LOAN AGREEMENT
LOAN AGREEMENT, dated as of June 1, 1998, among the CIT RV Trust
1998-A (the "Trust"), The First National Bank of Maryland, as collateral agent
for the Securityholders and the Trust (together with its successors and assigns
as trustee, the "Indenture Trustee"), The CIT Group/Sales Financing, Inc., as
servicer (the "Servicer"), and The CIT Group/Sales Financing, Inc., as lender
(the "Lender").
The CIT Group Securitization Corporation II, as seller (the
"Seller"), the Servicer and the Trust have entered into the Sale and Servicing
Agreement dated as of June 1, 1998 (as the same may from time to time be
amended, modified or otherwise supplemented, the "Sale and Servicing
Agreement"). Pursuant to the Sale and Servicing Agreement, the Trust is to issue
$6,060,865 aggregate principal amount of 6.70% Asset Backed Certificates (the
"Certificates"), representing interests in the Trust. The Trust will also issue
$111,000,000 Class A-1 5.83% Asset-Backed Notes, $94,000,000 Class A-2 5.92%
Asset-Backed Notes, $54,000,000 Class A-3 5.99% Asset-Backed Notes, $80,000,000
Class A-4 6.09% Asset-Backed Notes, $37,000,000 Class A-5 6.12% Asset-Backed
Notes and $18,000,000 Class B 6.29% Asset-Backed Notes (the "Notes" and,
together with the Certificates, the "Securities") pursuant to the Indenture
dated June 1, 1998 between the Trust and The First National Bank of Maryland, as
trustee. The corpus of the Trust will consist of a pool of recreation vehicle
retail installment sale contracts and direct loans and certain related rights
and other property (the "Contracts") to be acquired by the Trust from the Seller
and serviced on behalf of the Trust by the Servicer. The payment of principal of
and interest on the Notes and Certificates is to be funded by, among other
things, payments of principal and interest received by the Trust on the
Contracts.
It is a condition to the issuance of the Securities that the
Lender make a loan (the "Loan") to the Trust in the amount of $9,000,000, the
proceeds of which are to be deposited in the reserve account established and
maintained pursuant to Section 5.01(a)(iv) of the Sale and Servicing Agreement
(the "Reserve Account") to provide additional funds to make payments on the
Securities.
In consideration of the premises and the mutual agreements
hereinafter set forth, the parties hereto hereby agree as follows:
Section 1. Defined Terms. Capitalized terms used but not defined
in this Agreement shall have the meanings given to such terms in the Sale and
Servicing Agreement.
Section 2. Loan. The Lender shall make the Loan to the Trust on
the Closing Date. The Trust shall deposit the proceeds of the Loan in the
Reserve Account. The Lender shall have no obligation to deposit any funds in the
Reserve Account other than as provided in this Section 2. No one other than the
Trust, as the sole owner, beneficially and otherwise, of the Reserve Account,
shall have any interest in the Reserve Account or the other Reserve Account
Property.
Section 3. Repayment of the Loan.
(a) The outstanding principal amount of the Loan shall be due and
payable to the Lender by the Trust on the date (the "Maturity Date") which is
the earlier of (i) the close of business on the Certificate Final Distribution
Date or (ii) the date on which the Trust has terminated pursuant to Section 7.1
of the Trust Agreement. On each Distribution Date prior to the Maturity Date,
the Trust, acting in accordance with instructions from the Servicer, shall make
a prepayment of the principal amount of the Loan from funds available therefor
in the Reserve Account, such prepayment to be in an amount equal to the lesser
of the outstanding principal amount of the Loan and the Reserve Account Surplus
with respect to such Distribution Date remaining after paying any accrued and
unpaid interest on the Loan in accordance with Section 3(e).
(b) On each Distribution Date, the Trust, acting in accordance
with the instructions from the Servicer, shall, to the extent of funds
available, make, or cause to be made, the following payments to the Lender
hereunder from the Reserve Account:
(i) Investment Earnings on funds on deposit in the
Reserve Account in an amount equal to the lesser of (A) such Investment Earnings
accrued since the second preceding Deposit Date on funds on deposit in the
Reserve Account and (B) the sum of (1) any accrued and unpaid interest on the
Loan required to be paid on such Distribution Date pursuant to Section 3(f) and
(2) the amount required to be applied as a payment of principal of the Loan on
such Distribution Date pursuant to Section 3(a).
(ii) the Reserve Account Surplus, if any, in an amount
equal to the sum of (1) any accrued and unpaid interest on the Loan required to
be paid on such Distribution Date pursuant to Section 3(f) and (2) the amount
required to be applied as a payment of principal of the Loan on such
Distribution Date in accordance with Section 3(a).
