Exhibit 4.2
Form of Limited Guarantee
LIMITED GUARANTEE, dated as of _____, 199_, made by The CIT Group Holdings,
Inc. ("Holdings") in favor of , not in its individual capacity but solely as
Trustee (the "Trustee") under the Pooling and Servicing Agreement dated as of
_____, 199_ (the "Pooling and Servicing Agreement"), among The CIT Group
Securitization Corporation III (the "Company"), The CIT Group/Consumer Finance,
Inc. ("CIT Consumer Finance") and the Trustee for the benefit of the
Certificateholders.
WHEREAS, Section _____ of the Pooling and Servicing Agreement requires the
execution and delivery of this Limited Guarantee by Holdings on or before the
Closing Date (as defined in the Pooling and Servicing Agreement);
WHEREAS, Holdings will derive substantial benefit from the transactions
contemplated by the Pooling and Servicing Agreement, including, without
limitation, the payment of the Guarantee Fee (as defined in the Pooling and
Servicing Agreement) to Holdings and the sale of the mortgage loans by Holdings'
subsidiary, CIT Consumer Finance, to the Company, the sale of the mortgage loans
by the Company to the CIT Home Equity Loan Trust 199_-_, and the issuance and
sale of the Certificates (as defined in the Pooling and Servicing Agreement) in
the manner contemplated therein;
WHEREAS, capitalized terms used herein and not otherwise defined herein
shall have the meaning ascribed to such terms in the Pooling and Servicing
Agreement; and
WHEREAS, in order to induce the parties to the Pooling and Servicing
Agreement to enter into the Pooling and Servicing Agreement and perform their
respective obligations thereunder, Holdings is willing to execute and deliver
this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Holdings hereby unconditionally
agrees as follows:
SECTION 1. The Guarantee.
(a) Holdings hereby unconditionally and absolutely guarantees the payment
to the Trustee, on behalf of the Certificateholders, of the Guarantee Payment
due to the Certificateholders on each Distribution Date. Not later than the
third Business Day prior to each Distribution Date, the Servicer shall notify
Holdings of the amount of the Guarantee Payment, if any, for such Distribution
Date and not later than the Business Day preceding each Distribution Date,
Holdings shall deposit the Guarantee Payment, if any, for such Distribution Date
into the Collection Account.
(b) Notwithstanding the obligation of Holdings in clause (a) above, in no
event will Holdings be obligated to make payments under this Agreement, if the
aggregate amounts paid under this Agreement would exceed $____________ (the
"Guarantee Payment Limit"). Upon the date on which the aggregate amounts paid
hereunder equal the Guarantee Payment Limit, Holdings shall have no further
liability under this Limited Guarantee, and Holdings shall be deemed to have
satisfied in full all of its obligations under this Limited Guarantee.
(c) The obligations of Holdings under this Limited Guarantee shall not
terminate upon or otherwise be reduced by a Service Transfer pursuant to Article
VII of the Pooling and Servicing Agreement, by any amendment to the Pooling and
Servicing Agreement, the Purchase Agreement, any Subsequent Purchase Agreement
or any other agreement relating to the Certificateholders or any breach by any
party to any such agreement of its obligations thereunder or the failure of
Holdings to receive all or any part of the Guarantee Fee.
(d) The obligations of Holdings under this Limited Guarantee shall
terminate on the earlier of (i) the date referred to in Section 1(b) hereof,
(ii) one year following the Distribution Date on which the Certificate Balance
has been reduced to zero and all accrued interest on the Certificates has been
paid in full, or (iii) the date on which there shall have been deposited
Eligible Investments with the Trustee equal to the Defeasance Amount. The
"Defeasance Amount" is equal to such amount as shall satisfy the Rating Agency
Condition with respect to the Certificates.
(e) The obligation of Holdings to make the Guarantee Payments described in
clause (a) above shall be unconditional and irrevocable, subject to the
limitation set forth in clause (b) above.
SECTION 2. Representations and Warranties.
In making this Limited Guarantee Holdings represents and warrants to the
Trustee and the Certificateholders that:
(a) Organization and Good Standing. Holdings is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the corporate power to own its assets
and to transact the business in which it is currently engaged. Holdings is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which the character of the business transacted by it or
properties owned or leased by it requires such qualification and in which the
failure so to qualify would have a material adverse effect on the business,
properties, assets, or condition (financial or other) of Holdings.
(b) Authorization; Binding Obligations. Holdings has the power and
authority to make, execute, deliver and perform this Limited Guarantee and all
of the transactions contemplated under this Limited Guarantee, and has taken all
necessary corporate action to authorize the execution, delivery and performance
of this Limited Guarantee. When executed and delivered, this Limited Guarantee
will constitute the legal, valid and binding obligation of Holdings enforceable
in accordance with its terms, except as enforcement of such terms may be limited
by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable remedies.
(c) No Consent Required. Holdings is not required to obtain the consent of
any other party or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or agency
in connection with the execution, delivery, performance, validity or
enforceability of this Limited Guarantee the failure of which so to obtain would
have a material adverse effect on the business, properties, assets or condition
(financial or otherwise) of Holdings.
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(d) No Violations. The execution, delivery and performance of this Limited
Guarantee by Holdings will not violate any provision of any existing law or
regulation or any order or decree of any court or the Articles of Incorporation
or Bylaws of Holdings, or constitute a material breach of any mortgage,
indenture, contract or other agreement to which Holdings is a party or by which
Holdings may be bound.
