AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 23, 1997.
REGISTRATION NO. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PHH CORPORATION
(Exact name of registrant as specified in its charter)
MARYLAND 52-0551284
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
11333 MCCORMICK ROAD
HUNT VALLEY, MARYLAND 21031
(410) 771-3600
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive office)
SAMUEL H. WRIGHT
PHH CORPORATION
11333 MCCORMICK ROAD
HUNT VALLEY, MARYLAND 21031
(410) 771-3600
(Name, address, including zip code, and telephone number of agent for service)
COPIES TO:
LARRY P. SCRIGGINS DONALD B. BRANT, JR.
PIPER & MARBURY L.L.P. MILBANK, TWEED, HADLEY & MCCLOY
36 SOUTH CHARLES STREET 1 CHASE MANHATTAN PLAZA
BALTIMORE, MARYLAND 21201 NEW YORK, NEW YORK 10005
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ____________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ] ____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
BEING REGISTERED REGISTERED PER UNIT PRICE REGISTRATION FEE
<S> <C>
Debt Securities....................... $3,000,000,000* 100% $3,000,000,000 $909,091
</TABLE>
* Or, if any such securities are issued at original issue discount, such greater
principal amount as shall result in an aggregate initial offering price of
$3,000,000,000.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
<PAGE>
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED , 1997
[PHH LOGO]
$3,000,000,000
PHH CORPORATION
MEDIUM-TERM NOTES
DUE FROM 9 MONTHS TO 40 YEARS FROM DATE OF ISSUE
PHH Corporation (the "Company") may offer from time to time up to
$3,000,000,000 aggregate principal amount, or the equivalent thereof in foreign
currencies or currency units, of its Medium-Term Notes (the "Notes"), subject to
reduction as a result of the sale of other Debt Securities of the Company. Each
Note may be denominated or payable in U.S. dollars or in a foreign currency,
European Currency Units ("ECU") or such other currency unit specified in the
applicable Pricing Supplement (the "Specified Currency") or in amounts
determined by reference to an index as may be designated by the Company at the
time of the offering and set forth in a Pricing Supplement. The Notes will
mature on any day from 9 months to 40 years from the date of issue, as selected
by the initial purchaser and agreed to by the Company. The specific interest
rates and maturities of Notes sold will be set forth in Pricing Supplements to
this Prospectus Supplement. Interest rates or interest rate formulas are subject
to change by the Company from time to time but no such change will affect any
Note theretofore issued or which the Company has agreed to sell. Unless
otherwise indicated in the applicable Pricing Supplement, each Note will bear
interest at a fixed rate (a "Fixed Rate Note") or at a floating rate (a
"Floating Rate Note") determined by reference to the Commercial Paper Rate, the
CD Rate, the Federal Funds Effective Rate, LIBOR, the Treasury Rate, the Prime
Rate or such other base rate or interest rate formula as may be designated in
any accompanying Pricing Supplement. Except as described herein or in the
applicable Pricing Supplement, interest on each Fixed Rate Note will accrue from
its issue date and will be payable February 15 and August 15 of each year and at
maturity. Interest on each Floating Rate Note will be payable on the dates
indicated therein and in the applicable Pricing Supplement. The Notes will not
be subject to redemption or repayment prior to their stated maturity unless
otherwise specified in the applicable Pricing Supplement. See "Description of
Notes."
The Notes will be issued in the form of one or more fully registered global
notes (a "Global Note") unless otherwise indicated in the applicable Pricing
Supplement, in which case the Notes will be issued in fully registered
certificated form (a "Certificated Note"), in denominations of $1,000 and
integral multiples of $1,000 in excess thereof. Beneficial interest in Global
Notes will be shown on, and transfers thereof will be effected only through,
records maintained by The Depository Trust Company, as depositary (the
"Depositary") and its participants. See "Description of Notes -- Global Notes."
SEE "RISK FACTORS" BEGINNING ON PAGE S-3 HEREOF FOR CERTAIN INFORMATION THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE NOTES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT,
ANY PRICING SUPPLEMENT HERETO OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO AGENTS' DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(1)(2) COMPANY(2)(3)
<S> <C>
Per Note................................... 100% .125%-.750% 99.875%-99.250%
Total(4)................................... $3,000,000,000 $3,750,000-$22,500,000 $2,996,250,000-$2,977,500,000
</TABLE>
(1) Notes may be sold at discounts from their principal amounts, if provided for
in the applicable Pricing Supplements.
(2) The Company will pay a commission to an Agent acting in its capacity as
agent of from .125% to .750%, depending upon the Note maturity, of the
principal amount of any Note sold with a maturity of up to 30 years.
Commissions on agency sales of Notes with maturities of more than 30 years
will be determined at the time of sale. The Company may also sell Notes to
an Agent acting in its capacity as principal at negotiated discounts for
resale to investors or other purchasers at varying prices related to
prevailing market prices at the time of resale, as determined by such Agent.
No commission will be payable on any sales made directly by the Company. The
Company has agreed to indemnify the Agents against certain liabilities,
including liabilities under the Securities Act of 1933, and to reimburse the
Agents for certain expenses.
(3) Before deduction of estimated expenses of the offering of $1,702,591.
(4) Or the equivalent thereof in foreign currencies or currency units.
The Notes are offered on a continuing basis by the Company through the
Agents, as set forth below, which have agreed to use best efforts to solicit
purchases of the Notes. The Company also may sell Notes to any Agent acting as
principal at negotiated discounts for resale to one or more investors or other
purchasers. The Company has the right to sell the Notes directly on its own
behalf and to appoint additional agents under the Distribution Agreement. The
Notes will not be listed on any securities exchange, and there can be no
assurance that the Notes offered by this Prospectus Supplement will be sold or
that there will be a secondary market for the Notes. The Company reserves the
right to withdraw, cancel or modify the offering contemplated hereby without
notice. The Company or the Agents may reject any offer to purchase the Notes in
whole or in part. See "Supplemental Plan of Distribution."
Credit Suisse First Boston
Goldman, Sachs & Co.
Merrill Lynch & Co.
J.P. Morgan & Co.
The date of this Prospectus Supplement is , 1997.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MADE HEREBY MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE
NOTES, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN
SUCH NOTES, AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE
OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "SUPPLEMENTAL PLAN OF
DISTRIBUTION".
<PAGE>
RISK FACTORS
Certain of the Notes issuable under this Prospectus Supplement, any Pricing
Supplement hereto and the attached Prospectus may be payable in one or more
foreign currencies. This Prospectus Supplement, any Pricing Supplement hereto
and the attached Prospectus do not describe all the risks of an investment in
Foreign Currency Notes (defined herein) as they exist at the date of this
Prospectus Supplement or as such risks may change from time to time. Prospective
investors should consult their own financial and legal advisors as to the risks
entailed by an investment in such Notes. Such Notes are not an appropriate
investment for investors who are unsophisticated with respect to foreign
currency transactions. See "Special Provisions Relating to Foreign Currency
Notes" below.
DESCRIPTION OF NOTES
The following description of the terms of the Medium-Term Notes offered
hereby (the "Notes") of PHH Corporation (the "Company") supplements, and to the
extent inconsistent therewith replaces, insofar as such description relates to
the Notes, the description of the general terms and provisions of the Debt
Securities set forth in the Prospectus, to which description reference is hereby
made. The following description of the Notes will apply unless otherwise
specified in an applicable Pricing Supplement.
GENERAL
The Notes are to be issued under an Indenture dated as of May , 1997 (as
supplemented from time to time, the "Indenture"), between the Company and The
First National Bank of Chicago, as trustee (the "Trustee"), as described more
fully in the Prospectus. The Notes offered hereby constitute a portion of a
single series of Debt Securities for purposes of the Indenture, unlimited in
aggregate principal amount. The aggregate principal amount in which the Notes
offered hereby may be issued is limited to $3,000,000,000 (or the equivalent
thereof in foreign currencies or currency units), less an amount equal to the
gross proceeds from the sales of other Debt Securities (other than the Notes)
pursuant to the Registration Statement of which the accompanying Prospectus is a
part. The statements herein concerning the Notes and the Indenture do not
purport to be complete. They are qualified in their entirety by reference to the
provisions of the Indenture, including the definitions of certain terms used
herein without definition. A copy of the Indenture has been filed with the
Securities and Exchange Commission as an exhibit to the Registration Statement
of which the accompanying Prospectus is a part.
The Notes will be unsecured obligations of the Company and will rank prior
to all subordinated indebtedness of the Company and on a parity with all other
unsecured indebtedness of the Company. As of January 31, 1997, the aggregate
amount of outstanding indebtedness to which the Notes will rank pari passu,
including medium-term notes, commercial paper and commercial bank notes, was
$4,277,109,000. Although the Notes will not be subordinated in right of payment
to any other indebtedness of the Company, the right of the Company and its
creditors, including the holders of Notes, under general equitable principles,
to participate in any distributions of assets of any subsidiary of the Company
upon the Company's liquidation or reorganization or otherwise is, unless there
is a substantive consolidation of the Company with its subsidiaries, likely to
be subject to the prior claims of creditors of such subsidiary, except to the
extent that claims of the Company itself as a creditor of such subsidiary may be
recognized. As of January 31, 1997, the aggregate amount of outstanding
indebtedness of subsidiaries of the Company (excluding indebtedness of the
subsidiaries to the Company or other subsidiaries) was $392,724,000.
The Indenture does not limit the aggregate principal amount of Debt
Securities which may be issued thereunder and provides that Debt Securities may
be issued in one or more series up to the aggregate principal amount which may
be authorized from time to time by the Company. As of January 31, 1997, there
were $1,467,800,000 aggregate principal amount of medium-term notes of the
Company outstanding. The Company may, from time to time, without the consent of
the holders of the Notes (the "Holders"), provide for the issuance of additional
Notes or other Debt Securities under the Indenture. As used herein, "Holder"
includes the Depositary with respect to Global Notes.
S-3
<PAGE>
The Notes will be offered on a continuing basis and will mature on any day
from 9 months to 40 years from the date of issue, as selected by the initial
purchaser and agreed to by the Company (the "Stated Maturity"), and may be
subject to redemption or repayment prior to Stated Maturity at the price or
prices specified in the applicable Pricing Supplement. "Maturity" means, when
used with respect to the Notes, the date on which the principal of such Note or
an installment of principal becomes due and payable as therein provided, whether
at the Stated Maturity or by declaration of acceleration, call for redemption or
otherwise. Unless otherwise specified in any applicable Pricing Supplement, each
Note will bear interest at either (a) a fixed rate or (b) a floating rate
determined by reference to an interest rate formula or a Base Rate (as
hereinafter defined), which may be adjusted by adding or subtracting the Spread
and/or multiplying by the Spread Multiplier (as hereinafter defined).
Each Note will be issued initially as either a Global Note or a
Certificated Note and, if denominated in U.S. dollars, in denominations of
$1,000 and integral multiples of $1,000 in excess thereof or, if denominated in
any foreign currency or currency units, the dollar equivalent in such foreign
currency or currency units. For a description of the denominations of Notes
denominated or payable in a Specified Currency other than U.S. dollars (a
"Foreign Currency Note") see "Special Provisions Relating to Foreign Currency
Notes." Certificated Notes may be transferred or exchanged at the offices of the
Trustee, 14 Wall Street, Eighth Floor, Window 2, New York, New York 10005.
Global Notes may be transferred or exchanged through a participating member of
the Depositary. See "Global Notes" below. No service charge will be made for any
registration of transfer or exchange of Certificated Notes, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.
The interest rates offered by the Company with respect to the Notes may
differ depending upon, among other things, the aggregate principal amount of the
Notes purchased in any single transaction. Interest rates or interest rate
formulas are subject to change by the Company from time to time but no such
change will affect any Note theretofore issued or which the Company has agreed
to sell.
Unless otherwise indicated in the applicable Pricing Supplement, the
Interest Payment Dates for Fixed Rate Notes shall be as described below under
"Fixed Rate Notes." The Interest Payment Dates for Floating Rate Notes shall be
as indicated in the applicable Pricing Supplement. Unless otherwise specified in
the applicable Pricing Supplement, each Regular Record Date for a Fixed Rate
Note or a Floating Rate Note will be the fifteenth day (whether or not a
Business Day) next preceding each Interest Payment Date.
The Notes are referred to in the accompanying Prospectus as the "Debt
Securities." For a description of the rights attaching to different series of
Debt Securities under the Indenture, see "Description of Debt Securities" in the
accompanying Prospectus.
PAYMENT OF PRINCIPAL AND INTEREST
Payments of principal, premium, if any, and interest on Global Notes will
be made to the Depositary by wire transfer, either in same day funds or in next
day funds. See " -- Global Notes" below. In the case of Certificated Notes,
principal, premium, if any, and interest will be payable, the transfer of the
Notes will be registrable, and Notes will be exchangeable for Notes bearing
identical terms and provisions at the offices of the Trustee, 14 Wall Street,
Eighth Floor, Window 2, New York, New York 10005; provided, however, that
payment of interest, other than interest at Maturity, may be made at the option
of the Company by check mailed to the address of the person in whose name the
applicable Note is registered at the close of business on the relevant Regular
Record Date (as hereinafter defined) as shown on the applicable security
register (which in the case of Global Notes will be a nominee of the
Depositary). Notwithstanding the foregoing, a holder of U.S. $10,000,000 or more
in aggregate principal amount of Notes of like tenor and term (or a holder of
the equivalent thereof in a Specified Currency other than U.S. dollars) shall be
entitled to receive interest payments (other than an interest payment due at
Maturity) by wire transfer of immediately available funds to a designated
account maintained in the United States, but only if proper instructions have
been received in writing by the Trustee on or prior to the applicable Regular
Record Date. Such instructions shall remain in effect with respect to payments
of interest made to such holder on subsequent Interest Payment Dates unless
revoked or changed by written instructions received by the Trustee from such
holder, provided that any such written revocation or change which is received by
the Trustee
S-4
<PAGE>
after a Regular Record Date and before the related Interest Payment Date shall
not be effective with respect to the interest payable on such Interest Payment
Date. Interest will be payable on each date specified in the Note on which an
installment of interest is due and payable (an "Interest Payment Date") and at
Maturity. If the original issue date of a Note is between a Regular Record Date
and the related Interest Payment Date, the initial interest payment will be made
on the Interest Payment Date following the next succeeding Regular Record Date
to the registered Holder on such next succeeding Regular Record Date unless
otherwise specified in the applicable Pricing Supplement.
Unless otherwise specified in an applicable Pricing Supplement, interest
payments will be in the amount of interest accrued from and including the next
preceding Interest Payment Date in respect of which interest has been paid or
duly provided for (or from and including the date of issue, if no interest has
been paid with respect to such Note), to but excluding the applicable Interest
Payment Date (an "Interest Accrual Period"). In the case of Certificated Notes,
payment of principal, premium, if any, and interest payable at Maturity on each
Certificated Note will be paid in immediately available funds against
presentation of the Certificated Note at the offices of the Trustee, 14 Wall
Street, Eighth Floor, New York, New York 10005; provided that the Certificated
Notes are presented to the Trustee in time for the Trustee to make such payments
in such funds in accordance with its normal procedures. Interest payable at
Maturity will be payable to the person to whom the principal of the Note shall
be paid.
"Business Day" means any day, other than a Saturday or Sunday, that meets
each of the following applicable requirements: the day is (a) not a legal
holiday or a day on which banking institutions are authorized or required by law
or regulation to be closed in The City of New York, (b) if the Note is
denominated or payable in a Specified Currency other than U.S. dollars, (i) not
a day on which banking institutions are authorized or required by law or
regulation to close in the major financial center of the country issuing the
Specified Currency (which in the case of ECU shall include the financial center
of each country that issues a component currency of the ECU) and (ii) a day on
which banking institutions in such financial center are carrying out
transactions in such Specified Currency and (c) with respect to LIBOR Notes (as
defined below), also a London Banking Day. "London Banking Day" means any day on
which dealings on deposits in U.S. dollars are transacted in the London
interbank market.
REDEMPTION AND REPAYMENT
Unless otherwise specified in an applicable Pricing Supplement, the Notes
will not be redeemable prior to their Stated Maturity. If so specified in an
applicable Pricing Supplement with respect to a Note or Notes, such Note or
Notes will be redeemable on or after the date set forth in such Pricing
Supplement, either in whole or from time to time in part, at the option of the
Company, at a redemption price (the "Redemption Price") determined in accordance
with the following paragraph, together with interest accrued thereon to but
excluding the date of redemption, on notice given not more than 60 nor less than
30 days prior to the date of redemption.
The Redemption Price for each Note subject to redemption shall initially be
equal to a certain percentage (the "Initial Redemption Percentage") of the
principal amount of such Note to be redeemed and shall decline at each
anniversary of the Initial Redemption Date with respect to such Note by a
percentage (the "Annual Redemption Percentage Reduction") of the principal
amount to be redeemed until the Redemption Price is 100% of such principal
amount. The Initial Redemption Percentage and any Annual Redemption Percentage
Reduction with respect to each Note subject to redemption prior to Stated
Maturity will be fixed at the time of sale and set forth in the applicable
Pricing Supplement and in the applicable Note.
Unless otherwise specified in an applicable Pricing Supplement, the Notes
will not be subject to repayment at the option of the Holders. If so specified
in an applicable Pricing Supplement with respect to a Note or Notes, such Note
or Notes will be subject to repayment at the option of the Holders thereof in
accordance with the terms of the Notes on their respective optional repayment
dates fixed at the time of sale and set forth in the applicable Pricing
Supplement and in the applicable Note (the "Optional Repayment Dates"). On any
Optional Repayment Date with respect to a Note, such Note will be repayable in
whole or in part at the option of the Holder thereof at a price equal to 100% of
the principal amount to be repaid, together with interest thereon payable to the
Optional
S-5
<PAGE>
Repayment Date, on notice given by such Holder to the Company not more than 60
nor less than 30 days prior to the Optional Repayment Date.
If a Note is represented by a Global Note, the Depositary's nominee will be
the Holder of such Note and therefore will be the entity through which the
beneficial owners of Global Notes may exercise a right to repayment. In order to
ensure that the Depositary's nominee will timely exercise a right to repayment
with respect to a particular Note, the beneficial owner of such Note must
instruct the broker or other direct or indirect participant through which it
holds an interest in such Note to notify the Depositary of its desire to
exercise a right to repayment. The Depositary would then notify the Trustee.
Different firms have different deadlines for accepting instructions from their
customers and, accordingly, each beneficial owner should consult the broker or
other direct or indirect participant through which it holds an interest in a
Global Note in order to ascertain the deadline by which such an instruction must
be given in order for timely notice to be delivered to the Depositary.
Unless otherwise specified in an applicable Pricing Supplement, the Notes
will not be subject to any sinking fund.
FIXED RATE NOTES
Unless otherwise specified in an applicable Pricing Supplement, each Fixed
Rate Note will bear interest from the date of issue at the annual rate stated on
the face thereof, payable semiannually on February 15 and August 15 of each year
and at Maturity, subject to certain exceptions. Unless otherwise specified in an
applicable Pricing Supplement, interest on the Fixed Rate Notes will be computed
on the basis of a 360-day year of twelve 30-day months. Interest on the Fixed
Rate Notes will be payable generally to the person in whose name the Note is
registered at the close of business on the Regular Record Date. However,
interest payable at Maturity will be payable to the person to whom principal
shall be payable.
If any Interest Payment Date or the Maturity of a Fixed Rate Note falls on
a day that is not a Business Day, the payment will be made on the next Business
Day as if it were made on the date such payment was due, and no interest will
accrue on the amount so payable for the period from and after such Interest
Payment Date or Maturity, as the case may be.
FLOATING RATE NOTES
Each Floating Rate Note will bear interest at a floating rate determined by
reference to a Base Rate or an interest rate formula specified in the applicable
Pricing Supplement. Any Floating Rate Note may also have either or both of the
following: (i) a maximum numerical interest rate limitation, or ceiling, on the
rate of interest which may accrue during any interest period, and (ii) a minimum
numerical interest rate limitation, or floor, on the rate of interest which may
accrue during any interest period. Interest on the Floating Rate Notes will be
determined by reference to a "Base Rate," which may be: (a) the CD Rate in which
case such Note will be a "CD Rate Note," (b) the Commercial Paper Rate in which
case such Note will be a "Commercial Paper Rate Note," (c) the Federal Funds
Effective Rate in which case such Note will be a "Federal Funds Effective Rate
Note," (d) LIBOR in which case such Note will be a "LIBOR Note," (e) the
Treasury Rate in which case such Note will be a "Treasury Rate Note," (f) the
Prime Rate in which case such Note will be a "Prime Rate Note" or (g) such other
Base Rate or interest rate formula as is set forth in such Pricing Supplement.
The applicable Pricing Supplement will specify the interest rate formula or the
Base Rate and the Index Maturity, the Spread and/or Spread Multiplier, if any,
and the maximum or minimum interest rate limitation, if any, applicable to each
Floating Rate Note. In addition, such Pricing Supplement may contain information
concerning the Calculation Agent, Calculation Dates, Initial Interest Rate,
Interest Determination Dates, Interest Payment Period, Interest Payment Dates,
Maturity, Regular Record Dates, Interest Reset Dates, Interest Reset Period,
and, if applicable, the Initial Redemption Dates, the Initial Redemption
Percentage, Annual Redemption Percentage Reduction and Optional Repayment Date,
with respect to such Floating Rate Note. The "Index Maturity" is the period to
maturity of an instrument or obligation with respect to which the Base Rate is
calculated. The "Spread" is the number of basis points above or below the Base
Rate applicable to such Floating Rate Note, and the "Spread Multiplier" is the
percentage of the Base Rate applicable to the interest rate for such Floating
Rate Note. The Spread, Spread Multiplier, Index Maturity and
S-6
<PAGE>
other variable terms of the Floating Rate Notes are subject to change by the
Company from time to time, but no such change will affect any Floating Rate Note
theretofore issued or as to which an offer to purchase has been accepted by the
Company.
Unless otherwise specified in an applicable Pricing Supplement, the rate of
interest on each Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semi-annually or annually (each an "Interest Reset Date"), as
specified in the applicable Pricing Supplement. Unless otherwise specified in an
applicable Pricing Supplement, the Interest Reset Date will be, in the case of
Floating Rate Notes which reset daily, each Business Day; in the case of
Floating Rate Notes (other than Treasury Rate Notes) which reset weekly, the
Wednesday of each week; in the case of Treasury Rate Notes which reset weekly,
the Tuesday of each week (except as provided below); in the case of Floating
Rate Notes which reset monthly, the third Wednesday of each month; in the case
of Floating Rate Notes which reset quarterly, the third Wednesday of each
February, May, August and November; in the case of Floating Rate Notes which
reset semi-annually, the third Wednesday of each of the two months of each year
specified in the applicable Pricing Supplement; and in the case of Floating Rate
Notes which reset annually, the third Wednesday of one month of each year, as
specified in the applicable Pricing Supplement; provided, however, that, unless
otherwise specified in an applicable Pricing Supplement, the interest rate in
effect from the date of issue to the first Interest Reset Date with respect to a
Floating Rate Note will be the Initial Interest Rate (as set forth in the
applicable Pricing Supplement). If any Interest Reset Date for any Floating Rate
Note would otherwise be a day that is not a Business Day for such Floating Rate
Note, the Interest Reset Date for such Floating Rate Note shall be postponed to
the next day that is a Business Day for such Floating Rate Note, except that in
the case of a LIBOR Note, if such Business Day is in the next succeeding
calendar month, such Interest Reset Date shall be the immediately preceding
Business Day.
The interest rate applicable to each Interest Accrual Period commencing on
an Interest Reset Date will be the rate determined by reference to the Interest
Determination Date. The Interest Determination Date with respect to (a) a
Commercial Paper Rate Note (the "Commercial Paper Interest Determination Date"),
(b) a Federal Funds Effective Rate Note (the "Federal Funds Interest
Determination Date"), (c) a CD Rate Note (the "CD Interest Determination Date")
or (d) a Prime Rate Note (the "Prime Interest Determination Date") will be the
second Business Day prior to the Interest Reset Date for such Note. The Interest
Determination Date pertaining to an Interest Reset Date for a LIBOR Note (the
"LIBOR Interest Determination Date") will be the second London Banking Day prior
to such Interest Reset Date. The Interest Determination Date pertaining to an
Interest Reset Date for a Treasury Rate Note (the "Treasury Interest
Determination Date") will be the day of the week in which such Interest Reset
Date falls on which Treasury bills would normally be auctioned. Treasury bills
are usually sold at auction on Monday of each week, unless that day is a legal
holiday, in which case the auction is usually held on the following Tuesday,
except that such auction may be held on the preceding Friday. If, as the result
of a legal holiday, an auction is so held on the preceding Friday, such Friday
will be the Treasury Interest Determination Date pertaining to the Interest
Reset Date occurring in the next succeeding week. If an auction date shall fall
on any Interest Reset Date for a Treasury Rate Note, then such Interest Reset
Date shall instead be the first Business Day immediately following such auction
date.
With respect to a Floating Rate Note, accrued interest is calculated by
multiplying the principal amount of a Note by an accrued interest factor. The
accrued interest factor is computed by adding the interest factors calculated
for each day from the date of issue, or from the last date for which interest
has been paid, as the case may be, to the date for which accrued interest is
being calculated. Unless otherwise specified in an applicable Pricing
Supplement, the interest factor for each such day is computed by dividing the
interest rate applicable to such date by 360, in the case of Commercial Paper
Rate Notes, CD Rate Notes, Federal Funds Effective Rate Notes, LIBOR Notes and
Prime Rate Notes, or by the actual number of days in the year, in the case of
Treasury Rate Notes.
All percentages resulting from any calculation with respect to Floating
Rate Notes will be rounded, if necessary, to the nearest one hundred-thousandth
of a percentage point, with five one-millionths of a percentage point rounded
upward (e.g., 9.876545% (or .09876545) would be rounded to 9.87655% (or
.0987655)), and all dollar amounts used in or resulting from such calculation on
Floating Rates Notes will be rounded to the nearest cent with one half cent
being rounded upward. The Calculation Agent will, upon the request of the Holder
of any
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Floating Rate Note, provide the interest rate then in effect and the interest
rate which will become effective as a result of a determination made with
respect to the most recent Interest Determination Date with respect to such
Note. Unless otherwise specified in an applicable Pricing Supplement, the
Trustee will be the Calculation Agent for the Floating Rate Notes. Unless
otherwise specified in an applicable Pricing Supplement, the Calculation Date,
where applicable, pertaining to any Interest Determination Date will be the
earlier of (i) the tenth calendar day after such Interest Determination Date or
if any such day is not a Business Day, the next succeeding Business Day and (ii)
the Business Day next preceding the relevant Interest Payment Date or Maturity,
as the case may be.
In addition to any specified maximum interest rate which may be applicable
to any Floating Rate Note, the interest rate on the Notes will in no event be
higher than the maximum rate permitted by New York law, as the same may be
modified by United States law of general application. Under current New York
law, the maximum rate of interest on a loan to a corporation is 25% per annum on
a simple interest basis. The limit may not apply to Floating Rate Notes in which
$2,500,000 or more has been invested.
Each Floating Rate Note will bear interest from the date of issue at the
rates determined as described below until the principal thereof is paid or
otherwise made available for payment. Except as provided below, and unless
otherwise indicated in an applicable Pricing Supplement, interest will be
payable, in the case of Floating Rate Notes which reset daily, weekly or
monthly, on the third Wednesday of each month or on the third Wednesday of
February, May, August and November of each year, as specified in the applicable
Pricing Supplement; in the case of Floating Rate Notes which reset quarterly, on
the third Wednesday of February, May, August and November of each year; in the
case of Floating Rate Notes which reset semi-annually, on the third Wednesday of
the two months of each year specified in the applicable Pricing Supplement; and
in the case of Floating Rate Notes which reset annually, on the third Wednesday
of the month specified in the applicable Pricing Supplement and, in each case,
at Maturity.
If any Interest Payment Date, other than an Interest Payment Date occurring
at Maturity, for any Floating Rate Note would fall on a day that is not a
Business Day with respect to such Note, such Interest Payment Date will be the
following day that is a Business Day with respect to such Note, except that in
the case of a LIBOR Note, if such Business Day is in the next succeeding
calendar month, such Interest Payment Date will be the immediately preceding day
that is a Business Day with respect to such LIBOR Note. If the Maturity of any
Floating Rate Note would fall on a day that is not a Business Day, the payment
of interest and principal (and premium, if any) may be made on the next
succeeding Business Day, and no interest on such payment will accrue for the
period from and after Maturity.
COMMERCIAL PAPER RATE NOTES
A Commercial Paper Rate Note will bear interest at the interest rate
(calculated with reference to the Commercial Paper Rate and the Spread and/or
Spread Multiplier, if any) specified in the Commercial Paper Rate Note and in
the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement,
"Commercial Paper Rate" means, with respect to any Commercial Paper Interest
Determination Date, the Money Market Yield (calculated as described below) on
that date of the rate for commercial paper having the Index Maturity designated
in the applicable Pricing Supplement as such rate is published by the Board of
Governors of the Federal Reserve System in "Statistical Release H.15(519),
Selected Interest Rates," or any successor publication of the Board of Governors
of the Federal Reserve System ("H.15(519)") under the heading "Commercial
Paper." In the event that such rate is not published by 3:00 P.M., New York City
time, on the Calculation Date pertaining to such Commercial Paper Interest
Determination Date, then the Commercial Paper Rate shall be the Money Market
Yield (as defined below) on such Commercial Paper Interest Determination Date of
the rate for commercial paper having the Index Maturity designated in the
applicable Pricing Supplement as published by the Federal Reserve Bank of New
York in its daily statistical release, "Composite 3:30 P.M. Quotations for U.S.
Government Securities" ("Composite Quotations") under the heading "Commercial
Paper." If by 3:00 P.M., New York City time, on such Calculation Date such rate
is not yet published in either H.15(519) or Composite Quotations, then the
Commercial Paper Rate for such Commercial Paper Interest Determination Date
shall be calculated by the Calculation Agent and shall be
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the Money Market Yield of the arithmetic mean of the offered rates as of 11:00
A.M., New York City time, on such Commercial Paper Interest Determination Date,
of three leading dealers of commercial paper in New York City selected by the
Calculation Agent for commercial paper having the Index Maturity designated in
the applicable Pricing Supplement placed for an industrial issuer whose bond
rating is "AA," or the equivalent, from a nationally recognized securities
rating agency; provided, however, that if the dealers selected as aforesaid by
the Calculation Agent are not quoting as mentioned in this sentence, the
Commercial Paper Rate with respect to such Commercial Paper Interest
Determination Date will be the Commercial Paper Rate in effect on such
Commercial Paper Interest Determination Date.