(c) On the Maturity Date, the Indenture Trustee, after the
payment of all amounts payable from the Reserve Account to the Securityholders,
as provided in Section 5.06 of the Sale and Servicing Agreement, and to the
Lender, as provided in clauses (a) and (b) above, shall withdraw from the
Reserve Account all amounts on deposit in the Reserve Account and (A) shall pay
or cause to be paid to the Lender the outstanding principal amount of the Loan
and any accrued and unpaid interest on the Loan on such date and (B) shall pay
or cause to be paid any excess of such amounts over the amount in clause (A) to
the holder of the AO Interest as provided in Section 5.06 of the Sale and
Servicing Agreement.
(d) On each Distribution Date, amounts paid to the Lender shall
be applied by the Lender first to the payment of any accrued and unpaid interest
on the Loan and second to the payment of unpaid principal of the Loan.
(e) The Loan shall bear interest during each Interest Period (as
defined below) at a rate per annum determined such that the interest payable on
the Loan is equal to the sum of the following:
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(i) 0.70% per annum of the average unpaid principal
amount of the Loan during such Interest Period, plus
(ii) the Investment Earnings multiplied by a fraction
(not greater than 1.0) the numerator of which is the average unpaid
principal amount of the Loan during such Interest Period and the
denominator of which is the average amount on deposit (including the
principal amount of all Eligible Investments held, but excluding
Investment Earnings) in the Reserve Account during such Interest Period,
plus
(iii) LIBOR plus 1.00% (the "Lender Rate") applied to the
portion, if any, of the average unpaid principal amount of the Loan
during such Interest Period in excess of the average amount on deposit
in the Reserve Account (including the principal amount of all Eligible
Investments held, but excluding Investment Earnings) during such
Interest Period.
"Interest Period" means (A) with respect to the initial Distribution Date, the
period commencing on the Closing Date and ending on the day immediately
preceding the initial Distribution Date and (B) with respect to each subsequent
Distribution Date, the period commencing on the preceding Distribution Date and
ending on the day preceding such Distribution Date. "LIBOR" means, with respect
to each Interest Period, the London interbank offered rate for one-month United
States dollar deposits determined by the Lender for each Interest Period as
follows: On each LIBOR Determination Date, the Lender will determine LIBOR on
the basis of the rate for one-month United States dollar deposits that appears
on the display page of the Dow Xxxxx Telerate Service currently designated as
Telerate page 3750 (or such other page as may replace that page on that service
for the purpose of displaying comparable rates or prices), as of 11:00 a.m.,
London time, on such date. If such rate does not appear on such page, the rate
for that date will be determined on the basis of the rates at which one-month
loans in United States dollars are offered by four major banks in the London
interbank market, selected by the Lender, at approximately 11:00 a.m., London
time, on that day to banks in the London interbank market. The Lender will
request the principal London office of each such bank to provide a quotation of
its rate. If at least two such quotations are provided, the rate for that date
will be the arithmetic mean of the quotations. If fewer than two quotations are
provided as requested, the rate for that date will be the arithmetic mean of the
rates quoted by major banks in New York City, selected by the Lender, at
approximately 11:00 a.m., New York City, on that day for one-month loans in
United States dollars to leading European banks. If no major banks are quoting
rates for such loans at such time, "LIBOR" will be deemed to mean LIBOR as in
effect as of the preceding LIBOR Determination Date. For purposes of this
Agreement, "LIBOR Determination Date" shall mean the second London Business Day
prior to the commencement of each Interest Period and "London Business Day"
shall mean any Business Day in which dealings in deposits in United States
Dollars are transacted in the London interbank market.
(f) Interest shall be payable monthly in arrears on each
Distribution Date to the Lender by the Trust, from the amounts payable pursuant
to Section 3(b) hereof. Interest on the Loan shall be calculated on the basis of
the actual number of days elapsed divided by 365, provided that interest in
respect of the Lender Rate shall be calculated on the basis of the actual
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number of days elapsed divided by 360. Each determination thereof by the Lender
pursuant to the provisions of this Agreement shall be conclusive and binding on
the Trust, the Servicer and the Indenture Trustee, in the absence of manifest
error.
(g) If any portion of interest due and payable on a Distribution
Date is not paid on such Distribution Date (other than by reason of the Lender
having failed to provide information which is required by the Servicer, the
Trust or the Indenture Trustee to calculate the amount of such interest), the
unpaid portion of such interest shall be due and payable to the Lender by the
Trust on the next succeeding Distribution Date. Any interest which is not paid
when due shall accrue interest from the Distribution Date on which such interest
was due and payable to the date such interest is actually paid at a rate per
annum equal to the Lender Rate (in effect from time to time). The Lender shall,
as soon as practicable, notify the Servicer and the Indenture Trustee of each
determination of the Lender Rate.
