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Home Equity Loan Asset Backed
Certificates
Series 1998-1
POOLING AND SERVICING AGREEMENT
among
THE CIT GROUP SECURITIZATION CORPORATION III,
as Depositor,
THE CIT GROUP/CONSUMER FINANCE, INC.,
as Seller and Master Servicer,
and
THE BANK OF NEW YORK,
not in its individual capacity but solely as Trustee
Dated as of July 1, 1998
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS........................................................2
SECTION 1.01. General...................................................2
SECTION 1.02. Specific Terms............................................2
ARTICLE II ESTABLISHMENT OF THE TRUST; TRANSFER OF MORTGAGE LOANS...........33
SECTION 2.01. Establishment of the Trust...............................33
SECTION 2.02. Conveyance of the Mortgage Loans.........................33
SECTION 2.03. Conditions of Closing for the Mortgage Loans.............33
SECTION 2.04. [Reserved]...............................................35
SECTION 2.05. Appointment of REMIC Administrators......................35
SECTION 2.06. Acceptance by Trustee....................................36
SECTION 2.07. REMIC Designations; Execution, Authentication
and Delivery of Class R Certificates;
Creation of REMIC Tiers................................36
SECTION 2.08. REMIC Tax Matters........................................37
SECTION 2.09. REMIC Certificate Maturity Date..........................37
SECTION 2.10. REMIC Administration and Compliance......................37
SECTION 2.11. Other Tax Matters........................................41
ARTICLE III REPRESENTATIONS AND WARRANTIES..................................42
SECTION 3.01. Representations and Warranties Regarding
CIT Consumer Finance...................................42
SECTION 3.02. Representations and Warranties Regarding
Each Mortgage Loan.....................................43
SECTION 3.03. Representations and Warranties Regarding the Mortgage
Loans in the Aggregate.................................47
SECTION 3.04. Representations and Warranties Regarding the Files.......47
SECTION 3.05. Repurchase of Mortgage Loans or Substitution of
Mortgage Loans for Breach of Representations
and Warranties.........................................48
ARTICLE IV DELIVERY OF MORTGAGE DOCUMENTS; CUSTODY OF
MORTGAGE LOANS; RECORDATION OF MORTGAGES.......................51
SECTION 4.01. Delivery of Mortgage Documents;
Custody of Mortgage Loans..............................51
SECTION 4.02. Recordation of Mortgages.................................52
SECTION 4.03. Review of Mortgage Documents.............................53
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ARTICLE V SERVICING OF MORTGAGE LOANS.......................................56
SECTION 5.01. Responsibility for Mortgage Loan Administration..........56
SECTION 5.02. Standard of Care.........................................56
SECTION 5.03. Records..................................................56
SECTION 5.04. Inspection; Computer Tape................................57
SECTION 5.05. Certificate Account......................................57
SECTION 5.06. Enforcement..............................................59
SECTION 5.07. Trustee to Cooperate.....................................61
SECTION 5.08. Costs and Expenses.......................................61
SECTION 5.09. Maintenance of Insurance.................................62
SECTION 5.10. REMIC Compliance.........................................64
SECTION 5.11. Sub-Servicer.............................................65
SECTION 5.12. Calculation of One-Month LIBOR...........................66
SECTION 5.13. Applied Realized Loss Amounts............................67
SECTION 5.14. Xxxxxxxxxx 00
SECTION 5.15. Release of Collateral....................................67
ARTICLE VI REPORTS..........................................................68
SECTION 6.01. Monthly Reports to the Trustee...........................68
SECTION 6.02. Certificate of Servicing Officer.........................69
SECTION 6.03. Other Data...............................................70
SECTION 6.04. Annual Report of Accountants.............................70
SECTION 6.05. Statements to Certificateholders.........................70
Section 6.06 Annual Statement as to Compliance.........................71
ARTICLE VII SERVICE TRANSFER................................................72
SECTION 7.01. Event of Termination.....................................72
SECTION 7.02. Transfer.................................................73
SECTION 7.03. Trustee to Act; Appointment of Successor.................74
SECTION 7.04. Notification to Certificateholders
and to Rating Agencies................................74
SECTION 7.05. Effect of Transfer.......................................75
SECTION 7.06. Transfer of Accounts.....................................75
ARTICLE VIII DISTRIBUTIONS AND WITHDRAWALS FROM CERTIFICATE ACCOUNT.........76
SECTION 8.01. Monthly Distributions....................................76
SECTION 8.02. Permitted Withdrawals from the Certificate Account.......81
SECTION 8.03. Repurchase Option and Auction Sale.......................82
SECTION 8.04. Monthly Advances by the Master Servicer..................85
ARTICLE IX THE CERTIFICATES.................................................86
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SECTION 9.01. The Certificates.........................................86
SECTION 9.02. Registration of Transfer and Exchange of Certificates....87
SECTION 9.03. No Charge; Disposition of Void Certificates..............92
SECTION 9.04. Mutilated, Destroyed, Lost or Stolen Certificates........93
SECTION 9.05. Persons Deemed Owners....................................93
SECTION 9.06. Access to List of Certificateholders'
Names and Addresses...................................93
SECTION 9.07. Authenticating Agents....................................94
ARTICLE X INDEMNITIES.......................................................95
SECTION 10.01. Liabilities to Mortgagors...............................95
SECTION 10.02. Tax Indemnification.....................................95
SECTION 10.03. Master Servicer's Indemnities...........................95
SECTION 10.04. Operation of Indemnities................................96
ARTICLE XI THE TRUSTEE......................................................97
SECTION 11.01. Duties of Trustee.......................................97
SECTION 11.02. Certain Matters Affecting the Trustee...................98
SECTION 11.03. Trustee Not Liable for Certificates or Mortgage Loans...99
SECTION 11.04. Rights of Certificateholders to Direct Trustee
and to Waive Events of Termination...................99
SECTION 11.05. Master Servicer to Pay Trustee's Fees and Expenses.....100
SECTION 11.06. Eligibility Requirements for Trustee...................101
SECTION 11.07. Resignation or Removal of Trustee......................101
SECTION 11.08. Successor Trustee......................................102
SECTION 11.09. Merger or Consolidation of Trustee.....................102
SECTION 11.10. [Reserved].............................................103
SECTION 11.11. Separate Trustees and Co-Trustees......................103
SECTION 11.12. Trustee May Own Certificates...........................104
SECTION 11.13. Agents of Trustee......................................104
ARTICLE XII MISCELLANEOUS..................................................105
SECTION 12.01. Master Servicer Not To Resign..........................105
SECTION 12.02. Maintenance of Office or Agency........................105
SECTION 12.03. Termination............................................105
SECTION 12.04. Acts of Certificateholders.............................107
SECTION 12.05. Calculations...........................................108
SECTION 12.06. Assignment or Delegation by the Master Servicer;
Merger or Consolidation of the Company, CIT
Consumer Finance or the Master Servicer..............108
SECTION 12.07. Amendment..............................................109
SECTION 12.08. Contribution of Assets.................................111
SECTION 12.09. Notices................................................112
SECTION 12.10. Merger and Integration.................................113
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SECTION 12.11. Reliance on Credit.....................................113
SECTION 12.12. No Bankruptcy Petition.................................113
SECTION 12.13. Headings...............................................113
SECTION 12.14. Governing Law..........................................113
SECTION 12.15. Counterparts...........................................114
ARTICLE XIII THE COMPANY...................................................115
SECTION 13.01. Representations of the Company.........................115
SECTION 13.02. Merger or Consolidation of the Company.................116
SECTION 13.03. Limitation on Liability of the Company and Others......116
SECTION 13.04. The Company May Own Securities.........................116
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EXHIBITS
EXHIBIT A-1. - FORM OF CLASS A-1 CERTIFICATES
EXHIBIT A-2. - FORM OF CLASS A-2 CERTIFICATES
EXHIBIT A-3. - FORM OF CLASS A-3 CERTIFICATES
EXHIBIT A-4. - FORM OF CLASS A-4 CERTIFICATES
EXHIBIT A-5. - FORM OF CLASS A-5 CERTIFICATES
EXHIBIT A-6. - FORM OF CLASS A-6 CERTIFICATES
EXHIBIT A-7. - FORM OF CLASS A-7 CERTIFICATES
EXHIBIT A-8. - FORM OF CLASS A-8 CERTIFICATES
EXHIBIT B-1. - FORM OF CLASS B-1 CERTIFICATES
EXHIBIT B-2. - FORM OF CLASS B-2 CERTIFICATES
EXHIBIT B-3. - FORM OF CLASS B-3 CERTIFICATES
EXHIBIT B-4. - FORM OF CLASS B-4 CERTIFICATES
EXHIBIT C-1. - FORM OF CLASS M-1 CERTIFICATES
EXHIBIT C-2. - FORM OF CLASS M-2 CERTIFICATES
EXHIBIT D-1. - FORM OF CLASS IO-X1 CERTIFICATES
EXHIBIT D-2 FORM OF CLASS IO-X2 CERTIFICATES
EXHIBIT E-1. - FORM OF CLASS R-I CERTIFICATES
EXHIBIT E-2. - FORM OF CLASS R-II CERTIFICATES
EXHIBIT F. - CERTIFICATE OF OFFICERS OF CIT CONSUMER FINANCE
EXHIBIT G. - FORM OF OPINION OF COUNSEL FOR CIT CONSUMER FINANCE
EXHIBIT H. - FORM OF TRUSTEE'S ACKNOWLEDGMENT AND CERTIFICATION
EXHIBIT I. - CERTIFICATE OF SERVICING OFFICERS
EXHIBIT J-1. - CERTIFICATE REGARDING REPURCHASED MORTGAGE LOANS
EXHIBIT J-2. - CERTIFICATE REGARDING SUBSTITUTED MORTGAGE LOANS
EXHIBIT K. - LIST OF MORTGAGE LOANS
EXHIBIT L. - FORM OF MONTHLY REPORT TO CERTIFICATEHOLDERS
EXHIBIT M. - FORM OF TRANSFER AFFIDAVIT
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EXHIBIT N. - AUCTION PROCEDURES
EXHIBIT O. - FORM OF POWER OF ATTORNEY
EXHIBIT P. - PRIVATE CERTIFICATE TRANSFEREE LETTER
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POOLING AND SERVICING AGREEMENT, dated as of July 1, 1998, among The CIT
Group Securitization Corporation III, as depositor (together with its permitted
successors and assigns, the "Company"), The CIT Group/Consumer Finance, Inc., a
corporation organized and existing under the laws of the State of Delaware, as
Seller and Master Servicer (in its individual capacity, "CIT Consumer Finance,"
or, together with its permitted successors and assigns, the "Master Servicer"),
and The Bank of New York, a banking corporation organized and existing under the
laws of the State of New York, not in its individual capacity but solely as
Trustee (together with its permitted successors and assigns, the "Trustee").
PRELIMINARY STATEMENT:
The Company intends to sell mortgage pass-through certificates, to be
issued hereunder in multiple classes, which in the aggregate will evidence the
entire beneficial ownership interest in a trust fund to be created hereunder.
As provided herein, the Trustee will elect to treat the segregated pool of
assets consisting of the Mortgage Loans and the interest payments thereon as
well as certain other related assets subject to this Agreement as a REMIC for
federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC I." The Class R-I Certificates will represent the sole
class of "residual interests" in REMIC I for purposes of the REMIC Provisions
under the federal income tax law. Each REMIC I Regular Interest will have a
remittance rate equal to the Weighted Average Net Mortgage Rate and an initial
Uncertificated Principal Balance equal to the Original Certificate Balance of
the Corresponding Class of the REMIC II Certificates described below. None of
the REMIC I Regular Interests will be certificated.
As provided herein, the Trustee will elect to treat the segregated pool of
assets consisting of the REMIC I Regular Interests as a REMIC for federal income
tax purposes, and such segregated pool of assets will be designated as "REMIC
II." The Class R-II Certificates will represent the sole class of "residual
interests" in REMIC II for purposes of the REMIC Provisions under federal income
tax law. For federal income tax purposes, each Class of the Certificates (other
than the Class IO Certificates) and each of the Components of the Class IO
Certificates will be designated as a separate regular interest in REMIC II for
purposes of the REMIC Provisions.
The following table sets forth the Class designation of the REMIC II
Certificates other than the Class IO and Class R-II Certificates, the
corresponding REMIC I Regular Interests, the corresponding Component of the
Class IO Certificates and the Original Certificate Balance for each Class of the
Certificates other than the Class IO Certificates.
Corresponding Class of Original
Class REMIC I Regular Corresponding IO Certificate
Designation Interests Component Balance
----------- --------- --------- -------
Class A-1 K IO-A-1 $61,000,000
Class A-2 L IO-A-2 $38,000,000
Class A-3 N IO-A-3 $45,000,000
Class A-4 O IO-A-4 $25,000,000
Class A-5 P IO-A-5 $11,000,000
Class A-6 Q IO-A-6 $10,872,000
Class A-7 S IO-A-7 $19,000,000
Class A-8 T IO-A-8 $51,317,000
Class M-1 U IO-M-1 $23,046,000
Class M-2 V IO-M-2 $19,632,000
Class B-1 W IO-B-1 $11,950,000
Class B-2 X IO-B-2 $10,242,000
Class B-3 Y IO-B-3 $ 6,829,000
Class B-4 Z IO-B-4 $ 8,536,000
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, the parties hereto agree as provided herein:
ARTICLE I
DEFINITIONS
SECTION 1.01. General
For the purpose of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires, the terms defined in this Article
include the plural as well as the singular, the words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular Article, Section or other subdivision, and Section
references refer to Sections of this Agreement.
SECTION 1.02. Specific Terms.
"Accrual Period" means, the period for which interest on the outstanding
Certificate Balance or Certificate Notional Amount, as the case may be, of each
Class of Offered Certificates and the Private Certificates is payable. Such
period shall be the period from the preceding Distribution Date to and including
the date prior to the current Distribution Date (or, in the case of the initial
Distribution Date, from the Closing Date to and including the date prior to the
initial Distribution Date).
"Adjustable Rate Mortgage Loans" means Mortgage Loans having an adjustable
Mortgage Rate.
"Adverse REMIC Effect" has the meaning assigned in Section 2.10(f).
"Advisor" has the meaning assigned in Section 8.03.
2
"Affiliate" of any specified Person means any other Person controlling or
controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
"Agreement" means this Pooling and Servicing Agreement.
"Aggregate Certificate Balance" means, as of any date of determination, the
sum of the Certificate Balance of all Classes of the Offered Certificates and
the Private Certificates (other than the Class IO Certificates).
"Applicants" has the meaning assigned in Section 9.06.
"Applied Realized Loss Amount" means the amount, on any Distribution Date
after taking into account all Realized Losses experienced during the prior Due
Period and after taking into account the distribution of principal with respect
to the Certificates (other than the Class IO and Class R Certificates) on such
Distribution Date, by which the Aggregate Certificate Balance after giving
effect to all distributions on such Distribution Date exceeds the aggregate
Principal Balance of the Mortgage Loans as of the end of the related Due Period.
"Auction" has the meaning assigned in Section 8.03.
"Auction Procedures" has the meaning assigned in Section 8.03.
"Auction Property" has the meaning assigned in Section 8.03.
"Authenticating Agent" means any authenticating agent appointed pursuant to
Section 9.07.
"Balloon Loan" means a Mortgage Loan the terms of which require payment of
a substantial portion of the original principal balance of such Mortgage Loan to
be due at maturity.
"Book-Entry Certificate" means any Offered Certificate registered in the
name of the Depository or its nominee, ownership of which is reflected on the
books of the Depository or on the books of a person maintaining an account with
such Depository (directly or as an indirect participant in accordance with the
rules of such Depository).
"Business Day" means any day other than (a) a Saturday or a Sunday or (b)
another day on which banking institutions or trust companies in the State of
Oklahoma, the State of New Jersey or the State of New York are authorized by
law, regulation or executive order to be closed.
"Call Loan" means a Mortgage Loan which permits the mortgagee to require
the Mortgagor to pay the full principal balance of the Mortgage Loan on a
specified date prior to the maturity of the Mortgage Loan.
3
"Certificate" means a Home Equity Loan Asset Backed Certificate Series
1998-1 executed and delivered by the Trustee substantially in the form of
Exhibits A-E.
"Certificate Account" means a separate trust account maintained in the name
of the Trust as an Eligible Account.
"Certificate Balance" means any of the Class A-1 Certificate Balance, Class
A-2 Certificate Balance, Class A-3 Certificate Balance, Class A-4 Certificate
Balance, Class A-5 Certificate Balance, Class A-6 Certificate Balance, Class A-7
Certificate Balance, Class A-8 Certificate Balance, Class M-1 Certificate
Balance, Class M-2 Certificate Balance, Class B-1 Certificate Balance, Class B-2
Certificate Balance, Class B-3 Certificate Balance and Class B-4 Certificate
Balance, as applicable.
"Certificateholder" or "Holder" means the person who is the beneficial
owner of a Book-Entry Certificate or the person in whose name a Certificate is
registered on the Certificate Register, except that, solely for the purposes of
giving any consent, waiver, request or demand pursuant to this Agreement, any
Certificate registered in the name of the Seller, the Master Servicer or any
Affiliate of the Seller or the Master Servicer shall be deemed not to be
outstanding, and the Percentage Interest evidenced thereby shall not be taken
into account in determining whether the requisite Percentage Interest necessary
to effect any such consent, request, waiver or demand has been obtained unless
all the Certificates are held by such Persons; provided, however, that in
determining whether the Trustee shall be protected in relying upon any such
consent, waiver, request or demand only Certificates which the Trustee knows to
be so owned shall be so disregarded.
"Certificate Notional Amount" means the sum of the Component Notional
Amounts with respect to each of the Components related to a Class IO
Certificate.
"Certificate Register" means the register maintained pursuant to Section
9.02.
"Certificate Registrar" means the registrar appointed pursuant to Section
9.02.
"CIT" means The CIT Group, Inc., a Delaware corporation.
"CIT Purchase Agreements" means the CITCF-NY Purchase Agreement, the CITSF
Purchase Agreement and the Purchase Agreement.
"CITCF-NY" means The CIT Group/Consumer Finance, Inc. (NY), a wholly-owned
subsidiary of CIT.
"CITCF-NY Purchase Agreement" means the Purchase Agreement, dated as of
July 1, 1998, between CITCF-NY and CIT Consumer Finance, providing for the sale
of Mortgage Loans from CITCF-NY to CIT Consumer Finance.
"CIT Consumer Finance" means The CIT Group/Consumer Finance, Inc., and its
successors in interest as permitted hereunder.
4
"CITSF" means The CIT Group/Sales Financing Inc., and its successors in
interest as permitted hereunder.
"CITSF Purchase Agreement" means the Purchase Agreement, dated as of July
1, 1998, between CITSF and CIT Consumer Finance, providing for the sale of
Mortgage Loans from CITSF to CIT Consumer Finance.
"Class" means, collectively, all of the Certificates or uncertificated
interests, as the case may be, bearing the same alphabetical and, if applicable,
numerical class designation.
"Class A Certificate" means any one of the Class A-1 Certificates, Class
A-2 Certificates, Class A-3 Certificates, Class A-4 Certificates, Class A-5
Certificates, Class A-6 Certificates, Class A-7 Certificates or Class A-8
Certificates.
"Class A Current Interest" means with respect to each Class of Class A
Certificates and with respect to any Distribution Date, the aggregate amount of
interest accrued during the related Accrual Period on the Certificate Balance of
the related Class of Class A Certificates at the applicable Pass-Through Rate
for such Class A Certificate.
"Class A Interest Carry Forward Amount" means with respect to any Class of
the Class A Certificates for any Distribution Date, the sum of (x) the amount,
if any, by which (i) the sum of (A) the Class A Current Interest as of the
immediately preceding Distribution Date and (B) the Class A Interest Carry
Forward Amount from the immediately preceding Distribution Date exceeds (ii) the
amount of the actual distribution of the Interest Remittance Amount made to the
Holders of the Class A Certificates on such immediately preceding Distribution
Date and (y) 30 days' interest on such amount at the applicable Pass-Through
Rate for such Class A Certificate.
"Class A Principal Distribution Amount" means as of any Distribution Date
(a) prior to the Stepdown Date or on or after the Stepdown Date if a Trigger
Event is in effect, 100% of the Principal Distribution Amount and (b) on or
after the Stepdown Date and as long as a Trigger Event is not in effect, the
greater of (I) the lesser of (A) the Certificate Balance of the Class A-8
Certificates and (B) the Class A-8 Principal Distribution Amount and (II) the
excess of (x) the aggregate Certificate Balance of the Class A Certificates
immediately prior to such Distribution Date over (y) the lesser of (A) product
of (i) 52.99978912% and (ii) the outstanding Principal Balance of the Mortgage
Loans as of the last day of the related Due Period and (B) the outstanding
Principal Balance of the Mortgage Loans as of the last day of the related Due
Period minus $1,707,120.
"Class A-1 Certificate" means any one of the Certificates executed by the
Trustee and authenticated by the Authenticating Agent substantially in the form
set forth in Exhibit A-1 hereto, and evidencing a "regular interest" in REMIC II
for purposes of the REMIC Provisions.
"Class A-1 Certificate Balance" means, as to any Distribution Date, the
Original Class A-1 Certificate Balance less all amounts previously distributed
to Holders of Class A-1 Certificates on account of principal pursuant to Section
8.01.
5
"Class A-1 Pass-Through Rate" means the lesser of (x) 5.88% per annum,
computed on the basis of a 360-day year assumed to consist of twelve 30-day
months and (y) the REMIC I Remittance Rate minus the applicable Strip Rate.
"Class A-2 Certificate" means any one of the Certificates executed by the
Trustee and authenticated by the Authenticating Agent substantially in the form
set forth in Exhibit A-2 hereto, and evidencing a "regular interest" in REMIC II
for purposes of the REMIC Provisions.
"Class A-2 Certificate Balance" means, as to any Distribution Date, the
Original Class A-2 Certificate Balance less all amounts previously distributed
to Holders of Class A-2 Certificates on account of principal pursuant to Section
8.01.
"Class A-2 Pass-Through Rate" means the lesser of (x) 6.01% per annum,
computed on the basis of a 360-day year assumed to consist of twelve 30-day
months and (y) the REMIC I Remittance Rate minus the applicable Strip Rate.
"Class A-3 Certificate" means any one of the Certificates executed by the
Trustee and authenticated by the Authenticating Agent substantially in the form
set forth in Exhibit A-3 hereto, and a "regular interest" in REMIC II for
purposes of the REMIC Provisions.
"Class A-3 Certificate Balance" means, as to any Distribution Date, the
Original Class A-3 Certificate Balance less all amounts previously distributed
to Holders of Class A-3 Certificates on account of principal pursuant to Section
8.01.
"Class A-3 Pass-Through Rate" means the lesser of (x) 6.08% per annum,
computed on the basis of a 360-day year assumed to consist of twelve 30-day
months and (y) the REMIC I Remittance Rate minus the applicable Strip Rate.
"Class A-4 Certificate" means any one of the Certificates executed by the
Trustee and authenticated by the Authenticating Agent substantially in the form
set forth in Exhibit A-4 hereto, and evidencing a "regular interest" in REMIC II
for purposes of the REMIC Provisions.
"Class A-4 Certificate Balance" means, as to any Distribution Date, the
Original Class A-4 Certificate Balance less all amounts previously distributed
to Holders of Class A-4 Certificates on account of principal pursuant to Section
8.01.
"Class A-4 Pass-Through Rate" means the lesser of (x) 6.20% per annum,
computed on the basis of a 360-day year assumed to consist of twelve 30-day
months and (y) the REMIC I Remittance Rate minus the applicable Strip Rate.
"Class A-5 Certificate" means any one of the Certificates executed by the
Trustee and authenticated by the Authenticating Agent substantially in the form
set forth in Exhibit A-5 hereto, and evidencing a "regular interest" in REMIC II
for purposes of the REMIC Provisions.
6
"Class A-5 Certificate Balance" means, as to any Distribution Date, the
Original Class A-5 Certificate Balance less all amounts previously distributed
to Holders of Class A-5 Certificates on account of principal pursuant to Section
8.01.
"Class A-5 Pass-Through Rate" the lesser of (x) 6.36% per annum, computed
on the basis of a 360-day year assumed to consist of twelve 30-day months and
(y) the REMIC I Remittance Rate minus the applicable Strip Rate.
"Class A-6 Certificate" means any one of the Certificates executed by the
Trustee and authenticated by the Authenticating Agent substantially in the form
set forth in Exhibit A-6 hereto, and evidencing a "regular interest" in REMIC II
for purposes of the REMIC Provisions.
"Class A-6 Certificate Balance" means, as to any Distribution Date, the
Original Class A-6 Certificate Balance less all amounts previously distributed
to Holders of Class A-6 Certificates on account of principal pursuant to Section
8.01.
"Class A-6 Pass-Through Rate" means, the lesser of (x) with respect to any
Distribution Date which occurs on or prior to the Clean-up Call Date, 6.70% per
annum, computed on the basis of a 360-day year assumed to consist of twelve
30-day months and, for and Distribution Date thereafter 7.45% per annum,
computed on the basis of a 360-day year assumed to consist of twelve 30-day
months, and (y) the REMIC I Remittance Rate minus the applicable Strip Rate.
"Class A-7 Certificate" means any one of the Certificates executed by the
Trustee and authenticated by the Authenticating Agent substantially in the form
set forth in Exhibit A-7 hereto, and evidencing a "regular interest" in REMIC II
for purposes of the REMIC Provisions.
"Class A-7 Certificate Balance" means, as to any Distribution Date, the
Original Class A-7 Certificate Balance less all amounts previously distributed
to Holders of Class A-7 Certificates on account of principal pursuant to Section
8.01.
"Class A-7 Pass-Through Rate" means the lesser of (x) 6.30% per annum,
computed on the basis of a 360-day year assumed to consist of twelve 30-day
months and (y) the REMIC I Remittance Rate minus the applicable Strip Rate.
"Class A-7 Lockout Distribution Amount" means, for any Distribution Date,
the product of (i) the applicable Class A-7 Lockout Percentage for such
Distribution Date and (ii) the Class A-7 Lockout Pro Rata Distribution Amount
for such Distribution Date; provided, however, that in no event shall the Class
A-7 Lockout Distribution Amount for a Distribution Date exceed the Class A
Principal Distribution Amount for such Distribution Date.
"Class A-7 Lockout Percentage" means, for each Distribution Date, the
following:
Distribution Dates Lockout Percentage
------------------ ------------------
August 1998 - July 2001 0%
7
August 2001 - July 2003 45%
August 2003 - July 2004 80%
August 2004 - July 2005 100%
August 2005 and thereafter 300%
"Class A-7 Lockout Pro Rata Distribution Amount", means, for any
Distribution Date, an amount equal to the product of (x) a fraction, the
numerator of which is the Certificate Balance of the Class A-7 Certificates
immediately prior to such Distribution Date and the denominator of which is the
aggregate Certificate Balance of all Classes of the Class A Certificates (other
than the Class A-8 Certificates) immediately prior to such Distribution Date and
(y) the Class A Principal Distribution Amount minus the Class A-8 Principal
Distribution Amount for such Distribution Date.
"Class A-8 Certificate" means any one of the Certificates executed by the
Trustee and authenticated by the Authenticating Agent substantially in the form
set forth in Exhibit A-8 hereto, and evidencing a portion of a "regular
interest" in REMIC II for purposes of the REMIC Provisions.
"Class A-8 Certificate Balance" means, as to any Distribution Date, the
Original Class A-8 Certificate Balance less all amounts previously distributed
to Holders of Class A-8 Certificates on account of principal pursuant to Section
8.01.
"Class A-8 Extra Interest" means, if the Class A-8 Pass-Through Rate is
calculated based on the REMIC I Remittance Rate the excess of (i) the amount of
interest that the Class A-8 Certificateholder would have been entitled to
receive on such Distribution Date had the Class A-8 Pass-Through Rate not been
calculated based on the REMIC I Remittance Rate over (ii) the amount of interest
that the Class A-8 Certificateholders are entitled to receive on such
Distribution Date as a result of the Class A-8 Pass-Through Rate being
calculated based on the REMIC I Remittance Rate; provided, however, that the
amount of such excess shall not be greater than the funds available on such
Distribution Date after all distributions in Section 8.01(c)(i)-(vii) have been
made on such Distribution Date.
"Class A-8 Pass-Through Rate" means an amount equal to the least of (x)
with respect to any Distribution Date which occurs on or prior to the Clean-up
Call Date, One-Month LIBOR plus 0.16% per annum and for any Distribution Date
thereafter, One-Month LIBOR plus 0.32% per annum, (y) the Maximum Variable Rate,
and (z) the REMIC I Remittance Rate, computed on the basis of the actual number
of days elapsed in the related Accrual Period and a 360-day year.
"Class A-8 Principal Distribution Amount" means as of any Distribution
Date, the lesser of (i) the Principal Distribution Amount for such Distribution
Date and (ii) the amount required to reduce the Certificate Balance of the Class
A-8 Certificates such that the Certificate Balance after such distribution is
equal to the Principal Balance of the Adjustable Rate Mortgage Loans as of the
last day of the related Due Period.
8
"Class B Certificates" means the Class B-1 Certificates, the Class B-2
Certificates, the Class B-3 Certificates and the Class B-4 Certificates.
"Class B-1 Certificate" means any one of the Certificates executed by the
Trustee and authenticated by the Authenticating Agent substantially in the form
set forth in Exhibit B-1 hereto, and evidencing a "regular interest" in REMIC II
for purposes of the REMIC Provisions.
"Class B-1 Certificate Balance" means, as to the Class B-1 Certificates and
as of any date of determination, the Original Class B-1 Certificate Balance as
reduced by the sum of (x) all amounts actually distributed to the Holders of the
Class B-1 Certificates on all prior Distribution Dates on account of principal
pursuant to Section 8.01 and (y) the aggregate cumulative amount of Applied
Realized Loss Amounts applied to the Class B-1 Certificates pursuant to Section
5.13 on all prior Distribution Dates.
"Class B-1 Current Interest" means with respect to any Distribution Date,
the aggregate amount of interest accrued during the related Accrual Period on
the Class B-1 Certificate Balance at the Class B-1 Pass-Through Rate.
"Class B-1 Interest Carry Forward Amount" means with respect to any
Distribution Date, the sum of (x) the amount, if any, by which (i) the sum of
(A) the Class B-1 Current Interest as of the immediately preceding Distribution
Date and (B) the Class B-1 Interest Carry Forward Amount from the immediately
preceding Distribution Date exceeds (ii) the amount of the actual distribution
of the Interest Remittance Amount made to the Holders of the Class B-1
Certificates on such immediately preceding Distribution Date and (y) 30 days'
interest on such amount at the Class B-1 Pass-Through Rate.
"Class B-1 Pass-Through Rate" means the lesser of (x) 7.37% per annum,
computed on the basis of a 360-day year assumed to consist of twelve 30-day
months and (y) the REMIC I Remittance Rate minus the applicable Strip Rate.
"Class B-1 Principal Distribution Amount" means as of any Distribution Date
(a) prior to the Stepdown Date or on or after the Stepdown Date if a Trigger
Event is in effect, zero and (b) on or after the Stepdown Date and as long as a
Trigger Event is not in effect, the excess of (x) the sum of (i) the aggregate
Certificate Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the Class M-1 Certificate Balance (after taking into account the payment of
the Class M-1 Principal Distribution Amount on such Distribution Date), (iii)
the Class M-2 Certificate Balance (after taking into account the payment of the
Class M-2 Principal Distribution Amount on such Distribution Date) and (iv) the
Class B-1 Certificate Balance immediately prior to such Distribution Date (but
after the application of any Class B-1 Applied Realized Loss Amounts on such
Distribution Date) over (y) lesser of (A) the product of (i) 84.99988284% and
(ii) the outstanding aggregate Principal Balance of the Mortgage Loans as of the
last day of the related Due Period and (B) the outstanding Principal Balance of
the Mortgage Loans as of the last day of the related Due Period minus
$1,707,120.
9
"Class B-2 Certificate" means any one of the Certificates executed by the
Trustee and authenticated by the Authenticating Agent substantially in the form
set forth in Exhibit B-2 hereto, and evidencing a "regular interest" in REMIC II
for purposes of the REMIC Provisions.
"Class B-2 Certificate Balance" means, as to the Class B-2 Certificates and
as of any date of determination, the Original Class B-2 Certificate Balance as
reduced by the sum of (x) all amounts actually distributed to the Holders of the
Class B-2 Certificates on all prior Distribution Dates on account of principal
pursuant to Section 8.01 and (y) the aggregate cumulative amount of Applied
Realized Loss Amounts applied to the Class B-2 Certificates pursuant to Section
5.13 on all prior Distribution Dates.
"Class B-2 Current Interest" means with respect to any Distribution Date,
the aggregate amount of interest accrued during the related Accrual Period on
the Class B-2 Certificate Balance at the Class B-2 Pass-Through Rate.
"Class B-2 Interest Carry Forward Amount" means with respect to any
Distribution Date, the sum of (x) the amount, if any, by which (i) the sum of
(A) the Class B-2 Current Interest as of the immediately preceding Distribution
Date and (B) the Class B-2 Interest Carry Forward Amount from the immediately
preceding Distribution Date exceeds (ii) the amount of the actual distribution
of the Interest Remittance Amount made to the Holders of the Class B-2
Certificates on such immediately preceding Distribution Date and (y) 30 days'
interest on such amount at the Class B-2 Pass-Through Rate.
