________ (the "Indenture Trustee"). Pursuant to the Sale and Servicing Agreement, the Servicer will agree to perform certain administrative tasks imposed on the Trust under the Indenture. The Certificates, each representing a fractional undivided interest in the Trust, will be issued pursuant to a Trust Agreement to be dated as of ____________ , ____ (the "Trust Agreement"), between the Seller and ____________________ , as owner trustee (the "Owner Trustee"). Capitalized terms used herein and not otherwise defined shall have the meanings given them in the Sale and Servicing Agreement and the Indenture. The Seller and CITSF hereby agree with the several Underwriters named in Schedule I hereto (the "Underwriters") as follows: 2. Representations and Warranties of the Seller and CITSF. Each of the Seller 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 Securities pursuant to Section 3 hereof (the "Closing Date") that: (a) A registration statement on Form S-3 (No. 333-______) relating to the Securities, including a form of prospectus, has been filed with the Securities and Exchange Commission (the "Commission") and either (i) has been declared effective under the Securities Act of 1933, as amended (the "Act"), and is not proposed to be amended or (ii) is proposed to be amended by amendment or post-effective amendment. If the Seller does not propose to amend such registration statement and if any post-effective amendment to such registration statement has been filed with the Commission prior to the execution and delivery of this Agreement, the most recent such amendment has been declared effective by the Commission. For purposes of this Agreement, "Effective Time" means (i) if the Seller has advised the Representative that it does not propose to amend such registration statement, the date and time as of which such registration statement, or the most recent post-effective amendment thereto (if any) filed prior to the execution and delivery of this Agreement, was declared effective by the Commission, or (ii) if the Seller has advised the Representative that it proposes to file an amendment or post-effective amendment to such registration statement, the date and time as of which such registration statement, as amended by such amendment or post-effective amendment, as the case may be, is declared effective by the Commission. "Effective Date" means the date of the Effective Time. Such registration statement, as amended at the Effective Time, including all material incorporated by reference therein and including all information (if any) deemed to be a part of such registration statement as of the Effective Time pursuant to Rule 430A(b) under the Act, is hereinafter referred to as the "Registration Statement," and the form of prospectus relating to the Securities, as first filed with the Commission pursuant to and in accordance with Rule 424(b) ("Rule 424(b)") under the Act or (if no such filing is required) as included in the Registration Statement, including all material incorporated by reference in such prospectus is hereinafter referred to as the "Prospectus." (b) If the Effective Time is prior to the execution and delivery of this Agreement: (i) on the Effective Date, the Registration Statement conformed in all respects to the requirements of the Act, the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act") and the rules and regulations of the Commission promulgated under the Act and the Trust Indenture Act (the "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 (ii) on the date of this Agreement, the Registration Statement conforms, and at the time of filing of the Prospectus pursuant to Rule 424(b), the Registration Statement and the Prospectus will conform, in all respects to the requirements of the Act, the Trust Indenture Act and the Rules and Regulations, and neither of such documents includes, or will include, any untrue statement of a material fact or omits, or will omit, to state any material fact required to be stated therein or necessary to make the statements therein not misleading. If the Effective Time is subsequent to the execution and delivery of this Agreement: (i) on the Effective Date, the Registration Statement and the Prospectus will conform in all material respects to the requirements of the Act, the Trust Indenture Act and the Rules and Regulations, (ii) on the Effective Date, the Registration Statement will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading and (iii) on the Effective Date, at the time of filing of the Prospectus pursuant to Rule 424(b) and at the Closing Date, the Prospectus will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The two preceding sentences do not apply to statements in or omissions from the Registration Statement or Prospectus based upon written information furnished to the Seller by any Underwriter through the Representative specifically for use therein. The Seller and CITSF 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 Underwriters' Information (as defined in Section 7(a)). (c) Each of the Seller and CITSF have been duly organized and are validly existing as corporations in good standing under the laws of the State of Delaware. CITCF-NY has been duly organized and is validly existing as a corporation in good standing under the laws of the State of New York. Each of the Seller, CITSF and CITCF-NY have corporate power and authority to own, lease and operate their respective properties and conduct their respective businesses as described 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, CITSF and CITCF-NY 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 Sale and Servicing Agreement, the Trust Agreement, the Indenture, [the Cash Collateral Agreement,] the CITCF-NY Sale Agreement, the Purchase Agreement, the Note Depository Agreement and the Certificate Depository Agreement. (d) 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 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. (e) Neither CITSF nor CITCF-NY 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 of CITSF or CITCF-NY 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. (f) 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 its corporate power 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 Securities 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, nor the grant of the security interest in the Collateral to the Indenture Trustee pursuant to the Indenture, 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 its certificate of incorporation or by-laws 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. (g) The execution and delivery by each of CITSF and CITCF-NY 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 CITSF and CITCF-NY and duly authorized by all necessary corporate action on the part of each of CITSF and CITCF-NY on and as of the Closing Date; and neither the issuance and sale of the Securities to the Underwriters, nor the execution and delivery by CITSF and CITCF-NY of any of the Basic Documents to which it is a party, nor the consummation by CITSF and CITSF-NY of the transactions therein contemplated, nor compliance by CITSF and CITCF-NY with the provisions hereof or thereof, nor the grant of the security interest in the Collateral to the Indenture Trustee pursuant to the Indenture, 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 CITSF or CITCF-NY or their respective properties or the certificate of incorporation or by-laws of CITSF or CITCF-NY, or any of the provisions of any material indenture, mortgage, contract or other instrument to which CITSF or CITCF-NY is a party or by which CITSF or CITCF-NY 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. (h) This Agreement has been duly authorized, executed and delivered by each of the Seller and CITSF, and it constitutes 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, (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. (i) The Sale and Servicing Agreement when executed and delivered on the Closing Date will be duly authorized, executed and delivered by each of the Seller and CITSF, and 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). (j) The Trust Agreement when executed and delivered on the Closing Date will be duly authorized, executed and delivered by the Seller, and will constitute a legal, valid and binding instrument enforceable against the Seller 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). [(k) The Cash Collateral Agreement when executed and delivered on the Closing Date will be duly authorized, executed and delivered by CITSF and will constitute a legal, valid and binding instrument enforceable against 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 Certificates, when duly and validly executed by the Owner Trustee or an agent thereof on behalf of the Trust, authenticated and delivered in accordance with the Trust Agreement, and delivered to and paid for pursuant hereto will be validly issued and outstanding and entitled to the benefits of the Trust Agreement. (m) The Notes, when duly and validly executed by the Owner Trustee or an agent thereof on behalf of the Trust, authenticated and delivered in accordance with the Indenture, and delivered and paid for pursuant hereto will be validly issued and outstanding and entitled to the benefits of the Indenture. (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 or 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, CITSF and CITCF-NY 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 the Certificateholders or the Noteholders under the Basic Documents, and none of the Seller, CITSF or CITCF-NY has 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, CITSF or CITCF-NY 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 and related property will have been duly and validly assigned to the Owner Trustee in accordance with the Basic Documents; 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, CITSF or CITCF-NY will have occurred. As of the Closing Date, the Trust's grant of a security interest in the Collateral to the Indenture Trustee pursuant to the Indenture will vest in the Indenture Trustee, for the benefit of the Noteholders, a first priority perfected security interest therein, subject to no prior lien, mortgage, security interest, pledge, charge or other encumbrance created by the Seller, CITSF or CITCF-NY. [As of each Subsequent Transfer Date, the Subsequent Contracts and related property conveyed to the Trust on such date will have been duly and validly assigned to the Owner Trustee in accordance with the Basic Documents; and when such assignment is effected, the duly and validly perfected transfer of all such Subsequent Contracts will be subject to no prior lien, mortgage, security interest, pledge, charge or other encumbrance created by the Seller, CITSF or CITCF-NY. As of each Subsequent Transfer Date, the Trust's grant of a security interest in the Collateral sold to the Trust on such Subsequent Transfer Date pursuant to the Indenture will vest in the Indenture Trustee, for the benefit of the Noteholders, a first priority perfected security interest therein, subject to no prior lien, mortgage, security interest, pledge, charge or other encumbrance created by the Seller, CITSF or CITCF-NY. (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, each of the Subsequent Contracts being transferred to the Trust will meet the eligibility criteria described in the Prospectus]. (r) The chief executive office of each of the Seller, CITSF and CITCF-NY is listed opposite its name on Schedule II hereto, which office is the place where it is "located" for the purposes of Section 9-103(3)(d) of the Uniform Commercial Code as in effect in the State of New York, and the offices of each of the Seller, CITSF and CITCF-NY where it keeps its respective records concerning the Contracts are also listed in said Schedule opposite its name and there have been no other such locations during the four months preceding the Closing Date. (s) Neither the Seller, CITSF nor the Trust Fund created by the Sale and Servicing Agreement will be subject to registration as an "investment company" under the Investment Company Act of 1940, as amended (the "Investment Company Act"). (t) In connection with the offering of the 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. (u) As of the Closing Date, each of the respective representations and warranties of the Seller, CITSF and CITCF-NY set forth in the Basic Documents 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 Securities. 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 cause the Trust to sell to the Underwriters, and the Underwriters agree, severally and not jointly, to purchase from the Trust, the principal amount of the Notes set forth opposite the name of such Underwriter in Schedule I hereto at a purchase price equal to the Total Price to Seller specified in Schedule III hereto plus accrued interest at the Class A Rate from ____________, ____ to (but excluding) the Closing Date, and the principal balance of the Certificates set forth opposite the name of such Underwriter in Schedule I hereto at a purchase price equal to the Total Price to Seller specified in Schedule IV hereto plus accrued interest at the Pass-Through Rate from ____________, ____ to (but excluding) the Closing Date. The Seller will deliver the Securities to the Representative, for the account of the Underwriters, 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, at the office of Schulte Roth & Zabel LLP, 900 Third Avenue, New York, New York 10022 on ____________ , ___ at 10:00 a.m., New York City 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 Securities to be so delivered will be initially represented by one or more Notes and 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 Securities will be represented by book entries on the records of DTC and participating members thereof. [One Certificate in definitive form in the principal amount of $___________ will be registered in the name of ____________________ (the "Affiliated Purchaser Certificate"). Definitive Notes and Definitive Certificates (other than the Affiliated Purchaser Certificate) will be available only under the limited circumstances set forth in the Indenture and Trust Agreement. The notes and certificates evidencing the Notes and Certificates will be made available for checking and packaging at the offices of Schulte Roth & Zabel LLP at least 24 hours prior to the Closing Date. 4. Offering by Underwriters. It is understood that, after the Registration Statement becomes effective, the Underwriters propose to offer the Securities for sale to the public (which may include selected dealers), on the terms set forth in the Prospectus. 5. Covenants of the Seller and CITSF. Each of the Seller and CITSF, jointly and severally, covenants and agrees with the several Underwriters that: (a) If the Effective Time is prior to the execution and delivery of this Agreement, the Seller will file the Prospectus, properly completed, with the Commission pursuant to and in accordance with subparagraph (1) (or, if applicable and if consented to by the Representative, subparagraph (4)) of Rule 424(b) not later than the earlier of (i) the second business day following the execution and delivery of this Agreement or (ii) the fifth business day after the Effective Date. The Seller will advise the Representative promptly of any such filing pursuant to Rule 424(b). (b) The Seller will advise the Representative promptly of any proposal to amend or supplement the registration statement as filed or the related prospectus or 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 Seller will also advise the Representative promptly of the effectiveness of the Registration Statement (if the Effective Time is subsequent to the execution and delivery of this Agreement) and of any amendment or supplementation of the 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 Seller will arrange for the qualification of the 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 Securities, provided that in connection therewith the Seller 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 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 Seller 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 the consent of the Representative 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) As soon as practicable, but not later than the Availability Date (as defined below), the Seller will cause the Trust to make generally available to Noteholders and Certificateholders an earnings statement of the Trust covering a period of at least 12 months beginning after the Effective Date which will satisfy the provisions of Section 11(a) of the Act and Rule 158 of the applicable Rules and Regulations thereunder. For the purpose of the preceding sentence, "Availability Date" means the 45th day after the end of the fourth fiscal quarter following the fiscal quarter that includes the Effective Date, except that, if such fourth fiscal quarter is the last quarter of the Trust's fiscal year, "Availability Date" means the 90th day after the end of such fourth fiscal quarter. (f) The Seller will furnish to each of the Underwriters copies of the Registration Statement (two of which will be signed and include all 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 Securities are outstanding, the Seller 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 Noteholders and/or 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 Seller with the Commission pursuant to the Exchange Act and (ii) such additional information concerning the Seller or CITSF (relating to the Contracts, the servicing thereof or the ability of CITSF to act as Servicer), the Notes, the Certificates 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 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 Securities, (ii) any fees charged by Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's Structured Ratings Group, a Division of The McGraw-Hill Companies, Inc. ("S&P" and, together with Moody's, the "Rating Agencies"), for the rating of the Securities, (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 and CITSF and the independent public accountants of the Seller, (v) the fees and disbursements of the Indenture Trustee and its counsel, (vi) the fees and disbursement of the Owner Trustee and its counsel, (vii) the fees of DTC in connection with the book-entry registration of the Securities, (viii) the reasonable expenses of the Representative including the reasonable fees and disbursements of its counsel, in connection with the initial qualification of the 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 (ix) the printing and delivery to the Underwriters, in such quantities as the Underwriters may reasonably request, of copies of the Basic Documents. 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 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, CITSF and CITCF-NY shall cause each of their respective books and records (including any computer records) relating to the Initial Contracts to be marked to show the absolute ownership by the Owner Trustee in accordance with Section 3.01B(d) of the Sale and Servicing Agreement, on behalf of the Trust, of the Initial Contracts, and from and after the Closing Date neither the Seller, CITSF, as Servicer, nor CITCF-NY shall take any action inconsistent with the ownership by the Owner Trustee on behalf of the Trust of the Initial Contracts, other than as permitted by the Basic Documents. (j) On or before each Subsequent Transfer Date, the Seller, CITSF and CITCF-NY shall cause each of their respective books and records (including any computer records) relating to the Subsequent Contracts to be sold on such Subsequent Transfer Date to be marked to show the absolute ownership by the Owner Trustee in accordance with Section 3.01B(d) of the Sale and Servicing Agreement, on behalf of the Trust, of such Subsequent Contracts, and from and after such Subsequent Transfer Date neither the Seller, CITSF, as Servicer, nor CITCF-NY shall take any action inconsistent with the ownership by the Owner Trustee on behalf of the Trust of such Subsequent Contracts, other than as permitted by the Basic Documents. (k) Until the retirement of the Securities, or until such time as the Underwriters shall cease to maintain a secondary market in the Securities, whichever occurs first, the Seller or CITSF will deliver to the Representative the certified public accountants' annual statements of compliance furnished to the Indenture Trustee or the Owner Trustee pursuant to the Indenture and the Sale and Servicing Agreement, as soon as such statements are furnished to the Indenture Trustee or the Owner Trustee. (l) To the extent, if any, that either of the ratings provided with respect to the Securities by either Rating Agency is conditional upon the furnishing of documents or the taking of any other actions by the Seller, CITSF or CITCF-NY, the Seller, CITSF or CITCF-NY, as the case may be, shall furnish such documents and take any such other actions as may be required to satisfy such conditions. A copy of any such document shall be provided to the Representative at the time it is delivered to the Rating Agencies. 6. Conditions of the Obligations of the Underwriters. The obligations of the several Underwriters to purchase and pay for the Securities will be subject to the accuracy of the representations and warranties on the part of the Seller and CITSF, and contained or incorporated herein, to the accuracy of the statements of officers of the Seller and CITSF made pursuant to the provisions hereof, to the performance by the Seller and CITSF of its obligations hereunder and to the following additional conditions precedent: (a) On the date of this Agreement, the Representative and the Seller shall have received a letter, dated the date of delivery thereof, of KPMG Peat Marwick LLP confirming that they are independent public accountants with respect to the Seller and CITSF within the meaning of the Act and the Rules and Regulations, substantially in the form of the draft to which the Representative has previously agreed and otherwise in form and substance satisfactory to the Representative and counsel for the Underwriters. (b) If the Effective Time is not prior to the execution and delivery of this Agreement, the Effective Time shall have occurred not later than 10:00 p.m., New York City time, on the date of this Agreement or such later date as shall have been consented to by the Representative. If the Effective Time is prior to the execution and delivery of this Agreement, 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 Seller, shall be contemplated by the Commission. (c) The Representative shall have received a certificate, dated the Closing Date, executed by any two of the President, any Vice President, the principal financial officer or the principal accounting officer of (i) the Seller representing and warranting that, as of the Closing Date, to the best of each such officer's knowledge after reasonable investigation, the representations and warranties of the Seller in this Agreement and the other Basic Documents to which it is a party 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 or thereunder 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 and (ii) CITSF in which such officers shall state that, to the best of each such officer's knowledge after reasonable investigation, the representations and warranties of CITSF in this Agreement and the other Basic Documents to which it is a party 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 or thereunder at or prior to the Closing Date. (d) Subsequent to the execution and delivery of this Agreement, there shall not have occurred (i) any change, or any development involving a prospective change, in or affecting particularly the business or properties of the Trust, the Seller, CITSF or CITCF-NY which, in the judgment of a majority in interest of the Underwriters (including the Representative), materially impairs the investment quality of the Securities or makes it impractical or inadvisable to proceed with completion of the sale of and payment for the Securities; (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 Securities. (e) The Representative shall have received a written opinion of in-house General Counsel of the Seller, CITSF and CITCF-NY, or other counsel satisfactory to the Representative in its reasonable judgment, dated the Closing Date, in substantially the form set forth below, with such changes therein as the Representative and 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. CITCF-NY has been duly organized and is validly existing as a corporation in good standing under the laws of the State of New York. (ii) The Seller, CITSF and CITCF-NY 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, CITSF and CITCF-NY 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 Basic Documents to which it is a party. The Seller, CITSF and CITCF-NY 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, CITSF or CITCF-NY, respectively or on their ability to perform their respective obligations under the Basic Documents. (iv) This Agreement has been duly authorized, executed and delivered by each of the Seller and CITSF, and is 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, (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) Each of the Basic Documents to which the Seller, CITSF or CITCF-NY is a party have been duly authorized, executed and delivered by each of the Seller, CITSF and CITCF-NY, and each constitutes a valid and binding obligation of, each of the Seller, CITSF and CITCF-NY, enforceable against each of the Seller, CITSF and CITCF-NY 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, CITSF and CITCF-NY 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, CITSF and CITCF-NY, as applicable, and have been duly authorized by all necessary corporate action on the part of the Seller, CITSF and CITCF-NY, as applicable; and neither the issue and sale of the Securities, nor the consummation of the transactions contemplated by the Basic Documents nor the fulfillment of the terms thereof, nor the grant of the security interest in the Collateral to the Indenture Trustee pursuant to the Indenture 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, CITSF or CITCF-NY pursuant to, any contract, indenture, mortgage, loan agreement, note, lease or other instrument, if any, to which the Seller, CITSF or CITCF-NY is a party or by which either may be bound or to which the property or assets of the Seller, CITSF or CITCF-NY are subject (which contracts, indentures, mortgages, loan agreements, notes, leases and other such instruments, if any, have been identified by the Seller, CITSF or CITCF-NY 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, CITSF or CITCF-NY 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, CITSF or CITCF-NY. (vii) The Seller has duly authorized, executed and delivered the written order to the Owner Trustee to execute and deliver the Issuer Order to the Indenture Trustee. (viii) The Seller has duly authorized, executed and delivered the written order to the Owner Trustee to execute and deliver the Certificates. (ix) 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, New York or federal court or governmental authority or agency is required for the consummation by the Seller, CITSF or CITCF-NY 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. (x) There are no legal or governmental proceedings pending to which the Seller, CITSF or CITCF-NY is a party or of which any property of the Seller, CITSF or CITCF-NY 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 Notes or the Certificates, (3) that could materially and adversely affect the Seller's, CITSF's or CITCF-NY's obligations under any of the Basic Documents or (4) seeking to affect adversely the federal or state income tax attributes of the Securities. (xi) Such counsel is familiar with CITSF's and CITCF-NY's standard operating procedures relating to CITSF's and CITCF-NY's acquisition of a perfected first priority security interest in the boats financed by CITSF and CITCF-NY's pursuant to marine installment sale contracts and marine installment loan contracts and notes and U.S. Preferred Ship Mortgages in the ordinary course of CITSF's and CITCF-NY's business. Other than with respect to mechanic's and materialmen's liens, assuming that CITSF's standard procedures are followed with respect to the perfection of security interests in the Financed Boats (and such counsel has no reason to believe that either CITSF or CITCF-NY has not or will not continue to follow its standard procedures in connection with the perfection of security interests in the Financed Boats), CITSF and CITCF-NY have acquired or will acquire a perfected first priority security interest in the Financed Boats. (xii) The Contracts are chattel paper, as defined in the UCC in the State of New Jersey. (xiii) The form of assignment to be executed and delivered by CITSF to the Seller pursuant to the Purchase Agreement is sufficient in form and substance to convey to the Seller all of CITSF's right, title and interest in and to the Contracts and any security interests securing the Contracts. When the Purchase Agreement has been duly executed and delivered by all parties thereto, the assignment described in the Purchase Agreement has been duly executed and delivered to the Seller by CITSF, and the purchase price has been paid to CITSF by the Seller in the manner specified in the Purchase Agreement, all of CITSF's right, title and interest in and to the Contracts and any security interests securing the Contracts will have been conveyed to the Seller and the Seller will be the holder of a valid, binding and enforceable security interest in the Contracts. (xiv) The form of assignment to be executed and delivered by the Seller to the Owner Trustee pursuant to the Sale and Servicing Agreement is sufficient in form and substance to convey to the Owner Trustee all of the Seller's right, title and interest in and to the Contracts and any security interests securing the Contracts. When the Basic Documents have each been duly executed and delivered by all parties thereto, the assignment described in the Sale and Servicing Agreement has been duly executed and delivered to the Trust by the Seller, the purchase price therefor has been paid to the Seller by the Trust in the manner specified in the Sale and Servicing Agreement, and the Notes and the Certificates have been duly executed and duly authenticated and delivered by the Owner Trustee or the Indenture Trustee, as applicable, to or upon the order of the Seller in accordance with the Sale and Servicing Agreement, the Indenture and the Trust Agreement, all of the Seller's right, title and interest in and to the Contracts and any security interests securing the Contracts will have been conveyed to the Trust and the Trust will be the holder of a valid and binding security interest in the Contracts. (f) The Representative shall have received a written opinion of [Lowenstein, Sandler, Kohl, Fisher and Boylan], special local New Jersey counsel for the Seller and CITSF, dated the Closing Date, in form and substance satisfactory to the Representative and counsel for the Underwriters, to the effect that: (i)(A) If the transfer of the Contracts is deemed to be the grant of a security interest, and not a true sale, (1) to the extent that the Uniform Commercial Code as in effect in the State of New Jersey (the "New Jersey UCC") applies to the perfection of the Seller's security interests in the Contracts and the proceeds thereof under Section 9-103 of the New Jersey UCC, when the financing statements executed by CITSF as debtor (the "First Step Financing Statements") have been duly executed and delivered and filed or recorded, as appropriate, in the office of the Secretary of State of New Jersey, such security interests will be perfected and (2) to the extent that the New Jersey UCC applies to the perfection of the Trust's security interests in the Contracts and the proceeds thereof under Section 9-103 of the New Jersey UCC, when the First Step Financing Statements and the financing statements executed by the Seller as "debtor" ("Second Step Financing Statements") have been duly executed and delivered and filed or recorded, as appropriate, in the office of the Secretary of State of New Jersey, such security interests will be perfected and (B) based solely on such counsel's review of those Financing Statements, officer certificates and specified New Jersey UCC search reports, the security interests of the Trust in the Contracts are subject to no equal or prior security interest under the New Jersey UCC; provided, however that (1) for purposes of its opinions in this paragraph, such counsel may assume that: (a) the Seller is the holder of valid, binding and enforceable security interests in the Contracts and the Trust is the holder of valid, binding and enforceable security interests in the Contracts; (b) the Contracts constitute "chattel paper," as such term is defined in Section 9-105 of the New Jersey UCC; (c) the New Jersey UCC governs the perfection of the security interest in the Contracts, the priority of those security interests and the classification of the Contracts; (d) the chief executive office of each of the Company and the Seller is, and during the past four months has been, in the State of New Jersey; (e) neither CITSF, the Seller nor the Trust has assigned, nor will assign, any Contract to a buyer who takes possession of it in the ordinary course of its business and who acts without knowledge that such Contract is subject to a security interest; (f) the Contracts exist and each of CITSF and the Seller, respectively, has rights in the Contracts; (g) (i) no lien creditor has executed on or attached to the Contracts prior to the perfection of the security interests of the Seller or the Trust in the Contracts and the proceeds thereof; and (ii) the Contracts are not subject to the rights of the holder of a perfected "purchase money security interest" (as such term is defined in Section 9-107 of the New Jersey UCC); (h) no Contract, or the proceeds thereof, constitutes proceeds of any property subject to the security interest of a third party; (i) none of the proceeds of the Contracts which constitute "securities" under Article 8 of the New Jersey UCC are transferred to a bona fide purchaser (other than the Indenture Trustee) under Section 8-302 of the New Jersey UCC; (j) the Seller, the Indenture Trustee and the Owner Trustee have and will maintain a list describing the Contracts for inspection during normal business hours by interested parties; (k) the underlying facts in the officer certificates to be received by such counsel are correct; (l) all financing statements or other notice of liens, other than the financing statements, in which CITSF, the Seller or the Trust is named as debtor were properly filed and indexed, that the New Jersey UCC search reports have revealed all recorded liens against CITSF and the Seller and that no filings or notices covering CITSF or the Seller were made between the dates last searched and reported on in the New Jersey UCC search reports and the time of such financing statements, and (m) from and after the date hereof CITSF, acting in a capacity as servicer and custodian for the Trustee, will have taken, and will maintain, exclusive possession of the Contracts; and (2) such counsel need express no opinion: (a) regarding perfection as to any government or governmental agency (including without limitation the United States of America or any State thereof or any agency or department of the United States of America or any State thereof) of any security interest in any Contracts with respect to which such government or agency is obligated; (b) on the perfection of any security interests in the collateral described in the Contracts; (c) as to the priority of any perfected security interests under the New Jersey UCC of any liens, claims or other interests that do not require filing or similar action to attach or that arise by operation of law against any claim or lien in favor of the United States or any State or any agency or instrumentality of the United States or any State (including, without limitation, liens arising under the federal tax laws or the Employment Retirement Income Security Act of 1974, as amended) or against the rights of a "lien creditor" (as defined in the New Jersey UCC); and (d) as to the effect of the laws of any other state that may govern the perfection or priority of the security interest in the Contracts by possession or other than by filing a financing statement under the UCC; (3) such opinions may be subject to the effect of (i) the limitations on the existence and perfection of security interests in proceeds resulting from the operation of Section 9-306 of the New Jersey UCC; (ii) the limitations with respect to documents and instruments imposed by Section 9-309 of the New Jersey UCC; (iii) bankers' liens, rights of set-off and other rights of persons in possession of money, instruments and proceeds constituting certificated or uncertificated securities; and (iv) Section 552 of the Bankruptcy Code with respect to any Contracts acquired by the Seller or the Trust subsequent to the commencement of a case by or against CITSF, the Seller or the Trust under the Bankruptcy Code; (4) such counsel's opinions may be inapplicable to any Subsequent Contracts unless, upon the proper filing of New Jersey UCC financing statements describing the Subsequent Contracts, (i) the assumptions, qualifications and limitations in this letter shall be true as to conditions then existing and as to the Subsequent Contracts, (ii) there are no changes in law, and (iii) all searches have been updated and reveal no liens against any of the Subsequent Contracts; and (5) such counsel's opinion may be further subject to the effect of general principles of equity, regardless of whether such principles are considered in a proceeding in equity or at law, as the same may be applied in a proceeding seeking to enforce any obligation. (ii) Solely insofar as the present laws of the State of New Jersey and the Federal law of the United States of America are concerned, in a properly presented and decided case, a court would conclude that the transfer of the Contracts and the proceeds thereof by CITSF to the Seller constitute true sales of such Contracts and, assuming a court reached that conclusion, in such a case a court would conclude that the Contracts and the proceeds would not be considered property of the estate of CITSF pursuant to Section 541 of the Bankruptcy Code, and the Contracts and the proceeds thereof would not be subject to the automatic stay pursuant to Section 362 of the Bankruptcy Code; provided, however, such counsel need express no opinion (A) with respect to how long the Seller could be denied possession of the Contracts before the issues discussed in this paragraph are finally decided on appeal or other review, (B) with respect to the availability of a preliminary injunction or temporary restraining order pursuant to the broad equitable powers granted to a bankruptcy court and (C) as to the conveyance of any Subsequent Contracts unless, upon the proper filing of UCC financing statements describing the Subsequent Contracts, (1) the assumptions, qualifications and limitations in such opinion shall be true as to conditions then existing and (2) all searches have been updated and reveal no liens against any of the Subsequent Contracts. (iii) Solely insofar as the present laws of the State of New Jersey and the Federal law of the United States of America are concerned, in a properly presented and decided case, a court would conclude that the transfer of the Contracts and the proceeds thereof by the Seller to the Trust constitute true sales of such Contracts and, assuming a court reached that conclusion, in such a case a court would conclude that the Contracts and the proceeds would not be considered property of the estate of the Seller pursuant to Section 541 of the Bankruptcy Code, and the Contracts and the proceeds thereof would not be subject to the automatic stay pursuant to Section 362 of the Bankruptcy Code; provided, however, such counsel need express no opinion (A) with respect to how long the Trust could be denied possession of the Contracts before the issues discussed in this paragraph are finally decided on appeal or other review, (B) with respect to the availability of a preliminary injunction or temporary restraining order pursuant to the broad equitable powers granted to a bankruptcy court and (C) as to the conveyance of any Subsequent Contracts unless, upon the proper filing of UCC financing statements describing the Subsequent Contracts, (1) the assumptions, qualifications and limitations in such opinion shall be true as to conditions then existing and (2) all searches have been updated and reveal no liens against any of the Subsequent Contracts. Such opinion may contain such assumptions, qualifications and limitations as are customary in opinions of this type and are reasonably acceptable to counsel to the Underwriters. In rendering such opinion, such counsel may state that they express no opinion as to the laws of any jurisdiction other than the Federal law of the United States of America and the laws of the State of New Jersey. (g) The Representative shall have received a written opinion of Schulte Roth & Zabel LLP, special counsel to the Seller, CITSF and CITCF-NY, dated the Closing Date, in substantially the form set forth below, with such changes therein as the Representative and counsel for the Underwriters shall reasonably agree: (i) When the Notes have been duly executed, delivered and authenticated in accordance with the Indenture and delivered and paid for pursuant to this Agreement, the Notes will be validly issued, outstanding and entitled to the benefits of the Indenture, except that (A) 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) enforcement may be limited by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). (ii) The Registration Statement became effective under the Act as of ____________, ____ and, to the best of such counsel's knowledge, 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 form of the Indenture has been qualified under the Trust Indenture Act. (iv) Neither the Trust Agreement nor the Sale and Servicing Agreement need to be qualified under the Trust Indenture Act. The Trust is not, and will not as a result of the offer and sale of the Securities as contemplated in the Prospectus and in this Agreement become, required to register as an "investment company" under the Investment Company Act. (v) The statements in the Prospectus under the caption "The Notes," "The Certificates" and "The Purchase Agreements and The Trust Documents" insofar as such statements purport to summarize certain terms of the Notes, the Certificates and the Basic Documents, present a fair summary of such documents. (vi) To the best of such counsel's 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. (vii) 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 are correct in all material respects. (viii) 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 applicable Rules and Regulations. Such counsel need express no opinion with respect to the financial statements, the exhibits, annexes and other financial, statistical, numerical or portfolio data, economic conditions or financial condition of the portfolio information included in 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, CITSF, Counsel to 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 or Prospectus (except as stated in Sections 6(g)(v) and 6(g)(vii) 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 and CITSF), no facts have come to their attention that leads such counsel to believe that the Registration Statement, when it became effective, 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 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 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. (h) The Representative shall have received, in form and substance satisfactory to the Representative and counsel for the Underwriters an opinion of Schulte Roth & Zabel LLP, special counsel to the Trust, dated the Closing Date, regarding the creation of a security interest in the Collateral in favor of the Indenture Trustee on behalf of the Noteholders to the extent that a security interest in such Collateral can be created under Article 9 of the UCC as currently in effect in the State of New York. Such opinion may contain such assumptions, qualifications and limitations as are customary in opinions of this type and as are reasonably acceptable to counsel to the Underwriters. In rendering such opinion, such counsel may state that they express no opinion as to the laws of any jurisdiction other than the Federal law of the United States of America and the laws of the State of New York. (i) The Representative shall have received an opinion of [____________________], counsel for the Underwriters, dated the Closing Date, with respect to the validity of the Securities 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) The Representative shall have received an opinion of counsel to the Cash Collateral Depositor, dated the Closing Date, in form and substance satisfactory to the Representative and counsel for the Underwriters, to the effect that: (i) The Cash Collateral Depositor is licensed to maintain a branch in the State of New York and has full power and authority to enter into, and to take all action required of it, under the Cash Collateral Agreement. (ii) The Cash Collateral Agreement has been duly authorized, executed and delivered by the Cash Collateral Depositor. (iii) The Cash Collateral Agreement constitutes a legal, valid and binding agreement of the Cash Collateral Depositor, enforceable against the Cash Collateral Depositor in accordance with its terms, 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 the Cash Collateral Depositor generally, as such laws would apply in the event of bankruptcy, insolvency, liquidation, receivership, or reorganization or any moratorium or similar occurrence affecting the Cash Collateral Depositor, and the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or law).] (k) The Representative shall have received an opinion of [____________________], counsel to the Indenture Trustee, dated the Closing Date, in form and substance satisfactory to the Representative and counsel for the Underwriters, to the effect that: (i) The Indenture constitutes a legal, valid and binding agreement of the Indenture Trustee, enforceable against the Indenture Trustee in accordance with its terms, 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 the Indenture Trustee generally, as such laws would apply in the event of bankruptcy, insolvency, liquidation, receivership, or reorganization or any moratorium or similar occurrence affecting the Indenture Trustee, and the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or law). (ii) The Notes have been duly authenticated and delivered by the Indenture Trustee in accordance with the terms of the Indenture. (iii) he Indenture Trustee is a banking corporation validly existing under the laws of the state of __________ and has full power and authority to enter into, and to take all action required of it, under the Indenture. (iv) The Indenture has been duly authorized, executed and delivered by the Indenture Trustee. (l) The Representative shall have received an opinion of [____________________], counsel to the Owner Trustee, dated the Closing Date, in form and substance satisfactory to the Representative and counsel for the Underwriters, to the effect that: (i) The Owner Trustee is a banking corporation duly incorporated and validly existing under the laws of the State of __________. (ii) The Owner Trustee has the full power and authority to accept the office of owner trustee under the Trust Agreement and to enter into and perform its obligations under the Trust Agreement and the transactions contemplated thereby. (iii) The execution and delivery of the Trust Agreement by the Owner Trustee and the performance by the Owner Trustee of its obligations under the Trust Agreement have been duly authorized by all necessary action of the Owner Trustee and the Trust Agreement has been duly executed and delivered by the Owner Trustee. (iv) The Trust Agreement constitutes valid and binding obligations of the Owner Trustee enforceable against the Owner Trustee in accordance with its terms, except as the enforceability thereof may be (a) limited by bankruptcy, insolvency, reorganization, moratorium, liquidation or other similar laws affecting the rights of creditors generally, and (b) subject to general principals of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). (v) The execution and delivery by the Owner Trustee of the Trust Agreement and the transactions contemplated thereby do not require any consent, approval or authorization of, or any registration or filing with, any applicable governmental authority of the State of Delaware which has not been obtained or done. (vi) Neither the consummation by the Owner Trustee of the transactions contemplated in the Trust Agreement, nor the fulfillment of the terms thereof by the Owner Trustee will conflict with, result in a breach or violation of, or constitute a default under the Article of Association, By-Laws or other organizational documents of the Owner Trustee (m) The Representative shall have received an opinion of Richards, Layton & Finger, special Delaware counsel for the Trust, dated the Closing Date, in form and substance satisfactory to the Representative and counsel for the Underwriters, to the effect that: (i) The Trust Agreement is the legal, valid and binding agreement of the Owner Trustee and the Seller, enforceable against the Owner Trustee and the Seller in accordance with its terms subject to (i) applicable bankruptcy, insolvency, moratorium, receivership, reorganization, fraudulent conveyance and similar laws relating to and affecting the rights and remedies of creditors generally, (ii) principles of equity (regardless of whether considered and applied in a proceeding in equity or at law), and (iii) the effect of applicable public policy on the enforceability of provisions relating to indemnification or contribution. (ii) The Certificate of Trust has been duly filed with the Secretary of State of the State of Delaware. The Trust has been duly formed and is validly existing as a business trust under the Delaware Business Trust Act. (iii) The Trust has the power and authority under the Trust Agreement and the Delaware Business Trust Act to execute, deliver and perform its obligations under the Trust Agreement, the Indenture, the Cash Collateral Agreement, the Sale and Servicing Agreement, the Notes and the Certificates, and to issue the Notes and the Certificates. (iv) The Trust has duly authorized and executed the Trust Agreement, the Indenture, the Cash Collateral Agreement, the Sale and Servicing Agreement, the Notes and the Certificates. (v) The Trust has the power under the Trust Agreement and the Delaware Business Trust Act to pledge the Trust Estate to the Indenture Trustee as security for the Notes. (vi) The Certificates have been executed, authenticated and delivered by the Owner Trustee upon the order of the Seller in accordance with the Trust Agreement and when delivered to and paid for pursuant to this Agreement, the Certificates will be validly issued and outstanding, and the holder of record of any such Certificates will be entitled to the benefits accorded by the Trust Agreement subject to (i) applicable bankruptcy, insolvency, moratorium, receivership, reorganization, fraudulent conveyance and similar laws relating to and affecting the rights and remedies of creditors generally, (ii) principles of equity (regardless of whether considered and applied in a proceeding in equity or at law), and (iii) the effect of applicable public policy on the enforceability of provisions relating to indemnification or contribution. (vii) The Notes have been executed, authorized and delivered by the Owner Trustee upon the order of the Seller in accordance with the Trust Agreement and the Indenture. (viii) To the extent that Article 9 of the Uniform Commercial Code as in effect in the State of Delaware (the "Delaware UCC") is applicable (without regard to conflicts of laws principles), and assuming that the security interest created by the Indenture in the Collateral has been duly created and has attached, upon the filing of a UCC-1 financing statement with the Secretary of State of the State of Delaware, the Indenture Trustee will have a perfected security interest in such Collateral and the proceeds thereof; and such security interest will be prior to any other security interest granted by the Trust that is perfected solely by the filing of financing statements under the Delaware UCC, excluding purchase money security interests under ss. 9-312 of the Delaware UCC and temporarily perfected security interests in proceeds under ss. 9-306 of the Delaware UCC. (ix) No re-filing or other action is necessary under the Delaware UCC in the State of Delaware in order to maintain the perfection of the security interest referenced above except for the filing of continuation statements at five-year intervals. (x) Under ss. 3805(b) of the Delaware Business Trust Act, no creditor of any Certificateholder shall have any right to obtain possession of, or otherwise exercise legal or equitable remedies with respect to, the property of the Trust except in accordance with the terms of the Trust Agreement subject to (i) applicable bankruptcy, insolvency, moratorium, receivership, reorganization, fraudulent conveyance and similar laws relating to and affecting the rights and remedies of creditors generally, (ii) principles of equity (regardless of whether considered and applied in a proceeding in equity or at law), and (iii) the effect of applicable public policy on the enforceability of provisions relating to indemnification or contribution. (xi) Under ss. 3805(c) of the Delaware Business Trust Act, and assuming that the Sale and Servicing Agreement conveys good title to the Contracts to the Trust as a true sale and not as a security arrangement, the Trust, rather than the Certificateholders, is the owner of the Contracts subject to (i) applicable bankruptcy, insolvency, moratorium, receivership, reorganization, fraudulent conveyance and similar laws relating to and affecting the rights and remedies of creditors generally, (ii) principles of equity (regardless of whether considered and applied in a proceeding in equity or at law), and (iii) the effect of applicable public policy on the enforceability of provisions relating to indemnification or contribution. (xii) The execution and delivery by the Owner Trustee of the Trust Agreement and, on behalf of the Trust, of the Indenture and the Sale and Servicing Agreement do not require any consent, approval or authorization of, or any registration or filing with, any governmental authority of the State of Delaware, except for the filing of the certificate of Trust with the Secretary of State. (xiii) Neither the consummation by the Owner Trustee of the transactions contemplated by the Trust Agreement or, on behalf of the Trust, the transactions contemplated by the Trust Agreement, Indenture and the Sale and Servicing Agreement nor the fulfillment of the terms thereof by the Owner Trustee will conflict with or result in a breach or violation of any law of the State of Delaware. Such opinion may contain such assumptions, qualifications and limitations as are customary in opinions of this type and are reasonably acceptable to counsel to the Underwriters. In rendering such opinion, such counsel may state that they express no opinion as to the laws of any jurisdiction other than the Federal law of the United States of America and the laws of the State of Delaware. (q) The Notes shall have been rated "[___]" by Moody's and "[___]" by S&P, and the Certificates shall have been rated at least "[__]" by Moody's and "[__]" by S&P. (r) The Representative shall have received copies of each opinion of counsel delivered to either Rating Agency or the Cash Collateral Depositor, together with a letter addressed to the Representative, dated the Closing Date, to the effect that each Underwriter may rely on each such opinion to the same extent as though such opinion was addressed to each as of its date. (s) The Representative shall have received evidence satisfactory to it and counsel for the Underwriters that, on or before the Closing Date, UCC-1 financing statements shall have been submitted to the Trustee for filing in the appropriate filing offices reflecting (1) the transfer of the interest in the Contracts and the proceeds thereof (A) from CITCF-NY to CITSF, to the extent such Contracts have been transferred to CITSF from CITCF-NY, (B) from CITSF to the Seller, (C) from the Seller to the Owner Trustee, on behalf of the Trust, or the Trust, as the case may be, and (2) the grant of the security interest by the Trust in the Contracts and the proceeds thereof to the Indenture Trustee. (t) 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 Securities 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 Securities as herein contemplated shall be in form and substance satisfactory to the Representative and counsel for the Underwriters. 7. Indemnification and Contribution. (a) CITSF will 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 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 (i) 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 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 and (ii) CITSF shall not, in connection with any one such action or separate but substantially similar or related transactions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys for all such Underwriters, which firm shall be designated in accordance with Section 7(c) hereof. (b) Each Underwriter, severally and not jointly, will indemnify and hold harmless the Seller and CITSF against any losses, claims, damages or liabilities to which the Seller 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 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 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 or CITSF in connection with investigating or defending any such action or claim as such expenses are incurred, it being understood and agreed that (i) the only such information furnished by any Underwriter consists of the following information contained in the Prospectus: (a) the last paragraph at the bottom of the cover page concerning the terms of the offering by the Underwriters, (b) the legend concerning over-allotments and (c) the information contained under the caption "Underwriting" (the "Underwriters' Information") and (ii) the Underwriters shall not, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys for each of the Seller and CITSF, which firm shall be designated in accordance with Section 7(c) hereof. (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 and CITSF on the one hand and the Underwriters on the other from the offering of the Securities but also the relative fault of the Seller 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 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 Securities (before deducting expenses) received by the Seller 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, 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 Securities 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 CITSF under this Section shall be in addition to any liability which the Seller or 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 or CITSF, to each officer of the Seller or CITSF who has signed the Registration Statement and to each person, if any, who controls the Seller 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 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, CITSF or any of their respective representatives, officers or directors or any controlling person, and will survive delivery of and payment for the Securities. If this Agreement is terminated pursuant to Section 9 or if for any reason the purchase of the Securities by the Underwriters is not consummated, the Seller, CITSF and CITCF-NY 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, CITSF and the Underwriters pursuant to Section 7 hereof shall remain in effect. If the purchase of the Securities 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 clauses (iii), (iv) or (v) of Section 6(e) hereof, the Seller 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 Securities. 9. Failure to Purchase the Securities. If any Underwriter or Underwriters default in their obligations to purchase the principal amount of the Notes and/or the Certificates opposite such Underwriter's name on Schedule I hereto and the aggregate principal amount of the Securities that such defaulting Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of the total principal amount of the Securities, the Representative may make arrangements satisfactory to the Seller and CITSF for the purchase of such Notes or 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 Notes and/or the Certificates that such defaulting Underwriters agreed but failed to purchase. If any Underwriter or Underwriters so default and the aggregate principal amount of the Notes and/or the Certificates with respect to such default or defaults exceeds 10% of the total principal amount of the Securities and arrangements satisfactory to the Representative, the Seller and CITSF for the purchase of such Notes and/or 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 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 the Representative at [____________________], Attention: [__________] (facsimile number [______________]); 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 or by the Trust, 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 or the Trust in 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. Counterparts. This Agreement may be executed in any number of counterparts each of which shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Agreement. 15. 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. If the foregoing is in accordance with the Representative's understanding of our agreement, kindly sign and return to us a counterpart hereof, whereupon it will become a binding agreement among the Seller, CITSF and the several Underwriters in accordance with its terms. Very truly yours, THE CIT GROUP SECURITIZATION CORPORATION II By: ________________________________________ Name: Title: THE CIT GROUP/SALES FINANCING, INC. By: ________________________________________ Name: Title: The foregoing Underwriting Agreement is hereby confirmed and accepted as of the date first above written: [____________________] Acting on behalf of itself and as the Representative of the several Underwriters By:________________________________________ Name: Title: SCHEDULE I Underwriter Initial Principal Amount of Notes - ----------- --------------------------------- $ $ TOTAL $ Underwriter Initial Principal Amount of Certificates - ----------- ---------------------------------------- $ $ TOTAL $ SCHEDULE II Locations of Chief Executive Offices and Principal Places of Business The CIT Group Securitization Corporation II 650 CIT Drive Livingston, New Jersey 07039-0491 The CIT Group/Sales Financing, Inc. 650 CIT Drive Livingston, New Jersey 07039-0491 The CIT Group/Consumer Finance, Inc. (NY) 650 CIT Drive Livingston, New Jersey 07039-0491 Locations of Records The CIT Group Securitization Corporation II 715 South Metropolitan Avenue Suite 150 Oklahoma City, Oklahoma 73124-0610 The CIT Group/Sales Financing, Inc. 715 South Metropolitan Avenue Suite 150 Oklahoma City, Oklahoma 73124-0610 The CIT Group/Consumer Finance, Inc. (NY) 715 South Metropolitan Avenue Suite 150 Oklahoma City, Oklahoma 73124-0610 SCHEDULE III Original Principal Notes Amount Price Price Interest Rate Class A-__ $ % $ % Class A-__ $ % $ % Total Price to Public: $ Total Price to Seller: $ Underwriting Discounts and Commissions: $ SCHEDULE IV Original Principal Pass-Through Certificates Amount Price Price Rate Class A-__ $ % $ % Total Price to Public: $ Total Price to Seller: $ Underwriting Discounts and Commissions: $ EX-4.1 3 INDENTURE Exhibit 4.1 CIT MARINE TRUST ____-_ Class A ____% Asset Backed Notes INDENTURE Dated as of ____________, ____ ______________________, Indenture Trustee CROSS-REFERENCE TABLE TIA Section Indenture Section 310(a)(1) 6.11 310(a)(2) 6.11 310(a)(3) 6.10 310(a)(4) 6.14 310(b) 6.11 310(c) Not Applicable 311(a) 6.12 311(b) 6.12 311(c) Not Applicable 312(a) 7.1, 7.2 312(b) 7.2 312(c) 7.2 313(a) 7.4(a), 7.4(b) 313(b)(1) 7.4(a) 313(b)(2) 7.4(a) 313(c) 7.4(a) 313(d) 7.4(a) 314(a) 3.9, 7.3(a) 314(b) 3.6 314(c)(1) 2.2, 2.9, 4.1, 11.1 314(c)(2) 11.1(a) 314(c)(3) 11.1(a) 314(d) 2.9, 11.1(b) 314(e) 11.1(a) 314(f) 11.1(a) 315(a) 6.1(b) 315(b) 6.5 315(c) 6.1(a) 315(d) 6.2, 6.1(c) 315(e) 5.13 316 (a) last sentence 1.1 316(a)(1)(A) 5.11 316(a)(1)(B) 5.12 316(a)(2) Omitted 316(b), (c) 5.7 317(a)(1) 5.3(b) 317(a)(2) 5.3(d) 317(b) 3.3 318(a) 11.7 Note: This cross-reference table shall not for any purpose be deemed to be part of this Indenture. TABLE OF CONTENTS ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE..........................2 SECTION 1.1 Definitions.......................................................2 SECTION 1.2 Incorporation by Reference of Trust Indenture Act................2 ARTICLE II THE NOTES..........................................................2 SECTION 2.1 Form..............................................................2 SECTION 2.2 Execution, Authentication and Delivery............................3 SECTION 2.3 Temporary Notes...................................................4 SECTION 2.4 Registration; Registration of Transfer and Exchange of Notes......4 SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes........................5 SECTION 2.6 Persons Deemed Noteholders........................................6 SECTION 2.7 Payment of Principal and Interest.................................7 SECTION 2.8 Cancellation of Notes.............................................8 SECTION 2.9 Release of Collateral.............................................8 SECTION 2.10 Book-Entry Notes.................................................9 SECTION 2.11 Notices to Depository............................................9 SECTION 2.12 Definitive Notes.................................................9 SECTION 2.13 Seller as Noteholder............................................10 SECTION 2.14 Tax Treatment...................................................10 ARTICLE III COVENANTS........................................................10 SECTION 3.1 Payment of Principal and Interest................................10 SECTION 3.2 Maintenance of Agency Office.....................................10 SECTION 3.3 Money for Payments To Be Held in Trust...........................11 SECTION 3.4 Existence........................................................12 SECTION 3.5 Protection of Trust Estate; Acknowledgment of Pledge.............13 SECTION 3.6 Opinions as to Trust Estate......................................13 SECTION 3.7 Performance of Obligations; Servicing of Contracts...............13 SECTION 3.8 Negative Covenants...............................................15 SECTION 3.9 Annual Statement as to Compliance................................15 SECTION 3.10 Consolidation, Merger, etc. of Issuer; Disposition of Trust Assets..................................................15 SECTION 3.11 Successor or Transferee.........................................17 SECTION 3.12 No Other Business...............................................18 SECTION 3.13 No Borrowing....................................................18 SECTION 3.14 Guarantees, Loans, Advances and Other Liabilities...............18 SECTION 3.15 Servicer's Obligations..........................................18 SECTION 3.16 Capital Expenditures............................................18 SECTION 3.17 Removal of Servicer.............................................18 SECTION 3.18 Restricted Payments.............................................19 SECTION 3.19 Notice of Events of Default.....................................19 SECTION 3.20 Further Instruments and Acts....................................19 (i) SECTION 3.21 Representations and Warranties by the Issuer to the Indenture Trustee.............................................19 ARTICLE IV __________........................................................20 SECTION 4.1 Satisfaction and Discharge of Indenture..........................20 SECTION 4.2 Application of Trust Money.......................................21 SECTION 4.3 Repayment of Monies Held by Paying Agent.........................21 SECTION 4.4 Duration of Position of Indenture Trustee........................21 ARTICLE V DEFAULT AND REMEDIES...............................................21 SECTION 5.1 Events of Default................................................21 SECTION 5.2 Acceleration of Maturity; Rescission and Annulment...............23 SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by Indenture Trustee..............................................24 SECTION 5.4 Remedies; Priorities.............................................26 SECTION 5.5 Optional Preservation of the Contracts...........................27 SECTION 5.6 Limitation of Suits..............................................28 SECTION 5.7 Unconditional Rights of Noteholders To Receive Principal and Interest.........................................28 SECTION 5.8 Restoration of Rights and Remedies...............................29 SECTION 5.9 Rights and Remedies Cumulative...................................29 SECTION 5.10 Delay or Omission Not a Waiver..................................29 SECTION 5.11 Control by Noteholders..........................................29 SECTION 5.12 Waiver of Past Defaults.........................................30 SECTION 5.13 Undertaking for Costs...........................................30 SECTION 5.14 Waiver of Stay or Extension Laws................................31 SECTION 5.15 Action on Notes.................................................31 SECTION 5.16 Performance and Enforcement of Certain Obligations..............31 ARTICLE VI THE INDENTURE TRUSTEE.............................................32 SECTION 6.1 Duties of Indenture Trustee......................................32 SECTION 6.2 Rights of Indenture Trustee......................................33 SECTION 6.3 Indenture Trustee May Own Notes..................................34 SECTION 6.4 Indenture Trustee's Disclaimer...................................34 SECTION 6.5 Notice of Defaults...............................................34 SECTION 6.6 Reports by Indenture Trustee to Holders..........................35 SECTION 6.7 Compensation; Indemnity..........................................35 SECTION 6.8 Replacement of Indenture Trustee.................................35 SECTION 6.9 Merger or Consolidation of Indenture Trustee.....................36 SECTION 6.10 Appointment of Co-Indenture Trustee or Separate Indenture Trustee.............................................37 SECTION 6.11 Eligibility; Disqualification...................................38 SECTION 6.12 Preferential Collection of Claims Against Issuer................38 SECTION 6.13 Representations and Warranties of Indenture Trustee.............39 SECTION 6.14 Indenture Trustee May Enforce Claims Without Possession of Notes...........................................39 SECTION 6.15 Suit for Enforcement............................................39 SECTION 6.16 Rights of Noteholders to Direct Indenture Trustee...............40 ARTICLE VII NOTEHOLDERS' LISTS AND REPORTS...................................40 (ii) SECTION 7.1 Issuer To Furnish Indenture Trustee Names and Addresses of Noteholders.......................................40 SECTION 7.2 Preservation of Information, Communications to Noteholders.......40 SECTION 7.3 Reports by Issuer................................................41 SECTION 7.4 Reports by Trustee...............................................41 ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND RELEASES............................42 SECTION 8.1 Collection of Money..............................................42 SECTION 8.2 Designated Accounts and the Cash Collateral Account; Payments....42 SECTION 8.3 General Provisions Regarding Accounts............................42 SECTION 8.4 Release of Trust Estate..........................................43 SECTION 8.5 Opinion of Counsel...............................................44 ARTICLE IX SUPPLEMENTAL INDENTURES...........................................44 SECTION 9.1 Supplemental Indentures Without Consent of Noteholders...........44 SECTION 9.2 Supplemental Indentures With Consent of Noteholders..............45 SECTION 9.3 Execution of Supplemental Indentures.............................47 SECTION 9.4 Effect of Supplemental Indenture.................................47 SECTION 9.5 Conformity with Trust Indenture Act..............................47 SECTION 9.6 Reference in Notes to Supplemental Indentures....................47 ARTICLE X REDEMPTION OF NOTES................................................48 SECTION 10.1 Redemption......................................................48 SECTION 10.2 Form of Redemption Notice.......................................48 SECTION 10.3 Notes Payable on Redemption Date................................49 ARTICLE XI MISCELLANEOUS.....................................................49 SECTION 11.1 Compliance Certificates and Opinions, etc.......................49 SECTION 11.2 Form of Documents Delivered to Indenture Trustee................51 SECTION 11.3 Acts of Noteholders.............................................52 SECTION 11.4 Notices, etc., to Indenture Trustee, Issuer and Rating Agencies.53 SECTION 11.5 Notices to Noteholders; Waiver..................................53 SECTION 11.6 Alternate Payment and Notice Provisions.........................54 SECTION 11.7 Conflict with Trust Indenture Act...............................54 SECTION 11.8 Effect of Headings and Table of Contents........................54 SECTION 11.9 Successors and Assigns..........................................54 SECTION 11.10 Separability...................................................55 SECTION 11.11 Benefits of Indenture..........................................55 SECTION 11.12 Legal Holidays.................................................55 SECTION 11.13 Governing Law..................................................55 SECTION 11.14 Counterparts...................................................55 SECTION 11.15 Recording of Indenture.........................................55 SECTION 11.16 No Recourse....................................................55 SECTION 11.17 No Petition....................................................56 SECTION 11.18 Inspection.....................................................56 SECTION 11.19 Indemnification by and Reimbursement of the Servicer...........57 (iii) EXHIBIT A - Form of Asset Backed Notes (iv) INDENTURE, dated as of ____________, ____, between CIT MARINE TRUST ____-_, a Delaware business trust (the "Issuer"), and [____________________], a __________ banking corporation, as trustee and not in its individual capacity (the "Indenture Trustee"). Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Notes: GRANTING CLAUSE The Issuer hereby Grants to the Indenture Trustee at the Closing Date, as trustee for the benefit of the Noteholders and (only to the extent expressly provided herein) the Certificateholders, all of the Issuer's right, title and interest in and to (i) the Contracts (except, to the extent provided in the Sale and Servicing Agreement, any Post Cut-off Date Insurance Add-Ons); (ii) all monies received under the Initial Contracts on or after the Initial Cut-off Date and under the Subsequent Contracts on or after the related Subsequent Cut-off Date; (iii) such amounts as from time to time may be held in one or more accounts (other than the Excluded Assets) established and maintained by the Servicer pursuant to the Sale and Servicing Agreement (including all investments in such accounts and all income from the funds therein and all proceeds thereof); (iv) all monies on deposit in the Pre-Funding Account and the Capitalized Interest Account (including all investments in such accounts and all income from the funds therein and all proceeds thereof); (v) security interests in the Financed Boats granted by the Obligors and any accessions thereto and any other interest of the Issuer in the Financed Boats; (vi) the right to proceeds from physical damage, credit life and disability insurance policies, if any, covering individual Financed Boats or Obligors, as the case may be; (vii) the rights of the Issuer under the Sale and Servicing Agreement (but excluding all rights of the Issuer to the Excluded Assets) and the Subsequent Transfer Agreements and the Subsequent Purchase Agreements; and (viii) all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing and all payments on or under and all proceeds of every kind and nature whatsoever in respect of any or all of the foregoing, including all proceeds of the conversion, voluntary or involuntary, into cash or other liquid property, all cash proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts, insurance proceeds, condemnation awards, rights to payment of any and every kind and other forms of obligations and receivables, instruments and other property which at any time constitute all or part of or are included in the proceeds of any and all proceeds of the foregoing (collectively, the "Collateral"). The foregoing Grant is made in trust to secure the payment of principal of and interest on, and any other amounts owing in respect of, the Notes, equally and ratably without prejudice, priority or distinction, and to secure compliance with the provisions of this Indenture, all as provided in this Indenture. The Indenture Trustee, as trustee on behalf of the Noteholders, acknowledges such Grant, accepts the trusts under this Indenture in accordance with the provisions of this Indenture. ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.1 Definitions. Certain capitalized terms used in this Indenture and not otherwise defined herein shall have the respective meanings assigned them in the Sale and Servicing Agreement (the "Sale and Servicing Agreement") dated as of ____________, ____ among the Issuer, The CIT Group Securitization Corporation II (the "Company" or the "Seller") and The CIT Group/Sales Financing, Inc., as Servicer ("CITSF"). All references in this Indenture to Articles, Sections, subsections and exhibits are to the same contained in or attached to this Indenture unless otherwise specified. All terms defined in this Indenture shall have the defined meanings when used in any certificate, notice, Note or other document made or delivered pursuant hereto unless otherwise defined therein. SECTION 1.2 Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, such provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "Commission" means the Securities and Exchange Commission. "indenture securities" means the Notes. "indenture trustee" means the Indenture Trustee. "obligor" on the indenture securities means the Issuer and any other obligor on the indenture securities. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by a Commission rule have the respective meanings assigned to them by such definitions. ARTICLE II THE NOTES SECTION 2.1 Form. (a) The Class A Notes, with the Indenture Trustee's certificate of authentication, shall be substantially in the form set forth in Exhibit A, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of A-2 identification and such legends or endorsements placed thereon as may, consistently herewith, be determined by the officers executing such Notes, as evidenced by their execution of the Notes. Any portion of the text of any Note may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Note. (b) The Definitive Notes shall be typewritten, printed, lithographed or engraved or produced by any combination of these methods (with or without steel engraved borders), all as determined by the officers executing such Notes, as evidenced by their execution of such Notes. (c) The terms of the Notes as provided in Exhibit A are part of the terms of this Indenture. SECTION 2.2 Execution, Authentication and Delivery. (a) Each Note shall be dated the date of its authentication, and shall be issuable as a registered Note in the minimum denomination of $1,000 and in integral multiples thereof (except for one Note which may be issued in a denomination other than an integral multiple of $1,000). (b) The Notes shall be executed on behalf of the Issuer by any of its Authorized Officers. The signature of any such Authorized Officer on the Notes may be manual or facsimile. (c) Notes bearing the manual or facsimile signature of individuals who were Authorized Officers of the Issuer at the time such signatures were affixed shall bind the Issuer, notwithstanding that such individuals or any of them have ceased to hold such office prior to the authentication and delivery of such Notes or did not hold such office at the date of such Notes. (d) The Indenture Trustee, in exchange for the Grant of the Contracts and the other components of the Trust, and simultaneously with the constructive delivery to the Indenture Trustee of the Contract Files with respect to the Initial Contracts and the other components and assets of the Trust, shall cause to be authenticated and delivered to or upon the order of the Issuer, the Class A Notes for original issue in aggregate principal amount of $___________. The aggregate principal amount of Notes outstanding at any time may not exceed $___________ except as provided in Section 2.5. (e) No Notes shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Note a certificate of authentication substantially in the form set forth in Exhibit A, executed by the Indenture Trustee the manual signature of one of its Authorized Officers, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder. A-3 SECTION 2.3 Temporary Notes. (a) Pending the preparation of Definitive Notes, if any, the Issuer may execute, and upon receipt of an Issuer Order the Indenture Trustee shall authenticate and deliver, such Temporary Notes which are printed, lithographed, typewritten, mimeographed or otherwise produced, of the tenor of the Definitive Notes in lieu of which they are issued and with such variations as are consistent with the terms of this Indenture as the officers executing such Notes may determine, as evidenced by their execution of such Notes. (b) If Temporary Notes are issued, the Issuer shall cause Definitive Notes to be prepared without unreasonable delay. After the preparation of Definitive Notes, the Temporary Notes shall be exchangeable for Definitive Notes upon surrender of the Temporary Notes at the Agency Office of the Issuer to be maintained as provided in Section 3.2, without charge to the Noteholder. Upon surrender for cancellation of any one or more Temporary Notes, the Issuer shall execute and the Indenture Trustee shall authenticate and deliver in exchange therefor a like principal amount of Definitive Notes of authorized denominations. Until so delivered in exchange, the Temporary Notes shall in all respects be entitled to the same benefits under this Indenture as Definitive Notes. SECTION 2.4 Registration; Registration of Transfer and Exchange of Notes. (a) The Issuer shall cause to be kept the Note Register, in which, subject to such reasonable regulations as the Issuer may prescribe, the Issuer shall provide for the registration of the Notes and the registration of transfers and exchanges of the Notes. The Indenture Trustee shall initially be the Note Registrar for the purpose of registering the Notes and transfers of the Notes as herein provided. Upon any resignation of any Note Registrar, the Issuer shall promptly appoint a successor Note Registrar or, if it elects not to make such an appointment, assume the duties of the Note Registrar. (b) If a Person other than the Indenture Trustee is appointed by the Issuer as Note Registrar, the Issuer will give the Indenture Trustee prompt written notice of the appointment of such Note Registrar and of the location, and any change in the location, of the Note Register. The Indenture Trustee shall have the right to inspect the Note Register at all reasonable times and to obtain copies thereof. The Indenture Trustee shall have the right to rely upon a certificate executed on behalf of the Note Registrar by an Executive Officer thereof as to the names and addresses of the Noteholders and the principal amounts and number of such Notes. (c) Upon surrender for registration of transfer of any Note at the Corporate Trust Office of the Indenture Trustee or the Agency Office of the Issuer (and following the delivery, in the former case, of such Notes to the Issuer by the Indenture Trustee), the Issuer shall execute, the Indenture Trustee shall authenticate and the Noteholder shall obtain from the Indenture Trustee, in the name of the designated transferee or transferees, A-4 one or more new Notes in any authorized denominations, of a like aggregate principal amount. (d) At the option of the Noteholder, Notes may be exchanged for other Notes of the same class in any authorized denominations, of a like aggregate principal amount, upon surrender of the Notes to be exchanged at the Corporate Trust Office of the Indenture Trustee or the Agency Office of the Issuer (and following the delivery, in the former case, of such Notes to the Issuer by the Indenture Trustee), the Issuer shall execute, and the Indenture Trustee shall authenticate and the Noteholder shall obtain from the Indenture Trustee, the Notes which the Noteholder making the exchange is entitled to receive. (e) All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Notes surrendered upon such registration of transfer or exchange. (f) Every Note presented or surrendered for registration of transfer or exchange shall be duly endorsed by, or be accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee, (i) duly executed by the Holder thereof or such Holder's attorney duly authorized in writing, with such signature guaranteed by an "eligible guarantor institution" meeting the requirements of the Note Registrar which requirements include membership or participation in Securities Transfer Agents Medallion Program ("Stamp") or such other "signature guarantee program" as may be determined by the Note Registrar in addition to, or in substitution for, Stamp, all in accordance with the Exchange Act, and (ii) accompanied by such other documents as the Indenture Trustee may require. (g) No service charge shall be made to a Holder for any registration of transfer or exchange of Notes, but the Issuer or Indenture Trustee may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes, other than exchanges pursuant to Sections 2.3 or 9.6 not involving any transfer. (h) The preceding provisions of this Section 2.4 notwithstanding, the Issuer shall not be required to transfer or make exchanges, and the Note Registrar need not register transfers or exchanges, of Notes that: (i) have been selected for redemption pursuant to Article X, if applicable; or (ii) are due for repayment within 15 days of submission to the Corporate Trust Office or the Agency Office. SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes. (a) If (i) any mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, and (ii) there is delivered to the Indenture Trustee such security or indemnity as A-5 may be required by it to hold the Issuer and the Indenture Trustee harmless, then, in the absence of notice to the Issuer, the Note Registrar or the Indenture Trustee that such Note has been acquired by a bona fide purchaser, the Issuer shall execute and upon the Issuer's request the Indenture Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a replacement Note of a like class and aggregate principal amount; provided, however, that if any such destroyed, lost or stolen Note, but not a mutilated Note, shall have become or within seven days shall be due and payable, or shall have been called for redemption, instead of issuing a replacement Note, the Issuer may make payment to the Holder of such destroyed, lost or stolen Note when so due or payable or upon the Redemption Date, if applicable, without surrender thereof. (b) If, after the delivery of a replacement Note or payment in respect of a destroyed, lost or stolen Note pursuant to subsection (a), a bona fide purchaser of the original Note in lieu of which such replacement Note was issued presents for payment such original Note, the Issuer and the Indenture Trustee shall be entitled to recover such replacement Note (or such payment) from (i) any Person to whom it was delivered, (ii) the Person taking such replacement Note from the Person to whom such replacement Note was delivered; or (iii) any assignee of such Person, except a bona fide purchaser, and the Issuer and the Indenture Trustee shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Issuer or the Indenture Trustee in connection therewith. (c) In connection with the issuance of any replacement Note under this Section 2.5, the Issuer may require the payment by the Holder of such Note of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including all fees and expenses of the Indenture Trustee) connected therewith. (d) Any duplicate Note issued pursuant to this Section 2.5 in replacement for any mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Issuer, whether or not the mutilated, destroyed, lost or stolen Note shall be found at any time or be enforced by any Person, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder. (e) The provisions of this Section 2.5 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes. SECTION 2.6 Persons Deemed Noteholders. Prior to due presentment for registration of transfer of any Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name any Note is registered (as of the day of determination) as the Noteholder for the purpose of receiving payments of principal of and interest on such Note and for all other purposes whatsoever, whether or not such Note be A-6 overdue, and neither the Issuer, the Indenture Trustee nor any agent of the Issuer or the Indenture Trustee shall be affected by notice to the contrary. SECTION 2.7 Payment of Principal and Interest. (a) Interest on the Notes shall accrue in the manner set forth in the form of the Class A Notes set forth in Exhibit A at the Class A Rate, and such interest shall be payable on each Distribution Date as specified in the form of Class A Note set forth in Exhibit A. Any interest payable on any Note shall be punctually paid or duly provided for by a deposit by or at the direction of the Issuer into the Note Distribution Account on the applicable Distribution Date and shall be paid to the Person in whose name such Note (or one or more Predecessor Notes) is registered on the applicable Record Date, by check mailed first-class, postage prepaid to such Person's address as it appears on the Note Register on such Record Date; provided, however, that, unless and until Definitive Notes have been issued pursuant to Section 2.12, with respect to Notes registered on the applicable Record Date in the name of the Depository (initially, Cede & Co.), payment shall be made by wire transfer in immediately available funds to the account designated by the Depository. (b) Prior to the occurrence of an Event of Default and a declaration in accordance with Section 5.2 that the Notes have become immediately due and payable, the outstanding principal of the Notes shall be payable in full on the Class A Final Scheduled Distribution Date and, to the extent of funds available therefor, in installments on the Distribution Dates (if any) preceding the Class A Final Scheduled Distribution Date, in accordance with Section 8.2(c). All principal payments on the Notes shall be made pro rata to the Noteholders entitled thereto. Any principal payable on any Note shall be punctually paid or duly provided for by a deposit by or at the direction of the Issuer into the Note Distribution Account on the applicable Distribution Date and shall be paid to the Person in whose name such Note (or one or more Predecessor Notes) is registered on the applicable Record Date, by check mailed first-class, postage prepaid to such Person's address as it appears on the Note Register on such Record Date; provided, however, that, unless and until Definitive Notes have been issued pursuant to Section 2.12, with respect to Notes registered on the Record Date in the name of the Depository (initially, Cede & Co.), payment shall be made by wire transfer in immediately available funds to the account designated by the Depository, except for: (i) the final installment of principal on any Note; and (ii) the Redemption Price (as hereinafter defined) for any Notes, if so called, which, in each case, shall be payable as provided herein. The funds represented by any such checks in respect of interest or principal returned undelivered shall be held in accordance with Section 3.3. (c) The entire unpaid principal amount of the Notes shall be due and payable, if not previously paid, if: (i) an Event of Default shall have occurred and be continuing; and A-7 (ii) the Indenture Trustee or the Noteholders representing not less than a majority of the aggregate outstanding principal amount of the Notes have declared the Notes to be immediately due and payable in the manner provided in Section 5.2. (d) If the Issuer defaults in a payment of interest on the Notes, the Issuer shall pay defaulted interest at the Class A Rate in any lawful manner. The Issuer may pay such defaulted interest to the Persons who are Noteholders on a subsequent special record date, which date shall be at least five Business Days prior to the payment date. The Issuer shall fix or cause to be fixed any such special record date and payment date, and, at least 15 days before any such special record date, the Issuer shall mail to each Noteholder and the Trustee a notice that states the special record date, the payment date and the amount of defaulted interest to be paid. (e) With respect to any Distribution Date on which the final installment of principal and interest on the Notes is to be paid, the Indenture Trustee shall notify each Noteholder of record as of the Record Date for such Distribution Date of the fact that the final installment of principal of and interest on such Note is to be paid on such Distribution Date. Such notice shall be sent (i) on such Record Date by facsimile, if Book-Entry Notes are outstanding; or (ii) not later than three Business Days after such Record Date in accordance with Section 11.5(a) if Definitive Notes are outstanding, and shall specify that such final installment shall be payable only upon presentation and surrender of such Note and shall specify the place where such Note may be presented and surrendered for payment of such installment. Notices in connection with redemptions of Notes shall be mailed to Noteholders as provided in Section 10.2. SECTION 2.8 Cancellation of Notes. All Notes surrendered for payment, redemption, exchange or registration of transfer shall, if surrendered to any Person other than the Indenture Trustee, be delivered to the Indenture Trustee and shall be promptly canceled by the Indenture Trustee. The Issuer may at any time deliver to the Indenture Trustee for cancellation any Notes previously authenticated and delivered hereunder which the Issuer may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly canceled by the Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for any Notes canceled as provided in this Section 2.8, except as expressly permitted by this Indenture. All canceled Notes may be held or disposed of by the Indenture Trustee in accordance with its standard retention or disposal policy as in effect at the time unless the Issuer shall direct by an Issuer Order that they be destroyed or returned to it; provided, however, that such Issuer Order is timely and the Notes have not been previously disposed of by the Indenture Trustee. SECTION 2.9 Release of Collateral. Subject to Section 11.1, the Indenture Trustee shall release property from the lien of this Indenture only upon receipt of an Issuer Request accompanied by an Officers' Certificate, an Opinion of Counsel and Independent Certificates in accordance with TIA ss.314(c) and 314(d)(1) or an Opinion of Counsel in lieu of such Independent Certificates to the effect that the TIA does not require any such Independent Certificates. A-8 SECTION 2.10 Book-Entry Notes. The Notes, upon original issuance, shall be issued in the form of a typewritten Note or Notes representing the Book-Entry Notes, to be delivered to The Depository Trust Company, the initial Depository by or on behalf of the Issuer. Such Note or Notes shall be registered on the Note Register in the name of the Depository, and no Note Owner shall receive a Definitive Note representing such Note Owner's interest in such Note, except as provided in Section 2.12. Unless and until the Definitive Notes have been issued to Note Owners pursuant to Section 2.12: (a) the provisions of this Section 2.10 shall be in full force and effect; (b) the Note Registrar and the Indenture Trustee shall be entitled to deal with the Depository for all purposes of this Indenture (including the payment of principal of and interest on the Notes and the giving of instructions or directions hereunder) as the sole holder of the Notes and shall have no obligation to the Note Owners; (c) to the extent that the provisions of this Section 2.10 conflict with any other provisions of this Indenture, the provisions of this Section 2.10 shall control; (d) the rights of the Note Owners shall be exercised only through the Depository and shall be limited to those established by law and agreements between such Note Owners and the Depository and/or the Depository Participants. Unless and until Definitive Notes are issued pursuant to Section 2.12, the initial Depository shall make book-entry transfers between the Depository Participants and receive and transmit payments of principal of and interest on the Notes to such Depository Participants, pursuant to the Depository Agreement; and (e) whenever this Indenture requires or permits actions to be taken based upon instructions or directions of Holders of Notes evidencing a specified percentage of the aggregate outstanding principal amount of the Notes, the Depository shall be deemed to represent such percentage only to the extent that it has (i) received instructions to such effect from Note Owners and/or Depository Participants owning or representing, respectively, such required percentage of the beneficial interest in the Notes; and (ii) has delivered such instructions to the Indenture Trustee. SECTION 2.11 Notices to Depository. Whenever a notice or other communication to the Noteholders is required under this Indenture, unless and until Definitive Notes shall have been issued to Note Owners pursuant to Section 2.12, the Indenture Trustee shall give all such notices and communications specified herein to be given to Noteholders to the Depository and shall have no obligation to the Note Owners. SECTION 2.12 Definitive Notes. If (i) the Servicer advises the Indenture Trustee in writing that the Depository is no longer willing or able to properly discharge its responsibilities with respect to the Notes and the Issuer is unable to locate a qualified successor; (ii) the Servicer, at its option, advises the Indenture Trustee in writing that it elects to terminate the book-entry A-9 system through the Depository; or (iii) after the occurrence of an Event of Default or an Event of Termination, Note Owners representing beneficial interests aggregating at least a majority of the aggregate outstanding principal amount of the Notes advise the Depository in writing that the continuation of a book-entry system through the Depository is no longer in the best interests of the Note Owners, then the Depository shall notify all Note Owners and the Indenture Trustee of the occurrence of any such event and the Depository shall, after being informed by the Indenture Trustee, notify the Note Owners of the availability of Definitive Notes to Note Owners requesting the same. Upon surrender to the Indenture Trustee of the typewritten Note or Notes representing the Book-Entry Notes by the Depository, accompanied by registration instructions, the Issuer shall execute and the Indenture Trustee shall authenticate the Definitive Notes in accordance with the instructions of the Depository. None of the Issuer, the Servicer, the Note Registrar or the Indenture Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions. Upon the issuance of Definitive Notes, the Indenture Trustee shall recognize the Holders of the Definitive Notes as Noteholders. SECTION 2.13 Seller as Noteholder. The Seller in its individual or any other capacity may become the owner or pledgee of the Notes and may otherwise deal with the Issuer or its affiliates with the same rights it would have if it were not the Seller. SECTION 2.14 Tax Treatment. The Issuer and the Indenture Trustee, by entering into this Indenture, and the Noteholders, by acquiring any Note or interest therein, (i) express their intention that the Notes qualify under applicable tax law as indebtedness secured by the Contracts, and (ii) unless otherwise required by appropriate taxing authorities, agree to treat the Notes as indebtedness secured by the Contracts for the purpose of federal income taxes, state and local income and franchise taxes, and any other taxes imposed upon, measured by or based upon gross or net income. ARTICLE III COVENANTS SECTION 3.1 Payment of Principal and Interest. The Issuer shall duly and punctually pay the principal of and interest on the Notes in accordance with the terms of the Notes and this Indenture. On each Distribution Date and on the Redemption Date (if applicable), the Issuer shall cause amounts on deposit in the Note Distribution Account to be distributed to the Noteholders in accordance with Sections 2.7 and 8.2, less amounts properly withheld under the Code by any Person from a payment to any Noteholder of interest and/or principal. Any amounts so withheld shall be considered as having been paid by the Issuer to such Noteholder for all purposes of this Indenture. SECTION 3.2 Maintenance of Agency Office. As long as any of the Notes remains outstanding, the Issuer shall maintain in the Borough of Manhattan, the City of New York, an office (the "Agency Office"), being an office or agency where Notes may be surrendered to the A-10 Issuer for registration of transfer or exchange, and where notices and demands to or upon the Issuer in respect of the Notes and this Indenture may be served. The Issuer hereby initially appoints the Indenture Trustee to serve as its agent for the foregoing purposes. The Issuer shall give prompt written notice to the Indenture Trustee of the location, and of any change in the location, of any such office or agency. If at any time the Issuer shall fail to maintain any such office or agency or shall fail to furnish the Indenture Trustee with the address thereof, such surrenders, notices and demands may be made or served at the Corporate Trust Office of the Indenture Trustee, and the Issuer hereby appoints the Indenture Trustee as its agent to receive all such surrenders, notices and demands. SECTION 3.3 Money for Payments To Be Held in Trust. (a) As provided in Section 8.2(a) and (b), all payments of amounts due and payable with respect to any Notes that are to be made from amounts withdrawn from the Note Distribution Account pursuant to Section 8.2(c) shall be made on behalf of the Issuer by the Indenture Trustee or by another Paying Agent, and no amounts so withdrawn from the Note Distribution Account for payments of Notes shall be paid over to the Issuer except as provided in this Section 3.3. (b) On or before each Distribution Date or the Redemption Date (if applicable), the Issuer shall deposit or cause to be deposited in the Note Distribution Account an aggregate sum sufficient to pay the amounts then becoming due with respect to the Notes, such sum to be held in trust for the benefit of the Persons entitled thereto and (unless the Paying Agent is the Indenture Trustee) shall promptly notify the Indenture Trustee of its action or failure so to act. (c) The Issuer shall cause each Paying Agent other than the Indenture Trustee to execute and deliver to the Indenture Trustee an instrument in which such Paying Agent shall agree with the Indenture Trustee (and if the Indenture Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of this Section 3.3, that such Paying Agent shall: (i) hold all sums held by it for the payment of amounts due with respect to the Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided and pay such sums to such Persons as herein provided; (ii) give the Indenture Trustee notice of any default by the Issuer (or any other obligor upon the Notes) of which it has actual knowledge in the making of any payment required to be made with respect to the Notes; (iii) at any time during the continuance of any such default, upon the written request of the Indenture Trustee, forthwith pay to the Indenture Trustee all sums so held in trust by such Paying Agent; A-11 (iv) immediately resign as a Paying Agent and forthwith pay to the Indenture Trustee all sums held by it in trust for the payment of Notes if at any time it ceases to meet the standards required to be met by a Paying Agent in effect at the time of determination; and (v) comply with all requirements of the Code with respect to the withholding from any payments made by it on any Notes of any applicable withholding taxes imposed thereon and with respect to any applicable reporting requirements in connection therewith. (d) The Issuer may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, by Issuer Order direct any Paying Agent to pay to the Indenture Trustee all sums held in trust by such Paying Agent, such sums to be held by the Indenture Trustee upon the same trusts as those upon which the sums were held by such Paying Agent; and upon such payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be released from all further liability with respect to such money. (e) Subject to applicable laws with respect to escheat of funds, any money held by the Indenture Trustee or any Paying Agent in trust for the payment of any amount due with respect to any Note and remaining unclaimed for one year after such amount has become due and payable shall be discharged from such trust and be paid to the Issuer on Issuer Request; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Issuer for payment thereof (but only to the extent of the amounts so paid to the Issuer), and all liability of the Indenture Trustee or such Paying Agent with respect to such trust money shall thereupon cease; provided, however, that the Indenture Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Issuer cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining shall be repaid to the Issuer. The Indenture Trustee may also adopt and employ, at the expense of the Issuer, any other reasonable means of notification of such repayment (including, but not limited to, mailing notice of such repayment to Holders whose Notes have been called but have not been surrendered for redemption or whose right to or interest in monies due and payable but not claimed is determinable from the records of the Indenture Trustee or of any Paying Agent, at the last address of record for each such Holder). SECTION 3.4 Existence. Subject to Section 3.10, the Issuer shall keep in full effect its existence, rights and franchises as a business trust under the laws of the State of Delaware and shall obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Indenture, the Notes, the Collateral and each other instrument or agreement included in the Trust Estate. A-12 SECTION 3.5 Protection of Trust Estate; Acknowledgment of Pledge. The Issuer shall from time to time execute and deliver all such supplements and amendments hereto and all such financing statements, continuation statements, instruments of further assurance and other instruments, and shall take such other action necessary or advisable to: (i) maintain or preserve the lien and security interest (and the priority thereof) of this Indenture or carry out more effectively the purposes hereof; (ii) perfect, publish notice of or protect the validity of any Grant made or to be made by this Indenture; (iii) enforce any rights under this Indenture against the Collateral; or (iv) preserve and defend title to the Trust Estate and the rights of the Indenture Trustee and the Noteholders in such Trust Estate against the claims of all persons and parties, and the Issuer hereby designates the Indenture Trustee its agent and attorney-in-fact to execute any financing statement, continuation statement or other instrument required by the Indenture Trustee pursuant to this Section 3.5. SECTION 3.6 Opinions as to Trust Estate. (a) On the Closing Date, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel either stating that, in the opinion of such counsel, such action has been taken with respect to the recording and filing of this Indenture, any indentures supplemental hereto and any other requisite documents, and with respect to the execution and filing of any financing statements and continuation statements as are necessary to perfect and make effective the lien and security interest of this Indenture and reciting the details of such action, or stating that, in the opinion of such counsel, no such action is necessary to make such lien and security interest effective. (b) On or before April 15 in each calendar year, beginning April 15, ____, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel either stating that, in the opinion of such counsel, such action has been taken with respect to the recording, filing, re-recording and refiling of this Indenture, any indentures supplemental hereto and any other requisite documents and with respect to the execution and filing of any financing statements and continuation statements as is necessary to maintain the lien and security interest created by this Indenture and reciting the details of such action or stating that in the opinion of such counsel no such action is necessary to maintain the lien and security interest created by this Indenture. Such Opinion of Counsel shall also describe the recording, filing, re-recording and refiling of this Indenture, any indentures supplemental hereto and any other requisite documents and the execution and filing of any financing statements and continuation statements that will, in the opinion of such counsel, be required to maintain the lien and security interest of this Indenture until April 15 in the following calendar year. SECTION 3.7 Performance of Obligations; Servicing of Contracts. (a) The Issuer shall not take any action and shall use its reasonable efforts not to permit any action to be taken by others that would release any Person from any of such Person's material covenants or obligations under any instrument or agreement included in the Trust Estate or that would result in the amendment, hypothecation, subordination, A-13 termination or discharge of, or impair the validity or effectiveness of, any such instrument or agreement, except as otherwise expressly provided in this Indenture, the Sale and Servicing Agreement or such other instrument or agreement. (b) Issuer may contract with other Persons to assist it in performing its duties under this Indenture, and any performance of such duties by a Person identified to the Indenture Trustee in the Basic Documents or an Officers' Certificate of the Issuer shall be deemed to be action taken by the Issuer. Initially, the Issuer has contracted with the Servicer to assist the Issuer in performing its duties under this Indenture. (c) Issuer shall punctually perform and observe all of its obligations and agreements contained in this Indenture, the Basic Documents and in the instruments and agreements included in the Trust Estate, including but not limited to filing or causing to be filed all UCC financing statements and continuation statements required to be filed by the terms of this Indenture, the Sale and Servicing Agreement and the Purchase Agreement in accordance with and within the time periods provided for herein and therein. (d) If the Issuer shall have knowledge of the occurrence of an Event of Termination under the Sale and Servicing Agreement, the Issuer shall promptly notify the Indenture Trustee and the Rating Agencies thereof, and shall specify in such notice the response or action, if any, the Issuer has taken or is taking with respect to such default. If an Event of Termination shall arise from the failure of the Servicer to perform any of its duties or obligations under the Sale and Servicing Agreement with respect to the Contracts, the Issuer and the Indenture Trustee shall take all reasonable steps available to them pursuant to the Sale and Servicing Agreement to remedy such failure or to effect a Service Transfer pursuant to the Sale and Servicing Agreement. Without derogating from the absolute nature of the assignment granted to the Indenture Trustee under this Indenture or the rights of the Indenture Trustee hereunder, the Issuer agrees that it shall not, without the prior written consent of the Indenture Trustee or the Holders of at least a majority in aggregate outstanding principal amount of the Notes, as applicable in accordance with the terms thereof, amend, modify, waive, supplement, terminate or surrender, or agree to any amendment, modification, supplement, termination, waiver or surrender of, the terms of any Collateral or any of the Basic Documents (other than the Cash Collateral Agreement), or waive timely performance or observance by the Servicer or the Seller under the Sale and Servicing Agreement, a Subsequent Purchase Agreement, a Subsequent Transfer Agreement or the Purchase Agreement. If any such amendment, modification, supplement or waiver shall be so consented to by the Indenture Trustee or such Holders, as applicable, the Issuer agrees, promptly following a request by the Indenture Trustee to do so, to execute and deliver, in its own name and at its own expense, such agreements, instruments, consents and other documents as the Indenture Trustee may deem necessary or appropriate in the circumstances. A-14 SECTION 3.8 Negative Covenants. So long as any Notes are outstanding, the Issuer shall not: (a) sell, transfer, exchange or otherwise dispose of any of the properties or assets of the Issuer, except the Issuer may (i) collect, liquidate, sell or otherwise dispose of Contracts (including Repurchased Contracts and Liquidated Contracts) and Financed Boats, (ii) make cash payments out of the Designated Accounts and (iii) take other actions, in each case as contemplated by the Basic Documents; (b) claim any credit on, or make any deduction from the principal or interest payable in respect of the Notes (other than amounts properly withheld from such payments under the Code or applicable state law) or assert any claim against any present or former Noteholder by reason of the payment of the taxes levied or assessed upon any part of the Trust Estate; (c) voluntarily commence any insolvency, readjustment of debt, marshalling of assets and liabilities or other proceeding, or apply for an order by a court or agency or supervisory authority for the winding-up or liquidation of its affairs or any other event specified in Section 5.1(e); or (d) either (i) permit the validity or effectiveness of this Indenture to be impaired, or permit the Lien of this Indenture to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any covenants or obligations with respect to the Notes under this Indenture except as may be expressly permitted hereby, (ii) permit any Lien or other encumbrance (other than the Lien of this Indenture) to be created on or extend to or otherwise arise upon or burden the Trust Estate or any part thereof or any interest therein or the proceeds thereof (other than tax liens, mechanics' liens and other liens that arise by operation of law, in each case on a Financed Boat and arising solely as a result of an action or omission of the related Obligor) or (iii) permit the Lien of this Indenture not to constitute a valid first priority security interest in the Trust Estate (other than with respect to any such tax, mechanics' or other Lien). SECTION 3.9 Annual Statement as to Compliance. The Issuer shall deliver to the Indenture Trustee, on or before April 15 of each year, beginning April 15, ____, and otherwise in compliance with Section 314(a)(4) of the TIA, an Officer's Certificate signed by an Authorized Officer, dated as of April 15 of such year, stating that a review of the activities of the Issuer during such fiscal year and of performance under this Indenture has been made and, to the best of such Authorized Officer's knowledge, based on such review, the Issuer has fulfilled all of its obligations under this Indenture throughout such year, or, if there has been a default in the fulfillment of any such obligation, specifying each such default known to such Authorized Officer and the nature and status thereof. A copy of such certificate may be obtained by any Noteholder by a request in writing to the Issuer addressed to the Corporate Trust Office of the Indenture Trustee. SECTION 3.10 Consolidation, Merger, etc. of Issuer; Disposition of Trust Assets. A-15 (a) The Issuer shall not consolidate or merge with or into any other Person, unless: (i) the Person (if other than the Issuer) formed by or surviving such consolidation or merger shall be a Person organized and existing under the laws of the United States of America or any State or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Indenture Trustee, in form satisfactory to the Indenture Trustee, the due and timely payment of the principal of and interest on all Notes and the performance or observance of every agreement and covenant of this Indenture on the part of the Issuer to be performed or observed, all as provided herein; (ii) immediately after giving effect to such merger or consolidation, no Default or Event of Default shall have occurred and be continuing; (iii) the Rating Agency Condition shall have been satisfied with respect to such transaction and such Person; (iv) any action as is necessary to maintain the Lien created by this Indenture shall have been taken; and (v) the Issuer shall have delivered to the Indenture Trustee an Officers' Certificate and an Opinion of Counsel addressed to the Issuer, each stating: (A) that such consolidation or merger and such supplemental indenture comply with this Section 3.10; (B) that such consolidation or merger and such supplemental indenture shall have no material adverse tax consequence to the Trust or any Noteholder or Certificateholder; (C) that such consolidation or merger and such supplemental indenture comply with this Section 3.10; and (D) that all conditions precedent herein provided for in this Section 3.10 have been complied with, which shall include any filing required by the Exchange Act. (b) Except as otherwise expressly permitted by this Indenture or the other Basic Documents, the Issuer shall not sell, convey, exchange, transfer or otherwise dispose of any of its properties or assets (other than the Excluded Assets), including those included in the Trust Estate, to any Person unless: A-16 (i) the Person that acquires such properties or assets of the Issuer (A) shall be a United States citizen or a Person organized and existing under the laws of the United States of America or any State or the District of Columbia and (B) by an indenture supplemental hereto, executed and delivered to the Indenture Trustee, in form satisfactory to the Indenture Trustee: (1) expressly assumes the due and punctual payment of the principal of and interest on all Notes and the performance or observance of every agreement and covenant of this Indenture on the part of the Issuer to be performed or observed, all as provided herein; (2) expressly agrees that all right, title and interest so sold, conveyed, exchanged, transferred or otherwise disposed of shall be subject and subordinate to the rights of Noteholders; (3) unless otherwise provided in such supplemental indenture, expressly agrees to indemnify, defend and hold harmless the Issuer against and from any loss, liability or expense arising under or related to this Indenture and the Notes; and (4) expressly agrees that such Person (or if a group of Persons, then one specified Person) shall make all filings with the Commission (and any other appropriate Person) required by the Exchange Act in connection with the Notes; (ii) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; (iii) the Rating Agency Condition shall have been satisfied with respect to such transaction and such Person; (iv) any action as is necessary to maintain the Lien created by this Indenture shall have been taken: and (v) the Issuer shall have delivered to the Indenture Trustee an Officers' Certificate and an Opinion of Counsel addressed to the Issuer, each stating that: (A) such sale, conveyance, exchange, transfer or disposition and such supplemental indenture comply with this Section 3.10; (B) such sale, conveyance, exchange, transfer or disposition and such supplemental indenture has no material adverse tax consequence to the Trust or to any Noteholders or Certificateholders; and (C) that all conditions precedent herein provided for in this Section 3.10 have been complied with, which shall include any filing required by the Exchange Act. SECTION 3.11 Successor or Transferee. (a) Upon any consolidation or merger of the Issuer in accordance with Section 3.10(a), the Person formed by or surviving such consolidation or merger (if other than the Issuer) shall succeed to, and be substituted for, and may exercise every right and power A-17 of, the Issuer under this Indenture with the same effect as if such Person had been named as the Issuer herein. (b) Upon a sale, conveyance, exchange, transfer or disposition of all the assets and properties of the Issuer pursuant to Section 3.10(b), the Trust shall be released from every covenant and agreement of this Indenture to be observed or performed on the part of the Issuer with respect to the Notes immediately upon the delivery of written notice to the Indenture Trustee from the Person acquiring such assets and properties stating that the Trust is to be so released. SECTION 3.12 No Other Business. The Issuer shall not engage in any business or activity other than acquiring, holding and managing the Contracts, the other assets of the Trust Estate, and the Excluded Assets and the proceeds therefrom in the manner contemplated by the Basic Documents, issuing the Notes and the Certificates, making payments on the Notes and the Certificates and such other activities that are necessary, suitable or convenient to accomplish the foregoing or are incidental thereto, as set forth in Section 2.3 of the Trust Agreement. SECTION 3.13 No Borrowing. The Issuer shall not issue, incur, assume, guarantee or otherwise become liable, directly or indirectly, for any indebtedness for money borrowed other than indebtedness for money borrowed in respect of the Notes or in accordance with the Basic Documents. SECTION 3.14 Guarantees, Loans, Advances and Other Liabilities. Except as contemplated by this Indenture or the other Basic Documents, the Issuer shall not make any loan or advance or credit to, or guarantee (directly or indirectly or by an instrument having the effect of assuring another's payment or performance on any obligation or capability of so doing or otherwise), endorse or otherwise become contingently liable, directly or indirectly, in connection with the obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or agree contingently to do so) any stock, obligations, assets or securities of, or any other interest in, or make any capital contribution to, any other Person. SECTION 3.15 Servicer's Obligations. The Issuer shall use its best efforts to cause the Servicer to comply with its obligations under the Sale and Servicing Agreement. SECTION 3.16 Capital Expenditures. The Issuer shall not make any expenditure (whether by long-term or operating lease or otherwise) for capital assets (either real, personal or intangible property) other than the purchase of the Contracts and other property and rights from the Seller pursuant to the Basic Documents. SECTION 3.17 Removal of Servicer. So long as any Notes are outstanding, the Issuer shall not remove the Servicer without cause unless the Rating Agency Condition shall have been satisfied in connection with such removal. A-18 SECTION 3.18 Restricted Payments. Except for payments of principal or interest on or redemption of the Notes and except as expressly provided in the Basic Documents, so long as any Notes are outstanding, the Issuer shall not, directly or indirectly: (a) pay any dividend or make any distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, to the Owner Trustee or any owner of a beneficial interest in the Issuer or otherwise, in each case with respect to any ownership or equity interest or similar security in or of the Issuer or to the Servicer; (b) redeem, purchase, retire or otherwise acquire for value any such ownership or equity interest or similar security; or (c) set aside or otherwise segregate any amounts for any such purpose; provided, however, that the Issuer may make, or cause to be made, distributions to the Servicer, the Owner Trustee, the Cash Collateral Depositor (and any successor in interest thereto) and the Certificateholders as permitted by, and to the extent funds are available for such purpose under, the Sale and Servicing Agreement, the Cash Collateral Agreement or the Trust Agreement. The Issuer shall not, directly or indirectly, make payments to or distributions from the Collection Account except in accordance with the Basic Documents. SECTION 3.19 Notice of Events of Default. The Issuer agrees to give the Indenture Trustee and the Rating Agencies prompt written notice of each Event of Default hereunder, each Event of Termination, any Insolvency Event with respect to the Affiliated Purchaser and each default on the part of the Seller or the Servicer of their obligations under the Basic Documents. SECTION 3.20 Further Instruments and Acts. Upon request of the Indenture Trustee, the Issuer shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture. SECTION 3.21 Representations and Warranties by the Issuer to the Indenture Trustee. The Issuer hereby represents and warrants to the Indenture Trustee as follows: (a) No Contract has been sold, transferred, assigned or pledged by the Trust to any Person other than the Indenture Trustee; immediately prior to the conveyance of the Contracts pursuant to this Indenture, the Trust had good and marketable title thereto, free of any Lien; and, upon execution and delivery of this Indenture by the Trust, the Indenture Trustee shall have all of the right, title and interest of the Trust in, to and under the Contracts, the unpaid indebtedness evidenced thereby and the collateral security therefor, free of any Lien; and (b) All filings (including, without limitation, UCC filings) necessary in any jurisdiction to give the Indenture Trustee a first perfected ownership interest in the Contracts shall have been made. A-19 ARTICLE IV __________ SECTION 4.1 Satisfaction and Discharge of Indenture. This Indenture shall cease to be of further effect with respect to the Notes except as to: (i) rights of registration of transfer and exchange; (ii) substitution of mutilated, destroyed, lost or stolen Notes; (iii) rights of Noteholders to receive payments of principal thereof and interest thereon; (iv) Sections 3.3, 3.4, 3.5, 3.8, 3.10, 3.12, 3.13, 3.19 and 3.21; (v) the rights, obligations and immunities of the Indenture Trustee hereunder (including the rights of the Indenture Trustee under Section 6.7 and the obligations of the Indenture Trustee under Sections 4.2 and 4.4); and (vi) the rights of Noteholders as beneficiaries hereof with respect to the property so deposited with the Indenture Trustee payable to all or any of them, and the Indenture Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture with respect to the Notes, if: (a) either: (i) all Notes theretofore authenticated and delivered (other than (A) Notes that have been destroyed, lost or stolen and that have been replaced or paid as provided in Section 2.5 and (B) Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from such trust, as provided in Section 3.3) have been delivered to the Indenture Trustee for cancellation: or (ii) all Notes not theretofore delivered to the Indenture Trustee for cancellation: (A) have become due and payable, (B) will be due and payable on the Class A Final Scheduled Distribution Date within one year, or (C) are to be called for redemption within one year under arrangements satisfactory to the Indenture Trustee for the giving of notice of redemption by the Indenture Trustee in the name, and at the expense, of the Issuer, and the Issuer has irrevocably deposited or caused to be irrevocably deposited with the Indenture Trustee cash or direct obligations of or obligations guaranteed by the United States of America (which will mature prior to the date such amounts are payable), in trust for such purpose, in an amount sufficient to pay and discharge the entire unpaid principal and accrued interest on such Notes not A-20 theretofore delivered to the Indenture Trustee for cancellation when due on the Class A Final Scheduled Distribution Date for such Notes or the Redemption Date for such Notes (if such Notes have been called for redemption pursuant to Section 10.1(a)(i) or (ii), or Section 10.1(b)), as the case may be; (b) the Issuer has paid or caused to be paid all other sums payable hereunder by the Issuer; and (c) the Issuer has delivered to the Indenture Trustee an Officer's Certificate, an Opinion of Counsel and (if required by the TIA or the Indenture Trustee) an Independent Certificate from a firm of certified public accountants, each meeting the applicable requirements of Section 11.1(a) and each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. SECTION 4.2 Application of Trust Money. All monies deposited with the Indenture Trustee pursuant to Section 4.1 shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent, as the Indenture Trustee may determine, to Holders of the particular Notes for the payment or redemption of which such monies have been deposited with the Indenture Trustee, of all sums due and to become due thereon for principal and interest; but such monies need not be segregated from other funds except to the extent required herein or in the Sale and Servicing Agreement or required by law. SECTION 4.3 Repayment of Monies Held by Paying Agent. In connection with the satisfaction and discharge of this Indenture with respect to the Notes, all monies then held by any Paying Agent other than the Indenture Trustee under the provisions of this Indenture with respect to such Notes shall, upon demand of the Issuer, be paid to the Indenture Trustee to be held and applied according to Section 3.3 and thereupon such Paying Agent shall be released from all further liability with respect to such monies. SECTION 4.4 Duration of Position of Indenture Trustee. Notwithstanding the earlier payment in full of all principal and interest due to the Noteholders under the terms of the Notes and the cancellation of the Notes pursuant to Section 3.1, the Indenture Trustee shall continue to act in the capacity as Indenture Trustee hereunder and, for the benefit of the Certificateholders, shall comply with its obligations under the Basic Documents, as appropriate, until such time as all payments in respect of Certificate Balance and interest due to the Certificateholders have been paid in full. ARTICLE V DEFAULT AND REMEDIES SECTION 5.1 Events of Default. For the purposes of this Indenture, "Event of Default" wherever used herein, means any one of the following events: A-21 (a) failure to pay any interest on any Note as and when the same becomes due and payable, and such default shall continue for a period of five (5) days; or (b) except as set forth in Section 5.1(c), failure to pay any installment of the principal of any Note as and when the same becomes due and payable, and such default continues unremedied for a period of thirty (30) days after there shall have been given, by registered or certified mail, written notice thereof to the Servicer by the Indenture Trustee or to the Servicer and the Indenture Trustee by the Holders of not less than 25% of the outstanding principal balance of the Notes; or (c) failure to pay in full the outstanding principal balance of the Notes on or prior to the Class A Final Scheduled Distribution Date; or (d) default in the observance or performance in any material respect of any covenant or agreement of the Issuer made in this Indenture (other than a covenant or agreement for payment of principal or interest) which failure materially and adversely affects the rights of the Noteholders, and such default shall continue or not be cured for a period of 30 days after there shall have been given, by registered or certified mail, to the Issuer and the Seller (or the Servicer, as applicable) by the Indenture Trustee or to the Issuer and the Seller (or the Servicer, as applicable) and the Indenture Trustee by the Holders of at least 25% of the outstanding principal balance of the Notes, a written notice specifying such default and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (e) the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of the Issuer or any substantial part of the Trust Estate in an involuntary case under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Issuer or for any substantial part of the Trust Estate, or ordering the winding-up or liquidation of the Issuer's affairs, and such decree or order shall remain unstayed and in effect for a period of 90 consecutive days; or (f) the commencement by the Issuer of a voluntary case under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by the Issuer to the entry of an order for relief in an involuntary case under any such law, or the consent by the Issuer to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Issuer or for any substantial part of the Trust Estate, or the making by the Issuer of any general assignment for the benefit of creditors, or the failure by the Issuer generally to pay its debts as such debts become due, or the taking of action by the Issuer in furtherance of any of the foregoing. A-22 The Issuer shall deliver to the Indenture Trustee, within five Business Days after learning of the occurrence thereof, written notice in the form of an Officer's Certificate of any event which with the giving of notice and the lapse of time would become an Event of Default under Section 5.1(c), its status and what action the Issuer is taking or proposes to take with respect thereto. SECTION 5.2 Acceleration of Maturity; Rescission and Annulment. (a) If an Event of Default should occur and be continuing, then and in every such case, unless the principal amount of the Notes shall have already become due and payable, either the Indenture Trustee or the Holders of Notes representing not less than a majority of the aggregate outstanding principal amount of the Notes may declare all the Notes to be immediately due and payable, by a notice in writing to the Issuer (and to the Indenture Trustee if given by the Noteholders) setting forth the Event or Events of Default, and upon any such declaration the unpaid principal amount of such Notes, together with accrued and unpaid interest thereon through the date of acceleration, shall become immediately due and payable. (b) At any time after such declaration of acceleration of maturity has been made and before a judgment or decree for payment of the money due has been obtained by the Indenture Trustee as hereinafter provided in this Article V, the Holders of Notes representing a majority of the aggregate outstanding principal amount of the Notes, by written notice to the Issuer and the Indenture Trustee, may waive all Defaults set forth in the notice delivered pursuant to Section 5.2(a), and rescind and annul such declaration and its consequences if: (i) the Issuer has paid or deposited with the Indenture Trustee a sum sufficient to pay (A) all payments of principal of and interest on all Notes and all other amounts that would then be due hereunder or upon such Notes if the Event of Default giving rise to such acceleration had not occurred; and (B) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee and its agents and counsel; and (ii) all Events of Default, other than the nonpayment of the principal of the Notes that has become due solely by such acceleration, have been cured or waived as provided herein; provided that no such rescission and annulment shall extend to or affect any subsequent default or impair any right consequent thereto; and provided further, that if the Indenture Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned because of such rescission and annulment or for any other reason, or shall have been determined adversely to the A-23 Indenture Trustee, then and in every such case, the Indenture Trustee, the Issuer and the Noteholders, as the case may be, shall be restored respectively to their former positions and rights hereunder, and all rights, remedies and powers of the Indenture Trustee, the Issuer and the Noteholders, as the case may be, shall continue as though no such proceedings had been taken. SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by Indenture Trustee. (a) The Issuer covenants that if an Event of Default occurs and is continuing under Sections 5.1(a), 5.1(b) or 5.1(c) of this Indenture, then the Issuer shall, upon demand of the Indenture Trustee, pay to the Indenture Trustee, for the ratable benefit of the Noteholders in accordance with their respective outstanding principal amounts, the whole amount then due and payable on such Notes for principal and interest, with interest upon the overdue principal, at the rate borne by the Notes and in addition thereto such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and its agents and counsel. (b) If the Issuer shall fail forthwith to pay such amounts upon such demand, the Indenture Trustee, in its own name and as trustee of an express trust, may institute a proceeding for the collection of the sums so due and unpaid, and may prosecute such Proceeding to judgment or final decree, and may enforce the same against the Issuer or other obligor upon such Notes and collect in the manner provided by law out of the property of the Issuer or other obligor upon such Notes, wherever situated, the monies adjudged or decreed to be payable. (c) If an Event of Default occurs and is continuing, the Indenture Trustee may, as more particularly provided in Section 5.4, in its discretion, proceed to protect and enforce its rights and the rights of the Noteholders, by such appropriate Proceedings as the Indenture Trustee shall deem most effective to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy or legal or equitable right vested in the Indenture Trustee by this Indenture or by law. (d) If there shall be pending, relative to the Issuer or any other obligor upon the Notes or any Person having or claiming an ownership interest in the Trust Estate, proceedings under Title 11 of the United States Code or any other applicable federal or state bankruptcy, insolvency or other similar law, or if a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Issuer or its property or such other obligor or Person, or in case of any other comparable judicial Proceedings relative to the Issuer or other obligor upon the Notes, or to the creditors or property of the Issuer or such other obligor, the Indenture Trustee, irrespective of whether the principal of any Notes shall then be due and payable as therein expressed or by declaration or otherwise and A-24 irrespective of whether the Indenture Trustee shall have made any demand pursuant to the provisions of this Section 5.3, shall be entitled and empowered, by intervention in such Proceedings or otherwise: (i) to file and prove a claim or claims for the whole amount of principal and interest owing and unpaid in respect of the Notes and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee (including any claim for reasonable compensation to the Indenture Trustee and each predecessor Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Trustee, except as a result of negligence or bad faith) and of the Noteholders allowed in such Proceedings; (ii) unless prohibited by applicable law and regulations, to vote on behalf of the Holders of Notes in any election of a trustee, a standby trustee or Person performing similar functions in any such Proceedings; (iii) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute all amounts received with respect to the claims of the Noteholders and of the Indenture Trustee on their behalf; and (iv) to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee or the Holders of Notes allowed in any judicial proceedings relative to the Issuer, its creditors and its property; and any trustee, receiver, liquidator, custodian or other similar official in any such Proceeding is hereby authorized by each of such Noteholders to make payments to the Indenture Trustee, and, if the Indenture Trustee shall consent to the making of payments directly to such Noteholders, to pay to the Indenture Trustee such amounts as shall be sufficient to cover reasonable compensation to the Indenture Trustee, each predecessor Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor trustee except as a result of negligence or bad faith. (e) Nothing herein contained shall be deemed to authorize the Indenture Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Noteholder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof or to authorize the Indenture Trustee to vote in respect of the claim of any Noteholder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar Person. (f) All rights of action and of asserting claims under this Indenture, or under any of the Notes, may be enforced by the Indenture Trustee without the possession of any A-25 of the Notes or the production thereof in any trial or other Proceedings relative thereto, and any such Proceedings instituted by the Indenture Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Indenture Trustee, each predecessor Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Noteholders. (g) In any Proceedings brought by the Indenture Trustee (and also any Proceedings involving the interpretation of any provision of this Indenture to which the Indenture Trustee shall be a party), the Indenture Trustee shall be held to represent all the Noteholders, and it shall not be necessary to make any Noteholder a party to any such Proceedings. SECTION 5.4 Remedies; Priorities. (a) If an Event of Default shall have occurred and be continuing and the Notes have been accelerated under Section 5.2(a), the Indenture Trustee may do one or more of the following (subject to Section 5.5): (i) institute Proceedings in its own name and as trustee of an express trust for the collection of all amounts then payable on the Notes or under this Indenture with respect thereto, whether by declaration of acceleration or otherwise, enforce any judgment obtained, and collect from the Issuer and any other obligor upon such Notes monies adjudged due; (ii) institute Proceedings from time to time for the complete or partial foreclosure of this Indenture with respect to the Trust Estate; (iii) exercise any remedies of a secured party under the UCC and take any other appropriate action to protect and enforce the rights and remedies of the Indenture Trustee and the Noteholders; and (iv) sell the Trust Estate or any portion thereof or rights or interest therein, at one or more public or private sales called and conducted in any manner permitted by law; provided, however, that the Indenture Trustee may not sell or otherwise liquidate the Trust Estate following an Event of Default, unless (A) the Holders of all of the aggregate outstanding principal amount of the Notes consent thereto, (B) the proceeds of such sale or liquidation distributable to the Noteholders are sufficient to discharge in full the principal of and the accrued interest on the Notes at the date of such sale or liquidation or (C) the Indenture Trustee determines that the Trust Estate will not continue to provide sufficient funds for the payment of principal of and interest on the Notes as and when they would have become due if the Notes had not been declared due and payable, and the Indenture Trustee obtains the consent of Holders of a majority of the aggregate outstanding principal amount of the Notes. In determining such sufficiency or A-26 insufficiency with respect to clauses (B) and (C), the Indenture Trustee may, but need not, obtain and rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of such proposed action and as to the sufficiency of the Trust Estate for such purpose. (b) If the Indenture Trustee collects any money or property pursuant to this Article V, it shall pay out the money or property in the following order: FIRST: to the Indenture Trustee for any amounts due under Section 6.7; SECOND: to Noteholders for amounts due and unpaid on the Notes for principal, ratably among all Noteholders, without preference or priority of any kind, according to the amounts due and payable on all the Notes for principal; THIRD: to Noteholders for amounts due and unpaid on the Notes for interest, ratably among all Noteholders, without preference or priority of any kind, according to the amounts due and payable on all the Notes for interest; FOURTH: to the Issuer for distribution to the Certificateholders for amounts due and unpaid on the Certificates for interest, ratably among all such Certificateholders, without preference or priority of any kind, according to the amounts due and payable on all the Certificates for interest; FIFTH: to the Issuer for distribution to the Certificateholders for amounts due and unpaid on the Certificates for principal, ratably among all such Certificateholders, without preference or priority of any kind, according to the amounts due and payable on all the Certificates for principal; and SIXTH: to the Issuer for distribution to the Cash Collateral Depositor of amounts due to it under the Cash Collateral Agreement. The Indenture Trustee may fix a record date and payment date for any payment to Noteholders pursuant to this Section 5.4. At least 15 days before such record date, the Indenture Trustee shall mail to each Noteholder and the Indenture Trustee a notice that states the record date, the payment date and the amount to be paid. SECTION 5.5 Optional Preservation of the Contracts. If the Notes have been declared to be due and payable under Section 5.2 following an Event of Default and such declaration and its consequences have not been rescinded and annulled, the Indenture Trustee may, but need not, elect to take and maintain possession of the Trust Estate. It is the desire of the parties hereto and the Noteholders that there be at all times sufficient funds for the payment of principal of and interest on the Notes, and the Indenture Trustee shall take such desire into account when determining whether or not to take and maintain possession of the Trust Estate. In determining whether to take and maintain possession of the Trust Estate, the Indenture Trustee may, but need not, obtain and rely upon an opinion of an Independent investment banking or accounting firm of A-27 national reputation as to the feasibility of such proposed action and as to the sufficiency of the Trust Estate for such purpose. SECTION 5.6 Limitation of Suits. No Holder of any Note shall have any right to institute any Proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless: (a) such Holder has previously given written notice to the Indenture Trustee of a continuing Event of Default; (b) the Holders of not less than 25% of the aggregate outstanding principal amount of the Notes have made written request to the Indenture Trustee to institute such Proceeding in respect of such Event of Default in its own name as Indenture Trustee hereunder; (c) such Holder or Holders have offered to the Indenture Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in complying with such request; (d) the Indenture Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute such Proceedings; and (e) no direction inconsistent with such written request has been given to the Indenture Trustee during such 60-day period by the Holders of a majority of the aggregate outstanding principal amount of the Notes; it being understood and intended that no one or more Holders of Notes shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Notes or to obtain or to seek to obtain priority or preference over any other Holders of Notes or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all holders of Notes. For the protection and enforcement of the provisions of this Section 5.6, each and every Noteholder shall be entitled to such relief as can be given either at law or in equity. If the Indenture Trustee shall receive conflicting or inconsistent requests and indemnity from two or more groups of Holders of Notes, each representing less than a majority of the aggregate outstanding principal amount of the Notes, the Indenture Trustee in its sole discretion may determine what action, if any, shall be taken, notwithstanding any other provisions of this Indenture. SECTION 5.7 Unconditional Rights of Noteholders To Receive Principal and Interest. Notwithstanding any other provisions in this Indenture, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the principal of and interest, on such Note on or after the respective due dates thereof expressed in such Note or in this Indenture A-28 (or, in the case of redemption, if applicable, on or after the Redemption Date) and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder. SECTION 5.8 Restoration of Rights and Remedies. If the Indenture Trustee or any Noteholder has instituted any Proceeding to enforce any right or remedy under this Indenture and such Proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Indenture Trustee or to such Noteholder, then and in every such case the Issuer, the Indenture Trustee and the Noteholders shall, subject to any determination in such Proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Indenture Trustee and the Noteholders shall continue as though no such Proceeding had been instituted. SECTION 5.9 Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to the Indenture Trustee or to the Noteholders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 5.10 Delay or Omission Not a Waiver. No delay or omission of the Indenture Trustee or any Holder of any Note to exercise any right or remedy accruing upon any Default or Event of Default shall impair any such right or remedy or constitute a waiver of any such Default or Event of Default or an acquiescence therein. Every right and remedy given by this Article V or by law to the Indenture Trustee or to the Noteholders may be exercised from time to time, and as often as may be deemed expedient, by the Indenture Trustee or by the Noteholders, as the case may be. SECTION 5.11 Control by Noteholders. The Holders of a majority of the aggregate outstanding principal amount of the Notes shall, subject to provision being made for indemnification against costs, expenses and liabilities in a form satisfactory to the Indenture Trustee, have the right to direct the time, method and place of conducting any Proceeding for any remedy available to the Indenture Trustee with respect to the Notes or exercising any trust or power conferred on the Indenture Trustee; provided, however, that: (a) such direction shall not be in conflict with any rule of law or with this Indenture; (b) subject to the express terms of Section 5.4, any direction to the Indenture Trustee to sell or liquidate the Trust Estate shall be by the Holders of Notes representing not less than 100% of the aggregate outstanding principal amount of the Notes; (c) if the conditions set forth in Section 5.5 have been satisfied and the Indenture Trustee elects to retain the Trust Estate pursuant to Section 5.5, then any A-29 direction to the Indenture Trustee by Holders of Notes representing less than 100% of the aggregate outstanding principal amount of the Notes to sell or liquidate the Trust Estate shall be of no force and effect; and (d) the Indenture Trustee may take any other action deemed proper by the Indenture Trustee that is not inconsistent with such direction; provided, however, that, subject to Section 6.1, the Indenture Trustee need not take any action that it determines might cause it to incur any liability or might materially adversely affect the rights of any Noteholders not consenting to such action. SECTION 5.12 Waiver of Past Defaults. (a) Prior to the declaration of the acceleration of the maturity of the Notes as provided in Section 5.2, the Holders of not less than a majority of the aggregate outstanding principal amount of the Notes may waive any past Default or Event of Default and its consequences except a Default (i) in the payment of principal of or interest on any of the Notes or (ii) in respect of a covenant or provision hereof which cannot be modified or amended without the consent of the Holder of each Note. In the case of any such waiver, the Issuer, the Indenture Trustee and the Noteholders shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto. (b) Upon any such waiver, such Default shall cease to exist and be deemed to have been cured and not to have occurred, and any Event of Default arising therefrom shall be deemed to have been cured and not to have occurred, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto. SECTION 5.13 Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Note by such Holder's acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any Proceeding for the enforcement of any right or remedy under this Indenture, or in any Proceeding against the Indenture Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such Proceeding of an undertaking to pay the costs of such Proceeding, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such Proceeding, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 5.13 shall not apply to: (a) any Proceeding instituted by the Indenture Trustee; (b) any Proceeding instituted by any Noteholder, or group of Noteholders, in each case holding in the aggregate more than 10% of the aggregate outstanding principal amount of the Notes; or A-30 (c) any Proceeding instituted by any Noteholder for the enforcement of the payment of principal of or interest on any Note on or after the respective due dates expressed in such Note and in this Indenture (or, in the case of redemption, on or after the Redemption Date). SECTION 5.14 Waiver of Stay or Extension Laws. The Issuer covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, or plead or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture. The Issuer (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not hinder, delay or impede the execution of any power herein granted to the Indenture Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted. SECTION 5.15 Action on Notes. The Indenture Trustee's right to seek and recover judgment on the Notes or under this Indenture shall not be affected by the seeking, obtaining or application of any other relief under or with respect to this Indenture. Neither the lien of this Indenture nor any rights or remedies of the Indenture Trustee or the Noteholders shall be impaired by the recovery of any judgment by the Indenture Trustee against the Issuer or by the levy of any execution under such judgment upon any portion of the Trust Estate or upon any of the assets of the Issuer. SECTION 5.16 Performance and Enforcement of Certain Obligations. (a) Promptly following a request from the Indenture Trustee to do so and at the Servicer's expense, the Issuer agrees to take all such lawful action as the Indenture Trustee may reasonably request to compel or secure the performance and observance by the Seller and the Servicer of their respective obligations to the Issuer under or in connection with the Basic Documents (other than the Excluded Assets) in accordance with the terms thereof, and to exercise any and all rights, remedies, powers and privileges lawfully available to the Issuer under or in connection with the Sale and Servicing Agreement to the extent and in the manner reasonably directed by the Indenture Trustee, including the transmission of notices of default on the part of the Seller or the Servicer thereunder and the institution of legal or administrative actions or proceedings to compel or secure performance by the Seller or the Servicer of each of their obligations under the Basic Documents (other than with respect to the Excluded Assets). (b) If an Event of Default has occurred and is continuing, the Indenture Trustee may, and, at the direction (which direction shall be in writing or by telephone (confirmed in writing promptly thereafter)) of the Holders of 66-2/3% of the aggregate outstanding principal amount of the Notes shall, exercise all rights, remedies, powers, privileges and claims of the Issuer against the Seller or the Servicer under or in connection with the Basic Documents (other than with respect to the Excluded Assets), including the right or power to take any action to compel or secure performance or observance by the Seller or the Servicer of each of their obligations to the Issuer A-31 thereunder and to give any consent, request, notice, direction, approval, extension or waiver thereunder, and any right of the Issuer to take such action shall be suspended. (c) Promptly following a request from the Indenture Trustee to do so and at the Servicer's expense, the Issuer agrees to take all such lawful action as the Indenture Trustee may reasonably request to compel or secure the performance and observance by CITSF of each of its obligations to the Seller under or in connection with the Sale and Servicing Agreement, the Purchase Agreement and the Subsequent Purchase Agreement in accordance with the terms thereof, and to exercise any and all rights, remedies, powers and privileges lawfully available to the Issuer under or in connection with the Sale and Servicing Agreement, the Purchase Agreement and the Subsequent Purchase Agreement to the extent and in the manner reasonably directed by the Indenture Trustee, including the transmission of notices of default on the part of the Seller thereunder and the institution of legal or administrative actions or proceedings to compel or secure performance by CITSF of each of its obligations under the Sale and Servicing Agreement, the Purchase Agreement and the Subsequent Purchase Agreement. If an Event of Default has occurred and is continuing, the Indenture Trustee may, and, at the direction (which direction shall be in writing or by telephone (confirmed in writing promptly thereafter)) of the Holders of 66-2/3% of the aggregate outstanding principal amount of the Notes shall, exercise all rights, remedies, powers, privileges and claims of the Seller against CITSF under or in connection with the Sale and Servicing Agreement, the Purchase Agreement and the Subsequent Purchase Agreement, including the right or power to take any action to compel or secure performance or observance by CITSF of each of its obligations to the Seller thereunder and to give any consent, request, notice, direction, approval, extension or waiver under the Sale and Servicing Agreement, the Purchase Agreement and the Subsequent Purchase Agreement, and any right of the Seller to take such action shall be suspended. ARTICLE VI THE INDENTURE TRUSTEE SECTION 6.1 Duties of Indenture Trustee. (a) If an Event of Default has occurred and is continuing, the Indenture Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (b) Except during the continuance of an Event of Default: (i) the Indenture Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Indenture Trustee; and A-32 (ii) in the absence of bad faith on its part, the Indenture Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Indenture Trustee and conforming to the requirements of this Indenture; provided, however, that the Indenture Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Indenture Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: (i) this Section 6.1(c) does not limit the effect of Section 6.1(b); (ii) the Indenture Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer unless it is proved that the Indenture Trustee was negligent in ascertaining the pertinent facts; and (iii) the Indenture Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction properly delivered to it pursuant to Section 5.11. (d) The Indenture Trustee shall not be liable for interest on any money received by it except as the Indenture Trustee may agree in writing with the Issuer. (e) Money held in trust by the Indenture Trustee need not be segregated from other funds except to the extent required by law or the terms of this Indenture, the Sale and Servicing Agreement or the Trust Agreement. (f) No provision of this Indenture shall require the Indenture Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayments of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (g) Every provision of this Indenture relating to the Indenture Trustee shall be subject to the provisions of this Section 6.1 and to the provisions of the TIA. (h) The Indenture Trustee shall take the actions required to be taken by it set forth in Article XI of the Sale and Servicing Agreement in connection with a sale of the Contracts. SECTION 6.2 Rights of Indenture Trustee. A-33 (a) The Indenture Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper person. The Indenture Trustee need not investigate any fact or matter stated in the document. (b) Before the Indenture Trustee acts or refrains from acting, it may require an Officer's Certificate or an Opinion of Counsel. The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officer's Certificate or Opinion of Counsel. (c) The Indenture Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys or a custodian or nominee, and the Indenture Trustee shall not be responsible for any misconduct or negligence on the part of, or for the supervision of, any such agent, attorney, custodian or nominee appointed with due care by it hereunder. (d) The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith which it reasonably believes to be authorized or within its rights or powers; provided, however, that the Indenture Trustee's conduct does not constitute willful misconduct, negligence or bad faith. (e) The Indenture Trustee may consult with counsel, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Notes shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel. SECTION 6.3 Indenture Trustee May Own Notes. The Indenture Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuer, the Servicer or any of their respective Affiliates with the same rights it would have if it were not Indenture Trustee; provided, however, that the Indenture Trustee shall comply with Sections 6.10 and 6.11. Any Paying Agent, Note Registrar, co-registrar or co-paying agent may do the same with like rights. SECTION 6.4 Indenture Trustee's Disclaimer. The Indenture Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Issuer's use of the proceeds from the Notes, and it shall not be responsible for any statement of the Issuer in the Indenture or in any document issued in connection with the sale of the Notes or in the Notes other than the Indenture Trustee's certificate of authentication. SECTION 6.5 Notice of Defaults. If a Default occurs and is continuing and if it is known to a Responsible Officer of the Indenture Trustee, the Indenture Trustee shall mail to each Noteholder notice of the Default within 90 days after it occurs. Except in the case of a Default in payment of principal of or interest on any Note, the Indenture Trustee may withhold the notice if A-34 and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of Noteholders. SECTION 6.6 Reports by Indenture Trustee to Holders. The Indenture Trustee shall deliver to each Noteholder the information and documents set forth in Article VII, and, in addition, all such information with respect to the Notes as may be required to enable such holder to prepare its federal and state income tax returns. SECTION 6.7 Compensation; Indemnity. (a) The Issuer shall cause the Servicer pursuant to the Sale and Servicing Agreement to pay to the Indenture Trustee from time to time reasonable compensation for its services. The Indenture Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Issuer shall cause the Servicer pursuant to the Sale and Servicing Agreement to reimburse the Indenture Trustee for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Indenture Trustee's agents, counsel, accountants and experts. The Issuer shall cause the Servicer pursuant to the Sale and Servicing Agreement to indemnify the Indenture Trustee in accordance with Section 8.02 of the Sale and Servicing Agreement. (b) The Issuer's obligations to the Indenture Trustee pursuant to this Section 6.7 shall survive the discharge of this Indenture. When the Indenture Trustee incurs expenses after the occurrence of a Default specified in Section 5.1(d) or (e) with respect to the Issuer, the expenses are intended to constitute expenses of administration under Title 11 of the United States Code or any other applicable federal or state bankruptcy, insolvency or similar law. SECTION 6.8 Replacement of Indenture Trustee. (a) The Indenture Trustee may resign at any time by so notifying the Issuer. The Holders of a majority in aggregate outstanding principal amount of the Notes may remove the Indenture Trustee by so notifying the Indenture Trustee and may appoint a successor Indenture Trustee. Such resignation or removal shall become effective in accordance with Section 6.8(c). The Issuer shall remove the Indenture Trustee if: (i) the Indenture Trustee fails to comply with Section 6.11; (ii) the Indenture Trustee is adjudged a bankrupt or insolvent; (iii) a receiver or other public officer takes charge of the Indenture Trustee or its property; or (iv) the Indenture Trustee otherwise becomes incapable of acting. A-35 (b) If the Indenture Trustee resigns or is removed or if a vacancy exists in the office of Indenture Trustee for any reason (the Indenture Trustee in such event being referred to herein as the retiring Indenture Trustee), the Holders of a majority in aggregate outstanding principal amount of the Notes may appoint a successor Indenture Trustee, but until a successor Indenture Trustee shall have been so appointed by the Holders of the Notes, the Issuer shall appoint a successor Indenture Trustee, and until the Issuer has appointed such successor the resignation of the Indenture Trustee shall not become effective. After any such appointment other than by the holders of the Notes, the person making such appointment shall forthwith cause notice thereof to be mailed to the holders of the Notes at their addresses as the same then appear in the register of the Issuer; but any successor Trustee so appointed shall, immediately and without further act, be superseded by a successor Trustee appointed by the holders of the Notes in the manner above prescribed, if such appointment be made prior to the expiration of one year from the date of the mailing of such notice by the Issuer, or by such receivers, trustees, custodians, or assignees. A retiring Indenture Trustee shall not be liable for any acts or omissions of a successor Indenture Trustee occurring after the retirement of such retired Indenture Trustee, which retirement was effected pursuant to the terms and subject to the conditions of this Indenture. (c) A successor Indenture Trustee shall deliver a written acceptance of its appointment to the retiring Indenture Trustee and to the Issuer. Thereupon the resignation or removal of the retiring Indenture Trustee shall become effective, and the successor Indenture Trustee shall have all the rights, powers and duties of the Indenture Trustee under this Indenture. The successor Indenture Trustee shall mail a notice of its succession to Noteholders. The retiring Indenture Trustee shall promptly transfer all property held by it as Indenture Trustee to the successor Indenture Trustee. (d) If a successor Indenture Trustee does not take office within 60 days after the retiring Indenture Trustee resigns or is removed, the retiring Trustee, the Issuer or the Holders of a majority of the aggregate outstanding principal amount of the Notes may petition any court of competent jurisdiction for the appointment of a successor Indenture Trustee. (e) If the Indenture Trustee fails to comply with Section 6.11, any Noteholder may petition any court of competent jurisdiction for the removal of the Indenture Trustee and the appointment of a successor Indenture Trustee. (f) Notwithstanding the replacement of the Indenture Trustee pursuant to this Section 6.8, the Issuer's obligations under Section 6.7 and the Servicer's corresponding obligations under the Sale and Servicing Agreement shall continue for the benefit of the retiring Indenture Trustee. SECTION 6.9 Merger or Consolidation of Indenture Trustee. A-36 (a) Any corporation into which the Indenture Trustee may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which the Indenture Trustee shall be a party, or any corporation succeeding to the corporate trust business of the Indenture Trustee, shall be the successor of the Indenture Trustee under this Indenture; provided, however, that such corporation shall be eligible under the provisions of Section 6.11, without the execution or filing of any instrument or any further act on the part of any of the parties to this Indenture, anything in this Indenture to the contrary notwithstanding. (b) If at the time such successor or successors by merger or consolidation to the Indenture Trustee shall succeed to the trusts created by this Indenture, any of the Notes shall have been authenticated but not delivered, any such successor to the Indenture Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Indenture Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor to the Indenture Trustee. In all such cases such certificate of authentication shall have the same full force as is provided anywhere in the Notes or herein with respect to the certificate of authentication of the Indenture Trustee. SECTION 6.10 Appointment of Co-Indenture Trustee or Separate Indenture Trustee. (a) Notwithstanding any other provisions of this Indenture, at any time, for the purpose of meeting any legal requirement of any jurisdiction in which any part of the Trust or any Financed Boat may at the time be located, the Indenture Trustee shall have the power and may execute and deliver all instruments to appoint one or more Persons to act as a co-trustee or co-trustees, or separate trustee or separate trustees, of all or any part of the Trust, and to vest in such Person or Persons, in such capacity and for the benefit of the Noteholders, such title to the Trust, or any part hereof, and, subject to the other provisions of this Section 6.10, such powers, duties, obligations, rights and trusts as the Indenture Trustee may consider necessary or desirable. No co-trustee or separate trustee hereunder shall be required to meet the terms of eligibility as a successor trustee under Section 6.11 and no notice to Noteholders of the appointment of any co-trustee or separate trustee shall be required under Section 6.8. (b) Every separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions: (i) all rights, powers, duties and obligations conferred or imposed upon the Indenture Trustee shall be conferred or imposed upon and exercised or performed by the Indenture Trustee and such separate trustee or co-trustee jointly (it being understood that such separate trustee or co-trustee is not authorized to act separately without the Indenture Trustee joining in such act), except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed the Indenture Trustee shall be incompetent or unqualified to perform A-37 such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Indenture Trustee; (ii) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; and (iii) the Indenture Trustee may at any time accept the resignation of or remove any separate trustee or co-trustee. (c) Any notice, request or other writing given to the Indenture Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee shall refer to this Indenture and the conditions of this Article VI. Each separate trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Indenture Trustee or separately, as may be provided therein, subject to all the provisions of this Indenture, specifically including every provision of this Indenture relating to the conduct of, affecting the liability of, or affording protection to, the Indenture Trustee. Every such instrument shall be filed with the Indenture Trustee. (d) Any separate trustee or co-trustee may at any time constitute the Indenture Trustee, its agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Indenture on its behalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Indenture Trustee, to the extent permitted by law, without the appointment of a new or successor trustee. SECTION 6.11 Eligibility; Disqualification. The Indenture Trustee shall at all times satisfy the requirements of TIA ss. 310(a). The Indenture Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition and it shall have a long term unsecured debt rating of "Baa3" or better by Moody's and "BBB" or better by Standard & Poor's. The Indenture Trustee shall comply with TIA ss. 310(b); provided, however, that there shall be excluded from the operation of TIA ss. 310(b)(1) any indenture or indentures under which other securities of the Issuer are outstanding if the requirements for such exclusion set forth in TIA ss. 310(b)(1) are met. SECTION 6.12 Preferential Collection of Claims Against Issuer. The Indenture Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship listed in TIA ss. 311(b). A trustee who has resigned or been removed shall be subject to TIA ss. 311(a) to the extent indicated. A-38 SECTION 6.13 Representations and Warranties of Indenture Trustee. The Indenture Trustee represents and warrants as of the Closing Date that: (a) the Indenture Trustee is an [__________]banking corporation duly organized, validly existing and in good standing under the laws of the State of [__________]; (b) the Indenture Trustee has full power, authority and legal right to execute, deliver and perform this Indenture, and has taken all necessary action to authorize the execution, delivery and performance by it of this Indenture; (c) the execution, delivery and performance by the Indenture Trustee of this Indenture (i) shall not violate any provision of any applicable law or regulation governing the banking and trust powers of the Indenture Trustee or any order, writ, judgment or decree of any court, arbitrator, or governmental authority applicable to the Indenture Trustee or any of its assets, (ii) shall not violate any provision of the corporate charter or by-laws of the Indenture Trustee, or (iii) shall not violate any provision of, or constitute, with or without notice or lapse of time, a default under, or result in the creation or imposition of any Lien on any properties included in the Trust pursuant to the provisions of any mortgage, indenture, contract, agreement or other undertaking to which it is a party, which violation, default or Lien could reasonably be expected to have a materially adverse effect on the Indenture Trustee's performance or ability to perform its duties under this Indenture or on the transactions contemplated in this Indenture; (d) the execution, delivery and performance by the Indenture Trustee of this Indenture shall not require the authorization, consent or approval of, the giving of notice to, the filing or registration with, or the taking of any other action in respect of, any governmental authority or agency regulating the banking and corporate trust activities of the Indenture Trustee; and (e) this Indenture has been duly executed and delivered by the Indenture Trustee and constitutes the legal, valid and binding agreement of the Indenture Trustee, enforceable in accordance with its terms. SECTION 6.14 Indenture Trustee May Enforce Claims Without Possession of Notes. All rights of action and claims under this Indenture or the Notes may be prosecuted and enforced by the Indenture Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Indenture Trustee shall be brought in its own name as Indenture Trustee. Any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee, its agents and counsel, be for the ratable benefit of the Noteholders in respect of which such judgment has been obtained. SECTION 6.15 Suit for Enforcement. If an Event of Default shall occur and be continuing, the Indenture Trustee, in its discretion may, subject to the provisions of Section 6.1, A-39 proceed to protect and enforce its rights and the rights of the Noteholders under this Indenture by Proceeding whether for the specific performance of any covenant or agreement contained in this Indenture or in aid of the execution of any power granted in this Indenture or for the enforcement of any other legal, equitable or other remedy as the Indenture Trustee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights of the Indenture Trustee or the Noteholders. SECTION 6.16 Rights of Noteholders to Direct Indenture Trustee. Holders of Notes evidencing not less than a majority of the aggregate outstanding principal amount of the Notes shall have the right to direct the time, method and place of conducting any Proceeding for any remedy available to the Indenture Trustee or exercising any trust or power conferred on the Indenture Trustee; provided, however, that subject to Section 6.1, the Indenture Trustee shall have the right to decline to follow any such direction if the Indenture Trustee being advised by counsel determines that the action so directed may not lawfully be taken, or if the Indenture Trustee in good faith shall, by a Responsible Officer, determine that the proceedings so directed would be illegal or subject it to personal liability or be unduly prejudicial to the rights of Noteholders not parties to such direction; and provided, further, that nothing in this Indenture shall impair the right of the Indenture Trustee to take any action deemed proper by the Indenture Trustee and which is not inconsistent with such direction by the Noteholders. ARTICLE VII NOTEHOLDERS' LISTS AND REPORTS SECTION 7.1 Issuer To Furnish Indenture Trustee Names and Addresses of Noteholders. The Issuer shall furnish or cause to be furnished by the Servicer to the Indenture Trustee (a) not more than five days before each Distribution Date, a list, in such form as the Indenture Trustee may reasonably require, of the names and addresses of the Holders of Notes as of the close of business on the Record Date, and (b) at such other times as the Indenture Trustee may request in writing, within 14 days after receipt by the Issuer of any such request, a list of similar form and content as of a date not more than 10 days prior to the time such list is furnished; provided, however, that so long as the Indenture Trustee is the Note Registrar, no such list shall be required to be furnished. SECTION 7.2 Preservation of Information, Communications to Noteholders. (a) The Indenture Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of the Holders of Notes contained in the most recent list furnished to the Indenture Trustee as provided in Section 7.1 and the names and addresses of Holders of Notes received by the Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may destroy any list furnished to it as provided in such Section 7.1 upon receipt of a new list so furnished. A-40 (b) Noteholders may communicate pursuant to TIA ss. 312(b) with other Noteholders with respect to their rights under this Indenture or under the Notes. (c) The Issuer, the Indenture Trustee and the Note Registrar shall have the protection of TIA ss. 312(c). SECTION 7.3 Reports by Issuer. (a) The Issuer shall: (i) file with the Indenture Trustee, within 15 days after the Issuer is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Issuer may be required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act; (ii) file with the Indenture Trustee and the Commission in accordance with rules and regulations prescribed from time to time by the Commission such additional information, documents and reports with respect to compliance by the Issuer with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and (iii) supply to the Indenture Trustee (and the Indenture Trustee shall transmit by mail to all Noteholders described in TIA ss. 313(c)) such summaries of any information, documents and reports required to be filed by the Issuer pursuant to clauses (i) and (ii) of this Section 7.3(a) as may be required by rules and regulations prescribed from time to time by the Commission. (b) Unless the Issuer otherwise determines, the fiscal year of the Issuer shall end on December 31 of such year. SECTION 7.4 Reports by Trustee. (a) If required by TIA ss. 313(a), within 60 days after each June 1, beginning with June 1, 1998, the Indenture Trustee shall mail to each Noteholder as required by TIA ss. 313(c) a brief report dated as of such date that complies with TIA ss. 313(a). The Indenture Trustee also shall comply with TIA ss. 313(b). A copy of any report delivered pursuant to this Section 7.4(a) shall, at the time of its mailing to Noteholders, be filed by the Indenture Trustee with the Commission and each stock exchange, if any, on which the Notes are listed. The Issuer shall notify the Indenture Trustee if and when the Notes are listed on any stock exchange. A-41 (b) On each Distribution Date, the Indenture Trustee shall include with each payment to each Noteholder a copy of the statement for the related Due Period applicable to such Distribution Date as required pursuant to the Sale and Servicing Agreement. ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND RELEASES SECTION 8.1 Collection of Money. Except as otherwise expressly provided herein, the Indenture Trustee may demand payment or delivery of, and shall receive and collect, directly and without intervention or assistance of any fiscal agent or other intermediary, all money and other property payable to or receivable by the Indenture Trustee pursuant to this Indenture. The Indenture Trustee shall apply all such money received by it as provided in this Indenture. Except as otherwise expressly provided in this Indenture, if any default occurs in the making of any payment or performance under any agreement or instrument that is part of the Trust Estate, the Indenture Trustee may take such action as may be appropriate to enforce such payment or performance, including the institution and prosecution of appropriate Proceedings. Any such action shall be without prejudice to any right to claim a Default or Event of Default under this Indenture and any right to proceed thereafter as provided in Article V. SECTION 8.2 Designated Accounts and the Cash Collateral Account; Payments. (a) On or prior to the Closing Date, the Issuer shall cause the Servicer to establish and maintain, in the name of the Indenture Trustee or Owner Trustee, as appropriate, for the benefit of the Noteholders or the Certificateholders (and, in the case of the Cash Collateral Account, the Cash Collateral Depositor) as appropriate, the accounts as provided in Section 5.01 of the Sale and Servicing Agreement. (b) On or before each Distribution Date, all amounts of monies relating to the preceding Due Period will be deposited into the Collection Account as provided in Section 5.02 of the Sale and Servicing Agreement. On or before each Distribution Date, the amount which is due to the Noteholders with respect to the preceding Due Period will be transferred from the Collection Account to the Note Distribution Account as provided in Section 5.05 of the Sale and Servicing Agreement. (c) On each Distribution Date and Redemption Date, the Indenture Trustee shall distribute all amounts on deposit in the Note Distribution Account to Noteholders in respect of the Notes to the extent of amounts due and unpaid on the Notes for principal and interest. To the extent that the funds available for distribution in the Note Distribution Account are not sufficient to pay all amounts of accrued and unpaid principal and interest on the Notes, such amounts will be distributed first in respect of interest and then in respect of principal. SECTION 8.3 General Provisions Regarding Accounts. A-42 (a) So long as no Default or Event of Default shall have occurred and be continuing, all or a portion of the funds in the Designated Accounts and the Cash Collateral Account shall be invested in Eligible Investments and, in the case in the Collection Account and the Note Distribution Account, reinvested by the Indenture Trustee upon Issuer Order, and in the case of the Certificate Distribution Account and the Cash Collateral Account, reinvested by the Owner Trustee (or its designated agent) subject to the provisions of Section 5.01(c) of the Sale and Servicing Agreement. The Issuer shall not direct the Indenture Trustee to make any investment of any funds or to sell any investment held in any of the Collection Account and the Note Distribution Account unless the security interest granted and perfected in such account (to the extent provided in the Basic Documents) shall continue to be perfected in such investment or the proceeds of such sale, in either case without any further action by any Person, and, in connection with any direction to the Indenture Trustee to make any such investment or sale, if requested by the Indenture Trustee, the Issuer shall deliver to the Indenture Trustee an Opinion of Counsel, acceptable to the Indenture Trustee, to such effect. (b) Subject to Section 6.1(c), the Indenture Trustee shall not in any way be held liable by reason of any insufficiency in any of the Designated Accounts or the Cash Collateral Account resulting from any loss on any Eligible Investment included therein except for losses attributable to the Indenture Trustee's failure to make payments on such Eligible Investments issued by the Indenture Trustee, in its commercial capacity as principal obligor and not as trustee, in accordance with their terms. (c) If (i) the Servicer shall have failed to give investment directions for any funds on deposit in the Designated Accounts to the Indenture Trustee by 11:00 a.m., New York City Time (or such other time as may be agreed by the Servicer and the Indenture Trustee) on any Business Day; or (ii) a Default or Event of Default shall have occurred and be continuing with respect to the Notes but the Notes shall not have been declared due and payable pursuant to Section 5.2, or, if such Notes shall have been declared due and payable following an Event of Default, amounts collected or receivable from the Trust Estate are being applied in accordance with Section 5.5 as if there had not been such a declaration; then the Indenture Trustee shall, to the fullest extent practicable, invest and reinvest funds in such Designated Accounts in one or more Eligible Investments selected by the Indenture Trustee; provided that the Indenture Trustee will not be liable for the performance of such investments so long as it invests the funds in such Designated Accounts in Eligible Investments. SECTION 8.4 Release of Trust Estate. (a) Subject to the payment of its fees and expenses pursuant to Section 6.7, the Indenture Trustee may, and when required by the provisions of this Indenture shall, execute instruments to release property from the Lien of this Indenture, or convey the Indenture Trustee's interest in the same, in a manner and under circumstances that are consistent with the provisions of this Indenture. No party relying upon an instrument A-43 executed by the Indenture Trustee as provided in this Article VIII shall be bound to ascertain the Indenture Trustee's authority, inquire into the satisfaction of any conditions precedent or see to the application of any monies. (b) The Indenture Trustee shall, at such time as there are no Notes outstanding and all sums due to the Indenture Trustee pursuant to Section 6.7 have been paid, release any remaining portion of the Trust Estate that secured the Notes from the Lien of this Indenture and release to the Issuer or any other Person entitled thereto any funds then on deposit in the Designated Accounts (to the extent such funds were subject to the Lien of this Indenture). The Indenture Trustee shall release property from the Lien of this Indenture pursuant to this Section 8.4(b) only upon receipt of an Issuer Request accompanied by an Officer's Certificate, an Opinion of Counsel and (if required by the TIA) Independent Certificates in accordance with TIA ss. 314(c) and 314(d)(1) meeting the applicable requirements of Section 11.1. SECTION 8.5 Opinion of Counsel. The Indenture Trustee shall receive at least seven days' notice when requested by the Issuer to take any action pursuant to Section 8.4(a), accompanied by copies of any instruments involved, and the Indenture Trustee shall also require as a condition to such action, an Opinion of Counsel, in form and substance satisfactory to the Indenture Trustee, stating the legal effect of any such action, outlining the steps required to complete the same, and concluding that all conditions precedent to the taking of such action have been complied with and such action shall not materially and adversely impair the security for the Notes or the rights of the Noteholders in contravention of the provisions of this Indenture; provided, however, that such Opinion of Counsel shall not be required to express an opinion as to the fair value of the Trust Estate. Counsel rendering any such opinion may rely, without independent investigation, on the accuracy and validity of any certificate or other instrument delivered to the Indenture Trustee in connection with any such action. ARTICLE IX SUPPLEMENTAL INDENTURES SECTION 9.1 Supplemental Indentures Without Consent of Noteholders. (a) Without the consent of the Holders of any Notes but with prior written notice to the Rating Agencies and, in the case of clause (viii), satisfaction of the Rating Agency Condition, the Issuer and the Indenture Trustee, when authorized by an Issuer Order, at any time and from time to time, may enter into one or more indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as in force at the date of the execution thereof), in form satisfactory to the Indenture Trustee, for any of the following purposes: (i) to correct or amplify the description of the Collateral or add additional collateral; A-44 (ii) to provide for the assumption of the Note and the Indenture obligations by a permitted successor to the Trust; (iii) to add additional covenants for the benefit of the related Noteholders, or to surrender any rights or power conferred upon the Trust; (iv) to convey, transfer, assign mortgage or pledge any property to or with the Indenture Trustee; (v) to cure any ambiguity or correct or supplement any provision in the Indenture or any supplemental indenture which may be inconsistent with any other provision of the Indenture or in any supplemental indenture; (vi) to provide for the acceptance of the appointment of a successor Indenture Trustee or to add or change any of the provisions of the Indenture as shall be necessary and permitted to facilitate the administration by more than one trustee; (vii) to modify, eliminate or add to the provisions of the Indenture in order to comply with the Trust Indenture Act of 1939, as amended; or (viii) to add any provisions to, change in any manner or eliminate any of the provisions of, the Indenture or modify in any manner the rights of Noteholders under such Indenture; provided that any action specified in this clause (viii) shall not, as evidenced by an opinion of counsel, adversely affect in any material respect the interests of any Noteholder unless Noteholder consent is otherwise obtained as described herein. (b) The Issuer and the Indenture Trustee, when authorized by an Issuer Order, may, also without the consent of any of the Noteholders but with prior notice to the Rating Agencies, at any time and from time to time enter into one or more indentures supplemental hereto for the purpose of adding any provisions to, changing in any manner, or eliminating any of the provisions of, this Indenture or modifying in any manner the rights of the Noteholders under this Indenture; provided, however, that such action shall not, as evidenced by an Opinion of Counsel, adversely affect in any material respect the interests of any Noteholder. SECTION 9.2 Supplemental Indentures With Consent of Noteholders. (a) The Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may, with prior notice to the Rating Agencies and with the consent of the Holders of not less than a majority of the aggregate outstanding principal amount of the Notes, by Act (as defined in Section 11.3 hereof) of such Holders delivered to the Issuer and the Indenture Trustee, enter into an indenture or indentures supplemental hereto for the A-45 purpose of adding any provisions to, changing in any manner, or eliminating any of the provisions of, this Indenture or of modifying in any manner the rights of the Noteholders under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each outstanding Note affected thereby: (i) change the due date of any installment of principal of or interest on any Note or reduce the principal amount thereof, the interest rate specified thereon or the redemption price with respect thereto or change any place of payment where or the coin or currency in which any Note or any interest thereon is payable; (ii) impair the right to institute suit for the enforcement of certain provisions of the Indenture regarding payment; (iii) reduce the percentage of the aggregate principal amount of the outstanding Notes the consent of the holders of which is required for any such supplemental indenture or the consent of the holders of which is required for any waiver of compliance with certain provisions of the Indenture or of certain defaults thereunder and their consequences as provided for in the Indenture; (iv) modify or alter the provisions of the Indenture regarding the voting of Notes held by the Trust, any other obligor on the Notes, the Seller or an Affiliate of any of them; (v) reduce the percentage of the aggregate outstanding amount of the Notes the consent of the holders of which is required to direct the Indenture Trustee to sell or liquidate the Contracts if the proceeds of such sale would be insufficient to pay the principal amount and accrued but unpaid interest on the outstanding Notes; (vi) decrease the percentage of the aggregate principal amount of the Notes required to amend the sections of the Indenture which specify the applicable percentage of aggregate principal amount of the Notes necessary to amend the Indenture or certain other related agreements; or (vii) permit the creation of any Lien ranking prior to or on a parity with the Lien of the Indenture with respect to any of the collateral for the Notes or, except as otherwise permitted or contemplated in the Indenture, terminate the Lien of the Indenture on any such collateral or deprive the Holder of any Note of the security afforded by the Lien of the Indenture. (b) The Indenture Trustee may in its discretion determine whether or not any Notes would be affected (such that the consent of each would be required) by any supplemental indenture proposed pursuant to this Section 9.2 and any such determination shall be conclusive upon the Holders of all Notes, whether authenticated and delivered A-46 thereunder before or after the date upon which such supplemental indenture becomes effective. The Indenture Trustee shall not be liable for any such determination made in good faith. (c) It shall be sufficient if an Act of Noteholders approves the substance, but not the form, of any proposed supplemental indenture. (d) Promptly after the execution by the Issuer and the Indenture Trustee of any supplemental indenture pursuant to this Section 9.2, the Indenture Trustee shall mail to the Noteholders to which such amendment or supplemental indenture relates a notice setting forth in general terms the substance of such supplemental indenture. Any failure of the Indenture Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. SECTION 9.3 Execution of Supplemental Indentures. In executing, or permitting the additional trusts created by, any supplemental indenture permitted by this Article IX or the modifications thereby of the trusts created by this Indenture, the Indenture Trustee shall be entitled to receive, and subject to Sections 6.1 and 6.2, shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Indenture Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Indenture Trustee's own rights, duties, liabilities or immunities under this Indenture or otherwise. SECTION 9.4 Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith with respect to the Notes affected thereby, and the respective rights, limitations of rights, obligations, duties, liabilities and immunities under this Indenture of the Indenture Trustee, the Issuer and the Noteholders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. SECTION 9.5 Conformity with Trust Indenture Act. Every amendment of this Indenture and every supplemental indenture executed pursuant to this Article IX shall conform to the requirements of the TIA as then in effect so long as this Indenture shall then be qualified under the TIA. SECTION 9.6 Reference in Notes to Supplemental Indentures. Notes authenticated and delivered after the execution of any supplemental indenture pursuant to this Article IX may, and if required by the Indenture Trustee shall, bear a notation in form approved by the Indenture Trustee as to any matter provided for in such supplemental indenture. If the Issuer or the Indenture Trustee shall so determine, new Notes so modified as to conform, in the opinion of the Indenture Trustee and the Issuer, to any such supplemental indenture may be prepared and executed by the Issuer and authenticated and delivered by the Indenture Trustee in exchange for outstanding Notes of the same class. A-47 ARTICLE X REDEMPTION OF NOTES SECTION 10.1 Redemption. (a) The Notes are subject to redemption upon (i) the exercise by the Servicer of its option to purchase the Contracts pursuant to Section 11.01 of the Sale and Servicing Agreement, (ii) the mandatory sale of the Contracts pursuant to Section 11.02 of the Sale and Servicing Agreement, or (iii) at the end of the Funding Period to the extent funds remain on deposit in the Pre-Funding Account pursuant to Section 5.01(b)(iv) of the Sale and Servicing Agreement. Such redemption shall occur on any Distribution Date. The purchase price for the Notes shall be equal to the applicable redemption price as set forth in such Sections (the "Redemption Price"), provided the Issuer has available funds sufficient to pay such amount. The Issuer shall furnish the Rating Agencies notice of such redemption. If the Notes are to be redeemed pursuant to Section 10.1(a)(i) or 10.1(a)(ii), the Issuer shall furnish notice thereof to the Indenture Trustee not later than 25 days prior to the Redemption Date and the Issuer shall deposit into the Note Distribution Account, on or before the Redemption Date, the aggregate Redemption Price of the Notes to be redeemed, whereupon all such Notes shall be due and payable on the Redemption Date. The Servicer shall give the Indenture Trustee written notice on the Determination Date prior to the Distribution Date on which funds are to be released from the Pre-Funding Account pursuant to Section 5.01(b)(iv) of the Sale and Servicing Agreement with respect to redemption of the Notes pursuant to Section 10.1(a)(iii). (b) If the assets of the Trust are sold pursuant to Section 7.2 of the Trust Agreement, all amounts deposited in the Note Distribution Account pursuant to the Sale and Servicing Agreement as a result thereof shall be paid to the Noteholders. If amounts are to be paid to Noteholders pursuant to this Section 10.1(b), the Servicer or the Issuer shall, to the extent practicable, furnish notice of such event to the Indenture Trustee not later than 25 days prior to the Redemption Date whereupon all such amounts shall be payable on the Redemption Date. SECTION 10.2 Form of Redemption Notice. (a) Notice of redemption of the Notes under Section 10.1(a) shall be given by the Indenture Trustee by first class mail, postage prepaid, mailed not less than five days in the case of Section 10(a)(i) and (ii) and not less than three Business Days in the case of Section 10(a)(iii), prior to the applicable Redemption Date to each Noteholder of Notes of record at such Noteholder's address appearing in the Note Register. (b) All notices of redemption shall state: A-48 (i) the Redemption Date; (ii) the applicable Redemption Price; and (iii) the place where Notes are to be surrendered for payment of the Redemption Price (which shall be the Agency Office of the Indenture Trustee to be maintained as provided in Section 3.2). (c) Notice of redemption of the Notes shall be given by the Indenture Trustee in the name and at the expense of the Issuer. Failure to give notice of redemption, or any defect therein, to any Holder of any Note shall not impair or affect the validity of the redemption of any other Note. (d) Prior notice of redemption under Section 10.1(b) is not required to be given to Noteholders. SECTION 10.3 Notes Payable on Redemption Date. The Notes subject to redemption shall, following notice of redemption as required by Section 10.2 (in the case of redemption pursuant to Section 10.1(a)), on the Redemption Date cease to be outstanding for purposes of this Indenture and shall thereafter represent only the right to receive the applicable Redemption Price and (unless the Issuer shall default in the payment of such Redemption Price) no interest shall accrue on such Redemption Price for any period after the date to which accrued interest is calculated for purposes of calculating such Redemption Price. ARTICLE XI MISCELLANEOUS SECTION 11.1 Compliance Certificates and Opinions, etc. (a) Upon any application or request by the Issuer to the Indenture Trustee to take any action under any provision of this Indenture, the Issuer shall furnish to the Indenture Trustee: (i) an Officer's Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with, (ii) (if required by the TIA) an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with and (iii) (if required by the TIA) an Independent Certificate from a firm of certified public accountants meeting the applicable requirements of this Section 11.1, except that, in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: A-49 (i) a statement that each signatory of such certificate or opinion has read or has caused to be read such covenant or condition and the definitions herein relating thereto; (ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (iii) a statement that, in the judgment of each such signatory, such signatory has made such examination or investigation as is necessary to enable such signatory to express an informed opinion as to whether or not such covenant or condition has been complied with; and (iv) a statement as to whether, in the opinion of each such signatory, such condition or covenant has been complied with. (b) (i) Prior to the deposit with the Indenture Trustee of any Collateral or other property or securities that is to be made the basis for the release of any property or securities subject to the Lien of this Indenture, the Issuer shall, in addition to any obligation imposed in Section 11.1(a) or elsewhere in this Indenture, furnish to the Indenture Trustee an Officers' Certificate certifying or stating the opinion of each person signing such certificate as to the fair value (within 90 days of such deposit) to the Issuer of the Collateral or other property or securities to be so deposited. (ii) Whenever the Issuer is required to furnish to the Indenture Trustee an Officers' Certificate certifying or stating the opinion of any signer thereof as to the matters described in clause (b)(i) above, the Issuer shall also deliver to the Indenture Trustee an Independent Certificate as to the same matters, if the fair value to the Issuer of the securities to be so deposited and of all other such securities made the basis of any such withdrawal or release since the commencement of the then current fiscal year of the Issuer, as set forth in the certificates delivered pursuant to clause (i) above and this clause (b)(ii), is 10% or more of the aggregate outstanding principal amount of the Notes, but such a certificate need not be furnished with respect to any securities so deposited, if the fair value thereof to the Issuer as set forth in the related Officers' Certificate is less than $25,000 or less than one percent of the aggregate outstanding principal amount of the Notes. (iii) Other than with respect to the release of any Repurchased Contracts or Liquidated Contracts or disbursement from the Pre-Funding Account, whenever any property or securities are to be released from the lien of this Indenture, the Issuer shall also furnish to the Indenture Trustee an Officer's Certificate certifying or stating the opinion of each Person signing such certificate as to the fair value (within 90 days of such release) of the property or securities A-50 proposed to be released and stating that in the opinion of such person the proposed release will not impair the security under this Indenture in contravention of the provisions hereof. (iv) Whenever the Issuer is required to furnish to the Indenture Trustee an Officer's Certificate certifying or stating the opinion of any signatory thereof as to the matters described in clause (b)(iii) above, the Issuer shall also furnish to the Indenture Trustee an Independent Certificate as to the same matters if the fair value of the property or securities and of all other property, other than Repurchased Contracts or Liquidated Contracts or disbursement from the Pre-Funding Account, or securities released from the lien of this Indenture since the commencement of the then current calendar year, as set forth in the certificates required by clause (b)(iii) above and this clause (b)(iv), equals 10% or more of the aggregate outstanding principal amount of the Notes, but such certificate need not be furnished in the case of any release of property or securities if the fair value thereof as set forth in the related Officer's Certificate is less than $25,000 or less than one percent of the then aggregate outstanding principal amount of the Notes. (v) Notwithstanding Section 2.9 or any other provision of this Section 11.1, the Issuer may (A) collect, liquidate, sell or otherwise dispose of Contracts, Financed Boats and the Excluded Assets as and to the extent expressly permitted or required by the Basic Documents, (B) make cash payments out of the Designated Accounts, the Cash Collateral Account and the other Excluded Assets as and to the extent expressly permitted or required by the Basic Documents and (C) take any other action not inconsistent with the TIA. SECTION 11.2 Form of Documents Delivered to Indenture Trustee. (a) In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. (b) Any certificate or opinion of an Authorized Officer of the Issuer may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Servicer, the Seller or the Issuer, stating that the information with respect to such factual matters is in the possession of the Servicer, the Seller or the Issuer, unless A-51 such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. (c) Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. (d) Whenever in this Indenture, in connection with any application or certificate or report to the Indenture Trustee, it is provided that the Issuer shall deliver any document as a condition of the granting of such application, or as evidence of the Issuer's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Issuer to have such application granted or to the sufficiency of such certificate or report. The foregoing shall not, however, be construed to affect the Indenture Trustee's right to rely upon the truth and accuracy of any statement or opinion contained in any such document as provided in Article VI. SECTION 11.3 Acts of Noteholders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Noteholders or a class of Noteholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Noteholders in person or by agents duly appointed in writing; and except as herein otherwise expressly provided such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee, and, where it is hereby expressly required, to the Issuer. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Noteholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 6.1) conclusive in favor of the Indenture Trustee and the Issuer, if made in the manner provided in this Section 11.3. (b) The fact and date of the execution by any person of any such instrument or writing may be proved in any manner that the Indenture Trustee deems sufficient. (c) The ownership of Notes shall be proved by the Note Register. (d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Notes shall bind the Holder of every Note issued upon the registration thereof or in exchange therefor or in lieu thereof, in respect of anything done, omitted or suffered to be done by the Indenture Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon such Note. A-52 SECTION 11.4 Notices, etc., to Indenture Trustee, Issuer and Rating Agencies. Any request, demand, authorization, direction, notice, consent, waiver or Act of Noteholders or other documents provided or permitted by this Indenture to be made upon, given or furnished to or filed with: (a) the Indenture Trustee by any Noteholder or by the Issuer shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Indenture Trustee at its Corporate Trust Office and, unless otherwise specified in this Indenture, may be sent by electronic facsimile transmission (with hard copy to follow via first class mail), mailed by certified mail, return receipt requested, or delivered by hand; or (b) the Issuer by the Indenture Trustee or by any Noteholder shall be sufficient for every purpose hereunder if in writing and either sent by electronic facsimile transmission (with hard copy to follow via first class mail) or mailed, by certified mail, return receipt requested to the Issuer and the Owner Trustee, care of the Owner Trustee at its Corporate Trust Office or at any other address previously furnished in writing to the Indenture Trustee by the Issuer. The Issuer shall promptly transmit any notice received by it from the Noteholders to the Indenture Trustee and the Indenture Trustee shall likewise promptly transmit any notice received by it from the Noteholders to the Issuer, with a copy to the Owner Trustee at its Corporate Trust Office and a copy to [____________________] at ____________________, Attention: _______________. (c) Notices required to be given to the Rating Agencies by the Issuer, the Indenture Trustee or the Owner Trustee shall be in writing, personally delivered, sent by electronic facsimile transmission (with hard copy to follow via first class mail) or mailed by certified mail, return receipt requested to: (i) in the case of Moody's Investors Service, Inc., at the following address: Moody's Investors Service, Inc., ABS Monitoring Department, 99 Church Street, New York, New York 10007; and (ii) in the case of Standard & Poor's Corporation, at the following address: Standard & Poor's Corporation, 26 Broadway (20th Floor), New York, New York 10004, Attn: Asset Backed Surveillance Department or as to each of the foregoing, at such other address as shall be designated by written notice to the other parties. SECTION 11.5 Notices to Noteholders; Waiver. (a) Where this Indenture provides for notice to Noteholders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if it is in writing and mailed, first-class, postage prepaid to each Noteholder affected by such event, at such Person's address as it appears on the Note Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. If notice to Noteholders is given by mail, neither the failure to mail such notice nor any defect in any notice so mailed to any particular Noteholder shall affect the sufficiency of such notice A-53 with respect to other Noteholders, and any notice that is mailed in the manner herein provided shall conclusively be presumed to have been duly given regardless of whether such notice is in fact actually received. (b) Where this Indenture provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Noteholders shall be filed with the Indenture Trustee but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such a waiver. (c) In case, by reason of the suspension of regular mail service as a result of a strike, work stoppage or similar activity, it shall be impractical to mail notice of any event to Noteholders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice. (d) Where this Indenture provides for notice to the Rating Agencies, failure to give such notice shall not affect any other rights or obligations created hereunder, and shall not under any circumstance constitute an Event of Default. SECTION 11.6 Alternate Payment and Notice Provisions. Notwithstanding any provision of this Indenture or any of the Notes to the contrary, the Issuer may enter into any agreement with any Holder of a Note providing for a method of payment, or notice by the Indenture Trustee or any Paying Agent to such Holder, that is different from the methods provided for in this Indenture for such payments or notices. The Issuer shall furnish to the Indenture Trustee a copy of each such agreement and the Indenture Trustee shall cause payments to be made and notices to be given in accordance with such agreements. SECTION 11.7 Conflict with Trust Indenture Act. (a) If any provision hereof limits, qualifies or conflicts with another provision hereof that is required to be included in this Indenture by any of the provisions of the TIA, such required provision shall control. (b) The provisions of TIA ss.310 through 317 that impose duties on any Person (including the provisions automatically deemed included herein unless expressly excluded by this Indenture) are a part of and govern this Indenture, whether or not physically contained herein. SECTION 11.8 Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 11.9 Successors and Assigns. All covenants and agreements in this Indenture and the Notes by the Issuer shall bind its successors and assigns, whether so expressed or not. A-54 All covenants and agreements of the Indenture Trustee in this Indenture shall bind its successors and assigns, whether so expressed or not. SECTION 11.10 Separability. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 11.11 Benefits of Indenture. Nothing in this Indenture or in the Notes, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Noteholders, and any other party secured hereunder, and any other Person with an ownership interest in any part of the Trust Estate, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 11.12 Legal Holidays. If the date on which any payment is due shall not be a Business Day, then (notwithstanding any other provision of the Notes or this Indenture) payment need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the date on which nominally due, and no interest shall accrue for the period from and after any such nominal date. SECTION 11.13 Governing Law. THIS INDENTURE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. SECTION 11.14 Counterparts. This Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 11.15 Recording of Indenture. If this Indenture is subject to recording in any appropriate public recording offices, such recording is to be effected by the Issuer and at its expense accompanied by an Opinion of Counsel (which may be counsel to the Indenture Trustee or any other counsel reasonably acceptable to the Indenture Trustee) to the effect that such recording is necessary either for the protection of the Noteholders or any other Person secured hereunder or for the enforcement of any right or remedy granted to the Indenture Trustee under this Indenture. SECTION 11.16 No Recourse. No recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under this Indenture or any certificate or other writing delivered in connection herewith or therewith, against: (a) the Indenture Trustee or the Owner Trustee in its individual capacity; (b) any owner of a beneficial interest in the Issuer; or A-55 (c) any partner, owner, beneficiary, agent, officer, director, employee or agent of the Indenture Trustee or the Owner Trustee in its individual capacity, any holder of a beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or of any successor or assign of the Indenture Trustee or the Owner Trustee in its individual capacity, except as any such Person may have expressly agreed (it being understood that the Indenture Trustee and the Owner Trustee have no such obligations in their individual capacity) and except that any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity. For all purposes of this Indenture, in the performance of any duties or obligations of the Issuer hereunder, the Owner Trustee shall be subject to, and entitled to the benefits of, the terms and provisions of Articles VI, VII and VIII of the Trust Agreement. SECTION 11.17 No Petition. The Indenture Trustee, by entering into this Indenture, and each Noteholder, by accepting a Note issued hereunder, hereby covenant and agree that they shall not, prior to the date which is one year and one day after the termination of this Indenture with respect to the Trust pursuant to Section 4.1, acquiesce, petition or otherwise invoke or cause the Seller or the Trust to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Seller or the Trust under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Seller or the Trust or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Seller or the Trust. SECTION 11.18 Inspection. The Issuer agrees that, on reasonable prior notice, it shall permit any representative of the Indenture Trustee, during the Issuer's normal business hours, to examine all the books of account, records, reports, and other papers of the Issuer, to make copies and extracts therefrom, to cause such books to be audited by Independent certified public accountants, and to discuss the Issuer's affairs, finances and accounts with the Issuer's officers, employees and Independent certified public accountants, all at such reasonable times and as often as may be reasonably requested. The Indenture Trustee shall and shall cause its representatives to hold in confidence all such information except to the extent disclosure may be required by law (and all reasonable applications for confidential treatment are unavailing) and except to the extent that the Indenture Trustee may reasonably determine that such disclosure is consistent with its obligations hereunder. Notwithstanding anything herein to the contrary, the foregoing shall not be construed to prohibit (i) disclosure of any and all information that is or becomes publicly known, or information obtained by the Indenture Trustee from sources other than the Servicer or the Seller or any of their affiliates, (ii) disclosure of any and all information (A) if required to do so by any applicable statute, law, rule or regulation, (B) to any government agency or regulatory body having authority to regulate or oversee any respects of the Indenture Trustee's business, (C) pursuant to any subpoena, civil investigative demand or similar demand or request of any court, regulatory authority, arbitrator or arbitration to which the Indenture Trustee is a party, (D) to any independent or internal auditor, agent, employee or attorney of the Indenture Trustee reasonably having a need to know the same, provided that the Indenture Trustee advises such recipient of the confidential nature of the information being disclosed and such recipient A-56 agrees to keep the same confidential in accordance with the terms hereof, or (iii) any other disclosure authorized by the Servicer or the Seller; provided, however, the Indenture Trustee shall give the Servicer prior notice of any such disclosure. SECTION 11.19 Indemnification by and Reimbursement of the Servicer. The Indenture Trustee further acknowledges and accepts the conditions and limitations with respect to the Servicer's obligation to indemnify, defend and hold the Indenture Trustee harmless as set forth in the Sale and Servicing Agreement. A-57 IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this Indenture to be duly executed by their respective officers, thereunto duly authorized, all as of the day and year first above written. CIT MARINE TRUST ____-_ By: [____________________] not in its individual capacity but solely as Owner Trustee under the Trust Agreement By: ________________________________ Name: Title: [________________________] ` not in its individual capacity but solely as Indenture Trustee By: ________________________________ Name: Title: A-58 EXHIBIT A FORM OF ASSET BACKED NOTES REGISTERED $___________ No. __ SEE REVERSE FOR CERTAIN DEFINITIONS CUSIP NO. ________ Unless this Note is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its agent for registration of transfer, exchange or payment, and any Note issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. THE PRINCIPAL OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. CIT MARINE TRUST ____-_ CLASS A ____% ASSET BACKED NOTES CIT MARINE TRUST ____-_, a business trust organized and existing under the laws of the State of Delaware (herein referred to as the "Issuer"), for value received, hereby promises to pay to ____________________, or registered assigns, the principal sum of _______________ DOLLARS ($___________) payable in accordance with the Indenture, prior to the occurrence of an Event of Default and a declaration that the Notes are due and payable, on each Distribution Date to the extent of amounts available therefor in an amount equal to the difference between (i) the sum of (x) the Pool Balance on the last day of the second proceeding Due Period (or, in the case of the first Distribution Date the Initial Cut-off Date Principal Balance) and (y) the amount on deposit in the Pre-Funding Account (exclusive of Pre-Funding Earnings) on the last day of the second preceding Due Period (or, in the case of the first Distribution Date, as of the Closing Date), less (ii) the sum of (x) the Pool Balance on the last day of the preceding Due Period and (y) the amount on deposit in the Pre-Funding Account (exclusive of Pre-Funding Earnings) on the last day of the preceding Due Period; provided, however, that the outstanding principal balance of this Note shall be due and payable on the earlier of the _______________ Distribution Date (the "Class A Final Scheduled Distribution Date") and the Redemption Date with respect to a redemption of Notes, if any, pursuant to Section 10.1(a)(i) or (ii) or Section 10.1(b) of the Indenture. On each Distribution Date until the principal of this Note is paid or made available for payment, the Issuer shall pay interest on this Note in an amount equal to one-twelfth of the product of the rate per annum shown above and the principal amount of this Note outstanding on the preceding Distribution Date after giving effect to all payments of principal made on the preceding Distribution Date (or in the case of the first Distribution Date, the original outstanding principal amount of this Note). Interest on this Note will accrue for each Distribution Date from and including the most recent Distribution Date on which interest has been paid to but excluding the then current Distribution Date or, if no interest has yet been paid, from ____________,____. Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months. Such principal of and interest on this Note shall be paid in the manner specified on the reverse hereof. The principal of and interest on this Note are payable in such coin or currency of the United States of America which, at the time of payment, is legal tender for payment of public and private debts. All payments made by the Issuer with respect to this Note shall be applied first to interest due and payable on this Note as provided above and then to the unpaid principal of this Note. Reference is made to the further provisions of this Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Note. Unless the certificate of authentication hereon has been executed by the Indenture Trustee whose name appears below by manual signature, this Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof or be valid or obligatory for any purpose. A-2 IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed, manually or in facsimile, by its Authorized Officer. Date: ___________, ____ CIT MARINE TRUST ____-_ By: [____________________] not in its individual capacity but solely as Owner Trustee under the Trust Agreement By: ________________________________ Name: Title: INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Notes designated above and referred to in the within-mentioned Indenture. [______________], not in its individual capacity but solely as Indenture Trustee By: ______________________________________ Name: Title: A-3 REVERSE OF NOTE This Note is one of a duly authorized issue of Notes of the Issuer, designated as Class A ____% Asset Backed Notes (herein called the "Class A Notes" or "Notes"), all issued under an Indenture, dated as of ____________, ____ (such Indenture, as supplemented or amended, is herein called the "Indenture"), between the Issuer and ____________________, an __________ corporation, as trustee (the "Indenture Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Indenture Trustee and the Noteholders. The Class A Notes are subject to all terms of the Indenture. All terms used and not otherwise defined in this Note that are defined in the Indenture, as supplemented or amended, shall have the meanings assigned to them in or pursuant to the Indenture. The Class A Notes and all other Notes issued pursuant to the Indenture are and will be equally and ratably secured by the Collateral pledged as security therefor as provided in the Indenture. Subject to the immediately following paragraph, principal on the Class A Notes shall be payable in full on the earlier of the Distribution Date which is the Class A Final Scheduled Distribution Date for the Class A Notes set forth above and the Redemption Date, if any, pursuant to Section 10.1(a)(i) or (a)(ii) or Section 10.1(b) of the Indenture. In addition, principal on the Class A Notes will be payable in installments on earlier Distribution Dates to the extent of amounts available therefor, in the amounts and in the priorities set forth in Section 8.2(c) of the Indenture. "Distribution Date," with respect to the Notes means the fifteenth day of each month or, if any such date is not a Business Day, the next succeeding Business Day, commencing _________ 15, ____. Notwithstanding the provisions of the preceding paragraph, the entire unpaid principal amount of this Note shall be due and payable on the date on which an Event of Default shall have occurred and be continuing and the Indenture Trustee or the Noteholders representing not less than a majority of the outstanding amount of the Notes have declared the Notes to be immediately due and payable in the manner provided in Section 5.2 of the Indenture. In such event, the Holders of all Notes shall be entitled to receive repayment of principal ratably in proportion to their respective unpaid principal balances. All principal payments on the Class A Notes shall be made pro rata to the Holders of the Class A Notes. Payments of interest on this Note at the rate of _____% per annum shall be due and payable on each Distribution Date, together with the installment of principal, if any, if not in full payment of this Note, shall be made by check mailed to the Person whose name appears as the Registered Holder of this Note (or one or more Predecessor Notes) on the Note Register as of the close of business on each Record Date, except that with respect to Notes registered on the Record A-4 Date in the name of the nominee of the Depository (initially, such nominee to be Cede & Co.), payments will be made by wire transfer in immediately available funds to the account designated by such nominee. Such checks shall be mailed to the Person entitled thereto at the address of such Person as it appears on the Note Register as of the applicable Record Date without requiring that this Note be submitted for notation of payment. The Record Date, with respect to any Distribution Date, means the day immediately preceding such Distribution Date, or if Definitive Notes are issued, the last day of the month immediately preceding the month in which such Distribution Date occurs. Any reduction in the principal amount of this Note (or any one or more Predecessor Notes) effected by any payments made on any Distribution Date shall be binding upon all future Holders of this Note of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are expected to be available, as provided in the Indenture, for payment in full of the then remaining unpaid principal amount of this Note on a Distribution Date, then the Indenture Trustee, in the name of and on behalf of the Issuer, shall notify the Person who is the Registered Holder hereof as of the Record Date preceding such Distribution Date by notice sent in accordance with Section 2.7(e) of the Indenture, and the amount then due and payable shall be payable only upon presentation and surrender of this Note at the Indenture Trustee's principal Corporate Trust Office or at the office of the Indenture Trustee's agent appointed for such purposes located in the City of New York. As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Note may be registered on the Note Register upon surrender of this Note for registration of transfer at the office or agency designated by the Issuer pursuant to the Indenture, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney duly authorized in writing, with such signature guaranteed by a commercial bank or trust company located, or having a correspondent located, in the City of New York or the city in which the Corporate Trust Office is located, or a member firm of a national securities exchange, and such other documents as the Indenture Trustee may require, and thereupon one or more new Notes of authorized denominations and in the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be charged for any registration of transfer or exchange of this Note, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange. Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against (i) the Indenture Trustee or the Owner Trustee in their individual capacities, (ii) any owner of a beneficial interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or employee of the Indenture Trustee or the Owner Trustee in their individual capacities, any holder of a beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or of any successor or assign of the Indenture Trustee or the Owner Trustee in their individual capacities, except as any such Person may have expressly agreed and except that any such partner, owner or beneficiary shall be fully liable, to the extent provided by A-5 applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity. Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, covenants and agrees that by accepting the benefits of the Indenture such Noteholder will not, prior to the date which is one year and one day after the termination of this Indenture with respect to the Issuer, acquiesce, petition or otherwise invoke or cause the Seller or the Issuer to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Seller Issuer under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Seller or the Issuer or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Seller or the Issuer. Each Noteholder, by acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, unless otherwise required by appropriate taxing authorities, agrees to treat the Notes as indebtedness secured by the Contracts for the purpose of federal income taxes, state and local income and franchise taxes and any other taxes imposed upon, measured by or based upon gross or net income. Prior to the due presentment for registration of transfer of this Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name this Note (as of the day of determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes, whether or not this Note shall be overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall be affected by notice to the contrary. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Noteholders under the Indenture at any time by the Issuer with the consent of the Holders of Notes representing a majority of the outstanding principal amount of all the Notes. The Indenture also contains provisions permitting the Holders of Notes representing specified percentages of the outstanding principal amount of the Notes, on behalf of the Holders of all the Notes, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note (or any one of more Predecessor Notes) shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Note. The Indenture also permits the Indenture Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of the Noteholders. The term "Issuer" as used in this Note includes any successor to the Issuer under the Indenture. A-6 The Issuer is permitted by the Indenture, under certain circumstances, to merge or consolidate, subject to the rights of the Indenture Trustee and the Holders of Notes under the Indenture. The Notes are issuable only in registered form in denominations as provided in the Indenture, subject to certain limitations therein set forth. This Note and the Indenture shall be construed in accordance with the laws of the State of New York, without reference to its conflict of law provisions, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance with such laws. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Issuer to pay the principal of and interest on this Note at the times, place and rate, and in the coin or currency herein prescribed. Anything herein to the contrary notwithstanding, except as expressly provided in the Basic Documents, neither the Seller, the Servicer, the Indenture Trustee nor the Owner Trustee in their respective individual capacities, any owner of a beneficial interest in the Issuer, nor any of their respective partners, beneficiaries, agents, officers, directors, employees or successors or assigns, shall be personally liable for, nor shall recourse be had to any of them for, the payment of principal of or interest on, or performance of, or omission to perform, any of the covenants, obligations or indemnifications contained in this Note or the Indenture, it being expressly understood that said covenants, obligations and indemnifications have been made by the Owner Trustee solely as the Owner Trustee in the assets of the Issuer. The Holder of this Note by the acceptance hereof agrees that, except as expressly provided in the Basic Documents, in the case of an Event of Default under the Indenture, the Holder shall have no claim against any of the foregoing for any deficiency, loss or claim therefrom; provided, however, that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the assets of the Issuer for any and all liabilities, obligations and undertakings contained in the Indenture or in this Note. A-7 EX-4.2 4 TRUST AGREEMENT Exhibit 4.2 TRUST AGREEMENT BETWEEN THE CIT GROUP SECURITIZATION CORPORATION II, SELLER AND ___________________, OWNER TRUSTEE DATED AS OF ____________, ____ TABLE OF CONTENTS TRUST AGREEMENT, dated as of ____________, ____, between THE CIT GROUP SECURITIZATION CORPORATION II, a Delaware corporation, as Seller, and ____________________, a Delaware banking corporation, as Owner Trustee. The Seller and the Owner Trustee hereby agree as follows: ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.1 Definitions. Certain capitalized terms used in this Agreement shall have the respective meanings assigned to them in the Sale and Servicing Agreement of even date herewith, among the Seller, the Servicer and the Trust (the "Sale and Servicing Agreement"). All references herein to "the Agreement" or "this Agreement" are to the Trust Agreement, and all references herein to Articles, Sections and subsections are to Articles, Sections and subsections of this Agreement unless otherwise specified. ARTICLE II ORGANIZATION SECTION 2.1 Name. The Trust created hereby shall be known as "CIT Marine Trust ____-_" in which name the Owner Trustee may conduct the business of the Trust, make and execute contracts and other instruments on behalf of the Trust and sue and be sued on behalf of the Trust. SECTION 2.2 Office. The office of the Trust shall be in care of the Owner Trustee at the Corporate Trust Office or at such other address as the Owner Trustee may designate by written notice to the Certificate Owners and the Seller. SECTION 2.3 Purposes and Powers. The purpose of the Trust is to engage in the following activities: (a) to issue the Notes pursuant to the Indenture and the Certificates pursuant to this Agreement, and to sell, transfer or exchange the Notes and the Certificates; (b) with the proceeds of the sale of the Notes and the Certificates to fund the Capitalized Interest Account and the Pre-Funding Account and to pay the organizational, start-up and transactional expenses of the Trust and to pay the balance of the proceeds to the Seller pursuant to the Sale and Servicing Agreement; (c) to acquire, manage and hold the Contracts; (d) to assign, grant, transfer, pledge, mortgage and convey the Trust Estate pursuant to the terms of the Indenture and to hold, manage and distribute to the Certificate Owners pursuant to the terms of this Agreement and the Sale and Servicing Agreement any portion of the Trust Estate released from the lien of, and remitted to the Trust pursuant to, the Indenture; (e) to enter into and perform its obligations and exercise its rights under the Basic Documents to which it is to be a party; (f) to engage in those activities, including entering into agreements, that are necessary, suitable or convenient to accomplish the foregoing or are incidental thereto or connected therewith; (g) to hold and administer the Certificate Distribution Account and Cash Collateral Account and apply the proceeds thereof as provided in the Sale and Servicing Agreement; (h) to acquire Subsequent Contracts from the Seller from time to time with funds on deposit in the Pre-Funding Account; and (i) subject to compliance with the Basic Documents, to engage in such other activities as may be required in connection with conservation of the Owner Trust Estate and the making of distributions to the Certificateholders and the Noteholders. The Trust is hereby authorized to engage in the foregoing activities and shall not engage in any activity other than in connection with the foregoing or other than as required or authorized by the terms of this Agreement or the Basic Documents. SECTION 2.4 Appointment of Owner Trustee. The Seller hereby appoints the Owner Trustee as trustee of the Trust effective as of the date hereof, to have all the rights, powers and duties set forth herein. SECTION 2.5 Initial Capital Contribution of Owner Trust Estate. The Seller hereby sells, assigns, transfers, conveys and sets over to the Owner Trustee, as of the date hereof, the sum of $10. The Owner Trustee hereby acknowledges receipt in trust from the Seller, as of the date hereof, of the foregoing contribution, which shall constitute the initial Owner Trust Estate and shall be deposited in the Certificate Distribution Account. SECTION 2.6 Declaration of Trust. The Owner Trustee hereby declares that it shall hold the Owner Trust Estate in trust upon and subject to the conditions set forth herein for the use and benefit of the Certificate Owners, subject to the obligations of the Trust under the Basic Documents. It is the intention of the parties hereto that the Trust constitute a business trust under the Business Trust Statute and that this Agreement constitute the governing instrument of such business trust. It is the intention of the parties hereto that, solely for purposes of federal income taxes, state and local income and franchise taxes and any other taxes imposed upon, measured by, or based upon gross or net income, the Trust shall be treated as a partnership. The parties agree that, unless otherwise required by appropriate tax authorities, the Trust shall file or cause to be filed annual or other necessary returns, reports and other forms consistent with the characterization of the Trust as a partnership for such tax purposes. Effective as of the date hereof, the Owner Trustee shall have all rights, powers and duties set forth herein and in the Business Trust Statute with respect to accomplishing the purposes of the Trust. SECTION 2.7 Title to Trust Property. Legal title to all the Owner Trust Estate shall be vested at all times in the Trust as a separate legal entity except where applicable law in any jurisdiction requires title to any part of the Owner Trust Estate to be vested in a trustee or trustees, in which case title shall be deemed to be vested in the Owner Trustee, a co-trustee and/or a separate trustee, as the case may be, for the benefit of the Trust. SECTION 2.8 Situs of Trust. The Trust shall be located and administered in the State of Delaware. All bank accounts maintained by the Owner Trustee on behalf of the Trust shall be located in the State of Delaware or the State of New York. The Trust shall not have any employees in any state other than Delaware or New York; provided, however, that nothing herein shall restrict or prohibit the Owner Trustee from having employees within or without the State of Delaware. Payments shall be received by the Trust only in Delaware or New York, and payments will be made by the Trust only from Delaware or New York. The only office of the Trust shall be the Corporate Trust Office in Delaware. SECTION 2.9 Representations and Warranties of the Seller. The Seller hereby represents and warrants to the Owner Trustee, as of the Closing Date, that: (a) The Seller has been organized and is validly existing as a corporation in good standing under the laws of the State of Delaware, with power and authority to own its properties and conduct its business as such properties are presently owned and such business is presently conducted and had at all relevant times, and now has, power, authority and legal right to acquire and own the Contracts. (b) The Seller is duly qualified to do business as a foreign corporation in good standing, and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease of property or the conduct of its business requires such qualifications. (c) The Seller has the power and authority to execute and deliver this Agreement and to carry out its terms, the Seller has full power and authority to sell and assign the property to be sold and assigned to and deposited with, as part of, the Trust and the Seller has duly authorized such sale and assignment to the Trust by all necessary corporate action; and the execution, delivery and performance of this Agreement have been duly authorized by the Seller by all necessary corporate action. (d) The consummation of the transactions contemplated by this Agreement and the fulfillment of the terms of this Agreement do not conflict with, result in any breach of any of the terms and provisions of or constitute (with or without notice or lapse of time) a default under its certificate of incorporation or by-laws of the Seller, or any indenture, agreement or other instrument to which the Seller is a party or by which it is bound, or result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement or other instrument (other than pursuant to or as contemplated by the Basic Documents), or violate any law or, to the best of its knowledge, any order, rule or regulation applicable to the Seller of any court or of any federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Seller or any of its properties. SECTION 2.10 Tax Treatment. Net income of the Trust for any month as determined for Federal income tax purposes (and each item of income, gain, loss, credit and deduction entering into the computation thereof) shall be allocated to the extent of available net income, among the Certificateholders as of the first Record Date following the end of such month, in proportion to their ownership of principal amount of Certificates on such date, an amount of net income up to the sum of (i) the amount of monthly interest at the Pass-Through Rate to which the Certificateholders are entitled to for the related Due Period, (ii) interest on the excess, if any, of the amount of interest and principal due to the Certificateholders for the preceding Distribution Date over the amount in respect of interest at the Pass-Through Rate that is actually deposited in the Certificate Distribution Account on such preceding Distribution Date, to the extent permitted by law, at the Pass-Through Rate from such preceding Distribution Date through the current Distribution Date, and (iii) the portion of the market discount, if any, on the Contracts accrued during such month that is allocable to the excess of the initial aggregate principal amount, if any, of the Certificates over their initial aggregate issue price. Net losses of the Trust, if any, for any month as determined for Federal income tax purposes (and each item of income, gain, loss, credit and deduction entering into the computation thereof) shall be allocated among the Certificateholders as of the first Record Date following the end of such month in proportion to their ownership of principal amount of Certificates on such Record Date until the principal balance of the Certificates is reduced to zero. ARTICLE III THE CERTIFICATES SECTION 3.1 Initial Certificate Ownership. Upon the formation of the Trust by the contribution by the Seller pursuant to Section 2.5 and until the issuance of the Certificates, the Seller shall be the sole beneficiary of the Trust. SECTION 3.2 Form of the Certificates. (a) The Certificates shall be substantially in the form set forth in Exhibit A and shall be issued in minimum denominations of $______ and in integral multiples of $1,000 in excess thereof; provided, however, that one Certificate may be issued in a denomination other than an integral multiple of $1,000. The Certificates shall be executed on behalf of the Trust by manual or facsimile signature of a Responsible Officer of the Owner Trustee. Certificates bearing the manual or facsimile signatures of individuals who were, at the time when such signatures shall have been affixed, authorized to sign on behalf of the Trust, shall be valid and binding obligations of the Trust, notwithstanding that such individuals or any of them shall have ceased to be so authorized prior to the authentication and delivery of such Certificates or did not hold such offices at the date of authentication and delivery of such Certificates. (b) The Definitive Certificates (as hereinafter defined) shall be typewritten, printed, lithographed or engraved or produced by any combination of these methods (with or without steel engraved borders) all as determined by the officers executing such Certificates, as evidenced by their execution of such Certificates. (c) The terms of the Certificates set forth in Exhibit A shall form part of this Agreement. SECTION 3.3 Execution, Authentication and Delivery. Concurrently with the sale of the Initial Contracts to the Trust pursuant to the Sale and Servicing Agreement, the Owner Trustee shall cause the Certificates in an aggregate principal amount equal to the initial Certificate Balance to be executed on behalf of the Trust, authenticated and delivered to or upon the written order of the Seller, signed by its chairman of the board, its president or any vice president, without further corporate action by the Seller, in authorized denominations. No Certificate shall entitle its holder to any benefit under this Agreement, or shall be valid for any purpose, unless there shall appear on such Certificate a certificate of authentication substantially in the form set forth in Exhibit A, executed by the Owner Trustee, or by the Owner Trustee's authenticating agent, by manual signature. Such authentication shall constitute conclusive evidence that such Certificate shall have been duly authenticated and delivered hereunder. All Certificates shall be dated the date of their authentication. ____________________ is hereby appointed as the Owner Trustee's authenticating agent. SECTION 3.4 Registration; Registration of Transfer and Exchange of Certificates. (a) The Certificate Registrar shall keep or cause to be kept, at the office or agency maintained pursuant to Section 3.8, a Certificate Register in which, subject to such reasonable regulations as it may prescribe, the Owner Trustee shall provide for the registration of Certificates and of transfers and exchanges of Certificates as provided herein; provided, however, that no Certificate may be subdivided upon transfer or exchange such that the denomination of any resulting Certificate is less than $______. ____________________ shall be the initial Certificate Registrar. Upon any resignation of a Certificate Registrar, the Owner Trustee shall promptly appoint a successor or, if it elects not to make such an appointment, assume the duties of Certificate Registrar. (b) Upon surrender for registration or transfer of any Certificate at the office or agency maintained pursuant to Section 3.8, the Owner Trustee shall execute on behalf of the Trust, authenticate and deliver (or shall cause its authenticating agent to authenticate and deliver), in the name of the designated transferee or transferees, one or more new Certificates in authorized denominations of a like aggregate amount dated the date of authentication by the Owner Trustee or any authenticating agent. (c) At the option of a Holder of Certificates, Certificates may be exchanged for other Certificates of authorized denominations of a like aggregate principal amount upon surrender of the Certificates to be exchanged at the Corporate Trust Office maintained pursuant to Section 3.8. Whenever any Certificates are so surrendered for exchange, the Owner Trustee shall execute on behalf of the Trust, authenticate and deliver (or shall cause its authenticating agent to authenticate and deliver) one or more Certificates dated the date of authentication by the Owner Trustee or any authenticating agent. Such Certificates shall be delivered to the Holder making the exchange. (d) Every Certificate presented or surrendered for registration of transfer or exchange shall be accompanied by a written instrument of transfer in form satisfactory to the Owner Trustee and the Certificate Registrar duly executed by the Holder or his attorney duly authorized in writing with such signature guaranteed by an "eligible guarantor institution" meeting the requirements of the Certificate Registrar, which requirements include membership or participation in the Securities Transfer Agent's Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Certificate Registrar in addition to, or in substitution for, STAMP, all in accordance with the Exchange Act. Each Certificate surrendered for registration of transfer or exchange shall be canceled and subsequently destroyed by the Owner Trustee or Certificate Registrar in accordance with its customary practice. (e) No service charge shall be made for any registration of transfer or exchange of Certificates, but the Owner Trustee or the Certificate Registrar may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of Certificates. SECTION 3.5 Mutilated; Destroyed; Lost or Stolen Certificates. (a) If (i) any mutilated Certificate is surrendered to the Certificate Registrar, or the Certificate Registrar receives evidence to its satisfaction of the destruction, loss or theft of any Certificate, and (ii) there is delivered to the Certificate Registrar, the Owner Trustee and the Trust such security or indemnity as may be required by them to hold each of them harmless, then, in the absence of notice to the Certificate Registrar or the Owner Trustee that such Certificate has been acquired by a bona fide purchaser, the Owner Trustee shall execute on behalf of the Trust and the Owner Trustee shall authenticate and deliver (or shall cause its authenticating agent to authenticate and deliver), in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a replacement Certificate of a like aggregate principal amount; provided, however, that if any such destroyed, lost or stolen Certificate, but not a mutilated Certificate, shall have become or within seven days shall be due and payable, then instead of issuing a replacement Certificate the Owner Trustee may pay such destroyed, lost or stolen Certificate when so due or payable. (b) If, after the delivery of a replacement Certificate or payment in respect of a destroyed, lost or stolen Certificate pursuant to subsection 3.5(a), a bona fide purchaser of the original Certificate in lieu of which such replacement Certificate was issued presents for payment such original Certificate, the Owner Trustee shall be entitled to recover such replacement Certificate (or such payment) from the Person to whom it was delivered or any Person taking such replacement Certificate from such Person to whom such replacement Certificate was delivered or any assignee of such Person, except a bona fide purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Owner Trustee in connection therewith. (c) In connection with the issuance of any replacement Certificate under this Section 3.5, the Owner Trustee may require the payment by the Holder of such Certificate of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the fees and expenses of the Owner Trustee and the Certificate Registrar) connected therewith. (d) Any duplicate Certificate issued pursuant to this Section 3.5 in replacement of any mutilated, destroyed, lost or stolen Certificate shall constitute an original additional contractual obligation of the Trust, whether or not the mutilated, destroyed, lost or stolen Certificate shall be found at any time or be enforced by anyone, and shall be entitled to all the benefits of this Agreement equally and proportionately with any and all other Certificates duly issued hereunder. (e) The provisions of this Section 3.5 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Certificates. SECTION 3.6 Persons Deemed Certificateholders. Prior to due presentation of a Certificate for registration of transfer, the Owner Trustee or the Certificate Registrar may treat the Person in whose name any Certificate shall be registered in the Certificate Register as the Certificateholder of such Certificate for the purpose of receiving distributions pursuant to Article V and for all other purposes whatsoever, and neither the Owner Trustee nor the Certificate Registrar shall be affected by any notice to the contrary. SECTION 3.7 Access to List of Certificateholders' Names and Addresses. The Owner Trustee shall furnish or cause to be furnished to the Servicer and the Seller, within 15 days after receipt by the Owner Trustee of a request therefor from the Servicer or the Seller in writing, a list, in such form as the Servicer or the Seller may reasonably require, of the names and addresses of the Certificateholders as of the most recent Record Date. If three or more Holders of Certificates or one or more Holder of Certificates evidencing not less than 25% of the Certificate Balance apply in writing to the Owner Trustee, and such application states that the applicants desire to communicate with other Certificateholders with respect to their rights under this Agreement or under the Certificates and such application is accompanied by a copy of the communication that such applicants propose to transmit, then the Owner Trustee shall, within five Business Days after the receipt of such application, afford such applicants access during normal business hours to the current list of Certificateholders. Each Holder, by receiving and holding a Certificate, shall be deemed to have agreed not to hold the Seller or the Owner Trustee accountable by reason of the disclosure of its name and address, regardless of the source from which such information was derived. SECTION 3.8 Maintenance of Corporate Trust Office. The Owner Trustee shall maintain in the City of _______________, an office or offices or agency or agencies where Certificates may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Owner Trustee in respect of the Certificates and the Basic Documents may be served. The Owner Trustee initially designates the offices of ____________________, ____________________, as its principal office for such purposes. The Owner Trustee shall give prompt written notice to the Seller and to the Certificateholders of any change in the location of the Certificate Register or any such office or agency. SECTION 3.9 Appointment of Paying Agent. The Paying Agent shall make distributions to Certificateholders from the Certificate Distribution Account pursuant to Section 5.2 and make withdrawals from the Cash Collateral Account of amounts to be deposited in the Certificate Distribution Account, in each case pursuant to the Sale and Servicing Agreement and amounts to be paid to the Cash Collateral Depositor pursuant to the Cash Collateral Agreement, and the Paying Agent shall report the amounts of such distributions and withdrawals to the Owner Trustee and the Servicer. Any Paying Agent shall have the revocable power to withdraw funds from the Certificate Distribution Account and/or the Cash Collateral Account for the purpose of making the distributions referred to above. The Owner Trustee may revoke such power and remove the Paying Agent if the Owner Trustee determines in its sole discretion that the Paying Agent shall have failed to perform its obligations under this Agreement in any material respect. The Paying Agent shall initially be [____________________], and any co-paying agent chosen by the Owner Trustee, and acceptable to the Servicer. The Paying Agent shall be permitted to resign as Paying Agent upon 30 days' written notice to the Owner Trustee. If [____________________] shall no longer be the Paying Agent, the Owner Trustee shall appoint a successor to act as Paying Agent (which shall be an Eligible Institution). The Owner Trustee shall cause such successor Paying Agent or any additional Paying Agent appointed by the Owner Trustee to execute and deliver to the Owner Trustee an instrument in which such successor Paying Agent or additional Paying Agent shall agree with the Owner Trustee that as Paying Agent, such successor Paying Agent or additional Paying Agent shall hold all sums, if any, held by it for payment to the Certificateholders in trust for the benefit of the Certificateholders entitled thereto until such sums shall be paid to such Certificateholders. The Paying Agent shall return all unclaimed funds to the Owner Trustee and upon removal of a Paying Agent such Paying Agent shall also return all funds in its possession to the Owner Trustee. The provisions of Sections 6.3, 6.6, 6.7 and 6.9 shall apply to the Owner Trustee also in its role as Paying Agent (if the Owner Trustee shall also act as Paying Agent), for so long as the Owner Trustee shall act as Paying Agent and, to the extent applicable, to any other paying agent appointed hereunder. Any reference in this Agreement to the Paying Agent shall include any co-paying agent unless the context requires otherwise. SECTION 3.10 Book-Entry Certificates. The Certificates, upon original issuance, shall be issued in the form of a typewritten Certificate or Certificates representing Book-Entry Certificates, to be delivered to The Depository Trust Company, the initial Depository by or on behalf of the Trust. Such Certificate or Certificates shall initially be registered on the Certificate Register in the name of Cede & Co., the nominee of the initial Depository and no Certificate Owner shall receive a definitive Certificate representing such Certificate Owner's interest in such Certificate, except as provided in Section 3.13. Unless and until definitive fully registered Certificates (the "Definitive Certificates") shall have been issued to Certificate Owners pursuant to Section 3.13: (a) the provisions of this Section 3.11 shall be in full force and effect; (b) the Certificate Registrar and the Owner Trustee shall be entitled to deal with the Depository for all purposes of this Agreement (including the payment of principal of and interest on the Certificates and the giving of instructions or directions hereunder) as the sole Holder of the Certificate, and shall have no obligation to the Certificate Owners; (c) to the extent that the provisions of this Section 3.11 conflict with any other provisions of this Agreement, the provisions of this Section 3.11 shall control; (d) the rights of the Certificate Owners shall be exercised only through the Depository and shall be limited to those established by law and agreements between such Certificate Owners and the Depository and/or the Depository Participants. Pursuant to the Certificate Depository Agreement unless and until Definitive Certificates are issued pursuant to Section 3.13, the initial Depository will make book-entry transfers among the Depository Participants and receive and transmit payments of principal of and interest on the Certificates to such Depository Participants; (e) whenever this Agreement requires or permits actions to be taken based upon instructions or directions of Holders of Certificates evidencing a specified percentage of the Certificate Balance, the Depository shall be deemed to represent such percentage only to the extent that it has received instructions to such effect from Certificate Owners and/or Depository Participants owning or representing, respectively, such required percentage of Certificates and has delivered such instructions to the Owner Trustee. SECTION 3.12 Notices to Depository. Whenever a notice or other communication to the Certificateholders is required under this Agreement, unless and until Definitive Certificates shall have been issued to Certificate Owners pursuant to Section 3.13, the Owner Trustee shall give all such notices and communications specified herein to be given to Certificateholders to the Depository and shall have no further obligation to the Certificate Owners. SECTION 3.13 Definitive Certificates. If (i) the Servicer advises the Owner Trustee in writing that the Depository is no longer willing or able to properly discharge its responsibilities with respect to the Certificates, and the Servicer is unable to locate a qualified successor, (ii) the Servicer at its option advises the Owner Trustee in writing that it elects to terminate the book-entry system through the Depository, or (iii) after the occurrence of an Event of Default or an Event of Termination, Certificate Owners representing beneficial interests aggregating at least a majority of the Certificate Balance advise the Depository in writing that the continuation of a book-entry system through the Depository is no longer in the best interest of the Certificate Owners, then the Depository shall notify all Certificate Owners and the Owner Trustee of the occurrence of any such event and of the availability of Definitive Certificates to Certificate Owners requesting the same. Upon surrender to the Owner Trustee of the typewritten Certificate or Certificates representing the Book-Entry Certificates by the Depository, accompanied by registration instructions, the Owner Trustee shall execute and authenticate the Definitive Certificates in accordance with the instructions of the Depository. Neither the Certificate Registrar nor the Owner Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions. Upon the issuance of Definitive Certificates, the Owner Trustee shall recognize the Holders of the Definitive Certificates as Certificateholders. SECTION 3.14 Seller as Certificateholder. The Seller in its individual or any other capacity may become the owner or pledgee of Certificates and may otherwise deal with the Owner Trustee or its Affiliates as if it were not the Seller. ARTICLE IV ACTIONS BY OWNER TRUSTEE SECTION 4.1 Prior Notice to Certificateholders with Respect to Certain Matters. The Owner Trustee shall not take action with respect to the following matters, unless (i) the Owner Trustee shall have notified the Certificateholders in writing of the proposed action at least 30 days before the taking of such action, and (ii) the Certificateholders shall not have notified the Owner Trustee in writing prior to the 30th day after such notice is given that such Certificateholders have withheld consent or provided alternative direction: (a) the initiation of any material claim or lawsuit by the Trust (except claims or lawsuit brought in connection with the collection of payments due on the Contracts) and the compromise of any material action, claim or lawsuit brought by or against the Trust (except with respect to the aforementioned claims or lawsuits for collection of payments due on the Contracts); (b) the election by the Trust to file an amendment to the Certificate of Trust (unless such amendment is required to be filed under the Business Trust Statute), a conformed copy of which is attached hereto as Exhibit B; (c) the amendment of the Indenture by a supplemental indenture in circumstances where the consent of any Noteholder is required; (d) the amendment of the Indenture by a supplemental indenture in circumstances where the consent of any Noteholder is not required and such amendment materially adversely affects the interest of the Certificateholders; (e) the amendment, change or modification of the Sale and Servicing Agreement, except to cure any ambiguity or defect or to amend or supplement any provision in a manner that would not materially adversely affect the interests of the Certificateholders or in circumstances in which the Sale and Servicing Agreement expressly provides that the consent of the Certificateholders is not required; or (f) the appointment pursuant to the Indenture of a successor Note Registrar, Paying Agent or Indenture Trustee or pursuant to this Agreement of a successor Certificate Registrar, or the consent to the assignment by the Note Registrar, Paying Agent or Indenture Trustee or Certificate Registrar of its obligations under the Indenture or this Agreement, as applicable. SECTION 4.2 Action by Certificateholders with Respect to Certain Matters. The Owner Trustee shall not have the power, except upon the written direction of the Certificateholders, to (a) remove the Servicer under the Sale and Servicing Agreement pursuant to Section 9.01 thereof, (b) appoint a successor Servicer pursuant to Section 9.02 of the Sale and Servicing Agreement, or (c) except as expressly provided in the Basic Documents, sell the Contracts or any interest therein after the termination of the Indenture. SECTION 4.3 Action by Certificateholders with Respect to Bankruptcy. The Owner Trustee shall not have the power to commence a voluntary proceeding in bankruptcy relating to the Trust without the unanimous prior approval of all Holders of Certificates and the delivery to the Owner Trustee by each such Certificateholder of a certificate certifying that such Certificateholder reasonably believes that the Trust is insolvent. SECTION 4.4 Restrictions on Certificateholders' Power. The Certificateholders shall not direct the Owner Trustee to take or refrain from taking any action if such action or inaction would be contrary to any obligation of the Trust or the Owner Trustee under this Agreement or any of the Basic Documents or would be contrary to Section 2.3, nor shall the Owner Trustee be obligated to follow any such direction, if given. SECTION 4.5 Majority Control. Except as expressly provided herein, any action that may be taken or consent that may be given or withheld by the Certificateholders under this Agreement may be taken, given or withheld by the Holders of Certificates evidencing not less than a majority of the Certificate Balance. Except as expressly provided herein, any written notice of the Certificateholders delivered pursuant to this Agreement shall be effective if signed by Holders of Certificates evidencing not less than a majority of the Certificate Balance at the time of the delivery of such notice. ARTICLE V APPLICATION OF TRUST FUNDS; CERTAIN DUTIES SECTION 5.1 Establishment of Accounts. (a) On or prior to the Closing Date, the Trust shall cause the Servicer to establish and maintain, in the name of the Indenture Trustee or the Owner Trustee, as appropriate, for the benefit of the Noteholders and Certificateholders (and, in the case of the Cash Collateral Account, for the benefit of the Certificateholders and the Cash Collateral Depositor) the accounts as provided in Section 5.01 of the Sale and Servicing Agreement. (b) The Owner Trustee shall possess all right, title and interest in and to all funds on deposit from time to time in the Certificate Distribution Account and the Cash Collateral Account and in all proceeds thereof. Except as otherwise provided herein or in the Sale and Servicing Agreement, the Certificate Distribution Account and the Cash Collateral Account shall be under the sole dominion and control of the Owner Trustee for the benefit of the Certificateholders and, in the case of the Cash Collateral Account, for the benefit of the Certificateholders and the Cash Collateral Depositor, as their respective interests may appear. If, at any time, the Certificate Distribution Account or the Cash Collateral Account ceases to be held at an Eligible Institution, the Owner Trustee (or the Servicer on behalf of the Owner Trustee, if the Certificate Distribution Account or the Cash Collateral Account is not then held by the Owner Trustee or an Affiliate thereof) shall within 10 Business Days (or such longer period, not to exceed 30 calendar days, as to which each Rating Agency may consent) establish a new Certificate Distribution Account or Cash Collateral Account at an Eligible Institution and shall transfer any cash and/or any investments to such new Certificate Distribution Account or Cash Collateral Account, as the case may be. SECTION 5.2 Application of Trust Funds. (a) On each Distribution Date, the Owner Trustee shall (i) transfer or cause the transfer of amounts on deposit in the Cash Collateral Account to the Certificate Distribution Account pursuant to Section 5.06 of the Sale and Servicing Agreement, (ii) transfer and distribute, or cause to be transferred and distributed, amounts on deposit in the Cash Collateral Account to the Cash Collateral Depositor, pursuant to Section 5.06 of the Sale and Servicing Agreement and the applicable provisions of the Cash Collateral Agreement, respectively, on or prior to such Distribution Date, and (iii) distribute to the Certificateholders, on a pro rata basis, amounts deposited in the Certificate Distribution Account pursuant to the Sale and Servicing Agreement on or prior to such Distribution Date first in respect of interest and then in respect of principal. (b) On each Distribution Date, the Owner Trustee shall send to each Certificateholder the statement provided to the Owner Trustee by the Servicer pursuant to Section 5.08 of the Sale and Servicing Agreement on such Distribution Date setting forth, among other things, the amount of the distribution allocable to principal and to interest, the Certificate Balance after giving effect to such distribution, the amount of funds on deposit in the Pre-Funding Account during the Funding Period, the number and aggregate principal balance of Subsequent Contracts purchased by the Trust on the related Distribution Date during the Funding Period and the Servicer Payment with respect to such Distribution Date or Monthly Period, as applicable. (c) If any withholding tax is imposed on the Trust's payment (or allocations of income) to a Certificateholder, such tax shall reduce the amount otherwise distributable to the Certificateholder in accordance with this Section 5.2. The Owner Trustee is hereby authorized and directed to retain from amounts otherwise distributable to the Certificateholders sufficient funds for the payment of any tax that is legally owed by the Trust (but such authorization shall not prevent the Owner Trustee from contesting any such tax in appropriate proceedings and withholding payment of such tax, if permitted by law, pending the outcome of such proceedings). The amount of any withholding tax imposed with respect to a Certificateholder shall be treated as cash distributed to such Certificateholder at the time it is withheld by the Trust and remitted to the appropriate taxing authority. If there is a possibility that withholding tax is payable with respect to a distribution (such as a distribution to a non-U.S. Certificateholder), the Owner Trustee may in its sole discretion withhold such amounts in accordance with this subsection 5.2(c). If a Certificateholder wishes to apply for a refund of any such withholding tax, the Owner Trustee shall reasonably cooperate with such Certificateholder in making such claim so long as such Certificateholder agrees to reimburse the Owner Trustee for any out-of-pocket expenses incurred. (d) If the Indenture Trustee holds escheated funds for payment to the Trust pursuant to Section 3.3(e) of the Indenture, the Owner Trustee shall, upon notice from the Indenture Trustee that such funds exist, submit on behalf of the Trust an Issuer Order to the Indenture Trustee pursuant to Section 3.3(e) of the Indenture instructing the Indenture Trustee to pay such funds to or at the order of the Seller. SECTION 5.3 Method of Payment. Subject to subsection 7.1(c), distributions required to be made to Certificateholders on any Distribution Date shall be made to each Certificateholder of record on the immediately preceding Record Date either by wire transfer, in immediately available funds, to the account of such Holder at a bank or other entity having appropriate facilities therefor, if such Certificateholder shall have provided to the Certificate Registrar appropriate written instructions at least five Business Days prior to such Record Date and such Holder's Certificates in the aggregate evidence a denomination of not less than $1,000,000 or, if not, by check mailed to such Certificateholder at the address of such holder appearing in the Certificate Register; provided, however, that, unless Definitive Certificates have been issued pursuant to Section 3.13, with respect to Certificates registered on the Record Date in the name of the nominee of the Depository (initially, such nominee to be Cede & Co.), distributions will be made by wire transfer in immediately available funds to the account designated by such nominee. Notwithstanding the foregoing, the final distribution in respect of the Certificates (whether on the Certificate Final Distribution Date or otherwise) will be payable only upon presentation and surrender of such Certificate at the office or agency maintained for that purpose by the Owner Trustee pursuant to Section 3.8. SECTION 5.4 Accounting and Reports to the Certificateholders, The Internal Revenue Service and Others. The Owner Trustee shall (a) maintain (or cause to be maintained) the books of the Trust on a calendar year basis on the accrual method of accounting, (b) deliver to each Certificateholder, as may be required by the Code and applicable Treasury Regulations or otherwise, such information as may be required to enable each Certificateholder to prepare its federal and state income tax returns, (c) file such tax returns relating to the Trust and make such elections as may from time to time be required or appropriate under any applicable state or federal statute or rule or regulation thereunder so as to maintain the Trust's characterization as a partnership for federal income tax purposes, (d) cause such tax returns to be signed in the manner required by law and (e) collect or cause to be collected any withholding tax as described in and in accordance with subsection 5.2(c) with respect to income or distributions to Certificateholders. SECTION 5.5 Signature on Returns; Tax Matters Partner. The Owner Trustee shall sign on behalf of the Trust any and all tax returns of the Trust, unless applicable law requires a Certificateholder to sign such documents, in which case such documents shall be signed by ____________________. To the extent one may be required, ____________________ shall be the "tax matters partner" of the Trust pursuant to the Code. ARTICLE VI THE OWNER TRUSTEE SECTION 6.1 Duties of Owner Trustee. (a) The Owner Trustee undertakes to perform such duties, and only such duties, as are specifically set forth in this Agreement and the other Basic Documents, including the administration of the Trust in the interest of the Certificateholders, subject to the Basic Documents and in accordance with the provisions of this Agreement and the Basic Documents. No implied covenants or obligations shall be read into this Agreement. (b) Notwithstanding the foregoing, the Owner Trustee shall be deemed to have discharged its duties and responsibilities hereunder and under the Basic Documents to the extent the Servicer has agreed in the Sale and Servicing Agreement to perform any act or to discharge any duty of the Owner Trustee hereunder or under any Basic Document, and the Owner Trustee shall not be liable for the default or failure of the Servicer to carry out its obligations under the Sale and Servicing Agreement. (c) In the absence of bad faith on its part, the Owner Trustee may conclusively rely upon certificates or opinions furnished to the Owner Trustee and conforming to the requirements of this Agreement in determining the truth of the statements and the correctness of the opinions contained therein; provided, however, that the Owner Trustee shall have examined such certificates or opinions so as to determine compliance of the same with the requirements of this Agreement. (d) The Owner Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: (i) this subsection 6.1(d) shall not limit the effect of subsection 6.1(a) or (b); (ii) the Owner Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer unless it is proved that the Owner Trustee was negligent in ascertaining the pertinent facts; and (iii) the Owner Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 4.1, 4.2 or 6.4. (e) Subject to Sections 5.1 and 5.2, monies received by the Owner Trustee hereunder need not be segregated in any manner except to the extent required by law or the Sale and Servicing Agreement and may be deposited under such general conditions as may be prescribed by law, and the Owner Trustee shall not be liable for any interest thereon. (f) The Owner Trustee shall not take any action that (i) is inconsistent with the purposes of the Trust set forth in Section 2.3 or (ii) would, to the actual knowledge of a Responsible Officer of the Owner Trustee, result in the Trust's becoming taxable as a corporation for federal income tax purposes. The Certificateholders shall not direct the Owner Trustee to take action that would violate the provisions of this Section 6.1 and any such direction shall be null and void. SECTION 6.2 Rights of Owner Trustee. The Owner Trustee is authorized and directed to execute and deliver the Basic Documents and each certificate or other document attached as an exhibit to or contemplated by the Basic Documents to which the Trust is to be a party, in such form as the Seller shall approve as evidenced conclusively by the Owner Trustee's execution thereof. In addition to the foregoing, the Owner Trustee is authorized, but shall not be obligated, to take all actions required of the Trust pursuant to the Basic Documents. The Owner Trustee is further authorized from time to time to take such action as the Servicer recommends with respect to the Basic Documents. SECTION 6.3 Acceptance of Trusts and Duties. Except as otherwise provided in this Article VI, in accepting the trusts hereby created [____________________] acts solely as Owner Trustee hereunder and not in its individual capacity and all Persons having any claim against the Owner Trustee by reason of the transactions contemplated by this Agreement or any Basic Document shall look only to the Owner Trust Estate for payment or satisfaction thereof. The Owner Trustee accepts the trusts hereby created and agrees to perform its duties hereunder with respect to such trusts but only upon the terms of this Agreement. The Owner Trustee also agrees to disburse all monies actually received by it constituting part of the Owner Trust Estate upon the terms of the Basic Documents and this Agreement. The Owner Trustee shall not be liable or accountable hereunder or under any Basic Document under any circumstances, except (i) for its own negligent action, its own negligent failure to act or its own willful misconduct or (ii) in the case of the inaccuracy of any representation or warranty contained in Section 6.6 and expressly made by the Owner Trustee. In particular, but not by way of limitation (and subject to the exceptions set forth in the preceding sentence): (a) the Owner Trustee shall at no time have any responsibility or liability for or with respect to the legality, validity and enforceability of any Contract, or the perfection and priority of any security interest created by any Contract in any Financed Boat or the maintenance of any such perfection and priority, or for or with respect to the sufficiency of the Owner Trust Estate or its ability to generate the payments to be distributed to Certificateholders under this Agreement or the Noteholders under the Indenture, including, without limitation: the existence, condition and ownership of any Financed Boat; the existence and enforceability of any insurance thereon; the existence and contents of any Contract on any computer or other record thereof; the validity of the assignment of any Contract to the Trust or of any intervening assignment; the completeness of any Contract; the performance or enforcement of any Contract; the compliance by the Seller or the Servicer with any warranty or representation made under any Basic Document or in any related document or the accuracy of any such warranty or representation or any action of the Servicer, the Trustee or the Servicer or any subservicer taken in the name of the Owner Trustee. (b) the Owner Trustee shall not be liable with respect to any action taken or omitted to be taken by it in accordance with the instructions of the Servicer or any Certificateholder; (c) no provision of this Agreement or any Basic Document shall require the Owner Trustee to expend or risk funds or otherwise incur any financial liability in the performance of any of its rights or powers hereunder or under any Basic Document, if the Owner Trustee shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured or provided to it; (d) under no circumstances shall the Owner Trustee be liable for indebtedness evidenced by or arising under any of the Basic Documents, including the principal of and interest on the Notes or the Certificate Balance of and interest on the Certificates; (e) the Owner Trustee shall not be responsible for or in respect of and makes no representation as to the validity or sufficiency of any provision of this Agreement or for the due execution hereof by the Seller or for the form, character, genuineness, sufficiency, value or validity of any of the Owner Trust Estate or for or in respect of the validity or sufficiency of the Basic Documents, the Notes, the Certificates (other than the certificate of authentication on the Certificates) or of any Contracts or any related documents, and the Owner Trustee shall in no event assume or incur any liability, duty or obligation to any Noteholder, to any Certificateholder or the Cash Collateral Depositor, other than as expressly provided for herein and in the Basic Documents; (f) the Owner Trustee shall not be liable for the default or misconduct of the Servicer, the Indenture Trustee, the Seller or the Servicer under any of the Basic Documents or otherwise and the Owner Trustee shall have no obligation or liability to perform the obligations of the Trust under this Agreement or the Basic Documents that are required to be performed by the Servicer under the Sale and Servicing Agreement or the Indenture Trustee under the Indenture; and (g) the Owner Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement, or to institute, conduct or defend any litigation under this Agreement or otherwise or in relation to this Agreement or any Basic Document, at the request, order or direction of any of the Certificateholders, unless such Certificateholders have offered to the Owner Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities that may be incurred by the Owner Trustee therein or thereby. The right of the Owner Trustee to perform any discretionary act enumerated in this Agreement or in any Basic Document shall not be construed as a duty, and the Owner Trustee shall not be answerable for other than its negligence or willful misconduct in the performance of any such act. SECTION 6.4 Action Upon Instruction by Certificateholders. (a) Subject to Section 4.4, the Certificateholders may by written instruction direct the Owner Trustee in the management of the Trust. Such direction may be exercised at any time by written instruction of the Certificateholders pursuant to Section 4.5. (b) Notwithstanding the foregoing, the Owner Trustee shall not be required to take any action hereunder or under any Basic Document if the Owner Trustee shall have reasonably determined, or shall have been advised by counsel, that such action is likely to result in liability on the part of the Owner Trustee or is contrary to the terms hereof or of any Basic Document or is otherwise contrary to law. (c) Whenever the Owner Trustee is unable to decide between alternative courses of action permitted or required by the terms of this Agreement or any Basic Document, or is unsure as to the application, intent, interpretation or meaning of any provision of this Agreement or the Basic Documents, the Owner Trustee shall promptly give notice (in such form as shall be appropriate under the circumstances) to the Certificateholders requesting instruction as to the course of action to be adopted, and, to the extent the Owner Trustee acts in good faith in accordance with any such instruction received, the Owner Trustee shall not be liable on account of such action to any Person. If the Owner Trustee shall not have received appropriate instructions within ten days of such notice (or within such shorter period of time as reasonably may be specified in such notice or may be necessary under the circumstances) it may, but shall be under no duty to, take or refrain from taking such action which is consistent, in its view, with this Agreement or the Basic Documents, and as it shall deem to be in the best interests of the Certificateholders, and the Owner Trustee shall have no liability to any Person for any such action or inaction. SECTION 6.5 Furnishing of Documents. The Owner Trustee shall furnish (a) to the Certificateholders, promptly upon receipt of a written request therefor, duplicates or copies of all reports, notices, requests, demands, certificates, financial statements and any other instruments furnished to the Owner Trustee under the Basic Documents and (b) to Noteholders, promptly upon receipt of a written request therefor, copies of the Purchase Agreement, any Subsequent Purchase Agreements, the Sale and Servicing Agreement, any Subsequent Transfer Agreements and this Agreement. SECTION 6.6 Representations and Warranties of Owner Trustee. The Owner Trustee hereby represents and warrants to the Seller, for the benefit of the Certificateholders, that: (a) It is a banking corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation. (b) It has full power, authority and legal right to execute, deliver and perform this Agreement, and has taken all necessary action to authorize the execution, delivery and performance by it of this Agreement. (c) The execution, delivery and performance by it of this Agreement (i) shall not violate any provision of any law or regulation governing the banking and trust powers of the Owner Trustee or any order, writ, judgment or decree of any court, arbitrator or governmental authority applicable to the Owner Trustee or any of its assets, (ii) shall not violate any provision of the corporate charter or by-laws of the Owner Trustee, or (iii) shall not violate any provision of, or constitute, with or without notice or lapse of time, a default under, or result in the creation or imposition of any lien on any properties included in the Trust pursuant to the provisions of any mortgage, indenture, contract, agreement or other undertaking to which it is a party, which violation, default or lien could reasonably be expected to have a materially adverse effect on the Owner Trustee's performance or ability to perform its duties as Owner Trustee under this Agreement or on the transactions contemplated in this Agreement. (d) The execution, delivery and performance by the Owner Trustee of this Agreement shall not require the authorization, consent or approval of, the giving of notice to, the filing or registration with, or the taking of any other action in respect of, any governmental authority or agency regulating the banking and corporate trust activities of banks or trust companies in the jurisdiction in which the Trust was formed. (e) This Agreement has been duly executed and delivered by the Owner Trustee and constitutes the legal, valid and binding agreement of the Owner Trustee, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, or other similar laws affecting the enforcement of creditors' rights in general and by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law. SECTION 6.7 Reliance; Advice of Counsel. (a) The Owner Trustee shall incur no liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties and need not investigate any fact or matter in any such document. The Owner Trustee may accept a certified copy of a resolution of the board of directors or other governing body of any corporate party as conclusive evidence that such resolution has been duly adopted by such body and that the same is in full force and effect. As to any fact or matter the method of the determination of which is not specifically prescribed herein, the Owner Trustee may for all purposes hereof rely on a certificate, signed by the president or any vice president or by the treasurer or other authorized officers of the relevant party, as to such fact or matter, and such certificate shall constitute full protection to the Owner Trustee for any action taken or omitted to be taken by it in good faith in reliance thereon. (b) In the exercise or administration of the trusts hereunder and in the performance of its duties and obligations under this Agreement or the Basic Documents, the Owner Trustee: (i) may act directly or through its agents, attorneys, custodians or nominees pursuant to agreements entered into with any of them, and the Owner Trustee shall not be liable for the conduct or misconduct of such agents, attorneys, custodians or nominees if such agents, attorneys, custodians or nominees shall have been selected by the Owner Trustee with reasonable care; and (ii) may consult with counsel, accountants and other skilled professionals to be selected with reasonable care and employed by it. The Owner Trustee shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the opinion or advice of any such counsel, accountants or other such Persons and not contrary to this Agreement or any Basic Document. SECTION 6.8 Owner Trustee May Own Certificates and Notes. The Owner Trustee in its individual or any other capacity may become the owner or pledgee of Certificates or Notes and may deal with the Seller, the Indenture Trustee and the Servicer in transactions in the same manner as it would have if it were not the Owner Trustee. SECTION 6.9 Compensation and Indemnity. The Owner Trustee shall receive as compensation for its services hereunder such fees as have been separately agreed upon before the date hereof between the Seller, or any person representing the Seller, and the Owner Trustee, and the Owner Trustee shall be entitled to be reimbursed by the Servicer for its other reasonable expenses hereunder, including the reasonable compensation, expenses and disbursements of such agents, custodians, nominees, representatives, experts and counsel as the Owner Trustee may employ in connection with the exercise and performance of its rights and its duties hereunder. The Servicer shall indemnify the Owner Trustee and its successors, assigns, agents and servants in accordance with the provisions of Section 8.02 of the Sale and Servicing Agreement. The indemnities contained in this Section 6.9 shall survive the resignation or termination of the Owner Trustee or the termination of this Agreement. Any amounts paid to the Owner Trustee pursuant to this Article VI shall be deemed not to be a part of the Owner Trust Estate immediately after such payment. SECTION 6.10 Replacement of Owner Trustee. (a) The Owner Trustee may resign at any time and be discharged from the trusts hereby created by giving 30 days' prior written notice thereof to the Servicer, provided that such resignation shall not become effective until a successor Owner Trustee has been appointed. The Servicer may appoint a successor Owner Trustee by delivering a written instrument pursuant to Section 6.10(b). If no successor Owner Trustee shall have been appointed and have accepted appointment within 30 days after the giving of such notice of resignation, the resigning Owner Trustee may petition any court of competent jurisdiction for the appointment of a successor Owner Trustee. The Servicer shall remove the Owner Trustee if: (i) the Owner Trustee shall cease to be eligible in accordance with the provisions of Section 6.13 and shall fail to resign after written request therefor by the Servicer; (ii) the Owner Trustee shall be adjudged bankrupt or insolvent; (iii) a receiver or other public officer shall be appointed or take charge or control of the Owner Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; or (iv) the Owner Trustee shall otherwise be incapable of acting. (b) If the Owner Trustee resigns or is removed or if a vacancy exists in the office of Owner Trustee for any reason the Servicer shall promptly appoint a successor Owner Trustee by written instrument, in duplicate (one copy of which instrument shall be delivered to the outgoing Owner Trustee so removed and one copy to the successor Owner Trustee) and shall pay all fees owed to the outgoing Owner Trustee. (c) Any resignation or removal of the Owner Trustee and appointment of a successor Owner Trustee pursuant to any of the provisions of this Section 6.10 shall not become effective until a written acceptance of appointment is delivered by the successor Owner Trustee to the outgoing Owner Trustee and the Servicer and all fees and expenses due to the outgoing Owner Trustee are paid. Any successor Owner Trustee appointed pursuant to this Section 6.10 shall be eligible to act in such capacity in accordance with Section 6.13 and, following compliance with the preceding sentence, shall become fully vested with all the rights, powers, duties and obligations of its predecessor under this Agreement, with like effect as if originally named as Owner Trustee. The Servicer shall provide notice of such resignation or removal of the Owner Trustee to each of the Rating Agencies. (d) The predecessor Owner Trustee shall upon payment of its fees and expenses deliver to the successor Owner Trustee all documents and statements and monies held by it under this Agreement. The Servicer and the predecessor Owner Trustee shall execute and deliver such instruments and do such other things as may reasonably be required for fully and certainly vesting and confirming in the successor Owner Trustee all such rights, powers, duties and obligations. (e) Upon acceptance of appointment by a successor Owner Trustee pursuant to this Section 6.10, the Servicer shall mail notice of the successor of such Owner Trustee to all Certificateholders, the Indenture Trustee, the Noteholders and the Rating Agencies . SECTION 6.11 Merger or Consolidation of Owner Trustee. Any corporation into which the Owner Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Owner Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Owner Trustee, shall be the successor of the Owner Trustee hereunder, provided such corporation shall be eligible pursuant to Section 6.13, and without the execution or filing of any instrument or any further act on the part of any of the parties hereto; provided, however, that the Owner Trustee shall mail notice of such merger, conversion or consolidation to the Rating Agencies. SECTION 6.12 Appointment of Co-Trustee or Separate Trustee. (a) Notwithstanding any other provisions of this Agreement, at any time, for the purpose of meeting any legal requirement of any jurisdiction in which any part of the Owner Trust Estate or any Financed Boat may at the time be located, the Servicer and the Owner Trustee acting jointly shall have the power and shall execute and deliver all instruments to appoint one or more Persons approved by the Owner Trustee to act as co-trustee, jointly with the Owner Trustee, or as separate trustee or trustees, of all or any part of the Owner Trust Estate, and to vest in such Person, in such capacity, such title to the Trust, or any part thereof, and, subject to the other provisions of this Section 6.12, such powers, duties, obligations, rights and trusts as the Servicer and the Owner Trustee may consider necessary or desirable. If the Servicer shall not have joined in such appointment within 15 days after the receipt by it of a request so to do, the Owner Trustee alone shall have the power to make such appointment. No co-trustee or separate trustee under this Agreement shall be required to meet the terms of eligibility as a successor trustee pursuant to Section 6.13 and no notice of the appointment of any co-trustee or separate trustee shall be required pursuant to Section 6.10. (b) Each separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions: (i) all rights, powers, duties and obligations conferred or imposed upon the Owner Trustee shall be conferred upon and exercised or performed jointly by the Owner Trustee and such separate trustee or co-trustee (it being understood that such separate trustee or co-trustee is not authorized to act separately without the Owner Trustee joining in such act), except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the Owner Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Owner Trustee; (ii) no trustee under this Agreement shall be personally liable by reason of any act or omission of any other trustee under this Agreement; and (iii) the Servicer and the Owner Trustee acting jointly may at any time accept the resignation of or remove any separate trustee or co-trustee. (c) Any notice, request or other writing given to the Owner Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee shall refer to this Agreement and the conditions of this Article. Each separate trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Owner Trustee or separately, as may be provided therein, subject to all the provisions of this Agreement, specifically including every provision of this Agreement relating to the conduct of, affecting the liability of, or affording protection to, the Owner Trustee. Each such instrument shall be filed with the Owner Trustee and a copy thereof given to the Servicer. (d) Any separate trustee or co-trustee may at any time appoint the Owner Trustee as its agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Agreement on its behalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Owner Trustee, to the extent permitted by law, without the appointment of a new or successor trustee. SECTION 6.13 Eligibility Requirements for Owner Trustee. The Owner Trustee shall at all times: (a) be authorized to exercise corporate trust powers; (b) have a combined capital and surplus of at least $50,000,000 and be subject to supervision or examination by federal or state authorities; and (c) have (or have a parent which has) a long-term unsecured debt rating of at least "BBB" by Standard & Poor's and have a long-term unsecured debt rating of at least "Baa3" by Moody's. If such corporation shall publish reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purpose of this Section 6.13, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Owner Trustee shall cease to be eligible in accordance with the provisions of this Section 6.13, the Owner Trustee shall resign immediately in the manner and with the effect specified in Section 6.10. At all times, the Owner Trustee or Co-trustee appointed pursuant hereto shall be a person that satisfies the provisions of Section 3807(a) of the Business Trust Statute (the "Delaware Trustee"). ARTICLE VII TERMINATION OF TRUST AGREEMENT SECTION 7.1 Termination of Trust Agreement. (a) This Agreement has been entered into in part to induce the Indenture Trustee and the Certificateholders from time to time to participate in the transactions contemplated hereby, and each of the Owner Trustee and the Seller agree that the Indenture Trustee (so long as the Indenture shall not have been terminated in accordance with its terms) and the Certificateholders from time to time are third party beneficiaries hereof, and shall be entitled to enforce the terms of this Agreement to the same extent as if they were signatories hereto, subject, however, to Article IV hereof and to the applicable provisions of the Indenture. So long as the Indenture shall not have been terminated in accordance with its terms, this Agreement and the Trust created hereby are irrevocable by the Owner Trustee and the Seller, unless the Indenture Trustee and the Certificateholders consent in writing to such termination. This Agreement (other than Section 6.9) and the Trust shall terminate and be of no further force or effect on the earlier of: (i) the final distribution by the Owner Trustee of all monies or other property or proceeds of the Owner Trust Estate in accordance with the terms of the Indenture, the Sale and Servicing Agreement (including the exercise by the Servicer of its option to purchase the Contracts pursuant to Section 11.01 of the Sale and Servicing Agreement or resulting from the mandatory sale of all Contracts pursuant to Section 11.02 of the Sale and Servicing Agreement) and Article V, (ii) at the time provided in Section 7.2 or (iii) twenty-one years less one day after the death of the last survivor of all of the decedents of the grandparents of David C. Rockefeller living on the date of the earliest execution of this Agreement by any party hereto, but if this Agreement and the Trust created hereby shall be or become authorized under applicable law to be valid for a period commencing on the twenty-first anniversary of the death of such last survivor (or, without limiting the generality of the foregoing, if legislation shall become effective providing for the validity of this Agreement and the Trust created hereby for a period in gross exceeding the period for which this Agreement and the Trust created hereby are hereinabove stated to extend and be valid), then this Agreement and the Trust created hereby shall not terminate under this subsection (iii), but shall extend to and continue in effect, but only if such non-termination and extension shall then be valid under applicable law, until the day proceeding such date as the same shall, under applicable law, cease to be valid. Upon such termination, all monies or other property or proceeds constituting part of the Owner Trust Estate shall be distributed in accordance with the terms of the Agreement. The bankruptcy, liquidation, dissolution, death or incapacity of any Certificateholder, shall not (x) operate to terminate this Agreement or the Trust, nor (y) entitle such Certificateholder's legal representatives or heirs to claim an accounting or to take any action or proceeding in any court for a partition or winding up of all or any part of the Trust or the Owner Trust Estate nor (z) otherwise affect the rights, obligations and liabilities of the parties hereto. The bankruptcy, liquidation or dissolution of the Owner Trustee (or any other beneficiary herewith) will not terminate this Agreement or the Trust, nor entitle such person's legal representatives or heirs, as appropriate, to claim an accounting or to take any action or proceeding in any court for a partition or winding up of the Trust or Owner Trust Estate, nor otherwise affect the rights, obligations and liabilities of the parties hereto. No creditor of any Certificateholder shall obtain legal title to or exercise legal or equitable remedies with respect to the Owner Trust Estate as a result of such Certificateholder's holding of the Certificate. No transfer, by operation of law or otherwise, of any right, title and interest of any Certificateholder in and to its undivided beneficial interest in the Owner Trust Estate shall operate to terminate this Agreement or the Trust created hereby. (b) Except as provided in Section 7.1(a), neither the Seller nor any Certificateholder shall be entitled to revoke or terminate the Trust. (c) Notice of any termination of the Trust, specifying the Distribution Date upon which the Certificateholders shall surrender their Certificates to the Paying Agent for payment of the final distribution and cancellation, shall be given by the Owner Trustee by letter to Certificateholders mailed within five Business Days of receipt of notice of such termination from the Servicer given pursuant to Section 11.01 of the Sale and Servicing Agreement, or within five Business Days of the Owner Trustee receiving notice of such termination from the Indenture Trustee pursuant to Section 11.02 of the Sale and Servicing Agreement, stating: (i) the Distribution Date upon or with respect to which final payment of the Certificates shall be made upon presentation and surrender of the Certificates at the office of the Paying Agent therein designated; (ii) the amount of any such final payment; and (iii) that the Record Date otherwise applicable to such Distribution Date is not applicable, payments being made only upon presentation and surrender of the Certificates at the office of the Paying Agent therein specified. The Owner Trustee shall give such notice to the Certificate Registrar (if other than the Owner Trustee) and the Paying Agent at the time such notice is given to Certificateholders. Upon presentation and surrender of the Certificates, the Paying Agent shall cause to be distributed to Certificateholders amounts distributable on such Distribution Date pursuant to Section 5.2. (d) If all of the Certificateholders shall not surrender their Certificates for cancellation within six months after the date specified in the above mentioned written notice, the Owner Trustee shall give a second written notice to the remaining Certificateholders to surrender their Certificates for cancellation and receive the final distribution with respect thereto. If within one year after the second notice all the Certificates shall not have been surrendered for cancellation, the Owner Trustee may take appropriate steps, or may appoint an agent to take appropriate steps, to contact the remaining Certificateholders concerning surrender of their Certificates, and the cost thereof shall be paid out of the funds and other assets that shall remain subject to this Agreement. Subject to applicable laws with respect to escheat of funds, any funds remaining in the Trust after exhaustion of such remedies in the preceding sentence shall be deemed property of ____________________ and distributed by the Owner Trustee to ____________________. (e) Upon the winding up of the Trust and its termination, the Owner Trustee shall cause the Certificate of Trust to be canceled by filing a certificate of cancellation with the Secretary of State in accordance with the provisions of Section 3810 of the Business Trust Statute. ARTICLE VIII AMENDMENTS SECTION 8.1 Amendments Without Consent of Certificateholders or Noteholders. This Agreement may be amended by the Seller and the Owner Trustee without the consent of any of the Noteholders or the Certificateholders (but with prior written notice to each of the Rating Agencies and in the case of clauses (iii) and (vi), satisfaction of the Rating Agency Condition), to (i) correct manifest error or cure any ambiguity, (ii) correct or supplement any provision in this Agreement that may be inconsistent with any other provision in this Agreement, (iii) add or amend any provision as requested by Moody's or Standard & Poor's to maintain or improve the rating of the Notes or Certificates, (iv) add to the covenants, restrictions or obligations of the Seller, the Owner Trustee or the Indenture Trustee, (v) evidence and provide for the acceptance of the appointment of a successor trustee with respect to the Owner Trust Estate and add to or change any provisions as shall be necessary to facilitate the administration of the trusts hereunder by more than one trustee pursuant to Article VI and (vi) add, change or eliminate any other provision of this Agreement provided that an amendment pursuant to this clause (vi), as evidenced by an Opinion of Counsel, does not adversely affect in any material respect the interests of the Noteholders or the Certificateholders. SECTION 8.2 Amendments With Consent of Certificateholders and Noteholders. This Agreement may be amended from time to time by the Seller and the Owner Trustee with the consent of Noteholders whose Notes evidence not less than a majority of the aggregate outstanding amount of the Notes as of the close of the preceding Distribution Date and the consent of Certificateholders whose Certificates evidence not less than a majority of the Certificate Balance as of the close of the preceding Distribution Date (which consent, whether given pursuant to this Section 8.2 or pursuant to any other provision of this Agreement, shall be conclusive and binding on such Person and on all future Holders of such Notes or Certificates and of any Notes or Certificates issued upon the transfer thereof or in exchange thereof or in lieu thereof whether or not notation of such consent is made upon the Notes or Certificates) for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement, or of modifying in any manner the rights of the Noteholders or the Certificateholders; provided, however, that no such amendment shall (a) increase or reduce in any manner the amount of, or accelerate or delay the timing of, collections of payments on Contracts, or distributions that shall be required to be made on any Note or Certificate, any Contract Rate, the Pass Through Rate or the Class A Rate or (b) reduce the aforesaid percentage required to consent to any such amendment, without the consent of the holders of all Notes and all of the Certificate Balance with respect to Certificates then outstanding. The Owner Trustee shall furnish notice to each of the Rating Agencies prior to obtaining consent to any proposed amendment under this Section 8.2. SECTION 8.3 Form of Amendments. (a) Promptly after the execution of any amendment, supplement or consent pursuant to Section 8.1 or 8.2, the Owner Trustee shall furnish written notification of the substance of such amendment or consent to each Certificateholder and the Indenture Trustee. (b) It shall not be necessary for the consent of Certificateholders, the Noteholders or the Indenture Trustee pursuant to Section 8.2 to approve the particular form of any proposed amendment or consent, but it shall be sufficient if such consent shall approve the substance thereof. The manner of obtaining such consents (and any other consents of Certificateholders provided for in this Agreement or in any other Basic Document) and of evidencing the authorization of the execution thereof by Certificateholders shall be subject to such reasonable requirements as the Owner Trustee may prescribe. (c) Promptly after the execution of any amendment to the Certificate of Trust, the Owner Trustee shall cause the filing of such amendment with the Secretary of State. (d) Prior to the execution of any amendment to this Agreement or the Certificate of Trust, the Owner Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement. The Owner Trustee may, but shall not be obligated to, enter into any such amendment which affects the Owner Trustee's own rights, duties or immunities under this Agreement or otherwise. ARTICLE IX MISCELLANEOUS SECTION 9.1 No Legal Title to Owner Trust Estate. The Certificateholders shall not have legal title to any part of the Owner Trust Estate. The Certificateholders shall be entitled to receive distributions with respect to their undivided ownership interest therein only in accordance with Articles V and VII. No transfer, by operation of law or otherwise, of any right, title, and interest of the Certificateholders to and in their ownership interest in the Owner Trust Estate shall operate to terminate this Agreement or the trusts hereunder or entitle any transferee to an accounting or to the transfer to it of legal title to any part of the Owner Trust Estate. SECTION 9.2 Limitations on Rights of Others. Except for Section 2.7, the last sentence of Section 5.2(a) and Section 9.12, the provisions of this Agreement are solely for the benefit of the Owner Trustee, the Seller, the Certificateholders, the Servicer and, to the extent expressly provided herein, the Indenture Trustee and the Noteholders, and nothing in this Agreement, whether express or implied, shall be construed to give to any other Person any legal or equitable right, remedy or claim in the Owner Trust Estate or under or in respect of this Agreement or any covenants, conditions or provisions contained herein. SECTION 9.3 Notices. (a) All demands, notices and communications upon or to the Seller, the Servicer, the Indenture Trustee, the Owner Trustee or the Rating Agencies under this Agreement shall be in writing personally delivered, sent by electronic facsimile (with hard copy to follow via first class mail), provided, however, receipt of such is acknowledged by return facsimile or otherwise in writing, or mailed by certified mail-return receipt requested, and shall be deemed to have been duly given upon receipt (a) in the case of the Seller, at the following address: 650 CIT Drive, Livingston, N.J. 07039, (b) in the case of the Servicer, at the following address: 650 CIT Drive, Livingston, N.J. 07039, (c) in the case of the Indenture Trustee, at its Corporate Trust Office, (d) in the case of the Trust or the Owner Trustee, to the Owner Trustee at its Corporate Trust Office, (e) in the case of Moody's Investors Service, Inc., to Moody's Investors Service, Inc., ABS Monitoring Department, 99 Church Street, New York, New York 10007 and (f) in the case of Standard & Poor's Corporation, to Standard & Poor's Corporation, 26 Broadway (15th Floor), New York, New York 10004, Attention: Asset Backed Surveillance Department, or at such other address as shall be designated by such Person in a written notice to the other parties to this Agreement. (b) Any notice required or permitted to be given to a Certificateholder shall be given by first-class mail, postage prepaid, at the address of such Holder as shown in the Certificate Register. Any notice so mailed within the time prescribed in this Agreement shall be conclusively presumed to have been duly given, whether or not the Certificateholder receives such notice. SECTION 9.4 Severability. If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement or of the Certificates or the rights of the holders thereof. SECTION 9.5 Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument. SECTION 9.6 Successors and Assigns. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, the Seller, the Owner Trustee and each Certificateholder and their respective successors and permitted assigns, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by a Certificateholder shall bind the successors and assigns of such Certificateholder. SECTION 9.7 No Petition Covenant. Notwithstanding any prior termination of this Agreement, the Trust (or the Owner Trustee on behalf of the Trust), each Certificateholder or Certificate Owner, the Indenture Trustee and each Noteholder or Note Owner shall not, prior to the date which is one year and one day after the termination of this Agreement with respect to the Seller, acquiesce, petition or otherwise invoke or cause the Seller to invoke the process of any court or governmental authority for the purpose of commencing or sustaining a case against the Seller under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Seller or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Seller. SECTION 9.8 No Recourse. Each Certificateholder by accepting a Certificate acknowledges that such Certificateholder's Certificates represent beneficial interests in the Trust only and do not represent interests in or obligations of the Seller, the Servicer, the Owner Trustee, the Indenture Trustee or any Affiliate thereof and no recourse may be had against such parties or their assets, except as may be expressly set forth or contemplated in this Agreement, the Certificates or the Basic Documents. SECTION 9.9 Headings. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 9.10 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. SECTION 9.11 Certificate Transfer Restrictions. The Certificates may not be acquired by or for the account of (i) an employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA, (ii) a plan described in Section 4975(e)(1) of the Code or (iii) any entity whose underlying assets include plan assets by reason of a plan's investment in the entity (each, a "Benefit Plan"). By accepting and holding a Certificate, the Holder thereof and the Certificate Owner shall each be deemed to have represented and warranted that it is not a Benefit Plan and not subject to the foregoing limitation. SECTION 9.12 Indemnification by the Servicer. The Owner Trustee further acknowledges and accepts the conditions and limitations with respect to the Servicer's obligation to indemnify, defend and hold the Owner Trustee harmless as set forth in Section 8.02 of the Sale and Servicing Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be duly executed by their respective officers hereunto duly authorized, as of the day and year first above written --------------------, as Owner Trustee By: ___________________________________ Name: Title: THE CIT GROUP SECURITIZATION CORPORATION II By: ___________________________________ Name: Title: EXHIBIT A NUMBER ______ $_________________ CUSIP NO. _________ SEE REVERSE FOR CERTAIN DEFINITIONS UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. NO INTEREST IN THIS CERTIFICATE MAY BE ACQUIRED BY OR FOR THE ACCOUNT OF (i) AN "EMPLOYEE BENEFIT PLAN" (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, ("ERISA")) THAT IS SUBJECT TO THE PROVISIONS OF TITLE I OF ERISA, (ii) A PLAN DESCRIBED IN SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (INCLUDING, WITHOUT LIMITATION, INDIVIDUAL RETIREMENT ACCOUNTS AND KEOGH PLANS), OR (iii) ANY ENTITY WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF A PLAN'S INVESTMENT IN THE ENTITY. BY ACCEPTING AND HOLDING THIS CERTIFICATE, THE HOLDER HEREOF AND THE CERTIFICATE OWNER SHALL EACH BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT IT IS NOT A BENEFIT PLAN. CIT MARINE TRUST ____-_ ____% ASSET BACKED CERTIFICATE evidencing a fractional undivided interest in the Trust, as defined below, the property of which includes a pool of retail installment sale contracts secured by new and used boats and sold to the Trust by The CIT Group Securitization Corp II (This Certificate does not represent an interest in or obligation of The CIT Group Securitization Corporation II, The CIT Group/Sales Financing, Inc. or The CIT Group, Inc. or any of their respective affiliates, except to the extent described below.) THIS CERTIFIES THAT ____________________ is the registered owner of a nonassessable, fully-paid, fractional undivided interest in CIT Marine Trust ____-_ (the "Trust") formed by The CIT Group Securitization Corporation II, a Delaware corporation. The Trust was created pursuant to a Trust Agreement, dated as of ____________, ____ (as amended and supplemented from time to time, the "Trust Agreement"), between the Seller and [____________________], as owner trustee (the "Owner Trustee"), a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Trust Agreement. This Certificate is one of the duly authorized Certificates designated as ____% Asset Backed Certificates" (the "Certificates"). This Certificate is issued under and is subject to the terms, provisions and conditions of the Trust Agreement, to which Trust Agreement the holder of this Certificate by virtue of the acceptance hereof assents and by which such holder is bound. The property of the Trust includes a pool of installment sale contracts (the "Contracts") secured by the new and used boats financed thereby (the "Financed Boats"), certain monies received under the Initial Contracts on and after ____________, ____ (the "Initial Cut-off Date") or under the Subsequent Contracts as of the related Subsequent Cut-off Date, security interests in the Initial Financed Boats, the Collection Account, the Cash Collateral Account, the Note Distribution Account, the Certificate Distribution Account, the Capitalized Interest Account and the Pre-Funding Account, in each case together with the proceeds thereof (except for investment earnings on the Cash Collateral Account), the proceeds from claims under certain insurance policies in respect of individual Initial Financed Boats or the related Obligors and certain rights under the Sale and Servicing Agreement. The rights of the holders of the Certificates are subordinated to the rights of the holders of the Notes, as set forth in the Sale and Servicing Agreement. Under the Trust Agreement, there shall be distributed on the 15th day of each month or, if such 15th day is not a Business Day, the next Business Day, commencing on _________ 15, ____ (each, a "Distribution Date"), to the person in whose name this Certificate is registered on the related Record Date (as defined below), such Certificateholder's fractional undivided interest in the amount of interest and principal to be distributed to Certificateholders on such Distribution Date. On each Distribution Date interest on this Certificate shall be distributed in an amount equal to one-twelfth of the product of the rate per annum shown above and the outstanding principal amount of this Certificate as of the preceding Distribution Date after giving effect to all payments of principal and other reductions in the principal amount of this Certificate to be made on such Distribution Date (or in the case of the first Distribution Date the original outstanding principal amount of this Certificate). The "Record Date," with respect to any Distribution Date, means the close of business on the day immediately preceding such Distribution Date, or if Definitive Certificates are issued, the last day of the month immediately preceding the month in which such Distribution Date occurs. The distributions in respect of principal and interest on this Certificate are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. All payments made by the Trust with respect to this Certificate shall be applied first to interest due and payable on this Certificate as provided above and then to the unpaid distributions in respect of principal on this Certificate. The holder of this Certificate acknowledges and agrees that its rights to receive distributions in respect of this Certificate are subordinated to the rights of the Noteholders as and to the extent described in the Sale and Servicing Agreement and the Indenture. It is the intent of the Seller, the Servicer and the Certificateholders that, for purposes of federal income, state and local income and franchise taxes and any other taxes imposed upon, measured by or based upon gross or net income, the Trust shall be treated as a partnership. Except as otherwise required by appropriate taxing authorities, the Seller and the other Certificateholders by acceptance of a Certificate, agree to treat, and to take no action inconsistent with the treatment of, the Certificates for such tax purposes as interests in such partnership. Each Certificateholder or Certificate Owner, by its acceptance of a Certificate or, in the case of a Certificate Owner, a beneficial interest in a Certificate, covenants and agrees that such Certificateholder or Certificate Owner, as the case may be, shall not, prior to the date which is one year and one day after the termination of the Trust Agreement, acquiesce, petition or otherwise invoke or cause the Seller or the Issuer to invoke the process of any court or governmental authority for the purpose of commencing or sustaining a case against the Seller or the Issuer under any federal or state bankruptcy, insolvency, reorganization or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Seller or the Issuer or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Seller or the Issuer. Distributions on this Certificate shall be made as provided in the Trust Agreement by the Owner Trustee by wire transfer or check mailed to the Certificateholder of record in the Certificate Register without the presentation or surrender of this certificate or the making of any notation hereon, except that with respect to Certificates registered on the Record Date in the name of the nominee of the Depository (initially, such nominee to be Cede & Co.), payments shall be made by wire transfer in immediately available funds to the account designated by such nominee. Except as otherwise provided in the Trust Agreement and notwithstanding the above, the final distribution on this Certificate shall be made after due notice by the Owner Trustee of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office maintained for such purpose by the Owner Trustee. Reference is hereby made to the further provisions of this Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon shall have been executed by an authorized officer of the Owner Trustee by manual signature, this Certificate shall not entitle the holder hereof to any benefit under the Trust Agreement or the Sale and Servicing Agreement or be valid for any purpose. THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not in its individual capacity, has caused this Certificate to be duly executed. CIT MARINE TRUST ____-_ By: ____________________, not in its individual capacity, but solely as Owner Trustee By: ______________________________ Name: Title: Dated: OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Certificates referred to in the within-mentioned Trust Agreement. By: ____________________, By: ____________________, not in its individual capacity not in its individual capacity but solely as Owner Trustee but solely as Owner Trustee, as authenticating agent By __________________________ By __________________________ Name: Name: Title: Title: REVERSE OF CERTIFICATE The Certificates do not represent an obligation of, or an interest in, the Seller, the Servicer, The CIT Group, Inc., the Indenture Trustee, the Owner Trustee, the Cash Collateral Depositor or any affiliates of any of them and no recourse may be had against such parties or their assets, except as may be expressly set forth or contemplated herein or in the Trust Agreement or the Basic Documents. In addition, this Certificate is not guaranteed by any governmental agency or instrumentality and is limited in right of payment to certain collections and recoveries with respect to the Contracts (and certain other amounts), all as more specifically set forth herein and in the Trust Agreement and the Sale and Servicing Agreement. A copy of each of the Sale and Servicing Agreement and the Trust Agreement may be examined during normal business hours at the principal office of the Seller, and at such other places, if any, designated by the Seller, by any Certificateholder upon written request. The Trust Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Seller and the rights of the Certificateholders under the Trust Agreement at any time by the Seller and the Owner Trustee with the consent of the Holders of the Notes evidencing not less than a majority of the aggregate outstanding amount of the Notes as of the close of the preceding Distribution Date and the consent of Certificateholders whose Certificates evidence not less than a majority of the Certificate Balance as of the close of the preceding Distribution Date. Any such consent by the Holder of this Certificate shall be conclusive and binding on such holder and on all future Holders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange herefor or in lieu hereof whether or not notation of such consent is made upon this Certificate. The Trust Agreement also permits the amendment thereof, in certain circumstances, without the consent of the Holders of any of the Certificates or the Notes. As provided in the Trust Agreement and subject to certain limitations therein set forth, the transfer of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of transfer at the offices or agencies of the Certificate Registrar maintained by the Owner Trustee for such purposes, accompanied by a written instrument of transfer in form satisfactory to the Owner Trustee and the Certificate Registrar duly executed by the Holder hereof or such Holder's attorney duly authorized in writing and thereupon one or more new Certificates of authorized denominations evidencing the same aggregate interest in the Trust will be issued to the designated transferee. The initial Certificate Registrar appointed under the Trust Agreement is [____________________]. The Certificates are issuable only as registered Certificates without coupons in denominations of $______ or integral multiples of $1,000 in excess thereof; provided, however, that one Certificate may be issued in a denomination other than an integral multiple of $1,000. As provided in the Trust Agreement and subject to certain limitations therein set forth, Certificates are exchangeable for new Certificates of authorized denominations evidencing the same aggregate denomination, as requested by the Holder surrendering the same; provided, however, that no Certificate may be subdivided such that the denomination of any resulting Certificate is less than $______. No service charge shall be made for any such registration of transfer or exchange, but the Owner Trustee or the Certificate Registrar may require payment of a sum sufficient to cover any tax or governmental charge payable in connection therewith. The Owner Trustee, the Certificate Registrar and any agent of the Owner Trustee or the Certificate Registrar may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the Owner Trustee, the Certificate Registrar or any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Trust Agreement and the Trust created thereby shall terminate upon the payment to Certificateholders of all amounts required to be paid to them pursuant to the Trust Agreement and the Sale and Servicing Agreement and the disposition of all property held as part of the Trust. CITSF may at its option purchase the Contracts at a price specified in the Sale and Servicing Agreement, and such purchase of the Contracts shall effect early retirement of the Certificates; provided, however, that such right of purchase is exercisable on any Distribution Date following any Record Date as of which the Pool Balance is [10]% or less of the Initial Pool Balance. In addition, within ten days following a Distribution Date as of which the Pool Balance is [5]% or less of the Initial Pool Balance an auction sale of the remaining Contracts will be conducted (in each case, as described in the Sale and Servicing Agreement) and such auction shall effect early retirement of the Certificates. ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto ________________________________________________________________________________ PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Please print or type name and address, including postal zip code, of assignee) the within Certificate, and all rights thereunder, hereby irrevocably constituting and appointing ________________________________________________________________________________ to transfer said Certificate on the books of the Certificate Registrar, with full power of substitution in the premises. Dated: ______________________* Signature Guaranteed: ____________________ * NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Certificate in every particular, without alteration, enlargement or any change whatever. Such signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. EXHIBIT B CERTIFICATE OF TRUST OF CIT MARINE TRUST ____-_ THIS Certificate of Trust of CIT Marine Trust ____-_ (the "Trust"), dated as of ____________, ____, is being duly executed and filed by [____________________], a Delaware banking corporation, as trustee, to form a business trust under the Delaware Business Trust Act (12 Del. C. 3801 et seq.). 1. Name. The name of the business trust formed hereby is CIT Marine Trust ____-_. 2. Delaware Trustee. The name and business address of the Trust resident in the State of Delaware is ____________________, ____________________. 3. This Certificate of Trust shall be effective as of ____________, ____. IN WITNESS WHEREOF, the undersigned, being the trustee of the Trust, has executed this Certificate of Trust as of the date first-above written. ________________________________________, not in its individual capacity but solely as Owner Trustee under a Trust Agreement dated as of ___________, ____ By: ______________________________ Name: Title: EX-4.3 5 SALE AND SERVICING AGREEMENT Exhibit 4.3 THE CIT GROUP SECURITIZATION CORPORATION II, as Seller THE CIT GROUP/SALES FINANCING, INC., as Servicer CIT MARINE TRUST ____-_ SALE AND SERVICING AGREEMENT Dated as of ____________, ____ $_____________ CIT Marine Trust ____-_ Class A _____% Asset Backed Notes _____% Asset Backed Certificates TABLE OF CONTENTS EXHIBITS Exhibit A List of Initial Contracts Exhibit B Form of Subsequent Purchase Agreement Exhibit C Form of Subsequent Transfer Agreement Exhibit D Form of Assignment Exhibit E Form of Owner Trustee's Acknowledgment and Certification Exhibit F Form of Servicer's Certificate Exhibit G Form of Monthly Report Exhibit H Termination - Auction Procedures Exhibit I Form of Officers' Certificate This Sale and Servicing Agreement, dated as of ____________, ____, is made among The CIT Group Securitization Corporation II, as seller (together with its permitted successors and assigns, the "Company" or the "Seller"), The CIT Group/Sales Financing, Inc., a corporation organized and existing under the laws of the State of Delaware, as servicer (in its individual capacity, "CITSF," or, together with its permitted successors and assigns, the "Servicer"), and CIT Marine Trust ____-_ (the "Issuer" and the "Trust"), for which [____________________], a __________ banking corporation, acts not in its individual capacity but solely as Owner Trustee (together with permitted successors and assigns, the "Owner Trustee"). NOW, THEREFORE, in consideration of the mutual agreements hereinafter set forth, the parties hereto agree as provided herein: ARTICLE I DEFINITIONS SECTION 1.01 General. For the purpose of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, the terms defined in this Article include the plural as well as the singular, the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision, and Section references refer to Sections of this Agreement. SECTION 1.02 Specific Terms. "Affiliate" of any specified Person means any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" or "controlled" have meanings correlative to the foregoing. "Agency Office" means the office of the Trust maintained pursuant to Section 3.2 of the Indenture. "Amount Available" on any Distribution Date is equal to all amounts on deposit in the Collection Account attributable to collections or deposits made in respect of such Contracts in the related Due Period (together with the Purchase Price for any Repurchased Contracts paid on or prior to the Deposit Date immediately preceding such Distribution Date) less the following amounts (to the extent that the Servicer has not already withheld such amounts from collections on the Contracts): any repossession profits on Liquidated Contracts, any Liquidation Expenses incurred and taxes and insurance advanced by the Servicer in respect of Financed Boats that are reimbursable to the Servicer under the Sale and Servicing Agreement; any amounts incorrectly deposited in the Collection Account; and net investment earnings on the funds in the Collection Account due to the Servicer pursuant to the Sale and Servicing Agreement and any other amounts permitted to be withdrawn from the Collection Account by the Servicer (or to be retained by the Servicer from collections on the Contracts) pursuant to the Sale and Servicing Agreement. "Available Cash Collateral Amount" means, with respect to any date of determination, the lesser of (i) the Required Cash Collateral Amount and (ii) the amount on deposit in the Cash Collateral Account, excluding Investment Earnings with respect thereto. "Authorized Officer" means with respect to the Trust, any officer of the Owner Trustee who is authorized to act for the Owner Trustee in matters relating to the Trust and who is identified on the list of Authorized Officers delivered by the Owner Trustee to the Indenture Trustee on the Closing Date (as such list may be modified or supplemented from time to time thereafter). "Basic Documents" means the Certificate of Trust, the Trust Agreement, the Sale and Servicing Agreement, the Indenture, the Cash Collateral Agreement, the Purchase Agreement, any Subsequent Purchase Agreement and any Subsequent Transfer Agreements. "Benefit Plan" means a benefit plan as described in Section 9.11 of the Trust Agreement. "Boat" shall mean new or used boats, boat motors and boat trailers. "Book-Entry Certificates" means a beneficial interest in the Certificates, ownership and transfers of which shall be made through book entries by a Depository as described in Section 3.11 of the Trust Agreement. "Book-Entry Notes" means a beneficial interest in the Notes, ownership and transfers of which shall be made through book entries by a Depository as described in Section 2.10 of the Indenture. "Business Day" means any day other than a Saturday, Sunday or any day on which banking institutions or trust companies in the States of New York, Delaware, [__________]or Oklahoma are authorized or required by law, regulation or executive order to be closed. "Business Trust Statute" means Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code ss. 3801 et seq., as the same may be amended from time to time. "Capitalized Interest Account" means the account designated as such, established and maintained pursuant to Section 5.01 of the Sale and Servicing Agreement. "Cash Collateral Account" means the deposit account established and maintained pursuant to Section 5.01(a)(iv) hereof. "Cash Collateral Account Property" means the Cash Collateral Account, all amounts deposited from time to time in the Cash Collateral Account and all investments from time to time in the Cash Collateral Account, all income on such investments and all cash and non-cash proceeds of such investments and all cash and non-cash proceeds of such income from the date of the establishment of the Cash Collateral Account until the termination thereof pursuant to the terms of the Cash Collateral Agreement. "Cash Collateral Account Surplus" means, as of any Distribution Date, the amount, if any, by which Available Cash Collateral Amount, after taking into account any deposits to the Cash Collateral Account pursuant to Section 5.06(a) on such Distribution Date and any withdrawals from the Cash Collateral Account pursuant to Section 5.06(b) or (c) on such Distribution Date, exceeds the Required Cash Collateral Amount for the next Distribution Date. "Cash Collateral Depositor" means the financial institution which is a party to the Cash Collateral Agreement and which, pursuant to the Cash Collateral Agreement, will make a loan to the Trust on the Closing Date, the proceeds of which will be deposited in the Cash Collateral Account on the Closing Date. "Cash Collateral Agreement" means the Cash Collateral Agreement dated as of ____________, ____ among the Cash Collateral Depositor, the Trust, the Servicer and the Owner Trustee. "Certificate" means any one of the _____% Asset Backed Certificates executed by the Owner Trustee and authenticated by the Owner Trustee in substantially the form set forth in Exhibit A to the Trust Agreement. "Certificate Balance" initially means, as of the Closing Date, $___________ and, on any Distribution Date thereafter, the initial Certificate Balance reduced by (i) all distributions in respect of principal to the Certificateholders actually made, including payments of any Principal Liquidation Loss Amount and payments of any Principal Distribution Amount, (ii) the aggregate amount of all Principal Liquidation Loss Amounts distributable to Certificateholders to the extent such amounts have not been previously distributed and (iii) on or after the Cross-over Date, the aggregate amount of all Principal Distribution Amounts distributable to Certificateholders to the extent such amounts have not been previously distributed. "Certificate Depository Agreement" means the Agreement, dated as of the Closing Date, among the Trust, the Servicer, the Owner Trustee and The Depository Trust Company (as the initial Depository), relating to the Certificates, as the same may be amended and supplemented from time to time. "Certificate Distribution Account" means the account designated as such, established and maintained pursuant to Section 5.1 of the Trust Agreement. "Certificate Final Distribution Date" means the __________, Distribution Date. "Certificateholder" means the holder of record of a Certificate pursuant to the terms of the Trust Agreement. "Certificate Interest Distribution Amount" means the amount of interest payable on a Distribution Date to the Holders of the Certificates. Such amount will equal one-twelfth of the product of the Pass-Through Rate and the Certificate Balance as of the preceding Distribution Date, after giving effect to any distributions of principal on the Certificates on such preceding Distribution Date and other reductions in the Certificate Balance on such preceding Distribution Date (or, in the case of the first Distribution Date, on the basis of the original Certificate Balance), for the applicable Interest Accrual Period. "Certificate Pre-Funded Percentage" means the percentage derived from the fraction, the numerator of which is the Certificate Balance and the denominator of which is the sum of the initial principal balance of the Notes and the initial Certificate Balance. "Certificate of Trust" means the certificate of trust of the Issuer substantially in the form of Exhibit B to the Trust Agreement to be filed for the Trust pursuant to Section 3810(a) of the Business Trust Statute. "Certificate Owners" means with respect to a Book-Entry Certificate, the Person who is the beneficial owner of such Book-Entry Certificate, as reflected on the books of the Depository, or on the books of a Person maintaining an account with such Depository (directly as a Depository Participant or as an indirect participant, in each case in accordance with the rules of such Depository). "Certificate Pool Factor" means a seven-digit decimal which the Servicer will compute each month indicating the remaining Certificate Balance as of the Distribution Date, as a fraction of the initial Certificate Balance. The Certificate Pool Factor will be 1.0000000 as of the Initial Cut-off Date, and thereafter will decline to reflect reductions in the outstanding principal balance of the Certificates. A Certificateholder's portion of the aggregate outstanding Certificate Balance is the product of (i) the original denomination of the Certificateholder's Certificate and (ii) the Certificate Pool Factor. "Certificate Register" means the register of Certificates specified in Section 3.4 of the Trust Agreement. "Certificate Registrar" means the registrar at any time of the Certificate Register, appointed pursuant to Section 3.4 of the Trust Agreement. "CIT" means The CIT Group, Inc. "CITCF-NY" means The CIT Group/Consumer Finance (NY). "CITSF" means The CIT Group/Sales Financing, Inc., and its successors in interest as permitted under the related agreement. "Class A Final Scheduled Distribution Date" means the __________ Distribution Date. "Class A Interest Distribution Amount" means the amount of interest payable on a Distribution Date to the Holders of the Class A Notes. Such amount will equal one-twelfth of the product of the Class A Rate and the outstanding principal amount of Class A Notes as of the preceding Distribution Date, after giving effect to any distributions of principal on the Class A Notes on such preceding Distribution Date (or, in the case of the first Distribution Date, on the original outstanding principal amount of the Class A Notes), for the applicable Interest Accrual Period. "Class A Note" means any one of the Class A _____% Asset Backed Notes in the aggregate principal amount of $___________ issued pursuant to the Indenture and substantially in the form of Exhibit A to the Indenture. "Class A Rate" means _____% per annum, calculated on the basis of a 360-day year comprised of twelve 30-day months. "Closing Date" means ____________, ____. "Code" means the Internal Revenue Code of 1986, as amended from time to time, and the Treasury Regulations promulgated thereunder. "Collateral" means the collateral specified in the Granting Clause of the Indenture. "Collection Account" means the account designated as such established and maintained pursuant to Section 5.01 of the Sale and Servicing Agreement. "Commission" means the Securities and Exchange Commission. "Company" means The CIT Group Securitization Corporation II, and its successors in interest as permitted under the related agreement. "Computer Tape" means the computer tape generated by the Servicer which provides information relating to the Contracts, and includes the master file and the history file. "Contract(s)" means one or more of the Initial Contracts and/or Subsequent Contracts. "Contract File" means, as to each Contract (a) the original copy of the Contract, (b) either (i) the original title document for the related Financed Boat or a duplicate certified by the appropriate governmental authority which issued the original thereof or the application for such title document, or (ii) if the laws of the jurisdiction in which the related Financed Boat is located do not provide for the issuance of title documents for boats, other evidence of ownership of the related Financed Boat which is customarily relied upon in such jurisdiction as evidence of title to a boat; (c) evidence of one or more of the following types of perfection of the security interest in the related Financed Boat 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 boat as is customarily relied upon in the jurisdiction in which the related Financed Boat is located; (d) an assignment of the Contract evidencing the chain of title of the Contract from the Dealer which is the originator thereof to CITSF; and (e) any extension, modification or waiver agreement(s). "Contract Rate" means, with respect to any particular Contract, the rate of interest specified in that Contract. "Corporate Trust Office" means with respect to the Indenture Trustee or the Owner Trustee, the principal office at which at any particular time the corporate trust business of the Indenture Trustee or the Owner Trustee, respectively, shall be administered, which offices at the Closing Date are located, in the case of the Indenture Trustee, at ____________________, Attn: _______________, and in the case of the Owner Trustee, at ____________________, Attn: _______________. "Cross-over Date" means the Distribution Date on which the Notes have been paid in full. "Dealer" means the dealer which sold a Financed Boat and which originated and assigned the Contract relating to such Financed Boat to CITSF or CITCF-NY under a Dealer Agreement. "Dealer Agreement" means the agreement, if any, under which Contracts were originated by a Dealer and sold to CITSF or CITCF-NY, and all documents and instruments relating thereto. "Default" means any occurrence that is, or with notice or the lapse of time or both would become an Event of Default. "Defaulted Contract" means, with respect to any Due Period, a Contract (other than a Repurchased Contract) in respect of which payments exceeding $[25] in the aggregate were delinquent [120] days or more as of the last day of such Due Period; provided, however, that a Paid-Ahead Contract and a Contract which is delinquent due to the Soldiers' and Sailors' Relief Act of 1940 shall not be deemed to be delinquent. "Definitive Certificates" means the Certificates specified in Section 3.13 of the Trust Agreement. "Definitive Notes" means the Notes specified in Section 2.12 of the Indenture. "Deposit Date" means, with respect to any Distribution Date, the Business Day immediately preceding such related Distribution Date. "Depository" means the initial Depository, The Depository Trust Company, the nominee of which is CEDE & CO., and any permitted successor depository. The Depository shall at all times be a "clearing corporation" defined in Section 8-102(3) of the Uniform Commercial Code of the State of New York. "Depository Agreement" means the Agreement, dated as of the Closing Date, among the Trust, the Servicer, the Indenture Trustee and the Depository, relating to the Notes, as the same may be amended and supplemented from time to time. "Depository Participant" means a broker, dealer, bank or other financial institution or other Person for whom from time to time a Depository effects book-entry transfers and pledges of securities deposited with the Depository. "Designated Accounts" means the Collection Account, the Note Distribution Account, the Certificate Distribution Account, the Pre-Funding Account and the Capitalized Interest Account, collectively. "Determination Date" means the third Business Day prior to each Distribution Date. "Distribution Date" means the date on which payments of interest and principal on the Securities will be made. Such Distribution Dates will be on the fifteenth day of each month or, if any such day is not a Business Day, on the next succeeding Business Day, commencing _________ 15, ____. "Draw Amount" has the meaning specified in Section 5.06(b) of the Sale and Servicing Agreement. "Due Date" shall mean, with respect to each Contract, the day set forth in such Contract as the date on which payments under such Contract are scheduled to be made. "Due Period" means with respect to any Distribution Date the period during which principal, interest and fees will be collected on the Contracts for application towards the payment of principal and interest to the Securityholders and the payment of fees on such Distribution Date. The "Due Period" will be the calendar month immediately preceding the Distribution Date. The first Due Period will commence on and include ____________, ____ and will end on and include ____________, ____. "Electronic Ledger" means the electronic master record of installment sale contracts of the Servicer. "Eligible Institution" means either (i) the corporate trust department of the Indenture Trustee, the Owner Trustee or any paying agent satisfying the criteria under the Trust Agreement or Indenture, as applicable or (ii) a depository institution or trust company organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any domestic branch or agency of a foreign bank), (A) which has either a long-term unsecured debt rating of "AAA" or a short-term senior unsecured debt or certificate of deposit rating of "A-1+" or better by Standard & Poor's and a long-term senior unsecured debt rating of "A1" or better and a short-term senior unsecured debt rating of "P-1" or better by Moody's or any other long-term, short-term or certificate of deposit rating acceptable to the Rating Agencies and (B) whose deposits are insured by the FDIC. "Eligible Investments" means, at any time, any one or more of the obligations and securities described in Section 5.01(c) of the Sale and Servicing Agreement. "Eligible Servicer" means CITSF, the Trustees or any other Person qualified to act as Servicer of the Contracts under applicable federal and state laws and regulations, which Person services not less than $100,000,000 in outstanding principal amount of marine installment sale contracts. "ERISA" means The Employee Retirement Income Security Act of 1974, as amended. "Event of Default" means an event as described in Section 5.1 of the Indenture. "Event of Termination" means an event specified in Section 9.01 of the Sale and Servicing Agreement. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Excluded Assets" means any amounts on deposit in the Certificate Distribution Account and Cash Collateral Account and any Investment Earnings thereon. "Final Draw Amount" has the meaning set forth in Section 5.06(c) of the Sale and Servicing Agreement. "Financed Boat" with respect to a Contract means the new or used Boat, together with all accessions thereto, securing an Obligor's indebtedness under such Contract. "Force-Placed Insurance" means insurance described in Section 4.04(a) of the Sale and Servicing Agreement. "Force-Placed Insurance Premium" means any premium for theft and physical damage insurance purchased by CITSF or CITCF-NY. "Funding Period" means the period commencing on the Closing Date and ending on the earliest to occur of (i) the date on which the amount on deposit in the Pre-Funding Account is less than $100,000, (ii) the date on which an Event of Default occurs under the Indenture, (iii) the date on which an Event of Termination occurs under the Sale and Servicing Agreement, (iv) the insolvency of the Company, CITSF, CITCF-NY or CIT or (v) the close of business on ____________, ____. "Grant" means to mortgage, pledge, bargain, sell, warrant, alienate, remise, release, convey, assign, transfer, create, and grant a lien upon and a security interest in and right of set-off against, deposit, set over and confirm pursuant to the Indenture. A Grant of the Collateral or of any other agreement or instrument shall include all rights, powers and options (but none of the obligations) of the Granting party thereunder, including the immediate and continuing right to claim for, collect, receive and give receipt for principal and interest payments in respect of, the Collateral and all other moneys payable thereunder, to give and receive notices and other communications, to make waivers or other agreements, to exercise all rights and options, to bring Proceedings in the name of the Granting party or otherwise and generally to do and receive anything that the Granting party is or may be entitled to do or receive thereunder or with respect thereto. "Holder" means the Person in whose name a Note or Certificate is registered on the Note Register or the Certificate Register, as applicable. "Indenture" means the indenture, dated as of ____________, ____, between the Issuer and the Indenture Trustee, as amended and supplemented from time to time. "Indenture Trustee" means [____________________], not in its individual capacity but solely as trustee under the Indenture, or any successor trustee under the Indenture. "Independent" when used with respect to any specified Person, means that the Person (i) is in fact independent of the Issuer, any other obligor upon the Notes, the Seller and any Affiliates of any of the foregoing Persons, (ii) does not have any direct financial interest or any material indirect financial interest in the Issuer, any such other obligor, the Seller or any Affiliate of any of the foregoing Persons and (iii) is not connected with the Issuer, any such other obligor, the Seller or any Affiliate of any of the foregoing Persons as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions. "Independent Certificate" means a certificate or opinion to be delivered to the Indenture Trustee under the circumstances described in, and otherwise complying with, the applicable requirements of Section 11.1 of the Indenture, made by an Independent appraiser or other expert appointed by an Issuer Order and approved by the Indenture Trustee in the exercise of reasonable care, and such opinion or certificate shall state that the signer has read the definition of "Independent" in the Indenture and that the signer is Independent within the meaning thereof. "Initial Capitalized Interest Deposit" means the amount deposited in the Capitalized Interest Account on the Closing Date from the proceeds of the sale of the Notes and Certificates, which amount is $___________. "Initial Cash Collateral Amount" means $_________. "Initial Contract" means one or more of the installment sale contracts described in the List of Initial Contracts, which constitute part of the corpus of the Trust, and which Contracts are to be assigned by the Company to the Trust; including, without limitation, all related security interests, collateral, liens, insurance policies and guarantees of the obligations of the related Obligor (other than guarantees, if any, by the related Dealer) and any and all rights to receive payments which are received pursuant thereto from and after the Initial Cut-off Date, but excluding any rights to receive payments which are received pursuant thereto prior to the Initial Cut-off Date. "Initial Cut-off Date" means ____________, ____. "Initial Cut-off Date Principal Balance" means the aggregate unpaid principal balance of all of the Initial Contracts as of the Initial Cut-off Date. "Initial Financed Boat " means a Financed Boat with respect to an Initial Contract. "Initial Pool Balance" means the sum of (i) the Pool Balance as of the Initial Cut-off Date and (ii) the aggregate principal balance of all Subsequent Contracts added to the Trust as of their respective Subsequent Cut-off Dates. "Insolvency Event" with respect to a specified Person, (i) the entry of a decree or order by a court, agency or supervisory authority having jurisdiction in the premises for the appointment of a conservator, receiver or liquidator for such Person, in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of such Person's affairs, and the continuance of any such decree or order unstayed and in effect for a period of 90 consecutive days; (ii) the consent by such Person to the appointment of a conservator, receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings of or relating to such Person or of or relating to substantially all of such Person's property, or (iii) such Person shall admit in writing its inability to pay its debts generally as they become due, file a petition to take advantage of any applicable insolvency or reorganization statute, make an assignment for the benefit of its creditors or voluntarily suspend payment of its obligations. "Insurance Policy" means, with respect to each Contract, the policy of physical damage and all other insurance covering the Financed Boats or the Obligors, as provided in Section 4.04(a) of the Sale and Servicing Agreement, and which, as provided therein, may be a blanket policy maintained by the Servicer in accordance with the terms and conditions of such Section 4.04(b) of the Sale and Servicing Agreement. "Insurance Proceeds" means proceeds paid by any insurer pursuant to any Insurance Policy. "Interest Accrual Period" means the period for which interest is payable on a Distribution Date on the Securities, which shall be the period from the most recent Distribution Date on which interest has been paid to but excluding the following Distribution Date, or in the case of the initial Distribution Date from ____________, ____ to but excluding the initial Distribution Date. "Interest Shortfall" means with respect to any Contract and any Distribution Date, the excess of (x) the sum of (i) the product of one-twelfth of the weighted average of the Pass-Through Rate and the Class A Rate multiplied by the outstanding principal amount of such Contract as of the last day of the second preceding Due Period (or, in the case of the first Due Period ending after the Contract was acquired by the Trust, as of the Initial Cut-off Date or the Subsequent Cut-off Date, as applicable to such Contract) calculated on the basis of a 360-day year comprised of twelve 30-day months and (ii) the product of (A) one-twelfth of the Servicing Fee Rate and (B) the outstanding principal amount of such Contract as of the last day of the second preceding Due Period (or, in the case of the first Due Period ending after the Contract was acquired by the Trust, as of the Initial Cut-off Date or the Subsequent Cut-off Date, as applicable to such Contract) over (y) the amount of interest, if any, collected on such Contract in the related Due Period. "Investment Earnings" means investment earnings deposited in a Designated Account or the Cash Collateral Account, as applicable, net of losses and investment expenses. "Issuer" means the Trust until a successor replaces it and, thereafter, means the successor and, for purposes of any provision contained in the Indenture and required by the TIA, each other obligor on the Notes. "Issuer Order" and "Issuer Request" means a written order or request signed in the name of the Issuer by any one of its Authorized Officers and delivered to the Indenture Trustee. "Late Fees" means any late fees, prepayment charges, extension fees or other administrative fees or similar charges allowed by applicable law with respect to the Contracts. "Lien" means any security interest, charge, pledge, equity or encumbrance of any kind other than tax liens, mechanics' liens and any liens that attach by operation of law. "Liquidated Contract" means any Contract as to which the Servicer has determined that all amounts which it expects to recover from or on account of such Contract have been recovered; provided that any Contract in respect of which the related Financed Boat has been realized upon and disposed of and the proceeds of such disposition have been received, shall be deemed to be a Liquidated Contract. "Liquidation Expenses" means any out of pocket expenses incurred by the Servicer hereunder relating to the liquidation of a Contract, permissible hereunder. "List of Initial Contracts" means the list attached to the Sale and Servicing Agreement as Exhibit A identifying each Initial Contract constituting part of the corpus of the Trust, which list (a) identifies each Initial Contract and (b) sets forth as to each Initial Contract (i) the Initial Cut-off Date Principal Balance, (ii) the amount of the monthly payment due from the Obligor as of the Initial Cut-off Date, (iii) the Contract Rate as of the Initial Cut-off Date and (iv) the maturity date. "List of Subsequent Contracts" means, with respect to the sale of any Subsequent Contracts by the Company to the Trust pursuant to a Subsequent Transfer Agreement, the list attached to such Subsequent Transfer Agreement identifying each Subsequent Contract which, upon the execution and delivery of such Subsequent Transfer Agreement, will constitute part of the corpus of the Trust, which list (a) identifies each such Subsequent Contract and (b) sets forth as to each such Subsequent Contract (i) the Subsequent Cut-off Date Principal Balance, (ii) the amount of monthly payment due from the Obligor as of the applicable Subsequent Cut-off Date, (iii) the Contract Rate as of the applicable Subsequent Cut-off Date and (iv) the maturity date. "Military Reservist Relief Act" means the California Military Reservist Relief Act of 1991. "Monthly Advance" means, with respect to any Distribution Date, any payment made by the Servicer pursuant to Section 5.03 of the Sale and Servicing Agreement on the preceding Deposit Date. "Monthly Report" has the meaning assigned in Section 4.09 of the Sale and Servicing Agreement. The form of Monthly Report is attached as Exhibit G to the Sale and Servicing Agreement. "Moody's" means Moody's Investors Service, Inc. and its successors in interest. "Net Liquidation Proceeds" means the monies collected (from whatever source) during a Due Period on a Liquidated Contract, net of the sum of (a) any amount expended by or on behalf of the Servicer in effecting such collections permissible hereunder, plus (b) any payments required by law to be remitted to the Obligor, except such amounts as constitute Post Cut-off Date Insurance Add-ons. "Nonrecoverable Advance" means any advance made or proposed to be made pursuant to Section 5.03 in respect of a Contract, which the Servicer believes, in its good faith judgment, is not, or if made would not be, ultimately recoverable from subsequent collections in respect of interest on such Contract made by or on behalf of the Obligor thereunder, Net Liquidation Proceeds or insurance proceeds in respect of such Contract. In determining whether an advance is or will be nonrecoverable, the Servicer need not take into account that it might receive any amounts in a deficiency judgment. The determination by the Servicer that any advance is, or if made would constitute, a Nonrecoverable Advance, shall be evidenced by an officer's certificate of the Servicer delivered to the Trustees and stating the reasons for such determination. "Nonreimbursable Payment" shall have the meaning set forth in Section 5.04A of the Sale and Servicing Agreement. "Notes" means the Class A _____% Asset Backed Notes. "Note Distribution Account" means the account designated as such, established and maintained pursuant to Section 5.01(a) of the Sale and Servicing Agreement. "Noteholder" means the holder of record of a Note pursuant to the Indenture. "Note Owners" with respect to a Book-Entry Note, means the Person who is the beneficial owner of such Book-Entry Note, as reflected on the books of the Depository, or on the books of a Person maintaining an account with such Depository (directly as a Depository Participant or as an Indirect Participant, in each case in accordance with the rules of such Depository). "Note Pool Factor" means a seven-digit decimal which the Servicer will compute each month indicating the remaining outstanding principal balance of the Notes as of the Distribution Date, as a fraction of the initial outstanding principal balance of the Notes. The Note Pool Factor will be 1.0000000 as of the Initial Cut-off Date, and thereafter will decline to reflect reductions in the outstanding principal balance of the Notes. A Noteholder's portion of the aggregate outstanding principal balance of the Notes is the product of (i) the original denomination of the Noteholder's Note and (ii) the Note Pool Factor. "Note Pre-Funded Percentage" means the percentage derived from the fraction the numerator of which is the initial principal balance of the Notes and the denominator of which is the initial principal balance of the Notes and the initial Certificate Balance. "Note Register" means the register of the Notes as specified in Section 2.4 of the Indenture. "Note Registrar" means the registrar at any time of the Note Register, appointed pursuant to Section 2.4 of the Indenture. "Obligor" means each Person who is indebted under a Contract. "Officers' Certificate" means a certificate signed by any Authorized Officer of the Issuer, under the circumstances described in, and otherwise complying with, the applicable requirements of Section 11.1 of the Indenture, and delivered to the Indenture Trustee. Unless otherwise specified, any reference in the Indenture to an officer's certificate shall be to an Officer's Certificate of any Authorized Officer of the Issuer. "Opinion of Counsel" means a written opinion of counsel who may, except as otherwise expressly provided, be counsel (internal or external) for the Seller or Servicer. In addition, for the purposes of the Indenture: (i) the opinion shall be addressed to the Indenture Trustee as Indenture Trustee and (ii) the opinion shall comply with any applicable requirements of Section 11.1 of the Indenture and shall be in form and substance satisfactory to the Indenture Trustee. "Original Pre-Funded Amount" means the amount deposited in the Pre-Funding Account on the Closing Date from the proceeds of the sale of the Notes and Certificates, which amount is $___________. "Outstanding Certificate Interest" means the aggregate amount for each prior Distribution Date of the difference between (i) the Certificate Interest Distribution Amount and (ii) the amount of interest actually distributed to the Holders of the Certificates. "Outstanding Class A Interest" means the aggregate amount for each prior Distribution Date of the difference between (i) the Class A Interest Distribution Amount and (ii) the amount of interest actually distributed to the Holders of the Class A Notes. "Owner Trust Estate" means all right, title and interest of the Trust in and to the property and rights assigned to the Trust pursuant to Article II of the Sale and Servicing Agreement, all funds deposited from time to time in the Designated Accounts and the Cash Collateral Account (except the Note Distribution Account) and all other property of the Trust from time to time, including any rights of the Owner Trustee and the Trust pursuant to the Basic Documents. "Owner Trustee" means [____________________], a ________ banking corporation, or any successor trustee under the Trust Agreement. "Paid-Ahead Contract" means a Contract in respect of which the related Obligor, in addition to making his regularly scheduled payment in any Due Period, makes one or more additional payments in such Due Period, such that the Servicer, in accordance with its customary servicing procedures, (i) treats such additional payments as a Principal Prepayment applied to reduce the principal balance of the related Contract and (ii) does not require the Obligor to make a scheduled payment in respect of such Contract for the number of Due Dates which corresponds to the number of such additional scheduled payments. "Pass-Through Rate" means _____% per annum, calculated on the basis of a 360-day year comprised of twelve 30-day months. "Paying Agent" with respect to the Indenture means the Indenture Trustee or any other Person that meets the eligibility standards for the Indenture Trustee specified in Section 6.11 of the Indenture and is authorized by the Issuer to make the payments to and distributions from the Collection Account and the Note Distribution Account, including payment of principal and interest on the Notes on behalf of the Issuer. "Paying Agent" with respect to the Trust Agreement means any paying agent or co-paying agent appointed pursuant to Section 3.9 of the Trust Agreement that meets the eligibility requirements of Section 6.13 of the Trust Agreement. "Person" means any legal person, including any individual, corporation, partnership, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated organization or government or any agency or political subdivision thereof. "Pool Balance" means the aggregate outstanding principal balance of the Contracts. "Post Cut-off Date Insurance Add-Ons" means Force-Placed Insurance Premiums added to the Contracts on or after the Initial Cut-off Date with regard to each Initial Contract, or on or after the related Subsequent Cut-off Date with regard to each Subsequent Contract, which amounts are to be repaid to an account separate from the Collection Account over the remaining life of such Contract. "Pre-Funding Account" means the Pre-Funding Account established and maintained in accordance with Section 5.01(b) of the Sale and Servicing Agreement. "Pre-Funded Amount" means, with respect to any Determination Date, the amount on deposit in the Pre-Funding Account. "Pre-Funding Earnings" means (i) with respect to the _________ 15, ____ Distribution Date, the actual Investment Earnings earned on the Pre-Funded Amount during the period beginning on the Closing Date through _________ 14, ____ (inclusive), (ii) with respect to the _________ 15, ____ Distribution Date, the actual Investment Earnings earned on the Pre-Funded Amount during the period beginning on _________ 15, ____ through _________ 14, ____ (inclusive), and (iii) with respect to the _________ 15, ____ Distribution Date, the actual Investment Earnings earned on the Pre-Funded Amount during the period beginning on _________ 15, ____ through _________ 14, ____ (inclusive). "Predecessor Notes" with respect to any particular Note means every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for purposes of this definition, any Note authenticated and delivered under Section 2.5 of the Indenture in lieu of a mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Note. "Principal Distribution Amount" equals the difference between (i) the sum of (x) the Pool Balance on the last day of the second preceding Due Period (or, in the case of the first Distribution Date, the Initial Cut-off Date Principal Balance) and (y) the Pre-Funded Amount (exclusive of Pre-Funding Earnings) on the last day of the second preceding Due Period (or, in the case of the first Distribution Date, as of the Closing Date), less (ii) the sum of (x) the Pool Balance on the last day of the preceding Due Period and (y) the Pre-Funded Amount (exclusive of Pre-Funding Earnings) on the last day of the preceding Due Period; provided, however, that the Principal Distribution Amount on the Class A Final Scheduled Distribution Date will equal the outstanding principal balance of the Notes as of such date and the Principal Distribution Amount on the Certificate Final Distribution Date will equal the Certificate Balance on such date. For the purposes of determining the Principal Distribution Amount, the unpaid principal balance of a Defaulted Contract or a Repurchased Contract is deemed to be zero on and after the last day of the Due Period in which such Contract became a Defaulted Contract or a Repurchased Contract. The Principal Distribution Amount will not exceed the outstanding principal balance of the Notes or, after the Cross-over Date, the Certificate Balance. "Principal Liquidation Loss Amount" for any Distribution Date equals the amount, if any, by which the sum of the aggregate outstanding principal balance of the Notes and the Certificate Balance (after giving effect to all distributions of principal on such Distribution Date but before giving effect to any other reductions in the Certificate Balance on such Distribution Date) exceeds the sum of the Pool Balance plus the Pre-Funded Amount (exclusive of Pre-Funding Earnings), if any, at the close of business on the last day of the related Due Period. "Principal Prepayment" means a payment or other recovery of principal on a Contract (including Insurance Proceeds that are not liquidation proceeds, but exclusive of liquidation proceeds) which is received in advance of its Due Date and applied upon receipt (or, in the case of a partial Principal Prepayment, upon the next scheduled payment date on such Contract) to reduce the outstanding principal amount of such Contract prior to the date or dates on which such principal amount is scheduled to be made. "Principal Prepayment in Full" means any Principal Prepayment of the entire principal balance of a Contract. "Proceeding" means any suit in equity, action at law or other judicial or administrative proceeding. "Purchase Agreement" means the Purchase Agreement dated as of ____________, ____, between the Seller and CITSF, as amended and supplemented from time to time. "Purchase Price" means, with respect to a Contract to be purchased under the Sale and Servicing Agreement, an amount equal to the remaining principal amount outstanding on such Contract on the date of purchase, plus 30 days' interest thereon in an amount equal to the sum of (i) the product of one-twelfth of the weighted average of the Pass-Through Rate and of the Class A Rate and the remaining principal amount outstanding on the Contract and (ii) accrued and unpaid Servicing Fees thereon at the Servicing Fee Rate to the date of such purchase. "Rating Agencies" as of any date means the nationally recognized statistical rating organizations requested by the Seller to provide ratings of the Notes and the Certificates which are rating the Notes and Certificates on such date. "Rating Agency Condition" with respect to any action means, the condition that each Rating Agency shall have been given at least 10 days prior notice thereof and that each of the Rating Agencies shall have notified the Seller, the Servicer and the Issuer in writing that such action shall not result in a downgrade or withdrawal of the then current rating of the Notes or Certificates. "Record Date" with respect to any Distribution Date means the day immediately preceding the related Distribution Date or, in the event Definitive Securities have been issued, the last day of the month immediately preceding the month in which such Distribution Date occurs. "Redemption Date" means the Distribution Date specified by the Servicer or the Issuer pursuant to Section 10.1(a) or (b) of the Indenture, as applicable. "Relief Act Reduction" shall mean the reduction of the rate of interest payable on any Contract to a rate below the Contract Rate pursuant to the Soldiers' and Sailors' Civil Relief Act or the Military Reservist Relief Act. "Repurchased Contract" means, for any Due Period, a Contract which (i) CITSF purchased pursuant to Section 3.02 of the Sale and Servicing Agreement or (ii) the Servicer purchased pursuant to Section 4.07 of the Sale and Servicing Agreement, in each case, effective as of a date preceding such Due Period. "Required Cash Collateral Amount" means _____% of the sum of (i) the Pool Balance and (ii) the amount (excluding Investment Earnings) on deposit in the Pre-Funding Account, in each case, as of the first day of the related Due Period, but in no event less than $___________; provided, however, that if, with respect to any Distribution Date, (a) the average of the principal balance of Contracts 60 days or more delinquent (including Contracts relating to Financed Boats that have been repossessed) as a percentage of the Pool Balance for the three preceding Due Periods exceeds _____% or (b) the average of the principal balances of all Contracts which became Defaulted Contracts, less any Net Liquidation Proceeds on Defaulted Contracts, expressed as an annualized percentage of the average outstanding Pool Balance of the three preceding Due Periods exceeds _____%, then the Required Cash Collateral Amount with respect to such Distribution Date shall be _____% of the Pool Balance as of the first day of the related Due Period, but in no event (i) less than $___________ or (ii) greater than $___________; provided, further, however, that the Required Cash Collateral Amount may be reduced from time to time if the Rating Agencies shall have given prior written notice to the Seller, the Servicer and the Issuer that such reduction will not result in a downgrade or withdrawal of the then current rating of the Notes and the Certificates. "Responsible Officer" with respect to the Indenture Trustee or the Owner Trustee means, any officer within the Corporate Trust Office of such trustee, and, with respect to the Servicer, the President, any Vice President, Assistant Vice President, Secretary, Assistant Secretary or any other officer or assistant officer of such Person customarily performing functions similar to those performed by any of the above designated officers and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer's knowledge and familiarity with the particular subject. "Sale and Servicing Agreement" means the Sale and Servicing Agreement, dated as of ____________, ____, among the Seller, the Servicer and the Trust, as amended and supplemented from time to time. "Securities" means the Notes and the Certificates. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations thereunder. "Securityholders" means the Person in whose name a Note or Certificate is registered on the Note Register or the Certificate Register, as applicable. "Seller" means the Person executing the Sale and Servicing Agreement as the Seller, or any successor in interest to the Seller pursuant to the terms of the Sale and Servicing Agreement. "Service Transfer" has the meaning assigned in Section 9.01 of the Sale and Servicing Agreement. "Servicer" means the Person executing the Sale and Servicing Agreement as the Servicer, or any successor Servicer pursuant to a Service Transfer under the Sale and Servicing Agreement. "Servicer's Certificate" means a certificate, substantially in the form of Exhibit F to the Sale and Servicing Agreement, completed by and executed on behalf of the Servicer by a Servicing Officer in accordance with Section 4.09 of the Sale and Servicing Agreement. "Servicer's Errors and Omissions Protection Policy" means the errors and omissions policy maintained by the Servicer or any similar replacement policy, if any, pursuant to Section 4.14 of the Sale and Servicing Agreement. "Servicing Fee" means, as to any Distribution Date, the sum of (i) one-twelfth of the product of the Servicing Fee Rate and the Pool Balance as of the last day of the second preceding Due Period (or, in the case of the first Distribution Date, as of the Initial Cut-off Date) and (ii) any Investment Earnings on amounts on deposit in the Collection Account, the Note Distribution Account and the Certificate Distribution Account. "Servicing Fee Rate" means [1]%. "Servicing Officer" means any officer of the Servicer involved in, or responsible for, the administration and servicing of Contracts whose name appears on a list of servicing officers appearing in an Officers' Certificate furnished to the Trust by the Servicer, as the same may be amended from time to time. "Servicer Payment" with respect to a Distribution Date means, the sum of the Servicing Fee for such Distribution Date and the aggregate unpaid Servicing Fees for past Distribution Date. "Simple Interest Contract" means a Contract as to which interest is calculated each day on the basis of the actual principal balance outstanding on such day. "Soldiers' and Sailors' Civil Relief Act" means the Soldiers' and Sailors' Civil Relief Act of 1940, as amended. "Standard & Poor's" means Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc. and its successors in interest. "Stated Principal Balance" means, as of any Distribution Date, the unpaid principal balance of a Contract at the end of the related Due Period. "Subsequent Contracts" means one or more of the fixed-rate simple interest installment sale contracts described in the List of Subsequent Contracts, which constitute part of the corpus of the Trust, and which Contracts are to be assigned by the Company to the Trust; including, without limitation, all related security interests, collateral, liens, insurance policies and guarantees of the obligations of the related Obligor (other than guarantees, if any, by the related Dealer) and any and all rights to receive payments which are received pursuant thereto from and after the Subsequent Cut-off Date, but excluding any rights to receive payments which are received pursuant thereto prior to the Subsequent Cut-off Date. "Subsequent Cut-off Date" means the beginning of business on the first day of the month of the related Subsequent Transfer Date specified in a Subsequent Transfer Agreement with respect to those Subsequent Contracts which are transferred and assigned to the Trust pursuant to the related Subsequent Transfer Agreement. "Subsequent Cut-off Date Pool Principal Balance" means, as of any Subsequent Transfer Date, the sum of (i) the Initial Cut-off Date Principal Balance and (ii) the aggregate unpaid principal balances of the Subsequent Contracts to be sold on such Subsequent Transfer Date as of the related Subsequent Cut-off Date and (iii) if applicable, an amount calculated as provided in clause (ii) with respect to all Subsequent Transfer Dates, if any, occurring prior to such Subsequent Transfer Date. "Subsequent Cut-off Date Principal Balance" means the aggregate unpaid principal balance of all of the Subsequent Contracts transferred pursuant to a Subsequent Transfer Agreement, as of the related Subsequent Cut-off Date. "Subsequent Financed Boat" means a Financed Boat with regard to a Subsequent Contract. "Subsequent Purchase Agreement" means a Subsequent Purchase Agreement dated as of a Subsequent Cut-off Date between CITSF and the Company providing for the sale of Subsequent Contracts from CITSF to the Company and substantially in the form of Exhibit B to the Sale and Servicing Agreement. "Subsequent Transfer Agreement" means each Subsequent Transfer Agreement dated as of a Subsequent Transfer Date between the Trust and the Company substantially in the form of Exhibit C to the Sale and Servicing Agreement, by which Subsequent Contracts are sold and assigned to the Trust. "Subsequent Transfer Date" means the date specified in the related Subsequent Transfer Agreement. "Temporary Notes" means the Notes specified in Section 2.3 of the Indenture. "TIA" or "Trust Indenture Act" means The Trust Indenture Act of 1939 as in force on the date hereof, unless otherwise specifically provided. "Treasury Regulations" means any proposed, temporary or final regulation promulgated under the Code. "Trust" means CIT Marine Trust ____-_, a Delaware business trust created by the Trust Agreement between the Seller and the Owner Trustee. "Trust Estate" means all money, instruments, rights and other property that are subject or intended to be subject to the lien and security interest of the Indenture for the benefit of the Noteholders (including, without limitation, all property and interest Granted to the Indenture Trustee), including any proceeds thereof, but excluding the Excluded Assets. "Trust Indenture Act" or "TIA" means The Trust Indenture Act of 1939 as in force on the date hereof, unless otherwise specifically provided. "Trustees" means both the Indenture Trustee and the Owner Trustee. "UCC" means the Uniform Commercial Code as in effect in the relevant jurisdiction. ARTICLE II CONVEYANCE OF CONTRACTS; ACCEPTANCE BY TRUSTEE SECTION 2.01 Conveyance of the Initial Contracts. On the Closing Date, the Company shall sell, transfer, assign absolutely, set over and otherwise convey to the Trust by execution of an assignment substantially in the form of Exhibit D hereto, and the Trust shall purchase, (i) all the right, title and interest of the Company in and to the Initial Contracts and all the rights, benefits, and obligations arising from and in connection with each Initial Contract, (ii) the security interests in the Initial Financed Boats granted by the Obligors pursuant to the Initial Contracts, (iii) all payments received by the Company on or with respect to the Initial Contracts on or after the Initial Cut-off Date (exclusive of payments with respect to Post Cut-off Date Insurance Add-Ons), (iv) the interest of the Company in any Initial Financed Boat (including any right to receive future Net Liquidation Proceeds) that secures the Initial Contracts and that shall have been repossessed by the Servicer by or on behalf of the Trust; (v) all rights of the Company to proceeds of Insurance Policies covering the Obligors and the Initial Contracts, (vi) the proceeds from any Servicer's Errors and Omissions Protection Policy, any fidelity bond and any blanket hazard policy, to the extent such proceeds relate to any Initial Financed Boat, (vii) all rights of recourse against any cosigner or under any personal guarantee with respect to the Initial Contracts (other than any right as against a Dealer under a Dealer Agreement), (viii) all amounts held for the Trust in the Collection Account, (ix) all amounts held for the Trust in the Pre-Funding Account, (x) all amounts held for the Trust in the Capitalized Interest Account, (xi) all proceeds in any way derived from any of the foregoing items, and (xii) all documents contained or required to be contained in the Contract Files relating to the Initial Contracts. The parties intend and agree that the conveyance of the Company's right, title and interest in and to the Initial Contracts (and all rights, entitlements and amounts listed above) pursuant to this Agreement shall constitute an absolute sale. The Company hereby declares and covenants that it shall at no time have any legal, equitable or beneficial interest in, or any right, including without limitation any reversionary or offset right, to the Collection Account, the Pre-Funding Account, the Capitalized Interest Account and the Cash Collateral Account, and that, in the event it receives any of the same, it shall hold same in trust for the benefit of the Trust on behalf of the Securityholders and shall immediately endorse over to the Trust any such amount it receives. SECTION 2.02 Conveyance of the Subsequent Contracts. In consideration of the Owner Trustee's delivery on the related Subsequent Transfer Date to or upon the order of the Company of the purchase price for the Subsequent Contracts to be conveyed to the Trust on such date up to the balance of funds on deposit in the Pre-Funding Account on such related Subsequent Transfer Date, the Company shall sell, transfer, assign, set over and otherwise convey to the Trust by execution of an assignment substantially in the form of the Subsequent Transfer Agreement attached hereto as Exhibit C, and the Trust shall purchase, (i) all the right, title and interest of the Company in and to the Subsequent Contracts and all the rights, benefits, and obligations arising from and in connection with each Subsequent Contract, (ii) the security interests in the Subsequent Financed Boats granted by the Obligors pursuant to the Subsequent Contracts, (iii) all payments received by the Company on or with respect to the Subsequent Contracts on or after the Subsequent Cut-off Date (exclusive of payments with respect to Post Cut-off Date Insurance Add-Ons), (iv) the interest of the Company in any Subsequent Financed Boat (including any right to receive future Net Liquidation Proceeds) that secures the Subsequent Contracts and that shall have been repossessed by the Servicer by or on behalf of the Trust; (v) all rights of the Company to proceeds of Insurance Policies covering the Obligors and the Subsequent Contracts, (vi) the proceeds from any Servicer's Errors and Omissions Protection Policy, any fidelity bond and any blanket hazard policy, to the extent such proceeds relate to any Subsequent Financed Boat, (vii) all rights of recourse against any cosigner or under any personal guarantee with respect to the Subsequent Contracts (other than any right as against a Dealer under a Dealer Agreement), (viii) all proceeds in any way derived from any of the foregoing items, and (ix) all documents contained or required to be contained in the Contract Files relating to the Subsequent Contracts. The parties intend and agree that the conveyance of the Company's right, title and interest in and to the Subsequent Contracts pursuant to this Agreement shall constitute an absolute sale. The "purchase price" shall be one hundred percent (100%) of the aggregate principal amount outstanding on the Subsequent Contracts so transferred as of the related Subsequent Cut-off Date. SECTION 2.03 Acceptance by Owner Trustee. (a) On the Closing Date, the Owner Trustee shall deliver a certificate to the Company substantially in the form of Exhibit E hereto acknowledging conveyance of the Initial Contracts and Contract Files relating thereto to the Owner Trustee and declaring that the Owner Trustee, through the Servicer, as custodian, pursuant to Section 3.03 hereto, will hold all Contracts that have been delivered in trust, upon the trusts herein set forth, for the use and benefit of all Certificateholders and Noteholders, as their respective interests may appear, subject to the terms and provisions of this Agreement and the Basic Documents. (b) On any Subsequent Transfer Date, the Owner Trustee shall deliver a certificate to the Company substantially in the form of Exhibit E hereto acknowledging conveyance of the Subsequent Contracts and Contract Files relating thereto to the Owner Trustee and declaring that the Owner Trustee, through the Servicer, as custodian, pursuant to Section 3.04 hereto, will hold all Contracts that have been delivered in trust, upon the trusts herein set forth, for the use and benefit of all Certificateholders and Noteholders, as their respective interests may appear, subject to the terms and provisions of this Agreement and the Basic Documents. ARTICLE III REPRESENTATIONS AND WARRANTIES; THE CONTRACTS SECTION 3.01A Representations and Warranties Regarding Each Contract. The Initial Contracts have been sold by CITSF to the Company pursuant to the Purchase Agreement. Any Subsequent Contracts will be sold by CITSF to the Company pursuant to a Subsequent Purchase Agreement. In connection with such sales, CITSF made the representations and warranties in Sections 3.01A, 3.01B, 3.01C and 8.01 of this Agreement to the Company (such representations and warranties being incorporated in the Purchase Agreement and any Subsequent Purchase Agreement) and assumed the obligations in Section 3.02 of this Agreement. As a condition of the purchase by the Company, the Company has required that CITSF make such representations and warranties directly to the Trust and the Securityholders so that the Trust may recover directly against CITSF on such representations and warranties rather than indirectly through claims by the Company against CITSF. Consequently, CITSF represents and warrants to the Trust and the Securityholders as to each Initial Contract as of the Closing Date and as to each Subsequent Contract as of the related Subsequent Transfer Date (except as otherwise expressly stated): (a) List of Contracts. The information set forth in the List of Initial Contracts or the List of Subsequent Contracts, as applicable, is true and correct as of its date. (b) Payments. With respect to an Initial Contract, as of the Initial Cut-off Date, the payment of principal and interest for its Due Date next preceding the Cut-off Date was made by or on behalf of the Obligor (without any advance from CITSF or any Person acting at the request of CITSF) or was not delinquent for more than 30 days and, with respect to a Subsequent Contract, as of the related Subsequent Cut-off Date (or the date of origination, if later) the payment of principal and interest for its Due Date next preceding the related Subsequent Cut-off Date was made by or on behalf of the Obligor (without an advance from CITSF or any Person acting at the request of CITSF) or was not more than 30 days delinquent. (c) No Waivers. The terms of the Contract have not been waived, altered, amended or modified in any respect, except by instruments or documents identified in the Contract File with respect thereto, and no waiver, alteration, amendment or modification has caused such Contract to fail to meet any of the other representations and warranties made by CITSF with respect thereto. (d) Binding Obligation. The Contract is the legal, valid and binding obligation of the Obligor thereunder and is enforceable in accordance with its terms, except as such enforceability may be limited by laws affecting the enforcement of creditors' rights generally and equitable remedies. (e) No Defenses. No facts which give rise to any right of rescission, set-off, counterclaim or defense, including the defense of usury, by the Obligor, have been asserted with respect to the Contract. (f) Insurance. The Obligor on the Contract is required to maintain physical damage insurance covering the related Financed Boat in accordance with CITSF's normal requirements or, if not so covered, is covered by a blanket insurance policy maintained by CITSF. As of the Initial Cut-off Date, the Servicer has not obtained Force-Placed Insurance with respect to any Initial Contract and, as of any Subsequent Cut-off Date, the Servicer has not obtained Force-Placed Insurance with respect to any Subsequent Contract. (g) Origination. The Contract was originated by a Dealer in the United States of America and was purchased by CITSF or CITCF-NY in the ordinary course of its business. (h) Lawful Assignment. The Contract was not originated in and is not subject to the laws of any jurisdiction whose laws would make the transfer of the Contract to the Company under the Purchase Agreement in the case of an Initial Contract, or under a Subsequent Purchase Agreement in the case of a Subsequent Contract, the transfer of the Contract to the Trust under this Agreement in the case of an Initial Contract, or under a Subsequent Transfer Agreement in the case of a Subsequent Contract, or pursuant to transfers of Securities, or the ownership of the Contracts by the Trust, unlawful. (i) Compliance with Law. All requirements of any federal, state or local law, including, without limitation, usury, truth in lending and equal credit opportunity laws, applicable to the Contract have been complied with in all material respects and such compliance is not affected by the Trust's ownership of the Contracts, and CITSF shall for at least the period of this Agreement, maintain in its possession, available for the Trust's inspection, and shall deliver to the Trust upon demand, evidence of compliance with all such requirements. (j) Contract in Force. The Contract has not been satisfied or subordinated in whole or in part or rescinded, and the Financed Boat securing the Contract has not been released from the lien of the Contract in whole or in part. (k) Valid Security Interest. The Contract creates a valid and enforceable perfected first priority security interest in favor of CITSF, CITCF-NY or the Dealer which originated such Contract in the Financed Boat covered thereby as security for payment of the Initial Cut-off Date Principal Balance of such Contract in the case of an Initial Contract or the Subsequent Cut-off Date Principal Balance of such Contract in the case of a Subsequent Contract, which security interest (if in favor of CITCF-NY or the Dealer) has been validly and effectively assigned to CITSF. CITSF has assigned all of its right, title and interest in such Contract, including the security interest in the Financed Boat covered thereby, to the Company, and the Company has assigned all of its right, title and interest in such Contract and such Financed Boat to the Trust. (l) Notation of Security Interest. CITSF or CITCF-NY has taken all necessary action with respect to the Contract to perfect the security interest in the Financed Boat covered thereby in favor of CITSF or CITCF-NY. With respect to each Contract, if the related Financed Boat is located in a state in which notation of a security interest on the title document is required or permitted to perfect such security interest, the title document shows, or if a new or replacement title document with respect to such Financed Boat is being applied for such title document will be issued within 180 days and will show, CITSF or CITCF-NY as the holder of a first priority security interest in such Financed Boat; if the related Financed Boat is located in a state in which the filing of a financing statement under the UCC is required to perfect a security interest in a Boat, such filings or recordings have been duly made and show CITSF or CITCF-NY as secured party. (m) Capacity of Parties. All parties to the Contract had legal capacity to execute the Contract. (n) Good Title. CITSF or CITCF-NY purchased the Contract for fair value and took possession thereof in the ordinary course of its business, without knowledge that the Contract was subject to a security interest in favor of a third party. Neither CITSF, CITCF-NY nor the Company has sold, assigned or pledged the Contract to any person other than CITSF, the Company or the Trust, respectively. Prior to the transfer of the Contract by CITCF-NY to CITSF, CITSF to the Company and by the Company to the Trust, CITCF-NY, CITSF or the Company, respectively, had good and marketable title thereto free and clear of any encumbrance, equity, loan, pledge, charge, claim or security interest and was the sole owner thereof with full right to transfer the Contract to the Company and the Trust, respectively. The Company paid fair value to CITSF for the Contracts. Immediately upon the transfer thereof, the Trust for the benefit of the Securityholders shall acquire good and marketable title to each Contract free and clear of any encumbrance, equity, loan, pledge, charge, claim or security interest, and the transfer thereof shall have been perfected under applicable law. (o) No Defaults. As of the Initial Cut-off Date for each Initial Contract, and as of the related Subsequent Cut-off Date for each Subsequent Contract, there was no default, breach, violation or event permitting acceleration existing under the Contract and no event which, with notice and the expiration of any grace or cure period, would constitute such a default, breach, violation or event permitting acceleration under such Contract (except payment delinquencies permitted by clause (b) above). Neither CITCF-NY nor CITSF has waived any such default, breach, violation or event permitting acceleration except payment delinquencies permitted by clause (b) above. (p) No Liens. As of the Closing Date for each Initial Contract, and as of the related Subsequent Transfer Date for each Subsequent Contract, there are, to the best of CITSF's knowledge, no liens or claims which have been filed for work, labor or materials affecting the Financed Boat securing the Contract which are or may be liens prior to, or equal or coordinate with, the lien of the Contract. (q) Equal Installments. The Contract is a Simple Interest Contract and provides for level monthly payments which provide interest at the stated Contract Rate and, if paid in accordance with its schedule, fully amortize the loan over its original term. (r) Enforceability. The Contract contains customary and enforceable provisions such as to render the rights and remedies of the holder thereof adequate for the realization against the collateral of the benefits of the security, except as enforceability of such provisions may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and by the availability of equitable remedies. (s) Obligor Not a Governmental Entity. The Obligor on the Contract is not the United States of America or any state or any agency, department, instrumentality or political subdivision thereof. (t) Obligor Not Subject to Bankruptcy Proceedings. The Obligor on the Contract was not in a bankruptcy proceeding as of the Initial Cut-off Date for each Initial Contract or as of the related Subsequent Cut-off Date for each Subsequent Contract. (u) No Repossession. As of the Initial Cut-off Date for each Initial Contract, or as of the related Subsequent Cut-off Date for each Subsequent Contract, the Financed Boat which secured the Contract has not been repossessed without reinstatement. (v) Obligor Not a Relief Act Obligor. If (i) the Obligor on the Contract is in the military (including an Obligor who is a member of the National Guard or is in the reserves) and (ii) the Contract is subject to the Soldiers' and Sailors' Civil Relief Act or the Military Reservist Relief Act, such Obligor has not made a claim to CITSF that (i) the amount of interest on the related Contract should be limited to 6% pursuant to the Soldiers' and Sailors' Civil Relief Act during the period of such Obligor's active duty status, or (ii) payments on such Contract should be delayed pursuant to the Military Reservist Relief Act, in either case, unless a court has ordered otherwise upon application of CITSF. (w) Only One Original. There is only one original executed copy of the Contract, which, immediately prior to the execution of the Agreement, was in the possession of CITSF. (x) Contract is Chattel Paper. The Contract is "chattel paper" as defined in the New Jersey UCC. (y) Selection Criteria. As of the Initial Cut-off Date for each Initial Contract, or as of the related Subsequent Cut-off Date for each Subsequent Contract, the Contract satisfies the eligibility criteria discussed in the Prospectus for the Securities under the heading "The Contract Pool-General". SECTION 3.01B Representations and Warranties Regarding the Contracts in the Aggregate. CITSF represents and warrants to the Trust and the Securityholders, that: (a) Amounts. The aggregate principal amounts payable by Obligors under the Initial Contracts as of the Initial Cut-off Date equal the Initial Cut-off Date Principal Balance. (b) Characteristics. The Contracts have the following characteristics as of the Initial Cut-off Date: (i) each Contract is secured by a Financed Boat which is a new or used Boat; (ii) each Initial Contract has a fixed Contract Rate, which is equal to or greater than _____%; (iii) the remaining maturity of each Initial Contract is at least __ months, but not more than __ months; (iv) the original maturity of each Initial Contract was at least __ months, but not more than __ months; (v) the weighted average remaining term to stated maturity of each Initial Contract was at least __ months; (vi) the weighted average Contract Rate of the Initial Contracts was _____%; (vii) the final scheduled payment dates on the Initial Contracts range from ____________, ____ to ____________, ____; (viii) the average remaining principal balance of the Initial Contracts per contract was $___________; (ix) the outstanding principal balances of the Initial Contracts ranged from $___________ to $___________; (x) each of the Initial Contracts was first entered onto the Servicer's or CITCF-NY's servicing system (which, typically, represents the date on which CITSF or CITCF-NY funds the purchase of such Contracts from Dealers) between ____________, ____ and ____________, ____; (xi) not more than _____% of the Contracts by Initial Cut-off Date Principal Balance are located in any one state, as determined by information provided by Obligors in their credit applications (except Contracts secured by Financed Boats located in __________, __________, and __________, which represent approximately _____%, _____%, and _____%, respectively, of the Initial Cut-off Date Principal Balance) ; (xii) not more than _____% of the Contracts, by Initial Cut-off Date Principal Balance, have credit scores below ___; and (xiii) at least _____% of the Contracts, based on Initial Cut-off Date Principal Balance, involved new Financed Boats at origination. (c) Computer Tape. As of Closing Date, in the case of the Initial Contracts, and as of the related Subsequent Transfer Date, in the case of any Subsequent Contracts, the Computer Tape made available by the Servicer was complete and accurate as of its date and includes a description of the same Contracts that are described in the List of Initial Contracts or the applicable List of Subsequent Contracts, as the case may be. (d) Marking Records. By the Closing Date in the case of the Initial Contracts or by the related Subsequent Transfer Date in the case of the Subsequent Contracts, CITSF has caused the portions of the Electronic Ledger relating to the Contracts constituting part of the Trust to be clearly and unambiguously marked to indicate that such Contracts constitute part of the Trust and are owned by the Trust in accordance with the terms of the trust created hereunder. (e) No Adverse Selection. No adverse selection procedures have been employed in selecting the Contracts from the marine installment sale contracts owned by CITSF which were purchased by CITSF from CITCF-NY or Dealers, except that CITSF did not select any such contract which would cause a breach of any representation or warranty of CITSF contained in this Agreement that would materially adversely affect the Trust's interest in such Contract. SECTION 3.01C Representations and Warranties Regarding the Contract Files. CITSF represents and warrants to the Trust and the Securityholders that: (a) Possession. Immediately prior to the Closing Date in the case of the Initial Contracts, or the Subsequent Transfer Date in the case of the Subsequent Contracts, CITSF will have possession of each original Contract and the related Contract File, and there are and there will be no custodial agreements in effect materially and adversely affecting the right of CITSF to make, or to cause to be made, any delivery required in connection with the conveyance of the Contracts to the Company or from the Company to the Trust. (b) Bulk Transfer Laws. The transfer, assignment and conveyance of the Contracts and the Contract Files from CITSF to the Company and from the Company to the Trust are not subject to the bulk transfer or any similar statutory provisions in effect in any applicable jurisdiction. SECTION 3.01D Conditions of Closing for the Subsequent Contracts. On or before the transfer of any Subsequent Contracts on the related Subsequent Transfer Date, the following conditions shall have been satisfied: (a) The Servicer shall have provided the Rating Agencies and the Trustees with notice, at least 2 Business Days prior to the Subsequent Transfer Date, of the Subsequent Contracts to be sold and the aggregate principal balance thereof; (b) The Servicer shall have delivered to the Trustees a duly executed Subsequent Transfer Agreement; (c) The Funding Period shall not have terminated; (d) The Servicer shall have delivered to the Trustees an Officer's Certificate confirming the satisfaction of each condition precedent specified in this Section 3.01D and in the related Subsequent Transfer Agreement; (e) The Company shall have delivered to the Trustees an Assignment in the form of Exhibit D and the Opinion of Counsel required by the related Subsequent Purchase Agreement; (f) The Company shall have delivered an Officers' Certificate to each Trustee and each Rating Agency certifying that immediately following the transfer of such Subsequent Contracts to the Trust that none of the following would occur: (i) the weighted average Contract Rate of the Contracts based on the Subsequent Cut-off Date Pool Principal Balance would be less than _____%, (ii) less than _____% of the Contracts by Subsequent Cut-off Date Pool Principal Balance would be attributable to loans to purchase new Boats at the time the related Contract was originated, (iii) the weighted average remaining term to maturity of the Contracts based on the Subsequent Cut-off Date Pool Principal Balance would be more than __ months and (iv) more than _____% of the Contracts based on the Subsequent Cut-off Date Pool Principal Balance would have a credit score of less than ___. In addition, all of such Subsequent Contracts must (i) be secured by Boats with Obligors having mailing addresses in the United States at the time of origination, (ii) have a Due Date in the month of the Subsequent Cut-off Date with respect to such Subsequent Contract and not constitute a Paid-Ahead Contract, (iii) have a final scheduled payment date of no later than ____________, 20__; (iv) satisfy the representations and warranties specified in this Agreement, (v) not be selected by either CIT or the Seller in a manner that it believes is adverse to the interest of the Securityholders, (vi) have a Contract Rate of at least _____%, (vii) provide for level monthly payment which provide interest at the related Contract Rate and, if paid in accordance with its schedule, fully amortizes the amount financed over an original term of no greater than ___ months, (viii) as of the related Subsequent Cut-off Date, the most recent scheduled payment of principal and interest on each Subsequent Contract had been made by or on behalf of the related Obligor or not have been delinquent more than 30 days, (ix) no Subsequent Boat will have been repossessed without reinstatement as of the related Subsequent Cut-off Date, (x) as of the related Subsequent Cut-Off Date, no Obligor on any Contract will be the subject of a bankruptcy proceeding, (xi) as of the related Subsequent Cut-off Date, each Subsequent Contract will have a remaining principal balance of not less than $___________ and not more than $___________, and (xii) satisfy such other requirements as the Rating Agencies shall request; (g) The Servicer shall have delivered to the Trustees the relevant List of Subsequent Contracts; (h) The Servicer shall have delivered an Officers' Certificate to the Trustees substantially in the form of Exhibit I hereto; (i) The Servicer shall have delivered to the Trustees evidence of filing with the appropriate office in the following jurisdictions of the following UCC-1 Financing Statements, each listing the relevant Subsequent Contracts as required by Article 9 of the UCC: (i) UCC-1 Financing Statements executed by CITSF as debtor, naming the Company as Secured Party and filed in New Jersey and Oklahoma to perfect the sale from CITSF to the Company, (ii) UCC-1 Financing Statements executed by the Company as debtor naming the Trust as secured party and filed in New Jersey and Oklahoma to perfect the sale from the Company to the Trust, and (iii) UCC-1 Financing Statements executed by the Trust as debtor, naming the Indenture Trustee as secured party and filed in New Jersey, Oklahoma and Delaware; (j) The Servicer shall have delivered an Officers' Certificate to the Trustees stating that the Servicer has reviewed each such Subsequent Contract and the Contract File with respect thereto, and confirming that each such Subsequent Contract and the Contract File with respect thereto conforms in all material respects to the relevant List of Subsequent Contracts, that each Contract File with respect to such Subsequent Contract is complete in all material respects, and that each Boat securing any such Subsequent Contract is covered by a Hazard Insurance Policy as required by this Agreement; (k) The Servicer shall have delivered an Officers' Certificate to the Trustees stating that all funds received with respect to such Subsequent Contract on and after the relevant Subsequent Cut-off Date through the Subsequent Transfer Date have been deposited in the Collection Account; (l) The Servicer shall have delivered an Officers' Certificate to the Trustees stating that the Servicer has accepted delivery of such Subsequent Contracts and the Contract Files with respect to such Subsequent Contracts and will hold such Subsequent Contracts and Contract Files as custodian on behalf of the Trustees for the benefit of the Trust as provided herein; (m) The Servicer shall have delivered to the Trustees one or more Opinions of Counsel, either (1) stating that, in the opinion of such counsel, all financing statements and continuation statements have been executed and filed that are necessary fully to preserve and protect the interest of the Trustees in the Contracts, and reciting the details of such filings or referring to prior Opinions of Counsel in which such details are given, or (2) stating that, in the opinion of such counsel, no such action shall be necessary to preserve and protect such interest; it being understood that the opinions on perfection delivered by counsel on the Closing Date, if delivered on the Subsequent Transfer Date as to the Subsequent Contracts, shall satisfy the foregoing requirement; and (n) The Seller and the Trustees shall not have been advised by either Rating Agency that the conveyance of such Subsequent Contracts will result in a qualification, modification or withdrawal of its then current rating of either the Notes or the Certificates. SECTION 3.02 Repurchase of Contracts for Breach of Representations and Warranties. (a) Subject to Section 3.02(b), CITSF shall repurchase a Contract, at its Purchase Price, not later than 85 days after CITSF receives written notice from either the Trustees or the Servicer, or not later than 90 days after CITSF otherwise becomes aware, of a breach of any representation or warranty of CITSF set forth in Section 3.01A or 3.01B of this Agreement that materially and adversely affects the Trust's interest in such Contract and which breach has not been cured. CITSF shall effect such repurchase by paying to the Servicer for deposit in the Collection Account on the Deposit Date in the month following the month in which the loan was repurchased the aggregate of the Purchase Price of all Contracts that are required to be repurchased pursuant to the preceding sentence. With respect to any Contract incorrectly described on the List of Initial Contracts or any List of Subsequent Contracts, as the case may be, only with respect to remaining unpaid principal balance, which CITSF would otherwise be required to repurchase pursuant to this Section 3.02, CITSF may, in lieu of repurchasing such Contract, deposit in the Collection Account, not later than one Business Day after the first Determination Date which is more than 90 days after CITSF becomes aware or receives written notice from the Trustees or the Servicer of such incorrect description, cash in an amount sufficient to cure such deficiency or discrepancy. CITSF shall send written notice of any such cash deposit to the Rating Agencies as promptly as possible following such deposit. Notwithstanding any other provision of the Agreement, the obligation of CITSF under this Section 3.02 shall not terminate upon a Service Transfer pursuant to Article VII. (b) Promptly after any repurchase referred to in Section 3.02(a), the Trust shall execute such documents as are presented to it by CITSF and are reasonably necessary to reconvey the Repurchased Contract to CITSF. (c) The repurchase obligation of CITSF set forth in this Section 3.02 shall constitute the sole remedy available to the Trust and the Securityholders for a breach of representation and warranty hereunder with respect to the Contracts (but not with respect to any other breach by CITSF of its obligations hereunder, as set forth herein). SECTION 3.03 Custody of Contract Files. To assure uniform quality in servicing the Contracts and to reduce administrative costs, the Trust, upon the execution and delivery of this Agreement, revocably appoints the Servicer, and the Servicer accepts such appointment, to act as the agent of the Trust and as custodian of the Contract File with respect to each Contract, each of which are hereby constructively delivered to the Trust. SECTION 3.04 Duties of Servicer as Custodian. (a) Safekeeping. The Servicer, in its capacity as custodian, shall hold the Contract Files on behalf of the Trust for the use and benefit of the Trust and maintain such accurate and complete accounts, records and computer systems pertaining to the Contracts as shall enable the Owner Trustee and the Indenture Trustee to comply with its obligations pursuant to this Agreement and the Basic Documents. As custodian, the Servicer shall have and perform the following powers and duties: (i) hold the Contract Files on behalf of the Trust, maintain accurate records pertaining to each Contract to enable it to comply with the terms and conditions of this Agreement, maintain a current inventory thereof, conduct annual physical inspections of Contract Files held by it under this Agreement and certify to the Trust annually that it continues to maintain possession of such Contract Files; (ii) implement policies and procedures in writing and signed by a Servicing Officer, with respect to persons authorized to have access to the Contract Files on the Servicer's premises and the receipting for Contract Files taken from their storage area by an employee of the Servicer for purposes of servicing or any other purposes; and (iii) attend to all details in connection with maintaining custody of the Contract Files on behalf of the Trust. In performing its duties under this Section 3.04, the Servicer agrees to act with reasonable care, consistent with the same degree of skill and care that it exercises with respect to similar contracts serviced by it for its own account. The Servicer shall promptly report to the Trust in writing any failure by it to hold the Contract Files as herein provided and shall promptly take appropriate action to remedy any such failure. In acting as custodian of the Contract Files, the Servicer agrees further not to assert any beneficial ownership interests in the Contracts or the Contract Files. The Servicer agrees to indemnify the Trust, the Certificateholders, the Noteholders, the Owner Trustee and the Indenture Trustee for any and all liabilities, obligations, losses, damages, payments, costs, or expense of any kind whatsoever which may be imposed on, incurred or asserted against the Trust, the Certificateholders, the Noteholders, the Owner Trustee and the Indenture Trustee as the result of any act or omission by the Servicer relating to the maintenance and custody of the Contract Files; provided, however, that the Servicer will not be liable for any portion of any such amount resulting from the negligence or willful misconduct of the Trust, the Certificateholders, the Noteholders, the Owner Trustee or the Indenture Trustee. (b) Maintenance of and Access to Records. The Servicer, in its capacity as custodian, agrees to maintain the Contract Files at its office in the State of Oklahoma, or at such of its offices as shall from time to time be identified to the Trust by written notice. The Servicer, in its capacity as custodian, may temporarily move individual Contract Files or any portion thereof without notice as necessary to conduct collection and other servicing activities in accordance with its customary practices and procedures, but shall promptly return such Contract File as soon as practicable after it is no longer needed for such purpose. The Servicer, in its capacity as custodian, shall make available to the Trust or its duly authorized representatives, attorneys or auditors the Contract Files and the related accounts, records and computer systems maintained by the Servicer at such times during normal operating hours as the Trust shall reasonably instruct which does not unreasonably interfere with the Servicer's normal operations or customer or employee relations. (c) Release of Documents. Upon instruction from the Trust, the Servicer, in its capacity as custodian, shall release or cause to be released any document in the Contract Files to the Trust, the Trust's agent or the Trust's designee, as the case may be, at such place or places as the Trust may designate, as soon as practicable. The Servicer, in its capacity as custodian, shall not be responsible for any loss occasioned by the failure of the Trust, its agent or its designee to return any document or any delay in doing so. SECTION 3.05 Instructions; Authority to Act. The Servicer shall be deemed to have received proper instructions from either of the Trustees with respect to the Contract Files upon its receipt of written instructions signed by a Responsible Officer. A certified copy of a by-law or of a resolution of the Board of Directors of the Owner Trustee or the Indenture Trustee, as applicable, shall constitute conclusive evidence of the authority of any such Responsible Officer to act and shall be considered in full force and effect until receipt by the Servicer of written notice to the contrary given by the Trust. SECTION 3.06 Effective Period and Termination. The Servicer's appointment as custodian shall become effective as of the Closing Date and shall continue in full force and effect until terminated pursuant to this Section 3.06 or until this Agreement shall be terminated. The Servicer may perform its duties as custodian through one or more agents, which agents may maintain physical possession of Contract Files as agent for the Servicer acting as custodian. If the Servicer shall resign as Servicer under Section 8.05 or if all of the rights and obligations of the Servicer shall have been terminated under Section 9.01, the appointment of the Servicer as custodian may be terminated by the Indenture Trustee or by the Holders of Notes evidencing not less than a majority of the aggregate outstanding principal balance of the Notes as of the close of the preceding Distribution Date (or, if the Notes have been paid in full and the Indenture has been discharged in accordance with its terms, by the Owner Trustee or by the Holders of Certificates evidencing not less than a majority of the Certificate Balance as of the close of the preceding Distribution Date), in the same manner as rights and obligations of the Servicer may be terminated under Section 9.01. The Trust may terminate the Servicer's appointment as custodian at any time with cause upon written notification to the Servicer. As soon as practicable after any termination of such appointment, the Servicer shall deliver the Contract Files to the Trust or the Trust's agent at such place or places as the Trust may reasonably designate. The Servicer shall cooperate with the Trust in making the transfer and shall bear all of the Servicer's costs and expenses with respect to such transfer, but the Trust shall bear the actual costs and expenses of packing and transporting the Contract Files to the location designated by the Trust. Notwithstanding the termination of the Servicer as custodian, the Trust agrees that upon any such termination, the Trust shall provide, or cause its agent to provide, access to the Contract Files to the Servicer for the purpose of carrying out its duties and responsibilities with respect to the servicing of the Contracts hereunder. ARTICLE IV ADMINISTRATION AND SERVICING OF CONTRACTS SECTION 4.01 Duties of Servicer. (a) The Servicer, as agent for the Trust, shall manage, administer, service and make collections on the Contracts and perform or cause to be performed all contractual and customary undertakings of the holder of the Contracts to the Obligor. The Trust, at the request of a Servicing Officer, shall furnish the Servicer with any reasonable documents or take any action reasonably requested, necessary or appropriate to enable the Servicer to carry out its servicing and administrative duties hereunder. (b) In managing, administering, servicing and making collections on the Contracts pursuant to this Agreement, the Servicer will exercise the same degree of skill and care that the Servicer exercises with respect to similar contracts serviced by the Servicer for its own account. (c) The Servicer may enter into subservicing agreements with one or more subservicers (which shall be Eligible Servicers) for the servicing and administration of certain of the Contracts. References in this Agreement to actions taken, to be taken, permitted to be taken, or restrictions on actions permitted to be taken, by the Servicer in servicing the Contracts shall include actions taken, to be taken, permitted to be taken, or restrictions on actions permitted to be taken, by a subservicer on behalf of the Servicer. Each subservicing agreement will be upon such terms and conditions as are not inconsistent with this Agreement and the standard of care set forth herein and as the Servicer and the subservicer have agreed. All compensation payable to a subservicer under a subservicing agreement shall be payable by the Servicer from its servicing compensation or otherwise from its own funds, and none of the Trust, the Owner Trustee, the Indenture Trustee, the Certificateholders or the Noteholders will have any liability to the subservicer with respect thereto. Notwithstanding any subservicing agreement or any of the provisions of this Agreement relating to agreements or any arrangements between the Servicer or a subservicer or any reference to actions taken through such Persons or otherwise, the Servicer shall remain obligated and liable to the Trust, the Owner