Section 4. Limited Obligation; Waiver of Setoff.
Notwithstanding any provision in this Agreement to the contrary,
only the Trust is obligated to repay the Loan, together with interest thereon as
provided in Section 3, and such obligation, with respect to the Trust, shall be
with recourse solely to the funds from the Reserve Account Surplus and
Investment Earnings on the Reserve Account to the extent required to be
distributed in accordance with Section 3(b) hereof and amounts required to be
distributed in accordance with Section 3(c) hereof, in each case to the extent
payable to the Lender under the Sale and Servicing Agreement. No other person or
entity, including the Seller, the Servicer (or any person or organization acting
on the behalf of either of them, or any affiliate of either of them), the Owner
Trustee, the Indenture Trustee, the holder of the AO Interest, the Trust, any
Certificateholder or any Noteholder or any officer or director of any of them,
shall have any obligation to pay principal of or interest on the Loan, except
for the direct recourse indemnification obligation of each successor Servicer
pursuant to Section 6 hereof. The Lender agrees that it shall not have, and
hereby waives to the fullest extent permitted by law, any right of setoff or
lender's lien against any obligations or property of the Seller, the Servicer,
the Trust, the Owner Trustee, the Indenture Trustee or any Noteholder or
Certificateholder.
Section 5. Investments; Information; Amendments to the Sale and
Servicing Agreement.
(a) The Indenture Trustee shall from time to time during the term
of this Agreement invest all amounts on deposit in the Reserve Account in such
Eligible Investments as the Lender shall direct, which investments shall at all
times be made in compliance with the terms of the Sale and Servicing Agreement.
In the event that the amount on deposit in the Reserve Account (including the
principal amount of all Eligible Investments held, but excluding Investment
Earnings) exceeds the outstanding principal balance of the Loan, then the holder
of the AO Interest shall have the right to direct the Indenture Trustee to
invest, in Eligible Investments, the amount by which the amount on deposit in
the Reserve Account (including the principal amount of all Eligible Investments
held, but excluding Investment Earnings) exceeds the outstanding principal
balance of the Loan.
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(b) The Servicer shall, to the extent the Servicer is in
possession of such information, provide the Lender with such information and
data with respect to the Reserve Account as the Lender may reasonably request.
Section 6. Servicer Agreement; Servicing Transfer.
(a) In the event that a successor Servicer is appointed pursuant
to the Sale and Servicing Agreement, from and after the effective date of such
appointment, the successor Servicer appointed pursuant to the Sale and Servicing
Agreement, and not the former Servicer, shall agree in writing to (i) be
responsible for the performance of all servicing functions to be performed from
and after such date, (ii) be bound by the terms, covenants and conditions
contained herein applicable to the Servicer and subject to the duties and
obligations of the Servicer hereunder and (iii) indemnify and hold harmless the
Lender from and against any and all claims, damages, losses, liabilities, costs
or expenses whatsoever which the Lender may incur (or which may be claimed
against the Lender) by reason of the gross negligence or willful misconduct of
the successor Servicer in exercising its powers and carrying out its obligations
under the Sale and Servicing Agreement. Such transfer of servicing shall not
affect any rights or obligations of the former Servicer acting as Servicer which
arose prior to the effective date of the transfer of servicing or the rights or
obligations of the former Servicer under this Agreement whether arising before
or after such date, except that such former Servicer shall have no obligation to
indemnify the Lender as a result of any act or failure to act of any successor
Servicer in the performance of the servicing functions.
(b) The Servicer shall forward to the Lender each document
referred to in Sections 4.13(a) and 4.13(b) of the Sale and Servicing Agreement
and shall not agree to amend the Sale and Servicing Agreement except in
accordance with the terms thereof (as amended from time to time).
(c) The Servicer agrees to indemnify and hold harmless the Lender
from and against any and all claims, damages, losses, liabilities, cost or
expenses which the Lender may incur (i) by reason of the gross negligence or
willful misconduct of the Servicer in exercising its powers and carrying out its
obligations under this Agreement and (ii) under the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, or any other federal
or state law or regulation arising out of or based upon any untrue statement of
a material fact in the Prospectus Supplement dated June 3, 1998 to the
Prospectus dated October 29, 1997 relating to the issuance and sale of the
Securities (the "Prospectus") or other material provided to investors and
prospective investors by or on behalf of the Seller or the Servicer in
connection with the offer and sale of the Securities or any amendments thereof
or any supplement thereto or arising out of or based upon the omission to state
a material fact to make the statements in the Prospectus or such other material
or any amendment thereof or supplement thereto, in light of the circumstances in
which they were made, not misleading.