"Class B-2 Pass-Through Rate" means the lesser of (x) 8.00% per annum,
computed on the basis of a 360-day year assumed to consist of twelve 30-day
months and (y) the REMIC I Remittance Rate minus the applicable Strip Rate.
"Class B-2 Principal Distribution Amount" means as of any Distribution Date
(a) prior to the Stepdown Date or on or after the Stepdown Date if a Trigger
Event is in effect, zero and (b) on or after the Stepdown Date and as long as a
Trigger Event is not in effect, the excess of (x) the sum of (i) the aggregate
Certificate Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the Class M-1 Certificate Balance (after taking into account the payment of
the Class M-1 Principal Distribution Amount on such Distribution Date), (iii)
the Class M-2 Certificate Balance (after taking into account the payment of the
Class M-2 Principal Distribution Amount on such Distribution Date), (iv) the
Class B-1 Certificate Balance (after taking into account the payment of the
Class M-2 Principal Distribution Amount on such Distribution Date) and (v) the
Class B-2 Certificate Balance immediately prior to such Distribution Date (but
after the application of any Class B-2 Applied Realized Loss Amounts on such
Distribution Date) over (y) the lesser of (A) the product of (i) 90.99946108%
and (ii) the outstanding aggregate Principal Balance of the Mortgage Loans as of
the last day of the related Due Period and (B) the outstanding Principal Balance
of the Mortgage Loans as of the last day of the related Due Period minus
$1,707,120.
10
"Class B-3 Certificate" means any one of the Certificates executed by the
Trustee and authenticated by the Authenticating Agent substantially in the form
set forth in Exhibit B-3 hereto, and evidencing a "regular interest" in REMIC II
for purposes of the REMIC Provisions.
"Class B-3 Certificate Balance" means, as to the Class B-3 Certificates and
as of any date of determination, the Original Class B-3 Certificate Balance as
reduced by the sum of (x) all amounts actually distributed to the Holders of the
Class B-3 Certificates on all prior Distribution Dates on account of principal
pursuant to Section 8.01 and (y) the aggregate cumulative amount of Applied
Realized Loss Amounts applied to the Class B-3 Certificates pursuant to Section
5.13 on all prior Distribution Dates.
"Class B-3 Current Interest" means with respect to any Distribution Date,
the aggregate amount of interest accrued during the related Accrual Period on
the Class B-3 Certificate Balance at the Class B-3 Pass-Through Rate.
"Class B-3 Interest Carry Forward Amount" means with respect to any
Distribution Date, the sum of (x) the amount, if any, by which (i) the sum of
(A) the Class B-3 Current Interest as of the immediately preceding Distribution
Date and (B) the Class B-2 Interest Carry Forward Amount from the immediately
preceding Distribution Date exceeds (ii) the amount of the actual distribution
of the Interest Remittance Amount made to the Holders of the Class B-3
Certificates on such immediately preceding Distribution Date and (y) 30 days'
interest on such amount at the Class B-3 Pass-Through Rate.
"Class B-3 Pass-Through Rate" means the lesser of (x) 8.00% per annum,
computed on the basis of a 360-day year assumed to consist of twelve 30-day
months and (y) the REMIC I Remittance Rate minus the applicable Strip Rate.
"Class B-3 Principal Distribution Amount" means as of any Distribution Date
(a) prior to the Stepdown Date or on or after the Stepdown Date if a Trigger
Event is in effect, zero and (b) on or after the Stepdown Date and as long as a
Trigger Event is not in effect, the excess of (x) the sum of (i) the aggregate
Certificate Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the Class M-1 Certificate Balance (after taking into account the payment of
the Class M-1 Principal Distribution Amount on such Distribution Date), (iii)
the Class M-2 Certificate Balance (after taking into account the payment of the
Class M-2 Principal Distribution Amount on such Distribution Date), (iv) the
Class B-1 Certificate Balance (after taking into account the payment of the
Class B-1 Principal Distribution Amount on such Distribution Date), (v) the
Class B-2 Certificate Balance (after taking into account the payment of the
Class B-2 Principal Distribution Amount on such Distribution Date) and (vi) the
Class B-3 Certificate Balance immediately prior to such Distribution Date (but
after the application of any Class B-3 Applied Realized Loss Amounts on such
Distribution Date) over (y) lesser of (A) the product of (i) 94.99976569% and
(ii) the outstanding aggregate Principal Balance of the Mortgage Loans as of the
last day of the related Due Period and (B) the outstanding Principal Balance of
the Mortgage Loans as of the last day of the related Due Period minus
$1,707,120.
11
"Class B-4 Certificate" means any one of the Certificates executed by the
Trustee and authenticated by the Authenticating Agent substantially in the form
set forth in Exhibit B-4 hereto, and evidencing a "regular interest" in REMIC II
for purposes of the REMIC Provisions.
"Class B-4 Certificate Balance" means, as to the Class B-4 Certificates and
as of any date of determination, the Original Class B-4 Certificate Balance as
reduced by the sum of (x) all amounts actually distributed to the Holders of the
Class B-4 Certificates on all prior Distribution Dates on account of principal
pursuant to Section 8.01 and (y) the aggregate cumulative amount of Applied
Realized Loss Amounts applied to the Class B-4 Certificates pursuant to Section
5.13 on all prior Distribution Dates.
"Class B-4 Current Interest" means with respect to any Distribution Date,
the aggregate amount of interest accrued during the related Accrual Period on
the Class B-4 Certificate Balance at the Class B-4 Pass-Through Rate.
"Class B-4 Interest Carry Forward Amount" means with respect to any
Distribution Date, the sum of (x) the amount, if any, by which (i) the sum of
(A) the Class B-4 Current Interest as of the immediately preceding Distribution
Date and (B) the Class B-4 Interest Carry Forward Amount from the immediately
preceding Distribution Date exceeds (ii) the amount of the actual distribution
of the Interest Remittance Amount made to the Holders of the Class B-4
Certificates on such immediately preceding Distribution Date and (y) 30 days'
interest on such amount at the Class B-4 Pass-Through Rate.
"Class B-4 Pass-Through Rate" means the lesser of (x) 8.00% per annum,
computed on the basis of a 360-day year assumed to consist of twelve 30-day
months and (y) the REMIC I Remittance Rate minus the applicable Strip Rate.
"Class B-4 Principal Distribution Amount" means as of any Distribution Date
(a) prior to the Stepdown Date or on or after the Stepdown Date if a Trigger
Event is in effect, zero and (b) on or after the Stepdown Date and as long as a
Trigger Event is not in effect, the excess of (x) the sum of (i) the aggregate
Certificate Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the Class M-1 Certificate Balance (after taking into account the payment of
the Class M-1 Principal Distribution Amount on such Distribution Date), (iii)
the Class M-2 Certificate Balance (after taking into account the payment of the
Class M-2 Principal Distribution Amount on such Distribution Date), (iv) the
Class B-1 Certificate Balance (after taking into account the payment of the
Class B-1 Principal Distribution Amount on such Distribution Date) and (v) the
Class B-2 Certificate Balance (after taking into account the payment of the
Class B-2 Distribution Amount on such Distribution Date), (vi) the Class B-3
Certificate Balance (after taking into account the payment of the Class B-3
Distribution Amount on such Distribution Date and (vii) the Class B-4
Certificate Balance immediately prior to such Distribution Date (but after the
application of any Class B-4 Applied Realized Loss Amounts on such Distribution
Date) over (y) the outstanding aggregate Principal Balance of the Mortgage Loans
as of the last day of the related Due Period.
12
"Class IO-A-1 Current Interest Rate" means (I) the lesser of (i) the REMIC
I Remittance Rate and (ii) 9.358% minus (II) the Class A-1 Pass-Through Rate
minus (III) the applicable Strip Rate (but not less than zero).
"Class IO-A-2 Current Interest Rate" means (I) the lesser of (i) the REMIC
I Remittance Rate and (ii) 9.358% minus (II) the Class A-2 Pass-Through Rate
minus (III) the applicable Strip Rate (but not less than zero).
"Class IO-A-3 Current Interest Rate" means (I) the lesser of (i) the REMIC
I Remittance Rate and (ii) 9.358% minus (II) the Class A-3 Pass-Through Rate
minus (III) the applicable Strip Rate (but not less than zero).
"Class IO-A-4 Current Interest Rate" means (I) the lesser of (i) REMIC I
Remittance Rate and (ii) 9.358% minus (II) the Class A-4 Pass-Through Rate minus
(III) the applicable Strip Rate (but not less than zero).
"Class IO-A-5 Current Interest Rate" means (I) the lesser of (i) REMIC I
Remittance Rate and (ii) 9.358% minus (II) the Class A-5 Pass-Through Rate minus
(III) the applicable Strip Rate (but not less than zero).
"Class IO-A-6 Current Interest Rate" means (I) the lesser of (i) REMIC I
Remittance Rate and (ii) 9.358% minus (II) the Class A-6 Pass-Through Rate minus
(III) the applicable Strip Rate (but not less than zero).
"Class IO-A-7 Current Interest Rate" means (I) the lesser of (i) REMIC I
Remittance Rate and (ii) 9.358% minus (II) the Class A-7 Pass-Through Rate minus
(III) the applicable Strip Rate (but not less than zero).
"Class IO-A-8 Current Interest Rate" means the excess, if any, of (x) the
REMIC I Remittance Rate over (y) the lesser of (i) with respect to any
Distribution Date on or prior to the Clean-up Call Date, One-Month LIBOR plus
0.16% per annum and for any Distribution Date thereafter, One-Month LIBOR plus
0.32% and (ii) the Maximum Variable Rate.
"Class IO-B-1 Current Interest Rate" means (I) the lesser of (i) REMIC I
Remittance Rate and (ii) 9.358% minus (II) the Class B-1 Pass-Through Rate minus
(III) the applicable Strip Rate (but not less than zero).
"Class IO-B-2 Current Interest Rate" means (I) the lesser of (i) REMIC I
Remittance Rate and (ii) 9.358% minus (II) the Class B-2 Pass-Through Rate minus
(III) the applicable Strip Rate (but not less than zero).
"Class IO-B-3 Current Interest Rate" means (I) the lesser of (i) REMIC I
Remittance Rate and (ii) 9.358% minus (II) the Class B-3 Pass-Through Rate minus
(III) the applicable Strip Rate (but not less than zero).
13
"Class IO-B-4 Current Interest Rate" means (I) the lesser of (i) REMIC I
Remittance Rate and (ii) 9.358% minus (II) the Class B-4 Pass-Through Rate minus
(III) the applicable Strip Rate (but not less than zero).
"Class IO-M-1 Current Interest Rate" means (I) the lesser of (i) REMIC I
Remittance Rate and (ii) 9.358% minus (II) the Class M-1 Pass-Through Rate minus
(III) the applicable Strip Rate (but not less than zero).
"Class IO-M-2 Current Interest Rate" means (I) the lesser of (i) REMIC I
Remittance Rate and (ii) 9.358% minus (II) the Class M-2 Pass-Through Rate minus
(III) the applicable Strip Rate (but not less than zero).
"Class IO Certificate" means any one of the Class IO-X1 Certificates or the
Class IO-X2 Certificates.
"Class IO Current Interest" means, with respect to any Distribution Date,
interest equal to the sum of the interest accrued during the related Accrual
Period on the applicable Component Notional Amounts at the applicable Class IO
Current Interest Rate.
"Class IO Interest Carry Forward Amount" means the sum of (x) the amount,
if any, by which (i) the Class IO Current Interest as of the immediately
preceding Distribution Date plus the Class IO Interest Carry Forward Amount from
the immediately preceding Distribution Date exceeded (ii) the amount of the
actual distribution with respect to interest made to the Holders of the Class IO
Certificates on such immediately preceding Distribution Date plus (y) interest
on such amount calculated for the related Accrual Period at the Weighted Average
Component Interest Rate in effect.
"Class IO-XI Certificate" means any one of the Certificates executed by the
Trustee and authenticated by the Authenticating Agent substantially in the form
set forth in Exhibit D-1 hereto, evidencing the right to receive the Class IO
Current Interest related to the XX-X-0, XX-X-0, XX-X-0, XX-X-0, XX-X-0, XX-X-0,
XX-X-0, IO-M1, IO-M2, IO-B1, IO-B2, IO-B3 and IO-B4 Components.
"Class IO-X2 Certificate" means any one of the Certificates executed by the
Trustee and authenticated by the Authenticating Agent substantially in the form
set forth in Exhibit D-2 hereto, evidencing the right to receive the Class IO
Current Interest related to the IO-A-8 Component.
"Class M-1 Certificate" means any one of the Certificates executed by the
Trustee and authenticated by the Authenticating Agent substantially in the form
set forth in Exhibit C-1 hereto, and evidencing a "regular interest" in REMIC II
for purposes of the REMIC Provisions.
"Class M-1 Certificate Balance" means, as to the Class M-1 Certificates and
as of any date of determination, the Original Class M-1 Certificate Balance of
such Class as reduced by the sum of (x) all amounts actually distributed to the
Holders of the Class M-1 Certificates on all prior Distribution Dates on account
of principal pursuant to Section 8.01 and (y) the aggregate
14
cumulative amount of Applied Realized Loss Amounts applied to the Class M-1
Certificates pursuant to Section 5.13 on all prior Distribution Dates.
"Class M-1 Current Interest" means with respect to any Distribution Date,
the aggregate amount of interest accrued during the related Accrual Period on
the Class M-1 Certificate Balance at the Class M-1 Pass-Through Rate.
"Class M-1 Interest Carry Forward Amount" means with respect to any
Distribution Date, the sum of (x) the amount, if any, by which (i) the sum of
(A) the Class M-1 Current Interest as of the immediately preceding Distribution
Date and (B) the Class M-1 Interest Carry Forward Amount from the immediately
preceding Distribution Date exceeds (ii) the amount of the actual distribution
of the Interest Remittance Amount made to the Holders of the Class M-1
Certificates on such immediately preceding Distribution Date and (y) 30 days'
interest on such amount at the Class M-1 Pass-Through Rate.
"Class M-1 Pass-Through Rate" means the lesser of (x) 6.44% per annum,
computed on the basis of a 360-day year assumed to consist of twelve 30-day
months and (y) the REMIC I Remittance Rate minus the applicable Strip Rate.
"Class M-1 Principal Distribution Amount" means as of any Distribution Date
(a) prior to the Stepdown Date or on or after the Stepdown Date if a Trigger
Event is in effect, zero and (b) on or after the Stepdown Date and as long as a
Trigger Event is not in effect, the excess of (x) the sum of (i) the aggregate
Certificate Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date)
and (ii) the Class M-1 Certificate Balance immediately prior to such
Distribution Date (but after the application of any Class M-1 Applied
Realization Loss Amounts on such Distribution Date) over (y) lesser of (A) the
product of (i) 66.49971882% and (ii) the outstanding Principal Balance of the
Mortgage Loans as of the last day of the related Due Period and (B) the
outstanding Principal Balance of the Mortgage Loans as of the last day of the
related Due Period minus $1,707,120.
"Class M-2 Certificate" means any one of the Certificates executed by the
Trustee and authenticated by the Authenticating Agent substantially in the form
set forth in Exhibit C-2 hereto, and evidencing a "regular interest" in REMIC II
for purposes of the REMIC Provisions.
"Class M-2 Certificate Balance" means, as to the Class M-2 Certificates and
as of any date of determination, the Original Class M-2 Certificate Balance of
such Class as reduced by the sum of (x) all amounts actually distributed to the
Holders of the Class M-2 Certificates on all prior Distribution Dates on account
of principal pursuant to Section 8.01 and (y) the aggregate cumulative amount of
Applied Realized Loss Amounts applied to the Class M-2 Certificates pursuant to
Section 5.13 on all prior Distribution Dates.
"Class M-2 Current Interest" means with respect to any Distribution Date,
the aggregate amount of interest accrued during the related Accrual Period on
the Class M-2 Certificate Balance at the Class M-2 Pass-Through Rate.
15
"Class M-2 Interest Carry Forward Amount" means with respect to any
Distribution Date, the sum of (x) the amount, if any, by which (i) the sum of
(A) the Class M-2 Current Interest as of the immediately preceding Distribution
Date and (B) the Class M-2 Interest Carry Forward Amount from the immediately
preceding Distribution Date exceeds (ii) the amount of the actual distribution
of the Interest Remittance Amount made to the Holders of the Class M-2
Certificates on such immediately preceding Distribution Date and (y) 30 days'
interest on such amount at the Class M-2 Pass-Through Rate.
"Class M-2 Pass-Through Rate" means the lesser of (x) 6.72% per annum,
computed on the basis of a 360-day year assumed to consist of twelve 30-day
months and (y) the REMIC I Remittance Rate minus the applicable Strip Rate.
"Class M-2 Principal Distribution Amount" means as of any Distribution Date
(a) prior to the Stepdown Date or on or after the Stepdown Date if a Trigger
Event is in effect, zero and (b) on or after the Stepdown Date and as long as a
Trigger Event is not in effect, the excess of (x) the sum of (i) the aggregate
Certificate Balance of the Class A Certificates (after taking into account the
payment of the Class A Principal Distribution Amount on such Distribution Date),
(ii) the Class M-1 Certificate Balance (after taking into account the payment of
the Class M-1 Principal Distribution Amount on such Distribution Date) and (iii)
the Class M-2 Certificate Balance immediately prior to such Distribution Date
(but after the application of any Class M-2 Applied Realized Loss Amounts on
such Distribution Date) over (y) lesser of (A) the product of (i) 77.99978912%
and (ii) the outstanding aggregate Principal Balance of the Mortgage Loans as of
the last day of the related Due Period and (B) the outstanding Principal Balance
of the Mortgage Loans as of the last day of the related Due Period minus
$1,707,120.
"Class R-I Certificate" means any one of the Certificates executed by the
Trustee and authenticated by the Authenticating Agent substantially in the form
set forth in Exhibit E-1 hereto, and evidencing an interest designated as a
"residual interest" in REMIC I for purposes of the REMIC Provisions.
"Class R-II Certificate" means any one of the Certificates executed by the
Trustee and authenticated by the Authenticating Agent substantially in the form
set forth in Exhibit E-2 hereto, and evidencing an interest designated as a
"residual interest" in REMIC II for purposes of the REMIC Provisions.
"Class R Certificate" means any one of the Class R-I or Class R-II
Certificates.
"Class R Certificateholder" means the person in whose name a Class R
Certificate is registered on the Certificate Register.
"Clean-up Call Date" has the meaning assigned in Section 8.03.
"Closing Date" means August 10, 1998.
"Code" means the Internal Revenue Code of 1986, as amended.
16
"Combined Loan-to-Value Ratio" means, with respect to any Mortgage Loan at
any given time, the ratio, expressed as a percentage, determined by dividing (x)
the sum of the original Principal Balance of the Mortgage Loan plus the
then-current Principal Balance of any loan or loans secured by a senior lien on
the Mortgaged Property by (y) the value of the related Mortgaged Property, based
upon the appraisal or other valuation made at the time of origination of the
Mortgage Loan.
"Company" means The CIT Group Securitization Corporation III and its
permitted successors in interest.
"Compensating Interest" means has the meaning assigned in Section 8.04.
"Component" means each of the fourteen Components of the Class IO
Certificates, and collectively, the "Components," each evidencing a separate
"regular interest" in REMIC II for purposes of the REMIC Provisions and
corresponding to a Class of Certificates.
"Component Notional Amount" means, with respect to each Component and any
Distribution Date, an amount equal to the Certificate Balance of its
corresponding Class of Certificates as of such Distribution Date.
"Computer Tape" means the computer tape generated by the Master Servicer
which provides information relating to the Mortgage Loans, and includes the
master file and the history file.
"Confirmatory Note" has the meaning assigned in Section 4.01(a).
"Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of the execution of this Agreement is located at the
address set forth in Section 12.09.
"Cumulative Realized Loss Termination Event": A Cumulative Realized Loss
Termination Event occurs on any Distribution Date if the amount of Cumulative
Realized Losses as of the last day of the related Due Period expressed as a
percentage of the Cut-off Date Pool Principal Balance equals or exceed 6.625%.
"Cumulative Realized Losses" means as of any date of determination, the
aggregate amount of Realized Losses (net of any subsequent recoveries) with
respect to the Mortgage Loans.
"Cut-off Date Pool Principal Balance" means the aggregate of the Cut-off
Date Principal Balances of the Mortgage Loans.
"Cut-off Date Principal Balance" means, as to any Mortgage Loan, the
Principal Balance thereof at the Cut-off Date.
"Cut-off Date" means July 1, 1998.
17
"Definitive Certificates" has the meaning assigned in Section 9.02(g).
"Deleted Mortgage Loan" has the meaning assigned in Section 4.03.
"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 Participant" means a broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Determination Date" means the third Business Day prior to each
Distribution Date.
"Distribution Date" means the 15th day of each calendar month during the
term of this Agreement, or if such day is not a Business Day, the next
succeeding Business Day, commencing on August 17, 1998.
"Due Date" means, as to any Mortgage Loan, the date of the month on which
the monthly payment for such Mortgage Loan is due.
"Due Period" means, as to any Distribution Date, the calendar month
immediately preceding the month of such Distribution Date.
"Electronic Ledger" means the electronic master record of mortgage loans of
the Master Servicer.
"Eligible Account" means any account which is (i) an account maintained
with an Eligible Institution; (ii) an account or accounts the deposits in which
are fully insured by either the Bank Insurance Fund or the Savings Association
Insurance Fund of the FDIC; (iii) a "segregated trust account" maintained with
the corporate trust department of a federal or state chartered depository
institution or trust company with trust powers and acting in its fiduciary
capacity for the benefit of a Trustee, which depository institution or trust
company has capital and surplus (or, if such depository institution or trust
company is a subsidiary of a bank holding company system, the capital and
surplus of the bank holding company) of not less than $50,000,000 and the
securities of such depository institution (or, if such depository institution is
a subsidiary of a bank holding company system and such depository institution's
securities are not rated, the securities of the bank holding company) have a
credit rating from each Rating Agency in one of its generic credit rating
categories which signifies investment grade; or (iv) an account that will not
cause any Rating Agency to downgrade or withdraw its then-current rating
assigned to the Certificates, as confirmed in writing by each Rating Agency.
"Eligible Institution" means the Trustee or any depository institution or
trust company (which may be the Trustee or an Affiliate of the Trustee)
organized under the laws of
18
the United States or any state, the deposits of which are insured to the full
extent permitted by law by the Bank Insurance Fund (presently administered by
the Federal Deposit Insurance Corporation), which is subject to supervision and
examination by federal or state authorities and whose short-term deposits have
been rated P-1 or higher by Moody's and A-1 or higher by Standard & Poor's.
"Eligible Investments" has the meaning assigned in Section 5.05(b).
"Eligible Servicer" means (A) any Person which, together with its
Affiliates (i) is qualified to act as Master Servicer of the Mortgage Loans
under applicable federal and state laws and regulations and (ii) services not
less than $100,000,000 in outstanding principal amount of residential mortgage
loans, (B) CIT Consumer Finance and (C) CITSF.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Errors and Omissions Protection Policy" means the errors and omissions
policy maintained by the Master Servicer or any similar replacement policy, if
any, pursuant to Section 5.09(d).
"Event of Termination" has the meaning assigned in Section 7.01.
"File" means, as to each Mortgage Loan (a) the original Note (b) the
original Mortgage with evidence of recording indicated thereon, (c) any riders
or modifications of such Note and Mortgage, (d) assignments of the related
Mortgage in recordable form, (e) any title insurance policies with respect to
the Mortgages and (f) any assumption or modification agreement.
"Final Distribution Date" means the Distribution Date on which the final
distribution in respect of Certificates is made pursuant to Section 12.03.
"Fixed Rate Mortgage Loans" means Mortgage Loans having fixed Mortgage
Rates.
"Hazard Insurance Policy" means, with respect to each Mortgage Loan, the
policy of fire and extended coverage insurance (and federal flood insurance, if
the related Mortgaged Property was, at the time of origination thereof, and
continues to be, located in a federally designated special flood hazard area)
required to be maintained for the related Mortgaged Property, as provided in
Section 5.09, and which, as provided in said Section 5.09, may be a blanket
policy maintained by the Master Servicer in accordance with the terms and
conditions of said Section 5.09.
"Holder" has the same meaning as "Certificateholder".
"Independent" means, with respect to any specified Person, any person or
firm rendering an opinion on the Closing Date or any Person who (a) is in fact
independent of the
19
specified Person, (b) does not have any direct financial interest or any
material indirect financial interest in the specified Person or any Affiliate of
the specified Person (other than acting as outside counsel for the specified
Person or such Affiliate), and (c) is not connected with the specified Person as
an officer, employee, promoter, underwriter, trustee, partner, director (other
than a law firm a member of which is a director) or person performing similar
functions. Except with respect to any person or firm rendering an opinion on the
Closing Date, whenever it is herein provided that any Independent Person's
opinion or certificate shall be furnished to the Trustee, such person shall be
approved by the Trustee and such opinion or certificate shall state that the
signer has read this definition and that the signer is independent within the
meaning hereof.
"Insurance Proceeds" means proceeds paid by any insurer pursuant to any
insurance policy or contract relating to a Mortgage Loan.
"Interest Determination Date" has the meaning assigned in Section 5.12.
"Interest Remittance Amount" means, as of any Distribution Date, the sum of
(i) all interest collected or advanced by the Master Servicer during the related
Due Period on the Mortgage Loans (ii) if CIT Consumer Finance or one of its
affiliates is the Master Servicer, all Mortgage Fees collected by the Master
Servicer during the related Due Period, (iii) all Compensating Interest paid by
the Master Servicer with respect to such Due Period; (iv) the portion of any
Substitution Adjustment relating to interest delivered by the Seller in
connection with a substitution of a Mortgage Loan with respect to the related
Due Period, (v) the interest portion of any Purchase Price with respect to each
Mortgage Loan that was repurchased from the Trust during the related Due Period,
(vi) all Liquidation Proceeds actually collected by the Master Servicer during
the related Due Period (to the extent such Liquidation Proceeds related to
interest) and (vii) any Net Subsequent Recoveries. If CIT Consumer Finance or
one of its affiliates is not the Master Servicer, the Interest Remittance Amount
will be reduced by the Master Servicing Fee (excluding the amounts set forth in
clause (b) of the definition of Master Servicing Fee).
"Liquidated Mortgage" means any Mortgage Loan as to which the Master
Servicer has determined that all amounts (including Liquidation Proceeds and
Insurance Proceeds) which it expects to recover from or on account of such
Mortgage Loan have been recovered; provided that any Mortgage Loan in respect of
which the related Mortgaged Property has been realized upon and disposed of and
the proceeds of such disposition have been received, shall be deemed to be a
Liquidated Mortgage; provided, however, that a Liquidated Mortgage which has
been repurchased pursuant to Section 3.05(a), 4.03(a) or 5.14 or as to which a
Qualified Substitute Mortgage Loan has been substituted pursuant to Section
3.05(b) or 4.03(b), in either case on or before the Business Day immediately
preceding the Distribution Date following the Due Period in which such Mortgage
Loan becomes a Liquidated Mortgage, shall be deemed not to have become a
Liquidated Mortgage during such Due Period. The Principal Balance of any
Liquidated Mortgage is zero.
20
"Liquidation Expenses" means out-of-pocket expenses (exclusive of any
overhead expenses) which are incurred by the Master Servicer in connection with
the Liquidated Mortgages, including, without limitation, legal fees and
expenses, and any related and unreimbursed expenditures for property taxes,
property preservation or restoration of the property to marketable condition.
"Liquidation Proceeds" means cash (including Insurance Proceeds) received
and retained in connection with Liquidated Mortgages, by foreclosure sale or
otherwise, net of Liquidation Expenses and net of any insurance premiums paid by
the Master Servicer pursuant to Section 5.09(a).
"List of Mortgage Loans" means the list attached hereto as Exhibit K
identifying each Mortgage Loan constituting part of the corpus of the Trust.
"Master Servicer" means CIT Consumer Finance until any Service Transfer
hereunder, and thereafter means the new servicer appointed pursuant to Article
VII.
"Master Servicing Fee" means, as to any Distribution Date, the sum of (a)
the Monthly Servicing Fee for such Distribution Date, (b) any net investment
earnings due to the Master Servicer as of such Distribution Date and (c) any
Mortgage Fees collected by the Master Servicer during the related Due Period.
"Maximum Variable Rate" means 18.0% per annum.
"Mezzanine Certificates" means the Class M-1 Certificates and the Class M-2
Certificates.
"Monthly Advance" has the meaning assigned in Section 8.04.
"Monthly Report" has the meaning assigned in Section 6.01. The form of the
Monthly Report for the Certificates is attached as Exhibit L hereto.
"Monthly Servicing Fee" means, as to any Distribution Date, one twelfth of
the product of 0.50% and the Pool Principal Balance as of the first day of the
related Due Period (or, in the case of the first Distribution Date, the Cut-off
Date).
"Moody's" means Xxxxx'x Investors Service, Inc.
"Mortgage" means the mortgage, deed of trust or similar instrument creating
a lien on an estate in fee simple in the real property securing a Mortgage Loan.
"Mortgage Document" has the meaning assigned in Section 4.01(a).
"Mortgage Fees" means late fees, prepayment fees and other similar fees
relating to the Mortgage Loans.
"Mortgaged Property" means the property subject to a Mortgage.
21
"Mortgage Loan(s)" means one or more of the mortgage loans described in the
List of Mortgage Loans, and which Mortgage Loans are to be assigned by the
Company to the Trustee on the Closing Date; including, without limitation, the
Mortgage, collateral, liens, insurance policies and guarantees of the
obligations of the related Mortgage (other than guarantees, if any, by the
related broker) and any and all payments which are received pursuant thereto on
and after the Cut-off Date, but excluding any payments which are received
pursuant thereto prior to the Cut-off Date.
"Mortgage Pool" means the pool of Mortgage Loans assigned by the Company to
the Trustee on the Closing Date.
"Mortgage Rate" means, with respect to any particular Mortgage Loan, the
rate of interest specified in that Mortgage Loan.
"Mortgagor" means each Person who is indebted under a Mortgage Loan.
"Net Mortgage Rate" means, for each Mortgage Loan, (x) the Mortgage Rate in
effect for such Mortgage Loan as of the first day of the related Due Period,
minus (y) the Monthly Servicing Fee for such Mortgage Loan.
"Net Subsequent Recoveries" means, as of any Distribution Date, the excess,
if any, of (i) any subsequent recoveries collected by the Master Servicer during
the related Due Period on Mortgage Loans which became Liquidated Mortgages in a
Due Period prior to the related Due Period over (ii) the amount of Realized
Losses during the related Due Period.
"Nonrecoverable Advance" means any advance made or proposed to be made
pursuant to Section 8.04, which the Master Servicer believes, in its good faith
judgment, is not, or if made would not be, ultimately recoverable from future
payments and collections of the related Mortgage Loan.
"Note" means the promissory note evidencing the indebtedness of a Mortgagor
under a Mortgage Loan.
"NRSRO" means any nationally recognized statistical rating organization.
"Offered Certificates" means the Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates, Class A-5
Certificates, Class A-6 Certificates, Class A-7 Certificates. Class A-8
Certificates, Class M-1 Certificates, Class M-2 Certificates, and Class B-1
Certificates, collectively.
"Officer's Certificate" means a certificate signed by the chairman of the
board, president or any vice president of the Master Servicer and delivered to
the Trustee.
"One-Month LIBOR" has the meaning assigned in Section 5.12.
"Opinion of Counsel" means a written opinion of counsel (internal or
external) who may be counsel for the Master Servicer, except that any opinion of
counsel relating to the
22
qualification of any of the REMICs as a REMIC or compliance with the REMIC
Provisions must be an opinion of counsel Independent with respect to the Company
and the Master Servicer.
"Original Certificate Balance" means, as to any Certificate, the
Certificate Balance as of the Cut-off Date.
"Original Class A-1 Certificate Balance" means $61,000,000.
"Original Class A-2 Certificate Balance" means $38,000,000.
"Original Class A-3 Certificate Balance" means $45,000,000.
"Original Class A-4 Certificate Balance" means $25,000,000.
"Original Class A-5 Certificate Balance" means $11,000,000.
"Original Class A-6 Certificate Balance" means $10,872,000.
"Original Class A-7 Certificate Balance" means $19,000,000.
"Original Class A-8 Certificate Balance" means $51,317,000.
"Original Class B-1 Certificate Balance" means $11,950,000.
"Original Class B-2 Certificate Balance" means $10,242,000.
"Original Class B-3 Certificate Balance" means $6,829,000.
"Original Class B-4 Certificate Balance" means $8,536,000.
"Original Class M-1 Certificate Balance" means $23,046,000.
"Original Class M-2 Certificate Balance" means $19,632,000.
"Outstanding Mortgage Loan" means, as to any Due Period, a Mortgage Loan
which was not the subject of a Principal Prepayment or was not fully paid prior
to or during such Due Period, which did not become a Liquidated Mortgage prior
to or during such Due Period, and which was not purchased (and did not become a
Deleted Mortgage Loan or a Replaced Mortgage Loan) prior to or with respect to
such Due Period pursuant to Section 3.05, Section 5.14 or Section 4.03.
"Ownership Interest" means, with respect to any Certificate, any ownership
or security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether direct
or indirect, legal or beneficial.
"Paying Agent" has the meaning assigned in Section 8.01(i).