"Money Market Yield" shall be a yield (expressed as a percentage rounded,
if necessary, to the nearest one hundred-thousandth of a percent) calculated in
accordance with the following formula:
Money Market Yield = D x 360 x 100
-------------
360 - (D x M)
where "D" refers to the per annum rate for the commercial paper, quoted on a
bank discount basis and expressed as a decimal; and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
CD RATE NOTES
A CD Rate Note will bear interest at the interest rate (calculated with
reference to the CD Rate and the Spread and/or Spread Multiplier, if any)
specified in the CD Rate Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "CD Rate"
means, with respect to any CD Interest Determination Date, the rate on such date
for negotiable certificates of deposit having the Index Maturity designated in
the CD Rate Note as published in H.15(519) under the heading "CDs (Secondary
Market)" or, if not so published by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such CD Interest Determination Date, the CD Rate
will be the rate on such CD Interest Determination Date for negotiable
certificates of deposit of the Index Maturity designated in the applicable
Pricing Supplement as published in Composite Quotations under the heading
"Certificates of Deposit." If such rate is not published in either H.15(519) or
Composite Quotations by 3:00 P.M., New York City time, on the Calculation Date
pertaining to such CD Interest Determination Date, the CD Rate will be
calculated by the Calculation Agent and will be the arithmetic mean of the
secondary market offered rates as of 10:00 A.M., New York City time, on such CD
Interest Determination Date, of three leading nonbank dealers in negotiable U.S.
dollar certificates of deposit in New York City selected by the Calculation
Agent (after consultation with the Company) for negotiable certificates of
deposit of major United States money market banks of the highest credit standing
(in the market for negotiable certificates of deposit) with a remaining maturity
closest to the Index Maturity designated in the applicable Pricing Supplement in
a denomination of $5,000,000; provided, however, that if the dealers selected as
aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, the CD Rate with respect to such CD Interest Determination Date will
be the CD Rate in effect on such CD Interest Determination Date.
FEDERAL FUNDS EFFECTIVE RATE NOTES
A Federal Funds Effective Rate Note will bear interest at the interest rate
(calculated with reference to the Federal Funds Effective Rate and the Spread
and/or Spread Multiplier, if any) specified in the Federal Funds Effective Rate
Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Federal
Funds Effective Rate" means, with respect to any Federal Funds Interest
Determination Date, the rate on that date for Federal Funds as published in
H.15(519) under the heading "Federal Funds (Effective)" or, if not so published
by 9:00 A.M., New York City time, on the Calculation Date pertaining to such
Federal Funds Interest Determination Date, the Federal Funds Effective Rate will
be the rate on such Federal Funds Interest Determination Date as published in
Composite Quotations under the heading "Federal Funds/Effective Rate." If such
rate is not yet published in
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either H.15(519) or Composite Quotations by 9:00 A.M., New York City time, on
the Calculation Date pertaining to such Federal Funds Interest Determination
Date, then the Federal Funds Effective Rate for such Federal Funds Interest
Determination Date will be calculated by the Calculation Agent and will be the
arithmetic mean of the rates for the last transaction in overnight Federal Funds
arranged by three leading brokers of Federal Funds transactions in New York City
selected by the Calculation Agent as of 9:00 A.M., New York City time, on such
Federal Funds Interest Determination Date; provided, however, that if the
brokers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the Federal Funds Effective Rate with respect to
such Federal Funds Interest Determination Date will be the Federal Funds
Effective Rate in effect on such Federal Funds Interest Determination Date.
LIBOR NOTES
A LIBOR Note will bear interest at the interest rate (calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any) specified in
the LIBOR Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, LIBOR will
be determined by the Calculation Agent in accordance with the following
provisions:
(i) With respect to a LIBOR Interest Determination Date, LIBOR will
be, as specified in the applicable Pricing Supplement, either (a) the
arithmetic mean of the offered rates for deposits in U.S. dollars having
the Index Maturity designated in the applicable Pricing Supplement,
commencing on the second London Banking Day immediately following such
LIBOR Interest Determination Date, that appears on the Reuters Screen LIBO
Page as of 11:00 A.M., London time, on such LIBOR Interest Determination
Date, if at least two such offered rates appear on the Reuters Screen LIBO
Page ("LIBOR Reuters"), or (b) the rate for deposits in U.S. dollars having
the Index Maturity designated in the applicable Pricing Supplement,
commencing on the second London Banking Day immediately following such
LIBOR Interest Determination Date, that appears on the Telerate Page 3750
as of 11:00 A.M., London time, on such LIBOR Interest Determination Date
("LIBOR Telerate"). "Reuters Screen LIBO Page" means the display designated
as page "LIBO" on the Reuters Monitor Money Rates Service (or such other
page as may replace page LIBO on that service for the purpose of displaying
London interbank offered rates of major banks). "Telerate Page 3750" means
the display designated as page "3750" on the Telerate Service (or such
other page as may replace the 3750 page on that service or such other
service or services as may be nominated by the British Bankers' Association
for the purpose of displaying London interbank offered rates for U.S.
dollar deposits). If neither LIBOR Reuters nor LIBOR Telerate is specified
in the applicable Pricing Supplement, LIBOR will be determined as if LIBOR
Telerate had been specified. If at least two such offered rates appear on
the Telerate Page 3750, the rate in respect of such LIBOR Interest
Determination Date will be the arithmetic mean of such offered rates as
determined by the Calculation Agent. If fewer than two offered rates appear
on the Telerate Page 3750, or if no rate appears on the Reuters Screen LIBO
Page, as applicable, LIBOR in respect of such LIBOR Interest Determination
Date will be determined as if the parties had specified the rate described
in (ii) below.
(ii) On any LIBOR Interest Determination Date on which fewer than two
offered rates appear on the Reuters Screen LIBO Page as specified in (i)
(a) above, or on which no rate appears on the Telerate Page 3750, as
specified in (i)(b) above, as applicable, LIBOR will be determined on the
basis of the rates at which deposits in U.S. dollars are offered by four
major banks in the London interbank market selected by the Calculation
Agent (the "Reference Banks") at approximately 11:00 A.M., London time, on
such LIBOR Interest Determination Date to prime banks in the London
interbank market, having the Index Maturity designated in the applicable
Pricing Supplement, commencing on the second London Banking Day immediately
following such LIBOR Interest Determination Date and in a principal amount
equal to an amount of not less than U.S. $1,000,000 that is representative
for a single transaction in such market at such time. The Calculation Agent
will request the principal London office of each of such Reference Banks to
provide a quotation of its rate. If at least two such quotations are
provided, LIBOR in respect of such LIBOR Interest Determination Date will
be the arithmetic mean of such quotations. If fewer than two quotations are
provided, LIBOR in respect of such LIBOR Interest Determination Date will
be the arithmetic mean of the rates
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quoted by three major banks in New York City selected by the Calculation
Agent at approximately 11:00 A.M., New York City time, on such LIBOR
Interest Determination Date for loans in U.S. dollars to leading European
banks, having the Index Maturity designated in the applicable Pricing
Supplement, such loans commencing on the second London Banking Day
immediately following such LIBOR Interest Determination Date and in a
principal amount equal to an amount of not less than U.S. $1,000,000 that
is representative for a single transaction in such market at such time;
provided, however, that if the banks in New York City selected as aforesaid
by the Calculation Agent are not quoting as mentioned in this sentence,
LIBOR with respect to such LIBOR Interest Determination Date will be LIBOR
in effect on such LIBOR Interest Determination Date.
TREASURY RATE NOTES
A Treasury Rate Note will bear interest at the interest rate (calculated
with reference to the Treasury Rate and the Spread and/or Spread Multiplier, if
any) specified in the Treasury Rate Note and in the applicable Pricing
Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Treasury Interest Determination Date, the rate
for the most recent auction of direct obligations of the United States
("Treasury Bills") having the Index Maturity designated in the applicable
Pricing Supplement as published in H.15(519) under the heading Pricing "U.S.
Government Securities -- Treasury Bills -- auction average (investment)" or, if
not so published by 3:00 P.M., New York City time, on the Calculation Date
pertaining to such Treasury Interest Determination Date, the auction average
rate (expressed as a bond equivalent, rounded, if necessary, to the nearest one
hundred-thousandth of a percent, on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) as otherwise announced by the U.S.
Department of the Treasury. In the event that the result of the auction of
Treasury Bills having the Index Maturity designated in the applicable Pricing
Supplement is not otherwise reported as provided above by 3:00 P.M., New York
City time, on such Calculation Date or, if no such auction is held in a
particular week, then the Treasury Rate shall be calculated by the Calculation
Agent and shall be a yield to Stated Maturity (expressed as a bond equivalent on
the basis of a year of 365 or 366 days, as applicable, and applied on a daily
basis) of the arithmetic mean of the secondary market bid rates, as of
approximately 3:30 P.M., New York City time, on such Treasury Interest
Determination Date, of three leading primary U.S. securities dealers selected by
the Calculation Agent for the issue of Treasury Bills with a remaining maturity
closest to the Index Maturity designated in the applicable Pricing Supplement;
provided, however, that if the dealers selected as aforesaid by the Calculation
Agent are not quoting as mentioned in this sentence, the Treasury Rate with
respect to such Treasury Interest Determination Date will be the Treasury Rate
in effect on such Treasury Interest Determination Date.
PRIME RATE NOTES
A Prime Rate Note will bear interest at the interest rate (calculated with
reference to the Prime Rate and the Spread and/or Spread Multiplier, if any)
specified in the Prime Rate Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Prime Interest Determination Date, the rate set
forth on such date in H.15(519) under the heading "Bank Prime Loan." In the
event that such rate is not published prior to 9:00 A.M. New York City time, on
the Calculation Date pertaining to such Prime Interest Determination Date, then
the Prime Rate will be determined by the Calculation Agent and will be the
arithmetic mean of the rates of interest publicly announced by each bank that
appears on the Reuters Screen USPRIME1 Page (as defined below) as such bank's
prime rate or base lending rate as in effect for that Prime Interest
Determination Date. If fewer than four such rates but more than one such rate
appear on the Reuters Screen USPRIME1 Page for the Prime Interest Determination
Date, the Prime Rate will be determined by the Calculation Agent and will be the
arithmetic mean of the prime rates quoted on the basis of the actual number of
days in the year divided by a 360-day year as of the close of business on such
Prime Interest Determination Date by four major money center banks in New York
City selected by the Calculation Agent. If fewer than two such rates appear on
the Reuters Screen USPRIME1 Page, the Prime Rate will be determined by
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the Calculation Agent on the basis of the rates furnished in New York City by
the appropriate number of substitute banks or trust companies organized and
doing business under the laws of the United States, or any State thereof, having
total equity capital of at least U.S. $500,000,000 and being subject to
supervision or examination by federal or state authority, selected by the
Calculation Agent to provide such rate or rates; provided, however, that if the
banks selected as aforesaid are not quoting as mentioned in this sentence, the
Prime Rate will be the Prime Rate in effect on such Prime Interest Determination
Date. "Reuters Screen USPRIME1 Page" means the display designated as page
"USPRIME1" on the Reuters Monitor Money Rates Service (or such other page as may
replace the USPRIME1 page on that service for the purpose of displaying prime
rates or base lending rates of major United States banks).
FOREIGN CURRENCY AND INDEX-LINKED NOTES
If any Note is not to be denominated in U.S. dollars, certain provisions
with respect thereto will be set forth in a foreign currency Pricing Supplement
which will indicate the Specified Currency in which the principal, premium, if
any, and interest with respect to such Note are to be paid, along with any other
terms relating to the Specified Currency. The Pricing Supplement also will
provide specific historic exchange rate information, certain currency risks
relating to the specific currencies selected, certain investment considerations
and certain additional tax considerations.
Amounts due on a Note in respect of principal, premium, if any, and
interest may be determined with reference to (a) a currency exchange rate or
rates, (b) a securities or commodities exchange index, (c) the value of a
particular security or commodity or (d) any other index or indices (any such
Note being herein referred to as an "Index-Linked Note"). The Pricing Supplement
relating to an Index-Linked Note will set forth the method by and terms on which
the amount of principal payable at Stated Maturity (or upon redemption or
repayment, if applicable) and interest, premium or the amortized face amount, if
any, will be determined, the tax consequences to holders of Index-Linked Notes,
a description of certain risks associated with investments in Index-Linked Notes
and other information relating to such Index-Linked Notes.
An investment in Notes indexed, as to principal or interest or both, to one
or more values of currencies (including exchange rates between currencies),
commodities or interest rate indices entails significant risks that are not
associated with similar investments in a conventional fixed-rate debt security.
If the interest rate of such a Note is so indexed, it may result in an interest
rate that is less than that payable on a conventional fixed-rate debt security
issued at the same time, including the possibility that no interest will be
paid, and, if the principal amount of such a Note is so indexed, the principal
amount payable at Maturity may be less than the original purchase price of such
Note if allowed pursuant to the terms of such Note, including the possibility
that no principal will be paid. The secondary market for such Notes will be
affected by a number of factors independent of the creditworthiness of the
issuer and the value of the applicable currency, commodity or interest rate
index, including the volatility of the applicable currency, commodity or
interest rate index, the time remaining to the maturity of such Notes, the
amount outstanding of such Notes and market interest rates. The value of the
applicable currency, commodity or interest rate index depends on a number of
interrelated factors, including economic, financial and political events, over
which the Company has no control. Additionally, if the formula used to determine
the principal amount or interest payable with respect to such Notes contains a
multiple or leverage factor, the effect of any change in the applicable
currency, commodity or interest rate index will be increased. The historical
experience of the relevant currencies, commodities or interest rate indices
should not be taken as an indication of future performance of such currencies,
commodities or interest rate indices during the term of any Note. The credit
ratings assigned to the Company's medium-term note program are a reflection of
the Company's credit status, and are not a reflection of the potential impact of
the factors discussed above, or any other factors, on the market value of the
Notes. Accordingly, prospective investors should consult their own financial and
legal advisors as to the risks entailed by an investment in such Notes and the
suitability of such Notes in light of their particular circumstances.
GLOBAL NOTES
The Notes may be issued in whole or in part in the form of one or more
fully registered Notes (each, a "Global Note") which will be deposited with, or
on behalf of, the Depositary and registered in the name of the
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Depositary's nominee. Except as set forth below, a Global Note may not be
transferred except as a whole by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any nominee to a successor of the Depositary
or a nominee of such successor.
The Depositary has advised the Company and the Agents that it is a
limited-purpose trust company organized under the laws of the State of New York,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the Uniform Commercial Code and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). The Depositary was created to hold
securities for its participants and to facilitate the clearance and settlement
of securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depositary's participants include securities brokers and dealers (including the
Agents), banks, trust companies, clearing corporations and certain other
organizations, some of which (and/or their representatives) own the Depositary.
Access to the Depositary's book-entry system is also available to others, such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
Persons who are not participants may beneficially own securities held by the
Depositary only through participants.
Upon the issuance by the Company of Notes represented by a Global Note, the
Depositary will credit, on its book-entry registration and transfer system, the
respective principal amounts of the Notes represented by such Global Note to the
accounts of participants. The accounts to be credited shall be designated by the
Agents or by the Company, if such Notes are offered and sold directly by the
Company.
If the Depositary is at any time unwilling or unable to continue as
depositary and a successor depositary is not appointed by the Company within 90
days, the Company will issue Notes in certificated form in exchange for each
Global Note. In addition, the Company may at any time determine not to have
Notes represented by one or more Global Notes, and, in such event, will issue
Notes in certificated form in exchange for the Global Note or Notes representing
such Notes. In any such instance, an owner of a beneficial interest in a Global
Note will be entitled to physical delivery in certificated form of Notes equal
in principal amount to such beneficial interest and to have such Notes
registered in its name. Notes so issued in certificated form will be issued in
denominations of $1,000 or any amount in excess thereof which is an integral
multiple of $1,000 and will be issued in fully registered form only.
For a more complete description of Global Notes, see "Description of Debt
Securities -- Global Securities" in the accompanying Prospectus.
SPECIAL PROVISIONS RELATING TO FOREIGN CURRENCY NOTES
GENERAL
Unless otherwise indicated in the applicable Pricing Supplement, the Notes
will be denominated in U.S. dollars and payments of principal of, premium, if
any, and interest on the Notes will be made in U.S. dollars. The following
provisions shall apply to Foreign Currency Notes. Such provisions are in
addition to, and to the extent inconsistent therewith replace, the description
of general terms and provisions of the Notes set forth in the attached
Prospectus and elsewhere in this Prospectus Supplement.
Foreign Currency Notes are issuable in registered form only, without
coupons. The denominations for particular Foreign Currency Notes will be
specified in the applicable Pricing Supplement.
Unless otherwise provided in the applicable Pricing Supplement, payment of
the purchase price of Foreign Currency Notes will be made in immediately
available funds.
Unless otherwise indicated in the applicable Pricing Supplement, all
currency and currency unit amounts used and resulting from calculations relating
to currencies for a Foreign Currency Note will be rounded to the nearest
one-hundredth of a unit (with five one-thousandths of a unit being rounded
upwards).
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CURRENCIES
Unless otherwise specified in the applicable Pricing Supplement, purchasers
are required to pay for Foreign Currency Notes in the Specified Currency. At the
present time there are limited facilities in the United States for the
conversion of U.S. dollars into foreign currencies or currency units and vice
versa, and banks generally do not offer non-U.S. dollar checking or savings
account facilities in the United States. However, if requested on or prior to
the third Business Day preceding the date of delivery of the Notes, or by such
other day as determined by the Agent which presented the offer to purchase such
Notes to the Company, such Agent is prepared to arrange for the conversion of
U.S. dollars into the Specified Currency set forth in the applicable Pricing
Supplement to enable the purchasers to pay for the Notes. Each such conversion
will be made by the applicable Agent on such terms and subject to such
conditions, limitations and charges as the applicable Agent may from time to
time establish in accordance with its regular foreign exchange practices. All
costs of exchange will be borne by the purchasers of the Notes.
The Foreign Currency Notes provide that, in the event of an official
redenomination of a foreign currency or currency unit, the obligations of the
Company with respect to payments on Notes denominated or payable in such foreign
currency or currency unit shall, in all cases, be deemed immediately following
such redenomination to provide for payment of that amount of redenominated
currency representing the amount of such obligations immediately before such
redenomination. In no event, however, shall any adjustment be made to any amount
payable under the Notes as a result of any change in the value of such foreign
currency or currency unit relative to any other currency due solely to
fluctuations in exchange rates. See "Foreign Currency Risks -- Exchange Rates
and Exchange Controls."
PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST
The principal of, premium, if any, and interest on Foreign Currency Notes
are payable by the Company in the Specified Currency. However, the agent
appointed by the Company (the "Exchange Rate Agent") will convert all payments
of principal of, premium, if any, and interest on Foreign Currency Notes to U.S.
dollars. Unless otherwise specified in the applicable Pricing Supplement, the
Holder of a Foreign Currency Note may elect to receive such payments in the
Specified Currency as described below.
Unless the Holder has elected otherwise or unless otherwise specified in
the applicable Pricing Supplement, payment in respect of a Foreign Currency Note
shall be made in U.S. dollars based upon the exchange rate as determined by the
Exchange Rate Agent based on the quotation for such non-U.S. dollar currency or
composite currency appearing at approximately 11:00 a.m., New York City time, on
the second Business Day preceding the applicable date of payment, on the bank
composite or multi-contributor pages of the Telerate Monitor Foreign Exchange
Service (or, if such service is not then available to the Exchange Rate Agent,
the Reuters Monitor Foreign Exchange Service or, if neither is available, on a
comparable display or in a comparable manner as the Company and the Exchange
Rate Agent shall agree), for the first three banks (or two, if three are not
available), in chronological order, appearing on a list of banks agreed to by
the Company and the Exchange Rate Agent prior to such second Business Day, which
are offering quotes. The Exchange Rate Agent shall then select from among the
selected quotations in a manner specified in the applicable Pricing Supplement.
If fewer than two bids are available, then such conversion will be based on the
Market Exchange Rate (as defined below) as of the second Business Day preceding
the applicable payment date. "Market Exchange Rate" means the noon U.S. dollar
buying rate in The City of New York for cable transfers of the relevant currency
as certified for customs purposes by the Federal Reserve Bank of New York. If no
Market Exchange Rate as of the second Business Day preceding the applicable
payment date is available, payments will be made in the Specified Currency,
unless such Specified Currency is unavailable due to the imposition of exchange
controls or to other circumstances beyond the Company's control, in which case
payment will be made as described below under "Payment Currency." All currency
exchange costs will be borne by the Holders of such Notes by deductions from
such payments.
Unless otherwise specified in the applicable Pricing Supplement, a Holder
of Foreign Currency Notes may elect to receive payment of the principal of,
premium, if any, and interest on the Notes in the Specified Currency by
transmitting a written request for such payment to the principal office of the
Trustee, 14 Wall Street, Eighth
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Floor, New York, New York 10005, on or prior to the Regular Record Date or at
least fifteen days prior to Maturity, as the case may be. Such request may be in
writing (mailed or hand delivered) or by cable, telex or other form of facsimile
transmission. A Holder of a Foreign Currency Note may elect to receive payment
in the Specified Currency for all principal, premium, if any, and interest
payments and need not file a separate election for each payment. Such election
will remain in effect until revoked by written notice to the Trustee, 14 Wall
Street, Eighth Floor, New York, New York 10005, but written notice of any such
revocation must be received by the Trustee on or prior to the Regular Record
Date or at least fifteen days prior to Maturity, as the case may be. Holders of
Foreign Currency Notes whose Foreign Currency Notes are to be held in the name
of a broker or nominee should contact such broker or nominee to determine
whether and how an election to receive payments in the Specified Currency may be
made.
Interest on Foreign Currency Notes paid in U.S. dollars will be paid in the
manner specified in the attached Prospectus and this Prospectus Supplement for
interest on Notes denominated in U.S. dollars. Interest on Foreign Currency
Notes paid in the Specified Currency will be paid by a check drawn on an account
maintained at a bank outside the United States, unless other arrangements have
been made. The principal and premium, if any, of Foreign Currency Notes,
together with interest accrued and unpaid thereon, due at Maturity will be paid
in immediately available funds against presentation of such Foreign Currency
Notes at the offices of the Trustee, 14 Wall Street, Eighth Floor, New York, New
York 10005.
PAYMENT CURRENCY
Except as set forth below, if payment in respect of a Foreign Currency Note
is required to be made in a Specified Currency and such currency is unavailable
due to the imposition of exchange controls or other circumstances beyond the
Company's control, or is no longer used by the government of the country issuing
such currency or for the settlement of transactions by public institutions of or
within the international banking community, then all payments due on that due
date in respect of such Foreign Currency Note shall be made in U.S. dollars. The
amount so payable on any date in such Specified Currency shall be converted into
U.S. dollars at the Market Exchange Rate, on the date of such payment. In the
event such Market Exchange Rate is not then available, the Company will be
entitled to make payments in U.S. dollars (i) if such Specified Currency is not
a composite currency, on the basis of the most recently available Market
Exchange Rate for such Specified Currency or (ii) if such Specified Currency is
a composite currency, in an amount determined by the Exchange Rate Agent to be
the sum of the results obtained by multiplying the number of units of each
component currency of such composite currency, as of the most recent date on
which such composite currency was used, by the Market Exchange Rate for such
component currency on the second Business Day prior to such payment date (or if
such Market Exchange Rate is not then available, by the most recently available
Market Exchange Rate for such component currency).
If payment in respect of a Foreign Currency Note is required to be made in
ECU and ECU are unavailable due to the imposition of exchange controls or other
circumstances beyond the Company's control, or are no longer used in the
European Monetary System, then all payments due on that date in respect of such
Foreign Currency Note shall be made in U.S. dollars. The amount so payable on
any date in ECU shall be converted into U.S. dollars at a rate determined by the
Exchange Rate Agent as of the second Business Day prior to the date on which
such payment is due on the following basis. The component currencies of the ECU
for this purpose (the "Components") shall be the currency amounts that were
components of the ECU as of the last date on which ECU were used in the European
Monetary System. The equivalent of ECU in U.S. dollars shall be calculated by
aggregating the U.S. dollar equivalents of the Components. The U.S. dollar
equivalent of each of the Components shall be determined by the Exchange Rate
Agent on the basis of the most recently available Market Exchange Rate, or as
otherwise indicated in the applicable Pricing Supplement.
If the official unit of any component currency is altered by way of
combination or subdivision, the number of units of that currency as a Component
shall be divided or multiplied in the same proportion. If two or more component
currencies are consolidated into a single currency, the amounts of those
currencies as Components shall be replaced by an amount in such single currency
equal to the sum of the amounts of the consolidated component currencies
expressed in such single currency. If any component currency is divided into two
or more
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currencies, the amount of that currency as a Component shall be replaced by
amounts of such two or more currencies, each of which shall have a value on the
date of division equal to the amount of the former component currency divided by
the number of currencies into which that currency was divided.
All determinations referred to above made by the Exchange Rate Agent shall
be subject to approval by the Company.
FOREIGN CURRENCY RISKS
THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT HERETO AND THE ATTACHED
PROSPECTUS DO NOT DESCRIBE ALL THE RISKS OF AN INVESTMENT IN FOREIGN CURRENCY
NOTES AS THEY EXIST AT THE DATE OF THIS PROSPECTUS SUPPLEMENT OR AS SUCH RISKS
MAY CHANGE FROM TIME TO TIME. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN
FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN SUCH
NOTES. SUCH NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE
UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
GOVERNING LAW AND JUDGMENTS
The Notes will be governed by and construed in accordance with the laws of
the State of New York. Courts in the United States have not customarily rendered
judgments for money damages denominated or payable in any currency other than
the U.S. dollar. New York statutory law provides, however, that a court shall
render a judgment or decree in the foreign currency of the underlying obligation
and that the judgment or decree shall be converted into U.S. dollars at the rate
of exchange prevailing on the date of the entry of the judgment or decree.
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in Foreign Currency Notes entails significant risks that are
not associated with a similar investment in a security denominated and payable
in U.S. dollars. Such risks include, without limitation, the possibility of
significant market changes in rates of exchange between the U.S. dollar and the
various foreign currencies, the possibility of significant changes in rates of
exchange between the U.S. dollar and the various foreign currencies resulting
from official redenomination with respect to a Specified Currency and the
possibility of the imposition or modification of foreign exchange controls by
either the United States or foreign governments. Such risks generally depend on
factors over which the Company has no control, such as economic and political
events and on the supply of and demand for the relevant currencies. In recent
years rates of exchange between the U.S. dollar and certain foreign currencies
have been volatile and such volatility may be expected in the future.
Fluctuations in any particular exchange rate that have occurred in the past are
not necessarily indicative, however, of fluctuations in the rate that may occur
during the term of any Foreign Currency Note. Depreciation of the Specified
Currency of a Foreign Currency Note against the U.S. dollar would result in a
decrease in the effective yield of such Foreign Currency Note below its coupon
rate, and in certain circumstances could result in a loss to the investor, on a
U.S. dollar basis.
Governments have imposed from time to time, and may in the future impose,
exchange controls that could affect exchange rates as well as the availability
of a Specified Currency at an Interest Payment Date or at Maturity of a Foreign
Currency Note. There can be no assurance that exchange controls will not
restrict or prohibit payments of principal (and premium, if any) or interest in
any Specified Currency other than U.S. dollars. Even if there are no actual
exchange controls, it is possible that on an Interest Payment Date or at
Maturity of a particular Foreign Currency Note, the Specified Currency for such
Foreign Currency Note would not be available to the Company due to circumstances
beyond the control of the Company. In any such event, the Company will make
required payments in U.S. dollars on the basis described herein.
Unless otherwise specified in the applicable Pricing Supplement, Notes
denominated or payable in a Specified Currency other than U.S. dollars or ECU
will not be sold in or to residents of the country issuing the Specified
Currency. The information set forth in this Prospectus Supplement and the
applicable Pricing Supplement is directed to prospective purchasers who are
United States residents, and the Company disclaims any responsibility to advise
prospective purchasers who are residents of countries other than the United
States with respect to any
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matters that may affect the purchase, holding or receipt of payments of
principal (and premium, if any) or interest on the Notes. Such persons should
consult their own counsel with regard to such matters.
Pricing Supplements relating to Foreign Currency Notes will indicate the
Specified Currency in which the principal, premium, if any, and interest with
respect to such Note are to be paid, along with other terms relating to the
Specified Currency. The Pricing Supplement also will provide specific historic
exchange rate information, certain currency risks relating to the specific
currencies selected, certain investment considerations and certain additional
tax considerations. The information therein concerning exchange rates is
furnished as a matter of information only and should not be regarded as
indicative of the range of or trends in fluctuations in currency exchange rates
that may occur in the future.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material United States federal income tax
consequences of the ownership of Notes. It deals only with Notes held as capital
assets and not with special classes of Holders, such as dealers in securities or
currencies, life insurance companies, persons holding Notes as a hedge against
currency risks, and United States Holders (as defined below under "United States
Holders") whose functional currency is not the U.S. dollar. In addition, this
summary does not address the federal income tax consequences of owning Indexed
Notes. Such consequences will be addressed in the applicable Pricing Supplement.
The discussion is based upon the Internal Revenue Code of 1986, as amended (the
"Code") and regulations, rulings and judicial decisions thereunder as of the
date hereof. Such authorities may be repealed, revoked or modified so as to
produce federal income tax consequences different from those discussed below.
PROSPECTIVE PURCHASERS OF NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS
CONCERNING THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES IN THEIR PARTICULAR
SITUATIONS, AS WELL AS ANY CONSEQUENCES UNDER THE LAWS OF ANY OTHER TAXING
JURISDICTION.
UNITED STATES HOLDERS
For purposes of this discussion, a "United States Holder" means (i) a
citizen or resident of the United States, (ii) a partnership or corporation
created or organized in or under the law of the United States or of any State of
the United States, (iii) an estate the income of which is subject to United
States federal income tax regardless of its source, (iv) any trust if (A) a
court within the United States is able to exercise primary supervision over the
administration of the trust and (B) one or more United States fiduciaries have
the authority to control all substantive decisions of the trust and (v) any
other person that is subject to United States federal income tax on interest
income derived from a Note as a result of such income being effectively
connected with the conduct by such person of a trade or business within the
United States. The term also includes certain former citizens of the United
States whose income and gain on the Notes will be subject to U.S. income tax.
PAYMENTS OF INTEREST
Interest on a Note, whether payable in the Specified Currency or U.S.
dollars, that constitutes "qualified stated interest" (as defined below under
"Original Issue Discount") will be taxable to a United States Holder as ordinary
interest income at the time it is received or accrued, depending on the Holder's
method of accounting for tax purposes. In the case of a United States Holder of
a Foreign Currency Note using a cash method of accounting, the amount of such
interest income for United States federal income tax purposes ("taxable
interest") will be determined in the Specified Currency and translated into U.S.
dollars using the spot exchange rate on the date of receipt, regardless of
whether the interest is in fact paid in or converted to U.S. dollars. In the
case of a United States Holder of a Foreign Currency Note using an accrual
method of accounting, the amount of taxable interest will depend on whether the
Holder has made a valid election to use a "spot accrual convention" pursuant to
regulations under the Code. If the Holder has made such an election, the amount
of taxable interest will be measured in the Specified Currency and translated
into U.S. dollars using the spot exchange rate in effect on the last day of the
accrual period (or last day of a partial accrual period ending on the last day
of the Holder's taxable year); or where interest is paid within five business
days of such last day, the exchange rate in effect on the date
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of receipt may be used. If the Holder has not made such an election, the amount
of taxable interest will be measured in the Specified Currency and translated
into U.S. dollars using the average exchange rate in effect during the accrual
period. A United States Holder of a Foreign Currency Note on the accrual method
will also recognize ordinary income or loss for federal income tax purposes
("exchange gain or loss") upon actual or constructive receipt of accrued
interest income and upon the sale, retirement or other disposition of a Note.