(e) Litigation. No litigation or administrative proceeding of or before any
court, tribunal or governmental body is currently pending, or to the knowledge
of Holdings threatened, against Holdings or any of its properties or with
respect to this Limited Guarantee or the Certificates which, if adversely
determined, would in the opinion of Holdings have a material adverse effect on
the transactions contemplated by this Limited Guarantee.
SECTION 3. Miscellaneous.
(a) All payments by Holdings under this Limited Guarantee will be made free
and clear of and without deduction for any present or future income, stamp or
other taxes, levies, imposts, deductions, charges, fees, withholdings,
liabilities, restrictions or conditions of any nature whatsoever now or
hereafter imposed, levied, collected, assessed or withheld by any jurisdiction
or by any political subdivision or taxing authority thereof or therein, and all
interest, penalties or similar liabilities ("Taxes"); provided, however, that
Holdings shall not be obligated to pay any amount allocable to Taxes (i) which
the Trust was required to withhold or (ii) which result or were incurred by
reason of the ownership of any interest in a Certificate by any non-U.S. Person
which is not eligible for a complete exemption from U.S. withholding tax on U.S.
source interest.
(b) Holdings will not exercise any rights which it may acquire by way of
subrogation hereunder, by any payment made by it hereunder or otherwise, until
such date when all amounts of principal and interest payable to the Holders of
the Certificates shall have been paid in full. If any amount shall be paid to
Holdings on account of such subrogation rights at any time when all of the
amounts of principal and interest payable to the Holders of the Certificates
shall not have been paid in full, such amount shall be held in trust for the
benefit of the Certificateholders, shall be segregated from the other funds of
Holdings and shall forthwith be applied in whole or in part against such amounts
owed in accordance with the terms of the Pooling and Servicing Agreement.
(c) This Limited Guarantee is not secured by a security interest in, pledge
of or lien on any assets of Holdings or any of its subsidiaries. The Limited
Guarantee is a senior, unsecured general obligation of Holdings and is not
supported by any letter of credit or other credit enhancement arrangement.
(d) This Limited Guarantee may be amended from time to time by Holdings,
the Servicer and the Trustee, without the consent of any of the
Certificateholders, (i) to correct manifest error, to cure any ambiguity, to
correct or supplement any provisions herein or therein which may be inconsistent
with any other provisions herein or therein, as the case may be, (ii) to add any
other provisions with respect to matters or questions arising under this Limited
Guarantee which shall not be inconsistent with the provisions of this Limited
Guarantee, and (iii) to add or amend any provisions as required by Xxxxx'x,
Standard & Poor's or another NRSRO in order to maintain or
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improve the rating of the Certificates (it being understood that, after the
rating required by Section _____ of the Pooling and Servicing Agreement has been
obtained, neither the Trustee, the Company, CIT Consumer Finance or Holdings is
obligated to maintain or improve such rating); provided, however, that such
action shall not, as evidenced by an opinion of counsel for Holdings, adversely
affect in any material respect the interests of any Certificateholder.
This Limited Guarantee may also be amended from time to time by Holdings,
the Servicer and the Trustee, with the consent of Holders of the Certificates
aggregating 51% or more of the Certificate Balance as of the preceding
Determination Date, for the purpose of adding any of the provisions to or
changing in any manner or eliminating any of the provisions of this Limited
Guarantee or of modifying in any manner the rights of the Certificateholders;
provided, however, that no such amendment shall (i) reduce in any manner the
amount of, or delay the timing of, any Guarantee Payment or (ii) grant by
contract or operation of law any defense to the payment of any Guarantee Payment
without the consent of the Holder of each Certificate affected thereby.
The Guarantor shall provide Xxxxx'x and Standard & Poor's with a copy of
any amendment made to this Limited Guarantee no later than five (5) days after
the execution and delivery thereof.
(e) This Limited Guarantee shall be construed in accordance with and
governed by the internal laws of the State of New York applicable to contracts
made and to be performed thereon without regard to conflicts of law principles.
Any litigation relating to or arising out of this Limited Guarantee shall be
brought and maintained in the courts of the State of New York or in the United
States District Court for the Southern District of New York.
(f) Holdings agrees that, prior to the date which is one year and one day
after the payment in full of the Certificates it will not institute against, or
join any other person in instituting against, the Company or the Trust any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or other proceedings under any Federal or state bankruptcy or similar law.
(g) Holdings hereby acknowledges that the Guarantee Fee is subordinated to
payments in respect of the Certificates and the Monthly Servicing Fee to the
extent provided in the Pooling and Servicing Agreement and will be payable only
if and to the extent funds are available therefor in accordance with the Pooling
and Servicing Agreement. Holdings further acknowledges that the failure of
Holdings to receive, in whole or in part, payment of the Guarantee Fee shall not
in any way diminish Holdings' obligations hereunder and Holdings hereby waives
any right of set-off or counterclaim against the Trust for the failure to
receive all or any part of such Guarantee Fee or for the failure to receive
reimbursement for Guarantee Payments.
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IN WITNESS WHEREOF, The CIT Group Holdings, Inc. has duly executed this
Limited Guarantee as of the day and year first written above.
THE CIT GROUP HOLDINGS, INC.
By:__________________________________
Name:
Title:
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