23
"Percentage Interest" means, as to any Certificate, the percentage interest
evidenced thereby in distributions made on the related Class, such percentage
interest being equal to, (a) in the case of the Class A Certificates, the
percentage (carried to eight places) obtained from dividing the Certificate
Balance of such Certificate by the Certificate Balance of all Class A
Certificates, (b) in the case of the Class M-1 Certificates, the percentage
(carried to eight places) obtained by dividing the Certificate Balance of such
Certificate by the Certificate Balance of all Class M-1 Certificates, (c) in the
case of the Class M-2 Certificates, the percentage (carried to eight places)
obtained from dividing the Certificate Balance of such certificate by the
Certificate Balance of all Class M-2 Certificates, (d) in the case of the Class
B-1 Certificates, the percentage (carried to eight places) obtained by dividing
the Certificate Balance of such Certificate by the Certificate Balance of all
Class B-1 Certificates, (e) in the case of the Class B-2 Certificates, the
percentage (carried to eight places) obtained by dividing the Certificate
Balance of such Certificates by the Certificate Balance of all Class B-2
Certificates, (f) in the case of the Class B-3 Certificates, the percentage
(carried to eight places) obtained by dividing the Certificate Balance of such
Certificates by the Certificate Balance of all Class B-3 Certificates, (g) in
the case of the Class B-4 Certificates, the percentage (carried to eight places)
obtained by dividing the Certificate Balance of such Certificates by the
Certificate Balance of all Class B-4 Certificates and (h) in the case of the
Class IO and Class R Certificates, being equal to the percentage specified on
the face of such Certificate. The aggregate Percentage Interests for each Class
of Certificates shall equal 100%.
"Permitted Transferee" means, as to any Class R Certificateholder or any
other prospective transferee of a Class R Certificate, any Person other than (a)
the United States, a State or any political subdivision thereof, any possession
of the United States, a foreign government, an international organization, or
any agency or instrumentality of any of the foregoing, (b) an organization
(other than a cooperative described in Section 521 of the Code) which would not
be subject to tax under the Code (including the tax on unrelated business
taxable income, as defined in Section 512(a)(1) of the Code) on any excess
inclusions (as defined in Section 860E(c)(1) of the Code) with respect to any
Class R Certificate, (c) an organization which is engaged in furnishing
electrical energy, or providing telephone service, to persons in rural areas (as
described in Section 1381(a)(2)(C) of the Code), or (d) a person which is not a
United States Person. The terms "United States," "United States Person" "State"
and "international organization" shall have the meanings set forth in Code
Section 7701 or any successor provision and any regulations promulgated
thereunder. A corporation will not be treated as an instrumentality of the
United States or of any State or political subdivision thereof, if all of the
activities are subject to tax, and, with the exception of the Federal Home Loan
Mortgage Corporation, a majority of its board of directors is not selected by
such governmental unit.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political subdivision
thereof.
"Plan" has the meaning assigned in Section 9.02.
24
"Plurality Residual Certificateholder" means, as to any taxable year of
REMIC I or REMIC II, the Holder of Certificates with the largest Percentage
Interest of the related Class R Certificates.
"Pool Principal Balance" means, as to any Distribution Date, the aggregate
of the Principal Balance of each Mortgage Loan that was an Outstanding Mortgage
Loan as of the last day of the related Due Period.
"Prepayment Assumption" has the meaning assigned in Section 2.09.
"Principal Balance" means the unpaid principal balance of a Mortgage Loan.
"Principal Distribution Amount" means as of any Distribution Date, the sum
of (i) the principal actually collected by the Master Servicer on the Mortgage
Loans during the related Due Period, (ii) the Principal Balance of each Mortgage
Loan that was repurchased or purchased from the Trust with respect to the
related Due Period, (iii) the portion of any Substitution Adjustment relating to
principal delivered by the Seller in connection with a substitution of a
Mortgage Loan with respect to the related Due Period, (iv) all Liquidation
Proceeds actually collected by the Master Servicer during the related Due Period
(to the extent such Liquidation Proceeds related to principal) and (v) an amount
equal to the lesser of (i) any Realized Losses during the related Due Period and
(ii) any subsequent recoveries collected by the Master Servicer during the
related Due Period on Mortgage Loans which became Liquidated Mortgages in a Due
Period prior to the related Due Period.
"Principal Prepayment" means any prepayment of the entire Principal Balance
of a Mortgage Loan.
"Private Certificates" means the Class B-2 Certificates, the Class B-3
Certificates, the Class B-4 Certificates and the Class IO Certificates.
"Purchase Agreement" means the Purchase Agreement, dated as of July 1,
1998, between CIT Consumer Finance and the Company, providing for the sale of
the Mortgage Loans from CIT Consumer Finance to the Company.
"Purchase Price" means, with respect to a Mortgage Loan to be repurchased
hereunder, an amount equal to 100% of the outstanding Principal Balance thereof
as of the date of repurchase plus accrued and unpaid interest thereon to the
first day of the month in which the Purchase Price is to be distributed at its
Mortgage Rate plus unreimbursed Servicing Advances with respect to such Mortgage
Loan.
"Qualified Institutional Buyer" shall have the meaning specified in Rule
144A.
"Qualified Substitute Mortgage Loan" means, as to any Deleted Mortgage Loan
or Replaced Mortgage Loan for which such Qualified Substitute Mortgage Loan is
being substituted pursuant to Section 3.05(b) or Section 4.03(b), a Mortgage
Loan that (a) as of the date of its substitution, satisfies all of the
representations and warranties (which, except when
25
expressly stated to be as of origination, shall be deemed to be determined as of
the date of its substitution rather than as of the Cut-off Date or the Closing
Date) in Section 3.02 and does not cause any of the representations and
warranties in Section 3.03, to the extent previously applicable to the Deleted
Mortgage Loan or Replaced Mortgage Loan, and after giving effect to such
substitution, to be incorrect, (b) has a Principal Balance not in excess of the
Principal Balance of the Deleted Mortgage Loan or Replaced Mortgage Loan, (c) in
the case of an Adjustable Rate Mortgage Loan, has a Maximum Rate not less than
(and not more than two percentage points greater than) the Maximum Rate of the
Deleted Mortgage Loan or Replaced Mortgage Loan, and has the same index and
Periodic Rate Cap as the Deleted Mortgage Loan or Replaced Mortgage Loan and a
Gross Margin not less than that of the Deleted Mortgage Loan or Replaced
Mortgage Loan, (d) in the case of a Fixed Rate Mortgage Loan, has a Mortgage
Rate not more than 1% per annum lower than, and not more than 1% per annum
higher than, that of the Deleted Mortgage Loan or Replaced Mortgage Loan, (e)
has a Combined Loan-to-Value Ratio not higher than that of the Deleted Mortgage
Loan or Replaced Mortgage Loan, (f) has a remaining term to maturity not greater
than (and not more than one year less than) that of the Deleted Mortgage Loan or
Replaced Mortgage Loan, (g) is of the same or better credit risk category under
the Seller's underwriting guidelines, (h) has the same type of Mortgage Rate
(i.e., a Fixed Rate Mortgage Loan or an Adjustable Rate Mortgage Loan) and (i)
in the case of a Call Loan or Balloon Loan, is a Call Loan or Balloon Loan, as
the case may be. Notwithstanding the foregoing, in the event that on any date
more than one Qualified Substitute Mortgage Loan is substituted for one or more
Deleted Mortgage Loans or Replaced Mortgage Loans, the requirement set forth in
clause (b) above with respect to the Principal Balance may be satisfied if the
aggregate of the Principal Balances of such Qualified Substitute Mortgage Loans
is not greater than the aggregate of the Principal Balances of such Qualified
Mortgage Loans, the requirement set forth in clause (d) above with respect to
the Mortgage Rate may be satisfied if the weighted average Mortgage Rate of such
Qualified Substitute Mortgage Loans is at least equal to the weighted average
Mortgage Rate of such Qualified Mortgage Loans; and the requirement set forth in
clause (f) above with respect to remaining term to stated maturity may be
satisfied if the weighted average remaining term to stated maturity of such
Qualified Substitute Mortgage Loans is not greater than the weighted average
remaining term to stated maturity of such Deleted Mortgage Loans or Replaced
Mortgage Loans.
"Rating Agencies" means Moody's and Standard & Poor's, or any successors
thereto; provided that if Moody's and Standard & Poor's no longer have a rating
outstanding on any Class of the Certificates, then references herein to Moody's
and Standard & Poor's shall be deemed to refer to the NRSRO then rating any
Class of the Certificates (or, if more than one such NRSRO is then rating any
Class of the Certificates, to each such NRSRO as may be designated by the
Servicer), and references herein to ratings by or requirements of Moody's and
Standard & Poor's shall be deemed to have the equivalent meanings with respect
to ratings by or requirements of such NRSRO.
"Rating Agency Condition" with respect to any action means, the condition
that each Rating Agency shall have been given at least 30 days prior notice of a
contemplated action and that each of the Rating Agencies shall not have notified
the Company, the Master Servicer or
26
the Trustee in writing that such action will result in a downgrade or withdrawal
of the then current rating of any Class of the Certificates.
"Realized Loss" means as to any Liquidated Mortgage, the amount, if any, by
which the Principal Balance thereof as of the date of liquidation is in excess
of Liquidation Proceeds realized thereon and allocated to principal.
"Record Date" means the calendar day preceding each Distribution Date, or,
if Definitive Certificates are issued, the last Business Day of the month
preceding the month of the related Distribution Date.
"Reference Banks" means leading banks selected by the Trustee and engaged
in transactions in Eurodollar deposits in the international Eurocurrency market.
"Regular Certificate" means any REMIC II Certificate other than a Class
R-II Certificate.
"REMIC" means a "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC Administrator" means the Trustee or any Person appointed as REMIC
Administrator pursuant to Section 2.05.
"REMIC I" means the segregated pool of assets subject hereto, constituting
the primary trust created hereby and to be administered hereunder with respect
to which a separate REMIC election is to be made and, consisting of: (i) all the
right, title and interest of the Company in and to the Mortgage Loans,
including, without limitation, any related Mortgages and Notes, the Seller's
interest in any related Mortgaged Property which has been acquired by
foreclosure or deed in lieu of foreclosure, and all payments thereon and
proceeds of the conversion thereof, voluntary or involuntary, and all interest
and principal received by the Company on or with respect to the Mortgage Loans
on and after the Cut-off Date (exclusive of interest due and payable prior to
the Cut-off Date), (ii) all rights under any Hazard Insurance Policy relating to
a Mortgaged Property securing a Mortgage Loan for the benefit of the creditor of
such Mortgage Loan, (iii) the proceeds from any Errors and Omissions Protection
Policy and all rights under any blanket hazard insurance policy to the extent
they relate to the Mortgage Loan or the Mortgaged Properties related thereto,
(iv) all documents contained in the Files with respect to the Mortgage Loans,
(v) all amounts held for the Trust in the Certificate Account, (vi) all rights
under the CIT Purchase Agreements, and (vii) all proceeds in any way derived
from any of the foregoing.
"REMIC I Regular Interest" means any of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
"regular interest" in REMIC I, as described in the Preliminary Statement hereto.
"REMIC I Remittance Rate" means with respect to any REMIC I Regular
Interest, the Weighted Average Net Mortgage Rate.
27
"REMIC II" means the segregated pool of assets consisting of all of the
REMIC I Regular Interests conveyed in trust to the Trustee for the benefit of
the Holders of the REMIC II Certificates pursuant to Section 2.07(c), with
respect to which a separate REMIC election is to be made.
"REMIC II Certificate" means any Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6, Class X-0, Xxxxx X-0, Class M-1, Class M-2, Class
B-1, Class B-2, Class B-3, Class B-4, Class IO-X1, Class IO-X2 or Class R-II
Certificate.
"REMIC Certificate Maturity Date" means the "latest maturity date" of the
Offered Certificates and the Private Certificates as that term is defined in
Section 2.09.
"REMIC Provisions" means provisions of the federal income tax law and the
applicable state and local law relating to REMICs and related provisions, and
regulations promulgated thereunder, as the foregoing may be in effect from time
to time.
"REO Property" has the meaning assigned in Section 5.10.
"Replaced Mortgage Loan" has the meaning assigned in Section 3.05(b).
"Repurchased Mortgage Loan" means any Mortgage Loan repurchased by CIT
Consumer Finance pursuant to Section 3.05(a), Section 5.14 or Section 4.03(a).
The Principal Balance of any Repurchased Mortgage Loan shall be zero as of the
last day of the related Due Period.
"Reserve Interest Rate" has the meaning assigned in Section 5.12.
"Responsible Officer" means, with respect to the Trustee, any officer in
its Corporate Trust Department, as long as it is the Trustee hereunder,
including every vice president, assistant vice president, the secretary, every
assistant secretary, cashier or any assistant cashier, controller or assistant
controller, the treasurer, every assistant treasurer, every trust officer,
assistant trust officer and every other officer or assistant officer of the
Trustee customarily performing functions similar to those performed by persons
who at the time shall be such officers, respectively, or to whom a corporate
trust matter is referred because of knowledge of, familiarity with, and
authority to act with respect to a particular matter.
"Rule 144A" shall mean Rule 144A under the Securities Act, as such Rule may
be amended from time to time.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Seller" means CIT Consumer Finance.
"Senior Enhancement Percentage" means, for any Distribution Date, the
percentage obtained by dividing (x) the aggregate Certificate Balance of the
Subordinate Certificates after taking into account the distribution of the
Principal Distribution Amount on
28
such Distribution Date by (y) the aggregate Principal Balance of the Mortgage
Loans as of the last day of the related Due Period.
"Senior Specified Enhancement Percentage" means 47.0%.
"Service Transfer" has the meaning assigned in Section 7.02.
"Servicing Advance" has the meaning assigned in Section 5.08.
"Servicing Officer" means any officer of the Master Servicer or the
Sub-Servicer, as applicable, involved in, or responsible for, the administration
and servicing of Mortgage Loans whose name appears on a list of servicing
officers appearing in an Officer's Certificate furnished to the Trustee by the
Master Servicer, as the same may be amended from time to time.
"Standard & Poor's" means The Standard and Poor's Structured Ratings Group,
a division of XxXxxx-Xxxx, Inc.
"Stepdown Date" means the earlier to occur of (i) the later to occur of (x)
the Distribution Date in August 2001 and (y) the first Distribution Date on
which the Senior Enhancement Percentage (after taking into account distributions
of principal on such Distribution Date) is greater than or equal to the Senior
Specified Enhancement Percentage and (ii) the Distribution Date on which the
Certificate Balance of the Class A Certificates has been reduced to zero.
"Strip Rate" means
Component REMIC II Regular Interest Strip Rate
--------- ------------------------- ----------
Class IO-A-1 A-1 2.17%
Class IO A-2 A-2 2.04%
Class IO-A-3 A-3 1.97%
Class IO-A-4 A-4 1.85%
Class IO-A-5 A-5 1.69%
Class IO-A-6 A-6 1.35%
Class IO-A-7 A-7 1.75%
Class IO-M-1 M-1 1.61%
Class IO-M-2 M-2 1.33%
Class IO-B-1 B-1 0.68%
29
Class IO-B-2 B-2 0.05%
Class IO-B-3 B-3 0.05%
Class IO-B-4 B-4 0.05%
"Subordinate Certificates" means the Mezzanine Certificates and the Class B
Certificates.
"Sub-Servicer" has the meaning assigned in Section 5.11.
"Sub-Servicing Agreement" means the Sub-Servicing Agreement, dated as of
July 1, 1998, between CIT Consumer Finance and CITSF.
"Substitution Adjustment" has the meaning assigned in Section 3.05(b).
"Tax Matters Person" means, with respect to each of the REMICs created
hereunder, the Person designated as the "tax matters person" of such REMIC in
the manner provided under Treasury Regulations Section 1.860F-4(d) and Treasury
Regulations Section 301.6231(a)(7)-1, which Person shall be the applicable
Plurality Residual Certificateholder.
"Tax Returns" means, with respect to (i) each of the REMICs created
hereunder, the federal income tax return on Internal Revenue Service Form 1066,
U.S. Real Estate Mortgage Investment Conduit Income Tax Return, including
Schedule Q thereto, Quarterly Notice to Residual Interest Holders of REMIC
Taxable Income or Net Loss Allocation, or any successor forms, to be filed on
behalf of each of REMIC I and REMIC II due to its classification as a REMIC
under the REMIC Provisions, and (ii) any portion of the Trust that does not
constitute part of REMIC I and REMIC II, Internal Revenue Service Form 1041,
together, in each case, with any and all other information, reports or returns
that may be required to be furnished to the Certificateholders or filed with the
Internal Revenue Service under any applicable provisions of federal tax law or
any other governmental taxing authority under applicable state and local tax
laws.
"Telerate Page 3750" means the display page currently so designated on the
Telerate Service (or such other page as may replace that page on that service
for the purpose of displaying London interbank offered rates of major banks).
"Transfer" means any direct or indirect transfer or sale of any Ownership
Interest in a Certificate.
"Transferee" means any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
30
"Transferor" means any Person who is disposing by Transfer any Ownership
Interest in a Certificate.
"Treasury Regulations" means any proposed, temporary or final regulation
promulgated under the Code.
"Trigger Event": A Trigger Event is in effect with respect to a
Distribution Date if the percentage obtained by dividing (x) the aggregate
outstanding Principal Balance of the Outstanding Mortgage Loans as to which
payments aggregating at least $65 are 60 days or more delinquent by (y) the
aggregate outstanding Principal Balance of the Outstanding Mortgage Loans, in
each case as of the last day of the immediately preceding Due Period, equals or
exceeds 40.0% of the Senior Specified Enhancement Percentage.
"Trust" means CIT Home Equity Loan Trust 1998-1, the trust created by this
Agreement.
"Trustee" has the meaning given to such term in the preamble of this
Agreement.
"Uncertificated Current Interest" means, with respect to any REMIC I
Regular Interest, for any Distribution Date, one month's interest at the REMIC I
Remittance Rate applicable to such REMIC I Regular Interest as of the
commencement of the Due Period for such Distribution Date, accrued on the
Uncertificated Principal Balance of such REMIC I Regular Interest outstanding
immediately prior to such Distribution Date. Uncertificated Current Interest in
respect of any REMIC I Regular Interest shall accrue on the basis of a 360-day
year consisting of twelve 30-day months.
"Uncertificated Principal Balance" means the principal amount of any REMIC
I Regular Interest outstanding as of any date of determination. As of the
Closing Date, the Uncertificated Principal Balance of the REMIC I Regular
Interests shall equal the aggregate Original Certificate Balance as of the
Cut-off Date. On each Distribution Date, the Uncertificated Principal Balance of
each REMIC I Regular Interest shall be reduced by all distributions of principal
deemed to have been made in respect of such REMIC I Regular Interest on such
Distribution Date pursuant to Section 8.01(j), and shall be further reduced on
such Distribution Date by such Realized Losses deemed to have been applied
thereto on such Distribution Date pursuant to Section 5.13(b).
"Weighted Average Component Interest Rate" means the rate calculated as the
weighted average of the pass-through rates applicable to each Component based
upon the Component Notional Amount applicable to each such Component.
"Weighted Average Net Mortgage Rate" means, for each Distribution Date, the
weighted average of the Net Mortgage Rates for the Mortgage Loans as of the
first day of the related Due Period, weighted on the basis of their respective
Principal Balances outstanding as of the first day of the related Due Period.
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ARTICLE II
ESTABLISHMENT OF THE TRUST; TRANSFER OF MORTGAGE LOANS
SECTION 2.01. Establishment of the Trust.
There is hereby created, by the Company, a separate trust which shall be
known as CIT Home Equity Loan Trust 1998-1. The Trust shall be administered
pursuant to the provisions of this Agreement for the benefit of
Certificateholders.
SECTION 2.02. Conveyance of the Mortgage Loans.
In consideration of the purchase price of the Mortgage Loans, subject to
the conditions set forth in Section 2.03, on the Closing Date, the Company
shall, and by execution of this Agreement hereby does, sell, transfer, assign
absolutely, set over and otherwise convey to the Trustee without recourse,
except for the terms of this Agreement, on behalf of the Trust and the Trustee
on behalf of the Trust shall, and by execution of this Agreement hereby does,
purchase (i) all the right, title and interest of the Company in and to the
Mortgage Loans, including, without limitation, any related Mortgages and Notes,
the Seller's interest in any related Mortgaged Property which has been acquired
by foreclosure or deed in lieu of foreclosure, and all payments thereon and
proceeds of the conversion thereof, voluntary or involuntary, and all interest
and principal received by the Company on or with respect to the Mortgage Loans
on and after the Cut-off Date (exclusive of interest due and payable prior to
the Cut-off Date), (ii) all rights under any Hazard Insurance Policy relating to
a Mortgaged Property securing a Mortgage Loan for the benefit of the creditor of
such Mortgage Loan, (iii) the proceeds from any Errors and Omissions Protection
Policy and all rights under any blanket hazard insurance policy to the extent
they relate to the Mortgage Loan or the Mortgaged Properties related thereto,
(iv) all documents contained in the Files with respect to the Mortgage Loans,
(v) all amounts held for the Trust in the Certificate Account, (vi) all rights
under the CIT Purchase Agreements, and (vii) all proceeds in any way derived
from any of the foregoing. The parties intend that the conveyance of the
Company's right, title and interest in and to the Mortgage Loans pursuant to
this Agreement shall constitute an absolute sale. The "purchase price" for the
Mortgage Loans shall be an amount equal to $341,424,511.24. Such purchase price
shall be payable in immediately available funds on the Closing Date.
SECTION 2.03. Conditions of Closing for the Mortgage Loans.
On or before the Closing Date, the Master Servicer shall deliver the
following documents to the Trustee:
(a) The List of Mortgage Loans.
(b) A certificate of officers of CIT Consumer Finance, substantially
in the form of Exhibit F hereto.
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(c) Opinions of counsel for CIT Consumer Finance and the Company,
substantially in the form of Exhibit G hereto.
(d) Copies of resolutions of the board of directors of CIT Consumer
Finance and the Company approving the execution, delivery and performance
of this Agreement and the transactions contemplated hereunder.
(e) Officially certified recent evidence of due organization and good
standing of CIT Consumer Finance and the Company.
(f) An Officer's Certificate listing the Master Servicer's Servicing
Officers.
(g) An Officer's Certificate stating that the Master Servicer has
reviewed each Mortgage Loan and the File with respect thereto, and
confirming that each Mortgage Loan and the File with respect thereto
conforms in all material respects to the List of Mortgage Loans, that each
File with respect to the Mortgage Loans is complete in all material
respects, and that each Mortgaged Property securing a Mortgage Loan is
covered by a Hazard Insurance Policy as required by Section 3.02(f).
(h) A letter from Xxxxx'x confirming that (a) the Class A and the
Class IO Certificates have been assigned a rating of at least "Aaa", (b)
the Class M-1 Certificates have been assigned a rating of at least "Aa2",
(c) the Class M-2 Certificates have been assigned a rating of at least
"A2", (d) the Class B-1 Certificates have been assigned a rating of at
least "Baa2", (e) the Class B-2 Certificates have been assigned a rating of
at least "Ba2" and (f) the Class B-3 Certificates have been assigned a
rating of at least "B2".
(i) A letter from Standard & Poor's confirming that (a) the Class A
Certificates have been assigned a rating of at least "AAA", (b) the Class
IO Certificates have been assigned a rating of at least "AAAr", (c) the
Class M-1 Certificates have been assigned a rating of at least "AA", (d)
the Class M-2 Certificates have been assigned a rating of at least "A-",
(e) the Class B-1 Certificates have been assigned a rating of at least
"BBB-", (f) the Class B-2 Certificates have been assigned a rating of at
least "BB" and (g) the Class B-3 Certificates have been assigned a rating
of at least "B".
(j) A letter from KPMG Peat Marwick, LLP, or another nationally
recognized accounting firm that is Independent with respect to CIT Consumer
Finance, stating that such firm has reviewed sample Mortgage Loans chosen
by Xxxxxx Xxxxxxx & Co. Incorporated and, based on such sampling,
concluding that the Mortgage Loans conform in all material respects to the
List of Mortgage Loans, specifying those Mortgage Loans which do not so
conform.
(k) A power of attorney, substantially in the form of Exhibit O
hereto, executed by each of CIT Consumer Finance, CITSF and CITCF-NY in
favor of the Trustee, authorizing the Trustee to, among other things,
prepare, execute and record assignments of the Mortgages.
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(l) Any other documents or certificates that the Trustee may
reasonably request.
SECTION 2.04. [Reserved].
SECTION 2.05. Appointment of REMIC Administrators.
(a) The Trustee may appoint one or more REMIC Administrators, which shall
be authorized to act on behalf of the Trustee in performing the functions set
forth in Sections 2.10 and 5.10 herein. Each REMIC Administrator must be
acceptable to the Company and must be organized and doing business under the
laws of the United States of America or of any State and be subject to
supervision or examination by federal or state authorities. The Trustee
initially appoints CIT Consumer Finance as REMIC Administrator and CIT Consumer
Finance hereby accepts such appointment. The fees and expenses of the REMIC
Administrator shall be paid by the Master Servicer.
(b) Any Person into which any REMIC Administrator may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion, or consolidation to which any REMIC Administrator shall be a
party, or any Person succeeding to the corporate agency business of any REMIC
Administrator, shall continue to be the REMIC Administrator without the
execution or filing of any paper or any further act on the part of the Trustee
or the REMIC Administrator.
(c) Any REMIC Administrator (other than CIT Consumer Finance) may at any
time resign by giving at least 30 days' advance written notice of resignation to
the Trustee, the Certificate Registrar, the Paying Agent, the Master Servicer
and the Company. For so long as CIT Consumer Finance is acting as Master
Servicer hereunder, they may not resign as REMIC Administrator. The Trustee may
at any time terminate the agency of any REMIC Administrator by giving written
notice of termination to such REMIC Administrator, the Master Servicer, the
Certificate Registrar and the Company. Upon receiving a notice of resignation or
upon such a termination, or in case at any time any REMIC Administrator shall
cease to be eligible in accordance with the provisions of this Section 2.05, the
Trustee may appoint a successor REMIC Administrator, in which case the Trustee
shall give written notice of such appointment to the Master Servicer and the
Company and shall mail notice of such appointment to all Holders of
Certificates; provided, however, that no successor REMIC Administrator shall be
appointed unless eligible under the provisions of this Section 2.05. Any
successor REMIC Administrator upon acceptance of its appointment hereunder shall
become vested with all the rights, powers, duties and responsibilities of its
predecessor hereunder, with like effect as if originally named as REMIC
Administrator.
SECTION 2.06. Acceptance by Trustee.
On the Closing Date, if the conditions set forth in Section 2.03 have been
satisfied, the Trustee shall deliver a certificate to the Company substantially
in the form of Exhibit H hereto acknowledging conveyance of the Mortgage Loans
and the Files with respect thereto pursuant to Section 2.02 hereof to the
Trustee on behalf of the Trust and declaring that
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the Trustee will hold all Mortgage Loans that have been delivered in trust, upon
the trusts herein set forth, for the use and benefit of all Certificateholders,
that the Trustee will accept delivery of the Files with respect thereto pursuant
to Section 4.01 hereof and will hold such Files as custodian for the benefit of
the Trust as provided herein and shall issue to or upon the written order of the
Company, Certificates representing ownership of a beneficial interest in 100% of
the Trust.
SECTION 2.07. REMIC Designations; Execution, Authentication and Delivery of
Class R Certificates; Creation of REMIC Tiers
(a) Designation. The Closing Date is hereby designated as the "Startup Day"
of REMIC I and REMIC II within the meaning of Section 860G(a)(9) of the Code.
The REMIC I Regular Interests and the Regular Certificates (or, in the case of
the Class IO Certificates, each of its Components) are hereby designated as
"regular interests" (within the meaning of Section 860G(a)(1) of the Code) in
REMIC I and REMIC II respectively. The Class R-I Certificates and the Class R-II
Certificates are hereby designated as the single class of "residual interests"
(within the meaning of Section 860G(a)(2) of the Code) in REMIC I and REMIC II,
respectively. Neither the Master Servicer nor the Trustee shall (to the extent
within its control) permit the creation of any other "interests" in REMIC I or
REMIC II (within the meaning of Treasury Regulations Section 1.860D-l(b)(1)).
(b) Execution, Authentication and Delivery of Class R-I Certificates;
Creation of REMIC I Regular Interests. Concurrently with the assignment of the
Mortgage Loans and the delivery of the Files and in exchange therefor, (a) the
Trustee agrees to hold each of the Mortgage Loans assigned to it, in its
capacity as Trustee, as part of REMIC I and (b) the Trustee, on behalf of the
Trust, pursuant to the written request of the Company executed by an officer of
the Company, has executed, and the Authenticating Agent has authenticated and
delivered to or upon the order of the Company, the Class R-I Certificates in
authorized denominations. The interests evidenced by the Class R-I Certificates,
together with the REMIC I Regular Interests, constitute the entire beneficial
ownership of REMIC I. The rights of the Class R-I Certificateholders and REMIC
II (as Holder of the REMIC I Regular Interests) to receive distributions from
the proceeds of REMIC I in respect of the Class R-I Certificates and the REMIC I
Regular Interests, respectively, and all ownership interests evidenced or
constituted by the Class R-I Certificates and the REMIC I Regular Interests,
shall be as set forth in this Agreement.
(c) Conveyance of REMIC I Regular Interests; Acceptance of REMIC II by
Trustee. The Company, as of the Closing Date, and concurrently with the
execution and delivery of this Agreement, does hereby assign without recourse
all the right, title and interest of the Company in and to the REMIC I Regular
Interests to the Trust for the benefit of the respective Holders of the REMIC II
Certificates. The Trustee declares that it holds and will hold the interest of
the Company in the REMIC I Regular Interests assigned to the Trust, in trust for
the exclusive use and benefit of all present and future Holders of the REMIC II
Certificates.
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(d) Execution, Authentication and Delivery of REMIC II Certificates.
Concurrently with the assignment to it of the REMIC I Regular Interests and in
exchange therefor, the Trustee, on behalf of the Trust, has executed, and the
Authenticating Agent has authenticated and delivered to or upon the written
order of the Company, the REMIC II Certificates in authorized denominations
evidencing the entire beneficial ownership of REMIC II. The rights of the
holders of the respective Classes of REMIC II Certificates to receive
distributions from the proceeds of REMIC II in respect of their REMIC II
Certificates, and all ownership interests evidenced or constituted by the
respective Classes of REMIC II Certificates in such distributions, shall be as
set forth in this Agreement.
SECTION 2.08. REMIC Tax Matters.
The tax year of each of the REMICs shall be the calendar year, and each
REMIC shall use the accrual method of reporting income and loss.
SECTION 2.09. REMIC Certificate Maturity Date.
Solely for purposes of satisfying Section 1.860G-1(a)(4)(iii) of the
Treasury Regulations, and based upon certain assumptions described below, the
"latest possible maturity date" of each REMIC I Regular Interest and each Class
of Regular Certificates (or in the case of the Class IO Certificates, each of
its Components) is no later than May 10, 2028. The foregoing date represents the
date by which the Certificates would be reduced to zero as determined under a
hypothetical scenario which assumes, among other things, that (i) no scheduled
interest and principal payments on the Mortgage Loans are received after the
respective Due Date, (ii) there are no principal prepayments and (iii) the
Master Servicer will not exercise its option to purchase the assets of the Trust
and there will be no Auction Sale, each pursuant to Section 8.03 of this
Agreement, and thereby not cause a termination of the Trust pursuant to Section
12.03 of this Agreement (the "Prepayment Assumption").
SECTION 2.10. REMIC Administration and Compliance.
(a) The REMIC Administrator shall elect to treat each of REMIC I and REMIC
II as a REMIC under the Code and, if necessary, under applicable state law. Such
election will be made on Form 1066 or other appropriate federal or state Tax
Returns for the taxable year ending on the last day of the calendar year in
which the Certificates are issued.
(b) Each Plurality Residual Certificateholder as to the applicable taxable
year is hereby designated as the Tax Matters Person of each of REMIC I and REMIC
II, and shall act on behalf of the related REMIC in relation to any tax matter
or controversy and shall represent the related REMIC in any administrative or
judicial proceeding relating to an examination or audit by any governmental
taxing authority; provided, that the REMIC Administrator is hereby irrevocably
appointed to act and shall act (in consultation with the Tax Matters Person for
each of REMIC I and REMIC II) as agent and attorney-in-fact for the Tax Matters
Person for each of REMIC I or REMIC II in the performance of its duties as such.
36
(c) Any taxes, penalties, interest or extraordinary expenses including, but
not limited to, any professional fees or expenses related to audits or any
administrative or judicial proceedings with respect to any of REMIC I or REMIC
II that involve the Internal Revenue Service or state or local taxing
authorities will (to the extent not payable by a specified Person pursuant to
Section 2.10(g)) be expenses of the Trust.
(d) Within 30 days after the Closing Date, the REMIC Administrator shall
prepare and file with the Internal Revenue Service Form 8811, "Information
Return for Real Estate Mortgage Investment Conduits (REMIC) and Issuers of
Collateralized Debt Obligations" for the Trust. In addition, the REMIC
Administrator shall prepare, sign and file all of the other Tax Returns in
respect of REMIC I and REMIC II. The ordinary tax-related expenses, including
the expenses of preparing and filing such returns shall be borne by the REMIC
Administrator without any right of reimbursement therefor. The other parties
hereto shall provide on a timely basis to the REMIC Administrator or its
designee such information with respect to each of REMIC I and REMIC II as is in
its possession and reasonably requested by the REMIC Administrator to enable it
to perform its obligations under this Section. Without limiting the generality
of the foregoing, the Company, within ten days following the REMIC
Administrator's request therefor, shall provide in writing to the REMIC
Administrator such information as is reasonably requested by the REMIC
Administrator for tax purposes, as to the valuations and issue prices of the
Certificates, and the REMIC Administrator's duty to perform its reporting and
other tax compliance obligations under this Section shall be subject to the
condition that it receives from the Company such information possessed by the
Company that is necessary to permit the REMIC Administrator to perform such
obligations.