Such exchange gain or loss, if any, will be measured by subtracting the amount
of taxable interest accrued in the manner described above with respect to any
accrual period from the U.S. dollar value of the interest income received
attributable to that accrual period. The U.S. dollar value of the interest
payment received will be determined by translating the units of Specified
Currency received into dollars using the spot exchange rate in effect on the
date of receipt of the interest income or disposition of the Note.
ORIGINAL ISSUE DISCOUNT
GENERAL. A Note will generally be treated as having been issued at an
original issue discount (a "Discount Note") if the excess of its "stated
redemption price at maturity" over its issue price (defined as the first price
at which a substantial amount of the Notes are sold for money) equals or exceeds
1/4 of 1 percent of such Note's stated redemption price at maturity multiplied
by the number of complete years to its Stated Maturity. "Stated redemption price
at maturity" is the total of all payments provided by the Note that are not
payments of "qualified stated interest." Generally, "qualified stated interest"
is stated interest that is unconditionally payable in cash or property (other
than debt instruments of the issuer) at least annually in an amount equal to the
product of the outstanding principal amount of the Note and, with respect to a
Fixed Rate Note, a single fixed rate of interest (adjusted to account
appropriately for any differing lengths of intervals between payments).
Qualified stated interest also includes stated interest on certain variable rate
debt instruments that satisfy certain requirements of the Treasury regulations
applicable to original issue discount obligations (the "OID Regulations") if the
interest is unconditionally payable in cash or property (other than debt
instruments of the issuer) at least annually. A Floating Rate Note may or may
not qualify as a variable rate debt instrument under the OID Regulations
depending on its interest rate formula and other terms as set forth in the
applicable Pricing Supplement.
In certain cases, Notes that bear stated interest and are issued at par may
be deemed to have original issue discount for federal income tax purposes, with
the result that the inclusion of interest in the Holder's income may vary from
the actual cash payments of interest on such Notes, generally accelerating
income for cash or accrual method taxpayers. Notice will be given in the
applicable Pricing Supplement when the Company determines that a particular Note
will be a Discount Note. Unless an applicable Pricing Supplement so indicates,
Floating Rate Notes will not be Discount Notes.
United States Holders of Discount Notes having a Stated Maturity of more
than one year from their date of issue will have to include original issue
discount in income before the receipt of cash attributable to such income. The
amount of original issue discount includible in income by a United States Holder
of a Discount Note is the sum of the daily portions of original issue discount
with respect to the Discount Note for each day during the taxable year or
portion of the taxable year in which it holds such Note ("accrued original issue
discount"). The daily portion is determined by allocating to each day in any
"accrual period" a pro rata portion of the original discount allocable to that
accrual period. The amount of original issue discount allocable to an accrual
period is the excess of (a) the product of the Discount Note's adjusted issue
price at the beginning of such accrual period and its yield to maturity
(determined on the basis of compounding at the close of each accrual period and
adjusted for the length of such period) over (b) the sum of the qualified stated
interest payments, if any, payable (or treated as payable) on the Discount Note
during the accrual period. Under the OID Regulations, the "accrual period" may
be of any length and may vary in length over the term of the Note, provided that
each accrual period is no longer than one year and each scheduled payment of
principal or interest occurs either on the final day or on the first day of an
accrual period. The "adjusted issue price" of the Discount Note at the start of
any accrual period is the sum of the issue price of such Note plus the accrued
original issue discount for each prior accrual period minus any prior payments
on the Note that were not payments of qualified stated interest. The amount of
original issue discount includible in income is adjusted for any United States
Holder which acquires a Discount Note at a premium over its adjusted issue price
(an "acquisition premium"), but at an amount less than or equal to the sum
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of all amounts payable on the instrument after the acquisition date (other than
payments of qualified stated interest). It should be noted that the OID
Regulations require certain modifications to be made to the method for
determining OID in the case of variable rate instruments.
Under the foregoing rules, United States Holders of Discount Notes will
have to include in income increasingly greater amounts of original issue
discount in successive accrual periods and in advance of any payment of cash
related thereto.
At the time the Company issues a Note, it will make a determination based
on the applicable Treasury Regulations and other authorities whether such Note
bears original issue discount. The Company is required to report the amount of
original issue discount accrued on Notes held of record by persons other than
corporations and other exempt Holders.
OPTIONAL REDEMPTION OF DISCOUNT NOTES. Under the OID Regulations, if
either the Company or the Holder has an option to redeem, or cause the
redemption of, a Discount Note prior to its Stated Maturity, such option will be
presumed to be exercised if, by utilizing any date on which such Note may be
redeemed as its maturity date and the amount payable on such date in accordance
with the terms of the Note as its stated redemption price at maturity, the yield
on such Note would be (i) in the case of an option of the Company, lower than
its yield to maturity computed without assuming the option to be so exercised or
(ii) in the case of an option of the Holder, higher than its yield to maturity
computed without assuming the option to be so exercised. If such option is not
in fact exercised when presumed to be exercised, the Note would be treated
solely for original issue discount purposes as if it were redeemed, and a new
Note were issued, on the presumed exercise date for an amount equal to the
adjusted issue price of the original Note on such date. Notice will be given in
an applicable Pricing Supplement when the Company determines that a particular
Note will be deemed to have a maturity date for federal income tax purposes
prior to its Stated Maturity.
SHORT TERM DISCOUNT NOTES. Under the OID Regulations, a Note that matures
one year or less from the date of its issuance ("short-term Discount Note") will
be treated as having been issued at a discount ("short-term discount") equal to
the excess of the total principal and interest payments on the Note over its
issue price (or its tax basis if the United States Holder so elects). In
general, an individual or other cash basis United States Holder of a short-term
Discount Note is not required to accrue short-term discount for United States
federal income tax purposes unless it elects to do so. Accrual basis United
States Holders and certain other United States Holders, including banks and
dealers in securities, are required to accrue the short-term discount on
short-term Discount Notes on a straight-line basis unless an election is made to
accrue the short-term discount under the constant-yield method (based on daily
compounding). In the case of a United States Holder not required and not
electing to include the short-term discount in income currently, any gain
realized on the sale or retirement of the short-term Discount Note will be
ordinary income to the extent of the short-term discount accrued on a
straight-line basis (unless an election is made to accrue the short-term
discount under the constant-yield method) through the date of sale or
retirement. United States Holders who are not required and do not elect to
accrue the short-term discount on short-term Discount Notes will be required to
defer deductions for interest on borrowings allocable to short-term Discount
Notes in an amount not exceeding the deferred income until the deferred income
is realized.
FOREIGN CURRENCY NOTES. The amount of original issue discount for any
accrual period on a Discount Note that is a Foreign Currency Note will depend on
whether the Holder has made a valid election to use a "spot accrual convention"
pursuant to regulations under the Code. If the Holder has made such an election,
original issue discount will be determined in the Specified Currency and
translated into U.S. dollars using the spot exchange rate in effect on the last
day of the accrual period (or last day of a partial accrual period ending on the
last day of the Holder's taxable year); or where interest is paid within five
business days of such last day, the exchange rate in effect on the date of
receipt may be used. If the Holder has not made such an election, original issue
discount will be determined in the Specified Currency and translated into U.S.
dollars using the average exchange rate in effect during the accrual period. A
United States Holder of a Discount Note that is a Foreign Currency Note will
also recognize ordinary income or loss ("exchange gain or loss") upon actual or
constructive receipt of an amount attributable to original issue discount
(whether in connection with a payment of interest or the sale or retirement of a
Discount Note). Such exchange gain or loss, if any, will be measured by
subtracting the
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amount of original issue discount with respect to the accrual period from the
U.S. dollar value of the amount received attributable to that accrual period.
The U.S. dollar value of the amount received will be determined by translating
the units of Specified Currency received into dollars using the spot exchange
rate in effect on the date of receipt of payment or sale or retirement of the
Note.
NOTES ISSUED AT A PREMIUM. A United States Holder that purchases a Note
for an amount in excess of the sum of all amounts payable on the Note after the
purchase date other than qualified stated interest will be considered to have
purchased the Note at a "premium" and will not be required to include any
original issue discount in income. A United States Holder may generally elect to
amortize the premium over the remaining term of the Note on a constant-yield
method. The amount amortized in any year will be treated as a reduction of the
United States Holder's interest income from the Note in such year. Any such
election shall apply to all debt instruments (other than debt instruments the
interest on which is excludable from gross income) held by the United States
Holder at the beginning of the first taxable year to which the election applies
and to any such debt instruments thereafter acquired by the United States
Holder, and is irrevocable without the consent of the Internal Revenue Service
(the "IRS"). Bond premium on a Note held by a United States Holder that does not
make such election will decrease the gain or increase the loss otherwise
recognized on a taxable disposition of the Note. If a Note is callable by the
Company before its Stated Maturity, the earlier call date will be considered as
the Maturity if it results in a smaller amortizable bond premium attributable to
the period of earlier call date. If a Note is not then called on the earlier
call date, any unamortized bond premium must then be amortized to a succeeding
call date or to Maturity. Certain of the Notes may be callable prior to Stated
Maturity. Holders therefore should consult with their tax advisors to determine
whether this rule will apply to their individual situation.
Bond premium on a Foreign Currency Note will be computed in the applicable
Specified Currency. With respect to a United States Holder that elects to
amortize the premium, the amortizable bond premium will reduce interest income
measured in units of the Specified Currency. At the close of any period in which
a portion of the bond premium is amortized, exchange gain or loss (which is
generally ordinary income or loss) will be realized with respect to such portion
based on the difference between spot rates at the close of such period and spot
rates at the time of acquisition of the Foreign Currency Note. With respect to a
United States Holder that does not elect to amortize bond premium, the amount of
the bond premium will constitute a capital loss when the Note matures, which may
be offset or eliminated by exchange gain.
On June 27, 1996, the IRS proposed regulations concerning the tax treatment
of amortizable bond premium. These regulations, if effective, may change the
accounting for amortizable bond premium as described herein. The IRS has
proposed that these regulations become effective for bonds issued on or after
the date that is 60 days after the date such regulations are issued in final
form in the Federal Register. Holders should consult with their own tax advisors
regarding the tax accounting for bond premium relating to the notes.
MARKET DISCOUNT. If a United States Holder purchases a Note for an amount
that is less than its "revised issue price" (defined as the sum of the issue
price of the Note and the aggregate amount of the original issue discount, if
any, includible in the gross income of all previous Holders of the Note,
determined without regard to any adjustment for a previous holder's acquisition
premium), the amount of the difference will be treated as "market discount",
unless such difference is less than a de minimis amount. The market discount
provisions of the Code generally require a Holder of a Note acquired at a market
discount to treat as ordinary interest income any gain recognized on the
disposition of such Note to the extent of the "accrued market discount" on such
Note at the time of disposition. If a Holder of a Note makes a gift of such
Note, any accrued market discount will be included in income as if such Holder
had sold the Note for a price equal to its fair market value. In addition, if a
Holder of a Note acquired at a market discount receives a partial principal
payment prior to Maturity, that payment may be treated as ordinary income to the
extent of the accrued market discount on the Note at the time the payment is
received and the accrued market discount on the Note will be reduced by the
amount of ordinary income so recognized. These rules will not apply to the
extent the Holder has, pursuant to an election, included the accrued market
discount in income as it accrued. Once made, the election will apply to all
market discount obligations acquired on or after the first day of the first
taxable year to which the election applies and may not be revoked without the
consent of the IRS. The adjusted basis of a Note will be increased by any
accrued market discount that is included in a Holder's income pursuant to the
election.
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The amount of market discount that accrues while a Holder holds a Note will
be equal to the amount which bears the same ratio to the market discount on the
Note as the number of days on which the Holder holds the Note bears to the
number of days from the date the Holder acquires the Note through its Stated
Maturity. Alternatively, a Holder of a Note may elect to accrue market discount
on the basis of a constant-yield method, rather than the ratable-accrual method
described in the preceding sentence.
The market discount rules also provide that any Holder of a Note acquired
at a market discount may be required to defer the deduction of a portion of the
interest on any indebtedness incurred or maintained to purchase or carry the
Note until the Note is disposed of in a taxable transaction. This rule will not
apply if the Holder elects to include accrued market discount in income
currently.
Accrued market discount on Foreign Currency Notes will generally be
determined by translating the market discount determined in the Specified
Currency into U.S. dollars at the spot rate on the date the Foreign Currency
Note is retired or otherwise disposed of. If the United States Holder has
elected to accrue market discount currently, then the amount which accrues is
determined in the Specified Currency and then translated into U.S. dollars on
the basis of the average exchange rate in effect during the accrual period. A
United States Holder will recognize exchange gain or loss with respect to market
discount which is accrued currently upon the sale, retirement or other
disposition of the Foreign Currency Note measured in the same manner as exchange
gain or loss arising upon receipt of accrued interest on a Foreign Currency
Note, as described above.
ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE DISCOUNT
Under the OID Regulations, a United States Holder may elect to treat all
interest on any Note as original issue discount and calculate the amount
includible in gross income under the constant-yield method described above. For
the purpose of this election, interest includes stated interest, short-term
discount, original issue discount, de minimis original issue discount, market
discount, de minimis market discount and unstated interest, as adjusted by any
amortizable bond premium or acquisition premium. If a United States Holder makes
this election for a Note with market discount or amortizable bond premium, the
election is treated as an election under the market discount or amortizable bond
premium provisions as described above, as the case may be, and the electing
United States Holder will be required to include market discount in income
currently or amortize bond premium. The election is to be made for the taxable
year in which the United States Holder acquired the Note, and may not be revoked
without the consent of the IRS. United States Holders should consult with their
own tax advisors about this election.
PURCHASE, SALE AND RETIREMENT OF NOTES
A United States Holder's tax basis in a Note will be its U.S. dollar cost
(which, in the case of a Foreign Currency Note, will be the U.S. dollar value of
the purchase price on the date of purchase), increased by the amount of any
original issue discount, short-term discount or market discount included in the
United States Holder's income with respect to the Note and reduced by the amount
of any payments on a Note that are not qualified stated interest payments and by
the amount of any amortizable bond premium applied to reduce interest on the
Note. A United States Holder will generally recognize gain or loss upon the sale
or retirement of a Note equal to the difference between the amount realized upon
the sale or retirement and the tax basis in the Note. The amount realized will
equal the proceeds of the sale excluding the amount attributable to accrued but
unpaid interest, which is treated as the receipt of an interest payment. The
amount realized on a sale or retirement for an amount in Specified Currency will
be the U.S. dollar value of such amount on the date of sale or retirement
(excluding any amount attributable to accrued but unpaid interest). Except (i)
to the extent described above with respect to short-term Discount Notes and
Foreign Currency Notes, and (ii) to the extent attributable to market discount
or currency gain or loss (as described in the following paragraph), gain or loss
recognized by a United States Holder on the sale or retirement of a Note will
generally be capital gain or capital loss and such gain or loss will be
long-term capital gain or loss if the Note was held for more than one year.
Gain or loss recognized by a United States Holder on the sale or retirement
of a Foreign Currency Note that is attributable to changes in exchange rates
will be treated as ordinary income or loss and will be limited to the
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<PAGE>
amount of overall gain or loss realized on the disposition of the Note. Gain or
loss attributable to fluctuations in exchange rates will equal the difference
between the U.S. dollar value of the principal amount of the Note expressed in
units of the Specified Currency, determined at the spot exchange rate on the
date such payment is received or the Note is disposed of, and the U.S. dollar
value of the amount paid for the Note expressed in units of the Specified
Currency, determined at the spot exchange rate as of the date the Holder
acquired the Note.
EXCHANGE OF THE SPECIFIED CURRENCY
A United States Holder who purchases a Note with previously owned Specified
Currency will recognize exchange gain or loss at the time of purchase
attributable to the difference at the time of purchase, if any, between his tax
basis in such currency and the fair market value of the Note in U.S. dollars on
the date of purchase. Such gain or loss will be ordinary income or loss.
Specified Currency received as interest on (or original issue discount with
respect to) a Foreign Currency Note or on the sale or retirement of a Note will
have a tax basis equal to its U.S. dollar value determined with reference to the
spot exchange rate at the time such interest is received or at the time of such
sale or retirement. Foreign currencies and currency units which are purchased
will generally have a tax basis equal to their U.S. dollar cost. Any gain or
loss realized on a sale or other disposition of a foreign currency or currency
unit (including its use to purchase the Foreign Currency Notes or upon exchange
for U.S. dollars) will be ordinary income or loss.
UNITED STATES ALIEN HOLDERS
Under present United States federal income and estate tax law and subject
to the discussion of backup withholding below:
(a) payments of principal, premium, if any, and interest (including
original issue discount) on the Notes to any Holder who is not a United
States Holder (a "United States Alien Holder") will not be subject to
United States federal income tax or withholding of federal income tax,
provided that in the case of interest or original issue discount, (i) such
interest or original issue discount is not effectively connected with a
trade or business conducted by the United States Alien Holder in the United
States, (ii) the United States Alien Holder does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote, (iii) the United States
Alien Holder is not a controlled foreign corporation that is related to the
Company through stock ownership, (iv) the United States Alien Holder is not
a bank that acquired the Notes pursuant to a loan agreement made in the
ordinary course of its trade or business, and (v) either (A) the beneficial
owner of the Note certifies to the Company or its agent, under penalties of
perjury, that he is not a United States Holder and provides his name and
address, or (B) a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of its
trade or business (a "financial institution") and holds the Note, certifies
to the Company or its agent under penalties of perjury that such statement
has been received from the beneficial owner by it or by a financial
institution and furnishes the payor with a copy thereof;
(b) a United States Alien Holder will not be subject to United States
federal income tax or withholding of federal income tax on gain realized on
the sale, exchange or redemption of a Note unless (i) such gain is
effectively connected with a trade or business conducted by the United
States Alien Holder in the United States or (ii) in the case of a United
States Alien Holder who is an individual and holds a Note as a capital
asset, such Holder is present in the United States for 183 days or more in
the taxable year of sale and certain other requirements are met; and
(c) a Note held by an individual who at the time of death is not a
citizen or resident of the United States will not be subject to United
States federal estate tax as a result of such individual's death if the
individual does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of the Company entitled to
vote and the income on the Note, if received at the time of the
individual's death, would not have been effectively connected with a U.S.
trade or business of the individual.
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<PAGE>
Under certain proposed regulations that have not yet become effective,
certification procedures regarding a holder's status may change.
BACKUP WITHHOLDING AND INFORMATION REPORTING
UNITED STATES HOLDERS
In general, information reporting requirements will apply to payments of
principal and interest on a Note and the proceeds of the sale of a Note before
Maturity within the United States to, and to the accrual of original issue
discount on a Note with respect to, non-corporate United States Holders. A 31%
"backup withholding" tax will apply to such payments and to payments with
respect to original issue discount if the United States Holder fails to provide
an accurate taxpayer identification number or to report all interest and
dividends required to be shown on its federal income tax returns. The amount of
original issue discount required to be reported by the Company may not be equal
to the amount of original issue discount required to be reported as taxable
income by a United States Holder of Discount Notes.
UNITED STATES ALIEN HOLDERS
Payment of principal, premium, if any, and interest made within the United
States by the Company or any of its Paying Agents are generally subject to
information reporting and possibly "backup withholding" at a rate of 31%.
Information reporting and backup withholding will not, however, apply to
payments made to a United States Alien Holder on a Note if the certification
described in clause (a) (v) above under "United States Alien Holders" is
received, provided in each case the payor does not have actual knowledge that
the Holder is a United States person.
Payment of the proceeds from the sale by a United States Alien Holder of a
Note made to or through a foreign office of a broker will not generally be
subject to information reporting or backup withholding. If, however, the broker
is a United States person, a controlled foreign corporation for United States
tax purposes or a foreign person 50% or more of whose gross income is from a
United States trade or business, such payments will not be subject to backup
withholding but will be subject to information reporting, unless (a) such broker
has documentary evidence in its records that the beneficial owner is not a U.S.
person and certain other conditions are met or (b) the beneficial owner
otherwise establishes an exemption. Temporary Treasury regulations provide that
the Treasury is considering whether backup withholding will apply with respect
to the proceeds of a sale that are not subject to backup withholding under the
current regulations. Under proposed Treasury regulations not currently in
effect, backup withholding will not apply to such payments absent actual
knowledge that the payee is a United States person. Payment of the proceeds from
a sale of a Note through the United States office of a broker is subject to
information reporting and backup withholding unless the Holder or beneficial
owner certifies as to its non-United States status or otherwise establishes an
exemption from information reporting and backup withholding.
Any amounts withheld under the backup withholding rules will be allowed as
a credit against such holder's U.S. federal income tax liability (any resulting
overpayment being refundable) provided the required information is furnished to
the IRS.
On April 22, 1996, the IRS issued proposed regulations relating to (i)
withholding income tax on U.S.-source income paid to Non-U.S. persons, (ii)
claiming Non-U.S. holder status to avoid backup withholding, and (iii) reporting
to the IRS of payments to Non-U.S. persons. The proposed regulations would
substantially revise some aspects of the current system for withholding on and
reporting amounts paid to Non-U.S. Persons. The regulations would unify current
certification procedures and clarify forms and reliance standards. Most forms
are proposed to be combined into a single new Form W-8. In general, the
regulations are proposed to be effective for payments made after December 31,
1997. Certificates issued on or before the date that is 60 days after the
proposed regulations are made final, however, will continue to be valid until
they expire. All proposed regulations are subject to change before adoption in
final form. No reliable prediction can be made as to when, if ever, the proposed
regulations will be made final and, if so, as to their final form.
S-23
<PAGE>
SUPPLEMENTAL PLAN OF DISTRIBUTION
The Notes are offered on a continuing basis by the Company through Credit
Suisse First Boston Corporation, Goldman, Sachs & Co., Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities
Inc. (collectively, the "Agents") who have agreed to use their best efforts to
solicit purchases of the Notes, and may be sold to the Agents for resale to
investors and other purchasers at varying prices related to prevailing market
prices at the time of resale, to be determined by the Agents. The Company
reserves the right to sell Notes directly on its own behalf in those
jurisdictions where it is authorized to do so. The Company will have the sole
right to accept offers to purchase Notes and may reject any proposed purchase of
Notes in whole or in part. The Agents will have the right to reject any proposed
purchase of Notes through them in whole or in part. Payment of the purchase
price of Notes will be required to be made in immediately available funds in The
City of New York. The Company will pay the Agents a commission ranging from
.125% to .750% of the principal amount of Notes with maturities of up to 30
years sold through the Agents, depending upon the Stated Maturity, and may also
sell Notes to the Agents as principals at negotiated discounts. Commissions on
agency sales of Notes with maturities of more than 30 years will be determined
at the time of sale. No commission will be payable on any sales made directly to
the public by the Company.
In addition, the Agents may offer the Notes they have purchased as
principal to other dealers. The Agents may sell Notes to any dealer at a
discount and, unless otherwise specified in the applicable Pricing Supplement,
such discount allowed to any dealer may include all or a portion of the discount
to be received by such Agent from the Company. Unless otherwise indicated in the
applicable Pricing Supplement, any Note sold to an Agent as principal will be
purchased by such Agent at a price equal to 100% of the principal amount thereof
less a percentage equal to the commission applicable to any agency sale of a
Note of identical maturity, and may be resold by the Agent to investors and
other purchasers from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices
determined at the time of sale or may be resold to certain dealers as described
above. After the initial public offering of Notes to be resold to investors and
other purchasers, the public offering price (in the case of a fixed-price public
offering), concession and discount may be changed.
In connection with the offering made hereby, the Agents may purchase and
sell the Notes in the open market. These transactions may include over-allotment
and stabilizing transactions and purchases to cover short positions created by
the Agents in connection with the offering. Stabilizing transactions consist of
certain bids or purchases for the purpose of preventing or retarding a decline
in the market price of the Notes, and short positions created by the Agents
involve the sale by the Agents of a greater principal amount of Notes than they
are required to purchase from the Company. The Agents may also impose a penalty
bid, whereby selling concessions allowed to broker-dealers in respect of the
Notes sold in the offering may be reclaimed by the Agents if such Notes are
repurchased by the Agents in stabilizing or covering transactions. These
activities may stabilize, maintain or otherwise affect the market price of the
Notes, which may be higher than the price that might otherwise prevail in the
open market; and these activities, if commenced, may be discontinued at any
time. These transactions may be effected in the over-the-counter market or
otherwise.
The Agents and any dealers to whom Notes are sold may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"). The Company has agreed to indemnify the Agents against
certain liabilities, including liabilities under the Securities Act, and will
reimburse the Agents for certain expenses.
The Notes are a new issue of securities with no established trading market.
The Agents have informed the Company that they intend to make a market in the
Notes, but are under no obligation to do so and such market making may be
terminated at any time. Therefore, no assurance can be given as to the existence
of a trading market in the Notes in the future.
One or more of the Agents or their affiliates may be customers of, extend
credit to, engage in transactions with or perform services for the Company in
the ordinary course of business.
S-24
<PAGE>
PHH CORPORATION
DEBT SECURITIES
PHH Corporation (the "Company") from time to time may offer up to
$3,000,000,000 aggregate principal amount, or the equivalent thereof in foreign
currencies or currency units, of its debt securities (the "Debt Securities").
The Debt Securities will be offered as separate series in amounts, at prices and
on terms to be determined at the time of sale and to be set forth in supplements
to this Prospectus. The Company may sell Debt Securities to or through
underwriters, and also may sell Debt Securities directly to other purchasers or
through agents. See "Plan of Distribution."
The terms of the Debt Securities, including, where applicable, the specific
designation, aggregate principal amount, denominations, maturity, interest rate
(which may be fixed or variable) and time of payment of interest, if any,
currency denomination, terms for redemption, if any, at the option of the
Company or the holder, terms for sinking or purchase fund payments, if any, the
identity of the Trustee and the Indenture under which the Debt Securities are
being issued, the initial public offering price, the names of, and the principal
amounts, if any, to be purchased by, underwriters or agents, if any, the
compensation of such underwriters or agents and the other terms in connection
with the offering and sale of the Debt Securities in respect of which this
Prospectus is being delivered (the "Offered Debt Securities"), are set forth in
the accompanying Prospectus Supplement, as supplemented from time to time by
Pricing Supplements (as so supplemented, the "Supplement").
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1997
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports and other information filed by the
Company with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at: Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549; Chicago Regional Office, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511 and New York Regional Office, 7 World Trade
Center, Thirteenth Floor, New York, New York 10048. Copies of such material can
be obtained from the Public Reference Section of the Commission at Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. In addition,
registration statements and certain other filings made with the Commission
through its Electronic Data Gathering Analysis and Retrieval ("EDGAR") system
are publicly available through the Commission's site on the Internet's World
Wide Web, located at http://www.sec.gov. Such reports and other information
concerning the Company can also be inspected at the offices of the New York
Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission through EDGAR a registration
statement on Form S-3 (herein, together with all amendments and exhibits,
referred to as the "Registration Statement") under the Securities Act of 1933,
as amended (the "Securities Act"). This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information, reference is hereby made to the Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are incorporated herein by reference the following documents of the
Company filed by it with the Commission pursuant to Section 13 of the Exchange
Act: (1) Annual Report on Form 10-K for the fiscal year ended April 30, 1996 as
amended by Form 10-K/A filed March 27, 1997; (2) Quarterly Reports on Form 10-Q
as amended by Reports on Form 10-Q/A filed March 27, 1997 for the periods ended
July 31, 1996, October 31, 1996 and January 31, 1997; and (3) Current Reports on
Form 8-K filed November 15, 1996 and May 14, 1997. All documents filed by the
Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of the
offering of the Debt Securities shall be deemed to be incorporated by reference
in this Prospectus.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any document subsequently filed with the Commission which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request, a copy of any of the
documents incorporated by reference herein (other than exhibits to such
documents). Written or telephone requests should be directed to: PHH
Corporation, 11333 McCormick Road, Hunt Valley, Maryland 21031, Telephone (410)
771-3600, Attention: Treasurer.
THE COMPANY
PHH Corporation is a Maryland corporation. The Company's executive offices
are located at 11333 McCormick Road, Hunt Valley, Maryland 21031 (telephone
410-771-3600). Effective as of April 30, 1997, the Company became a wholly-owned
subsidiary of HFS Incorporated ("HFS").
The Company provides a broad range of integrated management services,
expense management programs and mortgage banking services to more than 3,000
clients, including many of the world's largest corporations, as well as
government agencies and affinity groups. Its primary business service segments
consist of vehicle management, real estate, and mortgage banking. Vehicle
management services consist primarily of the management,
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purchase, leasing and resale of vehicles for corporate clients and government
agencies, including fuel and cost management programs and other fee-based
services for their vehicle fleets in the United States, Europe and Canada. Real
estate services consist primarily of the purchase, management and resale of
homes for transferred employees of corporate clients, financial institutions and
government agencies in the United States, Europe and Canada. Services also
include related fee-based services which provide assistance to transferring
employees and other fee-based real estate and consulting services. Mortgage
banking services consist primarily of the origination, sale and servicing of
residential first mortgage loans.
HFS is a global consumer services company. HFS is the largest franchisor
of hotels and residential real estate brokerage offices and, in addition to
the Company, owns Avis, Inc., the world's second largest rental car system,
and owns Resort Condominiums International, Inc., the largest provider of
vacation timeshare exchanges worldwide.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED APRIL 30,
ENDED ------------------------------------
JANUARY 31, 1997 1996 1995 1994 1993 1992
---------------- ---- ---- ---- ---- ----
<S> <C>
Ratio of earnings to fixed charges.......... 1.65 1.53 1.60 1.64 1.47 1.34
</TABLE>
The ratios of earnings to fixed charges have been computed by dividing
earnings from continuing operations of the Company and its consolidated
subsidiaries before income taxes and fixed charges by the fixed charges. For
purposes of these ratios, fixed charges consist of interest, the interest
portion of "Costs, including interest, of carrying and reselling homes," and
that portion of rentals deemed representative of the appropriate interest
factor. Interest included in fixed charges consists of the amounts identified as
interest expense in the Company's consolidated statements of income, the
substantial portion of which represents interest on debt incurred to finance
leasing activities and mortgage banking activities, as well as interest costs
associated with home relocation services which are ordinarily recovered through
direct billings to clients and are included with "Costs, including interest, of
carrying and reselling homes" in the Company's consolidated financial
statements.
USE OF PROCEEDS
The net proceeds from the sale of the Debt Securities will be used to
finance assets the Company manages for its clients and for general corporate
purposes.
DIVIDEND POLICY
HFS owns 100% of the outstanding capital stock of the Company. HFS and the
Company currently operate under policies limiting the payment of dividends on
the Company's capital stock to 40% of net income of the Company on an annual
basis. The Indenture does not require this policy or otherwise directly limit
the Company's ability to pay dividends or make other distributions.
DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Supplement may relate. The particular terms of the Debt Securities offered by
any Supplement (the "Offered Debt Securities") and the extent, if any, to which
such general provisions may apply to the Debt Securities so offered will be
described in the Supplement relating to such Offered Debt Securities.
The Debt Securities are to be issued under any of three substantially
identical indentures (each, an "Indenture" and collectively, the "Indentures")
between the Company and various trustees (each, a "Trustee" and collectively,
the "Trustees"). A copy of each Indenture has been filed with the Commission as
indicated in the Registration Statement. The following summaries of certain
provisions of the Indentures do not purport to be complete
3
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and are subject to, and qualified in their entirety by reference to, all the
provisions of the Indentures, including the definitions therein of certain
terms. Wherever reference is made to particular sections or defined terms of the
Indentures, such sections or defined terms are incorporated herein by reference.
GENERAL
The Debt Securities will be unsecured obligations of the Company and will
rank on a parity with all other unsecured and unsubordinated indebtedness of the
Company. The Debt Securities will be issued under (i) an Indenture dated as of
May , 1997, between the Company and The First National Bank of Chicago, as
Trustee or (ii) an Indenture dated as of May , 1997, between the Company and
The Bank of New York, as Trustee.
Unless a different place is specified in the applicable Supplement,
principal of and interest, if any, on the Debt Securities will be payable at the
corporate offices of the applicable Trustee; provided that payment of interest
may be made at the option of the Company by check or draft mailed to the person
entitled thereto.
The Indentures do not limit the aggregate principal amount of the Debt
Securities or of any particular series of Offered Debt Securities and provide
that Debt Securities may be issued thereunder from time to time in one or more
series.
Reference is made to the Supplement relating to the particular series of
Debt Securities offered thereby for the following terms of the Offered Debt
Securities: (1) the title of the Offered Debt Securities and the series of which
the Offered Debt Securities shall be a part; (2) any limit on the aggregate
principal amount of the Offered Debt Securities; (3) the price (expressed as a
percentage of the aggregate principal amount thereof) at which the Offered Debt
Securities will be issued; (4) the date or dates on which the Offered Debt
Securities will mature; (5) the rate or rates (which may be fixed or variable)
per annum at which the Offered Debt Securities will bear interest, if any; (6)
the date from which such interest, if any, on the Offered Debt Securities will
accrue, the dates on which such interest, if any, will be payable, the date on
which payment of such interest, if any, will commence and the record dates for
such interest payment dates, if any; (7) the dates, if any, on which and the
price or prices at which the Offered Debt Securities will, pursuant to any
mandatory sinking fund provisions, or may, pursuant to any optional sinking fund
or to any purchase fund provisions, be redeemed by the Company, and the other
detailed terms and provisions of such sinking and/or purchase funds; (8) the
date, if any, after which and the price or prices at which the Offered Debt
Securities may, pursuant to any optional redemption provisions, be redeemed at
the option of the Company or of the Holder thereof and the other detailed terms
and provisions of such optional redemption; (9) the denominations in which the
Offered Debt Securities are authorized to be issued; (10) whether the principal
and/or interest of the Offered Debt Securities is denominated in a currency
other than United States dollars; (11) the identity of the Trustee and the
Indenture under which the Offered Debt Securities are issued; and (12) any other
terms of the Offered Debt Securities.
Debt Securities bearing no interest or interest at a rate which at the time
of issuance is below market rates may be issued under the Indentures and offered
and sold at a substantial discount from the principal amount thereof. Special
federal income tax, accounting and other considerations applicable thereto will
be described in any Supplement relating to such Debt Securities.
The Debt Securities are not subordinated in right of payment to any other
indebtedness of the Company. However, the right of the Company and its
creditors, including the holders of Debt Securities, under general equitable
principles to participate in any distributions of assets of any subsidiary upon
the Company's liquidation or reorganization or otherwise is, unless there is a
substantive consolidation of the Company with its subsidiaries, likely to be
subject to the prior claims of creditors of such subsidiary, except to the
extent that claims of the Company itself as a creditor may be recognized.
The Debt Securities will be issued only in fully registered form without
coupons. Offered Debt Securities may be presented at the corporate offices of
the applicable Trustee for registration of transfer or exchange without service
charge, but the Company may require payment to cover taxes or other governmental
charges payable in connection therewith.
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<PAGE>
Prospective purchasers of the Debt Securities should be aware that the
Indenture does not contain any covenant that would prevent HFS from removing
assets from the Company or any of the Company's subsidiaries, or that would
limit the Company's ability to make advances, pay dividends or make any other
distributions to HFS.
CERTAIN DEFINITIONS
The Indentures contain certain restrictions upon actions of the Company and
certain of its subsidiaries and related definitions of terms. The following
terms, among others, are used in the Indentures as indicated:
CONSOLIDATED NET WORTH means, at any date of determination, all amounts
which would be included on a balance sheet of the Company and its consolidated
Subsidiaries under stockholders' equity, in accordance with generally accepted
accounting principles in effect from time to time.
DEBT means (i) all debt, obligations and other liabilities of the Company
and its Subsidiaries which are includable as liabilities in a consolidated
balance sheet of the Company and its Subsidiaries, other than (x) accounts
payable and accrued expenses, (y) advances from clients obtained in the ordinary
course of the relocation management services business of the Company and its
Subsidiaries and (z) current and deferred income taxes and other similar
liabilities, plus (ii) without duplicating any items included in Debt pursuant
to the foregoing clause (i), the maximum aggregate amount of all liabilities of
the Company or any of its Subsidiaries under any guaranty, indemnity or similar
undertaking given or assumed of, or in respect of, the indebtedness, obligations
or other liabilities, assets, revenues, income or dividends of any person other
than the Company or one of its Subsidiaries and (iii) all other obligations or
liabilities of the Company or any of its Subsidiaries in relation to the
discharge of the obligations of any person other than the Company or one of its
Subsidiaries.
LIEN means any mortgage, pledge, lien, security interest or encumbrance.
MATERIAL U.S. SUBSIDIARY means any Subsidiary of the Company which together
with its Subsidiaries at the time of determination had assets constituting 10%
or more of consolidated assets, accounts for 10% or more of Consolidated Net
Worth, or accounts for 10% or more of the revenues of the Company and its
consolidated Subsidiaries for the Rolling Period immediately preceding the date
of determination.
ROLLING PERIOD means with respect to any fiscal quarter, such fiscal
quarter and the three immediately preceding fiscal quarters considered as a
single accounting period.
SPECIAL PURPOSE VEHICLE SUBSIDIARY means PHH Caribbean Leasing, Inc. and
any Subsidiary engaged in the fleet-leasing management business which (i) is, at
any one time, a party to one or more lease agreements with only one lessee and
(ii) finances, at any one time, its investment in lease agreements or vehicles
with only one lender, which lender may be the Company.
SUBSIDIARY means, with respect to any person, any corporation, association,
joint venture, partnership or other business entity of which at least a majority
of the voting stock or other ownership interests having ordinary voting power
for the election of directors (or the equivalent) is, at the time as of which
any determination is being made, owned or controlled by such person or one or
more subsidiaries of such person, or by such person and one or more subsidiaries
of such person.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more fully registered global notes (the "Global Securities") that
will be deposited with, or on behalf of, a depositary identified in the
Prospectus Supplement relating to such series. Global Securities will be issued
in registered form and in either temporary or permanent form. Unless and until
it is exchanged for Debt Securities in definitive form, a Global Security may
not be transferred except as a whole by the depositary for such Global Security
to a nominee of such depositary or by a nominee of such depositary to such
depositary or another nominee of such depositary or by such depositary or any
such nominee to a successor of such depositary or a nominee of such successor.
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The specific terms of the depositary arrangement with respect to a series
of Debt Securities will be described in the Prospectus Supplement relating to
such series. The Company anticipates that the following provisions will apply to
any depositary arrangements.
Upon the issuance of a Global Security, the depositary for such Global
Security or its nominee will credit the accounts of persons held with it with
the respective principal amounts of the Debt Securities represented by such
Global Security. Such accounts shall be designated by the underwriters or agents
with respect to such Debt Securities or by the Company if such Debt Securities
are offered and sold directly by the Company. Ownership of beneficial interests
in a Global Security will be limited to persons that have accounts with the
depositary for such Global Security or its nominee ("participants") or persons
that may hold interests through participants. Ownership of beneficial interests
in such Global Security will be shown on, and the transfer of ownership will be
effected only through, records maintained by the depositary (with respect to
participants' interests) for such Global Security or by participants or persons
that hold through participants (with respect to beneficial owners' interests).
LIMITATIONS ON LIENS
The Company shall not, and it shall not permit any Material U.S. Subsidiary
to, incur any Lien to secure Debt without equally and ratably securing the Debt
Securities except (i) deposits under worker's compensation, unemployment
insurance and social security laws or to secure statutory obligations or surety
or appeal bonds or performance or other similar bonds in the ordinary course of
business, or statutory Liens of landlords, carriers, warehousemen, mechanics and
materialmen and other similar Liens, in respect of liabilities which are not yet
due or which are being contested in good faith by appropriate proceedings, Liens
for taxes not yet due and payable, and Liens for taxes due and payable, the
validity or amount of which is currently being contested in good faith by
appropriate proceedings and as to which foreclosure and other enforcement
proceedings shall not have been commenced (unless fully bonded or otherwise
effectively stayed); (ii) purchase money Liens granted to the vendor or Person
financing the acquisition of property, plant or equipment if (a) limited to the
specific assets acquired and, in the case of tangible assets, other property
which is an improvement to or is acquired for specific use in connection with
such acquired property or which is real property being improved by such acquired
property; and (b) the debt secured by such Lien is the unpaid balance of the
acquisition cost of the specific assets on which the Lien is granted; (iii)
Liens upon real and/or personal property, each of which Liens existed on such
property before the time of its acquisition and was not created in anticipation
thereof; provided that no such Lien shall extend to or cover any property of the
Company or a Material U.S. Subsidiary other than the respective property so
acquired and improvements thereon; (iv) Liens arising out of attachments,
judgments or awards as to which an appeal or other appropriate proceedings for
contest or review are promptly commenced (and as to which foreclosure and other
enforcement proceedings (a) shall not have been commenced (unless fully bonded
or otherwise effectively stayed) or (b) in any event shall be promptly fully
bonded or otherwise effectively stayed); (v) Liens securing Debt of any Material
U.S. Subsidiary of the Company; (vi) Liens covering only the property or other
assets of any Special Purpose Vehicle Subsidiary and securing only the Debt of
any such Special Purpose Vehicle Subsidiary; (vii) mortgage liens existing on
homes acquired by the Company or any of its Material U.S. Subsidiaries in the
ordinary course of their relocation management business; (viii) other Liens
incidental to the conduct of its business or the ownership of its property and
other assets, which do not secure any Debt and did not otherwise arise in
connection with the borrowing of money or the obtaining of advances or credit
and which do not, in the aggregate, materially detract from the value of its
property or other assets or materially impair the use thereof in the operation
of its business; (ix) Liens covering only the property or other assets of any
Subsidiary which principally transacts business outside of the United States;
(x) Liens existing prior to the date of the Indenture and any extensions or
renewals thereof; (xi) Liens incurred in the ordinary course of business to
secure Debt utilized to fund net investment in leases and leased vehicles,
equity advances on homes and other assets under management programs; and (xii)
Liens to secure Debt not otherwise permitted by any of the clauses (i) through
(xi) if, at the time any such Liens are incurred, the aggregate amount of Debt
secured by such Liens plus the sum of all outstanding sale-leaseback
transactions permitted under the Indenture does not exceed $125,000,000.
6
<PAGE>
LIMITATIONS ON SALE-LEASEBACK TRANSACTIONS
The Company shall not, and it shall not permit any Subsidiary to, enter
into any arrangement whereby in contemporaneous transactions the Company or any
of its Subsidiaries sells essentially all of its right, title and interest in a
material asset and the Company or any of its Subsidiaries acquires or leases
back the right to use such property except that the Company may enter into
sale-leaseback transactions relating to assets not in excess of $100,000,000 in
the aggregate on a cumulative basis.
RESTRICTIONS ON SALE, CONSOLIDATION OR MERGER
The Company will not and will not consolidate with or merge into or
transfer all or substantially all of its assets to any other corporation unless
the resulting, surviving or transferee corporation assumes all the obligations
of the Company under the Debt Securities and the Indentures. Thereafter, all
such obligations of the predecessor corporation shall terminate. If upon any
such consolidation, merger or transfer any property or assets of the Company or
a Material U.S. Subsidiary would become subject to a Lien securing Debt, then
before the consolidation, merger or transfer occurs, the Company shall secure
the Debt Securities equally and ratably with or prior to the Debt secured by
such Lien; provided, however, that the Company need not so secure the Debt
Securities if the Company or a Material U.S. Subsidiary could incur such Debt
and secure it by a Lien on the property of the Company or any Material U.S.
Subsidiary pursuant to the Indentures (see "Limitations on Liens") without
equally and ratably securing the Debt Securities.
MODIFICATION AND WAIVER
The Company is permitted, with the consent of the Holders of not less than
a majority in principal amount of the Outstanding Debt Securities (as defined in
the Indentures) of each series affected by the modification, to supplement the
Indentures to modify the rights of the Holders of the Debt Securities; provided
that no such modification shall, without the consent of the Holder of each
Outstanding Debt Security affected thereby, (i) change the Stated Maturity of
the principal, or any installment of principal or interest, of any Outstanding
Debt Security or change the Redemption Price; (ii) reduce the principal amount
of or the rate of interest on or any premium payable on redemption of any
Outstanding Debt Security; (iii) modify the manner of determination of the rate
of interest so as to affect adversely the interest of a Holder or reduce the
amount of the principal of an Original Issue Discount Debt Security due and
payable upon acceleration; (iv) change the place or currency of payment of
principal of or interest, if any, on any Debt Security; (v) impair the right to
institute suit for the enforcement of any payment on or with respect to any Debt
Security; or (vi) modify the provisions relating to modification or amendment of
the Indenture or to waiver of compliance with or defaults of certain restrictive
provisions of the Indenture, except to increase the percentage in principal
amount of Outstanding Debt Securities required, or to provide that certain other
provisions of the Indenture cannot be modified or amended without the Consent of
the Holder of each Outstanding Debt Security affected thereby.
The Holders of a majority in principal amount of an Outstanding series of
Debt Securities may on behalf of all the Holders of such series waive the
compliance with certain covenants or waive any past default except (i) a default
in payment of the principal of (or premium, if any) or interest on any Debt
Security of such series or (ii) a default in respect of a covenant or provision
of the Indenture which cannot be amended or modified without the consent of the
Holder of each Outstanding Debt Security of such series affected.
EVENTS OF DEFAULT
The following shall constitute events of default with respect to Debt
Securities of any series then Outstanding: (i) default for a period of 30 days
in payment of any interest on the Debt Securities of such series when due; (ii)
default in payment of principal of (or premium, if any, on) the Debt Securities
of such series; (iii) default in the deposit of any sinking fund payment, when
and as due by the terms of a Debt Security of that series; (iv) default in
performance of any other covenant in the applicable Indenture with respect to a
series of Debt Securities, including violations of the covenants described above
relating to limitations on Liens, limitations on Sale-Leaseback Transactions,
limitations on certain advances to non-Subsidiaries and restrictions on sales of
assets and consolidation or merger of the Company, continued for 90 days after
written notice to the Company by
7
<PAGE>
the Trustee or by the Holders of at least 25% in principal amount of the
Outstanding Debt Securities of that series; and (v) certain events of
bankruptcy, insolvency or reorganization.
If an event of default with respect to Debt Securities of any series shall
occur and be continuing, the applicable Trustee or the holders of 25% in
principal amount of the Outstanding Debt Securities of such series may declare
the principal and accrued interest of all of the Debt Securities of that series
to be due and payable immediately. The Company will comply with applicable
tender offer rules under the Exchange Act in the event that the occurrence of an
event of default results in the repurchase of Debt Securities.
Each Indenture provides that the Trustee will, within 90 days after the
occurrence of a default under such Indenture, give to Holders of the series of
Debt Securities with respect to which a default has occurred notice of all
uncured defaults known to it but, except in the case of a default in the payment
of principal (including any sinking fund payment) or premium, if any, or
interest on or Redemption Price (if called for redemption) of a series of Debt
Securities with respect to which such default has occurred, the Trustee shall be
protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interest of such Holders.
Each Indenture contains a provision entitling the Trustee, subject to the
duty of such Trustee during default to act with the required standard of care,
to be indemnified by the Holders of a series of Debt Securities with respect to
which a default has occurred before proceeding to exercise any right or power
under the appropriate Indenture at the request of such Holders. Subject to such
right of indemnification, each Indenture provides that the Holders of a majority
in principal amount of the Outstanding Debt Securities of such series may direct
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.
The Company will be required to furnish to the Trustees annually a
statement as to the fulfillment by the Company of all of its obligations under
the Indentures.
The general provisions of the Indentures do not afford holders of the Debt
Securities protection in the event of a highly leveraged or other transaction
involving the Company that may adversely affect holders of the Debt Securities.
Any covenants or other provisions included in a supplement or amendment to the
Indenture for the benefit of the holders of any particular series of Debt
Securities will be described in the applicable Prospectus Supplement.
CONCERNING THE TRUSTEE
The Company maintains general banking and credit relations with the
Trustees in the ordinary course of business.
PLAN OF DISTRIBUTION
The Company may sell Debt Securities to or through underwriters, and also
may sell Debt Securities directly to other purchasers or through agents. The
distribution of the Debt Securities may be effected from time to time in one or
more transactions at a fixed price or prices (which may be changed from time to
time), at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. Each Supplement will
describe the method of distribution of the Offered Debt Securities.
In connection with the sale of Debt Securities, underwriters may receive
compensation from the Company or from purchasers of Debt Securities for whom
they may act as agents, in the form of discounts, concessions or commissions.
Underwriters may sell Debt Securities to or through dealers, and such dealers
may receive compensation in the form of discounts, concessions or commissions
from the underwriters and/or commissions from the purchasers for whom they may
act as agents. Underwriters, dealers and agents that participate in the
distribution of Debt Securities may be deemed to be underwriters under the
Securities Act and any discounts or commissions received by them and any profit
on the resale of Debt Securities by them may be deemed to be underwriting
8
<PAGE>
discounts and commissions under the Securities Act. Any such underwriter or
agent will be identified and any such compensation will be described in the
Supplement.
Under agreements which may be entered into by the Company, underwriters and
agents who participate in the distribution of Debt Securities may be entitled to
indemnification by the Company against certain liabilities, including
liabilities under the Securities Act.
If so indicated in the Supplement, the Company will authorize underwriters
or other persons acting as the Company's agents to solicit offers by certain
institutions to purchase Debt Securities from the Company pursuant to contracts
providing for payment and delivery on a future date. Institutions with which
such contracts may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others, but in all cases such institutions must be approved by
the Company. The obligations of any purchaser under any such contract will not
be subject to any conditions except that (1) the purchase of the Offered Debt
Securities shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject, and (2) if the Offered Debt
Securities are also being sold to dealers acting as principals for their own
account, the dealers shall have purchased such Offered Debt Securities not sold
for delayed delivery. The underwriters and such other agents will not have any
responsibility in respect of the validity or performance of such contracts.
LEGAL MATTERS
The validity of each issue of Debt Securities will be passed upon for the
Company by Piper & Marbury L.L.P. and certain legal matters will be passed upon
for the underwriters or agents by Milbank, Tweed, Hadley & McCloy. Milbank,
Tweed, Hadley & McCloy has represented the Company in connection with the merger
of the Company with HFS Incorporated ("HFS").
EXPERTS
The consolidated financial statements and the related financial statement
schedule of PHH Corporation and subsidiaries have been incorporated herein by
reference to the PHH Annual Report on Form 10-K and 10-K/A for the fiscal year
ended April 30, 1996, in reliance upon the report of KPMG Peat Marwick LLP,
independent auditors, incorporated herein by reference, given upon the authority
of said firm as experts in accounting and auditing. Their report contains an
explanatory paragraph that states that PHH adopted the provisions of Statement
of Financial Accounting Standards No. 122 "Accounting for Mortgage Servicing
Rights," in 1996.
9
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN
OFFER TO BUY, ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS
PROSPECTUS SUPPLEMENT OR AN OFFER TO SELL, OR THE SOLICITATION OF AN OFFER TO
BUY, SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS
NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, IN ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH
INFORMATION.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
PROSPECTUS SUPPLEMENT
Risk Factors................................... S-3
Description of Notes........................... S-3
Special Provisions Relating to Foreign
Currency Notes............................... S-13
Certain Federal Income Tax Considerations...... S-17
Supplemental Plan of Distribution.............. S-24
PROSPECTUS
Available Information.......................... 2
Incorporation of Certain Documents by
Reference.................................... 2
The Company.................................... 2
Ratio of Earnings to Fixed Charges............. 3
Use of Proceeds................................ 3
Description of Debt Securities................. 3
Plan of Distribution........................... 8
Legal Matters.................................. 9
Experts........................................ 9
</TABLE>
PHH
$3,000,000,000
PHH CORPORATION
Medium-Term Notes
PROSPECTUS SUPPLEMENT
Credit Suisse First Boston
Goldman, Sachs & Co.
Merrill Lynch & Co.
J.P. Morgan & Co.
, 1997
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses to be borne by the
Company in connection with the issuance and distribution of the securities being
registered hereunder, other than commissions.
<TABLE>
<S> <C>
Registration fee.......................................................................... $ 909,091
Transfer agent and registrar fees and expenses............................................ 60,000
Trustee fees and expenses................................................................. 33,500
Printing and engraving.................................................................... 10,000
Legal fees and expenses................................................................... 75,000
Accounting fees and expenses.............................................................. 32,000
Blue Sky filing fees and expenses......................................................... 5,000
Rating agency fees........................................................................ 550,000
Miscellaneous expenses.................................................................... 28,000
-----------
Total.............................................................................. $ 1,702,591
===========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
1. CHARTER, BY-LAW AND STATUTORY PROVISIONS
Article VII, Section 5 of the charter of the Company provides that the
Company shall indemnify its directors and officers to the full extent provided
by the general laws of the State of Maryland now or hereafter in force. Article
VII, Section 6 of the by-laws of the Company relating to indemnification of
directors and officers provides for indemnification in accordance with the
charter of the Company.
2. CONTRACT PROVISIONS
The Company expects to enter into selling agency agreements, distribution
agreements and underwriting agreements with selling agents and underwriters,
pursuant to which such selling agents and underwriters will agree to indemnify
officers, directors and other persons controlling the Company against certain
losses, claims, damages and liabilities arising out of untrue statements or
omissions in the Company's Registration Statement or related Supplements in
reliance upon information furnished by such selling agents and underwriters for
use therein.
ITEM 16. EXHIBITS AND FINANCIAL SCHEDULES.
(a) EXHIBITS
<TABLE>
<S> <C>
1 Proposed Form of Distribution Agreement.
4(a)(i) Form of Indenture between The First National Bank of Chicago and the Company.
4(a)(ii) Form of Indenture between The Bank of New York and the Company.
4(b)(i) Proposed Form of Fixed Rate Note between the Company and each of the following Trustees: The First
National Bank of Chicago and The Bank of New York.
4(b)(ii) Proposed Form of Floating Rate Note between the Company and each of the following Trustees: The First
National Bank of Chicago and The Bank of New York.
5 Opinion and consent of Piper & Marbury L.L.P., counsel for the Company.
10.1 364-day Credit Agreement among the Company, PHH Vehicle Management Services, Inc., the Lenders
referenced therein, The Chase Manhattan Bank, as Administrative Agent and The Chase Manhattan Bank of
Canada, as Canadian Agent, dated as of March 4, 1997.
10.2 Five-Year Credit Agreement among the Company, the Lenders referenced therein, and The Chase Manhattan
Bank, as Administrative Agent, dated as of March 4, 1997.
12 Computation of Ratio of Earnings to Fixed Charges.
23 Consent of Independent Certified Public Accountants.
25(a) Form T-1: Statement of Eligibility under the Trust Indenture Act of 1939 of The First National Bank of
Chicago, Trustee under the Indenture dated as of May , 1997.
25(b) Form T-1: Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New York,
Trustee under the Indenture dated as of May , 1997.
</TABLE>
II-1
<PAGE>
(b) FINANCIAL STATEMENT SCHEDULES
None.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to file, during any period in
which offers or sales are being made, a post-effective amendment to this
Registration Statement (i) to include any prospectus required by section
10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any
facts or events arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set forth in
the Registration Statement; and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement; that for the purpose of determining any liability under the
Securities Act of 1933 each such post-effective amendment shall be deemed to be
a new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and to remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or 497(h) under
the Securities Act shall be deemed to be part of this Registration Statement as
of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the County of Baltimore, State of Maryland, on the th day of
May, 1997.
PHH CORPORATION
By /S/ ROBERT D. KUNISCH
-----------------------------
ROBERT D. KUNISCH
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed by the following persons in
the capacities and on the dates indicated.
PRINCIPAL EXECUTIVE OFFICER:
<TABLE>
<S> <C>
/s/ ROBERT D. KUNISCH , 1997
- -----------------------------------------
ROBERT D. KUNISCH
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
PRINCIPAL FINANCIAL OFFICER:
<TABLE>
<S> <C>
/s/ MICHAEL P. MONACO , 1997
- -----------------------------------------
MICHAEL P. MONACO
EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL
OFFICER AND ASSISTANT TREASURER
</TABLE>
PRINCIPAL ACCOUNTING OFFICER:
<TABLE>
<S> <C>
/s/ NAN A. GRANT , 1997
- -----------------------------------------
NAN A. GRANT
CONTROLLER
</TABLE>
THE BOARD OF DIRECTORS:
<TABLE>
<S> <C>
/s/ STEPHEN P. HOLMES , 1997
- -----------------------------------------
STEPHEN P. HOLMES
/s/ JAMES E. BUCKMAN , 1997
- -----------------------------------------
JAMES E. BUCKMAN
</TABLE>
II-3
<PAGE>
EXHIBITS
Exhibit Page
No. Description of Exhibits No.
___ _______________________ ___
1 Proposed Form of Distribution Agreement.
4(a)(i) Form of Indenture between The First National Bank of Chicago
and the Company.
4(a)(ii) Form of Indenture between The Bank of New York and the Company.
4(b)(i) Proposed Form of Fixed Rate Note between the Company and each of
the following Trustees: The First National Bank of Chicago and,
The Bank of New York.
4(b)(ii) Proposed Form of Floating Rate Note between the Company and each
of the following Trustees: The First National Bank of Chicago and
The Bank of New York.
5 Opinion and consent of Piper & Marbury, L.L.P. counsel for the
Company.
10.1 364-day Credit Agreement among the Company, PHH Vehicle Management
Services, Inc., the Lenders, the Chase Manhattan Bank, as
Administrative Agent and the Chase Manhattan Bank of Canada, as
Canadian Agent, dated March 4, 1997.
10.2 Five-Year Credit Agreement among the Company, the Lenders, and the
Chase Manhattan Bank, as Administrative Agent, dated March 4, 1997.
12 Computation of Ratio of Earnings to Fixed Charges.
23 Consent of Independent Certified Public Accountants.
25(a) Form T-1: Statement of Eligibility under the Trust Indenture Act of
1939 of The First National Bank of Chicago, Trustee under the
Indenture dated as of May , 1997.
26(b) Form T-1: Statement of Eligibility under the Trust Indenture Act of
1939 of The Bank of New York, Trustee under the Indenture dated as
of May , 1997.
II-2
PHH CORPORATION
U.S. $3,000,000,000
Medium-Term Notes
DISTRIBUTION AGREEMENT
________, 1997
Credit Suisse First Boston Corporation
55 East 52nd Street
New York, New York 10055
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
North Tower
World Financial Center
New York, New York 10281
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Dear Sirs:
Section 1. Introductory. PHH Corporation, a Maryland corporation (the
"Company"), has filed with the Securities and Exchange Commission (the
"Commission"), and the Commission declared effective on _____________, 1996, a
registration statement on Form S-3 (Registration No. 333-_____, hereinafter
called the "Registration Statement"), covering up to U.S. $3,000,000,000
aggregate principal amount of the Company's debt securities (the "Securities").
Any reference herein to the term "Registration Statement" shall be deemed to
refer, unless the context otherwise indicates, to the Registration Statement,
including the form of final prospectus, financial statements and other documents
included or incorporated by reference therein and all exhibits included therein,
as from time to time amended, and the term "Prospectus" shall be deemed to refer
collectively,
-1-
<PAGE>
unless the context otherwise indicates, to the final prospectus in the form
filed with the Commission pursuant to Rule 424(b) under the Securities Act of
1933 (the "Act") and each prospectus as supplemented mailed to the Commission
pursuant to Rule 424(c) under the Act, including documents incorporated by
reference therein, as from time to time amended or supplemented (exclusive of
any supplements relating solely to Securities that are not Offered Securities as
hereinafter defined). The Securities will be issued under one or more indentures
(the "Indentures") identified and described in the Registration Statement
between the Company and one or more commercial banks, as trustees (the
"Trustees"). One class of Securities that the Company is authorized to issue
under the Indentures is Medium-Term Notes (the "Offered Securities"). Without
limitation on the Company's right to sell all other classes of Securities
through underwriters (which may include any or all of you) or dealers, or
directly to one or more institutional investors, or through agents (which may
include any or all of you), and without limitation on the Company's right to
sell Offered Securities through other agents as provided in Section 3(a) hereof,
the Company confirms its agreement with you with respect to the issue and sale
by the Company of up to U.S. $3,000,000,000 (or the equivalent in foreign
currency or currency units) principal amount of the Offered Securities issued
under the Indentures, subject to reduction as a result of the concurrent sale of
other Securities of the Company.
Section 2. Representations and Warranties of the Company. The Company
represents and warrants to each of you, as of the date hereof, as of the Closing
Time hereinafter referred to and as of the times referred to in Sections 4(k)
and 4(l) (in each case the "Representation Date"), as follows:
(a) The Registration Statement and the Prospectus, on their respective
dates of effectiveness and filing did, and as of the applicable Representation
Date will, conform in all material respects to the requirements of the Act, the
Trust Indenture Act of 1939 (the "Trust Indenture Act") and the rules and
regulations (the "Rules and Regulations") of the Commission; as of the
respective dates of their effectiveness and filing, neither the Registration
Statement nor the Prospectus did, nor as of the applicable Representation Date
will, include any untrue statement of a material fact or omit to state any
material fact necessary
-2-
<PAGE>
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and warranties
contained in this paragraph do not apply to (i) statements or omissions in the
Registration Statement or the Prospectus based upon written information
furnished to the Company by any of you or any of the Trustees expressly for use
therein or (ii) that part of the Registration Statement that constitutes the
Statement of Eligibility under the Trust Indenture Act on Form T-1 of any
Trustee, except statements or omissions in such Statement made in reliance upon
information furnished in writing to such Trustee by or on behalf of the Company
for use therein.
(b) The Company has been duly incorporated and is validly existing and
in good standing under the laws of the State of Maryland and has full power and
authority to conduct the businesses presently being conducted by it.