Trustee, the Indenture Trustee, the Certificateholders and the Noteholders for the servicing and administering of the Contracts and the other Trust property in accordance with the provisions of this Agreement without diminution of such obligation or liability by virtue of such subservicing agreements. Any subservicing agreement that may be entered into and any other transactions or servicing arrangements relating to the Contracts and the other Trust property involving a subservicer in its capacity as such and shall be deemed to be between the subservicer and the Servicer alone, and the Owner Trustee, the Indenture Trustee, the Certificateholders and the Noteholders shall not be deemed parties thereto and shall have no claims, rights, obligations, duties or liabilities with respect to the subservicer except as set forth in the next succeeding paragraph. In the event the Servicer shall for any reason no longer be acting as such, the successor Servicer may, in its discretion, thereupon assume all of the rights and obligations of the outgoing Servicer under a subservicing agreement. In such event, the successor Servicer shall be deemed to have assumed all of the Servicer's interest therein and to have replaced the outgoing Servicer as a party to each such subservicing agreement to the same extent as if such subservicing agreement had been assigned to the successor Servicer, except that the outgoing Servicer shall not thereby be relieved of any liability or obligations on the part of the outgoing Servicer to the subservicer under such subservicing agreement. The outgoing Servicer shall, upon request of the Trust, but at the expense of the outgoing Servicer, deliver to the successor Servicer all documents and records relating to each such subservicing agreement and the Contracts and other Trust property then being serviced thereunder and an accounting of amount collected and held by it and otherwise use its best efforts to effect the orderly and efficient transfer of any subservicing agreement to the successor Servicer. In the event that the successor Servicer elects not to assume a subservicing agreement, the outgoing Servicer, at its expense, shall cause the subservicer to deliver to the successor Servicer all documents and records relating to the Contracts and the other Trust property being serviced thereunder and all amounts held (or thereafter received) by such subservicer (together with an accounting of such amounts) and shall otherwise use its best efforts to effect the orderly and efficient transfer of servicing of the Contracts and the other Trust property being serviced by such subservicer to the successor Servicer. (d) The Servicer's duties shall include collection and posting of all payments, responding to inquiries by Obligors or by federal, state or local governmental authorities with respect to the Contracts, investigating delinquencies, reporting tax information to Obligors, administering and enforcing Insurance Policies in accordance with its customary practices, accounting for collections, furnishing monthly and annual statements to the Trust with respect to distributions, and making Monthly Advances pursuant to Section 5.03 hereof. The Servicer shall be authorized and empowered by the Trust to execute and deliver, on behalf of itself, the Trust, the Owner Trustee, the Indenture Trustee, the Certificateholders, the Noteholders, or any of them, any and all instruments of satisfaction or cancellation, or of partial or full release or discharge, and all other comparable instruments, with respect to the Contracts or with respect to the Financed Boats. Upon written request of the Servicer and receipt by the Trust of an Officer's Certificate setting forth the facts underlying such request, the Trust shall furnish the Servicer with any limited powers of attorney and other documents necessary or appropriate to enable the Servicer to carry out its servicing and administrative duties hereunder and the Trust shall not be held liable for such actions of the Servicer thereunder. SECTION 4.02 Collection of Contract Payments. The Servicer shall make reasonable efforts to collect all payments called for under the terms and provisions of the Contracts as and when the same shall become due, and in connection therewith shall follow such collection procedures as it follows with respect to comparable new or used marine installment sale contracts that it services for itself and others. The Servicer shall not reduce scheduled payments, extend any Contract or otherwise modify the terms of any Contract; provided, however, that, consistent with its normal procedures, the Servicer may extend or modify the payment schedule of any Contract for credit related reasons that would be acceptable to the Servicer with respect to comparable new or used Boats that it services for itself or others, if (a) the maturity of such Contract would not be extended beyond the 180th day prior to the Class A Final Scheduled Distribution Date and (b) the reducing, rescheduling, extension or other modification of the terms of the Contract would not constitute a cancellation of such Contract and the creation of a new installment sale contract. If, as a result of rescheduling or extending of payments or any other modification, such rescheduling, extension or modification breaches any of the terms of the preceding sentence, then the Servicer shall be obligated to purchase such Contract pursuant to Section 4.07 hereof as of the last day of the Due Period on which it became aware or receives written notice from the Trust of such failure. The Servicer may, in accordance with its customary standards, policies and procedures, in its discretion waive any Late Fees that may be collected in the ordinary course of servicing a Contract. SECTION 4.03 Realization Upon Contracts. (a) The Servicer will, consistent with customary servicing procedures and the terms of this Agreement, act with respect to the Contracts in such manner as will maximize the receipt of principal and interest on the Contracts and Net Liquidation Proceeds in respect of Defaulted Contracts. Notwithstanding the standard of care specified in Section 4.01 hereof, the Servicer shall commence procedures for the repossession of any Financed Boat or take such other steps that in the Servicer's reasonable judgment will maximize the receipt of principal and interest or Net Liquidation Proceeds with respect to the Contract secured by such Financed Boat, including, without limitation, selling such Financed Boat at a public or private sale, subject to the requirements of the applicable state and federal law. In connection with such repossession or foreclosure, the Servicer shall follow such practices and procedures as it shall deem necessary or advisable and as shall be consistent with Section 4.01 hereof. In the event that title to any Financed Boat is acquired in foreclosure or by conveyance in lieu of foreclosure, the deed or certificate of sale shall be issued to the Trust, or, at its election, to its nominee on behalf of the Trust. (b) The Servicer shall be entitled to recover all reasonable fees of third parties and expenses incurred by it in the course of converting any Financed Boat into cash proceeds including, without limitation, expenses relating to recovery and repossession of such Financed Boats, from liquidation proceeds with respect to such Financed Boat. The Net Liquidation Proceeds realized in connection with any such action with respect to a Contract shall be deposited by the Servicer in the Collection Account in the manner specified in Section 5.02 hereof and shall be applied to reduce (or to satisfy, as the case may be) the Purchase Price of the Contract, if such Contract is to be purchased by CITSF pursuant to Section 3.02 hereof, is to be purchased by the Servicer pursuant to Section 4.07 hereof, or is to be purchased by CITSF pursuant to Section 11.02 hereof. The foregoing shall be subject to the provision that, in any case in which the Financed Boat shall have suffered damage, the Servicer shall not expend funds in connection with the repair or the repossession of such Financed Boat unless it shall determine in its sole discretion that such repair and/or repossession will increase the Net Liquidation Proceeds of the related Contract by an amount equal to or greater than the amount of such expenses. (c) The Servicer may sue to enforce or collect upon Contracts, including foreclosure of any security interest on a Financed Boat, in its own name, if possible, or as agent for the Trust. If the Servicer elects to commence a legal proceeding to enforce a Contract or any Insurance Policy in respect thereof, the act of commencement shall be deemed to be an automatic assignment of the Contract to the Servicer for purposes of collection only. If, however, in any enforcement suit or legal proceeding it is held that the Servicer may not enforce a Contract on the ground that it is not a real party in interest or a holder entitled to enforce the Contract, the Trust shall, at the Servicer's expense, take such steps as the Servicer deems necessary to enforce the Contract, including bringing suit in its name or the names of the Securityholders. (d) Prior to a Service Transfer, the Servicer may grant to the Obligor on any Contract any rebate, refund or adjustment out of the Collection Account that the Servicer in good faith believes is required because of Principal Prepayment in Full. The Servicer will not permit any rescission or cancellation of any Contract. (e) The Servicer may enforce any due-on-sale clause in a Contract if such enforcement is called for under its then current servicing policies for obligations similar to the Contracts, provided that such enforcement is permitted by applicable law and will not adversely affect any applicable insurance policy. SECTION 4.04 Physical Damage Insurance. (a) The Servicer, in accordance with its customary servicing procedures, shall require that each Obligor shall have obtained and shall maintain physical damage insurance covering the Financed Boat, provided that such insurance shall be in an amount no greater than the outstanding principal balance of the related Contract or, if such insurance also covers the interest of the related Obligor in the Financed Boat, no greater than the greater of the outstanding principal balance of the related Contract and the value of the Financed Boat, or such lesser amount permitted by applicable law. The Servicer shall enforce its rights under the Contracts to require the Obligors to maintain physical damage insurance, in accordance with the Servicer's customary practices and procedures with respect to comparable new or used marine installment sale contracts that it services for itself or others. If an Obligor fails to maintain such insurance, the Servicer shall obtain and advance on behalf of such Obligor, as required under the terms of the applicable Contract and this Agreement, the premiums for such insurance, with uninsured physical damage loan insurance endorsements, each insurance policy naming the Servicer as an additional insured and loss payee, and issued by an insurer having a rating of "A" or better by A.M. Best (such insurance being referred to herein as "Force-Placed Insurance"). Such Force-Placed Insurance and any commissions or finance charges collected by the Servicer in connection therewith shall be, to the extent permitted by law, in an amount in accordance with customary servicing procedures, but in no event in an amount greater than the outstanding principal balance of the related Contract or, if such insurance also covers the interest of the related Obligor in the Financed Boat, no greater than the greater of the outstanding principal balance of the related Contract and the value of the Financed Boat, or such lesser amount permitted by applicable law and the Servicer shall disclose to the related Obligor all information with respect to such Force-Placed Insurance, commissions and finance charges as required by applicable law. The Servicer does not, under its customary servicing procedures, require Force-Placed Insurance when the principal balance of the related retail installment sale contract or installment loan falls below the level or levels periodically established in accordance with such customary servicing procedures. In accordance with such customary servicing procedures, the Servicer may periodically readjust such levels, suspend Force-Placed Insurance or arrange other methods of protection of the Financed Boats that it deems necessary or advisable, provided that the Servicer determines that such actions do not materially and adversely affect the interests of the Certificateholders or the Noteholders. Any portion of the principal balance of a Contract consisting of Post Cut-off Date Insurance Add-Ons will not be owned by the Trust, and amounts allocable thereto will not be available for distribution on the Securities. Unless otherwise designated by the Obligor, the Servicer will not allocate payments to Post Cut-off Date Insurance Add-Ons if any amount of principal or interest is due but unpaid on the Contracts. The Servicer shall not deposit payments posted with respect to Post Cut-off Date Insurance Add-Ons in the Collection Account and shall instead promptly pay such amounts to an account of the Servicer maintained for that purpose. In the event that an Obligor under a Contract with respect to which the Servicer has advanced funds to obtain Force-Placed Insurance makes scheduled payments under the Contract, but has failed to make scheduled payments of such Post Cut-off Date Insurance Add-Ons as due, and the Servicer has determined that eventual payment of such amount is unlikely, the Servicer may, but shall not be required to, take any action available to it, including determining that the related Contract is a Defaulted Contract; provided, however, that any Net Liquidation Proceeds with respect to such Contract shall be applied first to the accrued and unpaid interest at the Contract Rate, then to the principal amount outstanding, and the remainder, if any, to the Post Cut-off Date Insurance Add-Ons. (b) The Servicer may, in lieu of causing individual Insurance Policies to be maintained with respect to each Financed Boat pursuant to subsection (a) of this Section 4.04 maintain one or more blanket insurance policies covering losses on the Obligor's interest in the Contracts resulting from the absence or insufficiency of individual Insurance Policies. To the extent that the Obligor's individual insurance policy does not cover theft of the Financed Boat (to the extent required under the Servicer's customary practices and procedures with respect to comparable new or used marine installment sale contracts that it services for itself or others), the Servicer shall Force-Place Insurance, which may be obtained pursuant to one or more blanket insurance policies covering theft and other risks. The proceeds of any such blanket insurance policies relating to the Contracts shall be deposited in the Collection Account as collections on the Contracts in accordance with the provisions of Article V hereof. Any such blanket policy shall be substantially in the form and in the amount carried by the Servicer as of the date of this Agreement. The Servicer shall pay the premium for such policy on the basis described therein. The Servicer shall not, however, be required to deposit any deductible amount with respect to (a) claims under individual Hazard Insurance Policies maintained pursuant to subsection (a) of this Section 4.04, or (b) claims under any blanket insurance policy. If the insurer under such blanket insurance policy shall cease to be acceptable to the Servicer, the Servicer shall exercise its best reasonable efforts to obtain from another insurer a replacement policy comparable to such policy. The Servicer shall provide each Rating Agency with notice of the occurrence of any event specified in the preceding sentence. SECTION 4.05 Maintenance of Security Interests in Financed Boats; Retitling. (a) The Servicer, in accordance with its customary servicing procedures, shall take such steps as are necessary to maintain perfection of the security interest created by each Contract in the related Financed Boat in favor of CITSF or CITCF-NY. The Servicer hereby agrees to take such steps as are necessary to re-perfect such security interest in the name of CITSF or CITCF-NY in the event of the relocation of a Financed Boat to a jurisdiction other than the jurisdiction in which steps had been taken to perfect the security interest in favor of CITSF or CITCF-NY. In the event that the assignment of the Contract to the Trust is insufficient without a notation on the related Financed Boat's certificate of title, to grant to the Trust a perfected security interest in the related Financed Boat, CITSF or CITCF-NY hereby agrees to serve as the Trust's agent for the purpose of perfecting the security interest in such Financed Boat and that CITSF's or CITCF-NY's listing as the secured party on the certificate of title is in the capacity as agent of the Trust. (b) If, at any time, a Service Transfer has occurred and CITSF is no longer the Servicer, and the new Servicer is unable to foreclose upon a Financed Boat because the title document for such Financed Boat does not show such Servicer or the Trust as the holder of the first priority security interest in the Financed Boat, such Servicer shall take all necessary steps to apply for a replacement title document showing it or the Trust as the secured party. (c) In order to facilitate the Servicer's actions, as described in subsection 4.05(b) hereof, CITSF will provide the Servicer with any necessary power of attorney permitting it to retitle the Financed Boat. The Company hereby appoints the Trust its attorney-in-fact for the purposes to endorse, as appropriate, the certificate of title relating to any Financed Boat in order to cause a change in the registration of legal owner of the Financed Boat to the Trust at such time as such certificate of title is endorsed and delivered to the Department of Motor Vehicles of the State of California (or any other state department of motor vehicles) with appropriate fees. The Company will provide the Trust with any necessary power of attorney for such purpose. (d) If the Servicer is unable to retitle the Financed Boat, in the event that the Servicer seeks to foreclose on a Financed Boat then CITSF will take all actions necessary to act with the Servicer, to the extent permitted by law, to foreclose upon the Financed Boat, including, as appropriate, the filing of any UCC-1 or UCC-2 financing statements necessary to perfect the security interest in any Financed Boat. SECTION 4.06 Covenants of Servicer. The Servicer shall make the following covenants on which the Owner Trustee and Indenture Trustee will rely in accepting the Contracts in trust and executing and authenticating the Certificates and the Notes: (a) Security Interest to Remain in Force. The Financed Boat securing each Contract shall not be released from the security interest granted by the Contract in whole or in part except as contemplated herein; (b) No Impairment. The Servicer shall not impair the rights of the Trust in the Contracts or take any action inconsistent with the Trust's ownership of the Contracts, except as expressly provided herein; (c) Amendments. The Servicer shall not increase the number of payments under a Contract, nor increase the principal amount of such Contract which is used to finance the purchase price of the related Boats, nor extend or forgive payments on a Contract, except as provided in Section 4.02 hereof; and (d) Compliance with Insurance Policies. The Servicer shall not fail to comply with the provisions of any Insurance Policy, if the failure to so comply would impair the protection or benefit to be afforded by such Insurance Policies. SECTION 4.07 Purchase of Contracts Upon Breach. The Servicer or the Trustees, as the case may be, shall inform the other parties promptly, in writing, upon the discovery of any breach by the Servicer of its covenants under Section 4.04(a) with respect to Force-Placed Insurance, Section 4.06 and the proviso in Section 4.02 hereof which materially and adversely affects the Trust's interest in any Contract. The Trustees shall not be deemed to have discovered such a breach until such time as a Responsible Officer of the Trustees receives written notice of such breach. Except as otherwise specified in Section 4.02 hereof, unless the breach shall have been cured, the Servicer shall purchase such Contract, at its Purchase Price, not later than the first Determination Date which is more than 60 days after the Servicer receives written notice from the Trustees, or not later than 60 days after the Servicer otherwise becomes aware of, a breach of any of its obligations with respect to Force-Placed Insurance under Section 4.04(a) hereof or any representation or warranty of the Servicer in Section 4.06 hereof that materially and adversely affects the Trust's interest in such Contract. The Servicer shall effect such purchase by depositing, in accordance with Section 5.04 hereof, the Purchase Price of such Contract (less any Net Liquidation Proceeds deposited, or to be deposited, by the Servicer in the Collection Account with respect to such Contract pursuant to Section 5.02 hereof) in the Collection Account on the Deposit Date immediately preceding the Determination Date referred to in the preceding sentence. The effective date of such purchase shall be the last day of the Due Period preceding such Determination Date. The sole remedy of the Trust, the Owner Trustee, the Indenture Trustee, the Certificateholders or the Noteholders against the Servicer with respect to a breach pursuant to Section 4.06 hereof or Section 4.02 hereof shall be to require the Servicer to purchase Contracts pursuant to this Section 4.07. SECTION 4.08 Servicing Fee. The Servicing Fee for a Distribution Date shall be equal to the sum of (i) one-twelfth of the product of the Servicing Fee Rate and the Pool Balance as of the last day of the second preceding Due Period (or, in the case of the first Distribution Date, as of the Initial Cut-off Date) and (ii) any Investment Earnings on amounts on deposit in the Collection Account, the Certificate Distribution Account and the Note Distribution Account. In addition, the Servicer will be entitled to collect and retain any Late Fees received by the Servicer from Obligors during the preceding Due Period. SECTION 4.09 Servicer's Certificate. On or before each Determination Date, the Servicer shall furnish a report (the "Monthly Report"), which shall be in substantially the form of Exhibit G, to the Owner Trustee, the Indenture Trustee, any Paying Agent (under the Indenture and the Trust Agreement) and (if CITSF is not the Servicer) CITSF. The determination by the Servicer of the amount of the distributions to be made pursuant to Section 5.05 hereof shall, in the absence of obvious error, be presumptively deemed to be correct for all purposes hereunder, and the Trustees shall be protected in relying upon the same without any independent check or verification. The Servicer shall also specify in the Monthly Report each Contract which CITSF or the Servicer is required to purchase as of the last day of the related Due Period and each Contract which the Servicer shall have determined to be a Defaulted Contract or a Liquidated Contract during such Due Period. The Trustees shall not be required to recompute, verify or recalculate information contained in the Servicer's Certificate. Each Monthly Report shall be accompanied by a certificate of a Servicing Officer substantially in the form of Exhibit F, certifying the accuracy of the Monthly Report and that no Event of Termination or event that with notice or lapse of time or both would become an Event of Termination has occurred, or if such event has occurred and is continuing, specifying the event and its status. In addition, the Servicer shall, on request of the Trustees, furnish the Trustees such underlying data as can be generated by the Servicer's existing data processing system without undue modification or expense. SECTION 4.10 Annual Statement as to Compliance. (a) The Servicer shall deliver to the Trustees within 90 days after the end of each calendar year commencing March 31, ____, a certificate signed by the president, the treasurer or any vice president of the Servicer, stating that (i) a review of the activities of the Servicer during the preceding calendar year of its performance under this Agreement has been made under such officer's supervision and (ii) to the best of such officer's knowledge, based on such review, the Servicer has fulfilled all its obligations under this Agreement throughout such preceding calendar year, or, if there has been a default in the fulfillment of any such obligation, specifying each such default known to such officer and the nature and status thereof. (b) The Servicer shall deliver to the Trustees, promptly after having obtained knowledge thereof, an Officers' Certificate specifying any event which with the giving of notice or lapse of time, or both, would become an Event of Termination under clause (i) or (ii) of Section 9.01 hereof. The Company shall deliver to the Trustees, promptly after having obtained knowledge thereof, an Officer's Certificate specifying any event which with the giving of notice or lapse of time, or both, would become an Event of Termination under clause (i) or (ii) of Section 9.01 hereof. SECTION 4.11 Annual Report of Accountants. Within 90 days after the end of each calendar year, commencing March 31, ____, the Servicer, at its expense, shall cause a firm of independent public accountants which is a member of the American Institute of Certified Public Accountants to furnish a statement to the Trustee to the effect that such firm has, with respect to the Servicer's overall servicing operations, examined such operations in accordance with the requirements of the Uniform Single Audit Program for Mortgage Bankers, and stating such firm's conclusions relating thereto. Copies of the annual statement of accountants shall also be provided to each Rating Agency. SECTION 4.12 Duties of Owner Trustee. In accordance with Section 6.1(b) of the Trust Agreement, the Servicer will comply with, on behalf of the Owner Trustee, the requirements of Sections 5.4 and 5.5 of the Trust Agreement and Sections 3.6, 3.9 and 7.3 of the Indenture. SECTION 4.13 Reports to Securityholders and the Rating Agencies. (a) Concurrently with each distribution charged to the Certificate Distribution Account and the Note Distribution Account, the Owner Trustee and the Indenture Trustee, respectively, so long as it has received the Monthly Report from the Servicer, shall forward or cause to be forwarded by mail to each Securityholder, such Monthly Report. (b) The Servicer shall forward to each Rating Agency each letter of the Independent certified public accountants' described in Section 4.11 hereof, each Servicer's Certificate, each annual statement as to compliance described in Section 4.10 hereof and each statement to Securityholders described in Section 5.08 hereof. SECTION 4.14 Maintenance of Fidelity Bond and Errors and Omission Policy. The Servicer shall during the term of its service as Servicer maintain in force (a) a policy or policies of insurance covering errors and omissions for failure to maintain insurance as required by this Agreement, and (b) a fidelity bond in respect of its officers, employees and agents. Such policy or policies and such fidelity bond shall be in such form and amount as is generally customary among Persons which service a portfolio of marine installment sale contracts having an aggregate principal amount of $100,000,000 or more and which are generally regarded as servicers acceptable to institutional investors. SECTION 4.15 Trustees to Cooperate. Upon payment in full on any Contract, the Servicer will notify the Trustees by certification of a Servicing Officer (which certification shall include a statement to the effect that all amounts received in connection with such payments which are required to be deposited in the Collection Account pursuant to Section 5.05 have been so deposited). The Servicer is authorized to execute an instrument in satisfaction of such Contract and to do such other acts and execute such other documents as the Servicer deems necessary to discharge the Obligor thereunder and eliminate the security interest in the Financed Boat related thereto. The Servicer shall determine when a Contract has been paid in full. To the extent that insufficient payments are received on a Contract credited by the Servicer as prepaid or paid in full and satisfied, the shortfall shall be paid by the Servicer out of its own funds. SECTION 4.16 Costs and Expenses. Except as provided in Section 4.03 hereof, all costs and expenses incurred by the Servicer in carrying out its duties hereunder, including all fees and expenses incurred in connection with the enforcement of Contracts (including enforcement of Defaulted Contracts and repossessions of Financed Boats securing such Contracts), shall be paid by the Servicer and the Servicer shall not be entitled to reimbursement hereunder. ARTICLE V ACCOUNTS; DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS SECTION 5.01 Collection Account, Pre-Funding Account, Capitalized Interest Account and Cash Collateral Account. (a) (i) On or before the Closing Date, there shall be established and maintained in the name of the Indenture Trustee, for the benefit of the Noteholders and Certificateholders, with an Eligible Institution (which initially shall be the Indenture Trustee) an account known as the "CIT Marine Trust ____-_ Collection Account" (the "Collection Account"), bearing an additional designation clearly indicating that the funds deposited therein are held for the benefit of the Noteholders and Certificateholders. (ii) On or before the Closing Date, there shall be established and maintained in the name of the Indenture Trustee, for the benefit of the Noteholders, with the Indenture Trustee an account known as the "CIT Marine Trust ____-_ Note Distribution Account" (the "Note Distribution Account"), bearing an additional designation clearly indicating that the funds deposited therein are held for the benefit of the Noteholders. (iii) On or before the Closing Date, pursuant to the Trust Agreement, there shall be established and maintained in the name of the Owner Trustee, for the benefit of the Certificateholders, with an Eligible Institution (which initially shall be [____________________], the Paying Agent of the Owner Trustee) an account known as the "CIT Marine Trust ____-_ Certificate Distribution Account" (the "Certificate Distribution Account"), bearing an additional designation clearly indicating that the funds deposited therein are held for the benefit of the Certificateholders and owned by the Trust. (iv) On or before the Closing Date, there shall be established and maintained in the name of the Owner Trustee with an Eligible Institution (which, initially, shall be [____________________], the Paying Agent of the Owner Trustee) an account known as the "CIT Marine Trust ____-_ Cash Collateral Account (the "Cash Collateral Account"), bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Certificateholders and owned by the Trust. (b) Pre Funding Account and Capitalized Interest Account. (i) On or before the Closing Date, there shall be established and maintained the Pre-Funding Account and the Capitalized Interest Account, in the name of the Owner Trustee, on behalf of the Trust for the benefit of the Noteholders and Certificateholders with an Eligible Institution (which, initially, shall be the Indenture Trustee). If, at any time during the Funding Period, the Pre-Funding Account or the Capitalized Interest Account ceases to be maintained with an Eligible Institution, the Indenture Trustee (or the Servicer on its behalf) shall within five (5) Business Days (or such longer period, not to exceed thirty (30) calendar days, as to which the Rating Agency may consent) establish a new Pre-Funding Account or Capitalized Interest Account meeting the condition specified above, transfer any cash and/or any investments to such new Pre-Funding Account or Capitalized Interest Account and from the date such new Pre-Funding Account or Capitalized Interest Account is established, they shall be the "Pre-Funding Account" or "Capitalized Interest Account", as appropriate. The Pre-Funding Account shall be entitled the "CIT Marine Trust ____-_ Pre-Funding Account". The Capitalized Interest Account shall be entitled the "CIT Marine Trust ____-_ Capitalized Interest Account". Each of the Pre-Funding Account and the Capitalized Interest Account shall bear an additional designation clearly indicating that the funds on deposit therein are held for the benefit of, and owned by, the Trust. On the Closing Date, the Trust will deposit the Original Pre-Funded Amount into the Pre-Funding Account and deposit the Initial Capitalized Interest Deposit into the Capitalized Interest Account. (ii) On any Subsequent Transfer Date, the Servicer shall instruct the Owner Trustee to withdraw from the Pre-Funding Account an amount equal to 100% of the unpaid principal balance thereof as of the related Subsequent Cut-off Date of the Subsequent Contracts sold to the Trust on such Subsequent Transfer Date and pay such amount to or upon the order of Company with respect to such transfer. In no event shall the Servicer be permitted to instruct the Owner Trustee to release from the Pre-Funding Account with respect to Subsequent Contracts to be transferred to the Trust an amount, which, when added to the amounts previously released from the Pre-Funding Account to acquire Subsequent Contracts, would exceed the Original Pre-Funded Amount. (iii) On the Distribution Dates occurring in _________, _________ and _________ of ____, the Owner Trustee shall withdraw Pre-Funding Earnings from the Pre-Funding Account, to the extent available, and deposit such amount in the Collection Account for payment to the Holders of the Securities on such Distribution Dates, in an amount equal to the difference, if any, between (x) the sum of the amount of interest payable to the Noteholders on such Distribution Date and the amount of interest payable to the Certificateholders on such Distribution Date and (y) that portion of the Amount Available allocated to make such interest payments to Noteholders and Certificateholders, respectively, on such Distribution Dates. On such Distribution Dates, such funds, if any, shall be used first to pay to the Noteholders, to the extent available, the Pre-Funding Earnings so withdrawn such that the Noteholders will receive such amounts of interest due on such Distribution Date, and second, to pay to the Certificateholders, to the extent available, the remaining Pre-Funding Earnings so withdrawn such that the Certificateholders will receive such amounts of interest due on such Distribution Date. (iv) On the Distribution Dates occurring in _________, _________ and _________ of ____, the Owner Trustee shall withdraw monies on deposit in the Capitalized Interest Account, to the extent available, and deposit such amount in the Collection Account for payment to the Holders of the Securities on such Distribution Date, in an amount equal to the excess, if any, of (x) the product of (1) the weighted average of the Class A Rate and the Pass-Through Rate as of the first day of the related Interest Accrual Period and (2) the undisbursed funds (excluding investment earnings) in the Pre-Funding Account (as of the last day of the related Due Period) over (y) the amount if any Pre-Funding Earnings in the Pre-Funding Account that are available to pay interest on the Securities on such Distribution Date pursuant to clause (iii) above. On such Distribution Dates, such funds, if any, shall be used first to pay to the Noteholders, to the extent available, the amount so withdrawn such that the Noteholders will receive such amounts of interest due on such Distribution Date, and second, to pay to the Certificateholders, to the extent available, the amount so withdrawn such that the Certificateholders will receive such amounts of interest due on such Distribution Date. (v) On the last day of the Funding Period (or, if such day is not a Business Day, on the next succeeding Business Day) (but in no event later than the _________ ____ Distribution Date) the Servicer shall instruct the Owner Trustee to withdraw from the Pre-Funding Account, and the Owner Trustee shall so withdraw, the difference, if any, between (A) the sum of the Original Pre-Funded Amount, and (B) all amounts theretofore withdrawn from the Pre-Funding Account with respect to the purchase and transfer to the Trust of Subsequent Contracts, and the Owner Trustee shall (i) deposit the Note Pre-Funded Percentage of such amounts into the Note Distribution Account and (ii) deposit the Certificate Pre-Funded Percentage of such amounts into the Certificate Distribution Account. Such amounts will be used to prepay the principal amount of the outstanding Notes and Certificates in accordance with the Note Pre-Funded Percentage and the Certificate Pre-Funded Percentage, respectively, on the Distribution Date immediately following the Funding Period or if the end of the Funding Period is on a Distribution Date, then on such date. (vi) Any Pre-Funding Earnings on deposit in the Pre-Funding Account and all amounts remaining on deposit in the Capitalized Interest Account on the last day of the Funding Period which were not distributed to the Securityholders pursuant to Section 5.01(b) shall be deposited by the Owner Trustee in the Collection Account on such date and shall constitute part of the Amount Available on the first Distribution Date thereafter or, if the end of the Funding Period is on a Distribution Date, then on such date. (c) The Eligible Institution maintaining the accounts described in this Section 5.01(a) and (b) shall, in the name of the Trust invest amounts on deposit solely in Eligible Investments that mature not later than one Business Day prior to the next succeeding Distribution Date, in accordance with instructions provided to the Trustees by the Servicer in writing (or, in the case of the Cash Collateral Account, in accordance with instructions provided to the Servicer by the Cash Collateral Depositor, on behalf of the Owner Trustee and the Cash Collateral Depositor, in writing). Once such funds are invested, such Eligible Institution shall not change the investment of such funds. Notwithstanding the foregoing, amounts deposited in the Collection Account from funds on deposit in the Pre-Funding Account pursuant to Section 5.01(b) may not be invested at all. All Investment Earnings from the investment of funds in the accounts described in this Section 5.01(a) and (b) shall be deposited in the accounts in which such Investment Earnings were earned; provided, however, Investment Earnings from the investment of funds in the Cash Collateral Account shall be retained in a separate interest subaccount of the Cash Collateral Account and realized losses, if any, on amounts so invested shall be charged against undistributed Investment Earnings from the Cash Collateral Account. All Investment Earnings realized from any such investment of funds in the Collection Account, Certificate Distribution Account and Note Distribution Account (to the extent investment of such funds is permitted hereunder) shall be for the benefit of the Servicer and may be withdrawn by the Servicer on each Distribution Date pursuant to subsection 5.05(b)(ii). All Investment Earnings realized from any such investment of funds in the Pre-Funding Account and the Capitalized Interest Account shall be distributed as provided in Section 5.01(b). All Investment Earnings realized from any such investment of funds in the Cash Collateral Account shall be distributed as provided in Section 5.06. An amount equal to any net loss on such investments shall be deposited in the Collection Account, the Certificate Distribution Account and Note Distribution Account by the Servicer out of its own funds, without right to reimbursement, immediately as realized. "Eligible Investments" are any of the following: (i) direct obligations of, and obligations fully guaranteed by, the United States of America, the Federal Home Loan Mortgage Corporation (if then rated "Aaa" by Moody's), the Federal National Mortgage Association, or any agency or instrumentality of the United States of America the obligations of which are backed by the full faith and credit of the United States of America and which are non-callable; (ii) demand and time deposits in, certificates of deposit of, bankers' acceptances issued by, or federal funds sold by any depository institution or trust company (including the Trustees or any Affiliate of the Trustees, acting in their commercial capacity) incorporated under the laws of the United States of America or any state thereof or the District of Columbia (or any domestic branch or agency of a foreign bank) and subject to supervision and examination by federal and/or state authorities, so long as, at the time of such investment or contractual commitment providing for such investment, the commercial paper or other short-term debt obligations of such depository institution or trust company have been rated at least "P-1" or higher from Moody's and "A-1+" from Standard & Poor's (or, with respect to the investment of any amounts on deposit in the Cash Collateral Account or the Certificate Distribution Account, such Standard & Poor's rating shall be at least "A-1"); or any other demand or time deposit or certificate of deposit which is fully insured by the Federal Deposit Insurance Corporation and which is rated at least "P-1" by Moody's; (iii) repurchase obligations with respect to any security described in either clause (i) or (ii) above and entered into with any institution whose commercial paper is at least rated "P-1" by Moody's and at least "A-1+" by Standard & Poor's (or, with respect to the investment of any amounts on deposit in the Cash Collateral Account or the Certificate Distribution Account, such Standard & Poor's rating shall be at least "A-1"); (iv) securities bearing interest or sold at a discount issued by any corporation incorporated under the laws of the United States of America or any State thereof which have a credit rating of at least "A2" or "P-1" from Moody's and at least "AA"- from Standard & Poor's at the time of such investment (or, with respect to the investment of any amounts on deposit in the Cash Collateral Account or the Certificate Distribution Account, such Standard & Poor's rating shall be at least "A"); (v) commercial paper having a rating of at least "P-1" from Moody's and at least "A-1+" from Standard & Poor's (or, with respect to the investment of any amounts on deposit in the Cash Collateral Account or the Certificate Distribution Account, such Standard & Poor's rating shall be at least "A-1") at the time of such investment; and (vi) money market funds which are rated "Aaa" by Moody's and at least "AAAm" or "AAAm-G" by Standard & Poor's, including funds which meet such rating requirements for which the Trustees or an affiliate of the Trustees serves as an investment advisor, administrator, shareholder servicing agent and/or custodian or subcustodian, notwithstanding that (i) such Trustee or an affiliate of such Trustee charges and collects fees and expenses from such funds for services rendered, (ii) such Trustee charges and collects fees and expenses for services rendered pursuant to this instrument, and (iii) services performed for such funds and pursuant to this instrument may converge at any time. (The Seller and the Servicer specifically authorize such Trustee or an affiliate of such Trustee to charge and collect all fees and expenses from such funds for services rendered to such funds, in addition to any fees and expenses such Trustee may charge and collect for services rendered pursuant to this instrument). The Trustees may trade with themselves, each other, or with an Affiliate on an arm's length basis in the purchase or sale of such Eligible Investments. SECTION 5.02 Collections; Applications. (a) Deposits to Collection Account. Subject to subsections 5.02(b) and (c), the Servicer shall deposit in the Collection Account, no later than two Business Days after the Closing Date, any amounts representing payments received on the Contracts on or after the Initial Cut-off Date through and including the Closing Date. Subject to subsections 5.02(b) and (c), the Servicer shall deposit in the Collection Account as promptly as practicable (not later than the second Business Day) following the receipt thereof by the Servicer, all amounts received in respect of the Contracts, including all loan payments from Obligors, Net Liquidation Proceeds and Insurance Proceeds. (b) Monthly Deposits to Collection Account. Notwithstanding anything in this Agreement to the contrary, for so long as, and only so long as: (i) CITSF shall remain the Servicer hereunder and CITSF remains a direct or indirect subsidiary of CIT, if CIT shall have and maintain a short-term debt rating of at least "A-1" by Standard & Poor's and either a short-term debt rating of "P-1" or a long-term debt rating of at least "A2" by Moody's, or (ii) the Servicer obtains a letter of credit, surety bond or insurance policy (the "Servicer Letter of Credit") under which demands for payment will be made to secure timely remittance of monthly collections to the Collection Account and the Trustees are provided with a letter from each Rating Agency to the effect that the utilization of such alternative remittance schedule and any amendment required to be made to this Agreement in connection therewith will not result in a qualification, reduction or withdrawal of its then-current rating of the Notes or Certificates, the Servicer may make the deposits to the Collection Account specified in subsection 5.05(a) on a monthly basis, but not later than the Deposit Date immediately preceding the Distribution Date following the last day of the Due Period within which such payments were processed by the Servicer, in an amount equal to the net amount of such deposits and payments which would have been made to the Collection Account during such Due Period but for the provisions of this subsection 5.02(b). In the event that the Servicer is permitted to make remittances of collections to the Collection Account pursuant to Section 5.02(b)(ii), this Agreement may be modified, to the extent necessary, without the consent of any Securityholder. (c) Amounts Not Required to be Deposited. The Servicer will not be required to deposit in the Collection Account amounts relating to the Contracts attributable to the following: (i) amounts received with respect to each Contract (or property acquired in respect thereof) that has been purchased by CITSF or the Servicer pursuant to this Agreement and that are not required to be distributed to Securityholders, (ii) net investment earnings on funds deposited in the Collection Account, the Certificate Distribution Account, the Note Distribution Account and the Cash Collateral Account, (iii) amounts received as Late Fees, (iv) amounts received in respect of Post Cut-off Date Insurance Add-Ons, (v) any repossession profits on Liquidated Contracts, (vi) amounts received as liquidation proceeds, to the extent the Servicer is entitled to reimbursement of liquidation expenses relating thereto pursuant to Section 4.03, and (vii) amounts to be reimbursed to the Servicer in respect of Nonrecoverable Advances. (e) Permitted Withdrawals from the Collection Account. The Indenture Trustee will, from time to time as provided herein, make withdrawals from the Collection Account of amounts deposited in said account pursuant to this Agreement that are attributable to the Contracts for the following purposes: (i) to make payments and distributions in the amounts and in the manner provided for in Section 5.05; (ii) to pay to CITSF or the Servicer with respect to each Contract or property acquired in respect thereof that has been purchased pursuant to Section 3.02, 4.02, 4.07, 11.01 or 11.02, all amounts received thereon and not required to be distributed to Noteholders and Certificateholders; (iii) to withdraw any amount deposited in the Collection Account that was not required to be deposited therein; and (iv) to reimburse the Servicer out of liquidation proceeds for liquidation expenses incurred by it, to the extent such reimbursement is permitted under Section 4.03 and to the extent such expenses have not otherwise been reimbursed. Since, in connection with withdrawals pursuant to clauses (ii) and (iv) of this subsection 5.02(d), CITSF's entitlement thereto is limited to collections or other recoveries on the related Contract, the Servicer shall keep and maintain separate accounting, on a Contract by Contract basis, for the purpose of justifying any withdrawal from the Collection Account pursuant to such clauses. The Servicer shall keep and maintain an accounting for the purpose of justifying any withdrawal from the Collection Account pursuant to clause (iii) of this subsection 5.02(d). SECTION 5.03 Monthly Advances. With respect to each Contract as to which there has been an Interest Shortfall during the related Due Period (other than an Interest Shortfall arising from either (i) a Principal Prepayment in Full of a Contract or (ii) a Contract which has been subject to a Relief Act Reduction during such Due Period), the Servicer shall make a Monthly Advance in the amount of such Interest Shortfall, but only to the extent the Servicer, in its good faith judgment, expects to recoup such Monthly Advance from subsequent payments of interest by or on behalf of the Obligors, Net Liquidation Proceeds or proceeds from Insurance Policies with respect to the related Contract. The Servicer shall not be obligated to make any advance to the Trust in respect of the principal component of scheduled payments on any Contract which is not paid during the Due Period in which they are due. The Servicer shall deposit any such Monthly Advance into the Collection Account in next-day funds or immediately available funds no later than 12:00 noon, New York time, on the related Deposit Date. The Servicer shall be reimbursed for any such Monthly Advance by subsequent collections in respect of interest on such Contract made by or on behalf of the Obligor, and Net Liquidation Proceeds or proceeds from Insurance Policies with respect to such Contract. If an unreimbursed Monthly Advance shall become a Nonrecoverable Advance, the Servicer shall be reimbursed from collections on all the Contracts in the Trust in the order of priority set forth in Section 5.05 hereof. SECTION 5.04A Non-Reimbursable Payments. On each Deposit Date, the Servicer shall make a deposit (a "Non-Reimbursable Payment") to the Collection Account in respect of each Contract for which there has been an Interest Shortfall during the preceding Due Period arising either from a Principal Prepayment in Full or a Relief Act Reduction in respect of such Contract during such Due Period, in an amount equal to the Interest Shortfall. The Servicer shall deposit the aggregate amount of Non-Reimbursable Payments in respect of a Due Period into the Collection Account at the time and in the manner specified in Section 5.03. The Servicer shall not be entitled to reimbursement for any Non-Reimbursable Payment. SECTION 5.04B Additional Deposits. CITSF and the Servicer, as the case may be, shall deposit into the Collection Account the aggregate Purchase Price pursuant to Sections 3.02, 4.02, 4.07, 11.01 and 11.02, as applicable. All remittances shall be made to the Collection Account, in next-day funds or immediately available funds, no later than 12:00 noon, New York time, on the related Deposit Date. SECTION 5.05 Distributions. (a) On or before the Determination Date preceding a Distribution Date, the Servicer will make a determination and inform the Indenture Trustee and the Owner Trustee of the following amounts with respect to the preceding Due Period: (i) the aggregate amount of collections on the Contracts; (ii) the aggregate amount of Monthly Advances to be remitted by the Servicer; (iii) the aggregate Purchase Price of Contracts to be purchased by CITSF or the Servicer; (iv) the aggregate amount to be distributed as principal and interest on the Notes on the related Distribution Date; (v) the aggregate amount to be distributed as principal and interest on the Certificates on the related Distribution Date; (vi) the Servicing Fee; (vii) the aggregate amount of Non-Reimbursable Payments; (viii) the amounts required to be withdrawn from the Cash Collateral Account for such Distribution Date in accordance with Sections 5.05(b) and 5.06 hereof and the applicable provisions of the Cash Collateral Agreement; (ix) any amounts to be deposited into the Cash Collateral Account pursuant to Sections 5.05(b)(viii) and 5.06 hereof and the applicable provisions of the Cash Collateral Agreement and (x) the aggregate amount of unreimbursed Monthly Advances to be reimbursed to the Servicer. (b) On each Distribution Date the Indenture Trustee, based on the instruction provided by the Servicer in subsection (a) above, will withdraw the Amount Available from the Collection Account to make the following payments (to the extent sufficient funds are available therefor) in the following order and priority: (i) the aggregate amount of any unreimbursed Monthly Advances made by the Servicer (and which are then due to be reimbursed to the Servicer) will be paid to the Servicer; (ii) the Servicer Payment (to the extent not previously retained by the Servicer) will be paid to the Servicer; (iii) the Class A Interest Distribution Amount, including any Outstanding Class A Interest, will be deposited into the Note Distribution Account, for payment to the Noteholders; (iv) on and prior to the Cross-over Date, the Principal Distribution Amount, including any unpaid principal due on prior Distribution Dates, will be deposited into the Note Distribution Account, for payment to the Noteholders; (v) the Certificate Interest Distribution Amount, including any Outstanding Certificate Interest, will be deposited into the Certificate Distribution Account, for payment to the Certificateholders; (vi) prior to the Cross-over Date, the Principal Liquidation Loss Amount, if any, will be deposited into the Certificate Distribution Account, for payment to the Certificateholders; (vii) on and after the Cross-over Date, the Principal Distribution Amount (to the extent not paid to Noteholders on the Cross-over Date), including any unpaid principal due on prior Distribution Dates, will be deposited into the Certificate Distribution Account, for payment to the Certificateholders; (viii) an amount equal to the lesser of (a) the balance, if any, remaining after the payments in clauses (i) through (vii) above and (b) the sum of (1) the amount by which the Required Cash Collateral Amount with respect to the following Distribution Date exceeds the amount on deposit in the Cash Collateral Account (exclusive of Investment Earnings on amounts on deposit therein) on the current Distribution Date after giving effect to any withdrawals therefrom on such Distribution Date, and (2) the amount, if any, by which (I) the amount of payments of principal and interest required to be made on the Loan on such Distribution Date pursuant to the Cash Collateral Agreement exceeds (II) the Investment Earnings accrued on the Cash Collateral Account since the preceding Deposit Date, will be deposited in the Cash Collateral Account, for payment to the Certificateholders and, the Cash Collateral Depositor in accordance with the provisions of Section 5.06 hereof and the Cash Collateral Agreement; and (ix) the balance, if any, remaining after the payments in clauses (i) through (viii) above shall be distributed to [____________________]. (c) On each Distribution Date, the Indenture Trustee and the Owner Trustee shall distribute all amounts in the Note Distribution Account and the Certificate Distribution Account, respectively, to the Noteholders and the Certificateholders, respectively as provided in the Indenture and Trust Agreement respectively. SECTION 5.06 Cash Collateral Account. (a) The Owner Trustee shall, on the Closing Date, deposit or cause to be deposited in the Cash Collateral Account by wire transfer of immediately available funds the Initial Cash Collateral Amount from the proceeds of the loan to be made on the Closing Date by the Cash Collateral Depositor under the Cash Collateral Agreement. On each Distribution Date, the Owner Trustee shall deposit or cause to be deposited into the Cash Collateral Account by wire transfer of immediately available funds any amount it receives pursuant to Section 5.05(b)(viii) of this Agreement, which amount shall be designated as being for deposit in the Cash Collateral Account. The Owner Trustee shall have the sole right to make withdrawals from the Cash Collateral Account and to exercise all rights with respect to the Cash Collateral Account Property. Amounts withdrawn from the Cash Collateral Account and paid to the Certificateholders or the Cash Collateral Deposit, as provided herein and in the Cash Collateral Agreement, shall not be required to be reimbursed to the Cash Collateral Account by the Trustees, the Securityholders, the Cash Collateral Depositor, any Paying Agent or any transferee thereof. (b) In the event that the sum of the Certificate Interest Distribution Amount (including any Outstanding Certificate Interest), Principal Liquidation Loss Amount and Principal Distribution Amount to be distributed to the Certificateholders for any Distribution Date exceeds the amount deposited in the Certificate Distribution Account pursuant to Sections 5.05(b)(v), 5.05(b)(vi) and 5.05(b)(vii) of this Agreement, respectively, on such Distribution Date, the Servicer shall instruct the Owner Trustee in writing to withdraw or cause to be withdrawn from the Cash Collateral Account on or before the related Deposit Date the lesser of the amount of such excess and the Available Cash Collateral Amount (the "Draw Amount"). The Owner Trustee shall deposit such amount, or cause such amount to be deposited, into the Certificate Distribution Account no later than 12:00 noon, New York City time, on such Deposit Date. (c) On or before the Deposit Date immediately preceding the Certificate Final Distribution Date, the Servicer shall instruct the Owner Trustee to withdraw or cause to be withdrawn from the Cash Collateral Account an amount (the "Final Draw Amount") equal to the lesser of (i) the Certificate Balance on the Certificate Final Distribution Date, after giving effect to distributions of the Principal Distribution Amount to Certificateholders on the Certificate Final Distribution Date pursuant to Section 5.05(b)(vii) of this Agreement and (ii) the amount on deposit in the Cash Collateral Account, excluding Investment Earnings with respect thereto, after giving effect to any withdrawal from the Cash Collateral Account pursuant to clause (b) of this Section 5.06. The Owner Trustee shall deposit such amount, or cause such amount to be deposited, into the Certificate Distribution Account no later than 12:00 noon, New York City time, on such Deposit Date. (d) Investment Earnings on amounts on deposit in the Cash Collateral Account and Cash Collateral Account Surplus on deposit in the Cash Collateral Account shall be distributed to the Cash Collateral Depositor to the extent required by Sections 3(a) and (b) of the Cash Collateral Agreement. (e) If at any time the Cash Collateral Account ceases to be maintained at an Eligible Institution as required by Section 5.01(a), the Owner Trustee shall within 10 Business Days (or such longer period not to exceed 30 calendar days, as to which each Rating Agency may consent) establish a new Cash Collateral Account meeting the conditions specified in Section 5.01(a) and shall transfer any and all cash and investments in the Cash Collateral Account to such new Cash Collateral Account. SECTION 5.07 Net Deposits. CITSF (in whatever capacity) may make the remittances required pursuant to this Agreement, net of amounts to be retained by it or distributed to it (also in whatever capacity), pursuant to this Agreement, for so long as (a) it shall be the Servicer and (b) it will be entitled, pursuant to Section 5.02, to make deposits on a monthly basis, rather than a daily basis. Nonetheless, the Servicer shall account for all of the above-described amounts as if such amounts were deposited and distributed separately. SECTION 5.08 Statements to Securityholders. On each Distribution Date, the Servicer shall prepare and will include with the distribution to each Securityholder, a statement setting forth for the related Due Period the following information: (a) the amount of the distribution allocable to principal of the Notes and to the Certificate Balance of the Certificates, including any overdue principal; (b) the amount of the distribution allocable to interest on or with respect to each class of Securities, including any overdue interest; (c) the Pool Balance, the Note Pool Factor and the Certificate Pool Factor as of the end of the related Due Period; (d) the Servicer Payment for such Distribution Date; (e) the amount of Monthly Advances and Non-Reimbursable Payments on such date; (f) the aggregate principal balance of all Contracts which were delinquent 30, 60 and 90 days or more as of the last day of the related Due Period; (g) during the Funding Period, the amount of funds on deposit in the Pre-Funding Account; (h) during the Funding Period, the number and aggregate principal balance of Subsequent Contracts; (i) during the Funding Period, the number and aggregate principal balance of Subsequent Contracts purchased by the Trust on the related Distribution Date; (j) the aggregate outstanding principal balance of the Notes as of such Distribution Date after giving effect to any distributions on such Distribution Date; (k) the Certificate Balance as of such Distribution Date after giving effect to any distributions thereon and reductions thereto on such Distribution Date; (l) the Draw Amount, if any, and the Final Draw Amount (if applicable) with respect to such Distribution Date; (m) the Available Cash Collateral Amount, after giving effect to any deposit to or withdrawal from the Cash Collateral Account with respect to such Distribution Date, and such amount expressed as a percentage of the Pool Balance; and (n) the Required Cash Collateral Amount. Within a reasonable period of time after the end of each calendar year, but not later than the latest date permitted by law, the Servicer shall furnish or cause to be furnished to each Person who at any time during the calendar year was a Securityholder a statement containing the information with respect to interest accrued and principal paid on its Securities during such calendar year. Such obligation shall be deemed to have been satisfied to the extent that substantially comparable information shall be provided to the Securityholders pursuant to any requirements of the Code as from time to time in force. ARTICLE VI [RESERVED] ARTICLE VII THE COMPANY SECTION 7.01 Representations of Company. The Company hereby makes the following representations as to itself on which the Owner Trustee and the Indenture Trustee on behalf of the Trust shall rely in accepting the Contracts in trust and authenticating the Certificates and the Notes, respectively. The representations shall speak as of the execution and delivery of this Agreement, and shall survive the sale of the Contracts to the Trust. (a) Organization and Good Standing. The Company is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has the corporate power to own its assets and to transact the business in which it is currently engaged. The Company is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the character of the business transacted by it or properties owned or leased by it requires such qualification and in which the failure so to qualify would have a material adverse effect on the business, properties, assets, or condition (financial or other) of the Company or on the Certificates or the transactions contemplated by this Agreement. (b) Authorization; Binding Obligations. The Company has the power and authority to make, execute, deliver and perform this Agreement and all of the transactions contemplated under this Agreement, and has taken all necessary corporate action to authorize the execution, delivery and performance of this Agreement. When executed and delivered, this Agreement will constitute the legal, valid and binding obligation of the Company enforceable in accordance with its terms, except as enforcement of such terms may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and by the availability of equitable remedies. (c) No Consent Required. The Company is not required to obtain the consent of any other party or any consent, license, approval or authorization from, or registration or declaration with, any governmental authority, bureau or agency in connection with the execution, delivery, performance, validity or enforceability of this Agreement the failure of which so to obtain would have a material adverse effect on the business, properties, assets or condition (financial or otherwise) of the Company or on the Certificates or the transactions contemplated by this Agreement. (d) No Violations. The execution, delivery and performance of this Agreement by the Company will not violate any provision of any existing law or regulation or any order or decree of any court or the Articles of Incorporation or Bylaws of the Company, or constitute a material breach of any mortgage, indenture, contract or other agreement to which the Company is a party or by which the Company 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 the Company threatened, against the Company or any of its properties or with respect to this Agreement or the Certificates which, if adversely determined, would in the opinion of the Company have a material adverse effect on the transactions contemplated by this Agreement. SECTION 7.02 Merger or Consolidation of Company. Any Person into which the Company may be merged or consolidated, or any corporation resulting from any merger or consolidation to which the Company shall be a party, or any Person succeeding to the business of the Company, shall be the successor of the Company hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. The Company shall promptly notify each Rating Agency of any such merger to which it is a party and such merger shall satisfy the Rating Agency Condition. SECTION 7.03 Limitation on Liability of the Company and Others. (a) Neither the Company nor any of the directors, officers, employees or agents of the Company shall be under any liability to the Owner Trustee, the Indenture Trustee, the Certificateholders or the Noteholders for any action taken or for refraining from the taking of any action in good faith pursuant to this Agreement, or for errors in judgment; notwithstanding anything herein to the contrary, no party to this Agreement shall have any recourse against the Company for any actions taken, or failed to be taken, by the Company. (b) The Company and any director, officer, employee or agent of the Company may rely in good faith on any document of any kind prima facie properly executed and submitted by any Person respecting any matters arising hereunder. (c) The Company shall not be under any obligation to appear in, prosecute or defend any legal action which arises under this Agreement. SECTION 7.04 The Company May Own Securities. The Company and any Person controlling, controlled by, or under common control with the Company may in its individual or any other capacity become the owner or pledgee of Notes or Certificates with the same rights as it would have if it were not the Company or an Affiliate thereof, except as otherwise provided in the definition of "Noteholder" or "Certificateholder", respectively. Notes and Certificates so owned by or pledged to the Company or such controlling or commonly controlled Person shall have an equal and proportionate benefit under the provisions of this Agreement, without preference, priority or distinction as among all of the Notes and Certificates. SECTION 7.05 Indebtedness of and Sale of Assets by the Company. (a) The Company will not incur any material indebtedness (other than indebtedness which is contemporaneously repaid upon the issuance of securities by the Company or by selling any assets in connection therewith to the extent permitted by its Certificate of Incorporation) nor will it sell all or substantially all of its assets, if either such action would result in the downgrading by Moody's of any outstanding securities of the Company or any trust or other entity of which the Company is the settlor or depositor, which securities are then rated by Moody's; provided, however, nothing contained in this Agreement shall prohibit the Company from issuing any securities or acting as the settlor or depositor of any trust or other entity (or selling any assets in connection therewith) to the extent permitted by its Certificate of Incorporation. (b) Prior to the issuance of any securities by the Company, the Company shall give at least 5 days' prior written notice to Moody's with a copy of the Prospectus or Preliminary Prospectus Supplement and, on the issuance date, a copy of the agreements pertaining to such securities of the type in the definition of Basic Documents. ARTICLE VIII THE SERVICER; REPRESENTATIONS AND INDEMNITIES SECTION 8.01 Representations of CITSF. CITSF hereby makes the following representations on which the Owner Trustee and the Indenture Trustee on behalf of the Trust shall rely in accepting the Contracts in trust and authenticating the Certificates and the Notes, respectively. The representations shall speak as of the execution and delivery of this Agreement, and shall survive the sale of the Contracts to the Trust. (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 or on the Certificates or the transactions contemplated by the Agreement. (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 or on the Certificates or the transactions contemplated by the Agreement. (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 of CITSF threatened, against CITSF or any of its properties or with respect to this Agreement or the Certificates which, if adversely determined, would in the opinion of CITSF have a material adverse effect on the transactions contemplated by this Agreement. SECTION 8.02 Liability of Servicer, Indemnities. The Servicer shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Servicer, CITSF or the Company under this Agreement and shall have no other obligations or liabilities hereunder. (a) The Servicer shall defend, indemnify, and hold harmless the Owner Trustee, the Indenture Trustee, the Trust, the Certificateholders and the Noteholders from and against any and all costs, expenses, losses, damages, claims, and liabilities, arising out of or resulting from the negligent use or operation by the Servicer of a Financed Boat, to the extent such loss is not reimbursed pursuant to any Insurance Policy, the Servicer's Errors and Omission Policy or any fidelity bond. (b) Subject to Section 8.04(a), the Servicer will defend and indemnify the Owner Trustee, the Indenture Trustee, the Trust, the Certificateholders and the Noteholders against any and all costs, expenses, losses, damages, claims and liabilities arising out of or resulting from any negligent action taken, or negligently failed to be taken, by the Servicer with respect to any Financed Boat, to the extent such loss is not reimbursed pursuant to any Insurance Policy, the Servicer's Errors and Omission Policy or any fidelity bond. (c) The Servicer agrees to pay, and shall indemnify, defend, and hold harmless the Owner Trustee, the Indenture Trustee, the Trust, the Certificateholders and the Noteholders from and against, any taxes that may at any time be asserted with respect to, and as of the date of, the transfer of the Contracts to the Trust, including, without limitation, any sales, gross receipts, personal or real property, privilege or license taxes (but not including any federal, state or other taxes arising out of the creation of the Trust and the issuance of the Notes and Certificates or distributions with respect thereto) and costs, expenses and reasonable counsel fees in defending against the same. (d) The Servicer shall indemnify, defend, and hold harmless the Owner Trustee, the Indenture Trustee, the Trust, the Certificateholders and the Noteholders from and against any and all costs, expenses, losses, claims, damages, and liabilities to the extent that such cost, expense, loss, claim, damage, or liability arose out of, or was imposed upon such Persons, through the willful misfeasance, negligence, or bad faith of the Servicer in the performance of its duties under this Agreement or by reason of reckless disregard of its obligations and duties under this Agreement. (e) The Servicer shall indemnify, defend, and hold harmless from and against, and pay to the Trustees all costs, expenses, losses, claims, damages, and liabilities arising out of or incurred in connection with the acceptance or performance of the trusts and duties herein contained in accordance with the terms and conditions herein and in the Indenture and the Trust Agreement, as the case may be, except to the extent that such cost, expense, loss, claim, damage or liability: (i) shall be due to the willful misfeasance, gross negligence or bad faith of such Trustee; (ii) relates to any tax other than the taxes with respect to which the Company shall be required to indemnify such Trustee pursuant to this Agreement; (iii) shall arise from such Trustee's breach of any of its representations or warranties set forth in the Trust Agreement or the Indenture, as applicable; (iv) shall be one as to which the Company is required to indemnify such Trustee or (v) shall arise out of or be incurred in connection with the acceptance or performance by such Trustee of the duties of successor Servicer hereunder. Indemnification under this Section 8.02 shall include reasonable fees and expenses of counsel in any litigation appointed by the Servicer and reasonably satisfactory to the indemnitee, provided that the Servicer shall only be required to pay the fees and expenses of one counsel in any single litigation (or related proceedings) for all indemnitees; provided, however, if in the written opinion of counsel reasonably satisfactory to the Servicer, the interests of the Servicer and the Indenture Trustee conflict such that the Servicer and the Indenture Trustee may not both be represented by such counsel, upon ten days prior written notice to the Servicer, the Indenture Trustee may hire one other counsel, and the Indemnification under this Section 8.02 shall also include the reasonable fees and expenses of such other counsel. If the Servicer or the Company shall have made any indemnity payments pursuant to this Section 8.02 and the recipient thereafter collects any of such amounts from others, the recipient shall promptly repay such amounts to the Servicer and/or the Company, without interest. The indemnities under this Section 8.02 shall survive the resignation or removal of the Trustees, or the termination of the Trust Agreement and this Agreement. SECTION 8.03 Merger or Consolidation of Servicer. Any person into which the Servicer may be merged or consolidated, or any corporation or other entity resulting from any merger, conversion or consolidation to which the Servicer shall be a party, or any Person succeeding to the business of the Servicer (which Person assumes the obligations of the Servicer), shall be the successor of the Servicer hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding; provided, however, that the successor or surviving Person to the Servicer shall satisfy the criteria set forth in the definition of an Eligible Servicer. The Servicer shall promptly notify each Rating Agency of any such merger to which it is a party. SECTION 8.04 Limitation on Liability of Servicer and Others. (a) Neither the Servicer nor the Company, nor any of the directors, officers, employees or agents of the Servicer or the Company shall be under any liability to the Trustees, the Trust or the Securityholders for any action taken or for refraining from the taking of any action in good faith pursuant to this Agreement, or for errors in judgment; provided, however, that this provision shall not protect the Servicer, the Company or any such Person against any breach of warranties or representations made herein, or failure to perform its or his obligations in compliance with any standard of care set forth in this Agreement, or any liability which otherwise would be imposed by reason of any breach of the terms and conditions of this Agreement. (b) The Servicer and any director, officer, employee or agent of the Servicer may rely in good faith on any document of any kind prima facie properly executed and submitted by any Person respecting any matters arising hereunder. (c) Except as arises from its duties as Servicer hereunder, the Servicer shall not be under any obligation to appear in, prosecute or defend any legal action which arises under this Agreement and which in its opinion may involve it in any expenses or liability; provided, however, that the Servicer and the Company may in its discretion undertake any such action which it may deem necessary or desirable in respect of this Agreement and the rights and duties of the parties hereto. In such event, the legal expenses and costs of such action and any liability resulting therefrom shall be expenses, costs and liabilities of the Trust payable from the Collection Account and the Servicer and the Company shall be entitled to be reimbursed therefor out of the Collection Account. SECTION 8.05 Servicer Not To Resign. The Servicer shall not resign from its obligations and duties under this Agreement except upon determination that the performance of its duties shall no longer be permissible under applicable law, compliance with which could not be realized without material adverse impact on the Servicer's financial condition. Notice of any such determination permitting the resignation of the Servicer shall be communicated to the Trustees and the Rating Agencies at the earliest practicable time (and, if such communication is not in writing, shall be confirmed in writing at the earliest practicable time) and any such determination permitting the resignation of the Servicer shall be evidenced by an Opinion of Counsel to such effect delivered to the Trustee. No such resignation shall become effective until the Indenture Trustee or a successor Servicer shall have assumed the responsibilities and obligations of the Servicer in accordance with Section 9.02. ARTICLE IX EVENTS OF TERMINATION SECTION 9.01 Events of Termination. "Event of Termination" means the occurrence of any of the following: (a) Any failure by the Servicer to make any deposit into an account required to be made hereunder and the continuance of such failure for a period of five Business Days after the Servicer has become aware that such deposit was required; (b) Failure on the Servicer's part to observe or perform in any material respect any covenant or agreement in this Agreement (other than pursuant to Section 9.01(a)), which failure continues unremedied for 30 days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Servicer by the Indenture Trustee, the Owner Trustee or the Company or to the Servicer, the Company and the Trustees by Holders of Notes or Certificates evidencing not less than 25% of the aggregate outstanding principal balance of the Notes, or the outstanding Certificate Balance, respectively; (c) Any assignment or delegation by the Servicer of its duties or rights hereunder except as specifically permitted hereunder, or any attempt to make such an assignment or delegation; (d) A court or other governmental authority having jurisdiction in the premises shall have entered a decree or order for relief in respect of the Servicer in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Servicer, as the case may be, or for any substantial liquidation of its affairs, and such order remains undischarged and unstayed for at least 60 days; (e) The Servicer shall have commenced a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or shall have consented to the entry of an order for relief in an involuntary case under any such law, or shall have consented to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian or sequestrator (or other similar official) of the Servicer or for any substantial part of its property, or shall have made any general assignment for the benefit of its creditors, or shall have failed to, or admitted in writing its inability to, pay its debts as they become due, or shall have taken any corporate action in furtherance of the foregoing; or (f) The failure of the Servicer to be an Eligible Servicer. If an Event of Termination has occurred and is continuing, the Indenture Trustee may or at the written direction of Holders of Notes evidencing a majority of the aggregate outstanding principal balance of the Notes (or, if the Notes have been paid in full and the Indenture has been discharged in accordance with its terms, by the Owner Trustee or Holders of Certificates evidencing a majority or more of the Certificate Balance) shall, unless prohibited by applicable law, terminate all (but not less than all) of the Servicer's management, administrative, servicing and collection functions (such termination being herein called a "Service Transfer"). On receipt of such notice (or, if later, on a date designated therein), all authority and power of the Servicer under this Agreement, whether with respect to the Contracts, the Contract Files or otherwise (except with respect to the Collection Account, the transfer of which shall be governed by Section 9.06), shall pass to and be vested in the Indenture Trustee pursuant to and under this Section 9.01 (however, if all of the Notes have been paid in full and the Indenture has been discharged in accordance with its terms, such authority shall pass to and be vested in the Owner Trustee pursuant to and under this Section 9.01); and, without limitation, such Trustee is authorized and empowered to execute and deliver on behalf of the Servicer, as attorney-in-fact or otherwise, any and all documents and other instruments (including, without limitation, documents required to make such Trustee or a successor servicer the sole lienholder or legal title holder of record of each Financed Boat), and to do any and all acts or things necessary or appropriate to effect the purposes of such notice of termination. Each of CITSF and the Servicer agrees to cooperate with such Trustee in effecting the termination of the responsibilities and rights of the Servicer hereunder, including, without limitation, the transfer to such Trustee for administration by it of all cash amounts which shall at the time be held by the Servicer for deposit, or have been deposited by the Servicer, in the Collection Account, or for its own account in connection with its services hereafter or thereafter received with respect to the Contracts and the execution of any documents required to make such Trustee or a successor Servicer the sole lienholder or legal title holder of record in respect of each Financed Boat. The Servicer shall be entitled to receive any other amounts which are payable to the Servicer under this Agreement, at the time of the termination of its activities as Servicer, to the extent that funds in the Collection Account are available for the payment thereof without reducing the amount of distributions that would be made to Holders of the Notes and Certificates. The Servicer shall transfer to the new Servicer (i) the Servicer's records relating to the Contracts in such electronic form as the new Servicer may reasonably request and (ii) the Contracts and any of the Contract Files in the Servicer's possession. SECTION 9.02 Indenture Trustee to Act; Appointment of Successor. On and after the time the Servicer receives a notice of termination pursuant to Section 9.01 or a notice of determination pursuant to Section 8.05, the Indenture Trustee shall be the successor in all respects to the Servicer in its capacity as Servicer under this Agreement and the transactions set forth or provided for herein and shall be subject to all the responsibilities, duties and liabilities relating thereto placed on the Servicer by the terms and provisions hereof, and the Servicer shall be relieved of such responsibilities, duties and liabilities arising after such Service Transfer; provided, however, that (i) the Indenture Trustee will not assume any obligations of CITSF pursuant to Section 3.02 or be obligated to deposit any net loss on an investment directed by a predecessor Servicer pursuant to Section 5.01(b), and (ii) the Indenture Trustee shall not be liable for any acts or omissions of the Servicer occurring prior to such Service Transfer or for any breach by CITSF of any of its representations and warranties contained herein or in any related document or agreement. The Indenture Trustee and any successor Servicer shall have no responsibility for failure of CITSF and any predecessor Servicer to deliver to the Indenture Trustee or such successor Servicer any property or funds belonging to the Trust, including but not limited to the funds, records, Contracts and Contract Files. As compensation therefor, the Indenture Trustee shall, except as provided in this Section 9.02, be entitled to such compensation as the Servicer would have been entitled to hereunder if no such notice of termination had been given. Notwithstanding the above, the Indenture Trustee may, if it shall be unwilling so to act, or shall, if it is legally unable so to act, appoint, or petition a court of competent jurisdiction to appoint, an Eligible Servicer as the successor to the Servicer hereunder in the assumption of all or any part of the responsibilities, duties or liabilities of the Servicer hereunder. Pending appointment of a successor to the Servicer hereunder, unless the Indenture Trustee is prohibited by law from so acting, the Indenture Trustee shall act in such capacity as hereinabove provided. In connection with such appointment and assumption, the Indenture Trustee may make such arrangements for the compensation of such successor out of payments on Contracts as it and such successor shall agree; provided, however, that no such compensation shall, without the written consent of 100% of the Securityholders, be in excess of the Servicing Fee. The Indenture Trustee and such successor shall take such action, consistent with this Agreement, as shall be necessary to effectuate any such succession. SECTION 9.03 Notification to Securityholders. (a) Promptly following the occurrence of any Event of Termination, the Servicer shall give written notice thereof to the Trustees, the Cash Collateral Depositor (so long as the Loan under the Cash Collateral Agreement is still outstanding) and the Securityholders at their respective addresses appearing on the Certificate Register and the Note Register and to each Rating Agency. (b) Within 10 days following any termination or appointment of a successor to the Servicer pursuant to this Article IX, the Trustees shall give written notice thereof to the Cash Collateral Depositor (so long as the Loan under the Cash Collateral Agreement is still outstanding) and to the Certificateholders and Noteholders at their respective addresses appearing on the Certificate Register and the Note Register. (c) The Indenture Trustee shall give written notice to each Rating Agency at least 30 days prior to the date upon which any Eligible Servicer (other than the Indenture Trustee) is to assume the responsibilities of Servicer pursuant to Section 9.02, naming such successor Servicer. SECTION 9.04 Rights to Direct Trustees and Waiver of Events of Termination. Holders of Notes or Certificates evidencing not less than 25% of the aggregate outstanding principal amount of the Notes or 25% of the Certificate Balance, respectively, shall have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Indenture Trustee or the Owner Trustee, respectively, or exercising any trust or power conferred on the Trustees; provided, however, that, subject to Section 10.01, the Trustees shall have the right to decline to follow any such direction which such Trustee (being advised by counsel) determines that the action so directed may not lawfully be taken, or if such Trustee in good faith shall, by a Responsible Officer or Officers of such Trustee, determine that the proceedings so directed would be illegal or involve it in personal liability or be unduly prejudicial to the rights of Noteholders or Certificateholders not parties to such direction; provided further that nothing in this Agreement shall impair the right of the Trustees to take any action deemed proper by such Trustee and which is not inconsistent with such direction by the Noteholders or Certificateholders. Holders of Notes evidencing not less than a majority of the aggregate outstanding principal balance of the Notes (or, if all of the Notes have been paid in full and the Indenture has been discharged in accordance with its terms, Certificates evidencing not less than a majority of the Certificate Balance) may, on behalf of the Noteholders and Certificateholders, waive any past Event of Termination hereunder and its consequences (except a continuing failure to make any required deposits to or payments from the Collection Account and the other accounts contemplated herein in accordance with this Agreement, which default cannot be waived without the consent of all Securityholders) and, upon any such waiver, such Event of Termination shall cease to exist and shall be deemed to have been cured for every purpose of this Agreement; but no such waiver shall extend to any subsequent or other Event of Termination or impair any right consequent thereon. SECTION 9.05 Effect of Transfer. (a) After the Service Transfer, the Indenture Trustee or new Servicer may notify the Obligors to make payments directly to the new Servicer that are due under the Contracts after the effective date of the Service Transfer. (b) After the Service Transfer, the replaced Servicer shall have no further obligations with respect to the management, administration, servicing or collection of the Contracts and the new Servicer shall have all of such obligations, except that the replaced Servicer shall remain liable for any liability of the replaced Servicer hereunder that was already accrued at the time of the Service Transfer and except that the replaced Servicer will transmit or cause to be transmitted directly to the new Servicer for its own account, promptly on receipt and in the same form in which received, any amounts (properly endorsed where required for the new Servicer to collect them) received as payments upon or otherwise in connection with the Contracts. (c) A Service Transfer shall not affect the rights and duties of the parties hereunder (including but not limited to the indemnities and other agreements of the Servicer and CITSF) other than those relating to the management, administration, servicing or collection of the Contracts. ARTICLE X [RESERVED] ARTICLE XI OPTIONAL PURCHASE AND AUCTION SALE SECTION 11.01 Optional Purchase of All Contracts. On any Distribution Date, following any Record Date as of which the Pool Balance is 10% or less of the Initial Pool Balance, CITSF shall have the option to purchase the Contracts (including the Defaulted Contracts), any Financed Boats in the Trust relating to Defaulted Contracts and all rights relating to the Contracts under all Insurance Policies. To exercise such option, CITSF shall notify the Trustees and the Depository, if any, in writing, no later than the 20th day of the month preceding the month as of which such purchase is to be effected occurs; provided, however, that CITSF shall not effect any such purchase if the long-term unsecured obligations of its parent are rated less than "Baa3" by Moody's or less than "BBB" by Standard & Poor's, unless the Trustees shall have received an Opinion of Counsel acceptable to it that payment of the purchase price to the Securityholders will not constitute a voidable preference or a fraudulent transfer under the United States Bankruptcy Code. CITSF shall effect such purchase by depositing, in accordance with Section 5.04, the aggregate Purchase Price of the Contracts (less any other amounts deposited, or to be deposited, by the Servicer in the Collection Account with respect to the Contract pursuant to Section 5.02) plus the appraised value of any other property held by the Trust and purchased by CITSF (less liquidation expenses) in the Collection Account on the Deposit Date immediately following the month in which such purchase is to be effected; provided, however, in no event shall the amount so deposited, when added to the amounts on deposit in the Collection Account on such date and available for distribution to Securityholders on the next Distribution Date, be less than the amount required to pay all accrued and unpaid interest on the Notes, the remaining principal balance of the Notes, accrued and unpaid interest on the Certificates and the Certificate Balance, after giving effect to the reimbursement of the Servicer for all unpaid Monthly Advances and the Servicer Payment. The effective date of such purchase shall be the last day of the Due Period which ends in the month referred to in the preceding sentence. SECTION 11.02 Mandatory Sale of all Contracts. In accordance with the procedures and schedule set forth in Exhibit H hereto (the "Auction Procedures"), the Indenture Trustee (or, if the Notes have been paid in full and the Indenture shall have been discharged in accordance with its terms, the Owner Trustee) shall conduct an auction (the "Auction") of the Contracts remaining in the Trust (such Contracts hereinafter referred to as the "Auction Property") in order to effect a termination of the Trust pursuant to Section 7.1 of the Trust Agreement on the second Distribution Date succeeding the Record Date on which the Pool Balance is 5% or less of the Initial Pool Balance. Such Auction shall be conducted within 10 days following the Distribution Date following the Record Date on which the Pool Balance is 5% or less of the Initial Pool Balance. CITSF and the Company may, but shall not be required to, bid at the Auction. Such Trustee shall sell and transfer the Auction Property to the highest bidder therefor at the Auction provided that: (a) the Auction has been conducted in accordance with the Auction Procedures; (b) such Trustee has received good faith bids for the Auction Property from two prospective purchasers that are considered by such Trustee, in its sole discretion, to be competitive participants in the market for marine installment sale contracts; (c) a financial advisor, as advisor to such Trustee (in such capacity, the "Advisor"), shall have advised such Trustee in writing that at least two of such bidders (including the winning bidder) are participants in the market for marine installment sale contracts willing and able to purchase the Auction Property; (d) the highest bid in respect of the Auction Property is not less than the aggregate fair market value of the Auction Property (as determined by such Trustee in its sole discretion); (e) any bid submitted by CITSF, the Company or any affiliate of either of them shall reasonably represent the fair market value of the Auction Property, as independently verified and represented in writing by a qualified independent third party evaluator (which may include the Advisor or an investment banking firm) selected by such Trustee; and (f) the highest bid would result in proceeds from the sale of the Auction Property which will be at least equal to the sum of (A) the greater of (1) the aggregate Purchase Price for the Contracts (including Defaulted Contracts), plus the appraised value of any other property held by the Trust (less liquidation expenses) or (2) an amount that, when added to amounts on deposit in the Collection Account and available for distribution to Securityholders on the second Distribution Date following the consummation of such sale (the "Liquidation Distribution Date"), would result in proceeds sufficient to distribute to Securityholders the amounts of interest due to the Securityholders for such Distribution Date and any unpaid interest payable to the Securityholders with respect to one or more prior Distribution Dates and the outstanding principal amount of the Notes and the Certificate Balance, and (B) the sum of (1) an amount sufficient to reimburse the Servicer for any unreimbursed Monthly Advances for which it is entitled to reimbursement and (2) the Servicing Fee payable on such second Distribution Date, including any unpaid Servicing Fees with respect to one or more prior Due Periods. Provided that all of the conditions set forth in clauses (a) through (f) have been met, such Trustee shall sell and transfer the Auction Property, without representation, warranty or recourse, to such highest bidder in accordance with and upon completion of the Auction Procedures. Such Trustee shall deposit the purchase price for the Auction Property in the Collection Account at least one Business Day prior to such second succeeding Distribution Date. In addition, the Auction must stipulate that the Servicer be retained to service the Contracts on terms substantially similar to those in the Agreement. In the event that any of such conditions are not met or such highest bidder fails or refuses to comply with any of the Auction Procedures, such Trustee shall decline to consummate such sale and transfer. In the event such sale and transfer is not consummated in accordance with the foregoing, however, such Trustee may from time to time in the future, but shall not under any further obligation to, solicit bids for sale of the assets of the Trust Fund upon the same terms and conditions as set forth above. If any of the foregoing conditions are not met, such Trustee shall decline to consummate such sale and shall not be under any obligation to solicit any further bids or otherwise negotiate any further sale of Contracts remaining in the Trust. In such event, however, such Trustee may from time to time solicit bids in the future for the purchase of such Contracts pursuant to this Section 11.02. If applicable, the Indenture Trustee shall provide notice to the Owner Trustee of the termination of the Trust pursuant to this Section 11.02 as soon as practicable upon the consummation of the mandatory sale of the Contracts pursuant to this Section 11.02. ARTICLE XII MISCELLANEOUS PROVISIONS SECTION 12.01 Amendment. This Agreement may be amended in writing by the Company, the Servicer and the Owner Trustee (and, in the event such amendments affect the Indenture Trustee, the Indenture Trustee) without prior notice to or the consent of any of the Securityholders, and in the case of clauses (vi) and (vii), upon satisfaction of the Rating Agency Condition, (i) to correct manifest error or cure any ambiguity, (ii) to correct or supplement any provisions herein or therein which may be inconsistent with any other provisions herein or therein, as the case may be, (iii) to add or amend any provisions as requested by Moody's or Standard & Poor's in order to maintain or improve any rating of the Notes or Certificates (it being understood that, after the Closing Date, neither the Owner Trustee, the Indenture Trustee, the Company nor CITSF is obligated to maintain or improve such rating); (iv) to add to the covenants, restrictions or obligations of the Company, the Servicer, the Owner Trustee or the Indenture Trustee; (v) to evidence and provide for the acceptance of the appointment of a successor trustee with respect to the Owner Trust Estate and add to or change any provisions as shall be necessary to facilitate the administration of the trusts under the Trust Agreement by more than one trustee pursuant to Article VI of the Trust Agreement or (vi) to add, change or eliminate any other provisions provided that an amendment pursuant to this clause (vi), shall not, as evidenced by an Opinion of Counsel for the Servicer or the Company, adversely affect in any material respect the interests of the Trust, any Noteholder or any Certificateholder. This Agreement may also be amended in writing from time to time by the Company, the Servicer and the Owner Trustee (and, in the event such amendments affect the Indenture Trustee, the Indenture Trustee), with the consent of Holders of Certificates evidencing not less than a majority of the Certificate Balance and the consent of Holders of Notes evidencing not less than a majority of the aggregate outstanding principal balance of the Notes, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement, or of modifying in any manner the rights of the Certificateholders or Noteholders, respectively; provided, however, that no such amendment shall (i) increase or reduce in any manner the amount of, or accelerate or delay the timing of, collections of payments of Contracts, or distributions that shall be required to be made on any Certificate or Note, respectively, the Contract Rate, the Pass-Through Rate or the Class A Rate or (ii) reduce the aforesaid percentage required to consent to any such amendment, without the consent of the Holders of all Certificates and Notes then outstanding. Notwithstanding the foregoing, no amendment materially affecting the rights of the Cash Collateral Depositor shall be made without the consent of the Cash Collateral Depositor (so long as the Loan under the Cash Collateral Agreement is still outstanding). Promptly after the execution of any amendment or consent pursuant to this Section, the Owner Trustee shall furnish written notification of the substance of such amendment to each Certificateholder and each Noteholder (but only if such amendment is pursuant to the second paragraph of this Section 12.01) and (so long as the Loan under the Cash Collateral Agreement is still outstanding) the Cash Collateral Depositor and, in all cases, to each Rating Agency, which notification will be prepared by the Servicer and delivered to such Trustee. It shall not be necessary for the consent of the Certificateholders, the Noteholders or the Cash Collateral Depositor pursuant to this Section 12.01 to approve the particular form of any proposed amendment or consent, but it shall be sufficient if such consent shall approve the substance thereof. The manner of obtaining such consents and of evidencing the authorization of the execution thereof by Certificateholders, the Noteholders or the Cash Collateral Depositor, as the case may be, shall be subject to such reasonable requirements as such Trustee may prescribe. Such Trustee may, but shall not be obligated to, enter into any such amendment which affects such Trustee's own rights, duties or immunities under this Agreement or otherwise. However, no such amendment shall be permitted without the consent of the Trustee whose rights, duties or immunities are being modified. In connection with any amendment pursuant to this Section 12.01, the Owner Trustee shall be entitled to receive an Opinion of Counsel to the Servicer to the effect that such amendment is authorized or permitted by the Agreement. Upon the execution of any amendment or consent pursuant to this Section 12.01, this Agreement shall be modified in accordance therewith, and such amendment or consent shall form a part of this Agreement for all purposes, and every Holder of Securities theretofore or thereafter issued hereunder shall be bound thereby. SECTION 12.02 Protection of Title to Trust. (a) On or prior to the Closing Date, the Servicer shall cause the following UCC-1 financing statements to be filed: (i) UCC-1 financing statement executed by CITCF-NY as debtor, naming CITSF as secured party and filed in New Jersey and Oklahoma City to perfect the sale from CITCF-NY to CITSF; (ii) UCC-1 financing statement executed by CITSF as debtor, naming the Company as secured party and filed in New Jersey and Oklahoma City to perfect the sale from CITSF to the Company; (iii) UCC-1 financing statement executed by the Company as debtor, naming the Owner Trustee as secured party and filed in New Jersey and Oklahoma City to perfect the sale from the Company to the Owner Trustee; and (iv) UCC-1 financing statement executed by the Owner Trustee as debtor, naming the Indenture Trustee as secured party and filed in New Jersey, Oklahoma City, and Delaware to perfect the security interest granted in the Collateral by the Indenture. The Servicer shall cause to be filed all necessary continuation statements of the UCC-1 financing statement referred to in the previous sentence on which it is the debtor, and the Servicer shall cause to be filed all necessary continuation statements of the UCC-1 financing statement referred to in the previous sentence on which it is the debtor. From time to time the Servicer shall, subject to the following sentence, take and cause to be taken such actions and execute such documents as are necessary to perfect and protect the Noteholders' and Certificateholders' interests in the Contracts and their proceeds against all other persons, including, without limitation, the filing of financing statements, amendments thereto and continuation statements, the execution of transfer instruments and the making of notations on or taking possession of all records or documents of title. The Servicer will maintain the Trust's perfected first priority security interest in each Financed Boat so long as the related Contract is the property of the Trust; provided, however, that because of the expense and administrative inconvenience involved, the Servicer will not amend any certificate of title to name CITSF, the Company or the Trust as the lienholder, and neither the Servicer nor the Company will deliver any certificate of title to the Trust or note thereon the Trust's interest. The Servicer agrees to pay all reasonable costs and disbursements in connection with the perfection and the maintenance of perfection, as against all third parties, of the Noteholders' and Certificateholders' right, title and interest in and to the Contracts (including, without limitation, the security interest in the Financed Boats granted thereby). (b) During the term of this Agreement, neither the Company nor CITSF shall change its name, identity or structure or relocate its chief executive office without first giving notice thereof to the Trustees and the Servicer. In addition, following any such change in the name, identity, structure or location of the chief executive office of the Company or CITSF, the Company or CITSF, as appropriate, shall give prior written notice thereof to each Rating Agency. If any change in the Company's, the Servicer's or CITSF's name, identity or structure or the relocation of its chief executive office would make any financing or continuation statement or notice of lien filed under this Agreement seriously misleading within the meaning of applicable provisions of the UCC or any title statute or would cause any such financing or continuation statement or notice of lien to become unperfected (whether immediately or with lapse of time), the Servicer no later than five days after the effective date of such change, shall (subject to the proviso in the final sentence of the last paragraph of Section 12.01(a)) file, or cause to be filed, such amendments or financing statements as may be required to preserve, perfect and protect the Noteholders' and Certificateholders' interests in the Contracts and proceeds thereof and in the Financed Boats. (c) During the term of this Agreement, the Company and CITSF will maintain their respective chief executive offices in one of the States of the United States. (d) The Servicer shall maintain accounts and records as to each Contract accurately and in sufficient detail to permit (i) the reader thereof to know at any time the status of such Contract, including payments and recoveries made and payments owing (and the nature of each) and (ii) reconciliation between payments or recoveries on (or with respect to) each Contract and the amounts from time to time deposited in the Collection Account in respect of such Contract. (e) Each of the Company and the Servicer shall maintain its computer systems so that, from and after the time of sale under this Agreement of the Contracts to the Trust, the master computer records of the Company and the Servicer (including archives) that shall refer to a Contract indicate clearly that such Contract is owned by the Trust. Indication of the Trust's ownership of a Contract shall be deleted from or modified on the Company's and the Servicer's computer systems when, and only when, the Contract shall have been paid in full, purchased or assigned pursuant hereto. (f) At all times during the term hereof, the Servicer shall afford the Trust and its authorized agents reasonable access during normal business hours to the Servicer's records relating to the Contracts and will cause its personnel to assist in any examination of such records by the Trust or its authorized agents. The examination referred to in this Section 12.01(f) will be conducted in a manner which does not unreasonably interfere with the Servicer's normal operations or customer or employee relations. Without otherwise limiting the scope of the examination the Trust may make, the Trust or its authorized agents may, using generally accepted audit procedures, verify the status of each Contract and review the Electronic Ledger and records relating thereto for conformity to Monthly Reports prepared pursuant to Article V and compliance with the standards represented to exist as to each Contract in this Agreement. Nothing in this Section 12.01(f) shall affect the obligation of the Servicer to observe any applicable law prohibiting disclosure of information regarding the Obligors, and the failure of the Servicer to provide access to information as a result of such obligation shall not constitute a breach of this Section 12.01(f). (g) Upon request, the Servicer shall furnish to the Trust, within five Business Days, a list of all Contracts by contract number and name of Obligor as of the end of the most recent Due Period held as part of the Trust, together with a reconciliation of such list to the List of Contracts and to each of the Servicer Certificates indicating removal of Contracts from the Trust. At all times during the term hereof, the Servicer shall keep available a copy of the List of Contracts at its principal executive office for inspection by Securityholders. (h) The Servicer shall, to the extent required by applicable law, cause the Notes and Certificates to be registered with the Securities and Exchange Commission pursuant to Section 12(b) or Section 12(g) of the Securities Exchange Act of 1934 within the time periods specified in such sections. SECTION 12.03 Limitation on Rights of Securityholders. The death or incapacity of any Securityholder shall not operate to terminate this Agreement or the Trust, nor entitle the Securityholder's legal representatives or heirs to claim an accounting or to take any action or commence any proceeding in any court for a partition or winding up of the Trust, nor otherwise affect the rights, obligations, and liabilities of the parties to this Agreement or any of them. No Securityholder shall have any right to vote (except as provided in Sections 9.04 and this Section 12.02) or in any manner otherwise control the operation and management of the Trust, or the obligations of the parties to this Agreement, nor shall anything set forth in this Agreement or contained in the terms of the Securities, be construed so as to constitute the Holders as partners or members of an association; nor shall any Securityholder be under any liability to any third person by reason of any action taken pursuant to any provision of this Agreement. No Securityholder shall have any right by virtue or by availing itself of any provisions of this Agreement to institute any suit, action, or proceeding in equity or at law upon or under or with respect to this Agreement, except as provided in Section 10.03(b); no one or more Holders of Securities shall have any right in any manner whatever by virtue or by availing itself or themselves of any provisions of this Agreement to affect, disturb, or prejudice the rights of the Holders of any other of the Securities, or to obtain or seek to obtain priority over or preference to any other such Holder, or to enforce any right under this Agreement, except in the manner provided in this Agreement and for the equal, ratable and common benefit of all Securityholders. For the protection and enforcement of the provisions of this Section 12.02, each Securityholder and the Trust shall be entitled to such relief as can be given either at law or in equity. SECTION 12.04 Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without regard to its conflict-of-laws provisions. SECTION 12.05 Notices. All communications and notices pursuant hereto to the Company, the Servicer, Moody's and Standard & Poor's shall be in writing and delivered or mailed to it at the appropriate following address: If to the Company: The CIT Group Securitization Corporation II 650 CIT Drive Livingston, New Jersey 07039 Attention: President If to the Servicer: The CIT Group/Sales Financing, Inc. 650 CIT Drive Livingston, New Jersey 07039 Attention: President If to Standard & Poor's: Standard & Poor's Corporation 25 Broadway New York, New York 10004 Attention: ABS Group/Market Surveillance If to Moody's: Moody's Investors Service Inc. 99 Church Street New York, New York 10007 or at such other address as the party may designate by notice to the other parties hereto, which notice shall be effective when received. All communications and notices pursuant hereto to a Certificateholder or a Noteholder shall be in writing and delivered or mailed at the address shown in the Certificate Register or Note Register, respectively. Copies of all communications and notices required hereunder to be given to the Owner Trustee shall be sent to [____________________] at ____________________, __________, Attention: _______________. SECTION 12.06 Severability of Provisions. If any one or more of the covenants, agreements, provisions, or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions, or terms shall be deemed severable from the remaining covenants, agreements, provisions, or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement or of the Certificates and Notes or the rights of the Holders thereof. SECTION 12.07 Submission to Jurisdiction; Venue. The parties hereto with respect to any action or claim brought against or by the Trust submit to jurisdiction in the state or federal courts in New York, New York, and agree to New York, New York as the venue for any such claim or action. SECTION 12.08 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument. SECTION 12.09 Merger and Integration. Except as specifically stated otherwise herein, this Agreement sets forth the entire understanding of the parties relating to the subject matter hereof, and all prior understandings, written or oral, are superseded by this Agreement. This Agreement may not be modified, amended, waived, or supplemented except as provided herein. SECTION 12.10 Headings. The headings herein are for purposes of reference only and shall not otherwise affect the meaning or interpretation of any provision hereof. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of ____________, ____. THE CIT GROUP/SALES FINANCING, INC. By: ___________________________________ Name: Title: THE CIT GROUP SECURITIZATION CORPORATION II By: ___________________________________ Name: Title: CIT MARINE TRUST ____-_ By: [____________________], not in its individual capacity but solely as Owner Trustee on behalf of the Trust By: ___________________________________ Name: Title: Acknowledged and Accepted: [____________________], not in its individual capacity but solely as Indenture Trustee, By: ___________________________________ Name: Title: EXHIBIT A List of Initial Contracts EXHIBIT B FORM OF SUBSEQUENT PURCHASE AGREEMENT This Subsequent Purchase Agreement dated as of ____________, ____ (the "Agreement"), is between THE CIT GROUP SECURITIZATION CORPORATION II, as purchaser (the "Purchaser"), and THE CIT GROUP/SALES FINANCING, INC., as seller (the "Seller"). Reference is hereby made to the Purchase Agreement dated as of ____________, ____ between the parties hereto (the "Purchase Agreement") pursuant to which the Purchaser purchased from the Seller the marine installment sales contracts set forth on Exhibit A thereto (the "Initial Contracts"). The Purchaser sold the Initial Contracts to the trust established pursuant to the Trust Agreement dated as of ____________, ____ between the Purchaser and [____________________], as trustee (the "Owner Trustee"). Pursuant to the Sale and Servicing Agreement dated as of ____________, ____ between CIT Marine Trust ____-_ (the "Trust"), the Purchaser and the Seller, the Purchaser agreed to purchase from the Seller and the Seller agreed to sell to the Purchaser, subject to the terms and conditions set forth in Section 3.01D of the Sale and Servicing Agreement, Subsequent Contracts for the fixed purchase price specified in the Sale and Servicing Agreement for delivery on the date specified herein. The purchase price for any Subsequent Contract will be funded from money on deposit in the Pre-Funding Account during the Funding Period. The purchase of any Subsequent Contract by the Purchaser must be evidenced by the execution and delivery of a Subsequent Purchase Agreement substantially in the form of Exhibit B to the Sale and Servicing Agreement. Accordingly, subject to the terms hereof and the Sale and Servicing Agreement, the Seller agrees to sell, and the Purchaser agrees to purchase, the marine installment sales contracts set forth on Exhibit A hereto (collectively, the "Subsequent Contracts"), having an aggregate outstanding principal balance as of ____________, ____ (the "Subsequent Cut-Off Date") of $___________. The Purchaser and the Seller wish to prescribe the terms and conditions of the purchase by the Purchaser of the Subsequent Contracts and the servicing and administration of the Subsequent Contracts. In consideration of the premises and the mutual agreements hereinafter set forth, the Purchaser and the Seller agree as follows: ARTICLE I DEFINITIONS SECTION 1.1. Definitions. Certain capitalized terms used in this Agreement shall have the respective meanings assigned to them in the Sale and Servicing Agreement. All references in this Agreement to Articles, Sections, subsections and exhibits are to the same contained in or attached to this Agreement unless otherwise specified. ARTICLE II SALE AND CONVEYANCE OF SUBSEQUENT CONTRACTS; CONTRACT FILES SECTION 2.1. Sale and Conveyance of Contracts. On ____________, ____ (the "Subsequent Transfer Date"), subject to the terms and conditions hereof, the Seller shall sell, transfer, assign absolutely, set over and otherwise convey to the Purchaser as of the Subsequent Transfer Date (i) all the right, title and interest of the Company in and to the Subsequent Contracts and all the rights, benefits, and obligations arising from and in connection with each Subsequent Contract, (ii) the security interests in the Subsequent Financed Boats granted by the Obligors pursuant to the Subsequent Contracts, (iii) all payments received by the Company on or with respect to the Subsequent Contracts on or after the Subsequent Cut-off Date (exclusive of payments with respect to Post Cut-off Date Insurance Add-Ons), (iv) the interest of the Company in any Subsequent Financed Boat (including any right to receive future Net Liquidation Proceeds) that secures the Subsequent Contracts and that shall have been repossessed by the Servicer by or on behalf of the Trust; (v) all rights of the Company to proceeds of Insurance Policies covering the Obligors and the Subsequent Contracts, (vi) the proceeds from any Servicer's Errors and Omissions Protection Policy, any fidelity bond and any blanket hazard policy, to the extent such proceeds relate to any Subsequent Financed Vehicle, (vii) all rights of recourse against any cosigner or under any personal guarantee with respect to the Subsequent Contracts (other than any right as against a Dealer under a Dealer Agreement), (viii) all proceeds in any way derived from any of the foregoing items, and (ix) all documents contained or required to be contained in the Contract Files relating to the Subsequent Contracts. The parties intend and agree that the conveyance of the Seller's right, title and interest in and to the Subsequent Contracts (and all rights, entitlements and amounts listed above) pursuant to this Agreement shall constitute an absolute sale. SECTION 2.2. Purchase Price; Payments on the Subsequent Contracts. (a) The purchase price for the Subsequent Contracts shall be an amount equal to $___________, which is the aggregate outstanding principal balance of the Subsequent Contracts transferred pursuant to this Agreement as of the Subsequent Cut-off Date, and the Seller hereby acknowledges receipt of such amount in respect of the sale of the Subsequent Contracts hereunder. Such purchase price shall be payable in immediately available funds on the Subsequent Transfer Date from funds on deposit in the Pre-Funding Account. (b) The Purchaser shall be entitled to all payments of principal and interest received on or after the Subsequent Cut-off Date. All payments of principal and interest received before the Subsequent Cut-off Date shall belong to the Seller. The Seller shall hold in trust for the Purchaser and shall promptly remit to the Purchaser, any payments on the Subsequent Contracts received by the Seller that belong to the Purchaser under the terms of this Agreement. SECTION 2.3. Conditions to Sale of Subsequent Contracts. The Purchaser's obligations hereunder are subject to the following conditions: (a) The Purchaser shall have received: the Sale and Servicing Agreement executed by all the parties thereto, the documents listed in Section 3.01D of the Sale and Servicing Agreement, and such other opinions and documents as the Purchaser may reasonably require in connection with the purchase of the Subsequent Contracts hereunder or the sale of the Notes and Certificates; (b) The representations and warranties with respect to the Subsequent Contracts of (i) the Seller and the Servicer made in the Sale and Servicing Agreement and (ii) the Seller made in the Purchase Agreement and this Agreement shall be true and correct with respect to the Subsequent Contracts on the Subsequent Transfer Date; and (c) The conditions for transfer of the Subsequent Contracts from the Purchaser to the Trust set forth in Section 3.01D of the Sale and Servicing Agreement have been fulfilled. SECTION 2.4. Examination of Files. The Seller will make the Contract Files with respect to the Subsequent Contracts available to the Purchaser or its agent for examination at the Trust's offices or such other location as otherwise shall be agreed upon by the Purchaser and the Seller. SECTION 2.5. Transfer of Subsequent Contracts. Pursuant to the Sale and Servicing Agreement, the Purchaser will assign all of its right, title and interest in and to the Subsequent Contracts to the Trust for the benefit of the Securityholders. The Purchaser has the right to assign its interest under this Agreement as may be required to effect the purposes of the Sale and Servicing Agreement, by written notice to the Seller and without the consent of the Seller, and the assignee shall succeed to the rights and obligations hereunder of the Purchaser. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER; REPURCHASE OF CONTRACTS SECTION 3.1. Representations and Warranties of the Seller. (a) The representations and warranties of the Seller contained in Article III of the Sale and Servicing Agreement with respect to the Subsequent Contracts are incorporated herein, and are made to the Purchaser on the Subsequent Transfer Date, as if set forth herein and as if made to the Purchaser on the date hereof. The Seller will make such representations and warranties in the Sale and Servicing Agreement directly to the Trust and will become obligated in respect of such representations and warranties pursuant to Article III of the Sale and Servicing Agreement. On the Subsequent Transfer Date, the Seller shall deliver to the Purchaser an Officers' Certificate, dated the Subsequent Transfer Date, to the effect that the representations and warranties made in the Sale and Servicing Agreement with respect to the Subsequent Contracts by the Seller are true and correct as of the Subsequent Transfer Date. (b) It is understood and agreed that the representations and warranties incorporated by reference in this Agreement by Section 3.1. A hereof shall remain operative and in full force and effect, shall survive the transfer and conveyance of the Subsequent Contracts by the Seller to the Purchaser and by the Purchaser to the Trust, and shall inure to the benefit of the Purchaser, the Trust and their successors and permitted assignees. (c) The Seller shall indemnify the Purchaser and the Servicer and hold the Purchaser and the Servicer harmless against any loss, penalties, fines, forfeitures, legal fees and related costs, judgments and other costs and expenses resulting from any claim, demand, defense or assertion based on or grounded upon, or resulting from, a breach of the Seller's representations and warranties contained or incorporated by reference in this Agreement. It is understood and agreed that the obligation of the Seller set forth in this Section 3.1 to indemnify the Purchaser and the Servicer as provided in this Section 3.1. constitutes the sole remedy of the Purchaser and the Servicer respecting a breach of the foregoing representations and warranties. The Trust shall also have the remedies provided in the Sale and Servicing Agreement. (d) Each indemnified party shall give prompt notice to the Seller of any action commenced against it with respect to which indemnity may be sought hereunder but failure to so notify an indemnifying party shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement, unless the failure to notify materially prejudices the rights and condition of the Seller. The Seller shall be entitled to participate in any such action, and to assume the defense thereof, and after notice from the Seller to an indemnified party of its election to assume the defense thereof, the Seller will not be liable to such indemnified party under this Section for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof. (e) Any cause of action against the Seller or relating to or arising out of the breach of any representations and warranties made or incorporated by reference in this Section 3.01 shall accrue as to any Subsequent Contract upon (i) discovery of such breach by the Purchaser or the Servicer or notice thereof by the Seller to the Purchaser and the Servicer, (ii) failure by the Seller to cure such breach and (iii) demand upon the Seller by the Purchaser for all amounts payable in respect of such Subsequent Contract. ARTICLE IV MISCELLANEOUS PROVISIONS SECTION 4.1. Amendment. This Agreement may be amended from time to time by the Seller and the Purchaser by written agreement signed by the Seller and the Purchaser. SECTION 4.2. Counterparts. For the purpose of facilitating the execution of this Agreement as herein provided and for other purposes, this Agreement may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed to be an original, and such counterparts shall constitute but one and the same instrument. SECTION 4.3. Termination. The Seller's obligations under this Agreement shall survive the sale of the Subsequent Contracts to the Purchaser. SECTION 4.4. Governing Law. This Agreement shall be construed in accordance with the laws of the State of New York and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws. SECTION 4.05. Notices. All demands, notices and communications hereunder shall be in writing and shall be deemed to have been duly given if mailed by first class mail, postage prepaid, to (i) in the case of the Seller, The CIT Group/Sales Financing, Inc., 650 CIT Drive, Livingston, New Jersey 07039, Attention: President, or such other address as may hereafter be furnished to Purchaser in writing by the Seller, or (ii) in the case of the Purchaser, The CIT Group Securitization Corporation II, 650 CIT Drive, Livingston, New Jersey 07039, Attention: President, or such other address as may hereafter be furnished to the Seller by the Purchaser. SECTION 4.6. Severability of Provisions. If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement. SECTION 4.7. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Seller and the Purchaser and their respective successors and assigns, as may be permitted hereunder. SECTION 4.8. Opinion. The Counsel to the Seller shall deliver to the Purchaser and the Trustees an opinion in the form of Exhibit B hereto. IN WITNESS WHEREOF, the Seller and the Purchaser have caused their names to be signed hereto by their respective officers thereunto duly authorized as of the day and year first above written. THE CIT GROUP SECURITIZATION CORPORATION II, as Purchaser By: ___________________________________ Name: Title: THE CIT GROUP/SALES FINANCING, INC., as Seller By: ___________________________________ Name: Title: EXHIBIT A List of Subsequent Contracts EXHIBIT B [FORM OF OPINION OF COUNSEL] [Date] [____________________], solely in its capacity as Indenture Trustee under the Sale and Servicing Agreement referred to herein [____________________], solely in its capacity as Owner Trustee under the Sale and Servicing Agreement referred to herein Ladies and Gentlemen: I have acted as counsel to The CIT Group/Sales Financing, Inc. ("CITSF") and The CIT Group Securitization Corporation II, a Delaware corporation (the "Company"), in connection with the sale of CIT Marine Trust ____-_, Class A _____% Asset Backed Notes (the "Notes") and _____% Asset Backed Certificates (the "Certificates" and, collectively with the Notes, the "Securities"). The Notes represent obligations of, and the Certificates represent interests in, a trust, the CIT Marine Trust ____-_ (the "Trust"), consisting of a pool of installment sale contracts secured by new and used boats (collectively, the "Contracts") and certain related property. The Company purchased certain of the Contracts from CITSF (the "Initial Contracts") pursuant to a Purchase Agreement, dated as of ____________, ____, by and between CITSF and the Company. Additional Contracts are being purchased by the Company from CITSF (the "Subsequent Contracts") pursuant to the Subsequent Purchase Agreement dated as of ____________, ____ (the "Subsequent Purchase Agreement"). Pursuant to a Sale and Servicing Agreement, dated as of ____________, ____ (the "Sale and Servicing Agreement"), among the Company, CITSF and the Trust, the Company transferred the Initial Contracts to the Trust. The Company will also transfer, pursuant to the Sale and Servicing Agreement, the Subsequent Contracts to the Trust, the corpus of which will consist of each of the Initial Contracts and the Subsequent Contracts and certain other property transferred by the Company to the Trust. All capitalized terms used herein and not defined shall have the meanings assigned to them in the Subsequent Purchase Agreement. In rendering the following opinions, I have examined (i) the Subsequent Purchase Agreement; (ii) the Sale and Servicing Agreement; (iii) the Certificate of Incorporation of each of CITSF and the Company; (iv) the By-laws of each of CITSF and the Company; (v) copies of certain unanimous consents adopted by the Board of Directors of the Company authorizing the issuance and sale of the Securities and the purchase of the Contracts; and (vi) copies of certain unanimous written consents of the Board of Directors of CITSF. I have also examined such other documents and made such investigations of law as I have considered necessary and appropriate for the purposes of the opinions expressed herein. I have assumed the authenticity of signatures on original documents and the conformity to the original of all documents submitted to me as certified, conformed or photostatic copies and have relied as to all matters of fact on certificates, representations or statements by officers of the Company or CITSF. In making my examination of agreements, instruments and other documents and in giving opinions herein, I have assumed that the Trustees have and had the power and capacity to execute and deliver such agreements, instruments and other documents and to perform all of their obligations thereunder and that such agreements, instruments and other documents were duly authorized by all requisite action by or on behalf of the Trustees were duly executed, acknowledged, as necessary, and delivered by or on behalf of and are the legal, valid and binding obligations of, and are enforceable in accordance with their terms against, the Trustees. Based upon, and subject to, the foregoing I am of the opinion that: 1. The Subsequent Purchase Agreement has been duly authorized, executed and delivered by each of CITSF and the Company and constitutes the legal, valid and binding agreement of each of CITSF and the Company, and is enforceable against each of CITSF and the Company in accordance with its terms; the Subsequent Purchase Agreement is effective to transfer all of CITSF's right, title and interest in and to the Subsequent Contracts and other property described in Section 2.1 of the Subsequent Purchase Agreement to the Company; the Sale and Servicing Agreement is effective to transfer all of the Company's right, title and interest in and to such Subsequent Contracts and other property to the Trust subject to no prior liens or encumbrances. 2. No consent, approval, authorization or order of, registration or filing with, or notice to any governmental authority or court is required under federal laws or the laws of the State of Delaware for the execution, delivery and performance by the Company of the Subsequent Purchase Agreement or the consummation of any other transaction contemplated thereby by the Company, except for those which have been obtained or except such as may be required under the Securities Act of 1933, as amended or the regulations promulgated thereunder or state securities or Blue Sky laws of any jurisdiction. 3. No consent, approval, authorization or order of, registration or filing with, or notice to, any governmental authority or court is required under federal laws or the laws of the State of Delaware for the execution, delivery and performance by CITSF of the Subsequent Purchase Agreement or the consummation of any other transaction contemplated thereby by CITSF except for those which have been obtained or except such as may be required under the Securities Act of 1933, as amended or the regulations promulgated thereunder or state securities or Blue Sky laws of any jurisdiction. I am furnishing this opinion to you solely for your benefit. This opinion is not to be used, circulated, quoted or otherwise referred to or relied on by any other person or for any other purpose. The foregoing opinion is given on the express understanding that the undersigned is an officer of the Company and CITSF and shall in no event incur any personal liability in connection with the said opinion. Very truly yours, FORM OF SUBSEQUENT TRANSFER AGREEMENT The CIT Group Securitization Corporation II, as Seller, and CIT Marine Trust ____-_ (the "Trust"), as Purchaser, pursuant to the Sale and Servicing Agreement, dated as of ____________, ____, among the Seller, The CIT Group/Sales Financing, Inc., as Servicer and the Trust (the "Sale and Servicing Agreement"), hereby confirm their understanding with respect to the sale by the Seller and the purchase by the Purchaser of those Contracts listed on the attached List of Subsequent Contracts (the "Subsequent Contracts"). The Seller shall sell, transfer, assign absolutely, set over and otherwise convey to the Purchaser as of the Subsequent Transfer Date (i) all the right, title and interest of the Seller in and to the Subsequent Contracts and all the rights, benefits, and obligations arising from and in connection with each Subsequent Contract, (ii) the security interests in the Subsequent Financed Boats granted by the Obligors pursuant to the Subsequent Contracts, (iii) all payments received by the Seller on or with respect to the Subsequent Contracts on or after the Subsequent Cut-off Date (exclusive of payments with respect to Post Cut-off Date Insurance Add-Ons), (iv) the interest of the Seller in any Subsequent Financed Boat (including any right to receive future Net Liquidation Proceeds) that secures the Subsequent Contracts and that shall have been repossessed by the Servicer by or on behalf of the Trust; (v) all rights of the Seller to proceeds of Insurance Policies covering the Obligors and the Subsequent Contracts, (vi) the proceeds from any Servicer's Errors and Omissions Protection Policy, any fidelity bond and any blanket hazard policy, to the extent such proceeds relate to any Subsequent Financed Boat, (vii) all rights of recourse against any cosigner or under any personal guarantee with respect to the Subsequent Contracts (other than any right as against a Dealer under a Dealer Agreement), (viii) all proceeds in any way derived from any of the foregoing items and (ix) all documents contained or required to be contained in the Contract Files relating to the Subsequent Contracts. The parties intend and agree that the conveyance of the Seller's right, title and interest in and to the Subsequent Contracts (and all rights, entitlements and amounts listed above) pursuant to this Agreement shall constitute an absolute sale. The costs relating to the delivery of the documents specified in this Subsequent Transfer Agreement and the Sale and Servicing Agreement shall be borne by the Seller. The Seller hereby affirms the representations and warranties set forth in the Sale and Servicing Agreement that relate to the Subsequent Contracts as of the date hereof. The Seller hereby confirms that it has delivered notice of the sale of the Subsequent Contracts pursuant to the Sale and Servicing Agreement and that each of the conditions relating to the transfer of the Subsequent Contracts, set forth in the Sale and Servicing Agreement, have been satisfied as of the date hereof. All terms and conditions of the Sale and Servicing Agreement are hereby ratified, confirmed and incorporated herein, provided that in the event of any conflict the provisions of this Subsequent Transfer Agreement shall control over the conflicting provisions of the Sale and Servicing Agreement. Terms capitalized herein and not defined herein shall have their respective meanings as set forth in the Sale and Servicing Agreement. IN WITNESS WHEREOF, the undersigned has caused this Subsequent Transfer Agreement to be duly executed as of this ____ day of _________, ____. THE CIT GROUP SECURITIZATION CORPORATION II By: ___________________________________ Name: Title: CIT MARINE TRUST ____-_ By: [____________________], not in its individual capacity but solely as Owner Trustee on behalf of the Trust By: ___________________________________ Name: Title: EXHIBIT D FORM OF ASSIGNMENT OF INITIAL CONTRACTS In accordance with the Sale and Servicing Agreement (the "Agreement") dated as of ____________, ____, among The CIT Group/Sales Financing, Inc. ("CITSF"), The CIT Group Securitization Corporation II (the "Company"), and CIT Marine Trust ____-_ (the "Trust"), the Company does hereby sell, transfer, assign, set over and otherwise convey to the Trust created by the Trust Agreement, (i) all right, title and interest of the Company in and to the Initial Contracts and all the rights, benefits and obligations arising from and in connection with each Initial Contract, (ii) the security interests in the Initial Financed Boats granted by the Obligors pursuant to the Initial Contracts, (iii) all payments received by the Company on or with respect to the Initial Contracts on or after the Initial Cut-off Date (exclusive of payments with respect to Post Cut-off Date Insurance Add-Ons), (iv) the interest of the Company in any Initial Financed Boat (including any right to receive future Net Liquidation Proceeds) that secures the Initial Contracts and that shall have been repossessed by the Servicer by or on behalf of the Trust; (v) all rights of the Company to proceeds of Insurance Policies covering the Obligors and the Initial Contracts, (vi) the proceeds from any Servicer's Errors and Omissions Protection Policy, any fidelity bond and any blanket hazard policy, to the extent such proceeds relate to any Initial Financed Boat, (vii) all rights of recourse against any cosigner or under any personal guarantee with respect to the Initial Contracts (other than any right as against a Dealer under a Dealer Agreement), (viii) all amounts held for the Trust in the Collection Account, (ix) all amounts held for the Trust in the Pre-Funding Account, (x) all amounts held for the Trust in the Capitalized Interest Account, (xi) all proceeds in any way derived from any of the foregoing items and (xii) all documents contained or required to be contained in the Contract Files relating to the Initial Contracts. The parties intend and agree that the conveyance of the Company's right, title and interest in and to the Initial Contracts (and all rights, entitlements and amounts listed above) pursuant to this Agreement shall constitute an absolute sale. All capitalized terms used herein without definition have the meanings ascribed to such terms in the Agreement. This Assignment is made pursuant to the Agreement. IN WITNESS WHEREOF, the undersigned has caused this Subsequent Transfer Agreement to be duly executed as of this ____ day of _________, ____. THE CIT GROUP SECURITIZATION CORPORATION II By: ___________________________________ Name: Title: FORM OF ASSIGNMENT OF SUBSEQUENT CONTRACTS For good and valuable consideration in the amount of $___________ paid by THE CIT GROUP SECURITIZATION CORPORATION II (the "Purchaser"), to THE CIT GROUP/SALES FINANCING, INC. (the "Seller"), CITSF does hereby sell, transfer, assign absolutely, set over and otherwise convey to the Purchaser as of the Subsequent Transfer Date (i) all the right, title and interest of the Company in and to the marine installment sales contracts set forth on Exhibit A to the Subsequent Purchase Agreement, dated as of ____________, ____, between the Purchaser and the Seller (the "Subsequent Contracts") and all the rights, benefits, and obligations arising from and in connection with each Subsequent Contract, (ii) the security interests in the Subsequent Financed Boats granted by the Obligors pursuant to the Subsequent Contracts, (iii) all payments received by the Company on or with respect to the Subsequent Contracts on or after the Subsequent Cut-off Date (exclusive of payments with respect to Post Cut-off Date Insurance Add-Ons), (iv) the interest of the Company in any Subsequent Financed Boat (including any right to receive future Net Liquidation Proceeds) that secures the Subsequent Contracts and that shall have been repossessed by the Servicer by or on behalf of the Trust; (v) all rights of the Company to proceeds of Insurance Policies covering the Obligors and the Subsequent Contracts, (vi) the proceeds from any Servicer's Errors and Omissions Protection Policy, any fidelity bond and any blanket hazard policy, to the extent such proceeds relate to any Subsequent Financed Boat, (vii) all rights of recourse against any cosigner or under any personal guarantee with respect to the Subsequent Contracts (other than any right as against a Dealer under a Dealer Agreement), (viii) all proceeds in any way derived from any of the foregoing items, and (ix) all documents contained or required to be contained in the Contract Files relating to the Subsequent Contracts. The parties intend and agree that the conveyance of the Seller's right, title and interest in and to the Subsequent Contracts (and all rights, entitlements and amounts listed above) pursuant to this Agreement shall constitute an absolute sale. Certain capitalized terms used in this Assignment shall have the respective meanings assigned to them in the Sale and Servicing Agreement, dated as of ____________, ____, among The CIT Group Securitization Corporation II, CITSF and CIT Marine Trust ____-_. IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly executed this ____ day of ___________, ______. THE CIT GROUP/SALES FINANCING, INC., By: ___________________________________ Name: Title: EXHIBIT E FORM OF OWNER TRUSTEE'S ACKNOWLEDGMENT AND CERTIFICATION [____________________], a national banking association, acting as Owner Trustee (the "Owner Trustee") of the Trust created pursuant to the Trust Agreement, dated as of ____________, ____, between The CIT Group Securitization Corporation II (the "Company") and the Owner Trustee, acknowledged pursuant to the Sale and Servicing Agreement dated as of ____________, ____ among the Company, The CIT Group/Sales Financing, Inc. and the Owner Trustee (the "Agreement"), that the Owner Trustee has received, and holds in trust thereunder the following through the Servicer as custodian: (i) all the right, title and interest of the Company in and to the {Initial} {Subsequent} Contracts and all the rights, benefits, and obligations arising from and in connection with each {Initial} {Subsequent} Contract, (ii) the security interests in the {Initial} {Subsequent} Financed Boats granted by the Obligors pursuant to the {Initial} {Subsequent} Contracts, (iii) all payments received by the Company on or with respect to the {Initial} {Subsequent} Contracts on or after the {Initial} {Subsequent} Cut-off Date (exclusive of payments with respect to Post Cut-off Date Insurance Add-Ons), (iv) the interest of the Company in any {Initial} {Subsequent} Financed Boat (including any right to receive future Net Liquidation Proceeds) that secures the {Initial} {Subsequent} Contracts and that shall have been repossessed by the Servicer by or on behalf of the Trust; (v) all rights of the Company to proceeds of Insurance Policies covering the Obligors and the {Initial} {Subsequent} Contracts, (vi) the proceeds from any Servicer's Errors and Omissions Protection Policy, any fidelity bond and any blanket hazard policy, to the extent such proceeds relate to any {Initial} {Subsequent} Financed Boat, (vii) all rights of recourse against any cosigner or under any personal guarantee with respect to the {Initial} {Subsequent} Contracts (other than any right as against a Dealer under a Dealer Agreement), (viii) all proceeds in any way derived from any of the foregoing items, (ix) all documents contained or required to be contained in the Contract Files relating to the {Initial} {Subsequent} Contracts, (x) the Collection Account, (xi) the Pre-Funding Account, and (xii) the Capitalized Interest Account. {The Owner Trustee shall issue to, or upon the written order of, the Company Certificates representing ownership of a beneficial interest in 100% of the Trust and Notes representing obligations of the Trust.} Capitalized terms used herein have the meanings given them in the Agreement. IN WITNESS WHEREOF, [____________________], as Owner Trustee, has caused this acknowledgment to be executed by its duly authorized officer as of this ____ day of _________, ____. [____________________], not in its individual capacity but solely as Owner Trustee on behalf of the Trust By: ___________________________________ Name: Title: THE CIT GROUP/SALES FINANCING, INC. CERTIFICATE OF SERVICING OFFICERS The undersigned certify that they are the {title} and {title}, respectively of The CIT Group/Sales Financing, Inc., a corporation organized under the laws of Delaware ("CITSF"), and that as such they are duly authorized to execute and deliver this certificate on behalf of CITSF pursuant to Section 4.09 of the Sale and Servicing Agreement, dated as of ____________, ____ (the "Agreement"), among CITSF, The CIT Group Securitization Corporation II and [____________________], as Owner Trustee (all capitalized terms used herein without definition having the respective meanings specified in the Agreement), and further certify that: 1. The Monthly Report for the period from __________ to __________ attached to this certificate is complete and accurate in accordance with the requirements of Sections 4.09 and 5.08 of the Agreement; and 2. As of the date hereof, no Event of Termination or event that with notice or lapse of time or both would become an Event of Termination has occurred. [If an Event of Termination has occurred, such Event of Termination shall be specified and its current status reported.] IN WITNESS WHEREOF, I have affixed hereunto my signature this ____ day of _________, ____. THE CIT GROUP/SALES FINANCING, INC., By: ___________________________________ Name: Title: EXHIBIT G CIT MARINE TRUST ____-_ CLASS A _____% ASSET BACKED NOTES _____% ASSET BACKED CERTIFICATES MONTHLY REPORT DISTRIBUTION DATE: __________, ____ Amount Available $___________ Distribution Amounts 1. Aggregate Note distribution $___________ 2. Aggregate Certificate distribution $___________ Interest 3. Aggregate amount of Interest a. Notes $___________ b. Certificates $___________ 4. Total distribution in respect of interest a. Notes $___________ b. Certificates $___________ Principal 5. Principal Distribution Amount $___________ 6. Distribution made in respect of Principal a. Notes $___________ b. Certificates $___________ 7. Outstanding Principal Balance of Notes: $___________ 8. Certificate Balance $___________ Contract Pool 9. Pool Balance $___________ 10. Note Pool Factor __________ 11. Certificate Pool Factor __________ Delinquency Information Aggregate Principal Number Balance 12. Delinquent Contracts a. 30-59 days ____ $___________ b. 60-89 days ____ $___________ c. 90 days or more ____ $___________ 13. Repossessed Contracts ____ $___________ 14. Repossessed Contracts Remaining in Inventory ____ $___________ Miscellaneous 15. Monthly Servicing Fee $___________ 16. Amount of Servicer Fee Paid $___________ 17. Amount withdrawn from the Cash Collateral $___________ Account and Delivered to Certificateholders 18. Available Cash Collateral Amount after any _____% withdrawal or deposit to the Cash Collateral Account divided by the Pool Balance 19. Amount of Funds on deposit in the Pre-Funding Account $___________ 20. Weighted average Contract Rate of all outstanding Contracts _____% 21. Number of Subsequent Contracts ____ 22. Aggregate principal balance of Subsequent Contracts $___________ 23. Number of Subsequent Contracts Purchased ____ 24. Aggregate Stated Principal Balance of $___________ Subsequent Contracts Purchased 25. Amount of Monthly Advances by Servicer $___________ Amount of Non-Reimbursable Payments by Servicer $___________ TERMINATION - AUCTION PROCEDURES The following sets forth the auction procedures to be followed in connection with a sale effected pursuant to Section 11.02 of the Sale and Servicing Agreement (the "Agreement"), dated as of ____________, ____, between The CIT Group Securitization Corporation II, the CIT Group/Sales Financing, Inc. and [____________________], as Owner Trustee. Capitalized terms used herein that are not otherwise defined shall have the meanings described thereto in the Agreement. All references herein to "Trustee" shall be references to [____________________], as Indenture Trustee, pursuant to an Indenture, dated as of ____________, ____, between the Owner Trustee and the Indenture Trustee. However, if the Notes have been paid in full, and the Indenture has been discharged in accordance with its terms, all references herein to "Trustee" shall be references to the Owner Trustee. I. Pre-Auction Process (a) Upon receiving notice of the Auction Date, the Advisor will initiate its general Auction procedures consisting of the following: (i) with the assistance of the Servicer, prepare a general solicitation package along with a confidentiality agreement; (ii) derive a list of qualified bidders, in a commercially reasonable manner; (iii) initiate contact with all qualified bidders; (iv) send a confidentiality agreement to all qualified bidders; (v) upon receipt of a signed confidentiality agreement, send solicitation packages to all interested bidders on behalf of the Trustee; and (vi) notify the Servicer of all potential bidders and anticipated timetable. (b) The general solicitation package will include: (i) the prospectus from the public offering of the Notes and Certificates; (ii) a copy of all monthly servicing reports or a copy of all annual servicing reports and the prior year's monthly servicing reports; (iii) a form of a Purchase Agreement and Sale and Servicing Agreement; (iv) a description of the minimum purchase price required to cause the Trustee to sell the Auction Property as set forth in Section 11.02 of the Agreement; (v) a formal bidsheet; (vi) a detailed timetable; and (vii) a preliminary data tape of the Pool Scheduled Principal Balance as of the related Distribution Date reflecting the same data attributes used to create the Initial Cut-off Date tables for the prospectus dated ____________, ____ relating to the public offering of the Notes and Certificates. (c) The Trustee, with the assistance of the Servicer and the Advisor, will maintain an auction package beginning at the time of closing of the transaction, which will contain terms (i)-(iii) listed in the preceding paragraph. If the Advisor is unable to perform its role as advisor to the Trustee, the Servicer acting in its capacity under the Agreement will select a successor Advisor and inform the Trustee of its actions. (d) The Advisor will send solicitation packages to all bidders at least 15 business days before the Auction Date. Bidders will be required to submit any due diligence questions in writing to the Advisor for determination of their relevancy, no later than 10 business days before the Auction Date. The Servicer and the Advisor will be required to satisfy all relevant questions at least five Business Days prior to the Auction Date and distribute the questions and answers to all bidders. II. Auction Process (a) [____________________], in its role as Advisor to the Trustee, will be allowed to bid in the Auction, but will not be required to do so. (b) The Servicer will also be allowed to bid in the Auction if it deems appropriate, but will not be required to do so. (c) On the Auction Date, all bids will be due by facsimile to the offices of the Trustee by 1:00 p.m. New York City time, with the winning bidder to be notified by 2:00 p.m. New York City time. All acceptable bids (as described in Section 11.02 of the Agreement) will be due on a conforming basis on the bid sheet contained in the solicitation package. (d) If the Trustee receives fewer than two market value bids from participants in the market for marine installment sale contract willing and able to purchase the Auction Property, the Trustee shall decline to consummate the sale. (e) Upon notification to the winning bidder, a good faith deposit equal to one percent (1%) of the Pool Balance will be required to be wired to the Trustee upon acceptance of the bid. This deposit, along with any interest income attributable to it, will be credited to the purchase price but will not be refundable. The Trustee will establish a separate account for the acceptance of the good faith deposit, until such time as the account is fully funded and all monies are transferred into the Collection Account, such time not to exceed one Business Day before the related Distribution Date (as described above). (f) The winning bidder will receive on the Auction Date a copy of the draft Purchase Agreement, Sale and Servicing Agreement and Servicer's Representations and Warranties (which shall be substantially identical to the representations and warranties set forth in Section 8.01 of the Agreement). (g) [____________________], in its capacity as Advisor to the Trustee, will provide to the Trustee a letter concluding whether or not the winning bid is a fair market value bid. [____________________] will also provide such letter if it is the winning bidder. In the case where [____________________] or the Servicer is the winning bidder it will in its letter provide for market comparable and valuations. (h) The Auction will stipulate that the Servicer be retained to service the Contracts sold pursuant to the terms of the Purchase and Sale Agreement and Servicing Agreement. EXHIBIT I THE CIT GROUP/SALES FINANCING, INC. CERTIFICATE OF OFFICER The undersigned certifies that the undersigned is the _______________ of The CIT Group/Sales Financing, Inc., a corporation organized under the laws of Delaware ("CITSF"), and that as such is duly authorized to execute and deliver this certificate on behalf of CITSF in connection with the Sale and Servicing Agreement, dated as of ____________, ____ (the "Agreement"), among CITSF, The CIT Group Securitization Corporation II and CIT Marine Trust ____-_ (all capitalized terms used herein without definition having the respective meanings specified in the Agreement), and further certify that: (i) attached hereto as Exhibit I is a true and correct copy of the Articles of Incorporation of CITSF, together with all amendments thereto as in effect on the date hereof; (ii) attached hereto as Exhibit II is a true and correct copy of the By-laws of CITSF, as amended, as in effect on the date hereof; (iii) the representations and warranties of CITSF contained in Sections 8.01 and 3.01C of the Agreement are true and correct on and as of the date hereof and, to the best of their knowledge, the representations and warranties of CITSF contained in Sections 3.01A and 3.01B of the Agreement are true and correct on and as of the date hereof; (iv) no event with respect to CITSF has occurred and is continuing which would constitute an Event of Termination or an event that, with notice or lapse of time or both, would become an Event of Termination under the Agreement; and (v) each of the agreements and conditions of CITSF to be performed on or before the date hereof pursuant to the Agreement have been performed in all material respects. IN WITNESS WHEREOF, I have affixed hereunto my signature this ____ day of _________, ____. THE CIT GROUP/SALES FINANCING, INC., By: ___________________________________ Name: Title: EX-4.4 6 POOLING AND SERVICING AGREEMENT Exhibit 4.4 THE CIT GROUP SECURITIZATION CORPORATION II, Depositor, THE CIT GROUP / SALES FINANCING, INC. Servicer, and [ ], Trustee and Collateral Agent. POOLING AND SERVICING AGREEMENT Dated as of __________, ____ $_________________ CIT Marine Trust ____-_ [____]% Marine Receivable-Backed Certificates TABLE OF CONTENTS ARTICLE I SECTION 1.1. Creation of Trust................................................. ARTICLE II SECTION 2.1. Conveyance of Receivables......................................... ARTICLE III SECTION 3.1. Surety Bond....................................................... ARTICLE IV SECTION 4.1. Acceptance by Trustee............................................. ARTICLE V SECTION 5.1. Additional Representations and Warranties of the Depositor........ ARTICLE VI SECTION 6.1. The CIT Group / Sales Financing, Inc. not to resign as Servicer... ARTICLE VII SECTION 7.1. Definitions....................................................... SECTION 7.2. Usage of Terms.................................................... SECTION 7.3. Cutoff Date and Record Date....................................... ARTICLE VIII SECTION 8.1. Representations and Warranties of Depositor....................... SECTION 8.2. Repurchase upon Breach............................................ SECTION 8.3. Custody of Receivable Files....................................... SECTION 8.4. Duties of Servicer as Custodian................................... SECTION 8.5. Instructions; Authority to Act.................................... SECTION 8.6. Custodian's Indemnification....................................... SECTION 8.7. Effective Period and Termination.................................. ARTICLE IX SECTION 9.1. Duties of Servicer................................................ SECTION 9.2. Collection of Receivables Payments................................ SECTION 9.3. Realization upon Receivables...................................... SECTION 9.4. Physical Damage Insurance......................................... SECTION 9.5. Maintenance of Security Interests in Boats........................ SECTION 9.6. Covenants of Servicer............................................. SECTION 9.7. Purchase of Receivables upon Breach............................... SECTION 9.8. Servicing Fee..................................................... SECTION 9.9. Servicer's Certificate............................................ SECTION 9.10. Annual Statement as to Compliance; Notice of Default.............. SECTION 9.11. Annual Independent Certified Public Accountants Report............ SECTION 9.12. Access to Certain Documentation and Information Regarding Receivables .................................................... SECTION 9.13. Servicer Expenses................................................. SECTION 9.14. Appointment of Sub-Servicer....................................... SECTION 9.15. Representations and Warranties of Servicer with Respect to Receivables .................................................... ARTICLE X SECTION 10.1. Accounts......................................................... SECTION 10.2. Collections...................................................... SECTION 10.3. Application of Collections....................................... SECTION 10.4. Additional Deposits.............................................. SECTION 10.5. Distributions.................................................... SECTION 10.6. Net Deposits..................................................... SECTION 10.7. Statements to Certificateholders................................. ARTICLE XI SECTION 11.1. The Certificates................................................. SECTION 11.2. Authentication of Certificates................................... SECTION 11.3. Registration of Transfer and Exchange of Certificates............ SECTION 11.4. Mutilated, Destroyed, Lost or Stolen Certificates................ SECTION 11.5. Persons Deemed Owners............................................ SECTION 11.6. Access to List of Certificateholders Names and Addresses......... SECTION 11.7. Maintenance of Office or Agency.................................. SECTION 11.8. Book-entry Certificates.......................................... SECTION 11.9. Notices to Clearing Agency....................................... SECTION 11.10. Definitive Certificates.......................................... ARTICLE XII SECTION 12.1. Representations of Depositor..................................... SECTION 12.2. Liability of Depositor; Indemnities.............................. SECTION 12.3. Merger or Consolidation of, or Assumption of the Obligations of Depositor ..................................................... SECTION 12.4. Limitation on Liability of Depositor and Others.................. SECTION 12.5. Depositor May Own Certificates................................... SECTION 12.6. Depositor's Interest in Reserve Account; No Transfer............. ARTICLE XIII SECTION 13.1. Representations of Servicer...................................... SECTION 13.2. Liability of Servicer; Indemnities............................... SECTION 13.3. Merger or Consolidation of or Assumption of Obligations of Servicer ...................................................... SECTION 13.4. Limitation on Liability of Servicer and Others................... ARTICLE XIV SECTION 14.1. Events of Default................................................ SECTION 14.2. Appointment of Successor......................................... SECTION 14.3. Notification to Certificateholders............................... SECTION 14.4. Waiver of Past Defaults.......................................... ARTICLE XV SECTION 15.1. Duties of Trustee................................................ SECTION 15.2. Trustee's Certificate............................................ SECTION 15.3. Trustee's Assignment of Purchased Receivables.................... SECTION 15.4. Certain Matters Affecting Trustee................................ SECTION 15.5. Trustee Not Liable for Certificates or Receivables............... SECTION 15.6. Trustee May Own Certificates..................................... SECTION 15.7. Trustee's Fees and Expenses...................................... SECTION 15.8. Representations and Warranties of Trustee........................ SECTION 15.9. Eligibility Requirements for Trustee............................. SECTION 15.10. Resignation or Removal of Trustee................................ SECTION 15.11. Successor Trustee and Collateral Agent........................... SECTION 15.12. Merger or Consolidation of Trustee............................... SECTION 15.13. Appointment of Co-Trustee or Separate Trustee.................... ARTICLE XVI SECTION 16.1. Termination of the Trust......................................... SECTION 16.2. Optional Purchase of All Receivables............................. ARTICLE XVII SECTION 17.1. Amendment........................................................ SECTION 17.2. Protection of Title to Trust..................................... SECTION 17.3. Limitation on Rights of Certificateholders....................... SECTION 17.4. Governing Law.................................................... SECTION 17.5. Notices.......................................................... SECTION 17.6. Severability of Provisions....................................... SECTION 17.7. Assignment....................................................... SECTION 17.8. Certificates Nonassessable and Fully Paid........................ SECTION 17.9. No Petition...................................................... SCHEDULE A: SCHEDULE OF RECEIVABLES EXHIBIT A: FORM OF SURETY BOND EXHIBIT B: FORM OF CERTIFICATE EXHIBIT C: FORM OF DEPOSITORY AGREEMENT EXHIBIT D: MONTHLY SERVICER REPORT EXHIBIT E: CERTIFICATEHOLDER STATEMENT EXHIBIT F: TRUSTEE'S CERTIFICATE This POOLING AND SERVICING AGREEMENT, dated as of __________, ____ is made with respect to the formation of the CIT Marine Trust ____-_, among THE CIT GROUP SECURITIZATION CORPORATION II, a Delaware corporation, as Depositor (the "Depositor"), THE CIT GROUP / SALES FINANCING, INC., a Delaware corporation, as Servicer ("the "Servicer"), and [ ], as Trustee (the "Trustee") and as Collateral Agent (the "Collateral Agent"). WITNESSETH THAT: In consideration of the premises and of the mutual agreements herein contained, the parties hereto agree as follows: ARTICLE I SECTION 1.1. Creation of Trust. Upon the execution of this Agreement by the parties hereto, there is hereby created the CIT Marine Trust ____-_. ARTICLE II SECTION 2.1. Conveyance of Receivables (a) In consideration of the Trustee's delivery, on behalf of the Trust, to or upon the order of the Depositor of Certificates (the "Certificates") in an aggregate principal amount equal to $______________ (the "Purchase Price"), the Depositor does hereby sell, transfer, assign and otherwise convey to the Trustee, in trust for the benefit of the Certificateholders and the Surety Bond Issuer, without recourse: (i) all right, title and interest of the Depositor in and to the Receivables and all payments received thereunder, in the case of Simple Interest Receivables and due thereunder in the case of Precomputed Receivables, in each case, after the Cutoff Date; (ii) the interest of the Depositor in the security interests in the Boats related to Receivables granted by Obligors pursuant to the Receivables; (iii) the Purchase Agreement, including the right of the Depositor to cause CITSF to repurchase Receivables from the Depositor under certain circumstances; (iv) the interest of the Depositor in any proceeds from claims on any physical damage, credit life or disability insurance policies covering Boats or Obligors related to Receivables; (v) the interest of the Depositor in any proceeds from recourse to Dealers on Receivables; and (vi) any proceeds of the foregoing. The Depositor intends that the assignment and transfer herein contemplated constitute a sale of the Receivables, conveying good title thereto free and clear of any liens and encumbrances, from the Depositor to the Trustee and that such property not be part of the Depositor's estate or property of the Depositor in the event of any insolvency by the Depositor and the Trustee acquiesces in such characterization. In the event that such conveyance is deemed to be, or to be made as security for, a loan, the Depositor hereby grants to the Trustee a first priority perfected security interest in all of the Depositor's right, title and interest in and to the Receivables and the other property conveyed hereby, and this Agreement shall constitute a security agreement under applicable law. SECTION 2.2 The Trustee agrees to hold any amounts received in respect of the Receivables and allocable to late payment and extension fees, administrative charges in trust for the benefit of the Depositor and agrees to promptly remit any such amounts to the Depositor upon receipt thereof as directed in writing in the relevant Servicer's Certificate. ARTICLE III SECTION 3.1. Surety Bond. The Servicer shall, simultaneously with the execution and delivery of this Agreement, obtain the Surety Bond for the benefit of the Trust in accordance with the respective terms thereof and deliver it to the Trustee. ARTICLE IV SECTION 4.1. Acceptance by Trustee. The Trustee does hereby accept all consideration conveyed by the Depositor pursuant to Section 2.1, and declares that the Trustee shall hold such consideration and the Surety Bond and any proceeds of any draws thereunder upon the trusts herein set forth for the benefit of all present and future Certificateholders, subject to the terms and provisions of this Agreement. ARTICLE V SECTION 5.1. Additional Representations and Warranties of the Depositor. The Depositor does hereby make the following representations and warranties on which the Trustee, on behalf of the Trust, relies in accepting the Receivables in trust and executing and authenticating the Certificates: (i) Original Maturity of Receivables. Each Receivable shall have an original maturity of not more than _____________.. (ii) Remaining Maturity of Receivables. As of the Cutoff Date, each Receivable shall have a remaining maturity of not more than __________. (iii) Annual Percentage Rate. Each Receivable shall have a fixed Annual Percentage Rate of not less than _____% and not greater than _____%. (iv) Location of Receivable Files. The Receivable Files shall be kept at the offices of CITSF. at [address]. (v) Maximum Balance. No Receivable has a Principal Balance greater than $_______. (vi) No Repossessions. As of the Cutoff Date, no Boat securing any Receivable is in repossession status. (vii) No Bankruptcies. As of the Cutoff Date, no Obligor on a Receivable was noted in the related Receivable File as the subject of any bankruptcy proceeding. (viii) Delinquencies. As of the Cutoff Date, no Receivable shall have a payment that is ___ or more days delinquent. The foregoing representations and warranties shall (i) speak as of the Closing Date, but shall survive the sale, transfer and assignment of the Receivables to the Trustee, on behalf of the Trust and (ii) be subject to the notice and repurchase provisions set forth in Section 8.2 in the same manner and to the same extent as if they were set forth in Section 8.1. ARTICLE VI SECTION 6.1. CITSF Not to Resign as Servicer. Except as a result of the operation of Section 13.3, CITSF shall not resign from the obligations and duties hereby imposed on it as Servicer under this Agreement except upon determination that the performance of its duties under this Agreement shall no longer be permissible under applicable law. Notice of any such determination permitting the resignation of CITSF shall be communicated to the Trustee at the earliest practicable time (and, if such communication is not in writing, shall be confirmed in writing at the earliest practicable time) and any such determination shall be evidenced by an Opinion of Counsel to such effect delivered to the Trustee concurrently with or promptly after such notice. No such resignation shall become effective until the Trustee or a successor Servicer shall have assumed the responsibilities and obligations of CITSF in accordance with Section 14.2. ARTICLE VII SECTION 7.1. Definitions. Whenever used in this Agreement, the following words and phrases, unless the context otherwise requires, shall have the following meanings: "Permitted Investments" are any of the following, which shall mature on or prior to the next succeeding Deposit Date: (i) any 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; (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 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 or under the laws of any other jurisdiction, 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 the highest credit rating available from each Rating Agency or (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 (A) any security described in clause (i) above or (B) any other security issued or guaranteed by an agency or instrumentality of the United States of America, in either case entered into with a depository institution or trust company (acting as principal) described in clause (ii) (A) above or with any money market funds maintained by a broker which has, at the time of such investment, the highest credit rating from each Rating Agency; (iv) commercial paper having a rating of at least "___" by S&P and "___" by Moody's at the time of such investment, including commercial paper having such rating issued by the Trustee or The CIT Group, Inc. (v) money market funds or money market mutual funds (other than closed-end funds), including funds for which [ ] is investment manager or advisor, which (A) maintain a constant net asset value and (B) have at the time of such investment a rating by AAAm or ___ by S&P or ___ by Moody's; (vi) if the Trustee does not receive written investment instructions, the investments referred to in (v) above; or (vii) any other investment approved in writing by each Rating Agency. "Corporate Trust Office" at the date of the execution hereof is located at: ____________________. "Cutoff Date" shall be the close of business on __________, ____. "Final Scheduled Distribution Date" means __________, ____. "Insolvency Proceeding" means the commencement, after the Closing Date, of any bankruptcy, insolvency, readjustment of debt, reorganization, marshalling of assets and liabilities or similar proceedings by or against any person, or the commencement, after the Closing Date, of any proceedings by or against any Person for the winding up or liquidation of its affairs, or the consent after the date hereof to the appointment of a trustee, conservator, receiver or liquidator in any bankruptcy, insolvency, readjustment of debt, reorganization, marshalling of assets and liabilities or similar proceedings of or relating to any Person. "Permitted Investments" shall be, at anytime, any one or more of the obligations and securities set forth in Schedule C hereto. "Purchase Price" has the meaning set forth in Section 2.1(a). "Reimbursement Agreement" is the Insurance and Reimbursement Agreement dated as of __________, ____, among the Surety Bond Issuer, the Depositor and the Servicer. "Required Deposit Rating" shall be a rating on short-term deposits of "[__]" by Moody's and "[__]" by S & P or any other rating acceptable to each of the Rating Agencies; and any requirement that deposits have the "Required Deposit Rating" shall mean that such deposits have the foregoing ratings from each of such rating agencies or such other rating which is acceptable to the Rating Agencies. "Reserve Account" means the account designated as such, established and maintained pursuant to Section 10.1(b). "Servicing Fee Rate" shall be ____ per annum. "Surety Bond" means the unconditional, irrevocable surety bond, substantially in the form attached hereto as Exhibit A, to be issued by the Surety Bond Issuer and naming the Trustee as beneficiary. "Surety Bond Issuer" shall be _______________. "Account Property" means all amounts and investments held from time to time in the Reserve Account, as the case may be (whether in the form of deposit accounts, Physical Property, book-entry securities, uncertificated securities, securities entitlements, investment property or otherwise), and all proceeds of the foregoing. "Agreement" means this Pooling and Servicing Agreement executed by the Depositor, the Servicer, the Trustee and the Collateral Agent as of the Cutoff Date, and all amendments and supplements hereto. "Amount Financed" with respect to a Receivable means the original amount advanced under the Receivable toward the purchase price of the Boat and any cost to the related Obligor of any dealer installed options, extended warranty plans and credit life and disability insurance, including any amount allocable to the premium of collateral protection insurance purchased by CITSF prior to the Cutoff Date. "Annual Percentage Rate" or "APR" of a Receivable means the annual rate of finance charges stated in the Receivable. "Available Funds" means, for any Distribution Date, the sum of (i) all Collections received by the Servicer during the related Collection Period, (ii) all refunds received by the Servicer with respect to any refunded portion of extended warranty protection plan costs, or of physical damage, credit life or disability insurance premiums included in the Amount Financed unless such refund must be paid to the Obligor, (iii) the Purchase Amount of all Receivables purchased or repurchased under this Agreement on the Business Day prior to the Distribution Date, (iv) Liquidation Proceeds received by the Servicer during the related Collection Period and (v) all net income and gain realized on funds deposited into the Collection Account or the Certificate Account and invested in Permitted Investments during the related Collection Period. "Boat" means (i) a new or used boat, or boat motor and boat trailer, securing an Obligor's indebtedness under the respective Receivable. "Book-Entry Certificates" shall mean beneficial interests in the Certificates, ownership and transfers of which shall be made through book entries by a Clearing Agency as described in Section 11.8. "Business Day" means any day other than (i) a Saturday or a Sunday or (ii) a day on which banking institutions in the City of New York, New York shall be authorized or obligated by law or executive order to be closed. "Carry-Over Monthly Interest" means, for any Distribution Date, the aggregate Monthly Interest Payments for prior Distribution Dates which have not been paid, after giving effect to any payment of the Reserve Account Withdrawal Amount or any Surety Drawing Amount on such Distribution Date made pursuant to Section 10.5(a)(ii) and (iii), respectively. "Carry-Over Monthly Principal" means, for any Distribution Date, the aggregate Monthly Principal Payments for prior Distribution Dates which have not been paid, after giving effect to any payment of the Reserve Account Withdrawal Amount or any Surety Drawing Amount on such Distribution Date made pursuant to Section 10.5(a)(ii) and (iii), respectively. "Carry-Over Servicing Fee" means, for any Distribution Date, the aggregate Servicing Fees for prior Distribution Dates which have not been paid after giving effect to any Reserve Account Interest Withdrawal or any Surety Interest Drawing made on such Distribution Date pursuant to Section 10.5(a)(ii) and (iii), respectively. "Certificate" means a certificate executed by the Trust and authenticated by the Trustee substantially in the form of Exhibit B. "Certificate Account" means the account designated as such, established and maintained pursuant to Section 10.1(a). "Certificate Balance" means, as of any date of determination, the Original Certificate Balance, reduced by all principal distributions on the Certificates. "Certificate Factor" means, as of the close of business on a Distribution Date, a seven-digit decimal figure equal to the Certificate Balance as of such Distribution Date divided by the Original Certificate Balance. "Certificate Owner" shall mean, with respect to a Book-Entry Certificate, the Person who is the owner of such Book-Entry Certificate, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly or as an indirect participant, in accordance with the rules of such Clearing Agency). "Certificate Register" and "Certificate Registrar" mean the register maintained and the registrar appointed pursuant to Section 11.3. "Certificateholder" or "Holder" means the Person in whose name the respective Certificate shall be registered in the Certificate Register, except that, solely for the purposes of giving any consent, waiver, request or demand pursuant to this Agreement, the interest evidenced by any Certificate registered in the name of the Depositor or the Servicer, or any Person controlling, controlled by, or under common control with the Depositor or the Servicer, shall not be taken into account in determining whether the requisite percentage necessary to effect any such consent, waiver, request or demand shall have been obtained. "Clearing Agency" shall mean an organization registered as a "clearing agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. "Clearing Agency Participant" shall mean a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency. "Collateral Agent" means the Person acting as Collateral Agent under this Agreement, its successor in interest, and any successor Collateral Agent appointed pursuant to Section 15.10. "Collection Account" means the account designated as such, established and maintained pursuant to Section 10.1(a). "Collection Period" means each calendar month. "Collections" shall mean, with respect to a Collection Period, all payments by or on behalf of the Obligors made during such Collection Period other than Liquidation Proceeds on the Receivables (other than a Purchased Receivable). "Corporate Trust Office" means the office of the Trustee at which its corporate trust business shall be administered, which office at the date hereof is [address]. "Dealer" means the dealer who sold a Boat, and who originated and assigned the respective Receivable to CITSF under an existing agreement between such dealer and CITSF. "Defaulted Receivable" means a Receivable as to which either (x) the Servicer has determined, in accordance with its customary servicing procedures, that eventual payment in full is unlikely or (y) (1) 90 or more days have elapsed since the related Boat has been repossessed by the Servicer, in the case of any Receivable with a Principal Balance of $______ or less as of the day such Boat was repossessed by the Servicer or (2) 180 or more days have elapsed since the related Boat has been repossessed by the Servicer, in the case of any Receivable with a Principal Balance of greater than $______ as of the day such Boat was repossessed by the Servicer. "Definitive Certificates" means the Certificates specified in Section 11.8. "Delivery" or "Deliver" when used with respect to Account Property means: (a) with respect to bankers' acceptances, commercial paper, negotiable certificates of deposit and other obligations that constitute "instruments" within the meaning of Section 9-105(1)(i) of the Relevant UCC and are susceptible to physical delivery, transfer thereof to the Trustee or its nominee, agent or custodian by physical delivery to the Trustee or its nominee, agent or custodian endorsed to, or registered in the name of, the Trustee, as trustee for the benefit of the Certificateholders, or its nominee, agent or custodian or endorsed in blank, and, with respect to a certificated security (as defined in Section 8-102 of the Relevant UCC) transfer thereof (i) by delivery of such certificated security endorsed to, or registered in the name of, the Trustee, as trustee for the benefit of the Certificateholders, or its nominee, agent or custodian or endorsed in blank to a financial intermediary (as defined in Section 8-313 of the Relevant UCC) and the making by such financial intermediary of entries on its books and records identifying such certificated securities as belonging to the Trustee, as trustee for the benefit of the Certificateholders, or its nominee, agent or custodian and the sending by such financial intermediary of a confirmation of the purchase of such certificated security by the Trustee or its nominee, agent or custodian, or (ii) by delivery thereof to a "clearing corporation" (as defined in Section 8-102(3) of the Relevant UCC) and the making by such clearing corporation of appropriate entries on its books reducing the appropriate securities account of the transferor and increasing the appropriate securities account of a financial intermediary by the amount of such certificated security, the identification by the clearing corporation of the certificated securities for the sole and exclusive account of the financial intermediary, the maintenance of such certificated securities by such clearing corporation or a "custodian bank" (as defined in Section 8102(4) of the Relevant UCC) or the nominee of either subject to the clearing corporation's exclusive control, the sending of a confirmation by the financial intermediary of the purchase by the Trustee, as trustee for the benefit of the Certificateholders, or its nominee, agent or custodian of such securities and the making by such financial intermediary of entries on its books and records identifying such certificated securities as belonging to the Trustee, as trustee for the benefit of the Certificateholders, as applicable, or its respective nominee, agent or custodian (all of the foregoing, "Physical Property"), and, in any event, any such Physical Property in registered form shall be in the name of the Trustee, as trustee for the benefit of the Certificateholders, or its nominee, agent or custodian; and such additional or alternative procedures as may hereafter become appropriate to effect the complete transfer of ownership of any such Account Property (as defined herein) to the Trustee, as trustee for the benefit of the Certificateholders, or its nominee, agent or custodian, consistent with changes in applicable law or regulations or the interpretation thereof; (b) with respect to any securities issued by the U.S. Treasury, the Federal Home Loan Mortgage Corporation or by the Federal National Mortgage Association that is a book-entry security held through the Federal Reserve System pursuant to Federal book-entry regulations, the following procedures, all in accordance with applicable law, including applicable federal regulations and Articles 8 and 9 of the Relevant UCC: book-entry registration of such Account Property to an appropriate book-entry account maintained with a Federal Reserve Bank by a financial intermediary which is also a "depository" pursuant to applicable federal regulations and issuance by such financial intermediary of a deposit advice or other written confirmation of such book-entry registration to the Trustee or its nominee, agent or custodian of the purchase by the Trustee, as trustee for the benefit of the Certificateholders, or its nominee or custodian of such book-entry securities; the making by such financial intermediary of entries in its books and records identifying such book-entry security held through the Federal Reserve System pursuant to federal book-entry regulations as belonging to the Trustee, as trustee for the benefit of the Certificateholders, or its nominee, agent or custodian and indicating that such custodian holds such Account Property solely as agent for the Trustee, as trustee for the benefit of the Certificateholders, or its nominee, agent or custodian; and such additional or alternative procedures as may hereafter become appropriate to effect complete transfer of ownership of any such Account Property to the Trustee or its nominee, agent or custodian, consistent with changes in applicable law or regulations or the interpretation thereof; and (c) with respect to any item of Account Property that is an uncertificated security under Article 8 of the Relevant UCC and that is not governed by clause (b) above, registration on the books and records of the issuer thereof in the name of the financial intermediary, the sending of a confirmation by the financial intermediary of the purchase by the Trustee, as trustee for the benefit of the Certificateholders, or its nominee, agent or custodian of such uncertificated security, and the making by such financial intermediary of entries on its books and records identifying such uncertificated certificates as belonging to the Trustee, as trustee for the benefit of the Certificateholders, or its nominee, agent or custodian. "Deposit Date" means the Business Day preceding each Distribution Date. "Depositor" means The CIT Group Securitization Corporation II, a corporation organized under the laws of the State of Delaware, as the depositor of the Receivables hereunder, and each successor to The CIT Group Securitization Corporation II (in the same capacity) pursuant to Section 12.3. "Receivables" means the marine retail installment sales contracts listed on Schedule A. "Receivables Files" means the documents specified in Section 8.3 that relate to Receivables. "Depository Agreement" means the agreement among the Depositor, the Trustee and the initial Clearing Agency, dated __________, ____, substantially in the form attached hereto as Exhibit C. "Determination Date" means the ____ of each month. "Distribution Date" means, for each Collection Period, the ____ of the following month, or if the ____ is not a Business Day, the next following Business Day, commencing with the date specified herein. "Event of Default" means an event specified in Section 14.1. "Lien" means a security interest, lien, charge, pledge, equity or encumbrance of any kind other than tax liens, mechanics' liens and any liens which attach to the respective Receivable by operation of law. "Liquidation Proceeds" means, with respect to any Collection Period, the monies (including recoveries) collected from whatever source, during such Collection Period on a Defaulted Receivable, net of the sum of any amounts expended by the Servicer for the account of the Obligor plus any amounts required by law to be remitted to the Obligor. "Monthly Interest Payment" means, as of any Distribution Date, one-twelfth of the product of the Pass-Through Rate and the Certificate Balance as of the close of business on the prior Distribution Date or, in the case of the first Distribution Date, the Certificate Balance as of the Closing Date. "Monthly Principal Payment" means, (x) as of any Distribution Date (except for the Final Scheduled Distribution Date), an amount equal to the sum of (i) that portion of all collections received by the Servicer during the related Collection Period on Receivables allocable to principal (which shall not include the principal portion of proceeds from any recoveries or liquidations in respect of any Defaulted Receivable in any Collection Period following the Collection Period in which such Receivable became a Defaulted Receivable), (ii) Purchase Amounts allocable to principal and paid by the Depositor to the Servicer or by the Servicer and (iii) the Principal Balance of Defaulted Receivables, which became Defaulted Receivables during the related Collection Period and (y) as of the Final Scheduled Distribution Date, after giving effect to the distribution of the amounts set forth in (i) through (iii) of clause (x), an amount necessary to reduce the Certificate Balance to zero on such Distribution Date. "Moody's" means Moody's Investors Service, Inc. "CITSF" means The CIT Group / Sales Financing, Inc., a corporation organized under the laws of Delaware, or its successors. "Net Credit Loss Ratio" means, for any Collection Period, an amount expressed as an annualized percentage equal to (i) the aggregate gross losses with respect to the Receivables recognized in such Collection Period, as determined in accordance with the Servicer's normal practices, less any recoveries received during such Collection Period, divided by (ii) the average of the Pool Balances as of the last day of the prior Collection Period and as of the last day of such Collection Period. "Obligor" on a Receivable means the purchaser or the co-purchasers of the Boat or any other Person who owes payments under the Receivable. "Officer's Certificate" means a certificate signed by the chairman of the board, the president, any vice chairman of the board, any vice president, the treasurer, any assistant treasurer or the controller of the Depositor, the Servicer or the Surety Bond Issuer, as appropriate. "Opinion of Counsel" means a written opinion of counsel who may but need not be counsel to the Depositor or Servicer, which opinion shall be acceptable to the Trustee, and provided that any opinion relating to the tax status of the Trust shall be rendered by __________ or such other independent outside counsel acceptable to the Trustee. "Original Certificate Balance" means $__________ [the Certificate Balance as of the Closing Date]. "Original Pool Balance" means $__________ [the Pool Balance as of the Cutoff Date]. "Pass-Through Rate" means the interest rate payable to Certificateholders. "Permitted Investments" means those investments specified in Schedule C. "Person" means any individual, corporation, estate, partnership, joint venture, association, joint stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof. "Physical Property" has the meaning assigned to such term in the definition of "Delivery" above. "Pool Balance" means as the last day of any Collection Period, the aggregate Principal Balance of the Receivables. For purposes of this definition only the Principal Balance of a Defaulted Receivable shall equal zero. "Precomputed Receivable" means any Receivable under which the portion of a payment allocable to earned interest (which may be referred to in the Receivable as an add-on finance charge) and the portion allocable to the Amount Financed is determined according to the sum of periodic balances or the sum of monthly balances or any equivalent method or are monthly actuarial receivables. "Principal Balance" of a Receivable, as of the last day of a Collection Period, means the Amount Financed minus the sum of (a) that portion of all Collections received on or prior to such day by the Servicer allocable as a payment of principal pursuant to Section 10.3, (b) any refunded portion of extended warranty protection plan costs, or of physical damage, credit life or disability insurance premiums included in the Amount Financed which is applied during the related Collection Period unless such refund must be paid to the Obligor, and (c) the principal portion of all Purchase Amounts paid by the Depositor or the Servicer, in respect of such Receivable, after the preceding Distribution Date but prior to the related Distribution Date. "Purchase Agreement" means the Purchase Agreement executed by the Depositor and CITSF as of the Cutoff Date. "Purchase Amount" means the amount, as of the last day of a Collection Period, required to prepay in full the Principal Balance of a Receivable plus accrued interest thereon at one-twelfth the sum of the Pass-Through Rate plus the Servicing Fee Rate to the last day of the month of purchase. "Purchased Receivable" means a Receivable purchased as of the last day of a Collection Period by the Servicer pursuant to Section 9.7 or Section 16.2 or by the Depositor pursuant to Section 8.2. "Rating Agency" means S&P, Moody's or any other nationally recognized rating agency initially contracted by the Depositor to rate the Certificates. "Receivables Purchase Agreement" means the Receivables Purchase Agreement, dated as of __________, ____ between CITSF and [ ], as Administrator. "Record Date" means for any Distribution Date the close of business on the Business Day prior to such Distribution Date. "Reimbursement Agreement" means the agreement relating to the Surety Bond. "Required Deposit Rating" means the rating specified in Section 6.1. "Reserve Account Initial Deposit" shall equal $____________. "Reserve Account Withdrawal Amount" shall have the meaning in Section 10.5(a)(ii). "Residual Certificate" means the Certificate specified in Section 11.1. "Scheduled Payment" on a Receivable means that portion of the payment required to be made by the Obligor on the related due date during the respective Collection Period sufficient to amortize at level monthly payments the Principal Balance and to provide interest at the APR. "Servicer" means CITSF and each successor to CITSF(in the same capacity) pursuant to Section 13.3. "Servicer's Certificate" means a certificate completed and executed by the Servicer by its chairman of the board, its president, any vice chairman of the board, any vice president, the treasurer, any assistant treasurer or the controller of the Servicer pursuant to Section 9.9, substantially in the form of Exhibit D. "Servicing Fee" means the fee payable to the Servicer for services rendered during each Collection Period, determined pursuant to Section 9.8. "Servicing Standards" means, at any time, the quality of the Servicer's (or in the event that a subservicer performs servicing operations on behalf of the Servicer, such subservicer's) performance with respect to (i)compliance with the terms and conditions and (ii) adequacy, measured in accordance with industry standards and current and historical standards of the Servicer (or such subservicer) in respect of all receivables serviced by the Servicer (or such subservicer), regardless of whether such receivables are owned by the Servicer (or such subservicer), of the Servicer's (or such subservicer's) servicing of the Receivables. "Ship Mortgage Act" means the Ship Mortgage Act of 1920, as amended. "Simple Interest Method" means the method of allocating a fixed level payment to principal and interest, pursuant to which the portion of such payment that is allocated to interest is equal to the product of the fixed rate of interest multiplied by the unpaid principal balance multiplied by the number of days elapsed since the preceding payment of interest was made. "Simple Interest Receivable" means any Receivable under which the portion of a payment allocable to interest and the portion allocable to principal is determined in accordance with the Simple Interest Method. "Specified Reserve Account Requirement" with respect to any Distribution Date, shall equal the greater of (i) $____________, or (ii) ____% of the Pool Balance as of the last day of the related Collection Period. The Specified Reserve Account Requirement may be reduced without the consent of the Certificateholders to a lesser amount, including to zero, as determined by the Depositor; provided that such reduction is consented to in writing by the Surety Bond Issuer and does not adversely affect the rating of the Certificates assigned by any Rating Agency. Upon the occurrence and continuance of the event specified in Section 14.1(b)(iv), the Specified Reserve Account Requirement shall equal the sum of the Certificate Balance, accrued interest thereon and the Servicing Fee payable pursuant to Section 10.5 (b) (ii) and all amounts available under Section 10.5(b)(vi) shall be deposited in the Reserve Account up to such amount. "S&P" means Standard & Poor's Ratings Services, a Division of The McGraw-Hill Companies. "State" means any state of the United States of America or the District of Columbia. "Statement to Certificateholders" means a certificate completed and executed by the Servicer by its the chairman of the board, its president, any vice chairman of the board, any vice president, the treasurer, any assistant treasurer or the controller of the Servicer pursuant to Section 10.7, substantially in the form of Exhibit E. "Surety Bond" means the unconditional, irrevocable surety bond designated as such. "Surety Bond Issuer Default" means the failure of the Surety Bond Issuer to make a payment required under the Surety Bond in accordance with its terms. "Surety Drawing Amount" shall have the meaning set forth in Section 10.5(a)(iii). "Trust" means the trust created hereby, the estate of which shall consist of (i) the Receivables (other than Purchased Receivables), and all payments received in the case of Simple Interest Receivables and all payments due thereunder, in the case of Precomputed Receivables, in each case, after the Cutoff Date; (ii) funds deposited into the Collection Account or the Certificate Account; (iii) any interest of the Depositor in the security interests in the Boats granted by the Obligors; (iv) the Surety Bond; (v) the Purchase Agreement; (vi) any interest of the Depositor in any proceeds from claims on physical damage, credit life or disability insurance policies covering the Boats or the Obligors, as the case may be; (vii) any property (including the right to receive future Liquidation Proceeds) that shall have secured a Receivable and that shall have been acquired by or on the behalf of the Trustee; and (viii) the proceeds of all of the foregoing. "Trustee" means the Person acting as Trustee hereunder, its successor in interest, and any successor trustee pursuant to Section 15.11. "Trustee Officer" means any officer assigned to the Corporate Trust Office, including any managing director, vice president, any assistant vice president, any assistant secretary, any assistant treasurer, any trust officer or any other officer of the Corporate Trust Office of the Trustee customarily performing functions similar to those performed by persons who at the time shall be such officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Trustee's Certificate" means a certificate completed and executed by the Trustee by a Trustee Officer pursuant to Section 15.2, substantially in the form of, in the case of an assignment to the Depositor, Exhibit F-1, and in the case of an assignment to the Servicer, Exhibit F-2. "UCC" means the Uniform Commercial Code as in effect in the respective jurisdiction. "Unsold Contract" means any retail installment contract serviced by CITSF other than the Receivables. SECTION 7.2. Usage of Terms. With respect to all terms used herein, the singular includes the plural and the plural the singular; words importing any gender include the other gender; references to "writing" include printing, typing, lithography and other means of reproducing words in a visible form; references to agreements and other contractual instruments include all subsequent amendments thereto or changes therein entered into in accordance with their respective terms and not prohibited hereby; references to Persons include their permitted successors and assigns; and the term "including" means "including without limitation." SECTION 7.3. Cutoff Date and Record Date. All references to the Record Date prior to the first Record Date in the life of the Trust shall be to the Cutoff Date. ARTICLE VIII SECTION 8.1. Representations and Warranties of Depositor. The Depositor makes the following representations and warranties as to the Receivables on which the Trustee relies in accepting the Receivables in trust and executing and authenticating the Certificates. Such representations and warranties speak as of the Closing Date, but shall survive the sale, transfer and assignment of the Receivables to the Trustee. (i) Characteristics of Receivables. Each Receivable (a) shall have been originated in the United States by a Dealer for the retail sale of a Boat in the ordinary course of such Dealer's business, shall have been fully and properly executed by the parties thereto, shall be denominated in U.S. dollars, (b) shall have created or shall create a valid, subsisting and enforceable first priority perfected security interest in favor of CITSF in the related Boat (other than in the case of boat motors subject to certificate of title statutes that provide for perfection of the security interests in such boat motors by the filing of a UCC-1 financing statement), which security interest has been assigned to the Depositor and shall be validly assignable by the Depositor to the Trustee, (c) shall contain customary and enforceable provisions such that the rights and remedies of the holder thereof shall be adequate for realization against the collateral of the benefits of the security, (d) shall provide for level monthly payments (provided that the payment in the first or last month in the life of the Receivable may be minimally different from the level payment) that fully amortize the Amount Financed by maturity and yield interest at the Annual Percentage Rate, and (e) shall provide for, in the event that such contract is prepaid, a prepayment that fully pays the Principal Balance and includes accrued but unpaid interest due through the date of prepayment in an amount at least equal to the Annual Percentage Rate. (ii) Schedule of Receivables. The information set forth in Schedule A shall be true and correct in all material respects as of the close of business on the Cutoff Date, and no selection procedures believed to be adverse to the Certificateholders shall have been utilized in selecting the Receivables. (iii) Compliance with Law. Each Receivable and the sale of the related Boat shall have complied at the time it was originated or made, and at the date of issuance of the Certificates shall comply, in all material respects with all requirements of applicable Federal, State, and local laws and regulations thereunder, including, without limitation, usury laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Federal Trade Commission Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Magnuson-Moss Warranty Act, the Federal Trade Commission Credit Practices Rule, State unfair and deceptive trade practice laws, and State adaptations of the National Consumer Act and of the Uniform Consumer Credit Code, and any other applicable consumer credit, equal credit opportunity and disclosure laws. (iv) Binding Obligation. Each Receivable shall represent the genuine, legal, valid and binding payment obligation in writing of the Obligor, enforceable by the holder thereof in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, fraudulent conveyance and similar laws relating to creditors' rights generally and subject to general principles of equity. (v) No Government Obligor. None of the Receivables shall be due from the United States of America or any State or local government or from any agency, department or instrumentality of the United States of America, any State or local government. (vi) Receivables in Force. No Receivable shall have been satisfied, subordinated or rescinded, nor shall any Boat have been released from the security interest granted by the related Receivable in whole or in part. (vii) No Waiver. No provision of a Receivable shall have been waived. (viii) No Defenses. Except for the security interests in favor of the Depositor and the Trustee, the Receivables are free and clear of all security interests, liens, charges, and encumbrances and to the best knowledge of the Depositor no right of rescission, setoff, counterclaim or defense shall have been asserted or threatened with respect to any Receivable. (ix) No Liens. No liens or claims shall have been filed for work, labor or materials relating to a Boat that shall be liens prior to, or equal to the security interest in the Boat granted by the Receivable. (x) Insurance. The Obligor has obtained physical damage insurance covering the Boat and the Obligor is required under the terms of the Receivable to maintain such insurance. (xi) Title. It is the intention of the Depositor that the sale and assignment herein contemplated constitute a sale of the Receivables from the Depositor to the Trust and that the beneficial interest in and title to the Receivables not be part of the debtor's estate in the event of the filing of a bankruptcy petition by or against the Depositor under any bankruptcy law. No Receivable has been sold, transferred, assigned or pledged by the Depositor to any Person other than the Trustee. Immediately prior to the sale and assignment herein contemplated, the Depositor had good and marketable title to each Receivable free and clear of all Liens, and, immediately upon the sale and assignment contemplated hereby, the Trustee for the benefit of the Certificateholders and the Surety Bond Issuer shall have good and marketable title to each Receivable, free and clear of all Liens, encumbrances, security interests and rights of others; and the sale and assignment has been perfected under the UCC. (xiii) Lawful Assignment. No Receivable shall have been originated in, or shall be subject to the laws of any jurisdiction under which the sale, transfer and assignment of such Receivable under this Agreement or pursuant to transfers of the Certificates shall be unlawful, void or voidable. (xiv) Security Interest. Upon the Receivables being conveyed to the Trust pursuant to Section 2.1(a), the Trust shall have a perfected security interest under the UCC in the Receivables. (xv) One Original. There shall be in existence one, and only one, original executed copy of each Receivable. (xvi) UCC Characterization. Each Receivable constitutes "Chattel Paper" under the UCC. (xvii) Ship Mortgage Act. No Boat related to any Receivable meets the requirements for documentation under the Ship Mortgage Act. (xviii) No Default. Except for payment defaults continuing for a period of less than 60 days as of the Cutoff Date, no default, breach, violation or event permitting acceleration under the terms of any Receivable shall have occurred and neither CITSF nor the Depositor shall have waived any of the foregoing. SECTION 8.2. Repurchase Upon Breach. The Depositor or the Servicer, as the case may be, shall inform the other parties and the Trustee promptly, in writing, upon the discovery of any breach of the Depositor's representations and warranties pursuant to Section 8.1. Unless the breach shall have been cured by the second Record Date following the discovery, the Depositor shall repurchase any Receivable, which as a result of such breach would materially and adversely affect the interests of the Certificateholders or the Surety Bond Issuer, as of such Record Date (or, at the Depositor's option, the first Record Date following the discovery). In consideration of the purchase of the Receivable, the Depositor shall remit the Purchase Amount in the manner specified in Section 10.4(a) on the Deposit Date. The sole remedy of the Trustee, the Trust or the Certificateholders with respect to a breach of the Depositor's representations and warranties pursuant to Section 8.1 shall be to require the Depositor to repurchase Receivables pursuant to this Section 8.2. SECTION 8.3. Custody of Receivable Files. To assure uniform quality in servicing the Receivables and to reduce administrative costs, the Trustee, on behalf of the Trust, upon the execution and delivery of this Agreement, hereby revocably appoints the Servicer, and the Servicer hereby accepts such appointment, to act as the agent of the Trustee as custodian of the following documents or instruments which are hereby constructively delivered to the Trust on behalf of the Trust, with respect to each Receivable: (i) The original of the Receivable fully executed by the Obligor. (ii) The original credit application fully executed by the Obligor. (iii) The original certificate of title or such documents that the Servicer or the Depositor shall keep on file, in accordance with its customary procedures, evidencing the security interest of CITSF in the Boat. (iv) Any and all other documents that the Servicer shall keep on file, in accordance with its customary procedures, relating to a Receivable, an Obligor or a Boat. The Trustee shall have no duty to monitor the performance of the Servicer and shall have no liability in connection with the Servicer's performance hereunder. SECTION 8.4. Duties of Servicer as Custodian. (a) Safekeeping. The Servicer shall hold the Receivable Files on behalf of the Trust for the use and benefit of all Certificateholders and the Surety Bond Issuer, and maintain such accurate and complete accounts, records and computer systems pertaining to each Receivable File as shall enable the Servicer to comply with this Agreement. In performing its duties as custodian the Servicer shall act with reasonable care, using that degree of skill and attention that the Servicer exercises with respect to the receivable files relating to all comparable receivables that the Servicer services for itself or others. The Servicer shall conduct, or cause to be conducted, periodic audits of the Receivable Files held by it under this Agreement, and of the related accounts, records and computer systems, in such a manner as would enable the Trustee to verify the accuracy of the Servicer's record keeping. The Servicer shall promptly report to the Trustee any failure on its part to hold the Receivable Files and maintain its accounts, records and computer systems as herein provided and promptly take appropriate action to remedy any such failure. Nothing herein shall be deemed to require an initial review or any periodic review by the Trustee of the Receivable Files. (b) Maintenance of and Access to Records. The Servicer shall maintain each Receivable File at one of its offices specified in Section 5.1(iv), or at such other office as shall be specified to the Trustee by written notice not later than 90 days after any change in location. The Servicer shall make available to the Trustee or its duly authorized representatives, attorneys or auditors a list of locations of the Receivable Files, and shall also so make available the Receivable Files themselves, and the related accounts, records and