(e) The REMIC Administrator shall perform on behalf of each of REMIC I and
REMIC II all reporting and other tax compliance duties that are the
responsibility of each such REMIC under the Code, the REMIC Provisions or other
compliance guidance issued by the Internal Revenue Service or, with respect to
state and local taxes, any state or local taxing authority. Included among such
duties, the REMIC Administrator shall provide to: (i) any Transferor of a
Residual Certificate, such information as is necessary for the application of
any tax relating to the transfer of a Class R Certificate to any Person who is
not a Permitted Transferee; (ii) the Certificateholders, such information or
reports as are required by the Code or the REMIC Provisions, including, without
limitation, reports relating to interest, original issue discount and market
discount or premium (using the Prepayment Assumption as required hereunder); and
(iii) the Internal Revenue Service, the name, title, address and telephone
number of the Person who will serve as the representative of each of REMIC I and
REMIC II.
(f) The REMIC Administrator shall perform its duties hereunder so as to
maintain the status of each of REMIC I and REMIC II as a REMIC under the REMIC
Provisions (and the Trustee and the Master Servicer shall assist the REMIC
Administrator to the extent reasonably requested by the REMIC Administrator and
to the extent of information within the Trustee's or the Master Servicer's
possession or control). Neither the Trustee nor the Master Servicer shall
knowingly take (or cause any of REMIC I or REMIC II to take) any action or fail
to take (or fail to cause to be taken) any action that, under the REMIC
Provisions, if taken or not taken, as the case may be, could (i) endanger the
status of any of REMIC I or REMIC II as a
37
REMIC, or (ii) result in the imposition of a tax upon any of REMIC I or REMIC II
(including, but not limited to, the tax on prohibited transactions as defined in
Section 860F(a)(2) of the Code, the tax on contributions to a REMIC set forth in
Section 860G(d) of the Code or the result in the imposition of a tax on "net
income from foreclosure property" as defined in Section 860G(c) of the Code)
(any such endangerment or imposition, an "Adverse REMIC Event"), unless the
REMIC Administrator has obtained or received an Opinion of Counsel (at the
expense of the party requesting such action or at the expense of the Trust if
the REMIC Administrator seeks to take such action or to refrain from acting for
the benefit of the Certificateholders) to the effect that the contemplated
action will not result in an Adverse REMIC Event. The REMIC Administrator shall
not take any action or fail to take any action (whether or not authorized
hereunder) as to which the Master Servicer has advised it in writing that the
Master Servicer has received or obtained an Opinion of Counsel to the effect
that an Adverse REMIC Event could occur with respect to such action. In
addition, prior to taking any action with respect to REMIC I or REMIC II, or
causing any of REMIC I or REMIC II to take any action, that is not expressly
permitted under the terms of this Agreement, the Master Servicer shall consult
with the REMIC Administrator or its designee, in writing, with respect to
whether such action could cause an Adverse REMIC Event to occur. The Master
Servicer shall not take any such action or cause any of REMIC I or REMIC II to
take any such action as to which the REMIC Administrator has advised it in
writing that an Adverse REMIC Event could occur, and the Master Servicer shall
not have any liability hereunder for any action taken by it in accordance with
the written instruments of the REMIC Administrator. The REMIC Administrator may
consult with counsel to make such written advice, and the cost of same shall be
borne by the party seeking to take the action not expressly permitted by this
Agreement, but in no event at the cost or expense of the Trust, the REMIC
Administrator or the Trustee. At all times as may be required by the Code, the
REMIC Administrator shall make reasonable efforts to ensure that substantially
all of the assets of REMIC I and REMIC II will consist of "qualified mortgages"
as defined in Section 860G(a)(3) of the Code and "permitted investments" as
defined in Section 860G(a)(5) of the Code.
(g) If any tax is imposed on any of REMIC I or REMIC II, including, without
limitation, "prohibited transactions" taxes as defined in Section 860F(a)(2) of
the Code, any tax on "net income from foreclosure property" as defined in
Section 860G(c) of the Code, any taxes on contributions to REMIC I or REMIC II
after the Startup Day pursuant to Section 860G(d) of the Code, and any other tax
imposed by the Code or any applicable provisions of state or local tax laws,
such tax, together with all incidental costs and expenses (including, without
limitation, penalties and reasonable attorneys' fees), shall be charged to and
paid by: (i) the REMIC Administrator, if such tax arises out of or results from
a breach by the REMIC Administrator of any of its obligations under this Section
provided that no liability shall be imposed upon the REMIC Administrator under
this clause if another party has responsibility for payment of such tax under
clauses (ii) - (iv) of this Section 2.10(g); (ii) the Master Servicer, if such
tax arises out of or results from a breach by the Master Servicer of any of its
obligations under this Section; (iii) the Company, if such tax was imposed due
to the fact that any of the Mortgage loans did not, at the time of their
transfer to the REMIC I, constitute a "qualified mortgage" as defined in Section
860G(a)(3) of the Code; or (iv) the Trust in all other instances. Any such
amounts
38
payable by the Trust shall be paid by the Paying Agent upon the written
direction of the REMIC Administrator out of amounts on deposit in the
Certificate Account.
(h) Following the Startup Day, neither the Trustee nor the Master Servicer
shall accept any contributions of assets to REMIC I or REMIC II unless it shall
have received an Opinion of Counsel (at the expense of the party seeking to
cause such contribution and in no event at the expense of the Trust or the
Trustee) to the effect that the inclusion of such assets in such REMIC will not
cause: (i) such REMIC to fail to qualify as a REMIC at any time that any
Certificates are outstanding; or (ii) the imposition of any tax on such REMIC
under the REMIC Provisions or other applicable provisions of federal, state and
local law or ordinances.
(i) Neither the Trustee nor the Master Servicer shall consent to or, to the
extent it is within the control of such Person, permit: (i) the sale or
disposition of any of the Mortgage Loans (except in connection with (A) the
foreclosure of a Mortgage Loan, including, but not limited to, the sale or other
disposition of a Mortgaged Property acquired by deed in lieu of foreclosure, (B)
the bankruptcy of REMIC I or REMIC II, (C) the termination of REMIC I and REMIC
II pursuant to Section 12.03 of this Agreement, or (D) a purchase of Mortgage
Loans pursuant to or as contemplated by Article II, III, IV or V of this
Agreement); (ii) the sale or disposition of any investments in the Certificate
Account for gain; or (iii) the acquisition of any assets for REMIC I or REMIC II
(other than a Mortgaged Property acquired through foreclosure, deed in lieu of
foreclosure or otherwise in respect of a defaulted Mortgage Loan and other than
Eligible Investments acquired in connection with the investment of funds in the
Certificate Account), in any event unless it has received an Opinion of Counsel
(at the expense of the party seeking to cause such sale, disposition, or
acquisition but in no event at the expense of the Trust or the Trustee) to the
effect that such sale, disposition, or acquisition will not cause: (x) REMIC I
or REMIC II to fail to qualify as a REMIC at any time that any Certificates are
outstanding; or (y) the imposition of any tax on REMIC I or REMIC II under the
REMIC Provisions or other applicable provisions of federal, state and local law
or ordinances.
(j) Neither the Trustee nor the Master Servicer shall enter into any
arrangement by which REMIC I or REMIC II will receive a fee or other
compensation for services nor, to the extent it is within its control, permit
REMIC I or REMIC II to receive any income from assets other than "qualified
mortgages" as defined in Section 860G(a)(3) of the Code or "permitted
investments" as defined in Section 860G(a)(5) of the Code.
SECTION 2.11. Other Tax Matters.
For federal income tax purposes, the Certificates (other than the Class A-8
and the Class R Certificates) will be treated as variable rate debt instruments
which are subject to a fixed rate cap and the Class A-8 Certificates will be
treated as variable rate debt instruments which are subject to a funds available
cap and a fixed rate cap.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties Regarding CIT Consumer
Finance.
CIT Consumer Finance represents and warrants that:
(a) Organization and Good Standing. CIT Consumer Finance 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 Consumer Finance 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 Consumer Finance.
(b) Authorization; Binding Obligations. CIT Consumer Finance 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 CIT
Consumer Finance 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 Consumer Finance 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 CIT Consumer
Finance.
(d) No Violations. The execution, delivery and performance of this
Agreement by CIT Consumer Finance will not violate any provision of any
existing law or regulation or any order or decree of any court or the
Certificate of Incorporation or Bylaws of CIT Consumer Finance, or
constitute a material breach of any mortgage, indenture, Mortgage Loan or
other agreement to which CIT Consumer Finance is a party or by which CIT
Consumer Finance 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 Consumer Finance threatened, against CIT
40
Consumer Finance or any of its properties or with respect to this Agreement
or the Certificates which, if adversely determined, would in the opinion of
CIT Consumer Finance have a material adverse effect on the transactions
contemplated by this Agreement.
SECTION 3.02. Representations and Warranties Regarding Each Mortgage Loan.
The Mortgage Loans have been sold by CIT Consumer Finance to the Company
pursuant to the Purchase Agreement. In connection with such sale, CIT Consumer
Finance has made the representations and warranties in Sections 3.02, 3.03 and
3.04 to the Company and has assumed the obligations in Section 3.05. As a
condition of the purchase by the Company of the Mortgage Loans, the Company has
required that CIT Consumer Finance make such representations and warranties
directly to the Trustee and the Certificateholders so that the Trustee may
recover directly against CIT Consumer Finance on such representations and
warranties rather than indirectly through claims by the Company against CIT
Consumer Finance. Consequently, CIT Consumer Finance represents and warrants to
the Trustee and the Certificateholders as to each Mortgage Loan as of the
Closing Date (except as otherwise expressly stated):
(a) List of Mortgage Loans. The information set forth in the List of
Mortgage Loans is true and correct as of its date.
(b) Payments. With respect to each Mortgage Loan, as of the 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 Mortgagor (without any
advance from CIT Consumer Finance or any Person acting at the request of
CIT Consumer Finance) or was not delinquent for more than 60 days.
(c) No Waivers. The terms of the Mortgage Loan have not been waived,
altered or modified in any respect, except by instruments or documents
identified in the File with respect thereto.
(d) Binding Obligation. The Mortgage Loan is the legal, valid and
binding obligation of the Mortgagor thereunder and is enforceable in
accordance with its terms, except as such enforceability may be limited by
(i) applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws from time to time in effect
affecting generally the enforcement of creditors' rights and remedies; and
(ii) general principles of equity, including, without limitation,
principles of reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in equity or at law).
(e) No Defenses. No right of rescission, setoff, counterclaim or
defense, including the defense of usury, has been asserted with respect to
the Mortgage Loan.
(f) Insurance. The related Mortgaged Property is covered by a Hazard
Insurance Policy in the amount required by Section 5.09. All premiums due
as of the Closing Date on such insurance have been paid in full.
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(g) Flood Insurance. If the related Mortgaged Property was located, at
the time of origination of the Mortgage Loan, in a federally designated
special flood hazard area, the related Mortgage Property is covered by
flood insurance in the amount required by Section 5.09. All premiums due as
of the Closing Date on such insurance have been paid in full.
(h) Lawful Assignment. The Mortgage Loan was not originated in and is
not subject to the laws of any jurisdiction whose laws would make the
transfer of the Mortgage Loan to the Company under each of the CIT Purchase
Agreements, the transfer of the Mortgage Loan to the Trustee under this
Agreement, or the ownership of the Mortgage Loan by the Trust, unlawful.
(i) Compliance with Law. All requirements of any federal, state or
local law, including, without limitation, usury, truth in lending, the Real
Estate Settlement Procedures Act and equal credit opportunity laws,
applicable to the Mortgage Loan have been complied with and such compliance
is not affected by the transfer of the Mortgage Loan to the Company or to
the Trustee or by the Trust's ownership of the Mortgage Loans, and CIT
Consumer Finance shall for at least the period of this Agreement, maintain
in its possession, available for the Trustee's inspection, and shall
deliver to the Trustee upon demand, evidence of compliance with all such
requirements.
(j) Mortgage Loan in Force. The Mortgage Loan has not been satisfied
or rescinded, and the related Mortgaged Property has not been released from
the lien of the Mortgage Loan in whole or in part.
(k) Capacity of Parties. All parties to the Mortgage Loan had legal
capacity to execute the Mortgage Loan.
(l) Good Title. Neither CITSF, CITCF-NY nor CIT Consumer Finance has
sold, assigned or pledged the Mortgage Loan to any person other than CIT
Consumer Finance, CIT Consumer Finance or the Company, respectively. Prior
to the transfer of the Mortgage Loan by CITSF to CIT Consumer Finance, by
CITCF-NY to CIT Consumer Finance, by CIT Consumer Finance to the Company
and by the Company to the Trust, CITSF, CITCF-NY, CIT Consumer Finance 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
Mortgage Loan to CIT Consumer Finance, CIT Consumer Finance, the Company or
the Trust, respectively. The Company paid fair value to CIT Consumer
Finance for the Mortgage Loan. Immediately upon the transfer thereof, the
Trust for the benefit of the Certificateholders shall acquire good and
marketable title to each Mortgage Loan free and clear of any encumbrance,
equity, loan, pledge, charge, claim or security interest.
(m) No Defaults. As of the Cut-off Date, there was no default, breach,
violation or event permitting acceleration existing under the Mortgage Loan
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 Mortgage Loan (except payment
delinquencies permitted by clause (b) above). Neither CITSF, CITCF-NY nor
CIT Consumer
42
Finance has waived any such default, breach, violation or event permitting
acceleration except payment delinquencies permitted by clause (b) above.
(n) No Liens. As of the Closing Date there are, to the best of CIT
Consumer Finance's knowledge, no liens or claims which have been filed for
work, labor or materials affecting the related Mortgaged Property which are
or may be liens prior to, or equal or coordinate with, the lien of the
Mortgage Loan (other than a senior Mortgage in the case of a Mortgaged
Property secured by a subordinate Mortgage).
(o) Enforceability. The Mortgage Loan contains customary and
enforceable provisions such as to render the rights and remedies of the
holder thereof adequate for the realization against the collateral of the
benefits of the security provided thereby, except as enforceability of such
provisions may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and by the
availability of equitable remedies.
(p) Qualified Mortgage for REMIC. Each Mortgage Loan is a "qualified
mortgage" under Section 860G(a)(3) of the Code and the Treasury Regulations
thereunder. As of the Cut-off Date, no Mortgage Loan was in foreclosure nor
did CIT Consumer Finance consider acceleration and liquidation of any
particular Mortgage Loan to be reasonably foreseeable. The fair market
value of the interest in real property securing each Mortgage Loan (i) was
at least equal to 80 percent of the adjusted issue price of the obligation
at the time the obligation was originated (or, if later, but before the
Closing Date, the time the obligation was significantly modified, as such
term is defined in Treasury Regulations ss. 1.860G-2(b)(2)); or (ii) is at
least equal to 80 percent of the adjusted issue price of the obligation on
the Closing Date.
For purposes of this Section 3.02(p), the fair market value of the
real property interest must be first reduced by the amount of any lien on
the real property interest that is senior to the obligation being tested,
and must be further reduced by a proportionate amount of any lien that is
in parity with the obligation being tested, in each case before the
percentages set forth in (i) and (ii) above are determined. The adjusted
issue price of an obligation is its issue price plus the amount of accrued
original issue discount, if any, as of the date of determination.
(q) Conventional Mortgage Loans. None of the Mortgage Loans is insured
or guaranteed by any governmental agency.
(r) Lien. Each Mortgage is a valid and subsisting first or subordinate
lien of record on the Mortgaged Property subject to the exceptions to title
set forth in any title insurance policy or attorney's opinion of title with
respect to the related Mortgage Loan, which exceptions are generally
acceptable to banking institutions in connection with their regular
mortgage lending activities, and such other exceptions to which similar
properties are commonly subject and which do not individually, or in the
aggregate, materially and adversely affect the benefits of the security
intended to be provided by such Mortgage.
(s) Recordation. Each original Mortgage was recorded or is in the
process of being recorded, in the appropriate jurisdictions wherein such
recordation is necessary to perfect
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the lien thereof as against creditors of or purchasers from the Seller
delivering the related Mortgage Loan.
(t) Deed of Trust. With respect to each Mortgage constituting a deed
of trust, a trustee, duly qualified under applicable law to serve as such,
has been properly designated and currently so serves and is named in such
Mortgage, and no fees or expenses are or will become payable by the Holders
or the Trust to the trustee under the deed of trust, except in connection
with a trustee's sale after default by the related Mortgagor.
(u) Licenses. The Trust is in compliance with any and all license,
permit and other requirements of any federal or state law applicable to its
ownership of the Mortgage Loan and its exercise of rights under the
Mortgage Loan and this Agreement. The Trust 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 Trust.
(v) Manufactured Housing. In the case of a Mortgage Loan financing a
dwelling which is a manufactured home, (i) the manufactured home is affixed
to the real property in such a manner as to render the manufactured home
real property under the laws of the jurisdiction in which it is located,
(ii) the Mortgage is a lien on the land on which the manufactured home is
located as well as the manufactured home itself, and (iii) the manufactured
home (a) has a minimum of 400 square feet of living space, (b) has a
minimum width in excess of 102 inches and (c) is of a kind customarily used
at a fixed location.
(w) Underwriting Guidelines. Each Mortgage Loan was underwritten in
accordance with the policies and procedures set forth in the Prospectus
Supplement dated July 31, 1998 and the Prospectus dated April 8, 1997
relating to the Certificates.
(x) Combined Loan-to-Value Ratio. At the time of its origination (and,
in the case of a Mortgage Loan that has been modified, at the time of
origination and at the time such Mortgage Loan was modified), no Mortgage
Loan had a Combined Loan-to-Value Ratio of greater than 100.36%.
(y) Mortgagor Not Subject to Bankruptcy Proceedings. No Mortgagor is
in a bankruptcy proceeding as of the Cut-off Date.
(z) Condition of Mortgaged Property. To the best of its knowledge,
each Mortgaged Property is free of material damage and is in good repair.
SECTION 3.03. Representations and Warranties Regarding the Mortgage Loans
in the Aggregate.
CIT Consumer Finance represents and warrants to the Trustee and the
Certificateholders as of the Closing Date that:
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(a) Characteristics. Each Mortgage Loan individually and the Mortgage
Loans in the aggregate conform in all material respects to the description
thereof in the Prospectus Supplement.
(b) Computer Tape. As of Closing Date, the Computer Tape made
available by the Master Servicer was complete and accurate as of its date
and includes a description of the same Mortgage Loans that are described in
the List of Mortgage Loans.
(c) Marking Records. By the Closing Date CIT Consumer Finance has
caused the portions of the Electronic Ledger relating to the Mortgage Loans
constituting part of the Trust to be clearly and unambiguously marked to
indicate that such Mortgage Loans constitute part of the Trust and are
owned by the Trust in accordance with the terms of the trust created
hereunder.
(d) No Adverse Selection. Except for the effect of the representations
and warranties made in Sections 3.02 and 3.03 hereof, no adverse selection
procedures have been employed in selecting the Mortgage Loans.
SECTION 3.04. Representations and Warranties Regarding the Files.
CIT Consumer Finance represents and warrants to the Trustee and the
Certificateholders as of the Closing Date that:
(a) Possession. Immediately prior to the Closing Date CIT Consumer
Finance will have possession of each original Mortgage Loan and the related
File, and there are and there will be no custodial agreements in effect
materially and adversely affecting the right of CIT Consumer Finance to
make, or to cause to be made, delivery of the Files required in connection
with the conveyance of the Mortgage Loans to the Company.
(b) Bulk Transfer Laws. The transfer, assignment and conveyance of the
Mortgage Loans and the Files with respect thereto to the Company are not
subject to the bulk transfer or any similar statutory provisions in effect
in any applicable jurisdiction.
SECTION 3.05. Repurchase of Mortgage Loans or Substitution of Mortgage
Loans for Breach of Representations and Warranties.
(a) Subject to Section 3.05(b), CIT Consumer Finance shall repurchase a
Mortgage Loan, at its Purchase Price, not later than 85 days after CIT Consumer
Finance receives written notice from the Trustee or the Master Servicer, or not
later than 90 days after CIT Consumer Finance otherwise becomes aware, of a
material breach of any representation or warranty of CIT Consumer Finance set
forth in Section 3.02 or 3.03 of this Agreement that materially and adversely
affects the interests of the Certificateholders in such Mortgage Loan and which
breach has not been cured. CIT Consumer Finance shall effect such repurchase by
paying to the Master Servicer for deposit in the Certificate Account on the
Business Day immediately preceding the Distribution Date in the month following
the month in which the loan was repurchased, the aggregate of the Purchase Price
of all Mortgage Loans that are required to be
45
repurchased pursuant to the preceding sentence. Notwithstanding any other
provision of the Agreement, the obligation of CIT Consumer Finance under this
Section shall not terminate upon a Service Transfer pursuant to Article VII.
Notwithstanding the provisions of the preceding paragraph, but subject to
Section 3.05(b), CIT Consumer Finance will not be required to repurchase a
Mortgage Loan as a result of a material breach of a representation or warranty
as described in the preceding paragraph unless the Trustee has received an
Opinion of Counsel that such repurchase will not cause any of the REMICs to fail
to qualify as a REMIC at any time under the then applicable REMIC Provisions.
The cost of obtaining such Opinion of Counsel shall be borne by CIT Consumer
Finance. The Master Servicer shall obtain such Opinion of Counsel. CIT Consumer
Finance shall, subject to this Section 3.05, repurchase such Mortgage Loan or
substitute a Qualified Substitute Mortgage Loan and shall guarantee the payment
of any tax imposed under the REMIC Provisions as a result of such repurchase or
substitution by paying to the Trustee the amount of such tax not later than five
Business Days before such tax shall be due and payable to the extent that
amounts previously paid over to and then held by the Trustee pursuant to Section
5.10 hereof are insufficient to pay such tax and all other taxes chargeable
under Section 5.10. Pursuant to Section 5.10, the Master Servicer is hereby
directed to withhold, and shall withhold and pay over to the Trustee, an amount
sufficient to pay such tax and any other taxes imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or imposed on "contributions
after start up date" under Section 860G(d) of the Code from amounts otherwise
distributable to Class R Certificateholders. The Master Servicer shall give
notice to the Trustee at the time of such repurchase of the amounts due from CIT
Consumer Finance pursuant to the guarantee of CIT Consumer Finance and notice as
to who should receive such payment.
The Trustee shall have no obligation to pay any such amounts pursuant to
this Section other than from moneys provided to it by CIT Consumer Finance or
from moneys held in the funds and accounts created under this Agreement. The
Trustee shall be deemed conclusively to have complied with this Section if it
follows the directions of CIT Consumer Finance.
In the event any tax that is guaranteed by CIT Consumer Finance is refunded
to the Trust or otherwise is determined not to be payable, CIT Consumer Finance
shall be repaid the amount of such refund or that portion of any guarantee
payment made by CIT Consumer Finance that is not applied to the payment of such
tax.
(b) On or prior to the date that is the second anniversary of the Closing
Date, CIT Consumer Finance, at its election, may substitute a Qualified
Substitute Mortgage Loan for a Mortgage Loan that it is obligated to repurchase
pursuant to Section 3.05(a) (such Mortgage Loan being referred to as the
"Replaced Mortgage Loan") upon satisfaction of the following conditions:
(i) CIT Consumer Finance shall have conveyed to the Trustee the
Mortgage Loan to be substituted for the Replaced Mortgage Loan and the File
related to such Mortgage Loan and CIT Consumer Finance shall have marked
the Electronic Ledger indicating that such Mortgage Loan constitutes part
of the Trust;
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(ii) the Mortgage Loan to be substituted for the Replaced Mortgage
Loan is a Qualified Substitute Mortgage Loan and CIT Consumer Finance
delivers an Officer's Certificate, substantially in the form of Exhibit J-2
hereto, to the Trustee certifying that such Mortgage Loan is a Qualified
Substitute Mortgage Loan;
(iii) CIT Consumer Finance shall have delivered to the Trustee an
Opinion of Counsel to the effect that the substitution of such Mortgage
Loan for such Replaced Mortgage Loan will not cause any of the REMICs to
fail to qualify as a REMIC at any time under then applicable REMIC
Provisions or cause any "prohibited transaction" that will result in the
imposition of a tax under such REMIC Provision;
(iv) if the Principal Balance of such Replaced Mortgage Loan is
greater than the Principal Balance of the Mortgage Loan being substituted,
CIT Consumer Finance shall have deposited in the Certificate Account the
amount of such excess, plus accrued and unpaid interest (the "Substitution
Adjustment") and shall have included in the Officer's Certificate required
by clause (ii) above a certification that such deposit has been made; and
(v) CIT Consumer Finance shall have delivered to the Rating Agencies
prior written notice of such substitution, with a copy of such notice
delivered to the Trustee.
Upon satisfaction of such conditions, the Trustee shall add such Mortgage Loan
to, and delete such Replaced Mortgage Loan from, the List of Mortgage Loans.
Such substitution shall be effected prior to the expiration of the period in
which CIT Consumer Finance is otherwise obligated to repurchase such Replaced
Mortgage Loan pursuant to Section 3.05(a). Promptly after any substitution of a
Mortgage Loan, CIT Consumer Finance shall give written notice of such
substitution to the Rating Agencies.
(c) Promptly after the repurchase referred to in Section 3.05(a) or the
substitution referred to in Section 3.05(b), the Trustee shall execute such
documents as are presented to it by CIT Consumer Finance and are reasonably
necessary to reconvey the repurchased Mortgage Loan or Replaced Mortgage Loan,
as the case may be, to CIT Consumer Finance and deliver the related File to CIT
Consumer Finance.
(d) The repurchase obligation of CIT Consumer Finance set forth in this
Section 3.05 shall constitute the sole remedy available to the Trust and the
Certificateholders for a breach of representation and warranty hereunder with
respect to the Mortgage Loans (but not with respect to any other breach by CIT
Consumer Finance of its obligations hereunder, as set forth herein).
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ARTICLE IV
DELIVERY OF MORTGAGE DOCUMENTS; CUSTODY OF MORTGAGE LOANS;
RECORDATION OF MORTGAGES
SECTION 4.01. Delivery of Mortgage Documents; Custody of Mortgage Loans.
(a) CIT Consumer Finance shall deliver or cause to be delivered to the
Trustee, within 90 days of the Closing Date, with respect to each Mortgage Loan,
the original Note (and any modification or amendment thereto), the original
Mortgage with evidence of recording indicated thereon (except for any Mortgage
which has been lost or which was not returned from the public recording office,
a copy of which (together with a certificate that the original of such Mortgage
was delivered to such recording office) shall be delivered initially and the
original of which shall be delivered to the Trustee as soon as the same is
available to CIT Consumer Finance), and, if applicable, any riders or
modifications to such Note and Mortgage, any title insurance policies with
respect to such Mortgage and any assumption or modification agreement
(collectively, the "Mortgage Documents").
For certain Mortgage Loans transferred by the Company to the Trust, CIT
Consumer Finance may deliver to the Trustee, in lieu of the original Note, (i) a
new promissory note signed by the borrower confirming its obligation under the
original Note (a "Confirmatory Note"), or (ii) an affidavit of the Seller
certifying that the Seller or the Company was the sole owner of the indebtedness
evidenced by such note and the original thereof has been lost or destroyed. The
Seller hereby indemnifies the Trust against any loss, liability, damage, claim
or expense resulting from CIT Consumer Finance's failure to deliver to the
Trustee the original Note or Confirmatory Note. Such indemnification shall be
terminated if CIT Consumer Finance subsequently delivers the original Note or a
Confirmatory Note. If CIT Consumer Finance delivers such a lost note affidavit
or fails to deliver any assumption and modification agreement, within 90 days
after the Closing Date, it shall deliver to the Trustee either the original Note
or Confirmatory Note and assumption and modification agreement, as applicable,
or an opinion of counsel satisfactory to the Trustee from counsel admitted to
practice in the jurisdiction in which the related Mortgaged Property is located
to the effect that the absence of the originals of such documents will not
preclude the Master Servicer from initiating or prosecuting to completion any
foreclosure proceeding with respect to such Mortgaged Property. If CIT Consumer
Finance does not deliver such documents or an opinion of counsel within such
90-day period, it shall be required to use its best reasonable efforts to
substitute another Mortgage Loan or, if it is unable to make such substitution,
to repurchase the original Mortgage Loan at the Purchase Price, in each case in
accordance with the procedures and requirements of Section 3.05(b).
(b) Subject to the terms and conditions of this Section 4.01, the Trustee
shall act as custodian of the Files for the benefit of the Certificateholders.
(c) The Trustee agrees to maintain the related Files at one of its offices
as the Trustee and the Master Servicer may from time to time agree.
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(d) As custodian, the Trustee shall have and perform the following powers
and duties:
(i) hold the Files on behalf of the Certificateholders, maintain
accurate records pertaining to each Mortgage Loan to enable the Master
Servicer to comply with the terms and conditions of this Agreement,
maintain a current inventory thereof, conduct annual physical inspections
of the Files held by it under this Agreement and certify in writing to the
Master Servicer annually that it continues to maintain possession of such
Files;
(ii) implement policies and procedures in writing and signed by a
Servicing Officer, with respect to persons authorized to have access to the
Files and the receipting for Files taken from their storage area by an
employee of the Master Servicer for purposes of servicing or any other
purposes;
(iii) maintain custody of the Files on behalf of the
Certificateholders; and
(iv) make originals of any document in the Files available to the
Master Servicer to enforce the Mortgage Loans.
(e) In performing its duties under this Section 4.01, the Trustee agrees to
exercise that degree of skill and care, consistent with the same degree of skill
and care that a prudent person would exercise or use under the circumstances in
the conduct of his own affairs with respect to similar Mortgage Loans. Subject
to Section 11.03, the Trustee, in performing its duties under this Section 4.01,
shall have liability for its own negligent action, its own negligent failure to
act or its own willful misconduct.
SECTION 4.02. Recordation of Mortgages.
(a) The Master Servicer will maintain a recorded first or subordinate lien,
as applicable, on each Mortgaged Property so long as the related Mortgage Loan
is the property of the Trust (except as it may be limited by the absence of a
duly recorded mortgage assignment). Within 90 days of the Closing Date, the
Master Servicer will record assignments to the Trustee of the lien on any
Mortgaged Property (or, where permitted, assignments of the liens on any group
of Mortgaged Properties), at its sole expense, unless an opinion(s) of counsel
is delivered by the Master Servicer to the Trustee to the effect that
recordation of an assignment is not required to protect the interests of the
Trustee in a Mortgage Loan and the related Mortgaged Property or in a group of
Mortgage Loans (and the related Mortgage Properties). If, at a later date, the
Trustee is advised by counsel to the effect that recordation of an assignment is
required to protect the interests of the Trustee in the Mortgage Loan or the
related Mortgaged Property, the Master Servicer will record such assignments to
the Trustee within sixty (60) days, at CIT Consumer Finance's sole expense. The
Trustee shall cooperate with CIT Consumer Finance by executing such instruments
as CIT Consumer Finance shall request to facilitate recordation of the
assignments.
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If a Responsible Officer of the Trustee receives notice or has actual
knowledge that CIT Consumer Finance has failed to record such assignments of
Mortgages as provided above, the Trustee shall either (i) prepare such
assignments in recordable form and record such assignments in favor of the
Trustee within sixty (60) days at the expense of CIT Consumer Finance or (ii)
obtain opinions of counsel to the effect that recordation of assignments is not
required to protect the interests of the Trustee in the Mortgage Loans and the
related Mortgaged Property at the expense of CIT Consumer Finance. CIT Consumer
Finance hereby agrees to cooperate in the preparation, execution and recording
of such assignments and agrees to cause CITSF and CITCF-NY to cooperate in the
preparation, execution and recording of such assignments.
(b) From time to time the Master Servicer shall, subject to the preceding
paragraph, take and cause to be taken such actions and execute such documents as
are necessary to perfect and protect the Certificateholders' interests in the
Mortgage Loans and their proceeds and the Mortgaged Properties against all other
persons. The accounting records and computer systems of the Company and of CIT
Consumer Finance will be marked to reflect the sale and assignments of the
Mortgage Loans by CIT Consumer Finance and the Company as contemplated herein.
SECTION 4.03. Review of Mortgage Documents
(a) The Trustee, as custodian, shall review each Mortgage Document within
120 days of delivery of such Mortgage Document and if any such document is found
to be missing or defective in a material respect, is not properly executed, is
unrelated to the Mortgage Loans of the Trust or does not conform in a material
respect to the description thereof provided by or on behalf of CIT Consumer
Finance, the Trustee shall notify the Master Servicer and the Company, and the
Master Servicer will notify the Seller. If the Seller does not cure such defect
within 90 days after notice thereof from the Master Servicer or knowledge
thereof and the defect materially and adversely affects the interest of the
Trust in the related Mortgage Loan, the Seller shall be obligated to repurchase
the related Mortgage Loan from the Trust Fund at the Purchase Price. The Seller
shall effect such repurchase by paying to the Master Servicer for deposit in the
Certificate Account on the Business Day immediately preceding the Distribution
Date in the month following the month in which the loan was repurchased, the
aggregate of the Purchase Price of all Mortgage Loans that are required to be
repurchased pursuant to the preceding sentence.