(c) Neither the execution or delivery of this Agreement, the Offered
Securities or the Indentures, the consummation of the transactions herein or
therein contemplated, nor compliance with the terms, conditions or provisions of
any such instruments, will result in a breach or violation of any of the terms
and provisions of, or constitute (with due notice or lapse of time, or both) a
default under, any indenture, mortgage, deed of trust or other agreement or
instrument to which the Company or any material subsidiary of the Company is a
party or by which it or any of its assets is bound, any statute, the charter or
by-laws of the Company or any material subsidiary or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Company or any material subsidiary or over its assets (except, no
representation, warranty or agreement is being made in this paragraph as to the
Blue Sky or securities laws of any State of the United States or the District of
Columbia, the Commonwealth of Puerto Rico or foreign jurisdictions).
(d) This Agreement has been duly authorized, executed and delivered on
behalf of the Company and is a valid and legally binding agreement of the
Company enforceable in accordance with its terms (except as the same may be
limited by bankruptcy, insolvency, reorganization or other laws relating to or
affecting creditors' rights generally); the Offered Securities have been duly
authorized and, when authenticated as contemplated by the
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applicable Indenture or Indentures and delivered and paid for in accordance with
this Agreement, will have been duly executed, authenticated, issued and
delivered and will constitute valid and legally binding obligations of the
Company enforceable in accordance with their terms (except as the same may be
limited by bankruptcy, insolvency, reorganization or other laws relating to or
affecting creditors' rights generally) and will be entitled to the benefits
provided by the applicable Indenture or Indentures.
(e) There is no consent, approval, authorization, order, registration
or qualification of or with any court or any regulatory authority or other
governmental body having jurisdiction over the Company or any material
subsidiary which is required for, or the absence of which would materially
affect, the issue and sale of the Offered Securities as contemplated by this
Agreement or the execution, delivery or performance of the Indentures, except
the registration under the Act of the Offered Securities, the qualification of
the Indentures under the Trust Indenture Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under the
securities or "Blue Sky" laws of any jurisdiction in connection with the
offering of the Offered Securities by the Company and the Agent in the manner
contemplated hereby.
(f) All financial statements of the Company provided to the Agent(s)
by the Company (including those contained in the Registration Statement) fairly
present the financial condition of the Company in all material respects and have
been prepared in conformity with U.S. generally accepted accounting principles.
(g) The Company has complied with all provisions of section 517.075,
Florida Statutes (Chapter 92-198, Laws of Florida).
Section 3. Solicitations as Agent; Purchases as Principal or
Underwriter. (a) Solicitations as Agent. On the basis of the representations and
warranties herein contained, but subject to the terms and conditions herein set
forth, each of you will use your best efforts to solicit offers to purchase the
Offered Securities upon the terms and conditions set forth in the Prospectus as
then amended or supplemented. You are hereinafter sometimes referred to in your
capacity as agents, individually as an "Agent" and collectively as the "Agents".
The Company reserves the right, and may submit offers, to purchase and sell
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Offered Securities directly to the public on its own behalf in jurisdictions in
which it is authorized to do so. In addition, after notice to each of the
Agents, the Company may appoint any additional agent to solicit and receive
offers to purchase Offered Securities from the Company upon the terms and
conditions set forth in the Prospectus, provided that any such additional agent
is made a party to this Agreement or executes a distribution agreement
substantially identical to this Agreement.
Each Agent further undertakes that in connection with the distribution
of Offered Securities denominated in any foreign currency or currency unit, it
will comply with the further restrictions in respect of offers and sales of
Offered Securities so denominated set forth in Exhibit C hereto.
The Company agrees to pay each Agent a commission for each Offered
Security sold, the purchase of which is solicited by such Agent, as follows:
Commission as a Percentage
Maturity of Principal Amount
- -------- --------------------------
9 months to less than 1 year .125%
1 year to less than 18 months .150
18 months to less than 2 years .200
2 years to less than 3 years .250
3 years to less than 4 years .350
4 years to less than 5 years .450
5 years to less than 6 years .500
6 years to less than 7 years .550
7 years to less than 10 years .600
10 years to less than 15 years .625
15 years to less than 20 years .700
20 years to 30 years .750
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More than 30 years to 40 years To be negotiated
The authorized denominations of Offered Securities denominated in a
currency or currency unit other than United States dollars shall be the
equivalent, as determined by the Market Exchange Rate (as defined herein) for
such currency or currency unit on the business day immediately preceding the
trade date for such Offered Securities, of U.S. $1,000 (rounded down to an
integral multiple of 1,000 units of such currency or currency unit), and any
larger amount that is an integral multiple of 1,000 units of such currency or
currency unit. The authorized denominations of Offered Securities denominated in
United States dollars shall be U.S. $1,000 and any larger amount that is an
integral multiple of U.S. $1,000. The Agents shall communicate to the Company,
orally or in writing, each offer to purchase Offered Securities other than those
rejected by the Agents. The Company shall have the sole right to accept offers
to purchase the Offered Securities and may reject any such offer in whole or in
part. The Agents shall have the right to reject any offer to purchase the
Offered Securities in whole or in part, and any such rejection shall not be
deemed a breach of their agreements contained herein.
The "Market Exchange Rate" on a given date for a given foreign
currency means the noon buying rate in New York City for cable transfers in such
currency as certified for customs purposes by the Federal Reserve Bank of New
York on such date; provided, however, that in the case of European Currency
Units, Market Exchange Rate means the rate of exchange determined by the Council
of European Communities (or any successor thereto) as published on such date or
the most recently available date in the Official Journal of the European
Communities (or any successor publication).
(b) Purchases as Principal or Underwriter. Each sale of Offered
Securities to any or all of you as principal or underwriter for resale to others
shall be made in accordance with the terms of this Agreement and a separate
agreement to be entered into between us which will provide for the sale of such
Offered Securities to, and the purchase and reoffering thereof by, any or all of
you. Each such separate agreement is herein referred to as a "Terms Agreement".
Your commitment to purchase Offered Securities pursuant to any Terms Agreement
shall be deemed to have been made on the basis of the representations and
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warranties of the Company herein contained and shall be subject to the terms and
conditions herein set forth. Each Terms Agreement shall specify the currency
denomination, principal amount and maturity of Offered Securities to be
purchased by you pursuant thereto, the price to be paid to the Company for such
Offered Securities, the initial public offering price, if any, at which the
Offered Securities are proposed to be reoffered, the time and place of delivery
of and payment for such Offered Securities, and any provisions relating to
rights of, and default by, any purchasers acting together with you in the
reoffering of the Offered Securities. To the extent required, such Terms
Agreement shall also specify any requirements for opinions of counsel, officer's
certificates and letters from KPMG Peat Marwick or other independent certified
public accountant of national standing pursuant to Section 5 hereof. Terms
Agreements, each of which shall be substantially in the form of Exhibit A
hereto, may take the form of an exchange of any standard form of written
communication (including a written confirmation of an oral agreement) between
the Company and each of you participating in the sale referred to therein,
including by telecopy or telex. If agreed to by the Company and any one or more
Agents, such Agents may purchase Offered Securities as principal pursuant to the
procedures for documentation and settlement applicable to agency sales. The
Agents may utilize a selling or dealer group in connection with the resale of
the Offered Securities.
(c) Procedures. Certain administrative functions are set forth in the
Medium-Term Note Administrative Procedures (the "Procedure"), attached hereto as
Exhibit B. You and the Company agree to perform the respective duties and
obligations specifically provided to be performed by each of them herein and in
the Procedure, as amended from time to time. The Procedure may only be amended
by written agreement of all the parties hereto.
(d) Delivery. The documents required to be delivered by Section 5
hereof (subject to paragraph (b) above) shall be delivered at the office of
Milbank, Tweed, Hadley & McCloy, 1 Chase Manhattan Plaza, New York, New York, on
the date hereof, and at the delivery time specified in each Terms Agreement
(each called a "Closing Time").
Section 4. Covenants of the Company. The Company covenants with you
that:
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(a) The Company will make no amendment or supplement (other
than by an amendment or supplement in the form previously agreed to by
the parties providing solely for a change in the interest rates or
maturities offered in the Offered Securities, or for a change in the
currency in which the Offered Securities are denominated, chosen from
among currencies that have previously been described in the Prospectus
(a "Pricing Supplement")) to the Registration Statement or the
Prospectus, whether by the filing of documents incorporated by
reference in whole or in part into the Registration Statement or the
Prospectus or otherwise, or make any change in the form of final
prospectus prior to the time it is first filed with the Commission
pursuant to Rule 424(b) under the Act, prior to having furnished each
of you a reasonable opportunity to review the same and which shall not
have been disapproved by you; the Company will advise each of you
promptly of the filing and effectiveness of any amendment to the
Registration Statement or the filing of any amendment or supplement
(other than a Pricing Supplement) to the Prospectus (including the
filing and effectiveness of any document incorporated by reference in
whole or in part into the Registration Statement or the Prospectus),
and of the institution by the Commission of any stop-order proceedings
in respect of the Registration Statement, and will use its best efforts
to prevent the issuance of any such stop-order and to obtain as soon as
possible its lifting, if issued.
(b) If at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act any event occurs
as a result of which the Registration Statement or Prospectus would
include an untrue statement of a material fact, or omit to state any
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or if, in
your reasonable opinion or in the reasonable opinion of the Company, it
is necessary at any time to amend or supplement the Registration
Statement or Prospectus (including any document incorporated by
reference in whole or part therein) to comply with the Act, the Company
promptly will notify you, or you shall, as the case may be, suspend
solicitation of offers to purchase Offered Securities and, if so
notified by the Company, you shall
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<PAGE>
forthwith suspend such solicitation and cease using the Prospectus; the
Company will promptly prepare and file with the Commission an amendment
or supplement to such Registration Statement or Prospectus (or to such
document incorporated by reference therein) which will correct such
statement or omission or effect such compliance and will supply such
amended or supplemented Prospectus or document to each of you in such
quantities as you may reasonably request; and if such amendment or
supplement or document, and any documents, certificates and opinions
furnished to each of you pursuant to paragraph (i) below in connection
with the preparation or filing of such amendment or supplement, are
satisfactory in all respects to you, you will, upon the filing of such
amendment or supplement or document with the Commission or
effectiveness of an amendment to the Registration Statement, resume
your respective obligation to solicit offers to purchase Offered
Securities hereunder.
(c) As soon as practicable, the Company will make generally
available to its securityholders an earnings statement or statements
that will satisfy the provisions of Section 11(a) of the Act and Rule
158 thereunder.
(d) The Company will furnish to each of you copies of all
amendments of and supplements (other than Pricing Supplements, copies
of which need only be furnished to the Agents involved in the sale of
the Offered Securities to which such Pricing Supplements relates) to
the Registration Statement and the Prospectus, as soon as available and
in such quantities as you reasonably request.
(e) The Company will take such action as you may request in
order to qualify the Offered Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you may request;
provided, however, that in no event shall the Company be obligated to
subject itself to taxation or to qualify to do business in any
jurisdiction where it is not now so subject or qualified or to take any
action which would subject it to service of process in suits, other
than those arising out of the offering or sale of the Offered
Securities, in any jurisdiction where it is not now so subject.
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<PAGE>
(f) So long as any Offered Security is outstanding, the
Company will furnish to each of you, as soon as practicable after the
end of each fiscal year, a balance sheet and statement of income of the
Company as at the end of and for such fiscal year in reasonable detail
and reported on by independent public accountants. The Company will
furnish to each of you as soon as practicable after the end of each
quarterly fiscal period (except for the last quarterly fiscal period of
each fiscal year), a balance sheet and statement of income of each of
the Company as at the end of such period and for the fiscal year to
date, certified by either the Chief Financial Officer or Chief
Accounting Officer of the Company. So long as the Company has active
subsidiaries, such financial statements will be furnished on a
consolidated basis to the extent the accounts of the Company and its
subsidiaries are consolidated.
(g) The Company shall furnish to each of you as soon as
practicable following the filing of any amendment or supplement (other
than a Pricing Supplement) to the Registration Statement or Prospectus
(including the filing of any document incorporated by reference in
whole or in part into the Registration Statement or Prospectus), a
certificate of (i) the Chairman of the Board, the President, any
Executive Vice President or any Vice President and (ii) the Vice
President and Treasurer, the Vice President and Controller or any other
Vice President of the Company to the effect that, at the date of such
certificate, neither the Registration Statement nor the Prospectus
includes any untrue statement of a material fact or omits to state any
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except
that the foregoing does not apply to (i) statements or omissions in the
Registration Statement or Prospectus based upon written information
furnished to the Company by any of you or any of the Trustees expressly
for use therein or (ii) that part of the Registration Statement that
constitutes the Statement of Eligibility under the Trust Indenture Act
on Form T-1 of any Trustee, except statements or omissions in such
Statement made in reliance upon information furnished in writing to
such Trustee by or on behalf of the Company for use therein.
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<PAGE>
(h) The Company shall furnish to each of you (i) forthwith
after the Company is required to file the same with the Commission,
copies of its annual reports and quarterly reports on Forms 10-K and
10-Q, respectively, its proxy statements and of any other information,
documents and reports that the Company is required to file with the
Commission pursuant to Section 13, 14 or Section 15(d) of the
Securities Exchange Act of 1934 or with the New York Stock Exchange,
Inc., or any other national securities exchange on which any security
of the Company is listed and (ii) at the earliest time the Company
makes the same available to others, copies of annual reports and other
financial reports of the Company furnished or made available to the
public generally.
(i) The Company shall furnish to each of you such documents,
certificates of officers of the Company and opinions of counsel for the
Company relating to the business, operations and affairs of the
Company, the Registration Statement, the Prospectus (including any
amendments or supplements thereto), the Indenture, the Offered
Securities, this Agreement, the Procedure and the performance by the
Company and you of our respective obligations hereunder and thereunder
as you may from time to time and at any time prior to the termination
of this Agreement reasonably request.
(j) The Company shall pay all expenses incident to the
performance of its obligations under this Agreement, including the fees
and disbursements of its accountants, the cost of printing and delivery
of the Registration Statement, the Prospectus (including all amendments
and supplements thereto) and the Indentures, the costs of preparing,
printing, packaging and delivering the Offered Securities, the fees and
disbursements of the Trustees and the fees of any agency that rates the
Offered Securities, the reasonable fees of your counsel, and will
reimburse you from time to time for all reasonable out-of-pocket
expenses incurred by you, including in connection with the offering and
sale of the Offered Securities and the qualification of the Offered
Securities for sale and determination of eligibility for investment of
the Offered Securities under the securities or Blue Sky laws of such
jurisdictions as you designate and any
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<PAGE>
advertising expenses connected with the offering and sale of Offered
Securities.
(k) Each acceptance by the Company of an offer to purchase
Offered Securities and each delivery of Offered Securities in any sale
made to, or pursuant to an offer solicited by, you will be deemed to be
an affirmation to any Agent that solicited such offer or purchased such
Offered Securities that the representations and warranties of the
Company contained in Sections 2(a) through 2(e) are true and correct at
the time of such acceptance or delivery, as though made at and as of
such time, and a representation and warranty to any Agent that
solicited such offer or purchased such Offered Securities that neither
the Registration Statement nor the Prospectus includes any untrue
statement of a material fact or omits to state any material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that the foregoing
does not apply to (i) statements or omissions in the Registration
Statement or the Prospectus based upon written information furnished to
the Company by any of you or any of the Trustees expressly for use
therein or (ii) that part of the Registration Statement that
constitutes the Statement of Eligibility under the Trust Indenture Act
on Form T-1 of any Trustee, except statements or omissions in such
Statement made in reliance upon information furnished in writing to
such Trustee by or on behalf of the Company for use therein.
(l) Each time that the Registration Statement or the
Prospectus (including any portion of any document incorporated by
reference in whole or part into either), is amended or supplemented
(other than by a Pricing Supplement), the Company will deliver or cause
to be delivered forthwith to each of you a certificate of the officers
of the Company as specified in Section 4(g), dated the date of the
effectiveness of such amendment or the date of filing of such
supplement, in form reasonably satisfactory to you, to the effect that
the statements contained in the certificate referred to in Section
5(c)(ii) that was last furnished to you (either pursuant to Section
5(c)(ii) or this Section 4(l)) are true and correct at the time of the
effectiveness of such amendment or the filing of
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such supplement as though made at and as of such time or, in lieu of
such certificate, a certificate of the same tenor as the certificate
referred to in Section 5(c)(ii) dated the effective date of such
amendment or the date of filing of such supplement.
(m) Each time that the Registration Statement or the
Prospectus, including any portion of any document incorporated by
reference in whole or part into either, is amended or supplemented
(other than by a Pricing Supplement), and except for an amendment or
supplement occasioned by the incorporation by reference of proxy
materials of the Company or reports of the Company on Form 10-K, Form
10-Q or Form 8-K, in which case the written opinion furnished by the
Company referred to hereafter shall be that of the General Counsel or
Assistant General Counsel of the Company), the Company shall furnish or
cause to be furnished forthwith to each of you a written opinion of
Piper & Marbury L.L.P., or other counsel for the Company acceptable to
the Agents, dated the date of the effectiveness of such amendment or
the date of filing of such supplement or the filing of such document
incorporated by reference into the Registration Statement or the
Prospectus, in form satisfactory to you, relating to the Registration
Statement and the Prospectus.
(n) Each time that the Registration Statement or the
Prospectus is amended or supplemented to set forth amended or
supplemental financial information, whether by incorporation by
reference in whole or in part or otherwise, the Company shall cause
KPMG Peat Marwick L.L.P., or other independent certified public
accountants of national standing, forthwith to furnish to each of you a
letter, dated the date of the effectiveness of such amendment or the
date of filing of such supplement, in form satisfactory to you, of the
same tenor as the letter referred to in Section 5(d) with such changes
as may be necessary to reflect the amended or supplemental financial
information included in the Registration Statement and the Prospectus
and the other financial information of the Company available within
five days of the date of such letter; provided, however, that such
accountants need only furnish you a letter in compliance with SAS 71,
as appropriately modified, where
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such amendment or supplement or document incorporated by reference only
sets forth unaudited quarterly financial information contained in the
Company's Quarterly Report on Form 10-Q.
(o) Between the date of any Terms Agreement and the
settlement date with respect to the Offered Securities covered thereby,
the Company will not, without the prior consent of each of you that is
a party to such Terms Agreement, offer or sell, or enter into any
agreement to sell, any debt securities of the Company, other than (i)
borrowings under the Company's revolving credit agreements and lines of
credit and (ii) issuances of the Company's commercial paper.
(p) The Company shall offer to any person who has agreed to
purchase Offered Securities as a result of an offer to purchase
solicited by any of you the right to refuse to purchase and pay for
such Offered Securities if, on the related settlement date fixed
pursuant to the Procedure, (i) the condition set forth in Section 5(a)
hereof shall not be satisfied, (ii) the rating assigned by any
nationally recognized securities rating agency to any debt securities
of the Company as of the date of the applicable Terms Agreement shall
not have been lowered since that date nor shall any such organization
have publicly announced that it has under surveillance or review, with
possible negative implications, its ratings of any debt securities of
the Company or (iii) if any of the events set forth in clause (ii) or
clause (iii) of the second sentence of Section 9 hereof shall have
occurred (it being understood that, for purposes of this paragraph (p),
the judgment of such person shall be substituted for the judgment of
the Agent with respect to the matters referred to in clause (ii) of the
second sentence of Section 9 hereof, and that the Agent shall have no
duty or obligation to exercise its judgment on behalf of such person).
This paragraph (p) shall not affect any other right of any person who
has agreed to purchase Offered Securities to refuse to purchase and pay
for such Offered Securities that arises under any other provision of
this Agreement.
Section 5. Conditions of Obligations. Your several obligations to
solicit offers to purchase the Offered
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Securities as Agent(s) and your obligations to purchase Offered Securities
pursuant to any Terms Agreement or otherwise will be subject to the accuracy of
the representations and warranties on the part of the Company herein, to the
accuracy of the statements of the Company's officers made in each certificate
furnished pursuant to the provisions hereof, to the performance and observance
by the Company of all covenants and agreements herein contained on its part to
be performed and observed and to the following additional conditions precedent:
(a) At and subsequent to the date hereof and at each Closing
Time no stop-order suspending the effectiveness of the Registration
Statement shall have been issued and remain outstanding and no
proceedings for that purpose shall have been instituted or, to your
knowledge or the knowledge of the Company, threatened or contemplated
by the Commission.
(b) At the date hereof and at each Closing Time if called for
by the applicable Terms Agreement, each of you (or, with respect to a
Closing Time called for by any Terms Agreement, each of you that is a
party to such Terms Agreement) shall have received an opinion, dated,
as applicable, either the date hereof or such Closing Time, of Piper &
Marbury L.L.P., or other counsel for the Company acceptable to the
Agents (or in the case of any Closing Time other than the date hereof,
the opinion of the General Counsel or Assistant General Counsel of the
Company), substantially identical to the proposed form of their opinion
heretofore delivered to each of you.
(c) (i) At the date hereof and at each Closing Time,
subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus (except as set forth in
or contemplated by the Registration Statement and the Prospectus), the
Company shall not have incurred any material liabilities or
obligations, direct or contingent, or entered into any material
transactions not in the ordinary course of business, nor shall there
have been any material decrease in the stockholders' equity or any
material increase in the long-term debt of the Company or any material
adverse change in the condition, financial or otherwise, or in the
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earnings, affairs or business prospects of the Company, whether or not
arising in the ordinary course of business.
(ii) At the date hereof and at each Closing Time if called
for by the applicable Terms Agreement, each of you (or, with respect to
a Closing Time called for by any Terms Agreement, each of you that is a
party to such Terms Agreement) shall have received a certificate,
dated, as applicable, the date hereof or such Closing Time, signed by
the officers of the Company specified in Section 4(g), certifying that,
to the best of their knowledge after reasonable investigation, the
statements made in the immediately preceding paragraph (i) are accurate
and to the effect that (A) no stop- order suspending the effectiveness
of the Registration Statement has been issued, and no proceedings for
that purpose have been instituted or, to the knowledge of such
officers, are threatened or contemplated by the Commission, (B) the
Registration Statement and the Prospectus conform in all material
respects to the requirements of the Act, the Trust Indenture Act and
the Rules and Regulations, (C) neither the Registration Statement nor
the Prospectus contains any untrue statement of a material fact or
omits to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, except that the foregoing does not apply to (i)
statements or omissions in the Registration Statement or the Prospectus
made in reliance upon information furnished in writing to the Company
by any of you or on your behalf or on behalf of any of the Trustees
expressly for use therein or (ii) that part of the Registration
Statement that constitutes the Statement of Eligibility under the Trust
Indenture Act on Form T-1 of any Trustee, except statements or
omissions in such Statement made in reliance upon information furnished
in writing to such Trustee by or on behalf of the Company for use
therein, and (D) the representations and warranties of the Company
included in Sections 2(a) through 2(e) are, as of the Closing Time,
accurate in all material respects and the Company has performed and
observed all covenants and agreements herein contained on its part to
be performed and observed prior to the Closing Time.
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<PAGE>
(d) At the date hereof, and at each Closing Time if called
for by the applicable Terms Agreement, each of you (or, with respect to
a Closing Time called for by any Terms Agreement, each of you that is a
party to such Terms Agreement) shall have received a letter, dated as
of the Closing Time, signed by an independent certified public
accountant of national standing, substantially identical to the
proposed form of such letter heretofore delivered to each of you.
(e) At the date hereof and at each Closing Time if called for
by the applicable Terms Agreement, each of you (or with respect to a
Closing Time called for by any Terms Agreement, each of you that is a
party to such Terms Agreement) shall have received an opinion, dated
such date, of Milbank, Tweed, Hadley & McCloy, or other counsel
selected by the Agents, with respect to the Company, the Offered
Securities, the Registration Statement, including the form of final
prospectus included therein, this Agreement and the form and
sufficiency of all proceedings taken in connection with the
authorization, sale and delivery of the Offered Securities, all of
which shall be satisfactory in all respects to you, and the Company
shall have furnished to your counsel such documents as such counsel may
reasonably request for the purpose of enabling them to render such
opinion.
(f) At the date hereof and at each Closing Time if called for
by the applicable Terms Agreement, the Company shall have furnished to
each of you (or, with respect to a Closing Time called for by any Terms
Agreement, each of you that is a party to such Terms Agreement) such
further information and documents as you may have reasonably requested.
(g) There shall not have occurred any change, or any
development involving a prospective change, involving currency exchange
rates, exchange controls, taxation or similar matters that in your
respective judgments makes it impracticable or inadvisable to proceed
with your solicitation of offers to purchase the Offered Securities
denominated in the affected currency or currencies, or your purchase of
such Offered Securities from the Company as principal; provided,
however, that any such change or
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development shall not affect your respective obligations with respect
to Offered Securities denominated in any currency not so affected.
Your respective obligations to purchase Offered Securities pursuant to
any Terms Agreement (or as contemplated by the last sentence of Section 3(b)
hereof) will be subject to the following further conditions: (a) the rating
assigned by any nationally recognized securities rating agency to any debt
securities of the Company as of the date of the applicable Terms Agreement shall
not have been lowered since that date nor shall any such organization have
publicly announced that it has under surveillance or review, with possible
negative implications, its ratings of any debt securities of the Company and (b)
there shall not have come to your attention any facts that would cause you to
believe that the Prospectus, at the time it was required to be delivered to a
purchaser of the Offered Securities, contained an untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances existing at such time, not
misleading.
Section 6. Indemnification. (a) The Company shall indemnify and hold
harmless each of you, each of your partners, directors, officers and employees
and each person, if any, who controls you within the meaning of Section 15 of
the Act against any and all losses, claims, damages, and liabilities, joint or
several (including any investigation, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted), to which you or they, or any of you
or them, may become subject under the Act, the Securities Exchange Act of 1934
or other Federal or state law or regulation, at common law or otherwise, insofar
as such losses, claims, damages or liabilities arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus, the Registration Statement or the Prospectus, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except that the foregoing does not apply to (i) untrue statements or omissions
or alleged untrue statements or omissions in such preliminary prospectus, the
Registration Statement or the Prospectus, based upon written
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information furnished to the Company by any of you expressly for use therein or
(ii) that part of the Registration Statement that constitutes the Statement of
Eligibility under the Trust Indenture Act on Form T-1 of any Trustee, except
untrue statements or omissions or alleged untrue statements or omissions in such
Statement made in reliance upon information furnished in writing to such Trustee
by or on behalf of the Company for use therein; provided, however, that the
aforesaid indemnity agreement with respect to the Registration Statement and the
Prospectus shall not inure to your or their benefit (if the person asserting any
such loss, claim, damage or liability purchased the Offered Securities which are
the subject thereof through you), or to the benefit of any person controlling
you, if the Company shall have furnished an amendment or supplement to the
Prospectus to you prior to the time a written confirmation of the sale of such
Offered Securities was sent or given to the person asserting such loss, claim,
damage, liability or action for which indemnification is sought, and the
Prospectus as so supplemented or amended (i) corrected the alleged misstatement
or omission on which the asserted loss, claim, damage or liability was based and
(ii) was not sent or given to such person at or prior to the written
confirmation of the sale of such Offered Securities to such person.
(b) Each Agent shall indemnify and hold harmless the Company, each
person, if any, who controls the Company within the meaning of Section 15 of the
Act, each director of the Company and each officer of the Company who signs the
Registration Statement or any amendment thereto to the same extent as the
foregoing indemnity from the Company to you but only insofar as such losses,
claims, damages or liabilities arise out of or are based upon any untrue
statement or omission or alleged untrue statement or omission which was made in
any preliminary prospectus, the Registration Statement or the Prospectus in
reliance upon and in conformity with information furnished in writing to the
Company by such Agent expressly for use therein.
(c) Any party which proposes to assert the right to be indemnified
under this Section 6 shall, promptly after receipt of notice of commencement of
any action, suit or proceeding against such party in respect of which a claim is
to be made against an indemnifying party under paragraph (a) or (b) of this
Section 6, notify each such indemnifying party of the commencement of such
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action, suit or proceeding, enclosing a copy of all papers served, but the
omission so to notify such indemnifying party of any such action, suit or
proceeding shall not relieve it from any liability which it may have to any
indemnified party otherwise than under paragraph (a) or (b) of this Section 6.
In case any such action, suit or proceeding is brought against any indemnified
party and it notifies the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in, and, to the extent that
it wishes, jointly with any other indemnifying party, similarly notified, to
assume the defense thereof, with counsel satisfactory to such indemnified party
(who shall not except with the consent of the indemnified party be counsel to
the indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof the
indemnifying party will not be liable to such indemnified party for any legal or
other expenses, other than reasonable costs of investigation subsequently
incurred by such indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its counsel in any such action,
but the fees and expenses of such counsel will be at the expense of such
indemnified party unless (i) the employment of counsel by such indemnified party
has been authorized by the indemnifying party, (ii) the indemnified party shall
have reasonably concluded that there may be a conflict of interest between the
indemnifying party and the indemnified party in the conduct of the defense of
such action (in which case the indemnifying party shall not have the right to
direct the defense of such action on behalf of the indemnified party) or (iii)
the indemnifying party has not in fact employed counsel to assume the defense of
such action, in any of which events such fees and expenses shall be borne by the
indemnifying party. An indemnifying party shall not be liable for any settlement
of any action or claim effected without its consent (which shall not be
unreasonably withheld). No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any action or claim
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such proceeding.
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(d) If the indemnification provided for in this Section 6 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and each of you on the
other from the offering of the Securities to which such loss, claim, damage or
liability (or action in respect thereof) relates. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and each of you on the other in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and each of you on the other shall be deemed to be in the same
proportion as the total net proceeds from the sale of Offered Securities (before
deducting expenses) received by the Company bear to the total commissions or
discounts received by each of you in respect thereof. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact required to be stated therein or necessary in order to make the
statements therein not misleading relates to information supplied by the Company
on the one hand or by you on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and you agree that it would not be just and
equitable if contribution pursuant to this subsection (d) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect
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thereof) referred to above in this subsection (d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), no Agent shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities purchased by or through such Agent were sold
exceeds the amount of any damages which such Agent has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The Agents'
obligations to contribute pursuant to this Section 6(d) are several, in
proportion to the respective principal amounts of Offered Securities purchased
or sold by each of such Agents, and not joint.
(e) The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls you
within the meaning of the Act; and your obligations under this Section 6 shall
be in addition to any liability which you may otherwise have and shall extend,
upon the same terms and conditions, to each officer and director of the Company
and to each person, if any, who controls the Company within the meaning of the
Act.
Section 7. Position of the Agent(s). In soliciting purchases of the
Offered Securities, each Agent is acting solely as agent for the Company, and
not as principal. Each Agent shall make reasonable efforts to assist the Company
in obtaining performance by each purchaser whose offer to purchase Offered
Securities has been solicited by such Agent and accepted by the Company, but
such Agent shall not have any liability to the Company in the event any such
purchase is not consummated for any reason.
Section 8. Representations and Indemnities to Survive Delivery. Your
respective indemnities, agreements, representations, warranties and other
statements and those of the Company or its officers set forth in or made
pursuant to this Agreement shall remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made
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by or on behalf of any of you or on behalf of the Company or any of its officers
or directors or any controlling person, and will survive each delivery of and
payment for any of the Offered Securities.