SECTION 7. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED IN SUCH STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW, AND THE
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OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
Section 8. Termination. This Agreement shall terminate on the
later to occur of: (a) the date on which the Trust terminates in accordance with
Section 7.1 of the Trust Agreement, or (b) the payment in full of all amounts
owed to the Lender hereunder.
Section 9. Notices. Unless specifically indicated otherwise
herein, all notices and other communications provided for hereunder shall be in
writing and, if to the Lender, addressed to:
The CIT Group/Sales Financing, Inc.
000 XXX Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: President
Telephone: 000-000-0000
Telecopy: 000-000-0000
or, if to the Servicer, addressed to:
The CIT Group/Sales Financing, Inc.
000 XXX Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: President
Telephone: 000-000-0000
Telecopy: 000-000-0000
or, if to the Trust or the Indenture Trustee, addressed to:
The First National Bank of Maryland
00 Xxxxx Xxxxxxx Xxxxxx
16th Floor, Corporate Trust
Xxxxxxxxx, XX 00000
Telephone: 000-000-0000
Telecopy : 000-000-0000
or as to any party at such other address as shall be designated by such party in
a written notice hereunder to the other parties.
Any notice or other communication shall be sufficiently given and
shall be deemed given when delivered to the addressee in writing, when mailed by
registered or certified mail, return receipt requested, or when transmitted by
telecopier, receipt of which by the addressee is confirmed by telephone.
Section 10. Bankruptcy. To the extent that the Indenture Trustee
makes a payment to the Lender, or the Lender receives any payment or proceeds
with respect to the Loan,
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which payment or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any state or federal insolvency or bankruptcy
law then, to the extent such payment is set aside, the amount or part thereof
intended to be satisfied shall be revived and continue in full force and effect,
as if such payment had not been received by the Lender.
Section 11. Limitation of Remedies. The Lender shall not have the
right to accelerate or otherwise cause the Loan or any portion thereof to become
due and payable prior to the Maturity Date for the Loan except as set forth in
Section 3(a).
Section 12. No Petition. Notwithstanding any prior termination of
this Agreement the Lender shall not, prior to the date which is one year and one
day after the final payment of all of the Securities issued by the Trust,
acquiesce, petition or otherwise invoke or cause the Trust or the Seller to
invoke the process of any governmental authority for the purpose of commencing
or sustaining a case against the Trust or the Seller under any Federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Trust or the Seller or any substantial part of its property or ordering the
winding up or liquidation of the affairs of the Trust or the Seller.
Section 13. Participation; Miscellaneous. The Lender may, upon
prior written notice to the other parties hereto, sell participations to one or
more banks or other entities (each a "Participant") in all or a portion of its
rights under this Agreement (including all or a portion of the Loan); provided,
however, that (i) the Lender's rights and obligations under this Agreement shall
remain unchanged, (ii) the Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) the Indenture
Trustee, the Trust, the Seller and the Servicer shall continue to deal solely
and directly with the Lender in the exercise of its rights and obligations under
this Agreement, (iv) the Lender shall retain the sole right to enforce the
obligations of the Trust, the Indenture Trustee, or the Servicer under this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement and (v) such Participant expressly agrees to be bound by the
provisions contained in Sections 4 and 12 hereof. Unless the Servicer consents
in writing to such participation within 15 days of receipt of notice of such
participation, neither the Trust nor the Servicer shall be obligated to the
Lender for amounts payable under this Agreement in excess of such amounts which
would have been due and owing had such participation not been granted.
Section 14. Counterparts. This Agreement may be executed by one
or more of the parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument.
Section 15. Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
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Section 16. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Servicer, the Trust, the Indenture
Trustee, the Lender, and their respective successors and assigns.
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IN WITNESS WHEREOF, the parties have caused their names to be
signed hereto by their respective officers thereunto duly authorized, all as of
the day and year first above written.
CIT RV TRUST 1998-A
By: BANKERS TRUST (DELAWARE),
not in its individual capacity but solely as
Owner Trustee on behalf of the Trust
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: Attorney-in-Fact
THE FIRST NATIONAL BANK OF MARYLAND, not in its
individual capacity but solely as Indenture
Trustee on behalf of the Trust
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Assistant Vice President
THE CIT GROUP/SALES FINANCING, INC.,
as Servicer
By: Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Vice President
THE CIT GROUP/SALES FINANCING, INC.,
as Lender
By: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Vice President
Acknowledged as of date first above written:
THE CIT GROUP SECURITIZATION CORPORATION II,
as Seller
By: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Vice President