Notwithstanding the provisions of the preceding paragraph, but subject to
Section 4.03(b), the Seller will not be required to repurchase a Mortgage Loan
as described in the preceding paragraph unless the Trustee has received an
Opinion of Counsel that such repurchase will not cause any of the REMICs to fail
to qualify as a REMIC at any time under the then applicable REMIC Provisions.
The cost of obtaining such Opinion of Counsel shall be borne by the Seller. The
Master Servicer shall obtain such Opinion of Counsel. The Seller shall, subject
to this Section 4.03, repurchase such Mortgage Loan or substitute a Qualified
Substitute Mortgage Loan and shall guarantee the payment of any tax imposed
under the REMIC Provisions as a result of such repurchase or substitution by
paying to the Trustee the amount of
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such tax not later than five Business Days before such tax shall be due and
payable to the extent that amounts previously paid over to and then held by the
Trustee pursuant to Section 5.10 hereof are insufficient to pay such tax and all
other taxes chargeable under Section 5.10. Pursuant to Section 5.10, the Master
Servicer is hereby directed to withhold, and shall withhold and pay over to the
Trustee, an amount sufficient to pay such tax and any other taxes imposed on
"prohibited transactions" under Section 860F(a)(1) of the Code or imposed on
"contributions after start up date" under Section 860G(d) of the Code from
amounts otherwise distributable to Class R Certificateholders. The Master
Servicer shall give notice to the Trustee at the time of such repurchase of the
amounts due from the Seller pursuant to the guarantee of the Seller and notice
as to who should receive such payment.
The Trustee shall have no obligation to pay any such amounts pursuant to
this Section other than from moneys provided to it by the Seller or from moneys
held in the funds and accounts created under this Agreement. The Trustee shall
be deemed conclusively to have complied with this Section if it follows the
directions of the Seller.
In the event any tax that is guaranteed by the Seller is refunded to the
Trust or otherwise is determined not to be payable, the Seller shall be repaid
the amount of such refund or that portion of any guarantee payment made by the
Seller that is not applied to the payment of such tax.
(b) On or prior to the date that is the second anniversary of the Closing
Date, the Seller, at its election, may substitute a Qualified Substitute
Mortgage Loan for a Mortgage Loan that it is obligated to repurchase pursuant to
Section 4.03(a) (such Mortgage Loan being referred to as the "Deleted Mortgage
Loan") upon satisfaction of the following conditions:
(i) the Seller shall have conveyed to the Trustee the Mortgage Loan to
be substituted for the Deleted Mortgage Loan and the File related to such
Mortgage Loan and the Seller shall have marked the Electronic Ledger
indicating that such Mortgage Loan constitutes part of the Trust;
(ii) the Mortgage Loan to be substituted for the Deleted Mortgage Loan
is a Qualified Substitute Mortgage Loan and the Seller delivers an
Officer's Certificate, substantially in the form of Exhibit J-2 hereto, to
the Trustee certifying that such Mortgage Loan is a Qualified Substitute
Mortgage Loan;
(iii) the Seller shall have delivered to the Trustee an Opinion of
Counsel to the effect that the substitution of such Mortgage Loan for such
Deleted Mortgage Loan will not cause any of the REMICs to fail to qualify
as a REMIC at any time under then applicable REMIC Provisions or cause any
"prohibited transaction" that will result in the imposition of a tax under
such REMIC Provision;
(iv) if the Principal Balance of such Deleted Mortgage Loan is greater
than the Principal Balance of the Mortgage Loan being substituted, the
Seller shall have deposited in the Certificate Account the amount of such
excess, plus accrued and unpaid interest
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(the "Substitution Adjustment") and shall have included in the Officer's
Certificate required by clause (ii) above a certification that such deposit
has been made; and
(v) the Seller shall have delivered to the Rating Agencies prior
written notice of such substitution.
Upon satisfaction of such conditions, the Trustee shall add such Mortgage Loan
to, and delete such Deleted Mortgage Loan from, the List of Mortgage Loans. Such
substitution shall be effected prior to the expiration of the period in which
the Seller is otherwise obligated to repurchase such Deleted Mortgage Loan
pursuant to Section 4.03(a). Promptly after any substitution of a Mortgage Loan,
CIT Consumer Finance shall give written notice of such substitution to the
Rating Agencies.
(c) Promptly after the repurchase referred to in Section 4.03(a) or the
substitution referred to in Section 4.03(b), the Trustee shall execute such
documents as are presented to it by the Seller and are reasonably necessary to
reconvey the repurchased Mortgage Loan or Deleted Mortgage Loan, as the case may
be, to the Seller and deliver the related File to the Seller.
(d) The repurchase obligation of the Seller set forth in this Section 4.03
shall constitute the sole remedy available to the Trust and the
Certificateholders for a defect in documentation.
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ARTICLE V
SERVICING OF MORTGAGE LOANS
SECTION 5.01. Responsibility for Mortgage Loan Administration.
The Master Servicer shall, and shall cause the Sub-Servicer to, manage,
administer, service and make collections on the Mortgage Loans and perform or
cause to be performed all contractual and customary undertakings of the holder
of the Mortgage Loans to the Mortgagors. The Trustee, at the request of a
Servicing Officer, shall execute any reasonable documents or take any action
reasonably requested, necessary or appropriate to enable the Master Servicer to
carry out its servicing and administrative duties hereunder. CIT Consumer
Finance is hereby appointed the Master Servicer until such time as any Service
Transfer shall be effected under Article VII.
SECTION 5.02. Standard of Care.
In managing, administering, servicing and making collections on the
Mortgage Loans pursuant to this Agreement, the Master Servicer shall exercise
that degree of skill and care consistent with the same degree of skill and care
that the Master Servicer exercises with respect to similar mortgage loans
serviced by the Master Servicer for its own account. References to CIT Consumer
Finance's servicing practices shall also include CITSF's servicing practices in
the case of services performed by CITSF as the Sub-Servicer. Notwithstanding the
foregoing, the Master Servicer shall not release or waive the right to collect
the unpaid balance on a Mortgage Loan or grant an extension of payments due on a
Mortgage Loan, unless either (i) such release, waiver or extension is occasioned
by a default or a reasonably foreseeable default (in the opinion of the Master
Servicer) on such Mortgage Loan; or (ii) such release, waiver or extension is of
a type which Counsel has advised has been identified by the Code or Treasury
Regulations which would not be treated as an exchange of the Mortgage Loan for
purposes of Section 1001 of the Code; or (iii) unless the Master Servicer
obtains an Opinion of Counsel to the effect that such action will not cause the
Trust to fail to qualify as a REMIC under the Code and under the relevant state
and local law or result in the imposition of taxes on the Trust under the REMIC
Provisions.
SECTION 5.03. Records.
The Master Servicer shall during the period it is Master Servicer
hereunder, maintain such books of account and other records as will enable the
Trustee to determine the status of each Mortgage Loan.
SECTION 5.04. Inspection; Computer Tape.
(a) At all times during the term hereof, the Master Servicer shall, and
shall cause the Sub-Servicer to, afford the Trustee and its authorized agents
reasonable access during normal business hours to the Master Servicer's records
relating to the Mortgage Loans and will cause its personnel to assist in any
examination of such records by the Trustee or its authorized
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agents. The examination referred to in this Section 5.04 will be conducted in a
manner which does not unreasonably interfere with the Master Servicer's or the
Sub-Servicer's normal operations or customer or employee relations. Without
otherwise limiting the scope of the examination the Trustee may make, the
Trustee or its authorized agents may, using generally accepted audit procedures,
verify the status of each Mortgage Loan and review the Electronic Ledger and
records relating thereto for conformity to Monthly Reports prepared pursuant to
Article VI and compliance with the standards represented to exist as to each
Mortgage Loan in this Agreement.
(b) At all times during the term hereof, the Master Servicer shall keep
available a copy of the List of Mortgage Loans at its principal executive office
for inspection by Certificateholders.
SECTION 5.05. Certificate Account.
(a) Certificate Account. On or before the Closing Date, the Trustee shall
establish the Certificate Account on behalf of the Trust as an Eligible Account.
If, at any time, the Certificate Account ceases to be maintained as an Eligible
Account, the Trustee (or the Master 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 Agencies may consent) establish a new Certificate
Account meeting the condition specified above, transfer any cash and/or any
investments to such new Certificate Account and from the date such new
Certificate Account is established, it shall be the "Certificate Account". The
Certificate Account shall be entitled "The Bank of New York not in its
individual capacity but solely as trustee for the benefit of Holders of Home
Equity Loan Asset Backed Certificates, Series 1998-1 (The CIT Group/Consumer
Finance, Inc., Master Servicer) Certificate Account." The Master Servicer shall,
subject to the second following sentence, deposit in the Certificate Account, no
later than two Business Days after the Closing Date, any amounts representing
payments received on the Mortgage Loans on and after the Cut-off Date,
regardless of when due. The Master Servicer shall, subject to the following
sentence, pay into the Certificate Account as promptly as practicable (not later
than the second Business Day) following the receipt thereof by the Master
Servicer, all amounts received in respect of the Mortgage Loans, including all
payments from Mortgagors, Liquidation Proceeds, Insurance Proceeds, Monthly
Advances and any Purchase Price (or Substitution Adjustment) paid pursuant to
Section 3.05, Section 5.14 or Section 4.03. Notwithstanding anything in this
Agreement to the contrary, for so long as, and only so long as, CIT Consumer
Finance shall remain the Master Servicer hereunder and CIT Consumer Finance
remains a wholly-owned 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 a
short-term debt rating of at least P-1 by Moody's (notice of the failure to
maintain such rating shall be given to the Trustee by the Master Servicer within
ten (10) days of the occurrence thereof), the Master Servicer may make the
deposits to the Certificate Account specified in the two preceding sentences on
a monthly basis, but not later than the Business Day immediately preceding the
Distribution Date following the last day of the Due Period within which such
payments were processed by the Master Servicer, in an amount equal to the net
amount of such deposits and payments which would have been made to the
Certificate Account during such Due Period but for the provisions of this
sentence.
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The Master Servicer shall not be required to deposit in the Certificate Account
amounts that are otherwise permitted to be withdrawn therefrom pursuant to
clauses (c), (d), (e) and (f) of Section 8.02 or amounts that are payable to the
Master Servicer pursuant to Section 8.04; provided, however, the Master Servicer
shall not be required to so deposit the Master Servicing Fee referred to in
Section 8.02(g) unless CIT Consumer Finance is the Master Servicer (in which
case CIT Consumer Finance, as Master Servicer, shall be required to so deposit
the Master Servicing Fee referred to in Section 8.02(g)). All amounts paid into
the Certificate Account under this Agreement shall be held in trust for the
Certificateholders (or the Master Servicer, to the extent the Master Servicer is
entitled to receive any such amounts pursuant to this Agreement) until payment
of any such amounts is authorized under this Agreement.
(b) The Eligible Institution maintaining the Certificate Account shall, in
the name of the Trustee, as trustee, invest the amounts in the Certificate
Account 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 Trustee by the Master Servicer in writing. Once
such funds are invested, such Eligible Institution shall not change the
investment of such funds. All net income and gain from the investment of funds
in the Certificate Account shall be deposited in the Certificate Account. All
income and gain realized from any such investment of funds in the Certificate
Account (to the extent investment of such funds is permitted hereunder) shall be
for the benefit of the Master Servicer and may be withdrawn by the Master
Servicer on each Distribution Date pursuant to subsection 8.02(h). An amount
equal to any net loss on such investments shall be deposited in the Certificate
Account by the Master Servicer out of its own funds, without right to
reimbursement, immediately as realized. "Eligible Investments" are any of the
following:
(i) direct obligations of, and obligations fully guaranteed by, the
United States of America, the Federal Home Loan Mortgage Corporation, the
Federal National Mortgage Association, or any agency or instrumentality of
the United States of America the obligations of which are backed by the
full faith and credit of the United States of America and which are
non-callable;
(ii) (A) demand and time deposits in, certificates of deposit of,
bankers' acceptances issued by, or federal funds sold by any depository
institution or trust company (including the Trustee or any Affiliate of the
Trustee, acting in its commercial capacity) incorporated under the laws of
the United States of America or any state thereof 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 and (B) 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;
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(iii) repurchase obligations with respect to any security described in
either clause (i) or (ii) above and entered into with any institution whose
commercial paper is at least rated P-1 from Moody's and A-1+ from Standard
& Poor's;
(iv) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America or
any State thereof which have a long-term credit rating of at least Aa3 or a
short-term credit rating of P-1 from Moody's and at least AAA from Standard
& Poor's at the time of such investment;
(v) commercial paper (which may be commercial paper issued by The CIT
Group, Inc.) having a rating of at least P-1 from Moody's and A-1 by
Standard & Poor's at the time of such investment; and
(vi) money market funds rated Aaa or P-1 by Moody's and AAAm or AAAm-G
by Standard & Poor's, including, without limitation, any such fund for
which the Trustee or an affiliate of the Trustee serves as an investment
advisor, administrator, shareholder servicing agent and/or custodian or
subcustodian, notwithstanding that (i) the Trustee or an affiliate of the
Trustee charges and collects fees and expenses from such funds for services
rendered, (ii) the Trustee charges and collects fees and expenses for
services rendered pursuant to this instrument, and (iii) services performed
for such funds and pursuant to this instrument may converge at any time.
(The Seller and the Master Servicer specifically authorize the Trustee or
an affiliate of the Trustee to charge and collect all fees and expenses
from such funds for services rendered to such funds, in addition to any
fees and expenses the Trustee may charge and collect for services rendered
pursuant to this instrument).
The Trustee may trade with itself or with an Affiliate on an arm's length
basis in the purchase or sale of such Eligible Investments. The Trustee shall
not be liable for the selection of or for any investment losses made at the
direction of the Master Servicer on any Eligible Investments.
SECTION 5.06. Enforcement.
(a) The Master Servicer shall, consistent with customary servicing
procedures and the terms of this Agreement, act with respect to the Mortgage
Loans in such manner as will maximize the receipt of principal and interest on
the Mortgage Loans and Liquidation Proceeds in respect of Liquidated Mortgages.
(b) The Master Servicer may xxx to enforce or collect upon Mortgage Loans,
including foreclosure of any Mortgaged Property, in its own name, if possible,
or as agent for the Trustee. If the Master Servicer elects to commence a legal
proceeding to enforce a Mortgage Loan, the act of commencement shall be deemed
to be an automatic assignment of the Mortgage Loan to the Master Servicer for
purposes of collection only. If, however, in any enforcement suit or legal
proceeding it is held that the Master Servicer may not enforce a Mortgage Loan
on the ground that it is not a real party in interest or a holder entitled to
enforce the Mortgage Loan, the Trustee on behalf of the Trust shall, at the
Master Servicer's expense, take such steps as the
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Master Servicer deems necessary to enforce the Mortgage Loan, including bringing
suit in its name or the names of the Certificateholders.
(c) The Master Servicer shall exercise any rights of recourse against third
persons that exist with respect to any Mortgage Loan in accordance with the
Master Servicer's usual practice. In exercising recourse rights, the Master
Servicer is authorized on the Trustee's behalf to reassign the Mortgage Loan or
to resell the related Mortgaged Property to the person against whom recourse
exists at the price set forth in the document creating the recourse.
(d) Prior to a Service Transfer the Master Servicer may grant to the
Mortgagor on any Mortgage Loan any rebate, refund or adjustment out of the
Certificate Account that the Master Servicer in good faith believes is required
because of a Principal Prepayment of the Mortgage Loan. The Master Servicer
shall not permit any rescission or cancellation of any Mortgage Loan, except to
the extent, if any, required by law.
(e) Prior to a Service Transfer, the Master Servicer may, consistent with
its customary servicing procedures and in accordance with Section 5.02, grant to
the Mortgagor on any Mortgage Loan an extension of payments due under such
Mortgage Loan, provided that such extension does not result in any payments
coming due on or after May 10, 2028.
(f) The Master Servicer may enforce any due-on-sale clause in a Mortgage
Loan if such enforcement is consistent with its customary servicing procedures
for obligations similar to the Mortgage Loans, provided that such enforcement is
permitted by applicable law and will not adversely affect any applicable
insurance policy. If an assumption and modification of a Mortgage Loan is
permitted by the Master Servicer upon the conveyance of the related Mortgaged
Property, the Master Servicer shall use its best efforts to obtain an assumption
and modification agreement in connection therewith and deliver such assumption
and modification agreement to the Trustee for addition to the related File.
(g) In the event that applicable state law requires that the sale of any
Mortgaged Property to which the Trustee has acquired title, through foreclosure
or otherwise, be conducted through a licensed real estate broker or if the
Master Servicer otherwise determines that it is prudent, the Master Servicer
shall retain such broker, and the fees payable to such broker in connection with
any such sale shall constitute Liquidation Expenses.
(h) The Master Servicer may call any Call Loan, in accordance with the
provisions of such Call Loan, if it is consistent with its customary servicing
procedures.
(i) Consistent with the standard of care set forth in Section 5.02, the
Master Servicer may, in its discretion, (i) waive any assumption fee, prepayment
charge, penalty interest, late payment or other charge in connection with a
Mortgage Loan, and (ii) arrange with a Mortgagor a schedule for the repayment of
delinquent amounts, subject to Section 5.02. To the extent the Master Servicer
consents to the deferment of the due dates for payments due on a Mortgage Loan,
the Master Servicer shall make payment of any required Monthly Advance with
respect to the payments so extended to the same extent as if such installment
had not been deferred.
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SECTION 5.07. Trustee to Cooperate.
Upon payment in full on any Mortgage Loan, the Master Servicer shall notify
the Trustee by certification of a Servicing Officer (which certification shall
include a statement to the effect that such Mortgage Loan has been paid in full
and that all amounts received in connection with such payments which are
required to be deposited in the Certificate Account pursuant to Section 5.05
have been so deposited). The Master Servicer is authorized to execute an
instrument in satisfaction of such Mortgage Loan and to do such other acts and
execute such other documents as the Master Servicer reasonably deems to be
necessary to discharge the Mortgagor thereunder and eliminate the security
interest in the Mortgaged Property related thereto. The Master Servicer shall
determine when a Mortgage Loan has been paid in full. To the extent that
insufficient payments are received on a Mortgage Loan credited by the Master
Servicer as prepaid or paid in full and satisfied, the shortfall shall be paid
by the Master Servicer out of its own funds. From time to time as appropriate
for servicing and foreclosure in connection with any Mortgage Loan, the Trustee
shall, upon written request of a Servicing Officer and delivery to the Trustee,
of a receipt signed by such Servicing Officer, cause the original Mortgage Loan
and the related File to be released to the Master Servicer and shall execute
such documents as the Master Servicer shall deem necessary to the prosecution of
any such proceedings. Such receipt shall obligate the Master Servicer to return
the original Mortgage Loan and the related File to the Trustee when its need by
the Master Servicer has ceased unless the Mortgage Loan shall be liquidated or
repurchased as described in Section 3.05 or 4.03. Upon the request of a
Servicing Officer, the Trustee shall perform such other acts as reasonably
requested by the Master Servicer and otherwise cooperate with the Master
Servicer in enforcement of the Certificateholders' rights and remedies with
respect to the Mortgage Loans.
SECTION 5.08. Costs and Expenses.
(a) All costs and expenses incurred by the Master Servicer in carrying out
its duties hereunder, including all fees and expenses incurred in connection
with the enforcement of Mortgage Loans (including enforcement of Liquidated
Mortgages), shall be paid by the Master Servicer and the Master Servicer shall
not be entitled to reimbursement hereunder, except that the Master Servicer
shall be reimbursed out of the Liquidation Proceeds of a Liquidated Mortgage for
ordinary and necessary Liquidation Expenses incurred by it directly in
connection with realizing upon the related Mortgaged Property.
(b) In addition, the Master Servicer shall pay the cost of (i) the
preservation, restoration and protection of any Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, and (iii) the
management and liquidation of a Mortgaged Property acquired in satisfaction of
the related Mortgage Loan. Such expenditures may include costs of collection
efforts, reappraisals when a Mortgage Loan is past due, legal fees in connection
with foreclosure actions, advancing payments on the related senior mortgages, if
any, acquiring the related senior mortgage(s), if any, advances of delinquent
property taxes, upkeep and maintenance of the Mortgaged Property if it is
acquired through foreclosure and similar types of expenses. Each such
expenditure constitutes a "Servicing Advance." The Master Servicer shall be
obligated to make the Servicing Advances incurred in the performance of its
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servicing obligations only if it determines (i) that such actions will increase
the proceeds of liquidation of the Mortgage Loan to Certificateholders after
reimbursement to itself for such expenses, and (ii) that such expenses will be
recoverable to it as described in clause (c) of this Section 5.08.
(c) The Master Servicer shall be entitled to recover Servicing Advances to
the extent permitted by the related Mortgage Loan or, if not theretofore
recovered from the Mortgagor on whose behalf such Servicing Advance was made,
from Liquidation Proceeds, Insurance Proceeds and such other amounts as may be
collected by the Master Servicer from the Mortgagor or otherwise relating to the
Mortgage Loan. Servicing Advances shall be reimbursable to the Master Servicer
from the sources described above out of the funds on deposit in the Certificate
Account pursuant to Section 8.02(c), such right of reimbursement being prior to
the rights of Certificateholders to receive any related Liquidation Proceeds
(including Insurance Proceeds).
SECTION 5.09. Maintenance of Insurance.
(a) Except as otherwise provided in subsection (b) of this Section 5.09,
the Master Servicer shall cause to be maintained with respect to each REO
Property one or more Hazard Insurance Policies which provide, at a minimum, the
same coverage as a standard form fire and extended coverage insurance policy
that is customary for the type of Mortgaged Property, issued by a company
authorized to issue such policies in the state in which the related Mortgaged
Property is located, and in an amount which is not less than (i) the maximum
insurable value of such Mortgaged Property, (ii) the outstanding principal
balance due from the Mortgagor on the related Mortgage Loan and the related
senior mortgage (if any) or (iii) the minimum amount required to compensate for
damage or loss on a replacement cost basis, whichever is less; provided,
however, that the amount of coverage provided by each Hazard Insurance Policy
shall be sufficient to avoid the application of any co-insurance clause
contained therein; and provided, further, that such Hazard Insurance Policies
may provide for customary deductible amounts. If an REO Property's location is
within a federally designated special flood hazard area, the Master Servicer
shall also cause such flood insurance to be maintained, which coverage shall be
at least equal to the minimum amount specified in the preceding sentence or such
lesser amount as may be available under the federal flood insurance program;
provided, however, that the failure of the Master Servicer to maintain such
flood insurance coverage in the case of a Mortgage Loan for which such flood
insurance coverage was not maintained as of the Cut-off Date shall not give rise
to an Event of Termination under Section 7.01. Each Hazard Insurance Policy
caused to be maintained by the Master Servicer shall contain a standard loss
payee clause in favor of the Master Servicer and its successors and assigns. The
Master Servicer may, but shall not be obligated to, cause to be maintained, with
respect to each Mortgage Loan in which the related Mortgaged Property has not
become an REO Property, one or more Hazard Insurance Policies, which coverage
shall be at least equal to the minimum amount specified above. If any Mortgagor
is in default in the payment of premiums on its Hazard Insurance Policy or
Hazard Insurance Policies, the Master Servicer may, but shall not be obligated
to, in the case of a Mortgage Loan in which the related Mortgaged Property has
not become an REO Property, pay such premiums out of its own funds. If the
Master Servicer elects to pay such premiums out
59
of its own funds, it may separately add such premium to the Mortgagor's
obligation as provided by the Mortgage Loan, but shall not add such premium to
the remaining principal balance of the Mortgage Loan. The payment by the
Mortgagor to the Master Servicer of such premiums (and interest thereon) shall
not be an asset of the Trust and shall not be deposited by the Master Servicer
in the Certificate Account.
(b) The Master Servicer may, in lieu of causing individual Hazard Insurance
Policies to be maintained with respect to each REO Property pursuant to
subsection (a) of this Section 5.09, and shall, to the extent that a Mortgage
Loan does not require the Mortgagor to maintain a Hazard Insurance Policy with
respect to the related Mortgaged Property, maintain one or more blanket
insurance policies covering losses on the Mortgagor's interest in the Mortgage
Loans resulting from the absence or insufficiency of individual Hazard Insurance
Policies. Any such blanket policy shall be substantially in the form and in the
amount carried by the Master Servicer at such time. The Master Servicer shall
pay the premium for such policy on the basis described therein. If the insurer
under such blanket insurance policy shall cease to be acceptable to the Master
Servicer, the Master Servicer shall exercise its best reasonable efforts to
obtain from another insurer a replacement policy comparable to such policy. The
Master Servicer shall provide the Rating Agencies with notice of the occurrence
of any event specified in the preceding sentence.
(c) The Master Servicer, or any affiliate of the Master Servicer, may, to
the extent permitted by law (a) enter into agreements with one or more insurers
or other Persons pursuant to which the Master Servicer or such affiliate will
earn commissions and fees in connection with any insurance policy purchased by a
Mortgagor including, without limitation, any hazard insurance policy (whether or
not such hazard insurance policy is force-placed pursuant to the provisions of
any Mortgage Loan), or any other insurance policy whatsoever and (b) in
connection with the foregoing, to solicit, or permit and assist any insurer or
any agent thereof to solicit (including, without limitation, providing such
insurer or agent a list of Mortgagors including name, address or other
information) any Mortgagor.
(d) The Master Servicer shall keep in force throughout the term of this
Agreement (i) a policy or policies of insurance covering errors and omissions
for failure to maintain insurance as required by this Agreement, and (ii) a
fidelity bond. Such policy or policies and such fidelity bond shall be in such
form and amount as is generally customary among Persons which service a
portfolio of home equity mortgage loans having an aggregate principal amount of
$500,000,000 or more and which are generally regarded as Master Servicers
acceptable to institutional investors.
SECTION 5.10. REMIC Compliance.
In the event that any tax is imposed on "prohibited transactions" of the
Trust as defined in Section 860F(a)(2) of the Code or on "contributions after
startup date" as defined in Section 860G(d) of the Code, such tax shall be
charged against amounts otherwise distributable to the Holders of the Class R
Certificates in accordance with their Percentage Interests to the extent
hereinafter provided. Notwithstanding anything to the contrary contained herein,
the
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Master Servicer shall retain from amounts otherwise distributable to the Holders
of the Class R Certificates on any Distribution Date sufficient funds for the
payment of such tax, including without limitation any tax payable pursuant to
Section 3.05 and 4.03, and shall pay such amount to the Trustee (such payment to
be accompanied by an Officer's Certificate of the Master Servicer detailing such
tax payment) or, if the Master Servicer (other than as a Class R
Certificateholder) has paid such tax, reimburse the Master Servicer therefor (to
the extent that the Master Servicer has not been previously reimbursed or
indemnified therefor). The Master Servicer agrees first to seek indemnification
for any such tax payment from any indemnifying parties before reimbursing itself
from amounts otherwise distributable to the Holders of the Class R Certificates.
In the event that any Mortgaged Property is acquired in a foreclosure or
other realization procedure (an "REO Property"), the Master Servicer shall sell
such REO Property within two years of its acquisition by the Trust, unless the
Master Servicer seeks, and subsequently receives, an Opinion of Counsel,
addressed to the Trustee and the Master Servicer, to the effect that the holding
by the Trust of such REO Property subsequent to two years after its acquisition
will not result in the imposition of taxes on "prohibited transactions" of the
Trust as defined in Section 860F of the Code or cause any of the REMICs to fail
to qualify as a REMIC at any time that any Offered Certificates or Private
Certificates are outstanding. The Master Servicer shall manage, conserve,
protect and operate each REO Property such that it will qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) and will not result in the
receipt by the REMIC of any "income from nonpermitted assets" within the meaning
of Section 860F(a)(2)(B) or the Code. Pursuant to its efforts to sell such REO
Property, the Master Servicer shall either itself or through an agent selected
by the Master Servicer protect and conserve such REO Property in the same manner
and to such extent as it is customary in the locality where such REO Property is
located and may, incident to its conservation and protection of the interests of
the Certificateholders, rent the same, or any part thereof, as the Master
Servicer deems to be in the best interest of the Master Servicer and the
Certificateholders for the period prior to the sale of such REO Property.
The Master Servicer shall deposit all Liquidation Proceeds in the
Certificate Account in accordance with Section 5.05(a). The Master Servicer
shall include with its Monthly Report to the Trustee a separate report
specifying, with respect to each Mortgage Loan that becomes a Liquidated
Mortgage during the prior Due Period, the unpaid principal balance and the
Liquidation Proceeds for such Mortgage Loan.
SECTION 5.11. Sub-Servicer.
(a) On or before the Closing Date, CIT Consumer Finance, as Master
Servicer, shall enter into the Sub-Servicing Agreement. CIT Consumer Finance
shall not permit CITSF to resign as sub-servicer under the Sub-Servicing
Agreement (the "Sub-Servicer") nor shall CIT Consumer Finance terminate or
replace CITSF as Sub-Servicer under the Sub-Servicing Agreement or materially
reduce the duties of CITSF as Sub-Servicer under the Sub-Servicing Agreement in
connection with lockbox arrangements or payment processing, unless (i) an Event
of Termination has occurred and is continuing, in which event the Trustee may
61
terminate CIT Consumer Finance as Master Servicer pursuant to Section 7.02
hereof or (ii) the Rating Agency Condition has been satisfied.
(b) The Master Servicer may enter into other subservicing agreements with
one or more subservicers (which shall be Eligible Servicers) for the servicing
and administration of certain of the Mortgage Loans. 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 Master Servicer
and the subservicer have agreed. All compensation payable to a subservicer under
a subservicing agreement shall be payable by the Master Servicer from its
servicing compensation or otherwise from its own funds, and none of the Trust,
the Trustee or the Certificateholders will have any liability to the subservicer
with respect thereto.
Notwithstanding any subservicing agreement (including the Sub-Servicing
Agreement) or any of the provisions of this Agreement relating to agreements or
any arrangements between the Master Servicer or a subservicer or any reference
to actions taken through such Persons or otherwise, the Master Servicer shall
remain obligated and liable to the Trust, the Trustee, and the
Certificateholders for the servicing and administering of the Mortgage Loans 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 Mortgage Loans and the
other Trust property involving a subservicer in its capacity as such shall be
deemed to be between the subservicer and the Master Servicer alone, and the
Trustee and the Certificateholders 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 or as set forth
in such subservicing agreement.
Other than with respect to the Sub-Servicing Agreement, in the event the
Master Servicer shall for any reason no longer be acting as such, the successor
Master Servicer may, in its discretion, thereupon assume all of the rights and
obligations of the outgoing Master Servicer under a subservicing agreement. In
such event, the successor Master Servicer shall be deemed to have assumed all of
the Master Servicer's interest therein and to have replaced the outgoing Master
Servicer as a party to each such subservicing agreement to the same extent as if
such subservicing agreement had been assigned to the successor Master Servicer,
except that the outgoing Master Servicer shall not thereby be relieved of any
liability or obligations on the part of the outgoing Master Servicer to the
subservicer under such subservicing agreement. The outgoing Master Servicer
shall, upon request of the Trust, but at the expense of the outgoing Master
Servicer, deliver to the successor Master Servicer all documents and records
relating to each such subservicing agreement and the Mortgage Loans 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
Master Servicer. In the event that the successor Master Servicer elects not to
assume a subservicing agreement, the outgoing Master Servicer, at its expense,
shall cause the subservicer to deliver to the successor Master Servicer all
documents and records relating to the Mortgage
62
Loans 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 Mortgage Loans and the other Trust
property being serviced by such subservicer to the successor Master Servicer.
(a) On the second business day preceding each Distribution Date or, in the
case of the first Distribution Date, on the second business day preceding the
Closing Date (each such date, an "Interest Determination Date"), the Trustee
shall determine the London interbank offered rate for one-month U.S. dollar
deposits ("One-Month LIBOR") for the next Accrual Period for the Class A-8
Certificates on the basis of the offered rates of the Reference Banks for
one-month U.S. dollar deposits, as such rates appear in the Telerate Page 3750,
as of 11:00 a.m. (London time) on such Interest Determination Date. As used in
this section, "business day" means a day on which banks are open for dealing in
foreign currency and exchange in London and New York City.
If on such Interest Determination Date fewer than two Reference Banks
provide such offered quotations, One-Month LIBOR for the related Accrual Period
for the Class A-8 Certificates shall be the higher of (x) One-Month LIBOR as
determined on the previous Interest Determination Date and (y) the Reserve
Interest Rate. The "Reserve Interest Rate" shall be the rate per annum that the
Trustee determines to be either (i) the arithmetic mean (rounded upwards if
necessary to the nearest whole multiple of 1/16%) of the one-month U.S. dollar
lending rates which New York City banks selected by the Trustee are quoting on
the relevant Interest Determination Date to the principal London offices of
leading banks in the London interbank market or (ii) in the event that the
Trustee can determine no such arithmetic mean, the lowest one-month U.S. dollar
lending rate which New York City banks selected by the Trustee are quoting on
such Interest Determination Date to leading European banks.
(b) The establishment of One-Month LIBOR on each Interest Determination
Date by the Trustee and the Trustee's calculation of the rate of interest
applicable to the Class A-8 Certificates for the related Accrual Period shall
(in the absence of manifest error) be final and binding.