Section 9. Termination. This Agreement may be terminated at any time
(i) by the Company with respect to any Agent by giving written notice of such
termination to such Agent or (ii) by any Agent, as to the rights and obligations
of such Agent only, by giving written notice to the Company. Any Agent that is a
party to any Terms Agreement may also terminate such Terms Agreement (or other
obligation to purchase Offered Securities as principal as contemplated by the
penultimate sentence of Section 3(b) hereof), immediately upon notice to the
Company, at any time prior to the Closing Time relating thereto (i) if there has
been, since the respective dates as of which information is given in the
Registration Statement and Prospectus, any material adverse change in the
condition, financial or otherwise, of the Company and its subsidiaries
considered as one enterprise, or in the earnings, affairs or business prospects
of the Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
outbreak or escalation of hostilities or other calamity or crisis the effect of
which on the financial markets of the United States, or of any other country in
the currency of which the Offered Securities are denominated, is such as to make
it, in the judgment of such Agent, impracticable to market the Offered
Securities or enforce contracts for the sale of the Offered Securities, or (iii)
if trading in any securities of the Company has been suspended by the Commission
or a national securities exchange, or if trading generally on either the
American Stock Exchange or the New York Stock Exchange has been suspended, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices for securities have been required, by either of said exchanges or by
order of the Commission or any other governmental authority, or if a banking
moratorium has been declared by either Federal or New York State authorities or
by authorities in any other country in the currency of which the Offered
Securities are denominated. In the event of such termination by the Company, the
Company and any Agent as to which this Agreement has been terminated shall have
no liability or other obligation to each other, and in the event of such
termination by an Agent, such Agent and the Company
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shall have no further liability or obligation to each other, in each case except
as provided in the first sentence of the third paragraph of Section 3(a),
Section 4(c), Section 4(j), Section 6 and Section 8 and except that, if at the
time of termination (i) an offer to purchase any of the Offered Securities has
been accepted by the Company but the time of delivery to the purchaser or its
agent of the Offered Security or Offered Securities relating thereto has not
occurred or (ii) any Agent shall own any of the Offered Securities which were
bought by such Agent as principal with the intention of reselling them, the
Company's obligations provided in Sections 4(k) through 4(n) and, in the
circumstances described in clause (ii), all obligations of the Company relating
to such Agent's ability to resell such Offered Securities, shall not be
terminated.
Section 10. Notices. All communications hereunder will be in writing
and, if sent to you, will be mailed, delivered or telegraphed and confirmed in
duplicate originals to:
Credit Suisse First Boston Corporation
55 East 52nd Street
New York, New York 10055
Attention: Short and Medium Term Finance
Telephone: (212) 322-7198
Telecopy: (212) 318-1498
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: Credit Control--Medium Term Notes
Telecopy: (212) 363-7609
Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
North Tower
World Financial Center
New York, New York, 10281
Attention: MTN Product Management
Telecopy: (212) 449-2234
J.P. Morgan Securities Inc.
60 Wall Street - 3rd Floor
New York, New York 10260
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Attention: Medium-Term Note Desk
Telecopy: (212) 648-5909
or, if sent to the Company, will be mailed, delivered or telegraphed and
confirmed to it at 11333 McCormick Road, Hunt Valley, Maryland 21031, Attention
of Vice President and Treasurer.
Section 11. Parties. This Agreement will inure to the benefit of and
be binding upon each of the parties hereto and their respective successors.
Nothing expressed or mentioned in this Agreement is intended or is to be
construed to give any person, firm or corporation, other than the parties hereto
and their respective successors and the controlling persons, directors, officers
and employees referred to in Section 6, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein contained;
this Agreement and all conditions and provisions hereof being intended to be and
being for the sole exclusive benefit of the parties hereto and their respective
successors and said controlling persons and said directors, officers and
employees, and for the benefit of no other person, firm or corporation. No
purchaser of any Offered Securities through any Agent will be deemed to be a
successor by reason merely of such purchase.
Section 12. Governing Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
the Company and you in accordance with its terms.
Very truly yours,
PHH CORPORATION
By___________________________
Vice President and Treasurer
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Confirmed and Accepted,
as of the date first
above-written:
CREDIT SUISSE FIRST BOSTON CORPORATION
By _________________________
GOLDMAN, SACHS & CO.
By _________________________
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
By _________________________
J.P. MORGAN SECURITIES INC.
By _________________________
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EXHIBIT A
PHH CORPORATION
(A Maryland corporation)
Medium-Term Notes
TERMS AGREEMENT
[Date]
PHH Corporation
11333 McCormick Road
Hunt Valley, Maryland 21037
Attention: __________________
Re: Distribution Agreement for Above-Mentioned Securities
Pursuant to the Distribution Agreement dated _________ __, 1995 between PHH
Corporation (the "Company") and [Agent(s)], the undersigned agrees to purchase
the Company's Medium-Term Notes having the principal amounts (denominated in the
respective currencies), maturities, interest rates and other terms set forth in
Schedule I hereto.
[The opinions referred to in Sections 5(b) and 5(e) of the Distribution
Agreement, the accountants' letter referred to in Section 5(d) of the
Distribution Agreement [and the officer's certificate referred to in Section
5(c)(ii) of the Distribution Agreement] will be required.]
[Agent(s)]
Accepted: By __________________________
PHH CORPORATION
By __________________________
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Schedule I
Principal Discount Initial
Amount (as % of Public
Maturity Settlement and Interest Principal Offering
Date Date Currency Rate Amount) Price Trustee
-------- ---------- --------- -------- ---------- -------- -------
A.
B.
C.
D.
E.
F.
G.
H.
Time of delivery
Place of delivery
[Other terms]
[Closing date]
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EXHIBIT B
PHH CORPORATION
Administrative Procedures
These Administrative Procedures relate to the Offered Securities defined in
the Distribution Agreement, dated _______ __, 1996 (the "Distribution
Agreement"), between PHH Corporation (the "Company") and Credit Suisse
First Boston Corporation, Goldman, Sachs & Co., Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities Inc.
(together, the "Agents"), to which this Administrative Procedure is
attached as Exhibit B. Defined terms used herein and not defined herein shall
have the meanings given such terms in the Distribution Agreement, the
Prospectus as amended or supplemented, or the applicable Indenture. As
used in these Administrative Procedures, the "Indenture" refers to the
Indenture pursuant to which the subject Offered Securities are issued and
the "Trustee" refers to the Trustee under such Indenture.
The procedures to be followed with respect to the settlement of sales of
Offered Securities directly by the Company to purchasers solicited by an Agent,
as agent, are set forth below. The terms and settlement details related to a
purchase of Offered Securities by an Agent, as principal, from the Company will
be set forth in a Terms Agreement pursuant to the Distribution Agreement, unless
the Company and such Agent otherwise agree as provided in Section 3(b) of the
Distribution Agreement, in which case the procedures to be followed in respect
of the settlement of such sale will be as set forth below. An Agent, in relation
to a purchase of an Offered Security by a purchaser solicited by such Agent, is
referred to herein as the "Selling Agent" and, in relation to a purchase of an
Offered Security by such Agent as principal other than pursuant to a Terms
Agreement, as the "Purchasing Agent."
The Company will advise each Agent in writing of those persons with whom
such Agent is to communicate regarding offers to purchase Offered Securities and
the related settlement details.
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Each Offered Security will be issued only in fully registered form and will
be represented by either a global security (a "Global Security") delivered to
the Trustee, as agent for The Depository Trust Company (the "Depositary") and
recorded in the book-entry system maintained by the Depositary (a "Book-Entry
Security") or a certificate issued in definitive form (a "Certificated
Security") delivered to a person designated by an Agent, as set forth in the
applicable Pricing Supplement. An owner of a Book-Entry Security will not be
entitled to receive a certificate representing such a Security, except as
provided in the Indenture.
Certificated Securities will be issued in accordance with the Administrative
Procedure set forth in Part I hereof, and Book-Entry Securities will be issued
in accordance with the Administrative Procedure set forth in Part II hereof.
PART I: ADMINISTRATIVE PROCEDURE FOR CERTIFICATED SECURITIES
Posting Rates by Company:
The Company and the Agents will discuss from time to time the rates of
interest per annum to be borne by and the maturity of Certificated Securities
that may be sold as a result of the solicitation of offers by an Agent. The
Company may establish a fixed set of interest rates and maturities for an
offering period ("posting"). If the Company decides to change already posted
rates, it will promptly advise the Agents to suspend solicitation of offers
until the new posted rates have been established with the Agents.
Acceptance of Offers by Company:
Each Agent will promptly advise the Company by telephone or other
appropriate means of all reasonable offers to purchase Certificated Securities,
other than those rejected by such Agent. Each Agent may, in its discretion
reasonably exercised, reject any offer received by it in whole or in part. Each
Agent also may make offers to the Company to purchase Certificated Securities as
a Purchasing Agent. The Company will have the sole right to accept offers to
purchase Certificated Securities and may reject any such offer in whole or in
part.
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The Company will promptly notify the Selling Agent or Purchasing Agent, as
the case may be, of its acceptance or rejection of an offer to purchase
Certificated Securities. If the Company accepts an offer to purchase
Certificated Securities, it will confirm such acceptance in writing to the
Selling Agent or Purchasing Agent, as the case may be, and the Trustee.
Communication of Sale Information to
Company by Selling Agent:
After the acceptance of an offer by the Company, the Selling Agent or
Purchasing Agent, as the case may be, will communicate the following details of
the terms of such offer (the "Sale Information") to the Company by telephone
(confirmed in writing) or by facsimile transmission or other acceptable written
means:
(1) Principal amount of Certificated Securities to be purchased;
(2) If a Fixed Rate Certificated Security, the interest rate and the
initial interest payment date;
(3) Maturity Date;
(4) Specified Currency and, if the Specified Currency is other than
U.S. dollars, the applicable Exchange Rate for such Specified
Currency;
(5) Indexed Currency, the Base Rate and the Exchange Rate Determination
Date, if applicable;
(6) Issue Price;
(7) Selling Agent's commission or Purchasing Agent's discount, as the
case may be;
(8) Net proceeds to the Company;
(9) Settlement Date;
(10) If a redeemable Certificated Security, such of the following as
are applicable:
(i) Redemption Commencement Date,
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(ii) Initial Redemption Price (% of par), and
(iii) Amount (% of par) that the Redemption Price shall
decline (but not below par) on each anniversary
of the Redemption Commencement Date;
(11) If a Floating Rate Certificated Security, such of the following as
are applicable:
(i) Interest Rate Basis,
(ii) Index Maturity,
(iii) Spread or Spread Multiplier,
(iv) Maximum Rate,
(v) Minimum Rate,
(vi) Initial Interest Rate,
(vii) Interest Reset Dates,
(viii) Calculation Dates,
(ix) Interest Determination Dates,
(x) Interest Payment Dates, and
(xi) Calculation Agent;
(12) Name, address and taxpayer identification number of the registered
owner(s);
(13) Denomination of certificates to be delivered at settlement; and
(14) Name of the Trustee.
Preparation of Pricing Supplement by Company
If the Company accepts an offer to purchase a Certificated Security, it will
prepare a Pricing Supplement. The Company will supply at least ten copies of
such Pricing Supplement to the
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Selling Agent or Purchasing Agent, as the case may be, not later 3:00 p.m., New
York City time, on the second business day following the date of acceptance of
such offer, or if the Company and the purchaser agree to settlement on the date
of such acceptance, not later than noon, New York City time, on such date. The
Company will arrange to have ten Pricing Supplements filed with the Commission
not later than the close of business of the Commission on the fifth business day
following the date on which such Pricing Supplement is first used.
Pricing Supplements will be delivered to the Selling Agent or Purchasing
Agent as follows:
Credit Suisse First Boston Corporation
55 East 52nd Street
New York, New York 10055
Attn: Short and Medium Term Finance
Telephone: (212) 322-7198
Telecopy: (212) 318-1498
Goldman, Sachs & Co
85 Broad Street
New York, New York 10004
Attn: Karen Robinson
MTN Desk Assistant
Telephone: (212) 902-8401
Telecopy: (212) 902-0658
Merrill Lynch & Co. - Tritech Services
4 Corporate Place
Corporate Park 287
Piscataway, NJ 08854
Attn: Final Prospectus Unit/Nachman Kimerling
Telephone: (908) 878-6525/26/27
Telecopy: (908) 878-6530
with a copy to:
Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
Merrill Lynch World Headquarters
World Financial Center, North Tower
10th Floor
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<PAGE>
New York, NY 10281-1310
Attn: MTN Product Management
Telephone: (212) 449-7476
Telecopy: (212) 449-2234
J.P. Morgan Securities Inc.
60 Wall Street
3rd Floor
New York, New York 10260
Attn: Medium-Term Note Desk
Telecopy: (212) 648-5909
Delivery of Confirmation and Prospectus to
Purchaser by Selling Agent:
The Selling Agent will deliver to the purchaser of a Certificated Security a
written confirmation of the sale and delivery and payment instructions. In
addition, the Selling Agent will deliver to such Purchaser or its agent the
Prospectus as amended or supplemented (including the Pricing Supplement) in
relation to such Certificated Security prior to or together with the earlier of
the delivery to such purchaser or its agent of (a) the confirmation of sale or
(b) the Certificated Security.
Date of Settlement:
All offers solicited by a Selling Agent or made by a Purchasing Agent and
accepted by the Company will be settled on a date (the "Settlement Date") which
is the fifth business day after the date of acceptance of such offer, unless the
Company and the purchaser agree to settlement (a) on any other business day
after the acceptance of such offer or (b) with respect to an offer accepted by
the Company prior to 10:00 a.m., New York City time, on the date of such
acceptance.
Instruction from Company to Trustee for Preparation of Certificated Securities:
After receiving the Sale Information from the Selling Agent or Purchasing
Agent, as the case may be, the Company will communicate such Sale Information to
the Trustee by facsimile transmission or other acceptable written means.
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The Company will instruct the Trustee by facsimile transmission or other
acceptable written means to authenticate and deliver the Certificated Securities
no later than 2:15 p.m., New York City time, on the Settlement Date. Such
instruction will be given by the Company prior to 3:00 p.m., New York City time,
on the business day prior to the Settlement Date unless the Settlement Date is
the date of acceptance by the Company of the offer to purchase Certificated
Securities in which case such instruction will be given by the Company by 11:00
a.m., New York City time.
Preparation and Delivery of Certificated Securities by
Trustee and Receipt of Payment Therefor:
The Trustee will prepare each Certificated Security and appropriate receipts
that will serve as the documentary control of the transaction.
In the case of a sale of Certificated Securities to a purchaser solicited by
an Agent, the Trustee will, by 2:15 p.m., New York City time, on the Settlement
Date, deliver the Certificated Securities to the Selling Agent for the benefit
of the purchaser or such Certificated Securities against delivery by the Selling
Agent of a receipt therefor. On the Settlement Date the Selling Agent will
deliver payment for such Certificated Securities in immediately available funds
to the Company in an amount equal to the issue price of the Certificated
Securities less the Selling Agent's commission; provided that the Selling Agent
reserves the right to withhold payment for which it has not received funds from
the purchaser. The Company shall not use any proceeds advanced by a Selling
Agent to acquire securities.
In the case of a sale of Certificated Securities to a Purchasing Agent, the
Trustee will, by 2:15 p.m., New York City time, on the Settlement Date, deliver
the Certificated Securities to the Purchasing Agent against delivery of payment
for such Certificated Securities in immediately available funds to the Company
in an amount equal to the issue price of the Certificated Securities less the
Purchasing Agent's discount.
Certified Securities will be delivered to the Agents as follows:
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Credit Suisse First Boston Corporation
Five World Trade Center
New York, New York 10048
Attention: Paul Riley
Telephone: (212) 322-1606
Telecopy: (212) 335-0623
Goldman, Sachs & Co.
85 Broad Street, Sixth Floor
New York, New York 10004
Attention: Corporate Bond Operations
Telephone: (212) 902-8095
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
Money Market Clearance - MTNs
One Liberty Plaza
165 Broadway, 4th Floor
New York, NY 10080
Attention: David Alavarces
J.P. Morgan Securities Inc.
35 Wall Street
17th Floor
New York, New York 10015
Attention: Al Rios/Ron Reda
Failure of Purchaser to Pay Selling Agent:
If a purchaser (other than a Purchasing Agent) fails to make payment to the
Selling Agent for a Certificated Security, the Selling Agent will promptly
notify the Trustee and the Company thereof by telephone (confirmed in writing)
or by facsimile transmission or other acceptable written means. The Selling
Agent will immediately return the Certificated Security to the Trustee.
Immediately upon receipt of such Certificated Security by the Trustee, the
Company will return to the Selling Agent an amount equal to the amount
previously paid to the Company in respect of such Certificated Security. The
Company will reimburse the Selling Agent on an adequate basis for its loss of
the use of funds during the period when they were credited to the account of the
Company.
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The Trustee will cancel the Certificated Security in respect of which the
failure occurred, make appropriate entries in its records and, unless otherwise
instructed by the Company, destroy the Certificated Security.
PART II: ADMINISTRATIVE PROCEDURE FOR BOOK-ENTRY SECURITIES
In connection with the qualification of the Book-Entry Securities for
eligibility in the book-entry system maintained by the Depositary, the Trustee
will perform the custodial, document control and administrative functions
described below, in accordance with its respective obligations under a Letter of
Representation from the Company and the Trustee to the Depositary, dated the
date hereof, and a Medium-Term Note Certificate Agreement between the Trustee
and the Depositary (the "Certificate Agreement"), and its obligations as a
participant in the Depositary, including the Depositary's Same Day Funds
Settlement System ("SDFS").
Posting Rates by the Company:
The Company and the Agents will discuss from time to time the rates of
interest per annum to be borne by the maturity of Book-Entry Securities that may
be sold as a result of the solicitation of offers by an Agent. The Company may
establish a fixed set of interest rates and maturities for an offering period
("posting"). If the Company decides to change already posted rates, it will
promptly advise the Agents to suspend solicitation of offers until the new
posted rates have been established with the Agents.
Acceptance of Offers by the Company:
Each Agent will promptly advise the Company by telephone or other
appropriate means of all reasonable offers to purchase Offered Securities, other
than those rejected by such Agent. Each Agent may, in its discretion reasonably
exercised, reject any offer received by it in whole or in part. Each Agent also
may make offers to the Company to purchase Book-Entry Securities as a Purchasing
Agent. The Company will have the sole right to accept offers to purchase
Book-Entry Securities and may reject any such offer in whole or in part.
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The Company will promptly notify the Selling Agent or Purchasing Agent, as
the case may be, of its acceptance or rejection of an offer to purchase
Book-Entry Securities. If the Company accepts an offer to purchase Book-Entry
Securities, it will confirm such acceptance in writing to the Selling Agent or
Purchasing Agent, as the case may be, and the Trustee.
Communication of Sale Information to the Company by
Selling Agent and Settlement Procedures:
A. After the acceptance of an offer by the Company, the Selling Agent
or Purchasing Agent, as the case may be, will communicate promptly, but in no
event later than the time set forth under "Settlement Procedure Timetable"
below, the following details of the terms of such offer (the "Sale Information")
to the Company by telephone (confirmed in writing) or by facsimile transmission
or other acceptable written means:
(1) Principal amount of Book-Entry Securities to be purchased;
(2) If a Fixed Rate Book-Entry Security, the interest rate and the
initial interest payment date;
(3) Maturity Date;
(4) Specified Currency and, if the Specified Currency is other than
U.S. dollars, the applicable Exchange Rate for such Specified
Currency (it being understood that currently the Depositary
accepts deposits of Global Securities denominated in U.S.
dollars only);
(5) Indexed Currency, the Base Rate and the Exchange Rate
Determination Date, if applicable;
(6) Issue Price;
(7) Selling Agent's commission or Purchasing Agent's discount, as
the case may be;
(8) Net Proceeds to the Company;
(9) Settlement Date;
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(10) If a redeemable Book-Entry Security, such of the following as
are applicable:
(i) Redemption Commencement Date,
(ii) Initial Redemption Price (% of par), and
(iii) Amount (% of par) that the Redemption Price shall decline
(but not below par) on each anniversary of the Redemption
Commencement Date;
(11) If a Floating Rate Book-Entry Security, such of the following
as are applicable:
(i) Interest Rate Basis,
(ii) Index Maturity,
(iii) Spread or Spread Multiplier,
(iv) Maximum Rate,
(v) Minimum Rate,
(vi) Initial Interest Rate,
(vii) Interest Reset Dates,
(viii) Calculation Dates,
(ix) Interest Determination Dates,
(x) Interest Payment Dates, and
(xi) Calculation Agent; and
(12) Name of the Trustee.
B. After receiving the Sale Information from the Selling Agent or
Purchasing Agent, the Company will communicate such Sale Information to the
Trustee by facsimile transmission or other acceptable written means. The Company
will assign a CUSIP number to the Global Security representing such Book-Entry
Security and
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then advise the Trustee and the Selling Agent or Purchasing Agent, as the case
may be, of such CUSIP number.
C. The Trustee will enter a pending deposit message through the
Depositary's Participant Terminal System, providing the following settlement
information to the Depositary, and the Depositary shall forward such information
to such Agent and Standard & Poor's Corporation:
(1) The applicable Sale Information;
(2) CUSIP number of the Global Security representing such Book-Entry
Security;
(3) Whether such Global Security will represent any other Book-Entry
Security (to the extent known at such time);
(4) Number of the Participant account maintained by the Depositary
on behalf of the Selling Agent or Purchasing Agent, as the case
may be;
(5) The interest payment period;
(6) Initial Interest Payment Date for such Book-Entry Security,
number of days by which such date succeeds the record date for
the Depositary's purposes (which, in the case of Floating Rate
Offered Securities which reset weekly shall be the date five
calendar days immediately preceding the applicable Interest
Payment Date and in the case of all other Book-Entry Securities
shall be the Regular Record Date, as defined in the Offered
Security) and, if calculable at that time, the amount of
interest payable on such Interest Payment Date per $1,000
principal amount.
D. The Trustee will complete and authenticate the Global Security previously
delivered by the Company representing such Book-Entry Security.
E. The Depositary will credit such Book-Entry Security to the Trustee's
participant account at the Depositary.
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F. The Trustee will enter an SDFS deliver order through the Depositary's
Participant Terminal System instructing the Depositary to (i) debit such
Book-Entry Security to the Trustee's participant account and credit such
Book-Entry Security to such Agent's participant account and (ii) debit such
Agent's settlement account and credit the Trustee's settlement account for an
amount equal to the price of such Book-Entry Security less such Agent's
commission or discount, as applicable. The entry of such a deliver order shall
constitute a representation and warranty by the Trustee to the Depositary that
(a) the Global Security representing such Book-Entry Security has been issued
and authenticated and (b) the Trustee is holding such Global Security pursuant
to the Certificate Agreement.
G. Such Agent will enter an SDFS deliver order through the Depositary's
Participant Terminal System instructing the Depositary (i) to debit such
Book-Entry Security to such Agent's participant account and credit such
Book-Entry Security to the participant accounts of the Participants with respect
to such Book-Entry Security and (ii) to debit the settlement accounts of such
Participants and credit the settlement account of such Agent for an amount equal
to the price of such Book-Entry Security.
H. Transfers of funds in accordance with SDFS deliver orders described in
Settlement Procedures "F" and "G" will be settled in accordance with SDFS
operating procedures in effect on the settlement date.
I. Upon confirmation of receipt of funds, the Trustee will transfer to an
account of the Company previously specified by the Company to the Trustee funds
available for immediate use in the amount transferred to the Trustee in
accordance with Settlement Procedure "F".
J. Upon request, the Trustee will send to the Company a statement setting
forth the principal amount of Book-Entry Securities outstanding as of that date
under the Indenture.
K. Such Agent will confirm the purchase of such Book-Entry Security to the
purchaser either by transmitting to the Participants with respect to such
Book-Entry Security a confirmation order or orders through the Depositary's
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institutional delivery system or by mailing a written confirmation to such
purchaser.
L. The Depositary will, at any time, upon request of the Company or the
Trustee, promptly furnish to the Company or the Trustee a list of the names and
addresses of the Participants for whom the Depositary has credited Book- Entry
Securities.
Preparation of Pricing Supplement:
If the Company accepts an offer to purchase a Book-Entry Security, it will
prepare a Pricing Supplement reflecting the terms of such Book-Entry Security
and arrange to have delivered to the Selling Agent or Purchasing Agent, as the
case may be, at least ten copies of such Pricing Supplement, not later than 3:00
p.m., New York City time, on the second Business Day following the receipt of
the Sale Information, or if the Company and the purchaser agree to settlement on
the Business Day following the date of acceptance, not later than noon, New York
City time, on such date. The Company will arrange to have ten Pricing
Supplements filed with the Commission not later than the close of business of
the Commission on the fifth Business Day following the date on which such
Pricing Supplement is first used.
Pricing Supplements will be delivered to the Selling Agent or Purchasing
Agent as follows:
Credit Suisse First Boston Corporation
55 East 52nd Street
New York, New York 10055
Attn: Short and Medium Term Finance
Telephone: (212) 322-7198
Telecopy: (212) 318-1498
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attn: Karen Robinson
MTN Desk Assistant
Telephone: (212) 902-8401
Telecopy: (212) 902-0658
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Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attn: Patricia O'Connell,
MTN Desk Assistant
Telephone: (212) 902-1482
Telecopy: (212) 902-0658
Merrill Lynch & Co. - Tritech Services
4 Corporate Place
Corporate Park 287
Piscataway, NJ 08854
Attn: Final Prospectus Unit/Nachman Kimerling
Telephone: (908) 878-6525/26/27
Telecopy: (908) 878-6530
with a copy to:
Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
Merrill Lynch World Headquarters
World Financial Center, North Tower
23rd Floor
New York, NY 10281-1323
Attn: MTN Product Management
Telephone: (212) 449-7582
Telecopy: (212) 449-2234
J.P. Morgan Securities Inc.
60 Wall Street
3rd Floor
New York, New York 10260
Attn: Medium Term Note Desk
Telecopy: (212) 648-5909
Delivery of Confirmation and Prospectus
to Purchaser by Selling Agent:
The Selling Agent will deliver to the purchaser of a Book-Entry Security a
written confirmation of the sale and delivery and payment instructions. In
addition, the Selling Agent will deliver to such purchaser or its agent the
Prospectus as amended or supplemented (including the Pricing Supplement) in
relation to
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such Book-Entry Security prior to or together with the earlier of the delivery
to such purchaser or its agent of (a) the confirmation of sale or (b) the
Book-Entry Security.
Date of Settlement:
The receipt by the Company of immediately available funds in payment for a
Book-Entry Security and the authentication and issuance of the Global Security
representing such Book-Entry Security shall constitute "settlement" with respect
to such Book-Entry Security. All orders accepted by the Company will be settled
on the fifth Business Day pursuant to the timetable for settlement set forth
below unless the Company and the purchaser agree to settlement on another day
which shall be no earlier than the next Business Day.
Settlement Procedure Timetable:
For orders of Book-Entry Securities solicited by an Agent, as agent, and
accepted by the Company for settlement on the first Business Day after the sale
date, Settlement Procedures "A" through "I" set forth above shall be completed
as soon as possible but not later than the respective times (New York City time)
set forth below:
Settlement
Procedure Time
---------- ----
A 5:00 p.m. on the Business Day following the acceptance of an
offer by the Company or 10:00 a.m. on the Business Day
prior to the settlement date, whichever is earlier
B 12:00 noon on the sale date
C 2:00 p.m. on the sale date
D 9:00 a.m. on settlement date
E 10:00 a.m. on settlement date
F-G 2:00 p.m. on settlement date
H 4:45 p.m. on settlement date
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I 5:00 p.m. on settlement date
If a sale is to be settled more than one Business Day after the sale date,
Settlement Procedures "B" and "C" shall be completed as soon as practicable but
not later than 2:00 p.m. on the first Business Day after the sale date. If the
initial interest rate for a Floating Rate Book-Entry Security has not been
determined at the time that Settlement Procedure "A" is completed, Settlement
Procedures "B" and "C" shall be completed as soon as such rate has been
determined but no later than 2:00 p.m. on the second Business Day before the
settlement date. Settlement Procedure "H" is subject to extension in accordance
with any extension of Fedwire closing deadlines and in the other events
specified in the SDFS operating procedures in effect on the settlement date.
If settlement of a Book-Entry Security is rescheduled or cancelled, the
Trustee, upon obtaining knowledge thereof, will deliver to the Depositary,
through the Depositary's Participation Terminal System, a cancellation message
to such effect by no later than 2:00 p.m. on the Business Day immediately
preceding the scheduled settlement date.
Failure to Settle:
If the Trustee fails to enter an SDFS deliver order with respect to a
Book-Entry Security pursuant to Settlement Procedure "F", the Trustee may
deliver to the Depositary, through the Depositary's Participant Terminal System,
as soon as practicable a withdrawal message instructing the Depositary to debit
such Book-Entry Security to the Trustee's participant account, provided that the
Trustee's participant account contains a principal amount of the Global Security
representing such Book-Entry Security that is at least equal to the principal
amount to be debited. If a withdrawal message is processed with respect to all
the Book-Entry Securities represented by a Global Security, the Trustee will
mark such Global Security "cancelled", make appropriate entries in the Trustee's
records and send such cancelled Global Security to the Company. The CUSIP number
assigned to such Global Security shall, in accordance with CUSIP Service Bureau
procedures, be cancelled and not immediately reassigned. If a withdrawal message
is processed with respect to
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one or more, but not all, of the Book-Entry Securities represented by a Global
Security, the Trustee will exchange such Global Security for two Global
Securities, one of which shall represent such Book-Entry Security or Securities
and shall be cancelled immediately after issuance and the other of which shall
represent the remaining Book-Entry Securities previously represented by the
surrendered Global Security and shall bear the CUSIP number of the surrendered
Global Security.
If the purchase price for any Book-Entry Security is not timely paid to the
Participants with respect to such Book-Entry Security by the beneficial
purchaser thereof (or a person, including an indirect participant in the
Depositary, acting on behalf of such purchaser), such participants and, in turn,
the Agent for such Book-Entry Security may enter deliver orders through the
Depositary's Participant Terminal System debiting such Book-Entry Security to
such participant's account and crediting such Book-Entry Security to such
Agent's account and then debiting such Book-Entry Security to such Agent's
participant account and crediting such Book-Entry Security "free" to the
Trustee's participant account and shall notify the Company and the Trustee
thereof. Thereafter, the Trustee will (i) immediately notify the Company of such
order and the Company shall transfer to such Agent funds available for immediate
use in an amount equal to the price of such Book-Entry Security which was
transferred to the Company in accordance with Settlement Procedure I, and (ii)
deliver the withdrawal message and take the related actions described in the
preceding paragraph. If such failure shall have occurred for any reason other
than default by the applicable Agent to perform its obligations hereunder or
under the Distribution Agreement, the Company will reimburse such Agent on an
equitable basis for the loss of its use of funds during the period when the
funds were credited to the account of the Company.