computer systems maintained by the Servicer, at such times as the Trustee shall reasonably instruct. (c) Release of Documents. Upon instruction from the Trustee, the Servicer shall release any Receivable File to the Trustee, the Trustee's agent or the Trustee's designee, as the case may be, at such place or places as the Trustee may designate, as soon as practicable. SECTION 8.5. Instructions; Authority to Act. The Servicer shall be deemed to have received proper instructions with respect to the Receivable Files upon its receipt of written instructions signed by a Trustee Officer. SECTION 8.6. Custodian's Indemnification. The Servicer as custodian shall indemnify the Trustee (which shall include for purposes of this section it directors, officers, employees and agents) for any and all liabilities, obligations, losses, compensatory damages, payments, costs or expenses of any kind whatsoever that may be imposed on, incurred or asserted against the Trustee as the result of any improper act or omission in any way relating to the maintenance and custody by the Servicer as custodian of the Receivable Files; provided, however, that the Servicer shall not be liable for any portion of any such amount resulting from the willful misfeasance, bad faith or negligence of the Trustee. This indemnity shall survive the termination of this Agreement and the resignation and removal of the Trustee. SECTION 8.7. Effective Period and Termination. The Servicer's appointment as custodian shall become effective as of the Cutoff Date and shall continue in full force and effect until terminated pursuant to this Section 8.7. If CITSF shall resign as Servicer or if all the rights and obligations of the Servicer shall have been terminated under Section 14.1, the appointment of the Servicer as custodian may be terminated by the Surety Bond Issuer, in the same manner as the Surety Bond Issuer may terminate the rights and obligations of the Servicer under Section 14.1. The Trustee shall, if required by the Surety Bond Issuer following the occurrence and during the continuation of an Event of Default or the Trustee, on behalf of the Trust, may terminate the Servicer's appointment as custodian, with cause or as required by law at any time upon written notification to the Servicer. As soon as practicable after any termination of such appointment, the Servicer shall deliver the Receivable Files to the Trustee or the Trustee's agent at such place or places as the Trustee may reasonably designate. ARTICLE IX SECTION 9.1. Duties of Servicer. The Servicer shall manage, service, administer and make collections on the Receivables (other than Purchased Receivables) with reasonable care, using that degree of skill and attention that the Servicer exercises with respect to all comparable receivables that it services for itself or others. The Servicer's duties shall include collection and posting of all payments, responding to inquiries of Obligors on such Receivables, investigating delinquencies, sending payment statements to Obligors, reporting tax information to Obligors, accounting for collections and furnishing monthly and annual statements to the Trustee with respect to distributions. The Servicer shall follow its customary standards, policies and procedures in performing its duties as Servicer. Without limiting the generality of the foregoing, the Servicer is authorized and empowered by the Trustee to execute and deliver, on behalf of itself, the Trust, the Certificateholders, or the Trustee or any of them, any and all instruments of satisfaction or cancellation, or partial or full release or discharge, and all other comparable instruments, with respect to such Receivables or to the Boats securing such Receivables. If the Servicer shall commence a legal proceeding to enforce a Receivable, the Trustee (in the case of a Receivable other than a Purchased Receivable) shall thereupon be deemed to have automatically assigned, solely for the purpose of collection on behalf of the party retaining an interest in such Receivable, such Receivable to the Servicer. If in any enforcement suit or legal proceeding it shall be held that the Servicer may not enforce a Receivable on the ground that it shall not be a real party in interest or a holder entitled to enforce the Receivable, the Trustee shall, at the Servicer's expense and direction, take steps to enforce the Receivable, including bringing suit in its name or the name of the Certificateholders or the Surety Bond Issuer. To enable the Servicer to carry out its servicing and administrative duties hereunder, the Trustee hereby irrevocably appoints the Servicer as its attorney-in-fact, such appointment being coupled with an interest, to execute on its behalf such documents or instruments as are necessary to accomplish the foregoing. SECTION 9.2. Collection of Receivables Payments. The Servicer shall make reasonable efforts to collect all payments called for under the terms and provisions of the Receivables as and when the same shall become due and shall follow such collection procedures as it follows with respect to all comparable receivables that it services for itself or others. The Servicer may grant extensions, rebates or adjustments on a Receivable subject to the provisions of Section 9.6. The Servicer may in its discretion waive any late payment charge or any other fees that may be collected in the ordinary course of servicing a Receivable. SECTION 9.3. Realization Upon Receivables. On behalf of the Trust, the Servicer shall use its best efforts, consistent with its customary servicing procedures, to repossess or otherwise convert the ownership of the Boat securing any Receivable as to which the Servicer shall have determined eventual payment in full is unlikely. The Servicer shall follow such customary and usual practices and procedures as it shall deem necessary or advisable in its servicing of marine receivables, which may include reasonable efforts to realize upon any recourse to Dealers and selling the Boat at public or private sale. The foregoing shall be subject to the provision that, in any case in which the Boat shall have suffered damage, the Servicer shall not expend funds in connection with the repair or the repossession of such Boat unless it shall determine in its discretion that such repair and/or repossession will increase the related Liquidation Proceeds by an amount greater than the amount of such expenses. SECTION 9.4. Physical Damage Insurance. The Servicer, in accordance with its customary servicing procedures, shall require that each Obligor shall have obtained physical damage insurance covering the related Boat as of the date of execution of the related Receivable. SECTION 9.5. Maintenance of Security Interests in Boats. The Servicer shall, in accordance with its customary servicing procedures, take such steps as are necessary to maintain perfection of CITSF's security interest created by each Receivable in the related Boat. The Trustee, on behalf of the Trust, hereby authorizes the Servicer to take such steps as are necessary to perfect such security interest on behalf of the Trust in the event of the relocation of a Boat or for any other reason. SECTION 9.6. Covenants of Servicer. The Servicer shall make within the required time periods under the UCC all filings necessary in any jurisdiction to give the Trustee a first priority perfected ownership interest in the Receivables. The Servicer shall not release the Boat securing each Receivable from the security interest granted by such Receivable in whole or in part except in the event of payment in full by the Obligor thereunder. The Servicer shall not impair the rights of the Certificateholders in any Receivable. The Servicer shall make reasonable efforts to collect all payments called for under the terms and provisions of the Receivables as and when the same shall become due and shall follow such collection procedures as it follows with respect to all comparable marine receivables that it services for itself and others. The Servicer shall not sell, pledge, transfer, deliver or otherwise dispose of any Receivable, except as provided in this Agreement. The Servicer will not increase or decrease the number or amount of any Scheduled Payment, or the Principal Balance of a Receivable (except with respect to a prepayment of a Scheduled Payment that does not result in a deferral of any other Scheduled Payment) or the APR of a Receivable, or extend, rewrite or otherwise modify the payment terms of a Receivable; provided, however, that the Servicer may extend a Receivable for credit related reasons that would be acceptable to the Servicer with respect to comparable marine receivables that it services for itself and others and in accordance with its customary standards, policies and procedures if the cumulative extensions with respect to any Receivable shall not cause the term of such Receivable to extend beyond the last day of the Collection Period which is related to the Final Scheduled Distribution Date; provided, further, that such extensions will not be made if, in the reasonable opinion of the Servicer, the extensions would modify the terms of such Receivable in such a manner as to constitute a cancellation of such Receivable and the creation of a new receivable for federal income tax purposes. In the event that the Servicer fails to comply with the provisions of the preceding sentence or with respect to the second proviso of the preceding sentence, notwithstanding having acted according to its reasonable opinion, or if there is a final determination that the Servicer has modified the terms of a Receivable in such a manner as to constitute a cancellation of such Receivable and the creation of a new Receivable for federal income tax purposes, the Servicer shall be required to purchase the Receivable or Receivables affected thereby, for the Purchase Amount, in the manner specified in Section 9.7 as of the first day of the Collection Period following the Collection Period in which such failure occurs. SECTION 9.7. Purchase of Receivables Upon Breach. The Servicer or the Trustee shall inform the other party promptly, in writing, upon the discovery (or, in the case of the Trustee, receipt of written notice by a Trust Officer) of any breach pursuant to Section 9.6 or Section 9.15. Notice of any breach pursuant to Section 9.6 or Section 9.15 may be given to the Servicer and the Trustee by the Surety Bond Issuer. Unless the breach shall have been cured by the second Record Date following such discovery (or, at the Servicer's election, the first following Record Date), the Servicer shall purchase any Receivable (or in the case of any representation and warranty set forth in clause (xiv) of Section 9.15, the Servicer shall purchase Receivables such that, after giving effect to such purchase, such representation and warranty would be complied with), which as a result of such breach would materially and adversely affect the interests of the Certificateholders or the Surety Bond Issuer, as of such Record Date. In consideration of the purchase of such Receivable, the Servicer shall remit the Purchase Amount in the manner specified in Section 10.4 on the Deposit Date. The sole remedy of the Trustee, the Trust or the Certificateholders with respect to a breach pursuant to Section 9.6 or Section 9.15 shall be to require the Servicer to repurchase Receivables pursuant to this Section 9.7. SECTION 9.8. Servicing Fee. The Servicing Fee for a Collection Period shall equal the product of one twelfth times the Servicing Fee Rate times the Initial Pool Balance, in the case of the initial Collection Period, and thereafter, the Pool Balance as of the last day of the prior Collection Period (except that in the case of a successor Servicer, the Servicing Fee shall equal such amount as is arranged in accordance with Section 14.2). The Servicer shall also be entitled to all late payment and extension fees, prepayment charges and other administrative fees or similar charges allowed by applicable law with respect to Receivables, collected (from whatever source) on the Receivables; provided, however, such late payment and other fees shall not form a part of the Servicing Fee and the Servicer shall be entitled to such fees as and when collected. SECTION 9.9. Servicer's Certificate. On or before 10:00 a.m. New York time on the Determination Date, the Servicer shall deliver to the Trustee and the Surety Bond Provider a Servicer's Certificate, containing all information necessary to make the transfers and distributions pursuant to Section 10.5 for the Collection Period immediately preceding the date of such Servicer's Certificate. If on any Deposit Date there is a default by the Depositor or the Servicer in respect of any Purchase Amounts to be deposited into the Collection Account pursuant to Section 10.4, the Servicer shall recalculate all of the amounts described in the Servicer's Certificate to reflect such default and deliver to the Trustee a revised Servicer's Certificate reflecting such recalculations on such Deposit Date. SECTION 9.10. Annual Statement as to Compliance; Notice of Default. (a) The Servicer shall deliver to the Trustee and the Surety Bond Issuer, on or before March 31 of each year, beginning March 31, ____, an Officer's Certificate, dated as of December 31 of the preceding year, stating that (i) a review of the activities of the Servicer during the preceding 12-month period (or such shorter period from the date of initial issuance of the Certificates to December 31 of such year) and of its performance under this Agreement has been made under such officer's supervision and (ii) to the best of such officer's knowledge, based on such review, the Servicer has fulfilled all its obligations under this Agreement throughout such year (or such shorter period, as the case may be), or, if there has been a default in the fulfillment of any such obligation, specifying each such default known to such officer and the nature and status thereof. A copy of such certificate and the report referred to in Section 9.11 may be obtained by any Certificateholder by a request in writing to the Trustee addressed to the Corporate Trust Office. (b) The Servicer shall deliver to the Trustee and the Surety Bond Issuer promptly after having obtained knowledge thereof, but in no event later than 5 Business Days thereafter, written notice in an Officer's Certificate of any event which with the giving of notice or lapse of time, or both, would become an Event of Default under clause (i) or (ii) of Section 14.1. The Depositor shall deliver to the Trustee and the Surety Bond Issuer promptly after having obtained knowledge thereof, but in no event later than 5 Business Days thereafter, written notice in an Officer's Certificate of any event which with the giving of notice or lapse of time, or both, would become an Event of Default under clause (ii) of Section 14.1. SECTION 9.11. Annual Independent Certified Public Accountant's Report. The Servicer shall cause a firm of independent certified public accountants (who may also render other services to the Servicer and the Depositor) to deliver to the Trustee on or before March 31 of each year commencing March 31, ____, a report to the effect that such firm has conducted an examination, substantially in compliance with attestation standards established by the American Institute of Certified Public Accountants, of certain documents and records relating to the servicing procedures under this Agreement and that, on the basis of such examination, such firm is of the opinion that such servicing was conducted in compliance with the sections of this Agreement with which independent public accountants generally possess adequate professional knowledge and which are reasonably subject to positive assurance by them, except for such exceptions as they believe to be immaterial and such other exceptions as shall be set forth in such report. In the event such firm requires Trustee to agree to the procedures performed by such firm, Servicer shall direct Trustee in writing to so agree; it being understood and agreed that Trustee will deliver such letter of agreement in conclusive reliance upon the direction of Servicer, and Trustee makes no independent inquiry or investigation as to, and shall have no obligation or liability in respect of, the sufficiency, validity or correctness of such procedures. SECTION 9.12. Access to Certain Documentation and Information Regarding Receivables. The Servicer shall provide to the Certificateholders access to the Receivables Files in such cases where the Certificateholder shall be required by applicable statutes or regulations to review such documentation. Access shall be afforded without charge, but only upon reasonable request and during the normal business hours at the respective offices of the Servicer. Nothing in this Section 9.12 shall affect the obligation of the Servicer to observe any applicable law prohibiting disclosure of information regarding the Obligors, and the failure of the Servicer to provide access to information as a result of such obligation shall not constitute a breach of this Section 9.12. SECTION 9.13. Servicer Expenses. The Servicer shall be required to pay all expenses incurred by it in connection with its activities hereunder, including fees and disbursements of independent accountants, taxes imposed on the Servicer and expenses incurred in connection with distributions and reports to Certificateholders. SECTION 9.14. Appointment of Sub-servicer. The Servicer may at any time appoint a sub-servicer to perform all or any portion of its obligations as Servicer hereunder; provided however, that the Servicer shall remain obligated and be liable to the Trustee and the Certificateholders for the servicing and administering of the Receivables in accordance with the provisions hereof without diminution of such obligation and liability by virtue of the appointment of such sub-servicer and to the same extent and under the same terms and conditions as if the Servicer alone were servicing and administering the Receivables. The fees and expenses of the sub-servicer shall be as agreed between the Servicer and its sub-servicer from time to time and neither the Trust, the Trustee nor the Certificateholders shall have any responsibility therefor. SECTION 9.15. Representations and Warranties of Servicer with respect to the Receivables. The Servicer does hereby make the following representations and warranties on which the Trustee on behalf of the Trust, relies in accepting the Receivables pursuant to this Agreement and executing and authenticating the Certificates. Such representations and warranties speak as of the Closing Date, but shall survive the sale, transfer and assignment of the Receivables to the Trustee on behalf of the Trust and any termination of the Servicer pursuant to Section 14.1. (i) Characteristics of Receivables. Each Receivable (a) shall be denominated in U.S. dollars, (b) shall have an original maturity of not more than 180 months, (c) as of the Cutoff Date, shall have a remaining maturity of not more than 180 months, (d) shall contain customary and enforceable provisions such that the rights and remedies of the holder thereof shall be adequate for realization against the collateral of the benefits of the security, (e) shall be kept at the offices of CITSF at [address], (f) shall be adequate for realization against the collateral of the benefits of the security, (g) shall provide for level monthly payments (provided that the payment in the first or last month in the life of the Receivable may be minimally different from the level payment) that fully amortize the Amount Financed by maturity and yield interest at the Annual Percentage Rate, and (h) shall provide for , in the event that such contract is prepaid, a prepayment that fully pays the Principal Balance and includes accrued but unpaid interest due through the date of prepayment in an amount at least equal to the Annual Percentage Rate. (ii) Schedule of Receivables. The information set forth in Schedule B shall be true and correct in all material respects as of the close of business on the Cutoff Date, and no selection procedures believed to be adverse to the Certificateholders shall have been utilized in selecting the Receivables. (iii) No Government Obligor. None of the Receivables shall be due from the United States of America or any State or local government or from any agency, department or instrumentality of the United States of America, any State or local government. (iv) Receivables in Force. No Receivable shall have been satisfied, subordinated or rescinded, nor shall any Boat have been released from the security interests granted by the related Receivable in whole or in part. (v) No Waiver. No provision of a Receivable shall have been waived. (vi) No Defenses. Immediately following the conveyance of the Receivables to the Trust, except for the security interests in favor of the Depositor and the Trustee, the Receivables are free and clear of all security interests, liens, charges, and encumbrances and to the best knowledge of the Servicer no right of rescission, setoff, counterclaim or defense shall have been asserted or threatened with respect to any Receivable. (vii) No Liens. No liens or claims shall have been filed for work, labor or materials relating to a Boat that shall be liens prior to, or equal to the security interest in the Boat granted by the Receivable. (viii) Insurance. The Obligor has obtained physical damage insurance covering the Boat and the Obligor is required under the terms of the Receivable to maintain such insurance. (ix) Lawful Assignment. No Receivable shall have been originated in, or shall be subject to the laws of any jurisdiction under which the sale, transfer and assignment of such Receivable pursuant to transfers of the Certificates shall be unlawful, void or voidable. (x) Security Interest. Upon the Receivables being conveyed to the Trust, the Trust shall have a perfected security interest under the UCC in the Receivables. (xi) Ship Mortgage Act. No Boat related to any Receivable shall be required to be documented under the Ship Mortgage. (xii) Compliance with Law. Each Receivable complies in all material respects with all requirements of applicable Federal, State, and local laws and regulations thereunder, including, without limitation, usury laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Federal Trade Commission Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Magnuson-Moss Warranty Act, the Federal Trade Commission Credit Practices Rule, State unfair and deceptive trade practice laws, and State adaptations of the National Consumer Act and of the Uniform Consumer Credit Code, and any other applicable consumer credit, equal credit opportunity and disclosure laws. (xiii) Title. Immediately upon the sale and assignment of the Receivables to the Trust, the Trustee for the benefit of the Certificateholders and the Surety Bond Issuer shall have good and marketable title to each Receivable, free and clear of all Liens, encumbrances, security interests and rights of others; and the sale and assignment has been perfected under the UCC. (xiv) As of the Cutoff Date, not more than (a) approximately ____% of the number of Receivables, constituting approximately ____% of the Initial Pool Balance are related to Boats which have been repossessed by the Servicer, (b) approximately ____% of the number of Receivables, constituting approximately ____% of the Initial Pool Balance are 30 to 59 days delinquent, (c) approximately ____% of the number of Receivables, constituting approximately ____% of the Initial Pool Balance are related to Boats which are 60 to 89 days delinquent and (d) approximately ____% of the number of Receivables, constituting approximately ____% of the Initial Pool Balance are related to Boats which are 90 or more days delinquent. (xv) Each Receivable creates a first priority perfected security interest in the Boat financed thereby in favor of CITSF(other than in the case of boat motors subject to certificate of title statutes that provide for perfection of the security interests in such boat motors by the filing of a UCC-1 financing statement). (xvi) To the best of the Servicer's knowledge, no Liens or claims are pending or threatened with respect to a Boat which may be or become prior to or equal with the Lien of the related Receivable. ARTICLE X SECTION 10.1. Accounts. (a) The Servicer shall establish and maintain the Collection Account and the Certificate Account in the name of the Trustee for the benefit of the Certificateholders and, to the extent herein provided, for the benefit of the Surety Bond Issuer. The Collection Account shall be a segregated, non-interest-bearing trust account initially established with the Trustee and maintained with the Trustee so long as (i) the deposits of the Trustee have the Required Deposit Rating or (ii) the Collection Account is maintained as a fully segregated trust account. All amounts held in the Collection Account (other than Purchase Amounts) shall be invested in Permitted Investments by the Trustee, at the written direction of the Servicer, in each case such investments maturing not later than the Deposit Date following the Collection Period in which such amounts are so invested. Purchase Amounts deposited on a Deposit Date shall not be invested. Such written direction shall certify that any such investment is authorized by this Section 14.1 and complies with the requirements of Permitted Investments as set forth in Schedule C. The Certificate Account shall be a segregated, non-interest-bearing trust account initially established with the Trustee and maintained with the Trustee for so long as (x) the deposits of the Trustee have the Required Deposit Rating or (y) the Certificate Account is maintained as a fully segregated trust account. The amounts in the Certificate Account shall not be invested. Should the deposits of the Trustee no longer have the Required Deposit Rating and the Collection Account or the Certificate Account, as applicable, shall not be maintained as a fully segregated trust account, then the Servicer shall, with the Trustee's assistance as necessary, cause the Certificate Account and/or the Collection Account to be moved, within 60 days after the occurrence of the later of the loss of the Required Deposit Rating or the cessation of such accounts being maintained as fully segregated trust accounts, to a bank or trust company organized under the laws of the United States of any state thereof, the deposits of which shall have the Required Deposit Rating. (b) (i) The Depositor shall establish the Reserve Account in the name of the Collateral Agent which shall be pledged to the Trustee for the benefit of the Certificateholders and the Surety Bond Issuer. The Reserve Account shall be a segregated, non-interest-bearing trust account initially established and maintained with the Trustee for so long as (x) the deposits of the Trustee have the Required Deposit Rating or (y) the Reserve Account is maintained as a fully segregated trust account. The Reserve Account shall not be property of the Trust. All amounts held in the Reserve Account shall be invested in Permitted Investments by the Collateral Agent, at the written direction of the Depositor, in each case such investments maturing not later than the Deposit Date following the Collection Period in which such amounts are so invested. Such written direction shall certify that any such investment is authorized by this Section 10.1 and comply with the requirements of Permitted Investments as set forth in Schedule C. Should the deposits of the Collateral Agent no longer have the Required Deposit Rating or the Reserve Account shall not be maintained as a fully segregated trust account, then the Depositor shall, with the Collateral Agent's assistance as necessary, cause the Reserve Account to be moved, within 60 days after the occurrence of the later of the loss of the Required Deposit Rating or the cessation of such accounts being maintained as fully segregated trust accounts, to a bank or trust company organized under the laws of the United States or any state thereof, the deposits of which shall have the Required Deposit Rating. (ii) On the date of the issuance of the Certificates, the Depositor shall cause the Reserve Account Initial Deposit to be deposited into the Reserve Account. The Depositor hereby grants to the Collateral Agent for the benefit of the Certificateholders and the Surety Bond Issuer a security interest in and to the Reserve Account and any and all Account Property credited thereto from time to time, including, but not limited to, Permitted Investments, to secure payment of the Certificates according to their terms. Amounts held from time to time in the Reserve Account will continue to be held by the Collateral Agent for the benefit of the Certificateholders and the Surety Bond Issuer, but the Reserve Account shall not be an asset of the Trust. Funds held in the Reserve Account shall be remitted to the Depositor upon the Depositor's written request upon the termination of the Trust. By acceptance of their Certificates or interest therein and by execution and delivery of the Reimbursement Agreement by the Surety Bond Issuer, the Certificateholders and Certificate Owners and the Surety Bond Issuer, respectively, shall be deemed to have appointed [ ] as Collateral Agent. [ ] hereby accepts such appointment as Collateral Agent. (iii) With respect to the Account Property in respect of the Reserve Account, the Collateral Agent agrees that: A. any Account Property that is held in deposit accounts shall be held solely in a bank with the Required Deposit Rating; and each such bank with the Required Deposit Rating shall be subject to the exclusive custody and control of the Collateral Agent, and the Collateral Agent shall have sole signature authority with respect thereto; B. any Account Property that constitutes Physical Property shall be delivered to the Collateral Agent in accordance with paragraph (a) of the definition of "Delivery" and shall be held, pending maturity or disposition, solely by the Collateral Agent, or a financial intermediary (as such term is defined in Section 8-313(4) of the Relevant UCC) acting solely for the benefit of the Certificateholders; C. any Account Property that is a book-entry security held through the Federal Reserve System pursuant to Federal book-entry regulations shall be delivered to the Collateral Agent in accordance with paragraph (b) of the definition of "Delivery" and shall be maintained by the Collateral Agent, pending maturity or disposition, through continued book-entry registration of such Account Property as described in such paragraph; and D. any Account Property that is an "uncertificated security" under Article 8 of the Relevant UCC and that is not governed by clause (C) above shall be delivered to the Collateral Agent in accordance with paragraph (c) of the definition of "Delivery" and shall be maintained by the Collateral Agent, pending maturity or disposition, through continued registration of the Collateral Agent's (or its nominee's) ownership of such security. Effective upon Delivery of any Account Property in the form of Physical Property, book-entry securities or uncertificated securities, the Collateral Agent shall be deemed to have purchased such Account Property for value, in good faith and without notice of any adverse claim thereto. (iv) The Depositor and the Servicer agree to take or cause to be taken such further actions, to execute, deliver and file or cause to be executed, delivered and filed such further documents and instruments (including, without limitation, any financing statements under the Relevant UCC or this Agreement) as may be determined to be necessary, in order to perfect the interests created by this Section 10.1(b) and otherwise effectuate the purposes, terms and conditions of this Section 14.1(b). SECTION 10.2. Collections. The Servicer shall remit to the Collection Account within two Business Days after receipt thereof all Collections, any amounts referred to in clauses (ii) and (iv) of the definition of Available Funds, each as collected during the Collection Period; provided, however, that so long as CITSF is acting as the Servicer, the Servicer shall be permitted to make remittances of Collections, any amounts referred to in clause (ii) of the definition of Available Funds and Liquidation Proceeds to the Collection Account in next-day funds or immediately available funds by 12:30 p.m. New York City time on the Deposit Date immediately following such Collection Period if the specific terms and conditions set forth below in this Section 10.2 are satisfied and only for so long as such terms and conditions are satisfied: (i) the Servicer shall be CITSF or any other Successor Servicer pursuant to Section 13.3; (ii) there exists no Event of Default (as described below); (iii) if the Servicer does not have a short term debt rating or deposit rating, as applicable, of at least A-1 from S&P and P-1 from Moody's, a guaranty, letter of credit, surety bond or other similar instrument is issued covering Collections, any amounts referred to in clause (ii) of the definition of Available Funds and Liquidation Proceeds held by CITSF or its successor, which is acceptable to the Rating Agencies and the Surety Bond Issuer and issued by an entity, which has a short-term debt or deposit rating, as applicable, of at least A-1 from S&P and P-1 from Moody's; and (iv) the Servicer, the Trustee, the Depositor and the Surety Bond Issuer shall not have received any notice from S&P or Moody's that failure to deposit such funds more frequently will result in a reduction or withdrawal of the then current rating on the Certificates by either S&P or Moody's. The Trustee shall not be deemed to have knowledge of any event or circumstance under clause (ii) above that would require remittance by the Servicer of Collections and Liquidations Proceeds to the Collection Account two Business Days after receipt thereof unless the Trustee has received notice of such event or circumstance from the Depositor, the Servicer or the Surety Bond Issuer in an Officer's Certificate or from the Holders of Certificates evidencing not less than 25% of the Certificate Balance. SECTION 10.3. Application of Collections. As of each Determination Date, all Collections for the related Collection Period shall be applied first to late payment and extension fees, second to interest accrued on the Receivable, third to principal due on the Receivable during the related Collection Period, fourth to insurance premiums or amounts due on loans to the Obligors to finance the payment of insurance premiums for collateral protection insurance purchased by the Servicer, and fifth to administrative charges, if any. Last, any excess shall be applied to prepay the Principal Balance of the Receivable. SECTION 10.4. Additional Deposits. (a) The Servicer and/or the Depositor shall deposit in the Collection Account the aggregate Purchase Amount with respect to Purchased Receivables and the Servicer shall deposit therein all amounts to be paid under Section 8.2, 13.7 and 20.2. All such deposits shall be made in immediately available funds by 12:30 p.m. New York City Time on the Deposit Date relating to the Collection Period during which such repurchase, purchase or other obligation arose. The Trustee shall deposit in the Certificate Account the aggregate of any amounts received from the Surety Bond Issuer pursuant to Section 10.5(a)(iii) on the date of receipt thereof. (b) If the Servicer shall be required pursuant to Section 10.2 to remit Collections to the Collection Account two Business Days after receipt rather than on a monthly basis, then, if the Servicer is CITSF or an affiliate thereof is the servicer it may remit payments collected on Unsold Contracts as well as payments collected on Receivables and Liquidation Proceeds to the Collection Account. Upon receipt of an Officer's Certificate of the Servicer identifying the amount of funds in the Collection Account representing Collections attributable to Unsold Contracts, the Trustee shall transfer such funds in accordance with the instructions contained in such Officer's Certificate. SECTION 10.5. Distributions. (a) (i) On each Deposit Date, the Trustee shall transfer all amounts on deposit in the Collection Account to the Certificate Account, in immediately available funds, less any funds identified in an Officer's Certificate of the Servicer as proceeds (x) of Unsold Contracts and (y) of Collections on the Receivables allocable to late payment and extension fees, and administrative charges, provided, however, that in the event that the Servicer is required to make deposits to the Collection Account two Business Days after receipt pursuant to Section 10.2, the amount of Available Funds transferred from the Collection Account to the Certificate Account will include only those funds that were deposited into the Collection Account in the Collection Period relating to such Distribution Date. The amount of the transfer from the Collection Account to the Certificate Account shall be set forth in the Servicer's Certificate for such Distribution Date. (ii) On each Deposit Date, the Trustee shall transfer from the Reserve Account to the Certificate Account an amount equal to the lesser of (x) the amount on deposit in the Reserve Account and (y) an amount equal to the shortfall, if any, between, (A) Available Funds for such Collection Period and (B) the sum of (1) the Monthly Interest Payment and any Carry-Over Monthly Interest, (2) the Servicing Fee and any Carry-Over Servicing Fee to be distributed to the Servicer pursuant to Section 10.5(b)(ii) and (3) the Monthly Principal Payment and any Carry-Over Monthly Principal Payment, each for the related Distribution Date (collectively "Priority Distributions") (the amount transferred pursuant to this clause (ii) is the "Reserve Account Withdrawal Amount" for such Deposit Date). The Reserve Account Withdrawal Amount shall be set forth in the Servicer's Certificate with respect to each Distribution Date. (iii) If on any Determination Date the Servicer has reported to the Trustee in the Servicer's Certificate that the Servicer has determined that Available Funds for the related Distribution Date together with any Reserve Account Withdrawal Amount for such Distribution Date are insufficient to provide for the Priority Distribution on such Distribution Date (the amount of such insufficiency is referred to as the "Surety Drawing Amount" for such Distribution Date, then, after receipt of such Servicer's Certificate, the Trustee shall promptly (and in any event not later than 2:00 p.m. on the second Business Day prior to the Distribution Date) deliver a completed demand for payment under the Surety Bond to the Surety Bond Issuer requesting payment in an amount equal to the Surety Drawing Amount for such Distribution Date. The Surety Bond Issuer shall pay or cause to be paid the amount of such demand for payment to the Trustee for credit to the Certificate Account no later than the later of 11:00 a.m. on the related Deposit Date and the second Business Day after the Surety Bond Issuer receives a demand for payment. (b) On each Distribution Date, as set forth in the Servicer's Certificate for such Distribution Date, the Trustee will make the following distributions from the Certificate Account in the following order of priority: (i) to the Certificateholders of record as of the related Record Date, the Monthly Interest Payment and any Carry-Over Monthly Interest; (ii) if the Servicer is not CITSF or an affiliate thereof, to the Servicer, the Servicing Fee and any Carry-Over Servicing Fee; (iii) to the Certificateholders of record as of the related Record Date, the Monthly Principal Payment and any Carry-Over Monthly Principal; (iv) if CITSF or an affiliate thereof is the Servicer, to the Servicer, the Servicing Fee and any Carry-Over Servicing Fee; (v) to the Surety Bond Issuer, any amounts owing to the Surety Bond Issuer hereunder and pursuant to the Reimbursement Agreement and not paid; (vi) to the Collateral Agent, an amount up to the Specified Reserve Account Requirement for deposit into the Reserve Account; and (vii) to the Depositor, any remaining amounts. (c) On each Distribution Date as set forth in the Servicer's Certificate for such Distribution Date, the Trustee shall withdraw from the Reserve Account and distribute to the Depositor an amount equal to the excess, if any, of the (x) amount on deposit in the Reserve Account over (y) the Specified Reserve Account Requirement. Distributions to Certificateholders, except in the case of distributions under Section 16.1, shall be made by check mailed by the Trustee to each Certificateholder's respective address of record on the Certificate Register (or, where a Clearing Agency is the Certificateholder, by delivery of immediately available funds) and distributions to the Servicer, the Surety Bond Issuer, the Collateral Agent or the Depositor shall be made by wire transfer of immediately available funds. SECTION 10.6. Net Deposits. For so long as the Servicer shall be entitled pursuant to Section 10.2 to remit Collections on a monthly basis rather than more frequently, the Servicer may make the remittances pursuant to Sections 14.2 and 14.4 above net of amounts to be distributed to the Servicer pursuant to Section 10.5(b). Nonetheless, the Servicer shall account for all the above described remittances and distributions in the Servicer's Certificate as if the amounts were deposited and/or transferred separately. SECTION 10.7. Statements to Certificateholders. (a) On each Distribution Date, the Servicer shall provide to the Trustee the Statement to Certificateholders, setting forth for the Collection Period relating to such Distribution Date the following information (stated in the case of items (I), (ii) and (iii), on the basis of $1,000 initial principal amount) as of such Distribution Date a copy of which shall be forwarded by the Trustee to each Certificateholder on such Distribution Date: (i) The amount of the Certificateholder's distribution which constitutes the Monthly Principal Payment (including any Carry-Over Monthly Principal); (ii) The amount of the Certificateholder's distribution which constitutes the Monthly Interest Payment (including any Carry-Over Monthly Interest); (iii) The Certificateholder's pro rata portion of the Servicing Fee (including any Carry-Over Servicing Fee); (iv) The Certificate Balance and the Certificate Factor as of the close of business on such Distribution Date; and (v) The Pool Balance as of the last day of the Collection Period. (b) Within the prescribed period of time for tax reporting purposes after the end of each calendar year during the term of this Agreement, the Trustee shall mail, to each Person who at any time during such calendar year shall have been a Certificateholder, a statement containing the sum of the amounts determined in each of clauses (i) and (ii), for such calendar year or, in the event such Person shall have been a Certificateholder during a portion of such calendar year, for the applicable portion of such year. ARTICLE XI SECTION 11.1. The Certificates. The Certificates shall be issued in book-entry form in minimum denominations representing $1,000 of initial principal balance of the Receivables and in integral multiples thereof; provided, however, that one Certificate may be issued in a denomination that includes any residual amount and that such Certificate shall be retained by the Depositor (the "Residual Certificate"). The Certificates shall be executed by the Trustee on behalf of the Trust solely in its capacity as Trustee by manual or facsimile signature of a Trustee Officer. Certificates bearing the manual or facsimile signatures of individuals who were, at the time when such signatures shall have been affixed, authorized to sign on behalf of the Trust, shall be valid and binding obligations of the Trust, notwithstanding that such individuals or any of them shall have ceased to be so authorized prior to the authentication and delivery of such Certificates or did not hold such offices at the date of such Certificates. SECTION 11.2. Authentication of Certificates. The Trustee shall cause the Certificates to be executed on behalf of the Trust, authenticated and delivered to or upon the written order of the Depositor, signed by the Depositor's chairman of the board, the president, any vice chairman of the board, any vice president, the treasurer, any assistant treasurer or the controller of the Depositor, without further corporate action by the Depositor, in authorized denominations, pursuant to this Agreement. No Certificate shall entitle its holder to any benefit under this Agreement, or shall be valid for any purpose, unless there shall appear on such Certificate a certificate of authentication substantially in the form set forth in Exhibit B executed by the Trustee by manual signature; such authentication shall constitute conclusive evidence that such Certificate shall have been duly authenticated and delivered hereunder. All Certificates shall be dated the date of their authentication. SECTION 11.3. Registration of Transfer and Exchange of Certificates. (a) The Certificate Registrar shall keep or cause to be kept, at the office or agency maintained pursuant to Section 11.7, a Certificate Register in which, subject to such reasonable regulations as it may prescribe, the Trustee shall provide for the registration of Certificates and of transfers and exchanges of Certificates as herein provided. The Trustee shall be the initial Certificate Registrar. (b) Upon surrender for registration of transfer of any Certificate at the Corporate Trust Office, the Trustee shall execute, authenticate and deliver, in the name of the designated transferee or transferees, one or more new Certificates in authorized denominations of a like aggregate amount dated the date of authentication by the Trustee. At the option of a Holder, Certificates may be exchanged for other Certificates of authorized denominations of a like aggregate amount upon surrender of the Certificates to be exchanged at the Corporate Trust Office. (c) Every Certificate presented or surrendered for registration of transfer or exchange shall be accompanied by a written instrument of transfer in form satisfactory to the Trustee and the Certificate Registrar duly executed by the Holder or his attorney duly authorized in writing. Each Certificate surrendered for registration of transfer and exchange shall be canceled and subsequently disposed of by the Trustee. (d) No service charge shall be made for any registration of transfer or exchange of Certificates, but the Trustee may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of Certificates. SECTION 11.4. Mutilated, Destroyed, Lost or Stolen Certificates. If (a) any mutilated Certificate shall be surrendered to the Certificate Registrar, or if the Certificate Registrar shall receive evidence to its satisfaction of the destruction, loss or theft of any Certificate and (b) there shall be delivered to the Certificate Registrar or the Trustee such security or indemnity as may be required by them to save each of them harmless, then in the absence of notice that such Certificate shall have been acquired by a bona fide purchaser, the Trustee on behalf of the Trust shall execute and the Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like tenor and denomination. In connection with the issuance of any new Certificate under this Section 11.4, the Trustee and the Certificate Registrar may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. Any duplicate Certificate issued pursuant to this Section 11.4 shall Constitute conclusive evidence of ownership in the Trust, as if originally issued, whether or not the lost, stolen or destroyed Certificate shall be found at any time. SECTION 11.5. Persons Deemed Owners. Prior to due presentation of a Certificate for registration of transfer, the Trustee or the Certificate Registrar may treat the Person in whose name any Certificate shall be registered as the owner of such Certificate for the purpose of receiving distributions pursuant to Section 10.5 and for all other purposes whatsoever, and neither the Trustee nor the Certificate Registrar shall be bound by any notice to the contrary. SECTION 11.6. Access to List of Certificateholders Names and Addresses. At such time as the Certificates exist as Definitive Certificates, the Trustee shall furnish or cause to be furnished to the Servicer and the Surety Bond Issuer, within 15 days after receipt by the Trustee of a request therefor from the Servicer or the Surety Bond Issuer in writing, a list, of the names and addresses of the Certificateholders as of the most recent Record Date. If three or more Certificateholders, or one or more Holders of Certificates aggregating not less than 25% of the Certificate Balance, 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 such application shall be accompanied by a copy of the communication that such applicants propose to transmit, then the Trustee shall promptly after the receipt of such application, afford such applicants access during normal business hours to the current list of Certificateholders. Each Holder, by receiving and holding a Certificate, shall be deemed to have agreed to hold neither the Servicer nor the Trustee accountable by reason of the disclosure of its name and address, regardless of the source from which such information was derived. SECTION 11.7. Maintenance of Office or Agency. The Trustee shall maintain in the Borough of Manhattan, the City of New York, an office or offices or agency or agencies where Certificates may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Trustee in respect of the Certificates and this Agreement may be served. The Trustee initially designates the Corporate Trust Office as specified in this Agreement as its office for such purposes. The Trustee shall give prompt written notice to the Servicer and to Certificateholders of any change in the location of the Certificate Register or any such office or agency. SECTION 11.8. Book-Entry Certificates. The Certificates, upon original issuance (except for the Residual Certificate), will be issued in the form of one or more global Certificates registered in the name of the nominee of The Depository Trust Company, the initial Clearing Agency, by or on behalf of the Depositor. The Certificates delivered to The Depository Trust Company shall initially be registered on the Certificate Register in the name of CEDE & CO., the nominee of the initial Clearing Agency, and no Certificate Owner will receive a physical certificate representing such Certificate Owner's interest in the Certificates, except as provided in Section 11.10. Unless and until definitive, fully registered Certificates (the "Definitive Certificates") have been issued to Certificate Owners pursuant to Section 11.10: (i) the provisions of this Section 11.8 shall be in full force and effect; (ii) the Depositor, the Servicer, the Certificate Registrar and the Trustee may deal with the Clearing Agency for all purposes (including the making of distributions on the Certificates) as the authorized representative of the Certificate Owners; (iii) to the extent that the provisions of this Section 11.8 conflict with any other provisions of this Agreement, the provisions of this Section 11.8 shall control; (iv) the rights of Certificate Owners shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Certificate Owners and the Clearing Agency and/or the Clearing Agency Participants. Pursuant to the Depository Agreement, unless and until Definitive Certificates are issued pursuant to Section 11.10, the initial Clearing Agency will make book-entry transfers among the Clearing Agency Participants and receive and transmit distributions of principal and interest on the Certificates to such Clearing Agency Participants; and (v) whenever this Agreement requires or permits actions to be taken based upon instructions or directions of Holders of Certificates evidencing a specified percentage of the Pool Balance the Clearing Agency will take such actions with respect to specified percentages of the Pool Balance only at the direction of and on behalf of Clearing Agency Participants whose holdings include undivided interests that satisfy such specified percentages. DTC may take conflicting actions with respect to other undivided interests to the extent that such actions are taken on behalf of Clearing Agency Participants whose holdings include such undivided interests. SECTION 11.9. Notices to Clearing Agency. Whenever notice or other communication to the Certificateholders is required under this Agreement, other than to the Holder of the Residual Certificate, unless and until Definitive Certificates shall have been issued to Certificate Owners pursuant to Section 11.10, the Trustee and the Servicer shall give all such notices and communications specified herein to be given to Holders of the Certificates to the Clearing Agency. SECTION 11.10. Definitive Certificates. If (i) the Depositor advises the Trustee in writing that the Clearing Agency is no longer willing or able to properly discharge its responsibilities as Depository with respect to the Certificates and the Trustee or the Depositor is unable to locate a qualified successor, (ii) the Depositor, at its option, elects to terminate the book-entry system through the Clearing Agency, or (iii) after the occurrence of an Event of Default, Certificate owners representing beneficial interests aggregating not less than 51% of the Certificate Balance advise the Trustee and the Clearing Agency through the Clearing Agency Participants in writing that the continuation of a book-entry system through the Clearing Agency is no longer in the best interests of the Certificate Owners, then the Trustee through the Clearing Agency shall notify all Certificate Owners of the occurrence of any such event and of the availability through the Clearing Agency of Definitive Certificates. Upon surrender by the Clearing Agency of the global Certificates representing the Certificates and instructions for re-registration, the Trustee shall issue the Definitive Certificates and deliver such Definitive Certificates in accordance with the instructions of the Clearing Agency. Neither the Depositor, the Certificate Registrar 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, the Trustee shall recognize the Holders of the Definitive Certificates as Certificateholders hereunder. The Trustee shall not be liable if the Trustee or the Depositor is unable to locate a qualified successor Clearing Agency. ARTICLE XII SECTION 12.1. Representations of Depositor. The Depositor makes the following representations on which the Trustee relies in accepting the Receivables in trust and executing and authenticating the Certificates. (i) Organization and Good Standing. The Depositor shall have been duly organized and shall be validly existing as a corporation in good standing under the laws of the State of Delaware, with power and authority to own its properties and to conduct its business as such properties shall be currently owned and such business is presently conducted, and had at all relevant times, and shall have, power, authority and legal right to acquire and own the Receivables. (ii) Due Qualification. The Depositor shall be duly qualified to do business as a foreign corporation in good standing, and shall have obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease of property or the conduct of its business shall require such qualifications. (iii) Principal Place of Business. The Depositor's principal place of business is located in the State of New Jersey. (iv) Power and Authority. The Depositor shall have the power and authority to execute and deliver this Agreement and to carry out its terms; the Depositor shall have full power and authority to sell and assign the property to be sold and assigned to and deposited with the Trustee as part of the Trust and shall have duly authorized such sale and assignment to the Trustee by all necessary corporate action; and the execution, delivery and performance of this Agreement shall have been duly authorized by the Depositor by all necessary corporate action. (v) Valid Sale; Binding Obligations. This Agreement shall evidence (A) a valid sale, transfer and assignment of the Receivables, enforceable against creditors of and purchasers from the Depositor, and (B) a legal, valid and binding obligation of the Depositor enforceable in accordance with its terms. (vi) No Violation. The consummation of the transactions contemplated by this Agreement and the fulfillment of the terms hereof shall not conflict with, result in any breach of any of the terms and provisions of, nor constitute (with or without notice or lapse of time or both) a default under, the articles of incorporation or by-laws of the Depositor, or any indenture, agreement or other instrument to which the Depositor is a party or by which it shall be bound; nor result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement or other instrument (other than this Agreement); nor violate any law or, to the best of the Depositor's knowledge, any order, rule or regulation applicable to the Depositor of any court or of any Federal or State regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Depositor or its properties. (vii) No Proceedings. There are no proceedings or investigations pending, or to the Depositor's best knowledge, threatened, before any court, regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Depositor or its properties: (A) asserting the invalidity of this Agreement or the Certificates; (B) seeking to prevent the issuance of the Certificates or the consummation of any of the transactions contemplated by this Agreement; (C) seeking any determination or ruling that might materially and adversely affect the performance by the Depositor of its obligations under, or the validity or enforceability of, this Agreement or the Certificates; or (D) relating to the Depositor and which might adversely affect the Federal income tax attributes of the Certificates. (viii) All Consents Required. All approvals, authorizations, consents, orders or other actions of any Person or of any governmental body or official required in connection with the execution and delivery by the Depositor of this Agreement, the Reimbursement Agreement and the Certificates, the performance by the Depositor of the transactions contemplated by this Agreement, the Reimbursement Agreement and the Certificates, and the fulfillment by the Depositor of the terms hereof, have been obtained; provided, however, that the Depositor makes no representation or warranty regarding State securities or "blue sky" laws in connection with the distribution of the Certificates. SECTION 12.2. Liability of Depositor; Indemnities. The Depositor shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Depositor under this Agreement: (i) The Depositor shall indemnify, defend and hold harmless the Trustee (which for purposes of this Section 12.2 shall include its directors, employees, officers and agents) and the Trust from and against any taxes that may at any time be asserted against the Trustee or the Trust with respect to, and as of the date of, the sale of the Receivables to the Trustee or the issuance and original sale of the Certificates, including any sales, gross receipts, general corporation, tangible personal property, privilege or license taxes (but, in the case of the Trust, not including any taxes asserted with respect to ownership of the Receivables or Federal or other income taxes arising out of the transactions contemplated by this Agreement) and costs and expenses in defending against the same. (ii) The Depositor shall indemnify, defend and hold harmless the Trustee (which for purposes of this Section 12.2 shall include its directors, employees, officers and agents) and the Trust from and against any loss, liability or expense incurred by reason of (a) the Depositor's willful misfeasance, bad faith or negligence in the performance of its duties under this Agreement, or by reason of reckless disregard of its obligations and duties under this Agreement, (b) the Depositor's violation of Federal or State securities laws in connection with the registration of the sale of the Certificates or (c) any action taken by the Trustee at the direction of the Servicer pursuant to Section 9.1 or otherwise. Indemnification under this Section 12.2 shall survive the termination of this Agreement and the resignation or removal of the Trustee, and shall include, without limitation, reasonable fees and expenses of counsel and expenses of litigation. If the Depositor shall have made any indemnity payments to the Trustee pursuant to this Section 12.2 and the Trustee thereafter shall collect any of such amounts from others, the Trustee shall repay such amounts to the Depositor, without interest. SECTION 12.3. Merger or Consolidation of, or Assumption of the Obligations of Depositor. Any Person (a) into which the Depositor may be merged or consolidated, (b) which may result from any merger or consolidation to which the Depositor shall be a party, or (c) which may succeed to the properties and assets of the Depositor substantially as a whole, which Person in any of the foregoing cases executes an agreement of assumption to perform every obligation of the Depositor under this Agreement and the Reimbursement Agreement, shall be the successor to the Depositor hereunder without the execution or filing of any document or any further act by any of the parties to this Agreement; provided, however, that (i) immediately after giving effect to such transaction, no representation or warranty made pursuant to Section 8.1 shall have been breached and no Event of Default, and no event that, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing, (ii) the Depositor shall have delivered to the Trustee an Officer's Certificate and an Opinion of Counsel each stating that such consolidation, merger or succession and such agreement of assumption comply with this Section 16.3 and (iii) the Depositor shall have delivered an Opinion of Counsel either (A) stating that, in the opinion of such counsel, all financing statements and continuation statements and amendments thereto have been executed and filed that are necessary fully to preserve and protect the interest of the Trustee in the Receivables, and reciting the details of such filings, or (B) stating that, in the opinion of such counsel, no such action shall be necessary to preserve and protect such interest. The Depositor shall provide notice of any merger, consolidation or succession pursuant to this Section 12.3 to each Rating Agency and the Surety Bond Issuer. Notwithstanding anything herein to the contrary, the Depositor shall not consummate any transaction of a type referred to in clauses (a), (b) or (c) above unless at such time or prior thereto the foregoing agreement of assumption shall have been executed and the conditions described in clauses (i), (ii) and (iii) shall have been satisfied. SECTION 12.4. Limitation on Liability of Depositor and Others. The Depositor and any director or officer or employee or agent of the Depositor may rely in good faith on the advice of counsel or on any document of any kind, prima facie properly executed and submitted by any Person respecting any matters arising hereunder. The Depositor shall not be under any obligation to appear in, prosecute or defend any legal action that shall not be incidental to its obligations under this Agreement, and that in its opinion may involve it in any expense or liability. SECTION 12.5. Depositor May Own Certificates. The Depositor and any Person controlling, controlled by or under common control with, the Depositor may in its individual or any other capacity become the owner or pledgee of Certificates with the same rights as it would have if it were not the Depositor or an affiliate thereof, except as otherwise provided in the definition of "Certificateholder" specified in Section 7.1. Certificates so owned by or pledged to the Depositor or such controlling or commonly controlled Person shall have an equal and proportionate benefit under the provisions of this Agreement, without preference, priority or distinction as among all the Certificates. SECTION 12.6. Depositor's Interest in Reserve Account; No Transfer. The Depositor hereby acknowledges that the Reserve Account shall not be a part of the Trust. The Depositor hereby acknowledges that any amounts on deposit in the Reserve Account (and any investment earnings thereon) is owned directly by it, and the Depositor agrees to treat the same as its assets (and earnings) for federal tax and all other purposes. Funds deposited therein shall be distributable to the Collection Account, the Surety Bond Issuer and the Depositor as described in this Agreement and in the Reimbursement Agreement. ARTICLE XIII SECTION 13.1. Representations of Servicer. The Servicer makes the following representations on which the Trustee relies in accepting the Receivables in trust and executing and authenticating the Certificates. The representations speak as of the execution and delivery of this Agreement and shall survive the sale of the Receivables to the Trustee. (i) Organization and Good Standing. The Servicer shall have been duly organized and shall be validly existing as a corporation in good standing under the laws of the State of its incorporation, with power and authority to own its properties and to conduct its business as such properties shall be currently owned and such business is presently conducted, and had at all relevant times, and shall have, power, authority and legal right to acquire, own, sell and service the Receivables and to hold the Receivable Files as custodian on behalf of the Trustee. (ii) Due Qualification. The Servicer shall be duly qualified to do business as a foreign corporation in good standing, and shall have obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease of property or the conduct of its business (including the servicing of the Receivables as required by this Agreement) shall require such qualifications. (iii) Power and Authority. The Servicer shall have the power and authority to execute and deliver this Agreement and to carry out its terms; and the executions delivery and performance of this Agreement shall have been duly authorized by the Servicer by all necessary corporate action. (iv) Valid Sale; Binding Obligations. This Agreement shall constitute a legal, valid and binding obligation of the Servicer enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, fraudulent conveyance and similar laws relating to creditors' rights generally and subject to general principals of equity. (v) No Violation. The consummation of the transactions contemplated by this Agreement and the fulfillment of the terms hereof shall not conflict with, result in any breach of any of the terms and provisions of, nor constitute (with or without notice or lapse of time or both) a default under, the articles of incorporation or by-laws of the Servicer, or any indenture, agreement or other instrument to which the Servicer is a party or by which it shall be bound; nor result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement or other instrument (other than this Agreement); nor violate any law or, any order, rule or regulation applicable to the Servicer of any court or of any Federal or State regulatory body, administrative agency, or other governmental instrumentality having jurisdiction over the Servicer or its properties. (vi) No Proceedings. There are no proceedings or investigations pending, or, to the Servicer's knowledge, threatened, before any court, regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Servicer or its properties: (A) asserting the invalidity of this Agreement or the Certificates; (B) seeking to prevent the issuance of the Certificates or the consummation of any of the transactions contemplated by this Agreement; (C) seeking any determination or ruling that might materially and adversely affect the performance by the Servicer of its obligations under, or the validity or enforceability of, this Agreement or the Certificates; or (D) relating to the Servicer and which might adversely affect the Federal income tax attributes of the Certificates. (vii) All Consents Required. All approvals, authorizations, consents, orders or other actions of any Person or of any governmental body or official required in connection with the execution and delivery by the Servicer of this Agreement and the Reimbursement Agreement, the performance by the Servicer of the transactions contemplated by this Agreement, the Reimbursement Agreement and the Certificates, and the fulfillment by the Servicer of the terms hereof, have been obtained; provided, however, that the Servicer makes no representation or warranty regarding State securities or "blue sky" laws in connection with the distribution of the Certificates. SECTION 13.2. Liability of Servicer; Indemnities. The Servicer shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Servicer under this Agreement: (i) The Servicer shall defend, indemnify and hold harmless the Trustee (which for purposes of this Section 13.2 shall include its directors, officers, employees and agents), the Trust, the Certificateholders and the Surety Bond Issuer from and against any and all costs, expenses, losses, damages, claims and liabilities, arising out of or resulting from the use, ownership or operation by the Servicer or any affiliate thereof of a Boat. (ii) The Servicer shall indemnify, defend and hold harmless the Trustee, (which for purposes of this Section 13.2 shall include its directors, officers, employees and agents), the Trust and the Surety Bond Issuer from and against any taxes that may at any time be asserted against the Trustee, the Trust or the Surety Bond Issuer with respect to the transactions contemplated herein or in the Reimbursement Agreement, including, without limitation, any sales, gross receipts, general corporation, tangible personal property, privilege or license taxes (but, in the case of the Trust, not including any taxes asserted with respect to, and as of the date of, the sale of the Receivables to the Trust or the issuance and original sale of the Certificates, or asserted with respect to ownership of the Receivables, or Federal or other income taxes arising out of distributions on the Certificates) and costs and expenses in defending against the same. (iii) The Servicer shall indemnify, defend and hold harmless the Trustee (which for purposes of this Section 13.2 shall include its directors, officers, employees and agents), the Trust, and the Certificateholders from and against any and all costs, expenses, losses, claims, damages and liabilities to the extent that such cost, expense, loss, claim, damage or liability arose out of, or was imposed upon the Trustee, the Trust, the Surety Bond Issuer or the Certificateholders through, the negligence, willful misfeasance or bad faith of the Servicer in the performance of its duties under this Agreement or the Reimbursement Agreement or by reason of reckless disregard of its obligations and duties under this Agreement or the Reimbursement Agreement. (iv) The Servicer shall indemnify, defend and hold harmless the Trustee (which for purposes of this Section 13.2 shall include its directors, officers, employees and agents), from and against all costs, expenses, losses, claims, damages and liabilities arising out of or incurred in connection with the acceptance or performance of the trusts and duties, including any action by the Trustee at the direction of the Servicer taken pursuant to Section 9.1, and the trusts and duties contained in the Reimbursement Agreement, except to the extent that such cost, expense, loss, claim, damage or liability: (a) shall be due to the willful misfeasance, bad faith or negligence (except for errors in judgment) of the Trustee; (b) relates to any tax other than the taxes with respect to which either the Depositor or the Servicer shall be required to indemnify the Trustee; (c) shall arise from Trustee's breach of any of its representation or warranties set forth in Section 15.8; (d) shall be one as to which the Depositor is required to indemnify the Trustee; or (e) shall arise out of or be incurred in connection with the acceptance or performance by the Trustee of the duties of successor Servicer hereunder unless such cost, expense, loss, claim, damage or liability was caused by the act or omission of the predecessor Servicer. For purposes of this Section 13.2, in the event of the termination of the rights and obligations of CITSF(or any successor thereto pursuant to Section 13.3) as Servicer pursuant to Section 18.1, or a resignation by such Servicer pursuant to this Agreement, such Servicer shall be deemed to be the Servicer pending appointment of a successor Servicer (other than the Trustee) pursuant to Section 14.2. Indemnification under this Section 13.2 shall survive termination of this Agreement and the resignation or removal of the Trustee and shall include, without limitation, reasonable fees and expenses of counsel and expenses of litigation. If the Servicer shall have made any indemnity payments pursuant to this Section 13.2 and the recipient thereafter collects any of such amounts from others, the recipient shall promptly repay such amounts to the Servicer, without interest. SECTION 13.3. Merger or Consolidation of, or Assumption of the Obligations of the Servicer. Any Person (a) into which the Servicer may be merged or consolidated, (b) which may result from any merger or consolidation to which the Servicer shall be a party, or (c) which may succeed to the properties and assets of the Servicer substantially as a whole, or any Person, more than 50% of the voting stock of which is, directly or indirectly, owned by The CIT Group, Inc., which Person in each of the foregoing cases executed an agreement of assumption to perform every obligation of the Servicer hereunder and under the Reimbursement Agreement, shall be the successor to the Servicer under this Agreement without further act on the part of any of the parties to this Agreement; provided, however, that (i) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default shall have happened and be continuing, (ii) the Servicer shall have delivered to the Trustee an Officer's Certificate and an Opinion of Counsel each stating that such consolidation, merger or succession and such agreement of assumption comply with this Section 17.3, and (iii) the Servicer shall have delivered to the Trustee an Opinion of Counsel either (A) stating that, in the opinion of such counsel, all financing statements and continuation statements and amendments thereto have been executed and filed that are necessary fully to preserve and protect the interest of the Trustee in the Receivables, and reciting the details of such filings, or (B) stating that, in the opinion of such counsel, no such action shall be necessary to preserve and protect such interest. The Servicer shall provide notice of any merger, consolidation or succession pursuant to this Section 13.3 to each Rating Agency and the Surety Bond Issuer. Notwithstanding anything herein to the contrary, the Servicer shall not consummate any transaction of a type referred to in clauses (a), (b) or (c) above unless at or prior thereto the foregoing agreement of assumption shall have been executed and the conditions described in clauses (i), (ii) and (iii) shall have been satisfied. SECTION 13.4. Limitation on Liability of Servicer and Others. (a) Neither the Servicer nor any of the directors or officers or employees or agents of the Servicer shall be under any liability to the Trust or the Certificateholders, except as provided under this Agreement, for any action taken or for refraining from the taking of any action pursuant to this Agreement; provided, however, that this provision shall not protect the Servicer or any such person against any liability that would otherwise be imposed by reason of willful misfeasance, bad faith or negligence in the performance of duties or by reason of reckless disregard of obligations and duties under this Agreement. The Servicer and any director or officer or employee or agent of the Servicer may rely in good faith on any document of any kind prima facie properly executed and submitted by any Person respecting any matters arising under this Agreement. (b) Except as provided in this Agreement, the Servicer shall not be under any obligation to appear in, prosecute, or defend any legal action that shall not be incidental to its duties to service the Receivables in accordance with this Agreement, and that in its opinion may involve it in any expense or liability; provided, however, that the Servicer may undertake any reasonable action that it may deem necessary or desirable in respect of this Agreement and the rights and duties of the parties to this Agreement and the interests of the Certificateholders under this Agreement. ARTICLE XIV SECTION 14.1. Events of Default. (a) If any one of the following events (each an "Event of Default") shall occur and be continuing: (i) Any failure by the Servicer to deliver to the Trustee for distribution to Certificateholders any proceeds or payment required to be so delivered under the terms of the Certificates and this Agreement that shall continue unremedied for a period of three Business Days after written notice from the Trustee is received by the Servicer as specified in this Agreement or after discovery of such failure by an officer of the Servicer; or (ii) any failure on the part of the Servicer or the Depositor duly to observe or to perform in any material respect any other covenants or agreements of the Servicer or the Depositor (as the case may be) set forth in the Certificates or in this Agreement, which failure shall (a) materially adversely affects the rights of Certificateholders as determined by the Holders of Certificates evidencing not less than a majority of the Certificate Balance and (b) continue unremedied for a period of 60 days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given (1) to the Servicer or the Depositor (as the case may be), by the Trustee, or (2) to the Servicer or the Depositor (as the case may be) and to the Trustee by the Surety Bond Issuer; or (iii) The entry of a decree or order by a court or agency or supervisory authority having jurisdiction in the premises for the appointment of a conservator, receiver or liquidator for the Servicer or the Depositor in any bankruptcy, insolvency, readjustment of debt, marshaling of assets and liabilities, or similar proceedings, or for the winding up or liquidation of their respective affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; or (iv) The consent by the Servicer or the Depositor to the appointment of a conservator or receiver or liquidator in any bankruptcy, insolvency, readjustment of debt, marshaling of assets and liabilities, or similar proceedings of or relating to the Servicer or the Depositor or relating to substantially all their property; or the Servicer or the Depositor shall admit in writing its inability to pay its debts generally as they become due, file a petition to take advantage of any applicable insolvency or reorganization statute, make an assignment for the benefit of its creditors, or voluntarily suspend payment of its obligations; or (v) Any representation or warranty by the Servicer in this Agreement shall prove to have been incorrect in any material respect when made, which continues to be incorrect in any material respect for a period of 60 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 to the Servicer and the Trustee by the Surety Bond Issuer and as a result of which the interests hereunder of Certificateholders are materially and adversely affected; then, and in each and every case, so long as an Event of Default shall not have been remedied, the Surety Bond Issuer, by notice then given in writing to the Servicer may terminate all the rights and obligations of the Servicer under this Agreement (a "Servicer Transfer"). (b) In addition to a Servicer Transfer effected pursuant to clause (a) of this Section 14.1, the Surety Bond Issuer with notice in writing to the Servicer, may effect a Servicer Transfer upon the occurrence of any of the following events: (i) the Depositor or the Servicer, as the case may be, shall fail to pay when due any amount payable by it hereunder or under the Reimbursement Agreement which failure shall have continued for three (3) Business Days after receipt of notice thereof by the Depositor or the Servicer, as the case may be; (ii) the Surety Bond Issuer determines that the performance of the Servicer is not, in the opinion of the Surety Bond Issuer, in conformity with the Servicing Standards; or (iii) if, with respect to any Distribution Date, the average of the Net Credit Loss Ratio for the three preceding calendar months exceeds ____%. (c) On or after the receipt by the Servicer of such written notice which effects a Servicing Transfer, all authority and power of the Servicer under this Agreement, whether with respect to the Certificates or the Receivables or otherwise, shall, without further action, pass to and be vested in the Trustee or such successor Servicer as may be appointed under Section 14.2 pursuant to and under this Section 14.1; and, without limitation, the Trustee is hereby authorized and empowered to execute and deliver, on behalf of the predecessor Servicer, as attorney-in-fact or otherwise, any and all documents and other instruments, and to do or accomplish all other acts or things necessary or appropriate to effect the purposes of such notice of termination, whether to complete the transfer and endorsement of the Receivables and related documents, or otherwise. The predecessor Servicer shall cooperate with the successor Servicer and the Trustee in effecting the termination of the responsibilities and rights of the predecessor Servicer under this Agreement, including the transfer to the successor Servicer for administration by it of all cash amounts that shall at the time be held by the predecessor Servicer for deposit, or shall thereafter be received with respect to a Receivable. All reasonable costs and expenses (including attorneys' fees and disbursements) incurred in connection with transferring the Receivable Files to the successor Servicer and amending this Agreement and the Reimbursement Agreement to reflect such succession as Servicer pursuant to this Section 14.1 shall be paid by the predecessor Servicer upon presentation of reasonable documentation of such costs and expenses. SECTION 14.2. Appointment of Successor. (a) Upon the Servicer's receipt of notice of termination pursuant to Section 14.1 or the Servicer's resignation in accordance with the terms of this Agreement, the predecessor Servicer shall continue to perform its functions as Servicer under this Agreement, in the case of termination, only until the date specified in such termination notice or, if no such date is specified in a notice of termination, until receipt of such notice and, in the case of resignation, until the later of (x) the date 45 days from the delivery to the Trustee of written notice of such resignation (or written confirmation of such notice of resignation) in accordance with the terms of this Agreement and (y) the date upon which the predecessor Servicer shall become unable to act as Servicer, as specified in the notice of resignation and an accompanying Opinion of Counsel. In the event of the Servicer's resignation or termination hereunder, a successor Servicer appointed by the Trustee and consented to by the Surety Bond Issuer in writing which consent shall not be unreasonably withheld or the Trustee (unless it is unwilling or legally unable to do so) will succeed to all the responsibilities, duties and liabilities of the Servicer under this Agreement and will be entitled to similar compensation arrangements. The successor Servicer shall accept its appointment by a written assumption in form acceptable to the Trustee and the Surety Bond Issuer. Notwithstanding the above, the Trustee, if it is unwilling or unable so to act, shall appoint or petition a court of competent jurisdiction to appoint, an established institution, having a net worth of at least $50,000,000 and whose regular business shall include the servicing of marine retail installment sale contracts, as the successor to the Servicer under this Agreement. (b) Upon appointment, the successor Servicer shall be the successor in all respects to the predecessor Servicer and shall be subject to all the responsibilities, duties and liabilities arising thereafter relating thereto placed on the predecessor Servicer, and shall be entitled to the Servicing Fee and other fees payable to the Servicer pursuant to Section 9.8, and all the rights granted to the predecessor Servicer, by the terms and provisions of this Agreement. No such appointment shall make the successor Servicer responsible for any liabilities of the predecessor Servicer incurred prior to such appointment or for any acts, omissions or misrepresentations of such predecessor Servicer. (c) In connection with such appointment, the Trustee may, with the consent of the Surety Bond Issuer, make such arrangements for the compensation of such successor Servicer out of payments on Receivables as it and such successor Servicer shall negotiate on an arms-length basis, but in no event shall the Servicing Fee Rate be greater than ____% per annum. SECTION 14.3. Notification to Certificateholders. Upon any termination of, or appointment of a successor to, the Servicer pursuant to this Article XIV, the Trustee shall give prompt written notice thereof to Certificateholders at their respective addresses appearing in the Certificate Register and to each Rating Agency. SECTION 14.4. Waiver of Past Defaults. So long as no Surety Bond Issuer Default shall have occurred and be continuing, the Surety Bond Issuer may, on behalf of all the Holders of Certificates, waive any default by the Servicer in the performance of its obligations hereunder and its consequences, except a default in making any required deposits to or payments from the Certificate Account in accordance with this Agreement. Upon any such waiver of a past default, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been remedied for every purpose of this Agreement. No such waiver shall impair such Certificateholders' rights or the Surety Bond Issuer's rights with respect to subsequent defaults. ARTICLE XV SECTION 15.1. Duties of Trustee. (a) The Trustee, both prior to the occurrence of an Event of Default and after an Event of Default shall have been cured or waived, shall undertake to perform only such duties as are specifically set forth in this Agreement. If an Event of Default shall have occurred and shall not have been cured or waived and, the Trustee has received notice of such Event of Default pursuant to Section 9.10(b), the Trustee shall exercise such of the rights and powers vested in it by this Agreement, and shall 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; provided, however, that if the Trustee shall assume the duties of the Servicer pursuant to Section 14.2, the Trustee in performing such duties shall use the degree of skill and attention customarily exercised by a servicer with respect to comparable receivables that it services for itself or others. For purposes of this Article XV, an Event of Default shall be deemed to have been cured upon the appointment of a successor Servicer (including the Trustee in such capacity). (b) The Trustee, upon receipt of all resolutions, certificates, statements, opinions, reports, documents, orders or other instruments furnished to the Trustee that shall be specifically required to be furnished pursuant to any provision of this Agreement, shall examine them to determine whether they conform to the requirements of this Agreement. (c) The Trustee shall take and maintain custody of the Schedule of Receivables included as an exhibit to this Agreement and shall retain all Servicer's Certificates identifying Receivables that become Purchased Receivables. (d) No provision of this Agreement shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act (other than errors in judgment) or its own bad faith; provided, however, that: (i) Prior to the occurrence of an Event of Default (or in the case of an Event of Default described in clause (i) of Section 14.1, before the Trustee has received notice of such Event of Default pursuant to Section 9.10(b)), and after the curing or waiving of all such Events of Default that 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 shall be 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 or willful misfeasance on the part of the Trustee, the Trustee may conclusively rely on the truth of the statements and the correctness of the opinions expressed in any certificates or opinions furnished to the Trustee and conforming to the requirements of this Agreement; (ii) The Trustee shall not be liable for an error of judgment made in good faith by a Trustee Officer, unless it shall be proved that the Trustee shall have been negligent in ascertaining the pertinent facts; (iii) The Trustee shall not be liable with respect to any action taken, suffered or omitted to be taken in good faith in accordance with this Agreement or at the direction of the Holders of Certificates evidencing not less than 25% of the Certificate Balance relating to the time, method and place of continuing any proceeding for any remedy available to the Trustee, or relating to the exercise of any trust power conferred upon the Trustee, under this Agreement; (iv) The Trustee shall not be charged with knowledge of any failure by the Servicer to comply with the obligations of the Servicer referred to in clauses (i) or (ii) of Section 14.1, or of any failure by the Depositor to comply with the obligations of the Depositor referred to in clause (ii) of Section 14.1, or of any incorrect representation or warranty referred to in clause (v) of Section 14.1, unless a Trustee Officer assigned to the Corporate Trust Office receives written notice of such failure or incorrectness from the Servicer or the Depositor, as the case may be, from the Surety Bond Issuer or from the Holders of Certificates evidencing not less than 25% of the Certificate Balance, it being understood that knowledge of the Servicer or the Servicer as custodian is not attributable to the Trustee; (v) Without limiting the generality of this Section 15.1 or Section 15.4, the Trustee shall have no duty (i) to see to any recording, filing or depositing of this Agreement or any agreement referred to therein or any financing statement or continuation statement evidencing a security interest in the Receivables or the Boats, or to see to the maintenance if any such recording or filing or depositing or to any rerecording, refiling or redepositing of any thereof, (ii) to see to any insurance of the Boats or Obligors or to effect or maintain any such insurance, (iii) to see to the payment or discharge of any tax, assessment or other governmental charge or any Lien or encumbrance of any kind owing with respect to, assessed or levied against, any part of the Trust, (iv) to confirm or verify the contents of any reports or certificates of the Servicer delivered to the Trustee pursuant to this Agreement believed by the Trustee to be genuine and to have been signed or presented by the proper party or parties, (v) to inspect the Boats at any time or ascertain or inquire as to the performance or observance of any of the Depositor's or the Servicer's representations, warranties or covenants or the Servicer's duties and obligations as Servicer and as custodian of the Receivable Files under this Agreement, or (vi) to prepare or make any filings with the Securities and Exchange Commission with respect to the Trust; and (vi) The Trustee shall not be deemed to be a fiduciary for the Surety Bond Issuer in its capacity as such, and the Trustee's sole responsibility with respect to the Surety Bond Issuer, in its capacity as such, shall be to perform those duties with respect to the Surety Bond Issuer as are specifically set forth herein and no implied covenants shall be read into this Agreement against the Trustee with respect to the Surety Bond Issuer. (e) Neither the Trustee nor the Collateral Agent shall be required to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder, and the Trustee shall have no liability in connection with losses on Permitted Investments made pursuant to this Agreement or in the exercise of any of its rights or powers, and 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 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. (f) Notwithstanding anything to the contrary contained herein, the Collateral Agent shall have the same rights, indemnities and protections afforded the Trustee. SECTION 15.2 Trustee's Certificate. On or as soon as practicable after each Distribution Date on which Receivables shall be assigned to the Depositor or the Servicer, as applicable, pursuant to Section 15.3, the Trustee shall execute a Trustee's Certificate, based on the information contained in the Servicer's Certificate for the related Collection Period, amounts deposited to the Certificate Account and notices received pursuant to this Agreement, identifying the Receivables repurchased by the Depositor pursuant to Section 12.2, purchased by the Servicer pursuant to Section 9.7 or 20.2 during such Collection Period, and shall deliver such Trustee's Certificate, accompanied by a copy of the Servicer's Certificate for such Collection Period to the Depositor or the Servicer, as the case may be. The Trustee's Certificate submitted with respect to such Distribution Date shall operate, as of such Distribution Date, as an assignment, without recourse, representation or warranty, to the Depositor or the Servicer, as the case may be, of all the Trustee's right, title and interest in and to such repurchased Receivable, and all security and documents relating thereto, such assignment being an assignment outright and not for security. SECTION 15.3. Trustee's Assignment of Purchased Receivables. With respect to all Receivables repurchased by the Depositor pursuant to Section 12.2 or purchased by the Servicer pursuant to Section 9.7 or 20.2, the Trustee shall by a Trustee's Certificate assign, without recourse, representation or warranty, to the Depositor or the Servicer (as the case may be) all the Trustee's right, title and interest in and to such Receivables, and all security interests and documents relating thereto. SECTION 15.4. Certain Matters Affecting Trustee. Except as otherwise provided in Section 15.1: (i) The Trustee may rely conclusively and shall be protected in acting or refraining from acting upon any resolution, Officer's Certificate, Servicer's Certificate, 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. (ii) The Trustee may consult with counsel and any advice or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or suffered or omitted by it under this Agreement in good faith and in accordance with such advice or Opinion of Counsel. (iii) 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 under this Agreement or in relation to this Agreement, 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 security or indemnity satisfactory to it against the costs, expenses and liabilities that may be incurred therein or thereby. (iv) The Trustee shall not be liable for any action taken, suffered or omitted by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Agreement. (v) Prior to the occurrence of an Event of Default (or in the case of an Event of Default described in clause (i) of Section 14.1, before the Trustee has received notice of such Event of Default pursuant to Section 9.10(b)), and after the curing or waiving of all Events of Default that may have occurred, the Trustee shall not be bound to make any investigation into the facts of 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 the Surety Bond Issuer or by Holders of Certificates evidencing not less than 25% of the Certificate Balance; 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 shall be, in the opinion of the Trustee, not assured to the Trustee by the security afforded to it by the terms of this Agreement, the Trustee may require indemnity satisfactory to it against such cost, expense or liability as a condition to so proceeding. The 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. Nothing in this clause (v) shall affect the obligation of the Servicer to observe any applicable law prohibiting disclosure of information regarding the Obligors. (vi) The Trustee may execute any of the trusts or powers hereunder or perform any duties under this Agreement either directly or by or through agents or attorneys or a custodian. The Trustee shall not be responsible for any misconduct or negligence of any such agent or custodian appointed with due care by it hereunder or of the Servicer in its capacity as Servicer or custodian. (vii) Subsequent to the sale of the Receivables by the Depositor to the Trustee, on behalf of the Trust, the Trustee shall have no duty of independent inquiry, except as may be required by Section 15.1, and the Trustee may rely upon the representations and warranties and covenants of the Depositor and the Servicer contained in this Agreement with respect to the Receivables and the Receivable Files. SECTION 15.5. Trustee Not Liable for Certificates or Receivables. (a) The recitals contained herein and in the Certificates (other than the certificate of authentication on the Certificates) shall be taken as the statements of the Depositor or the Servicer, as the case may be, and the Trustee assumes no responsibility for the correctness thereof. The Trustee shall make no representations as to the validity or sufficiency of this Agreement or of the Certificates (other than the certificate of authentication on the Certificates), or of any Receivable or related document. (b) The Trustee shall at no time have any responsibility or liability for or with respect to the legality, validity and enforceability of any security interest in any Boat or any Receivable, or the perfection and priority of such a security interest or the maintenance of any such perfection and priority, or for or with respect to the efficacy of the Trust or its ability to generate the payments to be distributed to Certificateholders under this Agreement, including, without limitation: the existence, condition, location and ownership of any Boat; the review of any Receivable File; the existence and enforceability of any physical damage insurance thereon; the existence and contents of any Receivable or Receivable File or any computer or other record thereof; the validity of the assignment of any Receivable to the Trust or of any intervening assignment; the completeness of any Receivable or Receivable File; the performance or enforcement of any Receivable; the compliance by the Depositor or the Servicer with any warranty or representation made under this Agreement or in any related document and the accuracy of any such warranty or representation prior to the Trustee's receipt of notice or other discovery of any noncompliance therewith or any breach thereof; any investment of monies by the Servicer or any loss resulting therefrom; the acts or omissions of the Depositor, the Servicer or any Obligor; any action of the Servicer taken in the name of the Trustee; or any action by the Trustee taken at the instruction of the Servicer; provided, however, that the foregoing shall not relieve the Trustee of its obligation to perform its duties under this Agreement. (c) Except with respect to a claim based on the failure of the Trustee to perform its duties under this Agreement or based on the Trustee's negligence or willful misconduct, no recourse shall be had for any claim based on any provision of this Agreement, the Certificates or any Receivable or assignment thereof against the Trustee in its individual capacity, the Trustee shall not have any personal obligation, liability or duty whatsoever to any Certificateholder or any other Person with respect to any such claim, and any such claim shall be asserted solely against the Trust or any indemnitor who shall furnish indemnity as provided in this Agreement. (d) The Trustee shall not be accountable for the use or application by the Depositor of any of the Certificates or of the proceeds of such Certificates, or for the use or application of any funds paid to the Servicer in respect of the Receivables. (e) Any obligation of the Trustee to give any notice or statement to any rating agency hereunder shall constitute only a best efforts obligation and such notice or statement shall be so provided only as a matter of courtesy and accommodation, the Trustee having no liability to any rating agency or any other Person for any failure to so provide such notice or statement. The Depositor hereby certifies to the Trustee that each Rating Agency is rating the Certificates and that each Rating Agency's address is as set forth in Section 21.5. The Trustee may rely on the accuracy of such certification until it receives from the Depositor an Officer's Certificate superseding such certification. SECTION 15.6. Trustee May Own Certificates. The Trustee in its individual or any other capacity may become the owner or pledgee of Certificates and may deal with the Depositor and the Servicer in banking transactions with the same rights as it would have if it were not Trustee. SECTION 15.7. Trustee's Fees and Expenses. (a) The Servicer shall pay to the Trustee, and the Trustee shall be entitled to, reasonable compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) for all services rendered by it and in the execution of the trusts created by this Agreement, and in the exercise and performance of any of the Trustee's powers and duties under this Agreement. The Servicer shall pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances (including the reasonable compensation and the expenses and disbursements of its counsel and of all persons not regularly in its employ) incurred or made by the Trustee in accordance with any provisions of this Agreement except any such expense, disbursement or advance as may be attributable to its willful misfeasance, negligence or bad faith. (b) The Depositor shall indemnify the Trustee (which for purposes of this subsection (b) shall include its directors, officers, employees and agents) for, and shall hold it harmless against, any loss, liability or expense incurred without willful misfeasance, negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this Agreement and the Trust and the trusts created by the Reimbursement Agreement, 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 under this Agreement or the Reimbursement Agreement. Additionally, the Depositor, pursuant to Section 12.2, and the Servicer, pursuant to Section 13 .2, shall indemnify the Trustee with respect to certain matters, and Certificateholders, pursuant to Section 15.4, shall upon the circumstances therein set forth, indemnify the Trustee under certain circumstances. In the event that the Depositor fails to pay the amounts it is obligated to pay to the Trustee pursuant to this Section 15.7(b), the Trustee shall be entitled to receive such amounts from the Servicing Fee prior to the payment thereof to the Servicer. The indemnification provided under this Section 19.7 shall survive termination of this Agreement and removal or resignation of the Trustee. SECTION 15.8. Representations and Warranties of Trustee. The Trustee shall make the following representations and warranties on which the Depositor and Certificateholders shall rely: (i) The Trustee is a banking corporation duly organized, validly existing and in good standing under the laws of the State of New York. (ii) The Trustee has full corporate power, authority and legal right to execute, deliver and perform its duties and obligations under this Agreement, and shall have taken all necessary action to authorize the execution, delivery and performance by it of this Agreement. (iii) This Agreement shall have been duly executed and delivered by the Trustee. SECTION 15.9. Eligibility Requirements for Trustee. The Trustee under this Agreement shall at all times: be a banking corporation having an office in the same State as the location of the Corporate Trust Office as specified in this Agreement; be organized and doing business under the laws of such State or the United States of America; be authorized under such laws to exercise corporate trust powers; have a combined capital and surplus of at least $50,000,000; and be subject to supervision or examination by Federal or State authorities. If the Trustee shall publish reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purpose of this Section 15.9, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section l9.9, the Trustee shall resign immediately in the manner and with the effect specified in Section 15.10. SECTION 15.10. Resignation or Removal of Trustee. (a) The Trustee and the Collateral Agent may at any time resign and be discharged from the trusts hereby created by giving not less than 60 days' prior written notice thereof to the Servicer; provided, however, that any such resignation in either capacity shall be deemed a resignation as both Trustee and Collateral Agent. Upon receiving such notice of resignation, the Servicer with the consent of the Surety Bond Issuer (unless a Surety Bond Issuer Default shall have occurred and be continuing) shall promptly appoint a successor Trustee and Collateral Agent by written instrument, in duplicate, one copy of which instrument shall be delivered to the resigning Trustee and Collateral Agent and one copy to the successor Trustee and Collateral Agent. If no successor Trustee and Collateral Agent shall have been so appointed and have accepted appointment within 60 days after the giving of such notice of resignation, the resigning Trustee and Collateral Agent may petition any court of competent jurisdiction for the appointment of a successor Trustee and Collateral Agent. (b) If at any time the Trustee shall cease to be eligible in accordance with the provisions of Section 15.9 and shall fail to resign after written request there for by the Servicer, or if at any time the Trustee shall be legally unable to act, or shall be adjudged as 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 Servicer may remove the Trustee and Collateral Agent. If it shall remove the Trustee and Collateral Agent under the authority of the immediately preceding sentence, the Servicer shall promptly appoint a successor trustee and collateral agent acceptable to the Surety Bond Issuer by written instrument, in duplicate, one copy of which instrument shall be delivered to the Trustee and Collateral Agent so removed and one copy to the successor Trustee and Collateral Agent. (c) Any resignation or removal of the Trustee and Collateral Agent and appointment of a successor Trustee and Collateral Agent pursuant to any of the provisions of this Section 15.10 shall not become effective until acceptance of appointment by the successor Trustee pursuant and Collateral Agent pursuant to Section 15.11 and payment of all fees and expenses owed to the outgoing Trustee and Collateral Agent. The Servicer shall provide notice of such resignation or removal of the Trustee to each Rating Agency. SECTION 15.11. Successor Trustee and Collateral Agent. (a) Any successor Trustee or Collateral Agent appointed pursuant to Section 15.10 be approved as both Trustee and Collateral Agent and shall execute, acknowledge and deliver to the Servicer and to its predecessor Trustee and Collateral Agent an instrument accepting such appointment under this Agreement, and thereupon the resignation or removal of the predecessor Trustee and Collateral Agent shall become effective and such successor Trustee and Collateral Agent, without any further act, deed or conveyance, shall become fully vested with all the rights, powers, duties and obligations of its predecessor under this Agreement, with like effect as if originally named as Trustee and Collateral Agent. The predecessor Trustee and Collateral Agent shall deliver to the successor Trustee and Collateral Agent all documents, statements and monies held by it under this Agreement; and the Servicer and the predecessor Trustee and Collateral Agent 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 and Collateral Agent all such rights, powers, duties and obligations. (b) No successor Trustee and Collateral Agent shall accept appointment as provided in this Section 15.11, unless at the time of such acceptance such successor Trustee shall be eligible pursuant to Section 15.9. (c) Upon acceptance of appointment by a successor Trustee and Collateral Agent pursuant to this Section 15.11, the Servicer shall mail notice of the successor of such Trustee and Collateral Agent under this Agreement to all Holders of Certificates at their addresses as shown in the Certificate Register. If the Servicer shall fail to mail such notice within 10 days after acceptance of appointment by the successor Trustee and Collateral Agent, the successor Trustee and Collateral Agent shall cause such notice to be mailed at the expense of the Servicer. SECTION 15.12. Merger or Consolidation of Trustee. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be eligible pursuant to Section 15.9, without the execution or filing of any instrument or any further act on the part of any of the parties hereto; anything herein to the contrary notwithstanding. SECTION 15.13. Appointment of Co-Trustee or Separate Trustee. (a) Notwithstanding any other provisions of this Agreement, at any time, for the purpose of meeting any legal requirements of any jurisdiction in which any part of the Trust or any Boat may at the time be located, the Servicer and the Trustee acting jointly shall have the power and shall execute and deliver all instruments to appoint one or more Persons approved by the Trustee to act as co-trustee, jointly with the Trustee, or separate trustee or separate trustees, of all or any part of the Trust, and to vent in such Person, in such capacity and for the benefit of the Certificateholders, such title to the Trust, or any part thereof, and, subject to the other provisions of this Section 15.13, such powers, duties, obligations, rights and trusts as the Servicer and the Trustee may consider necessary or desirable. If the Servicer shall not have joined in such appointment within 15 days after the receipt by it of a request so to do, or in the case an Event of Default shall have occurred and be continuing, the Trustee alone shall have the power to make such appointment. No co-trustee or separate trustee under this Agreement shall be required to meet the terms of eligibility as a successor trustee pursuant to Section 15.9 and no notice of a successor trustee pursuant to Section 15.11 and no notice to Certificateholders of the appointment of any co-trustee or separate trustee shall be required pursuant to Section 15.11. (b) Each separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions: (i) All rights, powers, duties and obligations conferred or imposed upon the Trustee shall be conferred upon and exercised or performed by the Trustee and such separate trustee or co-trustee jointly (it being understood that such separate trustee or co trustee is not authorized to act separately without the Trustee joining in such act), except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed (whether as Trustee under this Agreement or as successor to the Servicer under this Agreement), the Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Trustee; (ii) No trustee under this Agreement shall be personally liable by reason of any act or omission of any other trustee under this Agreement; and (iii) The Servicer and the Trustee acting jointly may at any time accept the resignation of or remove any separate trustee or co-trustee. (c) Any notice, request or other writing given to the Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee shall refer to this Agreement and the conditions of this Article XV. Each separate trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Trusts or separately, as may be provided therein, subject to all the provisions of this Agreement, specifically including every provision of this Agreement relating to the conduct of, affecting the liability of, or affording protection to the Trustee. Each such instrument shall be filed with the Trustee and a copy thereof given to the Servicer. (d) Any separate trustee or co-trustee may at any time appoint the Trustee, its agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Agreement on its behalf and in its name. If any separate trustee or co-trustee shall become incapable of acting, resign or be removed, all 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. Notwithstanding anything to the contrary in this Agreement, the appointment of any separate trustee or co-trustee shall not relieve the Trustee of its obligations and duties hereunder. ARTICLE XVI SECTION 16.1. Termination of the Trust. (a) The respective obligations and responsibilities of the Depositor, the Servicer, the Trustee and the Trust created hereby shall terminate upon (i) the payment in full or other liquidation of the last Receivable and the disposition of any amounts received upon liquidation of any remaining Receivables, including Defaulted Receivables, (ii) the payment to the Certificateholders of all amounts required to be paid to them pursuant to this Agreement and the payment to the Surety Bond Issuer of all amounts required to be paid to it pursuant to this Agreement and the Reimbursement Agreement and disposition of all property held by the Trust or (iii) the purchase as of the last day of any Collection Period by the Servicer at its option, pursuant to Section 16.2, of the corpus of the Trust; provided, however, that in no event shall the trust created by this Agreement continue beyond the expiration of 21 years from the date hereof. The Servicer shall promptly notify the Trustee of any prospective termination pursuant to this Section 16.1. (b) Notice of any termination, specifying the Distribution Date upon which the Certificateholders may surrender their Certificates to the Trustee for payment of the final distribution and cancellation, shall be given promptly by the Trustee by letter to Certificateholders mailed not earlier than the 15th day and not later than the 25th day of the month next preceding the specified Distribution Date stating (A) the Distribution Date upon which final payment of the Certificates shall be made upon presentation and surrender of the Certificates at the office of the Trustee therein designated, (B) the amount of any such final payment, and (C) if applicable, that the Record Date otherwise applicable to such Distribution Date is not applicable, payments being made only upon presentation and surrender of the Certificates at the office of the Trustee therein specified. The Trustee shall give such notice to the Certificate Registrar (if other than the Trustee) at the time such notice is given to Certificateholders. Upon presentation and surrender of the Certificates, the Trustee shall cause to be distributed to Certificateholders amounts distributable on such Distribution Date pursuant to Section 10.5. (c) In the event that all the Certificateholders shall not surrender their Certificates for cancellation within six months after the date specified in the above-mentioned written notice, the Trustee shall give a second written notice to the remaining Certificateholders to surrender their Certificates for cancellation and receive the final distribution with respect thereto. If within 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 and other assets that shall remain subject to this Agreement. Any funds remaining in the Trust after exhaustion of such remedies shall be distributed by the Trustee upon written direction of the Servicer delivered to the Trustee to the United Way of Metropolitan Dallas. As soon as practicable after the Distribution Date specified for the final distribution or upon such other date upon which all amounts to be paid to Certificateholders pursuant to this Agreement have been paid, the Trustee shall deliver a letter to the Surety Bond Issuer in substantially the form of Exhibit C to the Surety Bond. SECTION 16.2. Optional Purchase of All Receivables. On the last day of any Collection Period as of which the Pool Balance shall decline to __% or less of the Original Pool Balance, the Servicer shall have the option to purchase the corpus of the Trust. To exercise such option, the Servicer shall deposit pursuant to Section 10.4 in the Collection Account an amount equal to the aggregate Purchase Amount for the Receivables, as of the beginning of the Collection Period related to such Record Date plus the appraised value of any other property held by the Trust less the amount of all Collections, any amounts referred to in clause (ii) of the definition of Available Funds, and Liquidation Proceeds received by the Servicer during such Collection Period, and shall succeed to all interests in and to the Trust; provided, however, that without the consent of the Surety Bond Issuer the Servicer may not make any such purchase if, after giving effect to such purchase and the distributions on the related Distribution Date there would be outstanding amounts under the Reimbursement Agreement and this Agreement, which have not been paid to the Surety Bond Issuer. ARTICLE XVII SECTION 17.1. Amendment. (a) This Agreement may be amended by the Depositor, the Servicer and the Trustee, without the consent of the Certificateholders or the Surety Bond Issuer, to cure any ambiguity, to correct or supplement any provisions in this Agreement, or to add any other provisions with respect to matters or questions arising under this Agreement that shall not be inconsistent with the provisions of this Agreement; provided, however, that such action will not, in the opinion of counsel satisfactory to the Trustee, materially and adversely affect the interest of any Certificateholder or the Surety Bond Issuer. (b) This Agreement may also be amended by the Depositor, the Servicer and the Trustee, with the consent of the Surety Bond Issuer and the Holders of Certificates (which consent of any Holder of a Certificate given pursuant to this Section 17.1 or pursuant to any other provision of this Agreement shall be conclusive and binding on such Holder and on all future Holders of such Certificate and of any Certificate issued upon the transfer thereof or in exchange thereof or in lieu thereof whether or not notation of such consent is made upon the Certificate) evidencing not less than 51% of the Certificate Balance as of the most recent Record Date, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement, or of modifying in any manner the rights of the Certificateholders or the Surety Bond Issuer; provided, however, that no such amendment may (i) increase or reduce in any manner the amount of, or accelerate or delay the timing of, Collections of payments on Receivables or distributions that are required to be made on any Certificate, or (ii) reduce the aforesaid percentage required to consent to any such amendment, in each case without the consent of the holders of all Certificates then outstanding. (c) Prior to the execution of any such amendment or consent, the Servicer shall furnish written notification of the substance of such amendment or consent to each Rating Agency. Promptly after the execution of any such amendment or consent, the Trustee shall forward such written notification provided to the Trustee by the Servicer of the substance of such amendment or consent to each Certificateholder. (d) It shall not be necessary for the consent of Certificateholders pursuant to this Section 17.1 to approve the particular form of any proposed amendment or consent, but it shall be sufficient if such consent shall approve the substance thereof. The manner of obtaining such consents and of evidencing the authorization of the execution thereof by Certificateholders shall be subject to such reasonable requirements as the Trustee may prescribe, including the establishment of record dates pursuant to the Depository Agreement. (e) Prior to the execution of any amendment to this Agreement, the Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement and the Opinion of Counsel referred to in Section 17.2(h)(i)(1). The Trustee may, but shall not be obligated to, enter into any such amendment which affects the Trustees own rights, duties or immunities under this Agreement or otherwise. (f) The provisions combined in clauses (a) and (b) of this Section 17.1 shall not apply to an amendment to the definition of "Specified Reserve Account Requirement." SECTION 17.2. Protection of Title to Trust. (a) The Depositor shall execute and file such financing statements and cause to be executed and filed such continuation statements, all in such manner and in such places as may be required by law fully to preserve, maintain and protect the interest of the Certificateholders and the Trustee in the Receivables and in the proceeds thereof. The Depositor shall deliver (or cause to be delivered) to the Trustee file-stamped copies of, or filing receipts for, any document filed as provided above, as soon as available following such filing. (b) Neither the Depositor nor the Servicer shall change its name, identity or corporate structure in any manner that would, could or might make any financing statement or continuation statement filed by the Depositor in accordance with paragraph (a) above seriously misleading within the meaning of Section 9-402(7) of the UCC, unless it shall have given the Trustee at least 30 days' prior written notice thereof and shall have promptly filed appropriate amendments to all previously filed financing statements or continuation statements. (c) The Depositor and the Servicer shall give the Trustee at least 30 days' prior written notice of any relocation of its principal executive office if, as a result of such relocation, the applicable provisions of the UCC would require the filing of any amendment of any previously filed financing or continuation statement or of any new financing statement, and shall promptly file any such amendment. The Servicer shall at all times maintain each office from which it shall service Receivables, and its principal executive office, within the United States of America. (d) The Servicer shall maintain accounts and records as to each Receivable accurately and in sufficient detail to permit (i) the reader thereof to know at any time the status of such Receivable, including payments and recoveries made and payments owing (and the nature of each) and (ii) reconciliation between payments or recoveries on (or with respect to) each Receivable and the amounts from time to time deposited in the Collection Account in respect of such Receivable. (e) The Servicer shall maintain its computer systems so that, from and after the time of sale under this Agreement of the Receivables to the Trustee, the Servicer's master computer records (including any back-up archives) that refer to a Receivable shall indicate clearly with reference to the particular grantor trust that such Receivable is owned by the Trustee. Indication of the Trustee's ownership of a Receivable, on behalf of the Trust, shall be deleted from or modified on the Servicer's computer systems when, and only when, the Receivable shall have been paid in full or repurchased. (e) If at any time the Depositor or the Servicer shall propose to sell, grant a security interest in, or otherwise transfer any interest in marine receivables to any prospective purchaser, lender or other transferee, the Servicer shall give to such prospective purchaser, lender or other transferee computer tapes, records or print-outs (including any restored from back-up archives) that, if they shall refer in any manner whatsoever to any Receivable, shall indicate clearly that such Receivable has been sold and is owned by the Trustee. (f) The Servicer shall permit the Trustee and its agents at any time during normal business hours to inspect, audit and make copies of and abstracts from the Servicer's records regarding any Receivable. (g) Upon request, the Servicer shall furnish to the Trustee, within five Business Days, a list of all Receivables (by contract number and name of Obligor) then held as part of the Trust, together with a reconciliation of such list to the Schedule of Receivables and to each of the Servicer's Certificates furnished before such request indicating removal of Receivables from the Trust. (h) The Servicer shall deliver to the Trustee: (1) promptly after the execution and delivery of this Agreement and of each amendment thereto, an Opinion of Counsel either (a) stating that, in the opinion of such counsel, all financing statements and continuation statements have been executed and filed that are necessary fully to preserve and protect the interest of the Trustee in the Receivables, and reciting the details of such filings or referring to prior Opinions of Counsel in which such details are given, or (b) stating that, in the opinion of such counsel, no such action shall be necessary to preserve and protect such interest; and (2) within 90 days after the beginning of each calendar year beginning with the first calendar year beginning more than three months after the Cutoff Date, an Opinion of Counsel, dated as of a date during such 90-day period, either (a) stating that, in the opinion of such counsel, all financing statements and continuation statements have been executed and filed that are necessary fully to preserve and protect the interest of the Trustee, on behalf of the Trust, in the Receivables, and reciting the details of such filings or referring to prior Opinions of Counsel in which such details are given, or (b) stating that, in the opinion of such counsel, no such action shall be necessary to preserve and protect such interest. Each Opinion of Counsel referred to in clause (h)(l) or (h)(2) above shall specify any action necessary (as of the date of such opinion) to be taken in the following year to preserve and protect such interest. (i) The Depositor shall, to the extent required by applicable law, cause the Certificates to be registered with the Securities and Exchange Commission pursuant to Section 12(b) or Section 12(g) of the Securities Exchange Act of 1934, as amended, within the time periods specified in such sections, and shall prepare and make all filings required by such Act with respect to the Trust. (j) For the purpose of facilitating the execution of this Agreement and for other purposes, this Agreement may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed to be an original, and all of which counterparts shall constitute but one and the same instrument. SECTION 17.3. Limitation on Rights of Certificateholders. (a) The death or incapacity of any Certificateholder shall not operate to terminate this Agreement or the Trust, nor entitle such Certificateholder's legal representatives or heirs to claim an accounting or to take any action or commence any proceeding in any court for a partition or winding up of the Trust, nor otherwise affect the rights, obligations and liabilities of the parties to this Agreement or any of them. (b) No Certificateholder shall have any right to vote (except as provided in Section 17.1 or 18.4) or in any manner otherwise control the operation and management of the Trust, or the obligations of the parties to this Agreement, nor shall anything in this Agreement set forth or contained in the terms of the Certificates, be construed so as to constitute the Certificateholders from time to time as partners or members of an association; nor shall any Certificateholder be under any liability to any third person by reason of any action taken pursuant to any provision of this Agreement. (c) No Certificateholder shall have any right by virtue or by availing itself of any provisions of this Agreement to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Agreement, unless such Holder previously shall have given to the Trustee a written notice of default and of the continuance thereof, as hereinbefore provided, and unless also the Holders of Certificates evidencing not less than 25% of the Certificate Balance shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as Trustee under this Agreement and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby, and the Trustee, for 30 days after its receipt of such and offer of indemnity, shall have neglected or refused to institute any such action, suit or proceeding and during such 30-day period no direction inconsistent with such written request has been given to the Trustee pursuant to this Section 17.3 or Section 14.4; no one or more Holders of Certificates shall have any right in any manner whatever by virtue or by availing itself or them selves of any provisions of this Agreement to affect, disturb or prejudice the rights of the Holders of any other of the Certificates, or to obtain or seek to obtain priority over or preference to any other such Holder, or to enforce any right, under this Agreement except in the manner provided in this Agreement and for the equal, ratable and common benefit of all Certificateholders. For the protection and enforcement of the provisions of this Section 17.3, each Certificateholder and the Trustee shall be entitled to such relief as can be given either at law or in equity. SECTION 17.4. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. SECTION 17.5. Notices. All demands, notices and communications under this Agreement shall be in writing, personally delivered or mailed by certified mail, return receipt requested, or by overnight courier or telecopied (with the original followed by mail within 24 hours) and shall be deemed to have been duly given upon receipt (a) in the case of the Depositor, at the following address: The CIT Group Securitization Corporation II, [address], or at such other address as shall be designated by the Depositor in a written notice to the Trustee, (b) in the case of the Servicer, at the following address: The CIT Group / Sales Financing, Inc., [address], or at such other address as shall be designated by the Servicer in a written notice to the Trustee, (c) in the case of the Trustee, at the Corporate Trust Office, and (d) in the case of the Surety Bond Issuer, at [address]. Any notice required or permitted to be mailed to a Certificateholder shall be given by first class mail, postage prepaid, at the address of such Holder as shown in the Certificate Register. Any notice so mailed within the time prescribed in this Agreement shall be conclusively presumed to have been duly given, whether or not the Certificateholder shall receive such notice. All communications and copies of all notices and reports from the Trustee or the Servicer shall be mailed to each Rating Agency at the following addresses: Moody's Investors Services, Inc. 99 Church Street (4th Floor) New York, New York 10007 Telephone No.: (212) 553-0300 Attention: ABS Monitoring Department Standard & Poor's Ratings Services 26 Broadway (l0th Floor) New York, New York 10004 Telephone No.: (212) 208-8925 Telecopy No.: (212) 208-8208 Attention: Asset-Backed Surveillance Group SECTION 17.6. Severability of Provisions. If any or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement or of the Certificates or the rights of the Holders thereof. SECTION 17.7. Assignment. Notwithstanding anything to the contrary contained herein, except as provided in Sections 16.3 and 17.3 and as provided in the provisions of this Agreement concerning the resignation of the Servicer, this Agreement may not be assigned by the Depositor or the Servicer without the prior written consent of the Trustee, the Holders of Certificates evidencing not less than 66% of the Certificate Balance and the Surety Bond Issuer, provided that the consent of Surety Bond Issuer shall not be unreasonably withheld. SECTION 17.8. Certificates Nonassessable and Fully Paid. Certificateholders shall not be personally liable for obligations of the Trust. The interests represented by the Certificates shall be nonassessable for any losses or expenses of the Trust or for any reason whatsoever, and, upon authentication thereof by the Trustee pursuant to Section 11.2 or 15.3, Certificates shall be deemed fully paid. SECTION 17.9. No Petition. Neither the Trustee nor the Servicer will not institute against, or join any other Person in instituting against, the Depositor or the Trust any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding, or other proceeding under any federal or state bankruptcy or similar law, until __________, ____. IN WITNESS WHEREOF, the Depositor, the Servicer, the Trustee and the Collateral Agent have caused this Agreement to be duly executed by their respective officers as of the day and year first above written. THE CIT GROUP SECURITIZATION CORPORATION II, as Depositor By: Name: Title: THE CIT GROUP / SALES FINANCING, INC., as Servicer By: Name: Title: [ ], as Trustee and as Collateral Agent By: Name: Title: SCHEDULE A Schedule of Receivables EXHIBIT A [FORM OF SURETY BOND] EXHIBIT B: FORM OF CERTIFICATE Front CIT MARINE TRUST ____-_ CIT MARINE TRUST ____-_ [____]% MARINE RECEIVABLE-BACKED CERTIFICATE evidencing a fractional undivided interest in the Trust, as defined below, the property of which includes a pool of retail installment sale contracts secured by new and used boats, boat motors and boat trailers, and sold or caused to be sold to the Trust by The CIT Group Securitization Corporation II. (This Certificate does not represent an interest in or obligation of The CIT Group / Sales Financing, Inc., The CIT Group Securitization Corporation II or any affiliate thereof, except to the extent described below.) NUMBER CUSIP FINAL SCHEDULED DISTRIBUTION DATE: $ THIS CERTIFIES THAT is the registered owner of a $__________ dollars nonassessable, fully-paid, fractional undivided interest in the CIT Marine Trust ____-_ (the "Trust") formed by The CIT Group Securitization Corporation II, a Delaware corporation (the "Depositor"). The Trust was created pursuant to a Pooling and Servicing Agreement dated as of __________, ____ (the "Agreement") among the Depositor, The CIT Group / Sales Financing Inc., as Servicer, and [ ], as Trustee (the "Trustee") and as Collateral Agent (the "Collateral Agent"), a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Agreement. This Certificate is one of the duly authorized Certificates designated as "CIT Marine Trust ____-_ [____]% Marine Receivable-Backed Certificates" (herein called the "Certificates"). This Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement, to which Agreement, as amended from time to time, the holder of this Certificate by virtue of the acceptance hereof assents and by which such holder is bound. The property of the Trust includes a pool of retail installment sale contracts (the "Receivables") secured by new and used boats, boat motors and boat trailers ("Boats"), all payments (other than late fees and certain other amounts) received thereunder, in the case of Simple Interest Receivables, and due thereunder, in the case of Precomputed Receivables after __________, ____, the interest of the Depositor in the security interests in the Boats, such amounts as may be held from time to time in certain trust accounts, the Surety Bond, any property that shall have secured a Receivable and that shall have been acquired by the Trustee, the Purchase Agreement, proceeds from claims on physical damage, credit life and disability insurance policies covering Boats, or the Obligors as the case may be, the interests of the Depositor in any proceeds from recourse to Dealers on the Receivables, and the proceeds of all of the foregoing. Under the Agreement, there will be distributed on the 15th day of each month or, if such 15th day is not a Business Day, the next Business Day (the "Distribution Date"), commencing on __________, ____, to the person in whose name this Certificate is registered at the close of business on the Business Day prior to such Distribution Date (the "Record Date"), such Certificateholder's fractional undivided interest in the Monthly Interest Payment, any Carry-Over Monthly Interest, the Monthly Principal Payment and any Carry-Over Monthly Principal, all as more specifically set forth in the Agreement. On the Final Scheduled Distribution Date, each Certificateholder shall be entitled to receive an amount equal to the Monthly Interest Payment and an amount necessary to reduce the Certificate Balance to zero. Distributions on this Certificate will be made by the Trustee by check or money order mailed to the Person entitled thereto without the presentation or surrender of this Certificate or the making of any notation hereon. Except as otherwise provided in the Agreement and notwithstanding the above, the final distribution on this Certificate will be made after due notice by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency maintained for that purpose by the Trustee in the Borough of Manhattan, The City of New York. Reference is hereby made to the further provisions of this Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless 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., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, CEDE & CO., has an interest herein. Unless the certificate of authentication hereon shall have been executed by an authorized officer of the Trustee, by manual or facsimile signature, this Certificate shall not entitle the holder hereof to any benefit under the Agreement or be valid for any purpose. IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its individual capacity has caused this Certificate to be duly executed. DATED: CIT MARINE TRUST ____-_ By: [ ], as Trustee By: Name: Title: Authenticated: [ ], as Trustee By: Name: Title: Reverse The Certificates do not represent an obligation of, or an interest in, the Depositor, the Servicer, the Trustee or any affiliate of any of them. The Certificates are limited in right of payment as more specifically set forth in the Agreement. A copy of the Agreement may be examined during normal business hours at the principal office of the Depositor, and at such other places, if any, designated by the Depositor, by any Certificateholder upon request. The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Depositor and the rights of the Certificateholders under the Agreement at any time by the Depositor and the Trustee with the consent of the Surety Bond Issuer and without the consent of the Holders of any of the Certificates. As provided in the Agreement and subject to certain limitations therein set forth, the transfer of this Certificate is registrable in the Certificate Register upon surrender of this Certificate for registration of transfer at the offices or agencies maintained by the Trustee in its capacity as Certificate Registrar, or by any successor Certificate Registrar, in the Borough of Manhattan, The City of New York, accompanied by a written instrument of transfer in form satisfactory to the Trustee and the Certificate Registrar duly executed by the holder hereof or such holder's attorney duly authorized in writing, and thereupon one or more new certificates of authorized denominations evidencing the same aggregate interest in the Trust will be issued to the designated transferee. The Certificates are issuable only as registered Certificates without coupons in denominations of $1,000 and integral multiples hereof. As provided in the Agreement and subject to certain limitations therein set forth, Certificates are exchangeable for new Certificates of authorized denominations evidencing the same aggregate denomination, as requested by the holder surrendering the same. No service charge will be made for any such registration of transfer or exchange, but the Trustee may require payment of a sum sufficient to cover any tax or governmental charges payable in connection therewith. The Trustee, the Certificate Registrar and any agent of the Trustee or the Certificate Registrar may treat the person in whose name this Certificate is registered as the owner hereof for all purposes, and neither the Trustee, the Certificate Registrar, nor any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Agreement and the Trust created thereby shall terminate upon the payment to Certificateholders of all amounts required to be paid to them pursuant to the Agreement and the disposition of all property held as part of the Trust. The Servicer may at its option purchase the corpus of the Trust at a price specified in the Agreement, and such purchase of the Receivables and other property of the Trust will effect early retirement of the Certificates; however, such right of purchase is exercisable only as of the last day of a Collection Period as of which the Pool Balance is equal to or less than __% of the Original Pool Balance. ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto (Please print or typewrite name and address, including postal zip code, and taxpayer I.D. or Social Security Number of assignee) the within certificate, and all rights thereunder, hereby irrevocably constituting and appointing Attorney to transfer said Certificate on the books o f the Certificate Registrar, with full power of substitution in the premises. Dated: * Signature Guaranteed: By: Name: Title: * NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Certificate in every particular, without alteration, enlargement or any change whatever. Such signature must be guaranteed by a member of the New York Stock Exchange or a commercial bank or trust company. EXHIBIT C [FORM OF DEPOSITORY AGREEMENT] EXHIBIT D THE CIT GROUP / SALES FINANCING, INC. MONTHLY SERVICER REPORT CURRENT DATE: __________ I. Monthly Principal Payment: (A) Principal received from Obligors: (1) Total principal collected $ (2) Percent relating to Unsold Contracts $ (3) Principal owed to Trust $ (B) Purchased Receivables $ (C) Liquidation Proceeds $ II. Principal to Investors: (A) Principal Balance at beginning of month $ (B) Certificate Factor at beginning of month $ (C) Principal Balance at end of month $ (D) Monthly principal due investors $ (E) Carry-Over Monthly Principal $ III. Monthly Interest Payment: (A) Principal Balance at beginning of month $ (B) Pass-Through Rate % $ (C) Monthly Interest Payment $ (D) Carry-Over Monthly Interest $ IV. Draw on Reserve Account and Surety Bond: (A) Total Available Funds equals: (1) Principal received from Obligors (or Dealers and insurers on non-Defaulted Receivables), plus $ (2) Interest received from Obligors, plus $ (3) Cash received from Depositor/Servicer on Purchased Receivables, plus $ (4) Liquidation Proceeds, plus $ (5) Interest on Collection Account $ (6) Total Available Funds $ (B) Total Distributions equal: (1) Monthly Interest Payment and any carry-over Monthly Interest Payment $ (2) Monthly Servicing Fee and any carry-over, plus Monthly Servicing Fee (if CITSF is not the Servicer), plus $ (3) Monthly Principal Payment and any carry-over Monthly Principal Payment $ (4) Total Distributions $ (C) Total Surplus/(Deficiency) (IV(A)-IV(B)) $ (D) Reserve Account balance $ (E) Reserve Account withdrawal $ (F) Surety Bond demand $ V. Monthly Servicing Fee and any carry-over Monthly Servicing Fee (if CITSF is the Servicer) $ VI. Reconciliation of Reserve Account: (A) Beginning Reserve Account balance $ (B) Interest on Reserve Account $ (C) Amounts paid to Reserve Account under the Pooling and Servicing Agreement $ (D) Reserve Account withdrawal $ (E) Reserve Account prior to release of excess $ (F) Required Reserve Account balance: (1) As percent of Principal Balance $ (2) Minimum Reserve Account balance $ (3) Required amount $ (G) Release of excess $ (H) Ending Reserve Account balance $ VII. Delinquency/Charge-off Experience: (A) Principal Balance at end of month $ (B) Number of Units $ (C) Delinquency $ # 30-59 Days $ 60-89 Days $ 90+ Days $ TOTAL $ (D) As % of EOM Outstanding (E) Receivables charged-of during month$ (F) Recoveries of Receivables previously charged-off $ (G) Net loss during month $ (H) Annualized monthly net loss rate $ EXHIBIT E THE CIT GROUP / SALES FINANCING, INC. CERTIFICATEHOLDER STATEMENT A-C (Per $1,000 Initial Balance): (A) The amount of the Certificateholder's distribution which constitutes the Monthly Principal Payment (including any Carry-Over Monthly Principal) $ (B) The amount of the Certificateholder's distribution which constitutes the Monthly Interest Payment (including any Carry-Over Monthly Interest) $ (C) The Certificateholder's pro rata portion of the Servicing Fee(including any Carry-Over Monthly Servicing Fee) $ (D) Certificate Balance as of Record Date $ (E) Certificate Factor as of Record Date $ EXHIBIT F-1 Trustee's Certificate pursuant to Section 15.3 of the Pooling and Servicing Agreement [ ], as trustee (the "Trustee") of the CIT Marine Trust ____-_ created pursuant to the Pooling and Servicing Agreement (the "Agreement") dated as of __________, ____, among The CIT Group Securitization Corporation II, as Depositor (the "Depositor"), The CIT Group / Sales Financing, Inc., as Servicer, and the Trustee, does hereby sell, transfer, assign and otherwise convey to the Depositor, without recourse, representation or warranty, all the Trustee's right, title and interest in and to all the Receivables (as defined in the Agreement) identified in the attached Servicer's Certificate as "Purchased Receivables," which are to be repurchased by the Depositor pursuant to Section 8.2 of the Agreement and all security and documents relating thereto. IN WITNESS WHEREOF I have hereunto set my hand this ____ day of ____. Name: Title: EXHIBIT F-2 Trustee's Certificate pursuant to Section 15.3 of the Pooling and Servicing-Agreement [ ], as trustee (the "Trustee") of the CIT Marine Trust ____-_ created pursuant to the Pooling and Servicing Agreement (the "Agreement") dated as of __________, ____, among The CIT Group Securitization Corporation II, as Depositor, The CIT Group / Sales Financing, Inc., as Servicer (the "Servicer"), and the Trustee, does hereby sell, transfer, assign and otherwise convey to the Servicer, without recourse, representation or warranty, all the Trustee's right, title and interest in and to all the Receivables (as defined in the Agreement) identified in the attached Servicer's Certificate as "Purchased Receivables," which are to be purchased by the Servicer pursuant to Section 9.7 or Section 16.2 of the Agreement, and all security and documents relating thereto. IN WITNESS WHEREOF I have hereunto set my hand this ____ day of ____. Name: Title: EX-4.5 7 LIMITED GUARANTEE Exhibit 4.5 LIMITED GUARANTEE, dated as of __________, ____, made by The CIT Group, Inc. ("CIT") in favor of _______________, not in its individual capacity but solely as Owner Trustee (the "Owner Trustee") under the Sale and Servicing Agreement dated as of __________, ____ (the "Sale and Servicing Agreement"), among The CIT Group Securitization Corporation II (the "Company"), The CIT Group/Sales Financing, Inc. ("CITSF") and the CIT Marine Trust ____-_. WHEREAS, the execution and delivery of this Limited Guarantee by CIT on or before the Closing Date (as defined in the Sale and Servicing Agreement) is a condition to the issuance and sale of the Notes and the Certificates, as contemplated by the Sale and Servicing Agreement; WHEREAS, CIT will derive substantial benefit from the transactions contemplated by the Sale and Servicing Agreement, including, without limitation, the payment of the Guarantee Fee (as defined in the Sale and Servicing Agreement) to CIT; WHEREAS, capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to such terms in the Sale and Servicing Agreement; and WHEREAS, in order to induce the parties to the Sale and Servicing Agreement to enter into the Sale and Servicing Agreement and perform their respective obligations thereunder, CIT is willing to execute and deliver this Agreement. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, CIT hereby unconditionally agrees as follows: SECTION 1. The Guarantee. (a) CIT hereby unconditionally and absolutely guarantees the payment to the Owner Trustee, on behalf of the Certificateholders, of the Guarantee Payment due to the Certificateholders on each Distribution Date. Not later than the third Business Day prior to each Distribution Date, the Servicer shall notify CIT of the amount of the Guarantee Payment, if any, for such Distribution Date (net of any reduction provided for in Section 1(e) hereof) and not later than the Business Day preceding each Distribution Date, CIT shall deposit the Guarantee Payment, if any, for such Distribution Date into the Certificate Distribution Account in immediately available funds. (b) Notwithstanding the obligation of CIT in clause (a) above, in no event will CIT be obligated to make a Guarantee Payment if the aggregate amounts paid under this Agreement would exceed $_________ (the "Initial Guarantee Payment Limit"), except as provided in Section 3 hereof. Subject to Section 3, the "Guarantee Payment Limit" will at any time equal the Initial Guarantee Payment Limit reduced by the amount of each Guarantee Payment. On the date that the Guarantee Payment Limit is reduced to zero (if the Nonreinstatement Notice has been given), CIT shall have no further liability under this Limited Guarantee, and CIT shall be deemed to have satisfied in full all of its obligations under this Limited Guarantee. (c) The obligations of CIT under this Limited Guarantee shall not terminate upon or otherwise be reduced by a Service Transfer pursuant to Article VII of the Sale and Servicing Agreement, by any amendment to the Sale and Servicing Agreement, the Purchase Agreement, any Subsequent Purchase Agreement or any other agreement relating to the Certificateholders or any breach by any party to any such agreement of its obligations thereunder or the failure of CIT to receive all or any part of the Guarantee Fee. (d) The obligations of CIT under this Limited Guarantee shall terminate on the earlier of (i) the date referred to in Section 1(b) hereof, (ii) one year and one day following the Distribution Date on which the Certificate Balance has been reduced to zero and all accrued interest on the Certificates has been paid in full, or (iii) the date on which there shall have been delivered "Alternate Credit Enhancement" in accordance with Section [5.06] of the Sale and Servicing Agreement. (e) On and after the Trigger Date (if the Nonreinstatement Notice is given), the amount of the Guarantee Payment to be made by CIT hereunder for each Distribution Date shall be reduced by the amount to be transferred on such Distribution Date from the Certificate Reserve Account to the Certificate Distribution Account. (f) The obligation of CIT to make the Guarantee Payments described in clause (a) above shall be unconditional and irrevocable, subject to the limitations set forth in clauses (b), (d) and (e) above. SECTION 2. Representations and Warranties. In making this Limited Guarantee CIT represents and warrants to the Owner Trustee and the Certificateholders that: (a) Organization and Good Standing. CIT 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. CIT 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 CIT. (b) Authorization; Binding Obligations. CIT has the power and authority to make, execute, deliver and perform this Limited Guarantee and all of the transactions -2- 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 CIT 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. CIT 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 CIT. (d) No Violations. The execution, delivery and performance of this Limited Guarantee by CIT 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 CIT, or constitute a material breach of any mortgage, indenture, contract or other agreement to which CIT is a party or by which CIT 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 CIT threatened, against CIT or any of its properties or with respect to this Limited Guarantee or the Certificates which, if adversely determined, would in the opinion of CIT have a material adverse effect on the transactions contemplated by this Limited Guarantee. Section 3. Reinstatement after Trigger Date; Nonreinstatement. (a) On each Distribution Date on and after the first Distribution Date (the "Trigger Date") on which the Guarantee Payment Limit is less than $_________, unless CIT has delivered the "Nonreinstatement Notice" to the Servicer and the Owner Trustee on or prior to such Trigger Date, the Guarantee Payment Limit will equal an amount equal to the least of: (i) $_________, and (ii) the Certificate Balance. If, subsequent to the Trigger Date, CIT delivers the Nonreinstatement Notice to the Servicer and the Owner Trustee, the Guarantee Payment Limit on and after the date of delivery of such notice will equal the least of: (i) $_________, (ii) the Certificate Balance, and (iii) the Guarantee Payment Limit in effect immediately prior to the delivery of such Nonreinstatement Notice, less any Guarantee Payments made on or after the delivery of such Nonreinstatement Notice. (b) The "Nonreinstatement Notice" shall mean a written notice given by CIT to the Servicer and the Owner Trustee stating that the Guarantee Payment Limit shall not be reinstated. -3- (c) "Excess Spread" shall mean the Amount Available, on each Distribution Date on and after the Trigger Date, remaining after application to the uses specified in Section [5.05(c)(i)-(viii)] of the Sale and Servicing Agreement. (d) CIT, in its sole discretion, may at any time give the Nonreinstatement Notice. SECTION 4. Miscellaneous. (a) All payments by CIT under this Limited Guarantee shall 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 CIT shall not be obligated to pay any amount allocable to Taxes (i) which the Trust was required to withhold or (ii) which result or were incurred by reason of the ownership of any interest in a Certificate by any non-U.S. Person which is not eligible for a complete exemption from U.S. withholding tax on U.S. source interest. (b) CIT shall 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 the Notes and the Certificates shall have been paid in full. If any amount shall be paid to CIT on account of such subrogation rights at any time when all of the amounts of principal and interest payable to the Holders of the Notes and the Certificates shall not have been paid in full, such amount shall be held in trust for the benefit of the Noteholders and the Certificateholders, shall be segregated from the other funds of CIT and shall forthwith be applied in whole or in part against such amounts owed in accordance with the terms of the Sale and Servicing Agreement. (c) This Limited Guarantee is not secured by a security interest in, pledge of or lien on any assets of CIT or any of its subsidiaries. The Limited Guarantee is a senior, unsecured general obligation of CIT 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, CIT, the Servicer and the Owner 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 inconsistent with the provisions of this Limited Guarantee, and (iii) to add or amend any provisions as required by Moody's, Standard & Poor's or another national statistical rating organization in order to maintain or improve the rating of the Certificates (it being understood that, after the rating required by the Sale and Servicing -4- Agreement has been obtained, neither the Owner Trustee, the Company, CITSF or CIT is obligated to maintain or improve such rating); provided, however, that such action shall not, as evidenced by an opinion of counsel for CIT, 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, CIT, the Servicer and the Owner Trustee, with the consent of Holders of the Certificates aggregating 51% or more of the Certificate Balance as of the preceding Determination Date, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Limited Guarantee or 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, 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 Certificate affected thereby. CIT shall provide Moody's and Standard & Poor's with a copy of any amendment made to this Limited Guarantee prior to the execution and delivery thereof, and the Rating Agency Condition shall be satisfied prior to the effective date of such amendment. (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 therein 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) CIT agrees that, prior to the date which is one year and one day after the payment in full of the Notes and the Certificates it shall 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) CIT hereby acknowledges that the Guarantee Fee and any reimbursement to CIT for Guarantee Payments is subordinated to payments in respect of the Notes and the Certificates, the Servicer Payment and the reimbursement of Monthly Advances to the extent provided in the Sale and Servicing Agreement and will be payable only if and to the extent funds are available therefor in accordance with the Sale and Servicing Agreement. CIT further acknowledges that the failure of CIT to receive, in whole or in part, payment of the Guarantee Fee shall not in any way diminish CIT's obligations hereunder and CIT 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 or for the failure to receive reimbursement for Guarantee Payments. -5- IN WITNESS WHEREOF, The CIT Group, Inc. has duly executed this Limited Guarantee as of the day and year first written above. THE CIT GROUP, INC. By:________________________ Name: Title: -6- EX-5.1 8 OPINION OF SCHULTE ROTH & ZABEL LLP Exhibit 5.1 January 27, 1998 The CIT Group Securitization Corporation II 650 CIT Drive Livingston, New Jersey 07039 The CIT Group, Inc. 1211 Avenue of the Americas New York, New York 10036 Dear Sirs: We have acted as special counsel to you (the "Corporations") in connection with the Registration Statement on Form S-3 (333-43323) (the "Registration Statement"), filed with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"), relating to the asset-backed certificates (the "Certificates"), the asset-backed notes (the "Notes" and, collectively with the Certificates, the "Securities") and the limited guarantees (the "Guarantees") of certain of the Securities by The CIT Group, Inc. ("CIT"), each described in the prospectus and prospectus supplement which form a part of the Registration Statement (the "Prospectus" and the "Prospectus Supplement," respectively). Each series of Certificates will be issued either pursuant to a trust agreement (the "Trust Agreement") substantially in the form filed as Exhibit 4.2 to the Registration Statement or pursuant to a pooling and servicing agreement (the "Pooling Agreement") substantially in the form filed as Exhibit 4.6 to the Registration Statement, pursuant to which The CIT Group Securitization Corporation II ("CIT II") will originate the CIT Marine Trust (the "Trust"). Each series of Notes will be issued pursuant to an indenture (the "Indenture") substantially in the form filed as Exhibit 4.1 to the Registration Statement. Certain rights of the holders of the Securities will be governed by a sale and servicing agreement (the "Sale and The CIT Group Securitiation Corporation II The CIT Group, Inc. January 27, 1998 Page 2 Servicing Agreement") substantially in the form filed as Exhibit 4.3 to the Registration Statement. In connection with this opinion, we have examined the Trust Agreement, the Pooling Agreement, the Indenture, the Guarantees and the Sale and Servicing Agreement (collectively, the "Basic Documents"), each in the form of the exhibits to the Registration Statement. We have also assumed, that: (a) the Trust Agreement or the Pooling Agreement and each of the other Basic Documents will be duly executed and delivered by each of the parties thereto in the form of the exhibits to the Registration Statement prior to the issuance of any of the Securities thereunder; (b) at the time of such execution, each such party, other than the Corporations, will be duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and will have all requisite power and authority to execute, deliver and perform its obligations under each of the Trust Agreement or the Pooling Agreement and each of the other Basic Documents; (c) the execution and delivery of the Trust Agreement or the Pooling Agreement and each of the other Basic Documents and performance of such obligations will have been duly authorized by all necessary actions on the part of each such party, other than the Corporations; (d) the Trust Agreement or the Pooling Agreement and each of the other Basic Documents will be the legal, valid and binding obligation of each such party, other than the Corporations, and will be enforceable against each such party, other than the Corporations, in accordance with its terms; and (e) during the period from the date hereof until the date of such execution and delivery, there will be no change in (i) any relevant authorization, law or regulation, or interpretation thereof or (ii) any set of facts or circumstances relating to the Basic Documents. We are attorneys admitted to practice in the State of New York and the opinion set forth below is limited to the laws of the State of New York and the Delaware General Corporation law. Paul N. Roth, a member of this firm, is a director of CIT. Based upon the foregoing, we are of the opinion that: (a) assuming the due execution of the Trust Agreement or the Pooling Agreement and each of the other Basic Documents, upon the issuance, authentication and delivery of the Notes in accordance with the terms of the Sale and Servicing Agreement and the Indenture against payment therefor as contemplated by the Prospectus and the Prospectus Supplement, the Notes will constitute valid and binding obligations of the Trust, each enforceable in accordance with its terms; and (b) the Guarantees have been duly authorized and, when duly executed by CIT and issued and delivered in accordance with the terms of the Sale and Servicing Agreement as contemplated by the Prospectus and the Prospectus Supplement, will be valid and binding obligations of CIT, enforceable in accordance with their terms, subject as to enforcement of remedies with The CIT Group Securitiation Corporation II The CIT Group, Inc. January 27, 1998 Page 3 respect to (a) and (b) above to applicable bankruptcy, reorganization, fraudulent conveyance, insolvency, moratorium or other laws affecting creditors' rights generally from time to time in effect and to general principles of equity, and will be entitled to the benefits of the Basic Documents. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to this firm appearing under the heading "Legal Matters" in the Prospectus. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the General Rules and Regulations of the Commission thereunder. Very truly yours, EX-5.2 9 OPINION OF RICHARDS, LAYTON & FINGER EXHIBIT 5.2 [Letterhead of Richards, Layton & Finger] January 27, 1998 The CIT Group Securitization Corporation II 650 CIT Drive Livingston, New Jersey 07039 The CIT Group, Inc. 1211 Avenue of the Americas New York, New York 10036 Dear Sirs: We have acted as special Delaware counsel to CIT Marine Trust ____-_, a Delaware business trust (the "Trust") in connection with the Registration Statement on Form S-3 (the "Registration Statement"), filed with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"), registering the asset backed certificates (the "Certificates"), the asset backed notes (the "Notes" and, collectively with the Certificates, the "Securities") and the limited guarantees (the "Guarantees") of certain of the Securities by The CIT Group, Inc. ("CIT"), each described in the prospectus and the prospectus supplement which form a part of the Registration Statement (the "Prospectus" and the "Prospectus Supplement"). Each series of Certificates will be issued pursuant to a trust agreement (the "Trust Agreement") substantially in the form filed as Exhibit 4.2 to the Registration Statement, pursuant to which The CIT Group Securitization Corporation II ("CIT II") will originate the Trust. Each series of Notes will be issued pursuant to an indenture (the "Indenture") substantially in the form filed as Exhibit 4.1 to the Registration Statement. Certain rights of the holders of the Securities will be governed by a sale and servicing agreement (the "Sale and Servicing Agreement") substantially in the form filed as Exhibit 4.3 to the Registration Statement. In connection with this opinion, we have examined signed copies of the Registration Statement and the exhibits thereto. We have not reviewed any documents other than the foregoing documents for purposes of rendering our opinions as expressed herein, and we have assumed that there exists no provision of any such other document that bears upon or is inconsistent with our opinions as expressed herein. We have conducted no independent factual investigation of our own but have relied solely upon the foregoing documents, the statements and information set forth therein and the additional matters recited or assumed herein, all of which we have assumed to be true, complete and accurate in all material respects. The CIT Group Securities Corporation II The CIT Group, Inc. January 27, 1998 Page 2 In our examination, we have assumed the genuineness of all signatures, the legal capacity of natural persons signing or delivering any instrument, the authenticity of all documents submitted to us as original, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such latter documents. We have also assumed, with respect to the Trust Agreement, the Indenture, the Sale and Servicing Agreement and the Guarantees (collectively, the "Basic Documents"), that: (a) each of the Basic Documents will be duly executed and delivered by each of the parties thereto prior to the issuance of any of the Securities thereunder; (b) at the time of such execution, each such party will be duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and will have all requisite power and authority to execute, deliver and perform its obligations under each of the Basic Documents; (c) the execution and delivery of the Basic Documents and performance of such obligations will have been duly authorized by all necessary actions on the part of each such party; (d) at the time of such execution, the Basic Documents will be the legal, valid and binding obligation of each such party, and will be enforceable against each such party in accordance with their terms; (e) the Guarantees will be duly executed and delivered by CIT; and (f) during the period from the date hereof until the date of such execution and delivery, there will be no change in (i) any relevant authorization, law or regulation, or interpretation thereof, (ii) the terms and conditions of the Basic Documents, or (iii) any set of facts or circumstances relating to the Basic Documents. Based upon the foregoing, we are of the opinion that assuming the due execution of the Basic Documents, each in substantially the form presented to us, upon the issuance, authentication and delivery of the Certificates in accordance with the provisions of the Sale and Servicing Agreement and the Trust Agreement against payment therefor, the Certificates will be legally issued, fully paid and, subject to Section 2.7 of the Trust Agreement, nonassessable Certificates representing undivided interests in the Trust, and will be entitled to the benefits of the Trust Agreement. We have not participated in the preparation of any offering materials with respect to the Notes or the Certificates and assume no responsibility for their contents. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to this firm appearing under the heading "Legal Matters" in the Prospectus. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the General Rules and Regulations of the Commission thereunder. Very truly yours, /S/ RICHARDS, LAYTON & FINGER EX-8.1 10 OPINION OF SCHULTE ROTH & ZABEL LLP Exhibit 8.1 January 27, 1998 The CIT Group Securitization Corporation II 650 CIT Drive Livingston, New Jersey 07039 The CIT Group, Inc. 1211 Avenue of the Americas New York, New York 10036 Dear Sirs: We have acted as special counsel to you in connection with the Registration Statement on Form S-3 (333-43323) (the "Registration Statement"), filed with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"), relating to the asset-backed certificates (the "Certificates"), the asset-backed notes (the "Notes" and, collectively with the Certificates, the "Securities") and the limited guarantees (the "Guarantees") of certain of the Securities by The CIT Group, Inc. ("CIT"), each described in the prospectus and prospectus supplement which form a part of the Registration Statement (the "Prospectus" and the "Prospectus Supplement"). Each series of Certificates will be issued either pursuant to a trust agreement (the "Trust Agreement") substantially in the form filed as Exhibit 4.2 to the Registration Statement, or pursuant to a pooling and servicing agreement (the "Pooling Agreement") substantially in the form filed as Exhibit 4.6 to the Registration Statement pursuant to which The CIT Group Securitization Corporation II will originate the CIT Marine Trust (the "Trust"). Each series of Notes will be issued pursuant to an indenture (the "Indenture") substantially in the form filed as Exhibit 4.1 to the Registration Statement. Certain rights of the holders of the Securities will be governed by a sale and servicing agreement (the "Sale and Servicing Agreement") substantially in the form filed as Exhibit 4.3 to the Registration Statement. The CIT Group Securitization Corporation II The CIT Group, Inc. January 27, 1998 Page 2 We are attorneys admitted to practice in the State of New York and the opinion set forth below is limited to the laws of the State of New York and the Delaware General Corporation Law. Paul N. Roth, a member of this firm, is a director of CIT. We hereby confirm that the statements set forth in the Prospectus and the Prospectus Supplement under the heading "Certain Federal Income Tax Consequences" accurately describe the material Federal income tax consequences to holders of the Securities. We hereby consent to the use of this opinion as an exhibit to the Registration Statement. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the General Rules and Regulations of the Commission thereunder. Very truly yours, EX-8.2 11 OPINION OF CROWE & DUNLEVY EXHIBIT 8.2 [LETTERHEAD OF CROWE & DUNLEVY] January 27, 1998 The CIT Group/Sales Financing, Inc. 650 CIT Drive Livingston, New Jersey 07039 Re: CIT MARINE TRUST Ladies and Gentlemen: For the purpose of the sale of Asset-Backed Notes and Asset-Backed Certificates issued by the CIT Marine Trust (the "Trust"), we have acted as Oklahoma tax counsel for The CIT Group/Sales Financing, Inc. and the Trust regarding the anticipated Oklahoma income tax characterization of the Trust. This letter is pursuant to your request that we advise you regarding the likely characterization under Oklahoma income tax law of the Trust. We understand the Trust will purchase Marine notes and/or chattel paper from a CIT "special purpose corporation," The CIT Group Securitization Corporation II, after purchase by the special purpose corporation from The CIT Group/Sales Financing, Inc. Capitalized terms used but not defined herein have the meanings ascribed in the Form of Sale and Servicing Agreement (the "Sale and Servicing Agreement") among The CIT Group/Sales Financing, Inc., The CIT Group/Sales Financing, Inc. and the Trust. In furnishing this opinion, we have examined copies of the following documents: (i) the Form of Trust Agreement; (ii) the Form of Sale and Servicing Agreement; (iii) the Form of Pooling and Servicing Agreement; (iv) the Form of Purchase Agreement; (v) the Form of Subsequent Purchase Agreement; and (vi) the Form of Indenture. The CIT Group/Sales Financing, Inc. January 27, 1998 Page 2 I. ASSUMPTIONS AND OPINION In rendering the opinions expressed herein, we have made the following assumptions, the accuracy of which we have not verified: 1. The Trust has been properly characterized as a nonpublicly traded Partnership for federal income tax purposes. 2. Any Notes issued by the Trust have been properly characterized as debt for federal income tax purposes. Based upon the foregoing and in reliance thereon, and upon consideration of applicable Oklahoma income tax laws, and subject to the qualifications and limitations described below, we are of the following opinions: 1. The Trust will be characterized as a nonpublicly traded Partnership for purposes of Oklahoma income tax laws, and the nonpublicly traded Partnership will not be taxed as an entity, but rather, the profits, income, losses, and deductions of the Trust will, for income tax purposes, flow through the Trust to the partner level. 68 Okla. Stat. ss. 2353(3) (1997 Supp.); Oklahoma Tax Commission Rule ss. 710:50-3-35. 2. The Notes will be characterized as debt for Oklahoma income tax purposes. 68 Okla. Stat. ss. 2353(3) (1997 Supp.); Oklahoma Tax Commission Rule ss. 710:50-3-35. Noteholders not otherwise subject to taxation in Oklahoma should not become subject to taxation in Oklahoma because of the holder's ownership of Notes. However, a Noteholder already subject to Oklahoma's income tax could be required to pay additional Oklahoma income tax as a result of the holder's ownership or disposition of Notes. II. ADDITIONAL DISCUSSION For the purposes of this additional discussion, we have made the following assumptions, the accuracy of which we have not verified: 1. The Trust is organized as a business trust under the laws of Delaware. The activities of the Trust occurring within the State of Oklahoma consist solely of the maintenance of the original notes and/or chattel paper and of the related contract files and documents with a custodian within the State of Oklahoma and of the activities described in Paragraph 4 below. 2. Less than ten percent (10%) of the notes and/or chattel paper acquired by the Trust will originate in Oklahoma. 3. The Trust will acquire the notes and/or chattel paper in a series of transactions occurring outside of Oklahoma. The CIT Group/Sales Financing, Inc. January 27, 1998 Page 3 4. The only activities which the Servicer, as Servicer of the Trust, will conduct in Oklahoma is the servicing of the loans evidenced by the notes and chattel paper including without limitation: (i) the maintenance of custody of the notes and/or chattel paper; (ii) the maintenance of the administrative records concerning payments and outstanding balances on the notes and/or chattel paper; (iii) the receipt of the payments on the notes and/or chattel paper; (iv) the deposit of the payments received on the notes and/or chattel paper in an Oklahoma financial institution for purposes of collection; (v) the collection activities relating to the notes and/or chattel paper; and (vi) the repossession and sale of the collateral therefor. As a nonpublicly traded Partnership for Oklahoma and federal income tax purposes, the Oklahoma distributive share of the partnership income, gains, losses or deductions of the partnership to be reported by the partners shall be the same portion of that reported for federal income tax purposes, as the Oklahoma income, gain, losses or deductions determined under ss.ss. 2358 and 2362 of Title 68 of the Oklahoma Statutes for said partnership, bears to the federal income, gains, losses or deductions. 68 Okla. Stat. ss. 2363 (1991). The Oklahoma taxable income of a nonresident includes the distributive share of the Oklahoma part of partnership income, gains, losses or deductions. 68 Okla. Stat. ss. 2362(4) (1997 Supp.). However, income from intangible personal property of a nonresident of Oklahoma is generally excluded from Oklahoma taxable income except to the extent that such income is from property employed in an Oklahoma trade or business or from property that has acquired a nonunitary business or commercial situs in Oklahoma. 68 Okla. Stat. ss.ss. 2358(A)(4)(b), 2362(6) (1997 Supp.). We believe it is unlikely that the Oklahoma Tax Commission would attempt to classify the income of the Trust as Oklahoma source income or as arising from an Oklahoma trade or business. Accordingly, a nonresident of Oklahoma should not incur Oklahoma taxable income solely as a result of an ownership interest in the Trust. However, we are not aware of any authority or pronouncement of the Oklahoma Tax Commission or the Oklahoma courts addressing this issue on comparable facts and no absolute assurance can be given in this regard. III. QUALIFICATIONS AND LIMITATIONS In preparing this letter, we have reviewed Oklahoma Statutes, Oklahoma court decisions and Oklahoma administrative rules and decisions, generally available to the public as of the date of this letter. We have no obligation to update or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in the law that may hereafter occur which place a different interpretation on the law other than that which has been applied herein, including interpretations of the law whether by way of Oklahoma statutory enactments or amendments, judicial decisions or administrative actions. Except as provided n the last paragraph, this opinion has been rendered solely for the benefit of The CIT Group/Sales Financing, Inc. and the Trust for use in the Trust's offering of the Asset-Backed Notes and the Asset-Backed Certificates and may not be used, circulated, quoted, relied upon or otherwise referred to for any other purpose without our prior written The CIT Group/Sales Financing, Inc. January 27, 1998 Page 3 consent; provided, however, that this opinion may be delivered to your regulators, accountants, attorneys and other professional advisers and may be used in connection with any legal or regulatory proceeding relating to the subject matter of this opinion and the disclosure statement entitled "Certain State Tax Consequences" included in the prospectus which forms a part of the Registration Statement on Form S-3 (333-43323). The undersigned shall not be responsible, liable or obligated to any third party who may obtain access to this letter. Crowe & Dunlevy hereby gives its consent solely to the parties on the distribution list attached hereto to rely on such Opinion for use in the Trust's sale. However, the parties on the distribution list may not use, circulate, quote or rely on this Opinion for any purpose without Crowe & Dunlevy's written consent. Very truly yours, CROWE & DUNLEVY, A Professional Corporation By: /s/ James H. Holloman, Jr. -------------------------------- James H. Holloman, Jr. DISTRIBUTION LIST The CIT Group, Inc. 1211 Avenue of the Americas New York, New York 10036 The CIT Group Securitization Corporation II 650 CIT Drive Livingston, New Jersey 07039 EX-10.1 12 PURCHASE AGREEMENT Exhibit 10.1 PURCHASE AGREEMENT This Purchase Agreement dated as of ____________, ____ (the "Agreement"), is between THE CIT GROUP SECURITIZATION CORPORATION II, as purchaser (the "Purchaser"), and THE CIT GROUP/SALES FINANCING, INC., as seller (the "Seller"). Subject to the terms hereof, the Seller agrees to sell, and the Purchaser agrees to purchase, the marine installment sales contracts set forth on Exhibit A (collectively, the "Contracts"), having an aggregate outstanding principal balance as of ____________, ____ (the "Initial Cut-off Date") of approximately $___________. It is the intention of the Seller and the Purchaser that the Purchaser shall sell the Contracts to CIT Marine Trust ____-_ and shall enter into a Sale and Servicing Agreement, dated as of the date hereof, with CIT Marine Trust ____-_ and the Seller, pursuant to which _____% Asset Backed Certificates (the "Certificates"), evidencing ownership interests in the Contracts and Class A _____% Asset Backed Notes secured by the Contracts, will be issued. The Purchaser and the Seller wish to prescribe the terms and conditions of the purchase by the Purchaser of the Contracts and the servicing and administration of the Contracts. In consideration of the premises and the mutual agreements hereinafter set forth, the Purchaser and the Seller agree as follows: ARTICLE I DEFINITIONS SECTION 1.01. Definitions. Certain capitalized terms used in this Agreement shall have the respective meanings assigned to them in the Sale and Servicing Agreement. All references in this Purchase Agreement to Articles, Sections, subsections and exhibits are to the same contained in or attached to this Purchase Agreement unless otherwise specified. ARTICLE II SALE AND CONVEYANCE OF CONTRACTS; CONTRACT FILES SECTION 2.01. Sale and Conveyance of Contracts. On the Closing Date, subject to the terms and conditions hereof, the Seller shall sell, transfer, assign absolutely, set over and otherwise convey to the Purchaser (i) all the right, title and interest of the Seller in and to the Initial Contracts and all the rights, benefits, and obligations arising from and in connection with each Initial Contract, (ii) the security interests in the Initial Financed Boats granted by the Obligors pursuant to the Initial Contracts, (iii) all payments received by the Seller on or with respect to the Initial Contracts on or after the Initial Cut-off Date (exclusive of payments with respect to Post Cut-off Date Insurance Add-Ons), (iv) the interest of the Seller in any Initial Financed Boat (including any right to receive future Net Liquidation Proceeds) that secures the Initial Contracts and that shall have been repossessed by the Servicer by or on behalf of the Trust; (v) all rights of the Seller to proceeds of Insurance Policies covering the Obligors and the Initial Contracts, (vi) the proceeds from any Servicer's Errors and Omissions Protection Policy, any fidelity bond and any blanket hazard policy, to the extent such proceeds relate to any Initial Financed Boat, (vii) all rights of recourse against any cosigner or under any personal guarantee with respect to the Initial Contracts (other than any right as against a Dealer under a Dealer Agreement), (viii) all amounts held for the Trust in the Collection Account, (ix) all amounts held for the Trust in the Pre-Funding Account, (x) all amounts held for the Trust in the Capitalized Interest Account, (xi) all proceeds in any way derived from any of the foregoing items, and (xii) all documents contained or required to be contained in the Contract Files relating to the Initial Contracts. The parties intend and agree that the conveyance of the Seller's right, title and interest in and to the Initial Contracts pursuant to this Agreement shall constitute an absolute sale. The Seller hereby declares and covenants that it shall at no time have any legal, equitable or beneficial interest in, or any right, including without limitation any reversionary or offset right, to the Collection Account, the Pre-Funding Account, the Capitalized Interest Account and the Cash Collateral Account, and that, in the event it receives any of the same, it shall hold same in trust for the benefit of the Trust on behalf of the Securityholders and shall immediately endorse over to the Trust any such amount it receives. SECTION 2.02. Purchase Price; Payments on the Contracts. (a) The purchase price for the Contracts shall be an amount equal to $___________. Such purchase price shall be payable in immediately available funds on the Closing Date. (b) The Purchaser shall be entitled to all payments of principal and interest received on or after the Initial Cut-off Date. All payments of principal and interest received before the Initial Cut-off Date shall belong to the Seller. The Seller shall hold in trust for the Purchaser and shall promptly remit to the Purchaser any payments on the Contracts received by the Seller that belong to the Purchaser under the terms of this Agreement. SECTION 2.03. Conditions to Sale of Contracts. The Purchaser's obligations hereunder are subject to the following conditions: (a) The Purchaser shall have received (i) the Sale and Servicing Agreement executed by all the parties thereto, (ii) all documents required by the Sale and Servicing Agreement and (iii) such other opinions and documents as the Purchaser may reasonably require in connection with the purchase of the Contracts hereunder or the sale of the Notes and Certificates; 2 (b) The representations and warranties of the Seller and the Servicer made in the Sale and Servicing Agreement shall be true and correct on the Closing Date; and (c) The Purchaser shall have received from counsel to the Seller a letter stating that the Purchaser may rely on such counsel's opinion delivered pursuant to the Sale and Servicing Agreement and such counsel's opinions to Moody's Investors Service, Inc. and Standard and Poor's Corporation in respect of the sale of the Contracts to the Purchaser by the Seller, or such opinions may be addressed and delivered to the Purchaser. SECTION 2.04. Examination of Files. The Seller will make the Contract Files with respect to the Initial Contracts available to the Purchaser or its agent for examination at the Trust's offices or such other location as otherwise shall be agreed upon by the Purchaser and the Seller. SECTION 2.05. Transfer of Contracts. Pursuant to the Sale and Servicing Agreement, the Purchaser will assign all of its right, title and interest in and to the Contracts to the Trust for the benefit of the Securityholders. The Purchaser has the right to assign its interest under this Agreement as may be required to effect the purposes of the Sale and Servicing Agreement, by written notice to the Seller and without the consent of the Seller, and the assignee shall succeed to the rights and obligations hereunder of the Purchaser. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER; REPURCHASE OF CONTRACTS SECTION 3.01. Representations and Warranties of the Seller. (a) The representations and warranties of the Seller contained in the Sale and Servicing Agreement are incorporated herein, and are made to the Purchaser on the date hereof, as if set forth herein and as if made to the Purchaser on the date hereof. The Seller will make such representations and warranties in the Sale and Servicing Agreement directly to the Trust and will become obligated in respect of such representations and warranties pursuant to the Sale and Servicing Agreement. On the Closing Date, the Seller shall deliver to the Purchaser an Officers' Certificate, dated the Closing Date, to the effect that the representations and warranties made in the Sale and Servicing Agreement by the Seller are true and correct as of the Closing Date. (b) It is understood and agreed that the representations and warranties incorporated by reference in this Agreement by Section 3.01(a) hereof shall remain operative and in full force and effect, shall survive the transfer and conveyance of the Contracts by the Seller to the Purchaser and by the Purchaser to the Trust, and shall inure to the benefit of the Purchaser, the Trust and their successors and permitted assignees. 3 (c) The Seller shall indemnify the Purchaser and the Servicer and hold the Purchaser and the Servicer harmless against any loss, penalties, fines, forfeitures, legal fees and related costs, judgments and other costs and expenses resulting from any claim, demand, defense or assertion based on or grounded upon, or resulting from, a breach of the Seller's representations and warranties contained or incorporated by reference in this Agreement. It is understood and agreed that the obligation of the Seller set forth in this Section 3.01 to indemnify the Purchaser and the Servicer as provided in this Section 3.01 constitutes the sole remedy of the Purchaser and the Servicer respecting a breach of the foregoing representations and warranties. The Trust shall also have the remedies provided in the Sale and Servicing Agreement. (d) Each indemnified party shall give prompt notice to the Seller of any action commenced against it with respect to which indemnity may be sought hereunder but failure to so notify an indemnifying party shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement, unless the failure to notify materially prejudices the rights and condition of the Seller. The Seller shall be entitled to participate in any such action, and to assume the defense thereof, and after notice from the Seller to an indemnified party of its election to assume the defense thereof, the Seller will not be liable to such indemnified party under this Section for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof. (e) Any cause of action against the Seller or relating to or arising out of the breach of any representations and warranties made or incorporated by reference in this Section 3.01 shall accrue as to any Contract upon (i) discovery of such breach by the Purchaser or the Servicer or notice thereof by the Seller to the Purchaser and the Servicer, (ii) failure by the Seller to cure such breach and (iii) demand upon the Seller by the Purchaser for all amounts payable in respect of such Contract. ARTICLE IV MISCELLANEOUS PROVISIONS SECTION 4.01. Amendment. This Agreement may be amended from time to time by the Seller and the Purchaser by written agreement signed by the Seller and the Purchaser. SECTION 4.02. Counterparts. For the purpose of facilitating the execution of this Agreement as herein provided and for other purposes, this Agreement may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed to be an original, and such counterparts shall constitute but one and the same instrument. SECTION 4.03. Termination. The Seller's obligations under this Agreement shall survive the sale of the Contracts to the Purchaser. 4 SECTION 4.04. Governing Law. This Agreement shall be construed in accordance with the laws of the State of New York and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws. SECTION 4.05. Notices. All demands, notices and communications hereunder shall be in writing and shall be deemed to have been duly given if mailed by first class mail, postage prepaid, to (i) in the case of the Seller, The CIT Group/Sales Financing, Inc., 650 CIT Drive, Livingston, New Jersey 07039, Attention: President, or such other address as may hereafter be furnished to Purchaser in writing by the Seller or (ii) in the case of the Purchaser, The CIT Group Securitization Corporation II, 650 CIT Drive, Livingston, New Jersey 07039, Attention: President, or such other address as may hereafter be furnished to the Seller by the Purchaser. SECTION 4.06. Severability of Provisions. If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement. SECTION 4.07. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Seller and the Purchaser and their respective successors and assigns, as may be permitted hereunder. 5 IN WITNESS WHEREOF, the Seller and the Purchaser have caused their names to be signed hereto by their respective officers thereunto duly authorized as of the day and year first above written. THE CIT GROUP SECURITIZATION CORPORATION II, as Purchaser By: ___________________________________ Name: Title: THE CIT GROUP/SALES FINANCING, INC., as Seller By: ___________________________________ Name: Title: EXHIBIT A List of Contracts EX-10.2 13 SUBSEQUENT PURCHASE AGREEMENT Exhibit 10.2 SUBSEQUENT PURCHASE AGREEMENT This Subsequent Purchase Agreement dated as of ____________, ____ (the "Agreement"), is between THE CIT GROUP SECURITIZATION CORPORATION II, as purchaser (the "Purchaser"), and THE CIT GROUP/SALES FINANCING, INC., as seller (the "Seller"). Reference is hereby made to the Purchase Agreement dated as of ____________, ____ between the parties hereto (the "Purchase Agreement") pursuant to which the Purchaser purchased from the Seller the marine installment sales contracts set forth on Exhibit A thereto (the "Initial Contracts"). The Purchaser sold the Initial Contracts to the trust established pursuant to the Trust Agreement dated as of ____________, ____ between the Purchaser and [____________________], as trustee (the "Owner Trustee"). Pursuant to the Sale and Servicing Agreement dated as of ____________, ____ between CIT Marine Trust ____-_ (the "Trust"), the Purchaser and the Seller, the Purchaser agreed to purchase from the Seller and the Seller agreed to sell to the Purchaser, subject to the terms and conditions set forth in Section 3.01D of the Sale and Servicing Agreement, Subsequent Contracts for the fixed purchase price specified in the Sale and Servicing Agreement for delivery on the date specified herein. The purchase price for any Subsequent Contract will be funded from money on deposit in the Pre-Funding Account during the Funding Period. The purchase of any Subsequent Contract by the Purchaser must be evidenced by the execution and delivery of a Subsequent Purchase Agreement substantially in the form of Exhibit B to the Sale and Servicing Agreement. Accordingly, subject to the terms hereof and the Sale and Servicing Agreement, the Seller agrees to sell, and the Purchaser agrees to purchase, the marine installment sales contracts set forth on Exhibit A hereto (collectively, the "Subsequent Contracts"), having an aggregate outstanding principal balance as of ____________, ____ (the "Subsequent Cut-Off Date") of $___________. The Purchaser and the Seller wish to prescribe the terms and conditions of the purchase by the Purchaser of the Subsequent Contracts and the servicing and administration of the Subsequent Contracts. In consideration of the premises and the mutual agreements hereinafter set forth, the Purchaser and the Seller agree as follows: ARTICLE I DEFINITIONS SECTION 1.1. Definitions. Certain capitalized terms used in this Agreement shall have the respective meanings assigned to them in the Sale and Servicing Agreement. All references in this Agreement to Articles, Sections, subsections and exhibits are to the same contained in or attached to this Agreement unless otherwise specified. ARTICLE II SALE AND CONVEYANCE OF SUBSEQUENT CONTRACTS; CONTRACT FILES SECTION 2.1. Sale and Conveyance of Contracts. On ____________, ____ (the "Subsequent Transfer Date"), subject to the terms and conditions hereof, the Seller shall sell, transfer, assign absolutely, set over and otherwise convey to the Purchaser as of the Subsequent Transfer Date (i) all the right, title and interest of the Company in and to the Subsequent Contracts and all the rights, benefits, and obligations arising from and in connection with each Subsequent Contract, (ii) the security interests in the Subsequent Financed Boats granted by the Obligors pursuant to the Subsequent Contracts, (iii) all payments received by the Company on or with respect to the Subsequent Contracts on or after the Subsequent Cut-off Date (exclusive of payments with respect to Post Cut-off Date Insurance Add-Ons), (iv) the interest of the Company in any Subsequent Financed Boat (including any right to receive future Net Liquidation Proceeds) that secures the Subsequent Contracts and that shall have been repossessed by the Servicer by or on behalf of the Trust; (v) all rights of the Company to proceeds of Insurance Policies covering the Obligors and the Subsequent Contracts, (vi) the proceeds from any Servicer's Errors and Omissions Protection Policy, any fidelity bond and any blanket hazard policy, to the extent such proceeds relate to any Subsequent Financed Vehicle, (vii) all rights of recourse against any cosigner or under any personal guarantee with respect to the Subsequent Contracts (other than any right as against a Dealer under a Dealer Agreement), (viii) all proceeds in any way derived from any of the foregoing items, and (ix) all documents contained or required to be contained in the Contract Files relating to the Subsequent Contracts. The parties intend and agree that the conveyance of the Seller's right, title and interest in and to the Subsequent Contracts (and all rights, entitlements and amounts listed above) pursuant to this Agreement shall constitute an absolute sale. SECTION 2.2. Purchase Price; Payments on the Subsequent Contracts. (a) The purchase price for the Subsequent Contracts shall be an amount equal to $___________, which is the aggregate outstanding principal balance of the Subsequent Contracts transferred pursuant to this Agreement as of the Subsequent Cut-off Date, and the Seller hereby acknowledges receipt of such amount in respect of the sale of the Subsequent Contracts hereunder. Such purchase price shall be payable in immediately available funds on the Subsequent Transfer Date from funds on deposit in the Pre-Funding Account. (b) The Purchaser shall be entitled to all payments of principal and interest received on or after the Subsequent Cut-off Date. All payments of principal and interest received before the Subsequent Cut-off Date shall belong to the Seller. The Seller shall hold in trust for the Purchaser and shall promptly remit to the Purchaser, any payments on 2 the Subsequent Contracts received by the Seller that belong to the Purchaser under the terms of this Agreement. SECTION 2.3. Conditions to Sale of Subsequent Contracts. The Purchaser's obligations hereunder are subject to the following conditions: (a) The Purchaser shall have received: the Sale and Servicing Agreement executed by all the parties thereto, the documents listed in Section 3.01D of the Sale and Servicing Agreement, and such other opinions and documents as the Purchaser may reasonably require in connection with the purchase of the Subsequent Contracts hereunder or the sale of the Notes and Certificates; (b) The representations and warranties with respect to the Subsequent Contracts of (i) the Seller and the Servicer made in the Sale and Servicing Agreement and (ii) the Seller made in the Purchase Agreement and this Agreement shall be true and correct with respect to the Subsequent Contracts on the Subsequent Transfer Date; and (c) The conditions for transfer of the Subsequent Contracts from the Purchaser to the Trust set forth in Section 3.01D of the Sale and Servicing Agreement have been fulfilled. SECTION 2.4. Examination of Files. The Seller will make the Contract Files with respect to the Subsequent Contracts available to the Purchaser or its agent for examination at the Trust's offices or such other location as otherwise shall be agreed upon by the Purchaser and the Seller. SECTION 2.5. Transfer of Subsequent Contracts. Pursuant to the Sale and Servicing Agreement, the Purchaser will assign all of its right, title and interest in and to the Subsequent Contracts to the Trust for the benefit of the Securityholders. The Purchaser has the right to assign its interest under this Agreement as may be required to effect the purposes of the Sale and Servicing Agreement, by written notice to the Seller and without the consent of the Seller, and the assignee shall succeed to the rights and obligations hereunder of the Purchaser. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER; REPURCHASE OF CONTRACTS SECTION 3.1. Representations and Warranties of the Seller. (a) The representations and warranties of the Seller contained in Article III of the Sale and Servicing Agreement with respect to the Subsequent Contracts are incorporated herein, and are made to the Purchaser on the Subsequent Transfer Date, as if set forth herein and as if made to the Purchaser on the date hereof. The Seller will make 3 such representations and warranties in the Sale and Servicing Agreement directly to the Trust and will become obligated in respect of such representations and warranties pursuant to Article III of the Sale and Servicing Agreement. On the Subsequent Transfer Date, the Seller shall deliver to the Purchaser an Officers' Certificate, dated the Subsequent Transfer Date, to the effect that the representations and warranties made in the Sale and Servicing Agreement with respect to the Subsequent Contracts by the Seller are true and correct as of the Subsequent Transfer Date. (b) It is understood and agreed that the representations and warranties incorporated by reference in this Agreement by Section 3.1. A hereof shall remain operative and in full force and effect, shall survive the transfer and conveyance of the Subsequent Contracts by the Seller to the Purchaser and by the Purchaser to the Trust, and shall inure to the benefit of the Purchaser, the Trust and their successors and permitted assignees. (c) The Seller shall indemnify the Purchaser and the Servicer and hold the Purchaser and the Servicer harmless against any loss, penalties, fines, forfeitures, legal fees and related costs, judgments and other costs and expenses resulting from any claim, demand, defense or assertion based on or grounded upon, or resulting from, a breach of the Seller's representations and warranties contained or incorporated by reference in this Agreement. It is understood and agreed that the obligation of the Seller set forth in this Section 3.1 to indemnify the Purchaser and the Servicer as provided in this Section 3.1. constitutes the sole remedy of the Purchaser and the Servicer respecting a breach of the foregoing representations and warranties. The Trust shall also have the remedies provided in the Sale and Servicing Agreement. (d) Each indemnified party shall give prompt notice to the Seller of any action commenced against it with respect to which indemnity may be sought hereunder but failure to so notify an indemnifying party shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement, unless the failure to notify materially prejudices the rights and condition of the Seller. The Seller shall be entitled to participate in any such action, and to assume the defense thereof, and after notice from the Seller to an indemnified party of its election to assume the defense thereof, the Seller will not be liable to such indemnified party under this Section for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof. (e) Any cause of action against the Seller or relating to or arising out of the breach of any representations and warranties made or incorporated by reference in this Section 3.01 shall accrue as to any Subsequent Contract upon (i) discovery of such breach by the Purchaser or the Servicer or notice thereof by the Seller to the Purchaser and the Servicer, (ii) failure by the Seller to cure such breach and (iii) demand upon the Seller by the Purchaser for all amounts payable in respect of such Subsequent Contract. 4 ARTICLE III MISCELLANEOUS PROVISIONS SECTION 4.1. Amendment. This Agreement may be amended from time to time by the Seller and the Purchaser by written agreement signed by the Seller and the Purchaser. SECTION 4.2. Counterparts. For the purpose of facilitating the execution of this Agreement as herein provided and for other purposes, this Agreement may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed to be an original, and such counterparts shall constitute but one and the same instrument. SECTION 4.3. Termination. The Seller's obligations under this Agreement shall survive the sale of the Subsequent Contracts to the Purchaser. SECTION 4.4. Governing Law. This Agreement shall be construed in accordance with the laws of the State of New York and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws. SECTION 4.05. Notices. All demands, notices and communications hereunder shall be in writing and shall be deemed to have been duly given if mailed by first class mail, postage prepaid, to (i) in the case of the Seller, The CIT Group/Sales Financing, Inc., 650 CIT Drive, Livingston, New Jersey 07039, Attention: President, or such other address as may hereafter be furnished to Purchaser in writing by the Seller, or (ii) in the case of the Purchaser, The CIT Group Securitization Corporation II, 650 CIT Drive, Livingston, New Jersey 07039, Attention: President, or such other address as may hereafter be furnished to the Seller by the Purchaser. SECTION 4.6. Severability of Provisions. If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement. SECTION 4.7. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Seller and the Purchaser and their respective successors and assigns, as may be permitted hereunder. SECTION 4.8. Opinion. The Counsel to the Seller shall deliver to the Purchaser and the Trustees an opinion in the form of Exhibit B hereto. 5 IN WITNESS WHEREOF, the Seller and the Purchaser have caused their names to be signed hereto by their respective officers thereunto duly authorized as of the day and year first above written. THE CIT GROUP SECURITIZATION CORPORATION II, as Purchaser By: ___________________________________ Name: Title: THE CIT GROUP/SALES FINANCING, INC., as Seller By: ___________________________________ Name: Title: EXHIBIT A List of Subsequent Contracts EXHIBIT B [FORM OF OPINION OF COUNSEL] [Date] [____________________], solely in its capacity as Indenture Trustee under the Sale and Servicing Agreement referred to herein [____________________], solely in its capacity as Owner Trustee under the Sale and Servicing Agreement referred to herein Ladies and Gentlemen: I have acted as counsel to The CIT Group/Sales Financing, Inc. ("CITSF") and The CIT Group Securitization Corporation II, a Delaware corporation (the "Company"), in connection with the sale of CIT Marine Trust ____-_, Class A _____% Asset Backed Notes (the "Notes") and _____% Asset Backed Certificates (the "Certificates" and, collectively with the Notes, the "Securities"). The Notes represent obligations of, and the Certificates represent interests in, a trust, the CIT Marine Trust ____-_ (the "Trust"), consisting of a pool of installment sale contracts secured by new and used boats (collectively, the "Contracts") and certain related property. The Company purchased certain of the Contracts from CITSF (the "Initial Contracts") pursuant to a Purchase Agreement, dated as of ____________, ____, by and between CITSF and the Company. Additional Contracts are being purchased by the Company from CITSF (the "Subsequent Contracts") pursuant to the Subsequent Purchase Agreement dated as of ____________, ____ (the "Subsequent Purchase Agreement"). Pursuant to a Sale and Servicing Agreement, dated as of ____________, ____ (the "Sale and Servicing Agreement"), among the Company, CITSF and the Trust, the Company transferred the Initial Contracts to the Trust. The Company will also transfer, pursuant to the Sale and Servicing Agreement, the Subsequent Contracts to the Trust, the corpus of which will consist of each of the Initial Contracts and the Subsequent Contracts and certain other property transferred by the Company to the Trust. All capitalized terms used herein and not defined shall have the meanings assigned to them in the Subsequent Purchase Agreement. In rendering the following opinions, I have examined (i) the Subsequent Purchase Agreement; (ii) the Sale and Servicing Agreement; (iii) the Certificate of Incorporation of each of CITSF and the Company; (iv) the By-laws of each of CITSF and the Company; (v) copies of certain unanimous consents adopted by the Board of Directors of the Company authorizing the issuance and sale of the Securities and the purchase of the Contracts; and (vi) copies of certain unanimous written consents of the Board of Directors of CITSF. I have also examined such other documents and made such investigations of law as I have considered necessary and appropriate for the purposes of the opinions expressed herein. I have assumed the authenticity of signatures on original documents and the conformity to the original of all documents submitted to me as certified, conformed or photostatic copies and have relied as to all matters of fact on certificates, representations or statements by officers of the Company or CITSF. In making my examination of agreements, instruments and other documents and in giving opinions herein, I have assumed that the Trustees have and had the power and capacity to execute and deliver such agreements, instruments and other documents and to perform all of their obligations thereunder and that such agreements, instruments and other documents were duly authorized by all requisite action by or on behalf of the Trustees were duly executed, acknowledged, as necessary, and delivered by or on behalf of and are the legal, valid and binding obligations of, and are enforceable in accordance with their terms against, the Trustees. Based upon, and subject to, the foregoing I am of the opinion that: 1. The Subsequent Purchase Agreement has been duly authorized, executed and delivered by each of CITSF and the Company and constitutes the legal, valid and binding agreement of each of CITSF and the Company, and is enforceable against each of CITSF and the Company in accordance with its terms; the Subsequent Purchase Agreement is effective to transfer all of CITSF's right, title and interest in and to the Subsequent Contracts and other property described in Section 2.1 of the Subsequent Purchase Agreement to the Company; the Sale and Servicing Agreement is effective to transfer all of the Company's right, title and interest in and to such Subsequent Contracts and other property to the Trust subject to no prior liens or encumbrances. 2. No consent, approval, authorization or order of, registration or filing with, or notice to any governmental authority or court is required under federal laws or the laws of the State of Delaware for the execution, delivery and performance by the Company of the Subsequent Purchase Agreement or the consummation of any other transaction contemplated thereby by the Company, except for those which have been obtained or except such as may be required under the Securities Act of 1933, as amended or the regulations promulgated thereunder or state securities or Blue Sky laws of any jurisdiction. 3. No consent, approval, authorization or order of, registration or filing with, or notice to, any governmental authority or court is required under federal laws or the laws of the State of Delaware for the execution, delivery and performance by CITSF of the Subsequent Purchase Agreement or the consummation of any other transaction contemplated thereby by CITSF except for those which have been obtained or except such as may be required under the Securities Act of 1933, as amended or the regulations promulgated thereunder or state securities or Blue Sky laws of any jurisdiction. I am furnishing this opinion to you solely for your benefit. This opinion is not to be used, circulated, quoted or otherwise referred to or relied on by any other person or for any other purpose. The foregoing opinion is given on the express understanding that the undersigned is an officer of the Company and CITSF and shall in no event incur any personal liability in connection with the said opinion. Very truly yours, ASSIGNMENT OF SUBSEQUENT CONTRACTS For good and valuable consideration in the amount of $___________ paid by THE CIT GROUP SECURITIZATION CORPORATION II (the "Purchaser"), to THE CIT GROUP/SALES FINANCING, INC. (the "Seller"), CITSF does hereby sell, transfer, assign absolutely, set over and otherwise convey to the Purchaser as of the Subsequent Transfer Date (i) all the right, title and interest of the Company in and to the marine installment sales contracts set forth on Exhibit A to the Subsequent Purchase Agreement, dated as of ____________, ____, between the Purchaser and the Seller (the "Subsequent Contracts") and all the rights, benefits, and obligations arising from and in connection with each Subsequent Contract, (ii) the security interests in the Subsequent Financed Boats granted by the Obligors pursuant to the Subsequent Contracts, (iii) all payments received by the Company on or with respect to the Subsequent Contracts on or after the Subsequent Cut-off Date (exclusive of payments with respect to Post Cut-off Date Insurance Add-Ons), (iv) the interest of the Company in any Subsequent Financed Boat (including any right to receive future Net Liquidation Proceeds) that secures the Subsequent Contracts and that shall have been repossessed by the Servicer by or on behalf of the Trust; (v) all rights of the Company to proceeds of Insurance Policies covering the Obligors and the Subsequent Contracts, (vi) the proceeds from any Servicer's Errors and Omissions Protection Policy, any fidelity bond and any blanket hazard policy, to the extent such proceeds relate to any Subsequent Financed Boat, (vii) all rights of recourse against any cosigner or under any personal guarantee with respect to the Subsequent Contracts (other than any right as against a Dealer under a Dealer Agreement), (viii) all proceeds in any way derived from any of the foregoing items, and (ix) all documents contained or required to be contained in the Contract Files relating to the Subsequent Contracts. The parties intend and agree that the conveyance of the Seller's right, title and interest in and to the Subsequent Contracts (and all rights, entitlements and amounts listed above) pursuant to this Agreement shall constitute an absolute sale. Certain capitalized terms used in this Assignment shall have the respective meanings assigned to them in the Sale and Servicing Agreement, dated as of ____________, ____, among The CIT Group Securitization Corporation II, CITSF and CIT Marine Trust ____-_. IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly executed this ____ day of __________, ________. THE CIT GROUP/SALES FINANCING, INC., By: ___________________________________ Name: Title: EX-23.4 14 CONSENT OF CROWE & DUNLEVY EXHIBIT 23.4 [LETTERHEAD OF CROWE & DUNLEVY] January 27, 1998 The CIT Group/Sales Financing, Inc. 650 CIT Drive Livingston, New Jersey 07039 The CIT Group, Inc. 1211 Avenue of the Americas New York, New York 10036 The CIT Group Securitization Corporation II 650 CIT Drive Livingston, New Jersey 07039 Re: CIT MARINE TRUST Ladies and Gentlemen: We hereby confirm that the statements set forth in the Amendment to the Registration Statement on Form S-3 (333-43323) under the heading "Certain State Tax Consequences" accurately describe the material Oklahoma income tax consequences to holders of the securities, as limited by the discussion in our opinion letter dated January 27 1998. We hereby consent to the use of this opinion letter dated January 27, 1998 as an exhibit to such Registration Statement. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the General Rules and Regulations of the Commission thereunder. Very truly yours, CROWE & DUNLEVY, A Professional Corporation By: /s/ James H. Holloman, Jr. ------------------------------- James H. Holloman, Jr. -----END PRIVACY-ENHANCED MESSAGE-----