SECTION 5.13. Applied Realized Loss Amounts.
(a) On each Distribution Date, the Master Servicer shall determine the
total of the Applied Realized Loss Amounts for such Distribution Date. The
Applied Realized Loss Amount for any Distribution Date shall be applied by
reducing the Certificate Balance of each Class of Subordinate Certificates
beginning with the Class B-4 Certificates, then the Class B-3 Certificates, the
Class B-2 Certificates, the Class B-1 Certificates, the Class M-2 Certificates
and then the Class M-1 Certificates, in each case until the respective
Certificate Balance thereof is reduced to zero. Any Applied Realized Loss Amount
allocated to a Class of Certificates shall be allocated among the Certificates
of such Class in proportion to their respective Percentage Interests. Applied
Realized Loss Amounts will not be allocated to reduce the Certificate Balance of
the Class A Certificates.
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(b) On each Distribution Date, following the deemed distributions to be
made in respect of the REMIC I Regular Interests, the Uncertificated Principal
Balance of each REMIC I Regular Interest (after taking account of such deemed
distributions) shall be reduced to equal the Principal Balance of the Mortgage
Loans that will be outstanding immediately following such Distribution Date.
Such reductions shall be deemed to be an allocation of Realized Losses.
SECTION 5.14. Repurchase.
The Master Servicer shall have the right and the option, but not the
obligation, to purchase for its own account any Mortgage Loan which becomes
delinquent, in whole or in part, as to four consecutive monthly installments or
any Mortgage Loan as to which enforcement proceedings have been brought by the
Master Servicer; provided, however, that the Master Servicer may not purchase
any such Mortgage Loan unless the Master Servicer has delivered to the Trustee
an Opinion of Counsel to the effect that such repurchase would not disqualify
any of the REMICs formed hereunder or result in a "prohibited transaction" tax
as defined in Section 860F of the Code. The purchase price for any such Mortgage
Loan is equal to the Purchase Price thereof, which purchase price shall be
delivered to the Trustee.
SECTION 5.15. Release of Collateral.
The Master Servicer may, if such action is consistent with the standard of
care set forth in Section 5.02, release a portion of land from the lien of the
Mortgage thereon; provided that the Combined Loan-to-Value Ratio immediately
after the date of the release of such land is not greater than the Combined
Loan-to-Value Ratio as of the Cut-off Date. The Master Servicer may not release
such land unless an Opinion of Counsel is provided to the effect that such
release would not disqualify any of the REMICs formed hereunder or result in a
"prohibited transaction" tax as defined in Section 860F of the Code.
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ARTICLE VI
REPORTS
SECTION 6.01. Monthly Reports to the Trustee.
On or before the Determination Date, the Master Servicer shall furnish a
report (the "Monthly Report") substantially in the form of Exhibit L, to the
Trustee, any Paying Agent and (if CIT Consumer Finance is not the Master
Servicer) CIT Consumer Finance. The determination by the Master Servicer of the
amount of the distributions to be made to the Certificateholders, and, with
respect to reimbursing the Master Servicer for the Monthly Advances made by it
as provided in Section 8.04, the Master Servicer shall, in the absence of
obvious error, be presumptively deemed to be correct for all purposes hereunder,
and the Trustee shall be protected in relying upon the same without any
independent check or verification.
The Monthly Reports shall contain the following information:
(i) the Interest Remittance Amount, separately identifying Monthly
Advances, Compensating Interest and the portion of any Substitution
Adjustment, Purchase Price and Liquidation Proceeds relating to interest;
(ii) the Principal Distribution Amount separately identifying
Principal Prepayments, and the portion of any Purchase Price, Substitution
Adjustment and Liquidation Proceeds relating to principal;
(iii) the Class A-8 Principal Distribution Amount;
(iv) the amount of such distribution allocable to principal on each
Class of Certificates (based on a Certificate in the original principal
amount of $1,000);
(v) the amount of such distribution allocable to principal on each
Class of Certificates (based on a Certificate in the original principal
amount of $1,000);
(vi) the amount of such distribution allocable to interest on each
Class of Certificates (based on a Certificate in the original principal
amount of $1,000);
(vii) the Interest Carry Forward Amount of each Class;
(viii) the principal amount of each Class of Certificates (based on a
Certificate in the original principal amount of $1,000) which will be
outstanding after giving effect to any payment of principal on such
Distribution Date;
(ix) the aggregate Principal Balance of all Mortgage Loans, the
aggregate Principal Balance of the Fixed Rate Mortgage Loans and the
aggregate Principal Balance of the Adjustable Rate Mortgage Loans after
giving effect to any payment of principal on such Distribution Date;
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(x) the Adjusted Weighted Average Net Mortgage Rate, the Weighted
Average Net Mortgage Rate and the weighted average remaining stated term to
maturity of the Mortgage Loans;
(xi) whether a Trigger Event has occurred;
(xii) the Senior Enhancement Percentage;
(xiii) the Class A-8 Extra Interest, if any; and
(xiv) the amount of any Applied Realized Loss Amount for each Class as
of the close of such Distribution Date.
In addition, the Monthly Report shall contain the following information
with respect to each of the Adjustable Rate Mortgage Loans and the Fixed Rate
Mortgage Loans:
(a) the number and aggregate Principal Balance of Mortgage Loans (i)
30-59 days delinquent, (ii) 60-89 days delinquent and (iii) 90 or more days
delinquent, as of the close of business on the last business day of the
calendar month next preceding the Distribution Date and the number and
aggregate Principal Balances of the Mortgage Loans and related data (as
used herein, "delinquent" means a Mortgage Loan as to which payments
aggregating $65 or more are delinquent);
(b) the number and aggregate Principal Balance of all Mortgage Loans
in foreclosure proceedings as of the close of business on the last business
day of the calendar month preceding such Distribution Date;
(c) the book value of any real estate acquired through foreclosure or
grant of a deed in lieu of foreclosure as of the close of business on the
last business day of the calendar month next preceding the Distribution
Date;
(d) the amount of Realized Losses and Cumulative Realized Losses and
any subsequent recoveries on Liquidated Mortgages; and
(e) the number and aggregate Principal Balance of Mortgage Loans
repurchased pursuant to Section 5.14 and the amount of Cumulative Realized
Losses with respect to such Mortgage Loss repurchased.
SECTION 6.02. Certificate of Servicing Officer.
Each Monthly Report pursuant to Section 6.01 shall be accompanied by a
certificate of a Servicing Officer substantially in the form of Exhibit I,
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.
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SECTION 6.03. Other Data.
In addition, the Master Servicer shall, on request of the Trustee, furnish
the Trustee such underlying data as can be generated by the Master Servicer's
existing data processing system without undue modification or expense.
SECTION 6.04. Annual Report of Accountants.
Within 90 days after the end of each calendar year, commencing March 31,
1999, the Master 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 deliver to the Trustee a report 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. Copies
of the annual statement of accountants shall also be provided to the Rating
Agencies.
SECTION 6.05. Statements to Certificateholders.
Concurrently with each distribution charged to the Certificate Account,
the Trustee, so long as it has received the Monthly Report from the Master
Servicer, shall forward or cause to be forwarded by mail to each
Certificateholder (or to the Depository), the Monthly Report.
The Trustee (so long as it has received the Monthly Report from the Master
Servicer) and the Master Servicer shall inform any Certificateholder inquiring
by telephone of the information contained in the most recent Monthly Report. The
Trustee shall be entitled to rely upon the accuracy of the Monthly Report
without independent verification unless it actually knows that the information
contained therein is not accurate.
Within a reasonable period of time after the end of each calendar year,
the Trustee shall furnish or cause to be furnished to each Person who at any
time during the calendar year was a Certificateholder a statement containing the
information with respect to interest accrued and principal paid on its
Certificates during such calendar year and such other information as the Master
Servicer deems necessary or desirable for Certificateholders to prepare their
tax returns. Such obligation of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code as from time to
time in force.
Copies of all reports provided to the Trustee shall also be provided by
the Master Servicer to the Rating Agencies.
Section 6.06. Annual Statement as to Compliance.
(a) The Master Servicer shall deliver to the Trustee within 90 days after
the end of each calendar year commencing March 31, 1999, a certificate signed by
a Responsible Officer of the Master Servicer, stating that (i) a review of the
activities of the Master Servicer during the preceding calendar year of its
performance under this Agreement has been made under
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such officer's supervision and (ii) to the best of such officer's knowledge,
based on such review, the Master 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 Master Servicer shall deliver to the Trustee, promptly after
having obtained knowledge thereof, a certificate of a Responsible Officer of the
Master Servicer specifying any event which with the giving of notice or lapse of
time, or both, would become an Event of Termination under subsection (a) or (b)
of Section 7.01 hereof.
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ARTICLE VII
SERVICE TRANSFER
SECTION 7.01. Event of Termination.
"Event of Termination" means the occurrence of any of the following:
(a) Any failure by the Master Servicer to make any deposit into the
Certificate Account required to be made hereunder or remit to the Trustee
any payment and the continuance of such failure for a period of five
Business Days after the giving of written notice of such failure,
requiring the same to be remedied, to the Master Servicer by the Trustee
or the Company or to the Master Servicer and the Trustee by
Certificateholders (other than the Class IO and Class R Certificates) of
any Class evidencing, as to such Class, Percentage Interests aggregating
not less than 51%;
(b) Any failure by the Master Servicer duly to observe or perform in
any material respect any of its covenants or agreements in this Agreement,
which failure continues unremedied for thirty (30) days after the date on
which written notice of such failure, requiring the same to be remedied,
shall have been given to the Master Servicer by the Trustee or the Company
or to the Master Servicer and the Trustee by Certificateholders (other
than the Class IO and Class R Certificates) evidencing, as to such Class,
Percentage Interests aggregating not less than 51%;
(c) Any assignment by the Master Servicer of its duties or rights
hereunder except as specifically permitted hereunder;
(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 Master 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 Master Servicer, as the case may
be, or for any substantial liquidation of its affairs, and such order
remains undischarged and unstayed for at least sixty (60) days;
(e) The Master 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 Master 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;
(f) The failure of the Master Servicer to be an Eligible Servicer;
and
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(g) Provided that Standard & Poor's shall not have notified the
Depositor, the Master Servicer or the Trustee that the Cumulative Realized
Loss Termination Event no longer constitutes an Event of Termination, upon
the occurrence and during the continuance of a Cumulative Realized Loss
Termination Event, and after the giving of written notice, to the effect
that such Certificateholders desire to cause an Event of Termination, to
the Trustee by Certificateholders evidencing Percentage Interests
aggregating not less than 51% of the Certificates (other than the Class IO
and Class R Certificates).
SECTION 7.02. Transfer.
If an Event of Termination has occurred and is continuing, the Company or
the Trustee may, or at the written direction of Certificateholders (other than
the Class IO and Class R Certificates) with aggregate Percentage Interests
evidencing not less than 51% of the Offered Certificates and the Private
Certificates shall, unless prohibited by applicable law, terminate all (but not
less than all) of the rights and obligations of the Master Servicer hereunder
and in and to the Mortgage Loans (such termination being herein called a
"Service Transfer"). Any such termination shall also terminate all (but not less
than all) of the rights and obligations of the Sub-Servicer under the
Sub-Servicing Agreement. On receipt of such notice (or, if later, on a date
designated therein), all authority and power of the Master Servicer under this
Agreement, whether with respect to the Mortgage Loans, the Files or otherwise
(except with respect to the Certificate Account, the transfer of which shall be
governed by Section 7.06), shall pass to and be vested in the Trustee pursuant
to and under this Section 7.02 (subject to applicable law regarding the
Trustee's ability to make advances), unless prohibited by applicable law; and,
without limitation, the Trustee is authorized and empowered to execute and
deliver on behalf of the Master Servicer, as attorney-in-fact or otherwise, any
and all documents and other instruments (including, without limitation,
documents required to make the Trustee or a successor Master Servicer the sole
assignee of the Mortgagee's position in, or legal title holder of record of,
each Mortgaged Property), and to do any and all acts or things necessary or
appropriate to effect the purposes of such notice of termination. Each of CIT
Consumer Finance and the Master Servicer agrees to cooperate with the Trustee
(and each agrees to cause the Sub-Servicer to cooperate with the Trustee) in
effecting the termination of the responsibilities and rights of the Master
Servicer hereunder, including, without limitation, the transfer to the Trustee
for administration by it of all cash amounts which shall at the time be held by
the Master Servicer for deposit, or have been deposited by the Master Servicer,
in the Certificate Account, or for its own account in connection with its
services hereafter or thereafter received with respect to the Mortgage Loans and
the execution of any documents required to make the Trustee or a successor
Master Servicer the sole assignee of the Mortgagee's position in, or legal title
holder of record of, each Mortgaged Property. The Master Servicer shall be
entitled to receive any other amounts which are payable to the Master Servicer
under this Agreement, at the time of the termination of its activities as Master
Servicer, to the extent that funds in the Certificate Account are available for
the payment thereof without reducing the amount of distributions that would be
made to Holders of the Offered Certificates or Private Certificates. The Master
Servicer shall transfer (and shall cause the Sub-Servicer to transfer) to the
new Master Servicer (i) the Master Servicer's records relating to the Mortgage
Loans in such electronic form as the new Master Servicer may reasonably request
and (ii) the Mortgage Loans and the Files in the Master
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Servicer's or the Sub-Servicer's possession. Upon termination of the authority
and power of the Master Servicer hereunder, the authority and power of the
Sub-Servicer shall be terminated under the Sub-Servicing Agreement on the same
date.
SECTION 7.03. Trustee to Act; Appointment of Successor.
On and after the time the Master Servicer receives a notice of termination
pursuant to Section 7.02, the Trustee shall be the successor in all respects to
the Master Servicer in its capacity as Master 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
Master Servicer by the terms and provisions hereof (including, without
limitation, the obligation to make Monthly Advances pursuant to Section 8.04),
and the Master Servicer shall be relieved of such responsibilities, duties and
liabilities arising after such Service Transfer; provided, however, that (i) the
Trustee will not assume any obligations of CIT Consumer Finance pursuant to
Section 3.05 and (ii) the Trustee shall not be liable for any acts or omissions
of the Master Servicer occurring prior to such Service Transfer or for any
breach by CIT Consumer Finance of any of its representations and warranties
contained herein or in any related document or agreement. As compensation
therefor, the Trustee shall, except as provided in Section 7.02 and in this
Section 7.03, be entitled to such compensation as the Master Servicer would have
been entitled to hereunder if no such notice of termination had been given.
Notwithstanding the above, the Trustee may, if it shall be unwilling so to act,
or shall, if it is legally unable so to act, appoint, or petition a court of
competent jurisdiction to appoint, an Eligible Servicer as the successor to the
Master Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer hereunder.
Pending appointment of a successor to the Master Servicer hereunder, unless the
Trustee is prohibited by law from so acting, the Trustee shall act in such
capacity as hereinabove provided. In connection with such appointment and
assumption, the Trustee may make such arrangements for the compensation of such
successor out of payments on Mortgage Loans as it and such successor shall
agree; provided, however, that no such compensation shall, without the written
consent of 100% of the Certificateholders, be in excess of the Master Servicing
Fee. The Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.
SECTION 7.04. Notification to Certificateholders and to Rating Agencies.
(a) Promptly following the occurrence of any Event of Termination, the
Master Servicer shall give written notice thereof to the Trustee,
Certificateholders at their respective addresses appearing on the Certificate
Register and to the Rating Agencies.
(b) Within ten (10) days following any termination or appointment of a
successor to the Master Servicer pursuant to this Article VII, the Trustee shall
give written notice thereof to Certificateholders at their respective addresses
appearing on the Certificate Register.
(c) The Trustee shall give written notice to the Rating Agencies at least
thirty (30) days prior to the date upon which any Eligible Servicer (other than
the Trustee) is to assume
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the responsibilities of Master Servicer pursuant to Section 7.03, naming such
successor Master Servicer.
SECTION 7.05. Effect of Transfer.
(a) After the Service Transfer, the Trustee or new Master Servicer may
notify the Mortgagors to make payments directly to the new Master Servicer that
are due under the Mortgage Loans after the effective date of the Service
Transfer.
(b) After the Service Transfer, the replaced Master Servicer shall have no
further obligations with respect to the management, administration, servicing or
collection of the Mortgage Loans and the new Master Servicer shall have all of
such obligations, except that the replaced Master Servicer shall remain liable
for any liability of the replaced Master Servicer hereunder that was already
accrued at the time of the Service Transfer and except that the replaced Master
Servicer will transmit or cause to be transmitted directly to the new Master
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 Master
Servicer to collect them) received as payments upon or otherwise in connection
with the Mortgage Loans.
(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 Master Servicer and CIT Consumer Finance pursuant to Article X
and Sections 3.05, 4.03, 11.05 and 11.10(f)) other than those relating to the
management, administration, servicing or collection of the Mortgage Loans.
SECTION 7.06. Transfer of Accounts.
Notwithstanding the provisions of Section 7.02, if the Certificate Account
shall be maintained with the Master Servicer and an Event of Termination shall
occur and be continuing, the Master Servicer shall, promptly after receipt of a
notice of termination, if any, pursuant to Section 7.02, establish, or cooperate
with the Trustee to establish, new accounts in trust for the Certificateholders
conforming with the requirements of this Agreement with an Eligible Institution
other than the Master Servicer and promptly transfer, or cooperate with the
Trustee to transfer, all funds in the Certificate Account to such new accounts,
which shall thereafter be deemed the Certificate Account for the purposes
hereof.
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ARTICLE VIII
DISTRIBUTIONS AND WITHDRAWALS FROM
CERTIFICATE ACCOUNT
SECTION 8.01. Monthly Distributions.
(a) Distributions on the Certificates shall be made from funds in the
Certificate Account. Each Certificateholder as of a Record Date shall be paid on
the next succeeding Distribution Date by check mailed to such Certificateholder
at the address for such Certificateholder appearing on the Certificate Register
(or, if a Holder of an Offered Certificate holds an aggregate Percentage
Interest of at least 5% of the Offered Certificates and the Private Certificates
(other than the Class IO Certificates) or, a Holder of a Private Certificate
(other than the Class IO Certificates) holds a Certificate with an Original
Certificate Balance of at least $1,000,000, or, a Holder of a Class IO
Certificate holds a Certificate with a Certificate Notional Amount as of the
Cut-off Date of at least $1,000,000, and if such Certificateholder so requests,
by wire transfer of immediately available funds pursuant to written instructions
delivered to the Trustee at least ten (10) days prior to such Distribution Date,
which instructions, until revised, shall remain operative for all Distribution
Dates thereafter), such Certificateholder's Percentage Interest of the amount to
be distributed. Final payment on any Certificate shall be made only upon
presentation of such Certificate at the office or agency of the Paying Agent.
(b) Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, which shall credit the amount of such distribution to
the accounts of its Depository Participants in accordance with its normal
procedures. Each Depository Participant shall be responsible for disbursing such
distribution to the Certificateholder that it represents and to each indirect
participating brokerage firm (a "brokerage firm" or "indirect participating
firm") for which it acts as agent. Each brokerage firm shall be responsible for
disbursing funds to the Certificateholder that it represents. All such credits
and disbursements with respect to a Book-Entry Certificate are to be made by the
Depository and the Depository Participants in accordance with the provisions of
the Book-Entry Certificates and the Depository's rules. Neither the Trustee, the
Certificate Registrar, the Seller, the Company nor the Master Servicer shall
have any responsibility therefor except as otherwise provided by applicable law.
To the extent applicable and, in the case of the Offered Certificates not
contrary to the rules of the Depository, the Trustee shall comply with the
provisions of the forms of the Offered Certificates and the Private Certificates
as set forth in Exhibits A-E hereto.
(c) Subject to Section 8.04(c), on each Distribution Date, the Interest
Remittance Amount shall be distributed by the Trustee in the following order of
priority:
(i) first, to the Holders of the Class A Certificates and the Class
IO Certificates, the Class A Current Interest or the Class IO Current
Interest, as applicable, plus the Interest Carry Forward Amount with
respect to each such Class of Class A Certificates and the Class IO
Certificates without any priority among such Class A Certificates and
Class IO Certificates; provided, that if the Interest Remittance Amount is
not sufficient to make a full distribution of interest with respect to all
Classes of the Class
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A Certificates and Class IO Certificates, the Interest Remittance Amount
shall be distributed among the outstanding Classes of Class A Certificates
and Class IO Certificates pro rata based on the aggregate amount of
interest due on each such Class, and the amount of the shortfall will be
carried forward with accrued interest at the applicable Pass-Through Rate
or Weighted Average Component Interest Rate, as the case may be;
(ii) second, to the extent of the Interest Remittance Amount then
remaining, to the Holders of the Class M-1 Certificates, the Class M-1
Current Interest plus the Class M-1 Interest Carry Forward Amount;
(iii) third, to the extent of the Interest Remittance Amount then
remaining, to the Holders of the Class M-2 Certificates, the Class M-2
Current Interest plus the Class M-2 Interest Carry Forward Amount;
(iv) fourth, to the extent of the Interest Remittance Amount then
remaining, to the Holders of the Class B-1 Certificates, the Class B-1
Current Interest plus the Class B-1 Interest Carry Forward Amount;
(v) fifth, to the extent of the Interest Remittance Amount then
remaining, to the Holders of the Class B-2 Certificates, the Class B-2
Current Interest plus the Class B-2 Interest Carry Forward Amount;
(vi) sixth, to the extent of the Interest Remittance Amount then
remaining, to the Holders of the Class B-3 Certificates, the Class B-3
Current Interest plus the Class B-3 Interest Carry Forward Amount;
(vii) seventh, to the extent of the Interest Remittance Amount then
remaining, to the Holders of the Class B-4 Certificates, the Class B-4
Current Interest plus the Class B-4 Interest Carry Forward Amount;
(viii) eighth, to the extent of the Interest Remittance Amount then
remaining, to the holders of the Class A-8 Certificates, the Class A-8
Extra Interest;
(ix) ninth, to the extent of the Interest Remittance Amount then
remaining, to pay the Master Servicing Fee to the Master Servicer if CIT
Consumer Finance or one of its affiliates is the Master Servicer; and
(x) tenth, to the extent of the Interest Remittance Amount then
remaining, to the holders of the Class R-II Certificates.
(d) On each Distribution Date, the Trustee shall make the following
distributions pursuant to this clause (d) to the extent of the Principal
Distribution Amount. The Holders of the Class A Certificates shall be entitled
to receive the Class A Principal Distribution Amount for such Distribution Date
in the following amounts and priorities:
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(i) first, to the Holders of the Class A-8 Certificates, an amount
equal to the Class A-8 Principal Distribution Amount, until the Class A-8
Certificate Balance has been reduced to zero;
(ii) second, to the Holders of the Class A-7 Certificates, in an
amount equal to the Class A-7 Lockout Distribution Amount;
(iii) third, to the Holders of the Class A-1 Certificates until the
Certificate Balance of the Class A-1 Certificates has been reduced to
zero;
(iv) fourth, to the Holders of the Class A-2 Certificates until the
Certificate Balance of the Class A-2 Certificates has been reduced to
zero;
(v) fifth, to the Holders of the Class A-3 Certificates until the
Certificate Balance of the Class A-3 Certificates has been reduced to
zero;
(vi) sixth, to the Holders of the Class A-4 Certificates until the
Certificate Balance of the Class A-4 Certificates has been reduced to
zero;
(vii) seventh, to the Holders of the Class A-5 Certificates until
the Certificate Balance of the Class A-5 Certificates has been reduced to
zero;
(viii) eighth, to the Holders of the Class A-6 Certificates until
the Certificate Balance of the Class A-6 Certificates has been reduced to
zero;
(ix) ninth, to the Holders of the Class A-7 Certificates until the
Class A-7 Certificate Balance has been reduced to zero; and
(x) tenth, to the Holders of the Class A-8 Certificates until the
Class A-8 Certificate Balance has been reduced to zero.
(e) On each Distribution Date on or after the Stepdown Date and as long as
a Trigger Event is not in effect, the Trustee shall, after making the
distributions required in the foregoing clause (d), make the following
disbursements to the extent of the remaining Principal Distribution Amount:
(i) the lesser of (x) the excess, if any, of (i) the Principal
Distribution Amount over (ii) the amount distributed to the Holders of the
Class A Certificates in clause (d) above, and (y) the Class M-1 Principal
Distribution Amount, shall be distributed to the Holders of the Class M-1
Certificates, until the Class M-1 Certificate Balance has been reduced to
zero;
(ii) then, the lesser of (x) the excess, if any, of (i) the
Principal Distribution Amount over (ii) the sum of the amount distributed
to the Holders of the Class A Certificates in clause (d) above and the
amount distributed to the Holders of the Class M-1 Certificates in clause
(e)(i) above, and (y) the Class M-2 Principal Distribution
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Amount, shall be distributed to the Holders of the Class M-2 Certificates,
until the Class M-2 Certificate Balance has been reduced to zero;
(iii) then, the lesser of (x) the excess, if any, of (i) the
Principal Distribution Amount over (ii) the sum of the amount distributed
to the Holders of the Class A Certificates pursuant to clause (d) above,
the amount distributed to the Holders of the Class M-1 Certificates
pursuant to clause (e)(i) above and the amount distributed to the Holders
of the Class M-2 Certificates pursuant to clause (e)(ii) above, and (y)
the Class B-1 Principal Distribution Amount, shall be distributed to the
Holders of the Class B-1 Certificates, until the Class B-1 Certificate
Balance has been reduced to zero;
(iv) then, the lesser of (x) the excess, if any, of (i) the
Principal Distribution Amount over (ii) the sum of the amount distributed
to the Holders of the Class A Certificates pursuant to clause (d) above,
the amount distributed to the Holders of the Class M-1 Certificates
pursuant to clause (e)(i) above, the amount distributed to the Holders of
the Class M-2 Certificates pursuant to clause (e)(ii) above and the amount
distributed to the Holders of the Class B-1 Certificates pursuant to
clause (e)(iii) above and (y) the Class B-2 Principal Distribution Amount,
shall be distributed to the Holders of the Class B-2 Certificates, until
the Class B-2 Certificate Balance has been reduced to zero;
(v) then, the lesser of (x) the excess, if any, of (i) the Principal
Distribution Amount over (ii) the sum of the amount distributed to the
Holders of the Class A Certificates pursuant to clause (d) above, the
amount distributed to the Holders of the Class M-1 Certificates pursuant
to clause (e)(i) above, the amount distributed to the Holders of the Class
M-2 Certificates pursuant to clause (e)(ii) above, the amount distributed
to the Holders of the Class B-1 Certificates pursuant to clause (e)(iii)
above and the amount distributed to the Holders of the Class B-2
Certificates pursuant to clause (e)(iv) above and (y) the Class B-3
Principal Distribution Amount, shall be distributed to the Holders of the
Class B-3 Certificates, until the Class B-3 Certificate Balance has been
reduced to zero; and
(vi) then, the lesser of (x) the excess, if any, of (i) the
Principal Distribution Amount over (ii) the sum of the amount distributed
to the Holders of the Class A Certificates pursuant to clause (d) above,
the amount distributed to the Holders of the Class M-1 Certificates
pursuant to clause (e)(i) above, the amount distributed to the Holders of
the Class M-2 Certificates pursuant to clause (e)(ii) above, the amount
distributed to the Holders of the Class B-1 Certificates pursuant to
clause (e)(iii) above, the amount distributed to the Holders of the Class
B-2 Certificates pursuant to clause (e)(iv) above and the amount
distributed to the Holders of the Class B-3 Certificates pursuant to
clause (e)(v) above and (y) the Class B-4 Principal Distribution Amount,
shall be distributed to the Holders of the Class B-4 Certificates, until
the Class B-4 Certificate Balance has been reduced to zero.
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(f) On each Distribution Date on or after the Distribution Date on which
the Certificate Balance of the Class A Certificates has been reduced to zero, if
a Trigger Event is in effect, the Trustee shall (on the date on which the
Certificate Balance of the Class A Certificates is reduced to zero after making
the distributions required in the foregoing clause (d)), make the following
distributions in the following amounts and priorities to the extent of the
remaining Principal Distribution Amount:
(i) first, to the Holders of the Class M-1 Certificates until the
Class M-1 Certificate Balance has been reduced to zero;
(ii) second, to the Holders of the Class M-2 Certificates until the
Class M-2 Certificate Balance has been reduced to zero;
(iii) third, to the Holders of the Class B-1 Certificates until the
Class B-1 Certificate Balance has been reduced to zero;
(iv) fourth, to the Holders of the Class B-2 Certificates until the
Class B-2 Certificate Balance has been reduced to zero;
(v) fifth, to the Holders of the Class B-3 Certificates until the
Class B-3 Certificate Balance has been reduced to zero; and
(vi) sixth, to the Holders of the Class B-4 Certificates until the
Class B-4 Certificate Balance has been reduced to zero.
(g) Notwithstanding the foregoing, amounts otherwise distributable to a
Certificateholder pursuant to such paragraph which are required to be withheld
and remitted to a taxing authority shall be withheld and remitted to such taxing
authority, and such amounts shall be treated as actually distributed to such
Certificateholder for all purposes of this Agreement.
(h) The Master Servicer may direct the Trustee to pay to the
Master Servicer an amount equal to unreimbursed Servicing Advances (without
interest) with respect to each Mortgage Loan for which the Master Servicer has
made a Servicing Advance, to the extent not netted from deposits to the
Certificate Account pursuant to Section 5.05, by wire transfer of immediately
available funds, from subsequent collections with respect to interest on or with
respect to such Mortgage Loan, Liquidation Proceeds and Insurance Proceeds or
the Purchase Price of such Mortgage Loan.
(i) The Trustee shall appoint an Eligible Institution to be
the paying agent (the "Paying Agent") and cause it to make the payments to the
Certificateholders required hereunder. The Trustee initially appoints itself,
with its office at 000 Xxxxxxx Xxxxxx, 00 Xxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Mortgage Backed Securities, as such Paying Agent. The Trustee shall
require the Paying Agent (if other than the Trustee) to agree in writing that
all amounts held by it for payment hereunder will be held in trust for the
benefit of the Certificateholders and that it will notify the Trustee of any
failure by the Master Servicer to make funds available to the Paying Agent for
the payment of amounts due on the Certificates. In
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respect of each Distribution Date, the Trustee shall withdraw from the
Certificate Account and deposit in an account established by the Paying Agent
for the purpose of this Section funds sufficient to make the distribution to
Certificateholders pursuant to this Section. Such funds shall be available to
the Paying Agent by 11:00 A.M. on each Distribution Date.
(j) All distributions made in respect of any Class of Certificates (other
than the Class IO Certificates and the Class R-II Certificates) shall be deemed
to have first been distributed from REMIC I to REMIC II in respect of the REMIC
I Regular Interest in each case to the extent of the remaining portions of such
funds, for the following purposes and in the following order of priority:
(i) as deemed distributions of interest in respect of the REMIC I
Regular Interests, in an amount equal to, and pro rata in accordance with,
all Uncertificated Current Interest in respect of each such REMIC I
Regular Interest for such Distribution Date and, to the extent not
previously deemed distributed, for all prior Distribution Dates; and
(ii) as deemed distributions of principal in respect of the REMIC I
Regular Interests, in an amount equal to, and pro rata in accordance with,
as to each such REMIC I Regular Interest, the excess, if any, of the
Uncertificated Principal Balance of such REMIC I Regular Interest
outstanding immediately prior to such Distribution Date, over the
Principal Balance of the related Mortgage Loan that will be outstanding
immediately following such Distribution Date.
(k) Any shortfalls in interest collections on the Mortgage Loans resulting
from application of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended (the "Relief Act"), shall be allocated to each Class of Certificates
that is entitled to receive interest in respect of such Mortgage Loans in
proportion to the interest that each such Class of Certificates would have
otherwise been entitled to receive in respect of such Mortgage Loans had such
interest shortfall not occurred. The Weighted Average Net Mortgage Rate will be
calculated based on the rate of interest on each Mortgage Loan as reduced by
application of the Relief Act.
SECTION 8.02. Permitted Withdrawals from the Certificate Account.
The Trustee shall at the written direction of the Master Servicer, from
time to time as provided herein, make withdrawals from the Certificate Account
of amounts deposited in said account pursuant to Section 5.05 that are
attributable to the Mortgage Loans for the following purposes:
(a) to make payments to Certificateholders and the Master Servicer
in the amounts and in the manner provided for in Section 8.01;
(b) to pay to CIT Consumer Finance with respect to each Mortgage
Loan or property acquired in respect thereof that has been purchased
pursuant to Section 3.05 or 4.03 or 5.14, all amounts received thereon and
not required to be distributed to
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Certificateholders as of the date on which the related Principal Balance
or Purchase Price is determined;
(c) to make payments to the Master Servicer in the amounts and in
the manner provided for in Section 8.01(h);
(d) to reimburse the Master Servicer out of Liquidation Proceeds for
Liquidation Expenses and taxes incurred by it, to the extent such
reimbursement is permitted pursuant to Section 5.08;
(e) to reimburse the Master Servicer for the payment of taxes as
permitted by Section 5.10;
(f) to withdraw any amount deposited in the Certificate Account that
was not required to be deposited therein;
(g) to pay to the Master Servicer (if CIT Consumer Finance or one of
its Affiliates is not the Master Servicer) the Master Servicing Fees for
such Distribution Date and the Master Servicing Fees from any prior
Distribution Date previously unpaid; and
(h) to pay to the Master Servicer net investment earnings from funds
on deposit in the Certificate Account due to the Master Servicer pursuant
to Section 5.05(b).