Notwithstanding the foregoing, upon any failure to settle with respect to a
Book-Entry Security, the Depositary may take any actions in accordance with its
SDFS operating procedures then in effect. In the event of a failure to settle
with respect to one or more, but not all, of the Book-Entry Securities to have
been represented by a Global Security, the Trustee will provide, in accordance
with Settlement Procedure "D" for the authentication and issuance of a Global
Security representing the
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other Book-Entry Securities to have been represented by such Global Security and
will make appropriate entries in its records. The Company will, from time to
time, furnish the Trustee with a sufficient quantity of Offered Securities.
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EXHIBIT C
Restrictions on Sale of
Medium-Term Notes
No Offered Securities denominated in a currency other than United States
dollars will be sold or offered for sale in the country issuing such currency.
-48-
---------------
PHH CORPORATION
and
THE FIRST NATIONAL BANK OF CHICAGO
TRUSTEE
---------------
INDENTURE
---------------
DATED AS OF MAY ____, 1997
---------------
SENIOR DEBT SECURITIES
---------------
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TABLE OF CONTENTS
PAGE
PARTIES........................................................................1
RECITALS OF THE COMPANY........................................................1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions:.....................................................1
Act...................................................................2
Affiliate; control....................................................2
Authenticating Agent..................................................2
Beneficial Owner......................................................2
Board of Directors....................................................2
Board Resolution......................................................2
Business Day..........................................................2
Commission............................................................2
Company...............................................................2
Company Request; Company Order........................................3
Corporate Trust Office................................................3
Corporation...........................................................3
Defaulted Interest....................................................3
Depositary............................................................3
Dollar................................................................3
ECU...................................................................3
Event of Default......................................................3
Fixed Rate Security...................................................3
Floating Rate Security................................................3
Foreign Currency......................................................3
Global Security.......................................................3
Holder................................................................4
Indenture.............................................................4
Interest..............................................................4
Interest Payment Date.................................................4
Market Exchange Rate..................................................4
Maturity..............................................................4
Officers' Certificate.................................................4
- ------------
NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
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PAGE
Opinion of Counsel....................................................4
Original Issue Discount Security......................................4
Outstanding...........................................................4
Paying Agent..........................................................5
Person................................................................5
Place of Payment......................................................5
Predecessor Security..................................................5
Property..............................................................6
Redemption Date.......................................................6
Redemption Price......................................................6
Regular Record Date...................................................6
Responsible Officer...................................................6
Securities............................................................6
Security Register and Security Registrar..............................6
Special Record Date...................................................6
Stated Maturity.......................................................6
Subsidiary............................................................6
Trustee...............................................................7
Trust Indenture Act...................................................7
Vice President........................................................7
SECTION 102. Compliance Certificates and Opinions.............................7
SECTION 103. Form of Documents Delivered to Trustee...........................8
SECTION 104. Acts of Holders................................................. 8
SECTION 105. Notices, Etc., to Trustee and Company........................... 9
SECTION 106. Notices to Holders; Waiver......................................10
SECTION 107. Conflict with Trust Indenture Act...............................10
SECTION 108. Effect of Headings and Table of Contents........................10
SECTION 109. Successors and Assigns..........................................10
SECTION 110. Separability Clause.............................................10
SECTION 111. Benefits of Indenture...........................................11
SECTION 112. Governing Law...................................................11
SECTION 113. Legal Holidays..................................................11
SECTION 114. Indenture and Securities Solely Corporate Obligations...........11
SECTION 115. Consent of Holders of Securities in a Foreign Currency or ECU...11
SECTION 116. Payment Currency................................................12
SECTION 117. Officers' Certificate Regarding Withholding Obligations.........12
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PAGE
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.................................................13
SECTION 202. Form of Trustee's Certificate of Authentication.................13
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series............................14
SECTION 302. Denominations 16
SECTION 303. Execution, Authentication, Delivery and Dating..................16
SECTION 304. Temporary Securities............................................17
SECTION 305. Registration, Registration of Transfer and Exchange.............18
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities................19
SECTION 307. Payment of Interest; Interest Rights Preserved.................20
SECTION 308. Persons Deemed Owners...........................................21
SECTION 309. Cancellation ...................................................21
SECTION 310. Computation of Interest.........................................21
SECTION 311. Global Securities...............................................21
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Securities of any Series..........23
SECTION 402. Satisfaction and Discharge of Indenture.........................25
SECTION 403. Application of Trust Money......................................25
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default...............................................26
SECTION 502. Acceleration of Maturity; Rescission and Annulment..............27
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee..........................................28
SECTION 504. Trustee May File Proofs of Claim................................29
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.....30
SECTION 506. Application of Money Collected..................................30
SECTION 507. Limitation on Suits.............................................30
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PAGE
SECTION 508. Unconditional Right of Holders to Receive
Principal, Premium and Interest..................31
SECTION 509. Restoration of Rights and Remedies..............................31
SECTION 510. Rights and Remedies Cumulative..................................31
SECTION 511. Delay or Omission Not Waiver....................................32
SECTION 512. Control by Holders..............................................32
SECTION 513. Waiver of Past Defaults.........................................32
SECTION 514. Undertaking for Costs...........................................33
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.............................33
SECTION 602. Notice of Defaults..............................................34
SECTION 603. Certain Rights of Trustee.......................................35
SECTION 604. Not Responsible for Recitals or Issuance of Securities..........36
SECTION 605. May Hold Securities.............................................36
SECTION 606. Money Held in Trust.............................................36
SECTION 607. Compensation and Reimbursement..................................36
SECTION 608. Disqualification; Conflicting Interests.........................37
SECTION 609. Corporate Trustee Required; Eligibility.........................42
SECTION 610. Resignation and Removal; Appointment of Successor...............42
SECTION 611. Acceptance of Appointment by Successor..........................44
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.....45
SECTION 613. Preferential Collection of Claims Against Company...............45
SECTION 614. Appointment of Authenticating Agent.............................49
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.......51
SECTION 702. Preservation of Information; Communications to Holders..........51
SECTION 703. Reports by Trustee..............................................53
SECTION 704. Reports by Company..............................................53
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PAGE
ARTICLE EIGHT
RESTRICTIVE COVENANTS; SUCCESSOR CORPORATION
SECTION 801. Certain Definitions.............................................54
SECTION 802. Limitation on Liens.............................................55
SECTION 803. Limitation on Sale-Leaseback Transactions.......................56
SECTION 804. (Intentionally Omitted).........................................56
SECTION 805. No Lien Created, etc............................................56
SECTION 806. When Company May Merge, etc.....................................57
SECTION 807. When Securities Must Be Secured.................................57
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders..............57
SECTION 902. Supplemental Indentures With Consent of Holders.................58
SECTION 903. Execution of Supplemental Indentures............................60
SECTION 904. Effect of Supplemental Indentures...............................60
SECTION 905. Conformity With Trust Indenture Act.............................60
SECTION 906. Reference in Securities to Supplemental Indentures..............60
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest.....................61
SECTION 1002. Maintenance of Office or Agency................................61
SECTION 1003. Money for Securities Payments to Be Held in Trust..............61
SECTION 1004. Corporate Existence............................................63
SECTION 1005. Statement as to Compliance.....................................63
SECTION 1006. Waiver of Certain Covenants....................................64
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article.......................................64
SECTION 1102. Election to Redeem; Notice to Trustee..........................64
SECTION 1103. Selection by Trustee of Securities to be Redeemed..............64
SECTION 1104. Notice of Redemption...........................................65
SECTION 1105. Deposit of Redemption Price....................................66
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PAGE
SECTION 1106. Securities Payable on Redemption Date..........................66
SECTION 1107. Securities Redeemed in Part....................................66
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article.......................................67
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities..........67
SECTION 1203. Redemption of Securities for Sinking ..........................67
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INDENTURE, dated as of May ____, 1997, between PHH Corporation, a
corporation duly organized and existing under the laws of the State of Maryland
(herein called the "Company"), and The First National Bank of Chicago, a
national banking association duly incorporated and existing under the laws of
the United States of America, Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured and
unsubordinated debentures, notes or other evidences of senior indebtedness
(herein called the "Securities"), to be issued in one or more series as in this
Indenture provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all holders of the Securities or of any
series thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as are
generally accepted at the date of such computation; and
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(4) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in that
Article.
"Act," when used with respect to any Holder, has the meaning specified
in Section 104.
"Affiliate" of any specified person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect 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" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee to
act on behalf of the Trustee to authenticate and deliver Securities.
"Beneficial Owner" means, with respect to Global Securities, the Person
who is the beneficial owner of such Securities as effected on the books of the
Depositary for such Securities or on the books of a Person maintaining an
account with such Depositary (directly or as an indirect participant, in
accordance with the rules of such Depositary).
"Board of Directors" means either the board of directors of the Company
or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day," when used with respect to any Place of Payment, means
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment, and (i) with respect to
Securities denominated in a Foreign Currency, the capital city of the country of
the Foreign Currency, or (ii) with respect to Securities denominated in ECU,
Brussels, are authorized or obligated by it to close.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Securities Exchange Act of 1934, or, if
at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor corporation shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.
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"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman, its President or a Vice
President, and by its Treasurer, an Assistant Treasurer, its Controller, an
Assistant Controller, its Secretary or an Assistant Secretary, and delivered to
the Trustee.
"Corporate Trust Office" means the principal corporate trust office of
the Trustee at which at any particular time its corporate trust business shall
be administered. At the date of this Indenture, the Corporate Trust Office of
the Trustee is located at One First National Plaza, Suite 0126, Chicago,
Illinois 60670-0126.
"Corporation" includes corporations, associations, companies and
business trusts.
"Defaulted Interest" has the meaning specified in Section 307.
"Depositary" means a clearing agency registered as such under the
Securities Exchange Act of 1934, as amended, or any successor thereto, which
shall in either case be designated by the Company pursuant to Section 301 until
a successor Depositary shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Depositary" shall mean or include
each Person who is then a Depositary hereunder, and if at any time there is more
than one such Person, "Depositary" as used with respect to the Securities of any
series shall mean the Depositary with respect to the Securities of that series.
"Dollar" means the coin or currency of the United States of America as
at the time of payment is legal tender for the payment of public and private
debts.
"ECU" means the European Currency Unit as defined from time to time by
the Council of European Communities.
"Event of Default" has the meaning specified in Section 501.
"Fixed Rate Security" means a Security which provides for the payment
of interest at a fixed rate.
"Floating Rate Security" means a Security which provides for the
payment of interest at a variable rate determined periodically by reference to
an interest rate index or other index specified pursuant to Section 301.
"Foreign Currency" means a currency issued by the government of a
country other than the United States.
"Global Security" means a Security evidencing all or part of a series
of Securities which is executed by the Company and authenticated and delivered
to the Depositary or pursuant to the Depositary's instructions, all in
accordance with this Indenture and pursuant to a Company Order, which shall be
registered in the name of the Depositary or its nominee and which shall
represent the amount of uncertificated securities as specified therein.
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"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
and shall include any Officers' Certificates setting forth the form and terms of
particular series of Securities as contemplated by Sections 201 and 301.
"Interest," when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, means interest
payable after Maturity.
"Interest Payment Date," when used with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.
"Market Exchange Rate" means on a given date, the noon buying rate in
New York City for cable transfers for the stated Foreign Currency as certified
for customs purposes by the Federal Reserve Bank of New York on such date;
provided that, in the case of the ECU, Market Exchange Rate shall mean the rate
of exchange determined by the Council of European Communities (or any successor
thereto) as published for such date in the Official Journal of the European
Communities or any successor publication.
"Maturity," when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Officers' Certificate" means a certificate signed by the Chairman, the
President, a Vice President or the Treasurer, and by an Assistant Treasurer, the
Controller, an Assistant Controller, the Secretary or an Assistant Secretary, of
the Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of or counsel for the Company or the Trustee, and who shall be
acceptable to the Trustee, which opinion is delivered to the Trustee.
"Original Issue Discount Security" means any Security which provides
for an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Outstanding," when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities or portions thereof for whose payment or
redemption money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent (other than the Company) in trust
or set aside and segregated in trust by the
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Company (if the Company shall act as its own Paying Agent) for the
Holders of such Securities; provided that, if such Securities or
portions thereof are to be redeemed, notice of such redemption has been
duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made; and
(iii) Securities which have been paid pursuant to Section 306
or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by a
bona fide purchaser in whose hands such Securities are valid
obligations of the Company;provided, however, that in determining
whether the Holders of the requisite principal amount of Outstanding
Securities have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, Securities owned by the Company or
any other obligor upon the Securities or any Affiliate of the Company
or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities which the Trustee
knows to be so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the pledgee's
right so to act with respect to such Securities and that the pledgee is
not the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor. In determining the
requisite principal amount of any Original Issue Discount Security,
such principal amount that shall be deemed to be Outstanding shall be
equal to the amount of the principal thereof that could be declared to
be due and payable upon an Event of Default pursuant to the terms of
such Original Issue Discount Security at the time of such
determination.
"Paying Agent" means any person authorized by the Company to pay the
principal of (and premium, if any) or interest, if any, on any Security on
behalf of the Company.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Payment," when used with respect to the Securities of any
series, means the place or places where the principal of (and premium, if any)
and interest, if any, on the Securities of that series are payable as specified
as contemplated in Section 301 or, if not so specified, as specified in Section
1002.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in lieu of a mutilated, destroyed,
lost or stolen Security shall be deemed to evidence the same debt as the
mutilated, destroyed, lost or stolen Security.
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"Property" means any kind of property or asset, whether real, personal
or mixed, tangible or intangible.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price," when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that purpose
as contemplated by Section 301.
"Responsible Officer," when used with respect to the Trustee, means the
chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any senior trust officer or trust officer, the controller or
any assistant controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and delivered
under this Indenture.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity," when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
"Subsidiary" means with respect to any Person, any corporation,
association, joint venture, partnership or other business entity of which at
least a majority of the voting stock or other ownership interests owned or
controlled by such Person or one or more subsidiaries of such Person, or by such
Person and one or more subsidiaries of such Person.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor trustee shall have become such
with respect to one or more series of Securities pursuant to the applicable
provisions of this Indenture, and thereafter "Trustee" shall mean or include
each Person who is then a Trustee hereunder, provided, however, that if at any
time there is more than one such person, "Trustee" as used with respect to the
Securities of any series shall mean the Trustee with respect to Securities of
that series.
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"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this instrument was executed, except as provided in
Section 905.
"Vice President," when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate
or opinion has read such condition or covenant and the definitions
herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such condition
or covenant has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more
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other such Persons as to other matters, and any such Person may certify or give
an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders (or Holders of any series) may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such Holders 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 it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments, proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 601) conclusive in favor of
the Trustee and the Company and any agent of the Trustee or the Company, if made
in the manner provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the person executing the same, may also be proved
in any other manner which the Trustee deems sufficient; and the Trustee may in
any instance require further proof with respect to any of the matters referred
to in this Section.
(c) The ownership of Securities shall be proved by the Security
Register.
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(d) If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company may,
at its option, by Board Resolution, fix in advance a record date for the
determination of Holders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other Act, but the Company shall have no
obligation to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be given
before or after such record date, but only the Holders of record at the close of
business on such record date shall be deemed to be Holders for the purposes of
determining whether Holders of the requisite proportion of Outstanding
Securities have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for that
purpose the Outstanding Securities shall be computed as of such record date,
provided that no such authorization, agreement or consent by the Holders on such
record date shall be deemed effective unless it shall become effective pursuant
to the provisions of this Indenture not later than six months after the record
date.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee, the
Security Registrar, any Paying Agent or the Company in reliance thereon, whether
or not notation of such action is made upon such Security.
SECTION 105. Notices, Etc., to Trustee and Company.
Except as otherwise specifically provided herein, any request, demand,
authorization, direction, notice, consent, waiver or Act of Holders or other
document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office,
or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to the attention of its Treasurer at
11333 McCormick Road, Hunt Valley, Maryland 21031 or at any other
address subsequently furnished in writing to the Trustee by the
Company.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Holders is given by mail,
neither the
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failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Any notice mailed in the manner prescribed by this Indenture
shall be conclusively presumed to have been duly given whether or not received
by any particular Holder. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Indenture by any of
the provisions of the Trust Indenture Act, such required provision shall
control.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
In case any provision of this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
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SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto, any Paying Agent, any
Security Registrar, or any Authenticating Agent and their respective successors
hereunder and the Holders, any benefit or any legal or equitable right, remedy
or claim under this Indenture.
SECTION 112. Governing Law.
This Indenture and the Securities shall be governed and construed by
and in accordance with the laws of the State of New York.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date, the
Stated Maturity of any Security or any date upon which any Defaulted Interest is
proposed to be paid shall not be a Business Day at any Place of Payment, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of interest, if any, or principal (and premium, if any) need not be made
at such Place of Payment on such date, but may be made on the next succeeding
Business Day at such Place of Payment with the same force and effect as if made
on the Interest Payment Date, Redemption Date, at the Stated Maturity, or on the
date for payment of Defaulted Interest, provided that no interest shall accrue
for the period from and after such Interest Payment Date, Redemption Date,
Stated Maturity or date for the payment of Defaulted Interest, as the case may
be.
SECTION 114. Indenture and Securities Solely Corporate Obligations.
No recourse for the payment of the principal of (or premium, if any) or
interest on any Security, or for any claim based thereon or otherwise in respect
thereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in this Indenture or in any supplemental indenture, or in any
Security, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, stockholder, officer or director, as
such, past, present or future, of the Company or of any successor corporation,
either directly or through the Company or any successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that all such
liability is hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issue of the
Securities.
SECTION 115. Consent of Holders of Securities in a Foreign Currency or ECU.
Unless otherwise specified in a certificate delivered pursuant to
Section 301 of this Indenture with respect to a particular series of Securities,
whenever for purposes of this Indenture any action may be taken by the Holders
of a specified percentage in aggregate principal amount of Securities of all
series or all series affected by a particular action at the time Outstanding
and, at such time, there are Outstanding Securities of any series which are
denominated in a coin,
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currency or currency unit other than Dollars, then the principal amount of
Securities of such series which shall be deemed to be Outstanding for the
purpose of taking such action shall be that amount of Dollars that could be
obtained for the stated Foreign Currency or ECU principal amount of such
Outstanding Securities at the Market Exchange Rate on the record date for the
purpose of taking such action. If the appropriate Market Exchange Rate is not
available for any reason with respect to the stated currency or currency unit,
the Trustee shall use, in its sole discretion and without liability on its part,
such quotation of the Federal Reserve Bank of New York or, in the case of ECU,
the rate of exchange as published in The Wall Street Journal, as of the most
recent available date, or quotations or, in the case of ECUs, rates of exchange
from one or more major banks in The City of New York or in the country of issue
of the currency in question which for purposes of the ECU shall be Brussels,
Belgium, or such other quotations or, in the case of ECU, rates of exchange as
the Trustee shall deem appropriate. All decisions and determinations of the
Trustee regarding the Market Exchange Rate or any alternative determination
provided for in the preceding paragraph shall be in its sole discretion and
shall, in the absence of manifest error, be conclusive for all purposes and
irrevocably binding upon the Company and all Holders.
SECTION 116. Payment Currency.
If the principal of and/or interest on (or premium, if any, on) any
Securities is payable in a Foreign Currency or ECU and such Foreign Currency or
ECU is not available for payment due to the imposition of exchange controls or
other circumstances beyond the control of the Company, then the Company shall be
entitled to satisfy its obligations to Holders under this Indenture by making
such payment in Dollars on the basis of the Market Exchange Rate for such
Foreign Currency or ECU on the latest date for which such rate was established
on or before the date on which payment is due. Any payment made under this
Section 116 in Dollars where the required payment is in a Foreign Currency or
ECU shall not constitute an Event of Default.
SECTION 117. Officers' Certificate Regarding Withholding Obligations.
At least 15 days prior to the first Interest Payment Date and at least
15 days prior to each date of payment of principal, premium, if any, or interest
thereafter if there has been any change with respect to the matters set forth in
the below-mentioned certificate, the Company will furnish the Trustee and each
Paying Agent with an Officers' Certificate instructing the Trustee and each
Paying Agent whether such payment of principal of and premium, if any, or
interest on the Securities shall be made without deduction or withholding for or
on account of any tax, assessment or other governmental charge imposed upon or
as a result of such payment. If any such deduction or withholding shall be
required, then such certificate shall specify, by country, the amount, if any,
required to be withheld on such payment to Holders of Securities and the Trustee
will cause such amounts to be withheld. The Company agrees to indemnify the
Trustee and each Paying Agent for, and to hold them harmless against, any loss,
liability or expense reasonably incurred without negligence or bad faith on
their part arising out of or in connection with actions taken or omitted by them
in reliance on any certificate furnished pursuant to this Section.
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In furnishing this Officers' Certificate, the Company shall be entitled
to rely on advice of counsel reasonably acceptable to the Trustee and the Paying
Agent and on information furnished in writing to the Company and any agent or
underwriter concerning the residences of the Holders of the Securities, but such
reliance shall not impair the indemnification set forth in the foregoing
paragraph.
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.
The Securities of each series shall be in substantially the form as
shall be established by or pursuant to a Board Resolution or in one or more
indentures supplemental hereto, in each case with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of the Securities. If the form of Securities of
any series is established by action taken pursuant to a Board Resolution, an
appropriate Officers' Certificate setting forth such form together with a copy
of the Board Resolution shall be delivered to the Trustee at or prior to the
delivery of the Company Order contemplated by Section 303 for the authentication
and delivery of such Securities.
The definitive Securities shall be printed, typed, lithographed or
engraved or produced by any combination of these methods or may be produced in
any other manner permitted by the rules of any securities exchange on which the
Securities may be listed, all as determined by the officers executing such
Securities, as evidenced by their execution of such Securities.
SECTION 202. Form of Trustee's Certificate of Authentication.
The Trustee's certificate of authentication shall be in substantially
the form set forth below:
This is one of the Securities of the series designated herein issued
under the within-mentioned Indenture.
The First National Bank of Chicago, as Trustee
By ___________________________________
Authorized Officer
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ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of securities which may be authenticated
and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a procedure established in a Board Resolution, and
set forth in an Officers' Certificate, or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of any series:
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from the Securities of all
other series);
(2) any limit upon the aggregate principal amount of the
Securities of the series which may be authenticated and delivered under
this Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities of the series pursuant to Section 304, 305, 306, 906 or
1107);
(3) the date or dates on which the principal of (and premium,
if any, on) the Securities of the series is payable, or the manner in
which such dates are determined;
(4) the rate or rates at which the Securities of the series
shall bear interest, if any, or the manner in which such rates are
determined, the date or dates from which any such interest shall
accrue, or the manner in which such dates are determined, the Interest
Payment Dates on which any such interest shall be payable, the Regular
Record Dates, if any, for the payment of interest on any Interest
Payment Date and the rate or rates of interest, if any, payable on
overdue installments of interest on or principal of (or premium, if
any, on) the Securities of the series, and whether the interest rate
may be reset upon certain designated events and, in the case of
Floating Rate Securities, the notice, if any, to Holders regarding the
determination of interest and the manner of giving such notice, and the
extent to which, or the manner in which, any interest payable on any
Global Security on an Interest Payment Date will be paid if other than
in the manner provided in Section 307;
(5) if other than the Trustee, the identity of the Security
Registrar and, if other than as specified in Section 1002, the place or
places where the principal of (and premium, if any) and interest, if
any, on Securities of the series shall be payable, provided, however,
that, at the option of the Company, any interest on the Securities of
any series may be paid by check mailed to the address of the person
entitled thereto as such address shall appear in the Security Register;
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(6) if the Securities of such series are redeemable, the
period or periods within which, the price or prices at which and the
terms and conditions upon which Securities of the series may be
redeemed, in whole or in part, at the option of the Company;
(7) the obligation, if any, of the Company to redeem or
purchase Securities of the series pursuant to any sinking fund or
analogous provisions or at the option of a Holder thereof and the
period or periods within which, the price or prices at which and the
terms and conditions upon which Securities of the series shall be
redeemed or purchased, in whole or in part, pursuant to such
obligation;
(8) if other than denominations of $5,000 and any integral
multiple thereof, the denominations in which Securities of the series
shall be issuable;
(9) if other than the principal amount thereof, the portion of
the principal amount of Securities of the series which shall be payable
upon declaration of acceleration of the Maturity thereof pursuant to
Section 502;
(10) additional covenants of the Company, if any, for the
benefit of the Holders of Securities of such series and additional
Events of Default, if any, with respect to Securities of such series;
(11) if the provisions of Section 401(4) relating to
satisfaction and discharge of Securities more than one year prior to
their Stated Maturity or redemption shall apply to Securities of the
series, a statement of such fact;
(12) if other than Dollars, the coin or currency in which the
Securities of that series are denominated (including, but not limited
to any Foreign Currency or ECU);
(13) if the amount of payments of principal (and premium, if
any) or interest, if any, on the Securities of the series may be
determined with reference to an index, the manner in which such amounts
shall be determined;
(14) provisions, if any, for the defeasance of Securities of
the series;
(15) the date as of which any Global Security representing any
Outstanding Debt Securities of the series shall be dated if other than
the date of original issuance of the first Security of the series to be
issued;
(16) whether the Securities of the series shall be issued in
whole or in part in the form of one or more Global Securities and, in
such case, the Depositary for such Global Security or Securities; and
(17) any other terms, conditions, rights and preferences (or
limitations on such rights and preferences) relating to the Securities
of such series.
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All Securities of any one series shall be substantially identical
except as to denomination and the rate or rates of interest, if any, the date or
dates from which interest shall accrue and maturity and except as may otherwise
be provided in or pursuant to such Board Resolution and set forth in such
Officers' Certificate or in any such indenture supplemental hereto.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
SECTION 302. Denominations.
The Securities of each series shall be issuable in registered form
without coupons in such denominations as shall be specified as contemplated by
Section 301. In the absence of any such provisions with respect to the
Securities of any series, the Securities of such series shall be issuable in
denominations of $5,000 and any integral multiple thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by any two of
its Chairman of the Board, its President, any Vice President, its Treasurer or
its Secretary, under its corporate seal reproduced thereon. The signature of any
of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver to the Trustee or an Authenticating
Agent for authentication Securities of any series executed by the Company,
together with a Company Order for the authentication and delivery of such
Securities, and the Trustee or such Authenticating Agent in accordance with the
Company Order shall authenticate and deliver such Securities. If all the
Securities of any series are not to be issued at one time, and if the Board
Resolution, Officers' Certificate or supplemental indenture establishing such
series shall so permit, such Company Order may set forth procedures acceptable
to the Trustee for the issuance of such Securities and the determination of the
terms of particular Securities of such series such as interest rate, maturity
date, date of issuance and date from which interest shall accrue. If the form or
terms of the Securities of the series have been established in or pursuant to
one or more Board Resolutions as permitted by Sections 201 and 301, in
authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating,
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(a) if the form of such Securities has been established by or
pursuant to Board Resolution as permitted by Section 201, that such
form has been established in conformity with the provisions of this
Indenture; and
(b) if the terms of such Securities have been established by
or pursuant to Board Resolution as permitted by Section 301, that such
terms have been established in conformity with the provisions of this
Indenture.
If all the Securities of any series are not to be issued at one time,
it shall not be necessary to deliver an Opinion of Counsel at the time of
issuance of each Security, but such Opinion of Counsel, with appropriate
modifications, may instead be delivered at or prior to the time of issuance of
the first Security of such series.
The Trustee or any Authenticating Agent shall have the right to
authenticate and deliver any of such Securities if it, being advised by counsel,
determines that such action may not lawfully be taken, or if it, its board of
directors, trustees, executive committee, or a trust committee of directors or
trustees and/or vice presidents shall determine in good faith that such action
would expose it to personal liability to existing Holders or if the issue of
such Securities pursuant to this Indenture will affect the Trustee's own rights,
duties or immunities under the Securities and this Indenture or otherwise in a
manner which is not reasonably acceptable to the Trustee.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee or an Authenticating Agent by manual signature, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered hereunder
and is entitled to the benefits of this Indenture.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee or an Authenticating
Agent shall authenticate and deliver, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Securities in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities may
determine, as evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Company will
cause definitive Securities of that series to be prepared without unreasonable
delay. After the preparation of definitive Securities of such series, the
temporary Securities of such series shall be exchangeable for definitive
Securities of such series upon surrender of the temporary Securities of such
series
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at the office or agency established by the Company in a Place of Payment for
that series, without charge to the Holder. Upon surrender for cancellation of
any one or more temporary Securities of any series the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor a like principal
amount of definitive Securities of the same series of authorized denominations.
Until so exchanged the temporary Securities of any series shall in all respects
be entitled to the same benefits under this Indenture as definitive Securities
of such series.
SECTION 305. Registration, Registration of Transfer and
Exchange.
With respect to each series of Securities, the Company shall cause to
be kept at one of the offices or agencies maintained pursuant to Section 1002 a
register (the register maintained in such office and in any other office or
agency established by the Company in a Place of Payment being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities of that series and of transfers of Securities of that
series. Pursuant to Section 301, the Company shall appoint, with respect to
Securities of each series, a "Security Registrar" for the purpose of registering
such Securities and transfers and exchanges of such Securities as herein
provided. In the event the Trustee shall not be Security Registrar, it shall
have the right to examine the Security Register at all reasonable times.
Upon surrender for registration of transfer of any Security of any
series at the designated office or agency in a Place of Payment for that series,
the Company shall execute, and the Trustee or an Authenticating Agent shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities of the same series, of any authorized
denominations and of a like tenor, aggregate principal amount and Stated
Maturity.
At the option of the Holder, Securities of any series (except Global
Securities) may be exchanged for other Securities of the same series, of any
authorized denominations and of a like tenor, aggregate principal amount and
Stated Maturity, upon surrender of the Securities to be exchanged at such office
or agency and upon payment, if the Company shall so require, of the charges
hereinafter provided. Whenever any Securities are so surrendered for exchange,
the Company shall execute, and the Trustee or an Authenticating Agent shall
authenticate and deliver, the Securities which the Holder making the exchange is
entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or
exchange shall (if so required by the Company or the Trustee or the Security
Registrar) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar (and, if
so required by the Trustee, to the Trustee) duly executed, by the Holder thereof
or his attorney duly authorized in writing.
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No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906 or 1107 not involving any transfer.
The Company shall not be required (i) to issue, register the transfer
of or exchange Securities of any series during a period beginning at the opening
of business 15 days before the day of selection for redemption of Securities of
that series selected for redemption under Section 1103 and ending at the close
of business on the day of the mailing of notice of redemption, or (ii) to
register the transfer of or exchange any Security so selected for redemption in
whole or in part, except the unredeemed portion of any Security being redeemed
in part.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If there shall be delivered to the Company and the Trustee (i) a
mutilated Security or evidence to their satisfaction of the destruction, loss or
theft of any Security and (ii) such security or indemnity as may be required by
them to save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security has been
acquired by a bona fide purchaser, the Company shall execute and upon its
request the Trustee or an Authenticating Agent shall authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Security, a new Security of the same series and of like tenor, principal amount
and Stated Maturity and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
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 (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in
lieu of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
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SECTION 307. Payment of Interest; Interest Rights Preserved.