Since, in connection with withdrawals pursuant to clause (b) of the
preceding paragraph, CIT Consumer Finance's entitlement thereto is limited to
collections or other recoveries on the related Mortgage Loan, the Master
Servicer shall keep and maintain separate accounting, on a Mortgage Loan by
Mortgage Loan basis, for the purpose of justifying any withdrawal from the
Certificate Account pursuant to such clause. The Master Servicer shall keep and
maintain an accounting for the purpose of justifying any withdrawal from the
Certificate Account pursuant to clause (f).
SECTION 8.03. Repurchase Option and Auction Sale.
(a) The Trust created hereby and the respective obligations and
responsibilities of the Company, the Master Servicer and the Trustee created
hereby (other than the responsibility of the Trustee to make any final
distributions to Certificateholders as set forth below) shall terminate upon the
earlier of the Distribution Date following the later of the final payment or
other liquidation (or any advance with respect thereto) of the last Mortgage
Loan remaining in the Trust or the termination of the Trust pursuant to Section
12.03, or the sale by the Trustee of all the Mortgage Loans and all the property
acquired in respect of any Mortgage Loan remaining in the Trust pursuant to
subsections (i) and (ii) below.
(i) The Master Servicer, at its option, may purchase all of the
Mortgage Loans and all REO Property acquired in respect of any Mortgage
Loan remaining in the Trust on any Distribution Date on which the Pool
Principal Balance is 10% or less of the Cut-off Date Pool Principal
Balance (the first such Distribution Date, the "Clean-up Call Date") at a
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purchase price equal to the greatest of (A) the sum of (1) 100% of the
Principal Balance of each Mortgage Loan (other than any Mortgage Loan as
to which title to the underlying property has been acquired and whose fair
market value is included pursuant to clause (2) below as of the Final
Distribution Date) and (2) the fair market value of such acquired property
(as determined by the Master Servicer as of the close of business on the
third Business Day next preceding the date upon which notice of any such
termination is furnished to Certificateholders pursuant to Section 12.03),
(B) the aggregate fair market value (as determined by the Master Servicer
as of the close of business on such third Business Day) of all of the
assets of the Trust, and (C) an amount that when added to amounts on
deposit in the Certificate Account available for distribution to
Certificateholders for such Distribution Date would result in proceeds
sufficient to distribute the Aggregate Certificate Balance and interest
for such Distribution Date and any unpaid interest with respect to one or
more prior Distribution Dates. The Master Servicer shall effect such
purchase by depositing such purchase price in the Certificate Account on
the Business Day immediately preceding such Distribution Date. Promptly
after such purchase, the Trustee shall execute such documents as are
presented to it by the Master Servicer and are reasonably necessary to
convey the Mortgage Loans and REO Property to the Master Servicer and
deliver the Files to the Master Servicer.
(ii) In accordance with the procedures and schedule set forth in
Exhibit N hereto (the "Auction Procedures"), the Trustee shall conduct an
auction (the "Auction") of the Mortgage Loans and all REO Property
acquired in respect of any Mortgage Loan remaining in the Trust (such
Mortgage Loans hereinafter referred to as the "Auction Property") in order
to effect a termination of the Trust, on the second Distribution Date
succeeding the related Due Period on which the Pool Principal Balance is
5% or less of the Cut-off Date Pool Principal Balance; provided however,
that that Trustee will not conduct such Auction if the Master Servicer has
exercised the repurchase option described in clause (i) above prior to
such date. Within five Business Days after the last day of the Due Period
in which the Pool Principal Balance is 5% or less of the Cut-off Date
Principal Balance the Master Servicer shall notify the Trustee to initiate
the Auction Procedures. The Auction shall be conducted no later than five
Business Days prior to the second Distribution Date succeeding such Due
Period (such date, the "Auction Date"). CIT Consumer Finance and the
Company may, but shall not be required to, bid at the Auction. The Trustee
shall appoint a financial advisor, as advisor to the Trustee (in such
capacity, the "Advisor"), to assist such Trustee with the Auction. The
Trustee may hire an agent to conduct the Auction. All fees and expenses of
any such Advisor and/or agent hired to conduct the Auction shall be borne
by the Master Servicer and the Master Servicer shall reimburse the Trustee
for any such fees or expenses paid by the Trustee. The Trustee shall sell
and transfer the Auction Property to the highest bidder therefor at the
Auction provided that:
(1) the Auction has been conducted in accordance with the
Auction Procedures;
(2) the Trustee has received good faith bids for the Auction
Property from at least two prospective purchasers;
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(3) the Advisor shall have advised the Trustee in writing that
at least two of such bidders (including the winning bidder) are
competitive participants in the market for home equity mortgage
loans willing and able to purchase the Auction Property;
(4) 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 the Advisor in its sole discretion);
(5) the highest bid must be equal to or greater than the sum
of (i) the greater of (a) the aggregate Purchase Price for the
Mortgage Loans (including Liquidated Mortgages) 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 Certificate Account available for distribution to
Certificateholders for such second succeeding Distribution Date
would result in proceeds sufficient to distribute the Aggregate
Certificate Balance and interest for such Distribution Date and any
unpaid interest with respect to one or more prior Distribution
Dates, and (ii) the sum of (a) an amount sufficient to reimburse the
Master Servicer for any unreimbursed Monthly Advances for which it
is entitled to reimbursement, (b) the Master Servicing Fee payable
on such final Distribution Date, including any unpaid Master
Servicing Fees with respect to one or more prior Due Periods and (c)
the expenses of such Auction as determined by the Advisor, whose
determination shall be binding absent manifest error;
(6) such sale and consequent termination of the Trust must
constitute a "qualified liquidation" of the Trust under Section 860F
of the Internal Revenue Code of 1986, as amended, including without
limitation, the requirement that such qualified liquidation takes
place over a period not to exceed 90 days (the Trustee may, in its
discretion, require that the purchaser of such Auction Property
provide an Opinion of Counsel to that effect); and
(7) the terms of the Auction must be made available to all
bidders and must stipulate that CIT Consumer Finance (if at such
time it is the Master Servicer) be retained to service the Mortgage
Loans on terms substantially similar to those in the Agreement.
Provided that all of the conditions set forth in clauses (1) through (8) have
been met, the Trustee shall sell and transfer the Auction Property, without
representation, warranty or recourse of any kind whatsoever, to such highest
bidder in accordance with and upon completion of the Auction Procedures. The
Trustee shall deposit the purchase price for the Auction Property in the
Certificate Account at least one Business Day prior to such second succeeding
Distribution Date. 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,
the Trustee shall decline to consummate such sale and transfer. The Trustee
shall have no liability in connection with any Auction, except for its own
negligence or willful misconduct.
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SECTION 8.04. Monthly Advances by the Master Servicer.
(a) By the close of business on the day prior to each Distribution Date,
the Master Servicer shall pay to the Trust, but only to the extent of the Master
Servicing Fee for such month, with respect to each Mortgage Loan as to which the
Master Servicer received a Principal Prepayment during the related Due Period an
amount ("Compensating Interest") equal to the excess of (i) 30 days' interest on
the Principal Balance of each such Mortgage Loan as of the beginning of the
related Due Period at the Mortgage Rate over, (ii) the amount of interest
actually received on the related Mortgage Loan during such Due Period.
(b) The Master Servicer shall be required to make an advance of its own
funds no later than the day prior to the Distribution Date and in no event
earlier than the seventh Business Day of such month, in the amount, if any, by
which 30 days' interest at the Mortgage Rate on the then outstanding Principal
Balance of a Mortgage Loan exceeds the amount received by the Master Servicer in
respect of interest on the Mortgage Loan during the related Due Period (any such
advance, a "Monthly Advance"), subject to limitations set forth in subsection
(c) below.
(c) The Master Servicer shall not be obligated to make a Monthly Advance
if it determines that such Monthly Advance is a Nonrecoverable Advance. The
determination by the Master Servicer that any advance is, or if made would
constitute, a Nonrecoverable Advance, shall be evidenced by an Officer's
Certificate of the Master Servicer delivered to the Trustee and stating the
reasons for such determination. If an unreimbursed Monthly Advance shall become
a Nonrecoverable Advance, the Master Servicer shall be reimbursed from interest
collections on all of the Mortgage Loans in the Trust prior to any distribution
to Certificateholders pursuant to Section 8.01(c).
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ARTICLE IX
THE CERTIFICATES
SECTION 9.01. The Certificates.
The Offered Certificates and the Private Certificates shall be
substantially in the forms set forth in Exhibits A-E, and shall, on original
issue, be executed by manual or facsimile signature of the Trustee, on behalf of
the Trust, by a duly authorized Responsible Officer or authorized signatory and
authenticated by the Trustee to or upon the order of the Company. The Offered
Certificates shall be evidenced by (i) one or more Class A-1 Certificates
representing $61,000,000 initial aggregate principal balance, (ii) one or more
Class A-2 Certificates representing $38,000,000 initial aggregate principal
balance, (iii) one or more Class A-3 Certificates representing $45,000,000
initial aggregate principal balance, (iv) one or more Class A-4 Certificates
representing $25,000,000 initial aggregate principal balance, (v) one or more
Class A-5 Certificates representing $11,000,000 initial aggregate principal
balance, (vi) one or more Class A-6 Certificates representing $10,872,000
initial aggregate principal balance, (vii) one or more Class A-7 Certificates
representing $19,000,000 initial aggregate principal balance, (viii) one or more
Class A-8 Certificates representing $51,317,000 initial aggregate principal
balance, (ix) one or more Class M-1 Certificates representing $23,046,000
initial aggregate principal balance, (x) one or more Class M-2 Certificates
representing $19,632,000 initial aggregate principal balance and (xi) one or
more Class B-1 Certificates representing $11,950,000 initial aggregate principal
balance, beneficial ownership of such Certificates to be held through Book-Entry
Certificates in minimum dollar denominations of $1,000 and integral dollar
multiples of $1,000 in excess thereof. The Private Certificates shall be
evidenced by (i) one or more definitive physical Class B-2 Certificates
representing $10,242,000 initial principal balance, (ii) one or more definitive
physical Class B-3 Certificates representing $6,829,000 initial principal
balance, (iii) one or more definitive physical Class B-4 Certificates
representing $8,536,000 initial principal balance, (iv) one or more definitive
physical Class IO-XI Certificates issuable in Percentage Interests and (v) one
or more definitive physical Class IO-X2 Certificates issuable in Percentage
Interests. Each Private Certificate shall be in a minimum denomination of
$500,000 principal balance and integral dollar multiples of $1,000 in excess
thereof. One Private Certificate of each Class of Private Certificates may be
issued in another denomination (in excess of the minimum denomination) to
accommodate the remainder of the Original Private Certificate Balances. The
Class R Certificates shall be issuable in Percentage Interests.
The Certificates shall be authenticated by manual signature on behalf of
the Trustee by a duly authorized Responsible Officer or authorized signatory at
the written request of the Company. No Certificate shall be entitled to any
benefit under this Agreement, or be valid for any purpose, unless such
Certificate has been authenticated by manual signature in accordance with this
Section, and such signature upon any Certificate shall be conclusive evidence,
and the only evidence, that such Certificate has been duly authenticated and
delivered hereunder. All Certificates shall be dated the date of their
authentication, except for those Certificates authenticated on the Closing Date,
which shall be dated the Closing Date.
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SECTION 9.02. Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall keep at the office or agency to be maintained in
accordance with Section 12.02 a "Certificate Register" in which the Trustee
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. The Trustee initially appoints
itself to be the "Certificate Registrar" and transfer agent for the purpose of
registering Certificates and transfers and exchanges of Certificates as provided
herein. Promptly after the Closing Date the Trustee will give the Master
Servicer, in writing, the names of all Class R Certificateholders and the
Trustee will give the Master Servicer, prompt written notice of any change in
the Class R Certificateholders. The Trustee will give prompt written notice to
Certificateholders and the Master Servicer of any change in the Certificate
Registrar.
(b) No transfer, sale, pledge or other disposition of any Class R
Certificate or Private Certificate or any interest therein (including any
transfer by a Certificateholder of any interest in a Book-Entry Certificate)
shall be made unless such transfer is made pursuant to an effective registration
statement under the Securities Act and effective registration or qualification
under applicable state securities laws or is made in a transaction that does not
require such registration or qualification. Until such time as the Class R
Certificates or the Private Certificates shall be registered pursuant to a
registration statement filed under the Securities Act, the Class R Certificates
and the Private Certificates, respectively, shall bear a legend to the effect
set forth in the preceding sentence.
In the event that registration of a transfer of a Class R Certificate or
Private Certificate or any interest therein (including any transfer by a
Certificateholder of any interest in a Book-Entry Certificate) is to be made in
reliance upon the exemption from registration under the Securities Act contained
in Rule 144A, such transfer shall be made only to a Qualified Institutional
Buyer which is aware that the transfer of such Certificate is being made in
reliance on Rule 144A and is acquiring such Certificate for its own account or
for the account of a Qualified Institutional Buyer, as the case may be, and such
transferee shall be deemed to have represented that the foregoing is true and
correct and that such transferee understands that such Certificates have not
been and will not be registered under the Securities Act and may not be
reoffered, resold, pledged or otherwise transferred except (A) to a person who
such transferee reasonably believes is a Qualified Institutional Buyer in a
transaction meeting the requirements of Rule 144A and (B) in accordance with all
applicable securities laws of the states of the United States.
In the event that registration of a transfer of a Class R Certificate or
Private Certificate or any interest therein (including any transfer by a
Certificateholder of any interest in a Book-Entry Certificate) is to be made in
reliance upon an exemption from registration under the Securities Act (other
than the exemption from registration contained in Rule 144A) and applicable
state securities laws in order to assure compliance with the Securities Act, the
transferor or the transferee shall deliver to the Trustee, the Company and the
Master Servicer an Opinion of Counsel (which may be internal counsel) that such
transfer may be made pursuant to an exemption from the Securities Act (other
than the exemption from registration contained in Section 3(a)(2) thereof).
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The Holder of a Class R Certificate or a Private Certificate desiring to
effect a transfer of such Certificate shall, and does hereby agree to, indemnify
the Trustee, the Company and the Master Servicer against any liability that may
result if such transfer is not so exempt or is not made in accordance with such
federal and state laws.
Neither the Master Servicer, the Company, the Certificate Registrar, the
Paying Agent, the Seller nor the Trustee is obligated to register the Class R
Certificates or the Private Certificates under the Securities Act or under any
state securities laws.
Prospective transferors of Class R Certificates or Private Certificates
(or Book-Entry Certificates), and prospective transferees of Certificates (or
Book-Entry Certificates) that are Qualified Institutional Buyers buying
Certificates in reliance upon Rule 144A may request from the Master Servicer
information regarding the Trust and the Trust assets. Within five (5) Business
Days of any such request, the Master Servicer shall deliver to any such
prospective transferor or transferee (i) a copy of each Monthly Report delivered
to Certificateholders since the first Distribution Date pursuant to Section
6.05, (ii) information relating to the Seller, the Master Servicer, the Mortgage
Loans and this Agreement substantially in the form of the Prospectus dated April
8, 1997 and the Prospectus Supplement relating to the Certificates, dated July
31, 1998 and (iii) such other information as may be required to comply with Rule
144A and any interpretation thereof.
(c) As a condition to the registration of any Transfer of any Private
Certificate, the prospective transferee shall deliver to the Certificate
Registrar and the Trustee a certificate substantially in the form attached
hereto as Exhibit P (a "Private Certificate Transferee Letter") or shall supply
other evidence to the same effect satisfactory to the Master Servicer.
(d) Each Person who has or who acquires any Ownership Interest in a Class
R Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions and to have
irrevocably appointed the Master Servicer as its attorney-in-fact to negotiate
the terms of any mandatory sale under clause (vi) below and to execute all
instruments of transfer and to do all other things necessary in connection with
any such sale, and the rights of each Person acquiring any Ownership Interest in
a Class R Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall be a Permitted Transferee and shall promptly
notify the Master Servicer of any change or impending change in its status
as a Permitted Transferee.
(ii) No Ownership Interest in a Class R Certificate may be
Transferred without the express written consent of the Master Servicer,
and the Trustee shall not register the Transfer of any Class R Certificate
without such consent with respect to any proposed Transfer. In connection
with any proposed Transfer of any Ownership Interest in a Class R
Certificate, the Master Servicer shall, as a condition to such consent,
require delivery to it, form and substance satisfactory to it, and the
proposed Transferee shall deliver to the Master Servicer, the following:
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(A) an affidavit (a "Transfer Affidavit") of the proposed
Transferee, in the form attached as Exhibit M hereto, that it is not
a "disqualified organization" within the meaning of Section
860E(e)(5) of the Code, and that the proposed Transferee is not
acquiring its Ownership Interest in the Class R Certificate as a
nominee, trustee or agent for, or for the benefit of, any Person who
is not a Permitted Transferee; and
(B) an express agreement by the proposed Transferee to be
bound by and to abide by the provisions of this Section and the
restrictions noted on the face of the Class R Certificates.
(iii) Notwithstanding the delivery of a Transfer Affidavit by a
proposed Transferee under clause (ii) above, if the Master Servicer has
actual knowledge that the Transfer Affidavit is false, no Transfer of an
Ownership Interest in a Class R Certificate to such proposed Transferee
shall be effected.
(iv) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall agree (A) to require a Transfer Affidavit from
any other Person to whom such Person attempts to Transfer its Ownership
Interest in a Class R Certificate and (B) not to Transfer its Ownership
Interest in a Class R Certificate or to cause the Transfer of an Ownership
Interest in a Class R Certificate to any other Person if it has actual
knowledge that such Transfer Affidavit is false.
(v) Any attempted or purported Transfer of any Ownership Interest in
a Class R Certificate in violation of the provisions of this Section shall
be absolutely null and void and shall vest no rights in the purported
Transferee. If any purported Transferee shall become a Holder of a Class R
Certificate in violation of the provisions of this Section, then, upon
discovery by or due notification of the Trustee that the registration of
Transfer of such Class R Certificate was not in fact permitted by this
Section, the last preceding Permitted Transferee shall be restored to all
rights as Holder thereof retroactive to the date of registration of
Transfer of such Class R Certificate. The Trustee shall be under no
liability to any Person for any registration of transfer of a Class R
Certificate that is in fact not permitted by this Section or for making
any payments due on such Certificate to the Holder thereof or taking any
other action with respect to such Holder under the provisions of this
Agreement so long as the Transfer was registered with the express prior
written consent of the Master Servicer. The Trustee shall be entitled but
not obligated to recover from any Holder of a Class R Certificate that was
in fact not a Permitted Transferee at the time it became a Holder or, at
such subsequent time as it became other than a Permitted Transferee, all
payments made on such Class R Certificate at and after either such time.
Any such payments so recovered by the Trustee shall be paid and delivered
by the Trustee to the last preceding Permitted Transferee of such
Certificate.
(vi) If any purported Transferee shall become a Holder of a Class R
Certificate in violation of the restrictions in this Section, then the
Master Servicer shall have the right
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without notice to the Holder or any prior Holder of such Class R
Certificate, to sell such Class R Certificate to a purchaser selected by
the Master Servicer on such terms as the Master Servicer may choose. Such
purchaser may be the Master Servicer itself or any Affiliate of the Master
Servicer. The proceeds of such sale, net of commissions (which may include
commissions payable to the Master Servicer or its Affiliates), expenses
and taxes due, if any, will be remitted by the Master Servicer to the last
preceding Permitted Transferee of such Class R Certificate, except that in
the event that the Master Servicer determines that the Holder or any prior
Holder of such Class R Certificate may be liable for any amount due under
this Section or any other provision of this Agreement, the Master Servicer
may withhold a corresponding amount from such remittance as security for
such claim. The terms and conditions of any sale under this clause (vi)
shall be determined in the sole discretion of the Master Servicer, and it
shall not be liable to any Person having an Ownership Interest in a Class
R Certificate as a result of its exercise of such discretion.
Upon notice to the Master Servicer that any legal or beneficial interest
in any portion of a Class R Certificate has been transferred, either directly or
indirectly to any person that is not a Permitted Transferee or an agent
(including a broker, nominee, or middleman) of such Transferee in contravention
of the foregoing restrictions, the Master Servicer agrees to furnish to the
Internal Revenue Service and to the transferor of such Class R Certificate or
such agent such information necessary to the application of Section 860E(e) of
the Code as may be required by the Code or any regulations or administrative
pronouncements thereunder, including but not limited to the present value of the
total anticipated excess inclusions with respect to such Class R Certificate (or
portion thereof) for periods after such transfer. At the election of the Master
Servicer, the Master Servicer may charge a reasonable fee for computing and
furnishing such information to the transferor or to such agent referred to
above; however, the Master Servicer shall in no event be excused from furnishing
such information to the Internal Revenue Service. The foregoing restrictions on
transfer contained in this Section 9.02(d) shall cease to apply to Transfers
occurring on or after the date on which there shall have been delivered to the
Trustee, the Company and the Master Servicer, in form and substance satisfactory
to the Master Servicer, an Opinion of Counsel that eliminating such restrictions
will not cause any of the REMICs to fail to qualify as a REMIC at any time while
the Certificates are outstanding.
(e) At the option of a Certificateholder, Certificates may be exchanged
for other Certificates of the same Class of authorized denominations of the same
aggregate denomination, upon surrender of the Certificates to be exchanged at
such office. Whenever any Certificates are so surrendered for exchange, the
Company shall execute and deliver, and the Trustee shall authenticate, the
Certificates which the Certificateholder making the exchange is entitled to
receive. Every Certificate presented or surrendered for transfer or exchange
shall be duly endorsed by, or shall be accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by, the Holder thereof or his or her attorney duly authorized in
writing.
(f) Except as provided in paragraph (g) below the Book-Entry Certificates
shall at all times remain registered in the name of the Depository or its
nominee and at all times:
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(i) registration of the Offered Certificates may not be transferred by the
Trustee except to another Depository; (ii) the Depository shall maintain
book-entry records with respect to the Certificateholders and with respect to
ownership and transfers of such Offered Certificates; (iii) ownership and
transfers of registration of the Offered Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository;
(iv) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (v) the Trustee shall deal with the
Depository, Depository Participants and indirect participating firms as
representatives of the Certificateholders of the Offered Certificates for
purposes of exercising the rights of Holders under this Agreement, and requests
and directions for and votes of such representatives shall not be deemed to be
inconsistent if they are made with respect to different Certificateholders; and
(vi) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants and furnished by the Depository Participants with respect to
indirect participating firms and persons shown on the books of such indirect
participating firms as direct or indirect Certificateholders.
All transfers by Certificateholders of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificateholder. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificates Owners
it represents or of brokerage firms for which it acts as agent in accordance
with the Depository's normal procedures.
(g) If (x)(i) the Company or the Depository advises the Trustee in writing
that the Depository is no longer willing or able properly to discharge its
responsibilities as Depository, and (ii) the Trustee or the Company is unable to
locate a qualified successor, or (y) the Company at its sole option advises the
Trustee in writing that it elects to terminate the book-entry system through the
Depository, the Trustee shall notify all Certificateholders, through the
Depository, of the occurrence of any such event and of the availability of
definitive, fully registered Offered Certificates (the "Definitive
Certificates") to Certificateholders requesting the same. Upon surrender to the
Trustee of the Offered Certificates by the Depository, accompanied by
registration instructions from the Depository for registration, the Trustee
shall issue the Definitive Certificates. Neither the Company nor the Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Certificates all references herein to
obligations imposed upon or to be performed by the Depository shall be deemed to
be imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Certificates and the Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder.
(h) On or prior to the Closing Date, there shall be delivered to the
Depository one Class A-1 Certificate, one Class A-2 Certificate, one Class A-3
Certificate, one Class A-4 Certificate, one Class A-5 Certificate, one Class A-6
Certificate, one Class A-7 Certificate, one Class A-8 Certificate, one Class M-1
Certificate, one Class M-2 Certificate, and one Class B-1 Certificate, each in
registered form registered in the name of the Depository's nominee, Cede & Co.,
the total face amount of which represents 100% of the Original Class A-1
Certificate Balance, the Original Class A-2 Certificate Balance, the Original
Class A-3 Certificate Balance,
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the Original Class A-4 Certificate Balance, the Original Class A-5 Certificate
Balance, the Original Class A-6 Certificate Balance, the Original Class A-7
Certificate Balance, the Original Class A-8 Certificate Balance, the Original
Class M-1 Certificate Balance, the Original Class M-2 Certificate Balance, and
the Original Class B-1 Principal Balance, respectively. If, however, the
aggregate principal amount of a Class of Offered Certificates exceeds
$200,000,000, one Offered Certificate will be issued with respect to each
$200,000,000 of principal amount and an additional Certificate of such Class or
Classes will be issued with respect to any remaining principal amount. Each such
Offered Certificate registered in the name of the Depository's nominee shall
bear the following legend:
"Unless this Certificate is presented by an authorized representative of
The Depository Trust Company to the Trustee or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as requested by an authorized
representative of The Depository Trust Company (and any payment is made to Cede
& Co. or to such other entity as is requested by an authorized representative of
the Depository Trust Company), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein."
(i) No Subordinate Certificate or any interest therein may 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 ERISA or (iii) any entity whose underlying
assets include plan assets by reason of a plan's investment in the entity (other
than an insurance company purchasing such Certificates for its general account)
(each a "Plan"). By accepting and holding a Subordinate Certificate (other than
a Private Certificate), the Holder thereof and the Subordinate Certificateholder
shall be deemed to have represented and warranted that it is not a Plan and not
subject to the foregoing limitation. No Transfer of a Private Certificate may be
made unless the Certificate Registrar shall have received from the prospective
transferee of such Private Certificate a representation that such transferee is
not a Plan; provided, however, if such prospective transferee is an insurance
company, the sole representation shall be that the source of the funds is an
"insurance company general account," as defined in Section V(e) of Prohibited
Transaction Exemption ("PTE") 95-60 and, in accordance with Section I(a) of PTE
95-60, there is no plan, treating as a single plan all plans maintained by the
same employer or employee organization, with respect to which the amount of the
reserves and liabilities for all general account contracts held by or on behalf
of such plan exceed ten percent (10%) of the total reserves and liabilities of
such general account (exclusive of separate account liabilities) plus surplus.
SECTION 9.03. No Charge; Disposition of Void Certificates.
No service charge shall be made to a Certificateholder for any transfer or
exchange of Certificates, but the Certificate Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Certificates. All Certificates
surrendered for transfer and exchange shall be disposed of in a manner approved
by the Trustee.
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SECTION 9.04. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate, and (b) there is delivered to
the Certificate Registrar and the Trustee such security or indemnity as may be
required by each to save each of them harmless, then in the absence of notice to
the Certificate Registrar or the Trustee that such Certificate has been acquired
by a bona fide purchaser, the Trustee shall authenticate, and the Company shall
execute and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of the same Class and
same denomination. Upon the issuance of any new Certificate under this Section
9.04, the Trustee may require the payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in relation thereto and any
other expenses connected therewith. Any duplicate Certificate issued pursuant to
this Section 9.04 shall constitute complete and indefeasible evidence of
ownership of the Percentage Interest evidenced thereby, as if originally issued,
whether or not the destroyed, lost or stolen Certificate shall be found at any
time.
SECTION 9.05. Persons Deemed Owners.
Prior to due presentation of a Certificate for registration of transfer,
the Master Servicer, the Company, the Trustee, the Paying Agent and the
Certificate Registrar may treat the person in whose name any Certificate is
registered as the owner of such Certificate for the purpose of receiving
remittances pursuant to Section 8.01 and for all other purposes whatsoever, and
none of the Master Servicer, the Company, the Trustee, the Certificate
Registrar, the Paying Agent or any agent of the Master Servicer, the Company,
the Trustee, the Paying Agent or the Certificate Registrar shall be affected by
notice to the contrary.
SECTION 9.06. Access to List of Certificateholders' Names and Addresses.
The Certificate Registrar will furnish to the Trustee, the Master Servicer
and the Company within five Business Days after receipt by the Certificate
Registrar of a request therefor from the Trustee, the Master Servicer or the
Company, in writing, a list, in such form as the Trustee, the Master Servicer or
the Company 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 Holders of Certificates evidencing, as to any Class,
Percentage Interests aggregating 25% or more (hereinafter referred to as
"Applicants") apply in writing to the Trustee, and such application states that
the Applicants desire to communicate with other Certificateholders with respect
to their rights under this Agreement or under the Certificates and is
accompanied by a copy of the communication which such Applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt of
such application, afford such Applicants access during normal business hours to
the most recent list of Certificateholders held by the Trustee. If such list is
as of a date more than ninety (90) days prior to the date of receipt of such
Applicants' request, the Trustee shall promptly request from the Certificate
Registrar a current list as provided above, and shall afford such Applicants
access to such list promptly upon receipt. Every Certificateholder, by receiving
and holding a Certificate, agrees with the
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Certificate Registrar and the Trustee that none of the Company, the Master
Servicer, the Certificate Registrar or the Trustee shall be held accountable by
reason of the disclosure of any such information as to the names and addresses
of the Certificateholders hereunder, regardless of the source from which such
information was derived.
SECTION 9.07. Authenticating Agents.
The Trustee may appoint one or more Authenticating Agents with power to
act on its behalf and subject to its direction in the authentication of the
Certificates. For all purposes of this Agreement, the authentication of
Certificates by the Authenticating Agent pursuant to this Section shall be
deemed to be the authentication of Certificates "by the Trustee".
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ARTICLE X
INDEMNITIES
SECTION 10.01. Liabilities to Mortgagors.
No liability to any Mortgagor under any of the Mortgage Loans arising out
of any act or omission to act of the Master Servicer in servicing the Mortgage
Loans prior to the Closing Date is intended to be assumed by the Company, the
Trust, the Trustee or the Certificateholders under or as a result of this
Agreement and the transactions contemplated hereby and, to the maximum extent
permitted and valid under mandatory provisions of law, the Company, the Trust,
the Trustee and the Certificateholders expressly disclaim such assumption.
SECTION 10.02. Tax Indemnification.
CIT Consumer Finance will pay, and shall indemnify, defend, and hold
harmless the Trustee, the Trust, and the Certificateholders 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 Mortgage Loans to the Trust, including, without
limitation, any sales, gross receipts, personal or real property, privilege or
license taxes (but not including any federal, state or other taxes arising out
of the creation of the Trust and the issuance of the Certificates or
distributions with respect thereto) and costs, expenses and reasonable counsel
fees in defending against the same.
SECTION 10.03. Master Servicer's Indemnities.
The Master Servicer will indemnify, defend, and hold harmless the Trustee,
the custodian, the Paying Agent, 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 such Persons, through the willful misfeasance,
negligence, or bad faith of the Master Servicer in the performance of its duties
under this Agreement or by reason of reckless disregard of its obligations and
duties under this Agreement.
The Master Servicer will indemnify, defend, and hold harmless from and
against, and pay to the Trustee 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 contained in this Agreement in accordance
with the terms and conditions therein, except to the extent that such cost,
expense, loss, claim, damage or liability: (a) shall be due to the willful
misfeasance, gross negligence or bad faith of the Trustee; (b) relates to any
tax other than the taxes with respect to which the Master Servicer shall be
required to indemnify the Trustee pursuant to this Agreement; (c) shall arise
from the Trustee's breach of any of its representations or warranties set forth
in this Agreement; or (d) shall arise out of or be incurred in connection with
the acceptance or performance by the Trustee of the duties of successor Master
Servicer hereunder.
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SECTION 10.04. Operation of Indemnities.
The indemnification provided under this Article shall include reasonable
fees and expenses of counsel, provided that the Master Servicer shall only be
required to pay the fees and expenses of one counsel, appointed by the Master
Servicer and reasonably satisfactory to the indemnitee, in any single litigation
(or related proceedings) for all indemnitees; provided, however, if in the
written opinion of counsel reasonably satisfactory to the Master Servicer, the
interests of the Master Servicer and the Trustee conflict such that the Master
Servicer and the Trustee may not both be represented by such counsel, upon ten
days prior written notice to the Master Servicer, the Trustee may hire one other
counsel, and the indemnification herein shall also include the reasonable fees
and expenses of such other counsel. If the Master Servicer or the Company shall
have made any indemnity payments pursuant to this Agreement and the recipient
thereafter collects any of such amounts from others, the recipient will promptly
repay such amounts to the Master Servicer and/or the Company, without interest.
The indemnities under this Agreement shall survive the resignation or removal of
the Trustee, or the termination of this Agreement.
SECTION 10.05 CIT Consumer Finance Indemnification.
CIT Consumer Finance will pay, and shall indemnify, defend, and hold
harmless the Trust from and against any and all costs, expenses, losses, claims,
damages, and liabilities imposed upon the Trust arising out of or based upon a
breach of a representation or warranty made by CIT Consumer Finance hereunder.
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ARTICLE XI
THE TRUSTEE
SECTION 11.01. Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Termination and after
the curing of all Events of Termination which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. If an Event of Termination has occurred (which has not been cured),
the Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform as to form to the requirements of this Agreement.
Subject to Section 11.03, no provision of this Agreement shall be
construed to relieve the Trustee from liability for its own negligent action,
its own negligent failure to act or its own willful misconduct; provided,
however, that:
(a) Prior to the occurrence of an Event of Termination, and after the
curing of all such Events of Termination which may have occurred, the duties and
obligations of the Trustee shall be determined solely by the express provisions
of this Agreement, the Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the Trustee, the Trustee
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished to
the Trustee and conforming to the requirements of this Agreement;
(b) The Trustee shall not be personally liable for an error of judgment
made in good faith by a Responsible Officer of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts;
(c) The Trustee shall not be (i) personally liable for any action taken,
suffered or omitted by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement and (ii) answerable or accountable under any circumstances except
for its own negligence or willful misconduct;
(d) The Trustee shall not be personally liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance with
the direction of the Holders of 25% or more of the Certificates relating to the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred upon the Trustee, under
this Agreement;
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(e) The Trustee shall not be charged with knowledge of any event referred
to in Section 7.01 unless a Responsible Officer of the Trustee at the Corporate
Trust Office obtains actual knowledge of such event or fact or the Trustee
receives written notice of such event or fact from the Master Servicer or the
Holders of 25% or more of the Certificates; and
(f) The Trustee shall not be required 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 there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it. None
of the provisions contained in this Agreement shall in any event require the
Trustee to perform, or be responsible for the manner of performance of, any of
the obligations of CIT Consumer Finance, the Company or the Master 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 Master Servicer in accordance with the terms of this Agreement.
SECTION 11.02. Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 11.01:
(a) The Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, Officer's Certificate, certificate of a
Servicing Officer, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) The Trustee may consult with counsel and any opinion of any counsel
shall be full and complete authorization and protection in respect of any action
taken or suffered or omitted by it hereunder in good faith and in accordance
with such opinion of counsel;
(c) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Agreement, or to institute, conduct or defend any
litigation hereunder or in relation hereto, at the request, order or direction
of any of the Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby; provided, however, that nothing contained herein
shall relieve the Trustee of the obligations, upon the occurrence of an Event of
Termination (which has not been cured), to exercise such of the rights and
powers vested in it by this Agreement, and to use the same degree of care and
skill in their exercise as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs;
(d) Prior to the occurrence of an Event of Termination and after the
curing of all Events of Termination which may have occurred, the Trustee shall
not be bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or document, unless
requested in writing so to do by Holders of 25% or more of the Certificates;
provided,
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however, that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of this Agreement, the
Trustee may require reasonable indemnity against such cost, expense or liability
as a condition to so proceeding. The reasonable expense of every such
examination shall be paid by the Master Servicer or, if paid by the Trustee,
shall be reimbursed by the Master Servicer upon demand;
(e) The Trustee may execute any of the trusts or powers hereunder or
perform by duties hereunder either directly or by or through agents, attorneys
or independent contractors and shall not be liable for any acts or omissions of
such agents, attorneys or independent contractors if appointed by it with due
care hereunder; and
(f) The Trustee shall have no liability for any acts or omissions of CIT
Consumer Finance as REMIC Administrator and the appointment of CIT Consumer
Finance to act as REMIC Administrator shall be deemed to have been made with due
care on the part of the Trustee.
SECTION 11.03. Trustee Not Liable for Certificates or Mortgage Loans.
The Trustee assumes no responsibility for the correctness of the recitals
contained herein or in the Certificates (other than the Trustee's authentication
thereof). The Trustee makes no representations as to the validity or sufficiency
of this Agreement or of the Certificates (other than its authentication or
execution thereof) or of any Mortgage Loan, File or related document. The
Trustee shall not be accountable for the use or application by the Master
Servicer or the Company of funds paid to CIT Consumer Finance in consideration
of conveyance of the Mortgage Loans to the Company by CIT Consumer Finance or
deposited in or withdrawn from the Certificate Account by the Master Servicer.
SECTION 11.04. Rights of Certificateholders to Direct Trustee and to Waive
Events of Termination.
Holders of the Offered Certificates and Private Certificates (other than
the Class IO and Class R Certificates) evidencing Percentage Interests
aggregating 25% or more shall have the right to direct the time, method, and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee; provided, however, that,
subject to Section 11.01, the Trustee shall have the right to decline to follow
any such direction if the Trustee being advised by counsel determines that the
action so directed may not lawfully be taken, or if the Trustee in good faith
shall, by a Responsible Officer or Officers of the Trustee, determine that the
proceedings so directed would be illegal or involve it in personal liability or
be unduly prejudicial to the rights of Certificateholders not parties to such
direction; provided further that nothing in this Agreement shall impair the
right of the Trustee to take any action deemed proper by the Trustee and which
is not inconsistent with such direction by the Certificateholders; and provided
further that the Trustee shall instead follow the directions of the Holders of
the Offered Certificates and Private Certificates evidencing Percentage
Interests (other than the Class IO and Class R Certificates) aggregating 51% or
more
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whenever it receives conflicting directions from the Certificateholders. Holders
of the Offered Certificates and Private Certificates evidencing Percentage
Interests (other than the Class IO and Class R Certificates) aggregating 51% or
more may on behalf of Certificateholders waive any past Event of Termination
hereunder and its consequences, except a default in respect of a covenant or
provision hereof which under Section 12.07 cannot be modified or amended without
the consent of all Certificateholders, and upon any such waiver, such Event of
Termination shall cease to exist and shall be deemed to have been cured for
every purpose of this Agreement; but no such waiver shall extend to any
subsequent or other Event of Termination or impair any right consequent thereon.
SECTION 11.05. Master Servicer to Pay Trustee's Fees and Expenses.
The Master Servicer agrees:
(a) that the Master Servicer shall pay to the Trustee reasonable
compensation on each Distribution Date for all services rendered by it
hereunder (which compensation is set forth in a prior agreement between
the Master Servicer and the Trustee which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
(b) except as otherwise expressly provided herein, that the Master
Servicer shall reimburse the Trustee on each Distribution Date, to the
extent requested by the Trustee, for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance
with any provisions of this Agreement (including the reasonable
compensation and the expenses and disbursements of it agents and counsel),
except any such expense, disbursement or advance as may be attributable to
its negligence or bad faith; and
(c) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or
administration of the Trust and its duties hereunder, including the costs
and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any
of the Trustee's powers or duties hereunder.
The covenants in this Section 11.05 shall be for the benefit of the
Trustee in its capacities as Trustee, Paying Agent, custodian, Certificate
Registrar and, if it is so acting, REMIC Administrator hereunder, and shall
survive the termination of this Agreement.
SECTION 11.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation or a national
banking association having its principal office in a state and city acceptable
to the Company and organized and doing business under the laws of the United
States of America or any State,
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authorized under such laws to exercise corporate trust powers, and shall have a
combined capital and surplus of at least $50,000,000 or shall be a member of a
bank holding system the aggregate combined capital and surplus of which is
$50,000,000 and the Trustee shall be subject to supervision and examination by a
federal or state authority having jurisdiction over depositary institutions. If
such corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of a supervising or examining authority, then for the
purposes of this Section 11.06, the combined capital and surplus of such Person
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. In addition, the Trustee shall at all
times have a long-term deposit rating of at least Baa3 and BBB, by Xxxxx'x and
Standard & Poor's, respectively, or a short-term debt rating of at least P-3 and
A-3 by Xxxxx'x and Standard & Poor's, respectively, or as such Rating Agency
shall otherwise deem acceptable. In case at any time the Trustee shall cease to
be eligible in accordance with the provisions of this Section 11.06, the Trustee
shall resign immediately in the manner and with the effect specified in Section
11.07.
SECTION 11.07. Resignation or Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Master Servicer, the
Company and the Rating Agencies. Upon receiving such notice of resignation, the
Company shall promptly appoint a successor Trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to each of the Master
Servicer and the Company and one copy to the successor Trustee. If no successor
Trustee shall have been so appointed and shall have accepted appointment within
thirty (30) days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor Trustee.
If, at any time, the Trustee shall cease to be eligible in accordance with
the provisions of Section 11.06 and shall fail to resign after written request
therefor by the Company, or if at any time the Trustee shall be legally unable
to act, or shall be adjudged a bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then the Company may remove the
Trustee. If the Company shall have removed the Trustee under the authority of
the immediately preceding sentence, the Company shall promptly appoint a
successor Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to the
successor Trustee. Upon appointment of any successor Trustee, the Trustee being
replaced shall change the name of the Certificate Account to the name of such
successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 11.07 shall not become
effective until acceptance of appointment by the successor Trustee as provided
in Section 11.08.
SECTION 11.08. Successor Trustee.
Any successor Trustee appointed as provided in Section 11.07 shall
execute, acknowledge and deliver to the Master Servicer, the Company and to its
predecessor Trustee an
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instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor
hereunder, with like effect as if originally named as Trustee. The Master
Servicer, the Company and the predecessor Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Trustee all such rights,
powers, duties and obligations.
No successor Trustee shall accept appointment as provided in this Section
11.08 unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 11.06.
Upon acceptance of appointment by a successor Trustee as provided in this
Section 11.08, the Master Servicer shall cause notice of the succession of such
Trustee hereunder to be mailed to each Certificateholder at their addresses as
shown in the Certificate Register. If the Master Servicer fails to mail such
notice within ten days after acceptance of appointment by the successor Trustee,
the successor Trustee shall cause such notice to be mailed at the expense of the
Master Servicer.
SECTION 11.09. Merger or Consolidation of Trustee.
Any Person into which the Trustee may be merged or converted or with which
it may be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
the corporate trustee business of the Trustee, shall be the successor of the
Trustee hereunder, provided such Person shall be eligible under the provisions
of Section 11.06, without the execution or filing of any paper or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
SECTION 11.10. [Reserved].
SECTION 11.11. Separate Trustees and Co-Trustees.
The Company shall have the power from time to time to appoint one or more
persons or corporations to act either as co-trustees jointly with the Trustee,
or as separate trustees, or as custodians, for the purpose of conforming to any
legal requirement, restriction or condition (i) with respect to the holding of
the Mortgage Loans or the Files or (ii) with respect to the enforcement of a
Mortgage Loan in any state in which a Mortgaged Property is located or in any
state in which any portion of the Trust is located. The separate trustees,
co-trustees, or custodians so appointed shall be trustees or custodians for the
benefit of all Certificateholders and shall, subject to the provisions of the
following paragraph, have such power, rights and remedies as shall be specified
in the instrument of appointment; provided, however, that no such appointment
shall, or shall be deemed to, constitute the appointee an agent of the Trustee.
Every separate trustee, co-trustee and custodian shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
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(a) all powers, duties, obligations and rights conferred upon the
Trustee in respect of the receipt, custody and payment of moneys shall be
exercised solely by the Trustee;
(b) all other rights, powers, duties and obligations conferred or
imposed upon the Trustee, to the extent also imposed upon such separate
trustees, co-trustees or custodians, shall be conferred or imposed upon
and exercised or performed by the Trustee and such separate trustee,
co-trustee, or custodian jointly, except to the extent that under any law
of any jurisdiction in which any particular act or acts are to be
performed, the Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including holding of the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed by such separate trustee,
co-trustee, or custodian;
(c) no separate trustee, co-trustee or custodian hereunder shall be
personally liable by reason of any act or omission of any other separate
trustee, co-trustee or custodian hereunder; and
(d) the Company may at any time accept the resignation of or remove
any separate trustee, co-trustee or custodian, so appointed by it.
If any separate trustee, co-trustee or custodian shall die, become
incapable of acting, resign or be removed, all of its estates, properties,
rights, remedies and trusts shall vest in and be exercised by the Trustee, to
the extent permitted by law, without the appointment of a new or successor
trustee or custodian. The reasonable fees and expenses of any such separate
trustee, co-trustee or custodian shall be treated as additional fees and
expenses of the Trustee subject to Section 11.05 and payable by the Master
Servicer if and only to the extent the Master Servicer shall have consented in
writing to his or its appointment, which consent shall not be unnecessarily
withheld.
SECTION 11.12. Trustee May Own Certificates.
The Trustee in its individual or other capacity may become the owner or
pledgee of Certificates representing less than all the beneficial interest in
the Trust with the same rights as it would have if it were not Trustee.
SECTION 11.13. Agents of Trustee.
To the extent not prohibited by law and not inconsistent with the terms of
this Agreement (including, without limitation, Section 11.11), the Trustee may,
with the prior consent of the Company, appoint one or more agents to carry out
ministerial matters on behalf of the Trustee under this Agreement.
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ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Master Servicer Not To Resign.
The Master Servicer shall not resign from the obligations and duties
hereby imposed on it except upon determination that the performance of its
duties hereunder is no longer permissible under this Agreement or applicable
law. Any such determination permitting the resignation of the Master Servicer
shall be evidenced by an Opinion of Counsel for the Master Servicer to such
effect delivered to the Trustee. No such resignation shall become effective
until the Trustee or a successor Master Servicer shall have assumed the
responsibilities and obligations of the Master Servicer in accordance with
Section 7.03.
SECTION 12.02. Maintenance of Office or Agency.
The Trustee will maintain, at its own expense, an office in New York City.
Such offices are currently located at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000.
The Trustee will give prompt written notice to Certificateholders of any change
in the location of the Certificate Register or any such office or agency.
SECTION 12.03. Termination.
(a) Subject to the other provisions of this Section, the respective
obligations and responsibilities of the Company, the Master Servicer and the
Trustee created hereby (other than the obligation of the Trustee to make certain
payments after the Final Distribution Date to Certificateholders and the
obligation of the Master Servicer to send certain notices as hereinafter set
forth) shall terminate upon the last action required to be taken by the Trustee
on the Distribution Date pursuant to this Section 12.03 following the earlier
of: (i) the purchase by the Company or the Master Servicer on any Distribution
Date of all Mortgage Loans and all property acquired in respect of any Mortgage
Loan remaining in the Trust pursuant to Section 8.03(a)(i), (ii) the sale by the
Trustee on any Distribution Date of all Mortgage Loans and all property acquired
in respect of any Mortgage Loan remaining in the Trustee pursuant to Section
8.03(a)(ii) or (iii) the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan remaining in the Trust or the
disposition of all property acquired upon repossession of any Mortgaged
Property; provided, however, that in no event shall the trust created hereby
continue beyond the expiration of 21 years from the death of the last survivor
of the descendants of Xxxxxx X. Xxxxxxx, the late ambassador of the United
States to the Court of St. Xxxxx, living on the date hereof.
(b) Notice of any termination, specifying the Final Distribution Date
(which shall be a date that would otherwise be a 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 Master Servicer (if the Company or the Master Servicer is exercising its
right to purchase the assets of the Trust) or by the Trustee (in any other case)
by letter to Certificateholders mailed out not earlier than the 15th day and not
later than the
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25th day of the month (or, in the case of final payment of liquidation of the
last Mortgage Loan remaining in the Trust, as promptly as practicable after
receipt of such final payment or liquidation) next preceding the month of such
final distribution specifying (i) the Final Distribution Date upon which final
payment of the Certificates will be made upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein designated, (ii) the
amount of any such final payment and (iii) that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made only
upon presentation and surrender of the Certificates at the office or agency of
the Trustee herein specified. Such notice shall provide that, in addition to any
other office or agency of the Trustee designated therein, the presentation and
surrender of Certificates as aforesaid may occur at an office or agency of the
Trustee in New York City specified therein. If the Master Servicer is obligated
to give notice to Certificateholders as aforesaid, it shall give such notice to
the Trustee, the Certificate Registrar and to the Rating Agencies at the time
such notice is given to Certificateholders. In the event such notice is given by
the Master Servicer, the Company or the Master Servicer shall deposit in the
Certificate Account on or before the Final Distribution Date in immediately
available funds an amount equal to the purchase price for the assets of the
Trust computed as above provided.
(c) Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed, in accordance with written instructions from the Master
Servicer, in the following order of priority, to Certificateholders on the final
Distribution Date in proportion to their respective Percentage Interests an
amount equal to (i) as to the Class A Certificates, the Class A Certificate
Balance, together with any unpaid interest at the related Pass-Through Rate and
interest for the related Accrual Period at the related Pass-Through Rate, (ii)
as to the Class IO Certificates, any unpaid interest at the related Class IO
Current Interest Rate and interest for the related Accrual Period at the related
Class IO Current Interest Rate, (iii) as to the Class M-1 Certificates, the
Class M-1 Certificate Balance, together with any unpaid interest at the related
Pass-Through Rate and interest for the related Accrual Period at the related
Pass-Through Rate, (iv) as to the Class M-2 Certificates, the Class M-2
Certificate Balance, together with any unpaid interest at the related
Pass-Through Rate and interest for the related Accrual Period at the related
Pass-Through Rate, (v) as to the Class B-1 Certificates, the Class B-1
Certificate Balance, together with any unpaid interest at the related
Pass-Through Rate and interest for the related Accrual Period at the related
Pass-Through Rate, (vi) as to the Class B-2 Certificates, the Class B-2
Certificate Balance, together with any unpaid interest at the related
Pass-Through Rate and interest for the related Accrual Period at the related
Pass-Through Rate, (vii) as to the Class B-3 Certificates, the Class B-3
Certificate Balance, together with any unpaid interest at the related
Pass-Through Rate and interest for the related Accrual Period at the related
Pass-Through Rate, (viii) as to the Class B-4 Certificates, the Class B-4
Certificate Balance, together with any unpaid interest at the related
Pass-Through Rate and interest for the related Accrual Period at the related
Pass-Through Rate and (ix) as to the Class R Certificates, the amount which
remains on deposit in the Certificate Account (other than amounts retained to
meet claims) after application pursuant to clauses (i)-(viii) above.
(d) In the event that all of the Certificateholders shall not surrender
their Certificates for final payment and cancellation on or before the Final
Distribution Date, the Trustee shall on such date cause all funds in the
Certificate Account not distributed in final
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distribution to Certificateholders to be withdrawn therefrom and credited to the
remaining Certificateholders by depositing such funds in a separate escrow
account for the benefit of such Certificateholders, and the Master Servicer (if
the Company or the Master Servicer exercised its right to purchase the assets of
the Trust) or the Trustee (in any other case) shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If, within
one year after the second notice, all the Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds on deposit in such escrow account.
(e) Upon any termination pursuant to this Section, the Trust shall be
terminated in accordance with the following additional requirements, unless the
Trustee has received an Opinion of Counsel to the effect that the failure of the
Trust to comply with the requirements of this Section will not (i) result in the
imposition of taxes on "prohibited transactions" of the Trust as described in
Section 860F of the Code, or (ii) cause any of the REMICs to fail to qualify as
a REMIC at any time that any Offered Certificates or Private Certificates are
outstanding:
(i) Within ninety (90) days prior to the Final Distribution Date set
forth in the notice given by the Master Servicer or the Trustee under this
Section, the Holders of 100% of the aggregate Percentage Interests
evidenced by the Class R Certificates shall adopt a plan of complete
liquidation of the Trust; and
(ii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the Final Distribution Date, the Master
Servicer as agent of the Trustee shall sell all of the assets of the Trust
to the Company or the Master Servicer as the case may be, for cash.
By their acceptance of the Class R Certificates, the Holders thereof
hereby agree to adopt such a plan of complete liquidation upon the written
request of the Master Servicer or the Company and to take such other action in
connection therewith as may be reasonably requested by CIT Consumer Finance.
SECTION 12.04. Acts of Certificateholders.
(a) Except as otherwise specifically provided herein, whenever
Certificateholder approval, authorization, direction, notice, consent, waiver,
or other action is required hereunder, such approval, authorization, direction,
notice, consent, waiver or other action shall be deemed to have been given or
taken on behalf of, and shall be binding upon, all Certificateholders if agreed
to by Holders of Certificates (other than the Class IO and Class R Certificates)
of the specified Class or Classes evidencing, as to each such Class, Percentage
Interests aggregating 51% or more.
(b) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by
Certificateholders may be
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embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Certificateholders in person or by agent duly appointed in
writing; and except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee and, where required, to the Master Servicer. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Agreement and (subject to Section 11.01) conclusive in
favor of the Trustee, the Master Servicer and the Company if made in the manner
provided in this Section.
(c) The fact and date of the execution by any Certificateholder of any
such instrument or writing may be proved in any reasonable manner which the
Trustee deems sufficient.
(d) The ownership of Certificates shall be proved by the Certificate
Register.
(e) Any request, demand, authorization, direction, notice, consent, waiver
or other act by a Certificateholder shall bind every Holder of every Certificate
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof, in respect of anything done, or omitted to be done by the Trustee,
the Master Servicer or the Company in reliance thereon, whether or not notation
of such action is made upon such security.
(f) The Trustee may require such additional proof of any matter referred
to in this Section as it shall deem necessary.
SECTION 12.05. Calculations.
Except as otherwise provided in this Agreement, all interest rate and
basis point calculations under this Agreement will be made on the basis of a
360-day year consisting of twelve thirty-day months and will be carried out to
at least three decimal places.
SECTION 12.06. Assignment or Delegation by the Master Servicer; Merger or
Consolidation of the Company, CIT Consumer Finance or the Master Servicer.
Except as specifically authorized hereunder, and except for its
obligations as Master Servicer, in respect of which a transfer thereof is dealt
with under Article VII, the Master Servicer may not assign or delegate any of
its rights or obligations hereunder, except its right to receive any fees
pursuant to this Agreement, absent the prior written consent of Holders of
Certificates (other than the Class IO and Class R Certificates) of each Class
evidencing, as to each such Class, Percentage Interests aggregating 66-1/2% or
more, and any attempt to do so without such consent shall be void.
Notwithstanding the foregoing, CIT Consumer Finance may not delegate its
obligation to repurchase Mortgage Loans under Section 3.05 or 4.03.
Notwithstanding the foregoing, any person into which the Company, CIT
Consumer Finance or the Master Servicer may be merged or consolidated, or any
corporation resulting from any merger or consolidation to which the Company, CIT
Consumer Finance or the Master Servicer shall be a party, or any Person
succeeding to the business of the Company, CIT Consumer
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Finance or the Master Servicer, shall be the successor of the Company, CIT
Consumer Finance or the Master 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 Master Servicer shall satisfy the criteria
set forth in the definition of an Eligible Master Servicer. Each of CIT Consumer
Finance, the Company and the Master Servicer shall promptly notify the Rating
Agencies of any such merger to which it is a party.
Neither the Company nor the Master Servicer, nor any of the directors,
officers, employees or agents of the Company or the Master Servicer, shall be
under any liability to the Trustee or the Certificateholders for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Company, the Master Servicer or any such person
against any breach of warranties or representations made herein, or failure to
perform its or his obligations in compliance with any standard of care set forth
in this Agreement, or any liability which otherwise would be imposed by reason
of any breach of the terms and conditions of this Agreement. The Company, the
Master Servicer 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. Neither the
Company nor the Master Servicer shall be under any obligation to appear in,
prosecute or defend any legal action, which arises under this Agreement and
which in its opinion may involve it in any expenses or liability; provided,
however, that the Company or the Master Servicer may in its discretion undertake
any such action which it may deem necessary or desirable to in respect of this
Agreement and the rights and duties of the parties hereto and the interests of
the Certificateholders thereunder and the interests of the Certificateholders
thereunder. In such event, the legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and liabilities payable
from the Certificate Account and the Company and the Master Servicer shall be
entitled to be reimbursed therefor out of the Certificate Account.
SECTION 12.07. Amendment.
(a) This Agreement may be amended from time to time by agreement of the
Trustee, the Company, and the Master Servicer at any time, without the consent
of any of the Certificateholders, (i) to cure any ambiguity, (ii) to correct or
supplement any provisions herein which may be inconsistent with any other
provisions herein, (iii) to add to the duties of a Seller, Trustee or the Master
Servicer, (iv) to make such changes as are necessary to maintain the status of
any of the REMICs as a REMIC; provided that the Trustee has received an Opinion
of Counsel to the effect that such action is necessary or helpful to maintain
such qualification, (v) to add or amend any provisions as required by Moody's,
Standard & Poor's or any other NRSRO in order to maintain or improve any rating
of the Certificates (it being understood that, after the rating required by
Section 2.02 hereof has been obtained, neither the Trustee, the Company nor CIT
Consumer Finance is obligated to maintain or improve such rating), or (vi) to
add any other provisions or make any other revisions not inconsistent with any
other provision herein upon receipt of an Opinion of Counsel to the Master
Servicer addressed to the Trustee that such amendment will not adversely affect
in any material respect the interests of any Certificateholder
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(including, without limitation, the maintenance of the status of any of the
REMICs under the Code and under relevant state and local law).
(b) This Agreement may also be amended from time to time by the Company,
the Master Servicer and the Trustee, with the consent of Holders of Certificates
(other than the Class IO and Class R Certificates) of each Class affected
thereby evidencing, as to each such Class, Percentage Interests aggregating 51%
or more, 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; provided, however, that no such
amendment shall (i) reduce in any manner the amount of, or delay the timing of,
payments on any Certificate without the consent of the Holder of each
Certificate affected thereby, (ii) reduce the aforesaid percentage required to
consent to any such amendment, without the consent of the Holders of all
Certificates then outstanding, (iii) result in the disqualification of any of
the REMICs as a REMIC under the Code, (iv) adversely affect the status of any of
the REMICs as a REMIC or the status of the Certificates as "regular interests"
therein, (v) cause any tax (other than any tax imposed on "net income from
foreclosure property" under Section 860G(c)(1) of the Code that would be imposed
without regard to such amendment) to be imposed on the Trust, including, without
limitation, any tax imposed on "prohibited transactions" under Section
860G(d)(1) of the Code, or (vi) adversely affect in any material respect the
interest of the Class R Certificateholders without the unanimous consent of the
Class R Certificateholders.
(c) This Agreement may also be amended from time to time, without the
consent of any of the Certificateholders, by the Company, the Master Servicer
and the Trustee to modify, eliminate or add to the provisions of this Agreement
to such extent as shall be necessary to (i) maintain the qualification of any of
the REMICs as a REMIC under the Code and under relevant state and local law or
avoid, or reduce the risk of, the imposition of any tax on the Trust under the
Code that would be a claim against the Trust assets, provided that (A) there
shall have been delivered an Opinion of Counsel addressed to the Trustee to the
effect that such action is necessary to maintain such qualification or avoid any
such tax or reduce the risk of its imposition and (B) such amendment shall not
have any of the effects described in the proviso to Section 12.07(a), or (ii)
prevent the Trust from entering into any "prohibited transaction" as defined in
Section 860F of the Code, provided that such amendment shall not, as evidenced
by an Opinion of Counsel, adversely affect in any material respect the interests
of any Certificateholder (including, without limitation, the maintenance of any
of the REMICs as a REMIC under the Code and under relevant state and local law).
(d) This Agreement shall not be amended under this section without the
consent of all of the Certificateholders if such amendment would result in the
disqualification of any of the REMICs as a REMIC under the Code or relevant
state and local law.
(e) Promptly after the execution of any amendment or consent pursuant to
this Section, the Trustee shall furnish written notification of the substance of
such amendment to each Certificateholder (but only if such amendment is pursuant
to Section 12.07(b) and affects the Class of Certificates held by such
Certificateholder) and, in all cases, to the Rating Agencies
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(which shall be furnished no later than 5 days after the execution and delivery
thereof), which notification will be prepared by the Master Servicer and
delivered to the Trustee.
(f) It shall not be necessary for the consent of Certificateholders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Trustee may prescribe.
(g) The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this Agreement or otherwise.
(h) In connection with any amendment pursuant to this Section, the Trustee
shall be entitled to receive an Opinion of Counsel to the Master Servicer to the
effect that such amendment is authorized or permitted by the Agreement.
(i) Upon the execution of any amendment or consent pursuant to this
Section, this Agreement shall be modified in accordance therewith, and such
amendment or consent shall form a part of this Agreement for all purposes, and
every Holder of Certificates theretofore or thereafter issued hereunder shall be
bound thereby.
SECTION 12.08. Contribution of Assets.
Following the Closing Date, the Trustee shall not accept any contribution
of additional assets to the Trust unless the Trustee has received an Opinion of
Counsel addressed to the Trustee to the effect that (i) the contribution of such
assets into the Trust will not cause any of the REMICs to fail to qualify as a
REMIC under the Code and under the relevant state and local law and (ii) such
contribution will not cause the imposition of a tax on "prohibited transactions"
(as defined in Section 860F of the Code or under similar provisions under the
relevant state and local law) or on contributions to the Trust after the
"start-up day" (as defined in Section 860G of the Code or under similar
provisions under the relevant state and local law) with respect thereto.
SECTION 12.09. Notices.
All communications, instructions, directions and notices pursuant hereto
to the Company, the Master Servicer and the Trustee and the Rating Agencies
shall be in writing and delivered or mailed to it at the appropriate following
address:
If to the Company:
The CIT Group Securitization Corporation III
000 XXX Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: President
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If to the Master Servicer:
The CIT Group/Consumer Finance, Inc.
000 XXX Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: President
If to the Trustee or the Paying Agent:
The Bank of New York
000 Xxxxxxx Xxxxxx, 00 Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Mortgage Backed Securities Unit
If to Moody's:
Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Home Equity Monitoring Group
If to Standard & Poor's:
Standard and Poor's Ratings Group
00 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Residential Mortgage Surveillance Group
or at such other address as the party may designate by notice to the other
parties hereto, which notice shall be effective when received.
All communications and notices pursuant hereto to a Certificateholder
shall be in writing and delivered or mailed at the address shown in the
Certificate Register.
SECTION 12.10. Merger and Integration.
Except as specifically stated otherwise herein, this Agreement sets forth
the entire understanding of the parties relating to the subject matter hereof,
and all prior understandings, written or oral, are superseded by this Agreement.
This Agreement may not be modified, amended, waived, or supplemented except as
provided herein.
SECTION 12.11. Reliance on Credit.
The parties hereto acknowledge that, with respect to receiving payments on
the Certificates, the Certificateholders are relying on the Mortgagors to make
payments on the Mortgage Loans and not on the creditworthiness of the Company,
CIT Consumer Finance, CIT or any of their respective affiliates. The parties
hereto further acknowledge that the transfer of
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any Mortgage Loans by CIT Consumer Finance to the Company or by the Company to
the Trust is intended to be a true sale of such Mortgage Loans, and not a
financing, such that creditors of CIT Consumer Finance and the Company are
intended to have no further claim to the Mortgage Loans or any payments made
thereon as a source of repayment of any indebtedness of CIT Consumer Finance or
the Company to such creditors.
SECTION 12.12. No Bankruptcy Petition.
Each of CIT Consumer Finance, the Trustee and the Master Servicer agrees
that, prior to the date which is one year and one day after the payment in full
of the Offered Certificates and Private Certificates it will not institute
against, or join any other person in instituting against, the Company or the
Trust any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other proceedings under any Federal or state bankruptcy or
similar law.
SECTION 12.13. Headings.
The headings herein are for purposes of reference only and shall not
otherwise affect the meaning or interpretation of any provision hereof.
SECTION 12.14. Governing Law.
This Agreement shall be governed by, and construed and enforced in
accordance with the laws of the State of New York, without regard to its
conflict-of-laws provisions.
SECTION 12.15. Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall be an original, but all of which together shall constitute one and the
same instrument.
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ARTICLE XIII
THE COMPANY
SECTION 13.01. Representations of the Company.
The Company hereby makes the following representations as to itself on
which the Trustee on behalf of the Trust shall rely in accepting the Mortgage
Loans in trust and authenticating the Certificates. The representations are made
as of the execution and delivery of this Agreement, and shall survive the sale
of the Mortgage Loans to the Trust.
(i) Organization and Good Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization and has the corporate power to own
its assets and to transact the business in which it is currently engaged.
The Company is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction in which the character of the
business transacted by it or properties owned or leased by it requires
such qualification and in which the failure so to qualify would have a
material adverse effect on the business, properties, assets, or condition
(financial or other) of the Company or on the Certificates or the
transactions contemplated by this Agreement.
(ii) Authorization; Binding Obligations. The Company has the power
and authority to make, execute, deliver and perform this Agreement and all
of the transactions contemplated under this Agreement, and has taken all
necessary corporate action to authorize the execution, delivery and
performance of this Agreement. When executed and delivered, this Agreement
will constitute the legal, valid and binding obligation of the Company
enforceable in accordance with its terms, except as enforcement of such
terms may be limited by bankruptcy, insolvency or similar laws affecting
the enforcement of creditors' rights generally and by the availability of
equitable remedies.
(iii) No Consent Required. The Company is not required to obtain the
consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement the failure of
which so to obtain would have a material adverse effect on the business,
properties, assets or condition (financial or otherwise) of the Company or
on the Certificates or the transactions contemplated by this Agreement.
(iv) No Violations. The execution, delivery and performance of this
Agreement by the Company will not violate any provision of any existing
law or regulation or any order or decree of any court or the Articles of
Incorporation or Bylaws of the Company, or constitute a material breach of
any mortgage, indenture, contract or other agreement to which the Company
is a party or by which the Company may be bound.
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(v) Litigation. No litigation or administrative proceeding of or
before any court, tribunal or governmental body is currently pending, or
to the knowledge of 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 13.02. Merger or Consolidation of the 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 13.03. 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 Trustee or the
Certificateholders for any action taken or for refraining from the taking of any
action in good faith pursuant to this Agreement, or for errors in judgment;
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 13.04. 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 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 "Certificateholder". 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 Certificates.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of July 1, 1998.
THE CIT GROUP/CONSUMER FINANCE, INC.
By:/s/ Xxxxx Xxxxxx
--------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
THE CIT GROUP SECURITIZATION CORPORATION III
By:/s/ Xxxxx Xxxxxx
--------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
THE BANK OF NEW YORK,
not in its individual
capacity but solely as
Trustee
By:/s/ Xxxxxxxx Xxxxxxx
--------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Assistant Treasurer
112