Except as otherwise specified with respect to a series of Securities in
accordance with the provisions of Section 301, interest on any Security which is
payable, and is punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest.
Any interest on any Security of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the
registered Holder on the relevant Regular Record Date by virtue of having been
such Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the persons in whose names the Securities of such series
(or their respective Predecessor Securities) are registered at the
close of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security of such series and the
date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited to
be held in trust for the benefit of the Persons entitled to such
Defaulted Interest as in this Clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less than 10 days
after the receipt by the Trustee of the notice of the proposed payment.
The Trustee shall promptly notify the Company of such Special Record
Date and, in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor to be mailed, first-class postage prepaid,
to each Holder of Securities of such series at his address as it
appears in the Security Register, not less than l0 days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been so mailed,
such Defaulted Interest shall be paid to the persons in whose names the
Securities of such series (or their respective Predecessor Securities)
are registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest on
the Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on which
such Securities may be listed, and upon such notice as may be required
by such exchange, if, after notice given by the Company to the Trustee
of the proposed payment pursuant to this Clause, such manner of payment
shall be deemed practicable by the Trustee.
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Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee, any Paying Agent, any Authenticating Agent and any
other agent of the Company or the Trustee may treat the Person in whose name
such Security is registered as the owner of such Security for the purpose of
receiving payment of principal of (and premium, if any) and (subject to Section
307) interest, if any, on such Security and for all other purposes whatsoever,
whether or not such Security be overdue, and neither the Company, the Trustee,
any Paying Agent, any Authenticating Agent nor any other agent of the Company or
the Trustee shall be affected by notice to the contrary.
SECTION 309. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any person other than the Trustee, be delivered to the Trustee
and shall be promptly cancelled by it. The Company may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Securities so delivered shall be promptly cancelled by the
Trustee. No Securities shall be authenticated in lieu of or in exchange for any
Securities cancelled as provided in this Section, except as expressly permitted
by this Indenture. All cancelled Securities shall be destroyed by the Trustee
and the Trustee shall deliver a certificate of such destruction to the Company,
unless the Company by Company Order shall direct that such cancelled Securities
be returned to it.
SECTION 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a 360-day year of twelve 30-day months.
SECTION 311. Global Securities.
If the Company shall establish pursuant to Section 301 that the
Securities of a series are to be issued in whole or in part in the form of one
or more Global Securities, then the Company shall execute and the Trustee shall,
in accordance with Section 303 and the Company Order with respect to such
series, authenticate and deliver one or more Global Securities in temporary or
permanent form that (i) shall represent and shall be denominated in an amount
equal to the aggregate principal amount of the outstanding Securities of such
series to be represented by one or more Global Securities, (ii) shall be
registered in the name of the Depositary for such Global Security or Securities
or the nominee of such depositary, (iii) shall be delivered by the Trustee to
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such depositary or pursuant to such depositary's instruction, and (iv) shall
bear a legend substantially to the following effect: "Unless and until it is
exchanged in whole or in part for Securities in definitive form, this Security
may not be transferred except as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor depositary or a nominee of such successor Depositary". The Trustee
shall deal with the Depositary and its participants as representatives of the
Beneficial Owners of the Global Securities for purposes of exercising the rights
of the Holders hereunder and the rights of the Beneficial Owners of the Global
Securities shall be limited to those established by law and agreements between
such Beneficial Owners and the Depositary and its participants. Beneficial
Owners shall not be entitled to certificates for Global Securities as to which
they are the Beneficial Owners. Requests and directions from, and votes of, such
representatives shall not be deemed to be inconsistent if they are made with
respect to different Beneficial Owners.
Notwithstanding any other provision of this Section or Section 305,
unless and until it is exchanged in whole or in part for Securities in
definitive form, a Global Security representing all or a portion of the
Securities of a series may not be transferred except as a whole by the
Depositary for such series to a nominee of such depositary or by a nominee of
such depositary to such depositary or another nominee of such depositary or by
such depositary or any such nominee to a successor Depositary for such series or
a nominee of such successor depositary. The Beneficial Owner's ownership of
Securities shall be recorded on the records of a participant of the Depositary
that maintains such Beneficial Owner's account for such purpose and the
participant's record ownership of such Securities shall be recorded on the
records of the Depositary.
If at any time the Depositary for the Securities of a series notifies
the Company that it is unwilling or unable to continue as Depositary for the
Securities of such series or if at any time the Depositary for Securities of a
series shall no longer be registered or in good standing under the Securities
Exchange Act of 1934, as amended, or other applicable statute or regulation, the
Company shall appoint a successor Depositary with respect to the Securities of
such series. If a successor Depositary for the Securities of such series is not
appointed by the Company within 90 days after the Company receives such notice
or becomes aware of such condition, the Company will execute, and the Trustee,
upon receipt of a Company Order for the authentication and delivery of
definitive Securities of such series, will authenticate and deliver, Securities
of such series in definitive form in an aggregate principal amount equal to the
principal amount of the Global Security or Securities representing such series
in exchange for such Global Security or Securities.
The Company may at any time and in its sole discretion determine that
the Securities of any series issued in the form of one or more Global Securities
shall no longer be represented by such Global Security or Securities. In such
event, the Company will execute, and the Trustee, upon receipt of a Company
Order for the authentication and delivery of definitive Securities of such
series, will authenticate and deliver, Securities of such series in definitive
form and in an
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aggregate principal amount equal to the principal amount of the Global Security
or Securities representing such series in exchange for such Global Security or
Securities.
If specified by the Company pursuant to Section 301 with respect to
Securities of a series, the Depositary for such series of Securities may
surrender a Global Security for such series of Securities in exchange in whole
or in part for Securities of such series in definitive form on such terms as are
acceptable to the Company and such Depositary. Thereupon, the Company shall
execute and the Trustee shall authenticate and deliver, without charge,
(i) to each Person specified by the Depositary a new Security
or Securities of the same series, of any authorized denomination as
requested by such Person in aggregate principal amount equal to and in
exchange for such Person's beneficial interest in the Global Security;
and
(ii) to the Depositary a new Global Security in a denomination
equal to the difference, if any, between the principal amount of the
surrendered Global Security and the aggregate principal amount of
Securities delivered to Holders thereof.
Upon the exchange of a Global Security for Securities in definitive
form, such Global Security shall be cancelled by the Trustee. Securities issued
in exchange for a Global Security pursuant to this Section 311 shall be
registered in such names and in such authorized denominations as the Depositary
for such Global Security, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall deliver
such Securities to the persons in whose names such Securities are so registered.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Securities of any
Series.
The Company shall be deemed to have satisfied and discharged the entire
indebtedness on all the Securities of any particular series and the Trustee,
upon Company request and at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of such indebtedness, when
(1) either
(A) all Securities of such series theretofore
authenticated and delivered (other than (i) Securities which
have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 306 and (ii)
Securities for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged
from
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such trust, as provided in the last paragraph of Section 1003)
have been delivered to the Trustee for cancellation; or
(B) with respect to all Outstanding Securities of
such series described in (A) above not theretofore delivered
to the Trustee for cancellation,
(i) The Company has deposited or caused to
be deposited with the Trustee as trust funds in trust an
amount sufficient to pay and discharge the entire indebtedness
on all such Outstanding Securities of such series for
principal (and premium, if any) and interest to the Stated
Maturity or any Redemption Date as contemplated by Section
403, as the case may be; or
(ii) The Company has deposited or caused to
be deposited with the Trustee as obligations in trust such
amount of direct obligations of, or obligations the principal
of and interest on which are fully guaranteed by, the United
States of America (other than obligations subject to
prepayment, redemption or call prior to their stated maturity)
as will, together with the predetermined and certain income to
accrue thereon (without consideration of any reinvestment
thereof), be sufficient to pay and discharge when due the
entire indebtedness on all such Outstanding Securities of such
series for principal (and premium, if any) and interest to the
Stated Maturity or any Redemption Date as contemplated by
Section 403, as the case may be;
(2) the Company has paid or caused to be paid all other sums
payable with respect to the Securities of such series;
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of the entire indebtedness on all Securities of such series
have been complied with; and
(4) if (i) the entire indebtedness on the Outstanding
Securities of such series is to be satisfied and discharged pursuant to
Section 401(l)(B) above, (ii) such Securities will not become due and
payable at their Stated Maturity within one year after the date of
deposit provided in Section 40l(1)(B) above, and (iii) such Securities
of such series are not to be called for redemption within one year of
the date of such deposit under arrangements satisfactory to the Trustee
as of the date of such deposit, then (x) the Company shall have
specified the applicability (as provided in Section 301) of this
Section 401(4) to the Securities of such series, (y) the Company shall
have given, not later than the date of such deposit, notice of such
deposit to the Holders of Securities of such series and (z) the Trustee
shall have received an Opinion of Counsel (which Counsel shall be
recognized tax counsel) stating that, in such counsel's opinion, the
deposit of funds or obligations and the satisfaction and discharge of
indebtedness on the Securities of such series pursuant to this Section
401 will not result in recognition by the Holders of income, gain or
loss for federal income tax purposes (other than income, gain or loss
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which would have been recognized in like amount and at a like time
absent such deposit, satisfaction and discharge).
Upon the satisfaction of the conditions set forth in this Section 401
with respect to all the Securities of any series, the terms and conditions of
such series, including the terms and conditions with respect thereto set forth
in this Indenture, shall no longer be binding upon, or applicable to, the
Company, and the Holders of the Securities of such series shall look for payment
only to the funds or obligations deposited with the Trustee pursuant to Section
401(l)(B); provided, however, that, in no event shall the Company be discharged
(a) from any payment obligations in respect of Securities of such series which
are deemed not to be Outstanding under clause (iii) of the definition thereof if
such obligations continue to be valid obligations of the Company under
applicable law, (b) from any obligations under Section 607 or the last paragraph
of Section 1003, and (c) from any obligations under Section 305 and 306 (except
that Securities of such series issued upon registration of transfer or exchange
or in lieu of mutilated, lost, destroyed or stolen Securities shall not be
obligations of the Company), and Section 701.
SECTION 402. Satisfaction and Discharge of Indenture.
Upon compliance by the Company with the provisions of Section 401 as to
the satisfaction and discharge of each series of Securities issued hereunder,
this Indenture shall cease to be of any further effect (except as otherwise
provided herein). Upon Company Request (and at the expense of the Company), the
Trustee shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture. In the event there are two or more Trustees
hereunder, then the effectiveness of any such instrument shall be conditioned
upon receipt of such instruments from all Trustees hereunder.
Notwithstanding the satisfaction and discharge of this Indenture, any
obligations of the Company under Sections 305, 306, 607 and 701 and the last
paragraph of Section 1003, and of the Trustee under Sections 403 and 614 and the
last two paragraphs of Section 1003, shall survive.
SECTION 403. Application of Trust Money.
Subject to the provisions of the last two paragraphs of Section 1003,
all money and obligations deposited with the Trustee pursuant to Section 401
shall be held irrevocably in trust and shall be made under the terms of an
escrow trust agreement in form and substance satisfactory to the Trustee. Such
money and obligations shall be applied by the Trustee, in accordance with the
provisions of the Securities, this Indenture and such escrow trust agreement, to
the payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal of (and premium, if any) and interest, if
any, on the Securities for the payment of which such money and obligations have
been deposited with the Trustee (but such money need not be segregated from
other funds except to the extent required by law). If Securities of any series
are to be redeemed prior to their Stated Maturity, whether pursuant to any
optional redemption
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provisions or in accordance with any mandatory sinking fund requirement, the
Company shall make such arrangements as are satisfactory to the Trustee for the
giving of notice of redemption by the Trustee in the name, and at the expense,
of the Company.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default," wherever used herein with respect to Securities of
any series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Security
of that series when it becomes due and payable, and continuance of such
default for a period of 30 days; or
(2) default in the payment of the principal of (or premium, if
any, on) any Security of that series at its Maturity; or
(3) default in the deposit of any sinking fund payment, when
and as due by the terms of a Security of that series; or
(4) default in the performance, or breach, of any covenant or
agreement of the Company in this Indenture (other than a covenant or
agreement a default in whose performance or whose breach is elsewhere
in this Section specifically dealt with or which has expressly been
included in this Indenture solely for the benefit of series of
Securities other than that series), and continuance of such default or
breach for a period of 90 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in principal
amount of the Outstanding Securities of that series a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
(5) the Company pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
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(C) consents to the appointment of a Custodian of it
or for all or substantially all of its property, or
(D) makes a general assignment for the benefit of its
creditors; or
(6) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company in an
involuntary case;
(B) appoints a Custodian of the Company or for all or
substantially all of its property, or
(C) orders the liquidation of the Company,
and the order or decree remains unstayed and in effect for 60 days.
The term "Bankruptcy Law" means Title 11 of the U.S. Code or any
similar Federal or State law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
(7) any other Event of Default provided with respect to the
Securities of that series pursuant to Section 301 or in a supplemental
indenture.
SECTION 502. Acceleration of Maturity; Rescission and
Annulment
If an Event of Default with respect to Securities of any series at the
time Outstanding occurs and is continuing, then in every such case the Trustee
or the Holders of not less than 25% in principal amount of the outstanding
Securities of that series may declare the principal amount (or, if the
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount as may be specified in the terms of that series) of all
of the Securities of that series to be due and payable immediately, by a notice
in writing to the Company (and to the Trustee if given by Holders), and upon any
such declaration such principal amount (or specified portion) shall become
immediately due and payable.
Upon payment of such amount, all obligations of the Company in respect
of the payment of principal of the Securities of such series shall terminate.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if
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(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest, if any, on all Securities
of that series,
(B) the principal of (and premium, if any, on) any
Securities of that series which have become due otherwise than
by such declaration of acceleration and interest thereon at
the rate or rates prescribed therefor in such Securities,
(C) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate or rates,
if any, prescribed therefor in such Securities, and
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel; and
(2) all Events of Default with respect to Securities of that
series, other than the non-payment of the principal of Securities of
that series which have become due solely by such declaration of
acceleration, have been cured, or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for
Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any
Security of any series when such interest becomes due and payable and
such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Security of any series at the Maturity
thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of Securities of such series, the whole amount then due and payable on
Securities of such series for principal (and premium, if any) and interest and,
to the extent that payment of such interest shall be legally enforceable,
interest on any overdue principal (and premium, if any) and on any overdue
interest, at the rate or rates, if any, prescribed therefor in such Securities;
and, in addition thereto, such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
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If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Securities, wherever
situated.
If an Event of Default with respect to Securities of any series occurs
and is continuing, the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of Securities of such series by
such appropriate judicial proceedings as the Trustee shall deem most effectual
to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration of
acceleration or otherwise and irrespective of whether the Trustee shall have
made any demand on the Company for the payment of overdue principal or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(i) to file and prove a claim for the whole amount of
principal (or with respect to Original Issue Discount Securities, such
portion of the principal amount as may be specified in the terms of
such Securities), and premium, if any and interest owing and unpaid in
respect of the Securities and to file such other papers or documents as
may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and
of the Holders allowed in such judicial proceeding, and
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial proceeding
is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making
of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607. Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization,
arrangement, adjustment or composition affecting the Securities or the
rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
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SECTION 505. Trustee May Enforce Claims Without Possession
of Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (or premium,
if any) or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the payment of all amounts due the Trustee under Section 607;
SECOND: To the payment of the amounts then due and unpaid for principal
of (and premium, if any) and interest, if any, on the Securities in respect of
which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due and
payable on such Securities for principal (and premium, if any) and interest, if
any, respectively; and
THIRD: The balance, if any, to the Person or Persons entitled
thereto.
SECTION 507. Limitation on Suits.
No Holder of any Security of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Indenture,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless
(1) An Event of Default shall have occurred and be continuing
with respect to the Securities of that series and such Holder shall
have previously given written notice thereof to the Trustee;
(2) the Holders of not less than 25% in principal amount of
the Outstanding Securities of that series shall have made written
request to the Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
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(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Securities of that
series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other Holder
or to obtain or to seek to obtain priority or preference over any other Holder
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all Holders of Securities of
such series.
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Section 307) interest, if any, on such Security on the Stated Maturity or
Maturities expressed in such Security (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 306, no right or remedy herein conferred upon or reserved to the Trustee
or to the Holders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
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No delay or omission of the Trustee or of any Holder of any Security to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
SECTION 512. Control by Holders.
The Holders of a majority in principal amount of the Outstanding
Securities of any series 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, with respect to the
Securities of such series, provided that
(1) such direction shall not be in conflict with any rule of
law or with this Indenture,
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction,
(3) such direction is not unduly prejudicial to the rights of
other Holders, and
(4) such direction would not involve the Trustee in personal
liability.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to such
series and its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest, if any (subject to the provisions of Section 502), on any
Security of such series, or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of the Securities of such series under this Indenture; but no such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon.
SECTION 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for
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any action taken, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees at trial and on appeal, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to any
suit instituted by the Company, to any suit instituted by the Trustee, to any
suit instituted by any Holder, or group of Holders, holding in the aggregate
more than 10% in principal amount of the Outstanding Securities of any series,
or to any suit instituted by any Holder for the enforcement of the payment of
the principal of (or premium, if any) or interest on any Security on or after
the Stated Maturity or Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date).
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such certificate or opinion
which by any provision hereof is specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not it conforms to the requirements of this
Indenture.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(c) No provision of this Indenture 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, except that
(1) this Subsection shall not be construed to limit the effect
of Subsection (a) of this Section;
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(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be 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 a majority in principal
amount of the Outstanding Securities of any series, as provided in
Section 512, 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 Indenture with
respect to the Securities of such series; and
(4) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to
it.
(d) Whether or not herein expressly so provided, every provision of
this Indenture relating to the conduct of or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
SECTION 602. Notice of Defaults.
Within 90 days after the occurrence of any default hereunder with
respect to the Securities of any series, the Trustee shall transmit by mail to
all Holders of Securities of such series, as their names and addresses appear in
the Security Register, notice of such default hereunder known to the Trustee,
unless such default shall have been cured or waived; provided, however, that
except in the case of a default in the payment of the principal of (or premium,
if any) or interest, if any, on any Security of such series, in the payment of
any sinking fund installment with respect to Securities of such series or in the
payment of the Redemption Price of any Securities as to which notice of
redemption has been given, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee or a
trust committee of directors or Responsible Officers of the Trustee in good
faith determines that the withholding of such notice is in the interest of the
Holders of Securities of such series; and provided, further, that in the case of
any default of the character specified in Section 501(4) with respect to
Securities of such series, no such notice to Holders shall be given until at
least 30 days after the occurrence thereof. For the purpose of this Section, the
term "default" means any event which is, or after notice or lapse of time or
both would become, an Event of Default with respect to Securities of such
series.
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SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness 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) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(d) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders pursuant to this Indenture, unless
such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(f) 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, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters
as it may see fit;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney,
including any Authenticating Agent, appointed with due care by it
hereunder; and
(h) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Indenture.
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SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except
certificates of authentication, shall be taken as the statements of the Company,
and neither the Trustee nor any Authenticating Agent assumes any responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Securities. Neither the Trustee nor
any Authenticating Agent shall be accountable for the use or application by the
Company of Securities or the proceeds thereof.
SECTION 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, the Security
Registrar or any other agent of the Company or the Trustee, in their individual
or any other capacity, may become the owner or pledgee of Securities and,
subject to Sections 608 and 613, may otherwise deal with the Company with the
same rights it would have if it were not Trustee, Authenticating Agent, Paying
Agent, Security Registrar or such other agent.
SECTION 606. Money Held in Trust.
Money held by the Trustee or any Paying Agent in trust hereunder need
not be segregated from other funds except to the extent required by law. Neither
the Trustee nor any paying Agent shall be subject to any liability for interest
on any money received by it hereunder except as otherwise agreed with the
Company.
SECTION 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee and its agents for, and to hold
them harmless against, any loss, liability or expense incurred without
negligence or bad faith on their part, arising out of or in connection
with the acceptance or administration of the trust or trusts hereunder,
including the costs and expenses of defending themselves against any
claim or liability in connection with the exercise or performance of
any of their powers or duties hereunder.
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As security for the performance of the obligations of the Company under
this Section, the Trustee shall have a lien prior to the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the payment of principal (or premium, if any) or interest, if any,
on Securities.
The provisions of this Section 607 shall survive the resignation of the
Trustee or the discharge of this Indenture. When the Trustee incurs expenses
after the occurrence of a default specified in Section 501(5) or (6) the
expenses are intended to constitute expenses of administration under any
Bankruptcy law.
SECTION 608. Disqualification; Conflicting Interests.
(a) If the Trustee has or shall acquire any conflicting interest, as
defined in this Section, with respect to the Securities of any series, it shall,
within 90 days after ascertaining that it has such conflicting interest, either
eliminate such conflicting interest or resign with respect to the Securities of
that series in the manner and with the effect hereinafter specified in this
Article.
(b) In the event that the Trustee shall fail to comply with the
provisions of Subsection (a) of this Section with respect to the Securities of
any series, the Trustee shall, within l0 days after the expiration of such
90-day period, transmit by mail to all Holders of Securities of that series, as
their names and addresses appear in the Security Register, notice of such
failure.
(c) For the purposes of this Section, the Trustee shall be deemed to
have a conflicting interest with respect to the Securities of any series if
(1) the Trustee is trustee under this Indenture with respect
to the Outstanding Securities of any series other than that series or
is trustee under another indenture under which any other securities, or
certificates of interest or participation in any other securities, of
the Company are outstanding, unless such other indenture is a
collateral trust indenture under which the only collateral consists of
Securities issued under this Indenture, provided that there shall be
excluded from the operation of this paragraph this Indenture with
respect to the Securities of any series other than that series or any
indenture or indentures under which other securities, or certificates
of interest or participation in other securities, of the Company are
outstanding, if
(i) this Indenture and such other indenture or
indentures are wholly unsecured and such other indenture or
indentures are hereafter qualified under the Trust Indenture
Act, unless the Commission shall have found and declared by
order pursuant to Section 305(b) or Section 307(c) of the
Trust Indenture Act that differences exist between the
provisions of this Indenture with respect to Securities of
that series and one or more other series or the provisions of
such other indenture or indentures which are so likely to
involve a material conflict of interest as to make it
necessary in the public interest or for the protection of
investors to disqualify the Trustee from acting as such under
this Indenture with
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respect to the Securities of that series and such other series
or under such other indenture or indentures, or
(ii) the Company shall have sustained the burden of
proving, on application to the Commission and after
opportunity for hearing thereon, that trusteeship under this
Indenture with respect to the Securities of that series and
such other series or such other indenture or indentures is not
so likely to involve a material conflict of interest as to
make it necessary in the public interest or for the protection
of investors to disqualify the Trustee from acting as such
under this Indenture with respect to the Securities of that
series and such other series or under such other indenture or
indentures;
(2) the Trustee or any of its directors or executive officers
is an obligor upon any Securities of such series or an underwriter for
the Company;
(3) the Trustee directly or indirectly controls or is directly
or indirectly controlled by or is under direct or indirect common
control with the Company or an underwriter for the Company;
(4) the Trustee or any of its directors or executive officers
is a director, officer, partner, employee, appointee or representative
of the Company, or of an underwriter (other than the Trustee itself)
for the Company who is currently engaged in the business of
underwriting, except that (i) one individual may be a director or an
executive officer, or both, of the Trustee and a director or an
executive officer, or both, of the Company but may not be at the same
time an executive officer of both the Trustee and the Company; (ii) if
and so long as the number of directors of the Trustee in office is more
than nine, one additional individual may be a director or an executive
officer, or both, of the Trustee and a director of the Company; and
(iii) the Trustee may be designated by the Company or by any
underwriter for the Company to act in the capacity of transfer agent,
registrar, custodian, paying agent, fiscal agent, escrow agent or
depositary, or in any other similar capacity, or, subject to the
provisions of paragraph (1) of this Subsection, to act as trustee,
whether under an indenture or otherwise;
(5) 10% or more of the voting securities of the Trustee is
beneficially owned either by the Company or by any director, partner or
executive officer thereof, or 20% or more of such voting securities is
beneficially owned, collectively, by any two or more of such persons;
or 10% or more of the voting securities of the Trustee is beneficially
owned either by an underwriter for the Company or by any director,
partner or executive officer thereof, or is beneficially owned,
collectively, by any two or more such persons;
(6) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as
hereinafter in this Subsection defined), (i) 5% or more of the voting
securities, or 10% or more of any other class of security, of the
Company not including the Securities issued under this Indenture and
securities issued under any
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other indenture under which the Trustee is also trustee, or (ii) 10% or
more of any class of security of an underwriter for the Company;
(7) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as
hereinafter in this Subsection defined), 5% or more of the voting
securities of any person who, to the knowledge of the Trustee, owns 10%
or more of the voting securities of, or controls directly or indirectly
or is under direct or indirect common control with, the Company;
(8) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as
hereinafter in this Subsection defined), 10% or more of any class of
security of any person who, to the knowledge of the Trustee, owns 50%
or more of the voting securities of the Company; or
(9) the Trustee owns, on March 1 in any calendar year, in the
capacity of executor, administrator, testamentary or inter vivos
trustee, guardian, committee or conservator, or in any other similar
capacity, an aggregate of 25% or more of the voting securities, or of
any class of security, of any person, the beneficial ownership of a
specified percentage of which would have constituted a conflicting
interest under paragraph (6), (7) or (8) of this Subsection. As to any
such securities of which the Trustee acquired ownership through
becoming executor, administrator or testamentary trustee of an estate
which included them, the provisions of the preceding sentence shall not
apply, for a period of two years from the date of such acquisition, to
the extent that such securities included in such estate do not exceed
25% of such voting securities or 25% of any such class of security.
Promptly after March 1 in each calendar year, the Trustee shall make a
check of its holdings of such securities in any of the above-mentioned
capacities as of such March 1. If the Company fails to make payment in
full of the principal of (or premium, if any) or interest, if any, on
any of the Securities when and as the same becomes due and payable, and
such failure continues for 30 days thereafter, the Trustee shall make a
prompt check of its holdings of such securities in any of the
above-mentioned capacities as of the date of the expiration of such
30-day period, and after such date, notwithstanding the foregoing
provisions of this paragraph, all such securities so held by the
Trustee, with sole or joint control over such securities vested in it,
shall, but only so long as such failure shall continue, be considered
as though beneficially owned by the Trustee for the purposes of
paragraphs (6), (7) and (8) of this Subsection with respect to
Securities of such series.
In determining whether the Trustee has a conflicting interest with
respect to any series of Securities under this Subsection, each other series of
Securities will be treated as having been issued under an indenture other than
this Indenture.
The specification of percentages in paragraphs (5) through (9),
inclusive, of this Subsection shall not be construed as indicating that the
ownership of such percentages of the securities of a person is or is not
necessary or sufficient to constitute direct or indirect control for the
purposes of paragraph (3) or (7) of this Subsection.
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For the purposes of paragraphs (6), (7), (8) and (9) of this Subsection
only, (i) the terms "security" and "securities" shall include only such
securities as are generally known as corporate securities, but shall not include
any note or other evidence of indebtedness issued to evidence an obligation to
repay moneys lent to a person by one or more banks, trust companies or banking
firms, or any certificate of interest or participation in any such note or
evidence of indebtedness; (ii) an obligation shall be deemed to be "in default"
when a default in payment of principal shall have continued for 30 days or more
and shall not have been cured; and (iii) the Trustee shall not be deemed to be
the owner or holder of (A) any security which it holds as collateral security,
as trustee or otherwise, for an obligation which is not in default as defined in
clause (ii) above, or (B) any security which it holds as collateral security
under this Indenture, irrespective of any default hereunder, or (C) any security
which it holds as agent for collection, or as custodian, escrow agent or
depositary, or in any similar representative capacity.
(d) For the purposes of this Section:
(1) The term "underwriter," when used with reference to the
Company, means every person who, within three years prior to the time
as of which the determination is made, has purchased from the Company
with a view to, or has offered or sold for the Company in connection
with, the distribution of any security of the Company outstanding at
such time, or has participated or has had a direct or indirect
participation in any such undertaking, or has participated or has had a
participation in the direct or indirect underwriting of any such
undertaking, but such term shall not include a person whose interest
was limited to a commission from an underwriter or dealer not in excess
of the usual and customary distributors' or sellers' commission.
(2) The term "director" means any director of a corporation or
any individual performing similar functions with respect to any
organization, whether incorporated or unincorporated.
(3) The term "person" means an individual, a corporation, a
partnership, an association, a joint-stock company, a trust, an
unincorporated organization or a government or political subdivision
thereof. As used in this paragraph, the term "trust" shall include only
a trust where the interest or interests of the beneficiary or
beneficiaries are evidenced by a security.
(4) The term "voting security" means any security presently
entitling the owner or holder thereof to vote in the direction or
management of the affairs of a person, or any security issued under or
pursuant to any trust, agreement or arrangement whereby a trustee or
trustees or agent or agents for the owner or holder of such security
are presently entitled to vote in the direction or management of the
affairs of a person.
(5) The term "Company" means any obligor upon the Securities.
(6) The term "executive officer" means the president, every
vice president, every trust officer, the cashier, the secretary and the
treasurer of a corporation, and any
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individual customarily performing similar functions with respect to any
organization whether incorporated or unincorporated, but shall not
include the chairman of the board of directors.
(e) The percentages of voting securities and other securities specified
in this Section shall be calculated in accordance with the following provisions:
(1) A specified percentage of the voting securities of the
Trustee, the Company or any other person referred to in this Section
(each of whom is referred to as a "person" in this paragraph) means
such amount of the outstanding voting securities of such person as
entitles the holder or holders thereof to cast such specified
percentage of the aggregate votes which the holders of all the
outstanding voting securities of such person are entitled to cast in
the direction or management of the affairs of such person.
(2) A specified percentage of a class of securities of a
person means such percentage of the aggregate amount of securities of
the class outstanding.
(3) The term "amount," when used in regard to securities,
means the principal amount if relating to evidences of indebtedness,
the number of shares if relating to capital shares and the number of
units if relating to any other kind of security.
(4) The term "outstanding" means issued and not held by or for
the account of the issuer. The following securities shall not be deemed
outstanding within the meaning of this definition.
(i) securities of an issuer held in a sinking fund
relating to securities of the issuer of the same class;
(ii) securities of an issuer held in a sinking fund
relating to another class of securities of the issuer, if the
obligation evidenced by such other class of securities is not
in default as to principal or interest or otherwise;
(iii) securities pledged by the issuer thereof as
security for an obligation of the issuer not in default as to
principal or interest or otherwise; and
(iv) securities held in escrow if placed in escrow by
the issuer thereof; provided, however, that any voting
securities of an issuer shall be deemed outstanding if any
person other than the issuer is entitled to exercise the
voting rights thereof.
(5) A security shall be deemed to be of the same class as
another security if both securities confer upon the holder or holders
thereof substantially the same rights and privileges; provided,
however, that, in the case of secured evidences of indebtedness, all of
which are issued under a single indenture, differences in the interest
rates or maturity dates of various series thereof shall not be deemed
sufficient to constitute such series different classes; and provided,
further, that, in the case of unsecured evidences of
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indebtedness, differences in the interest rates or maturity dates
thereof shall not be deemed sufficient to constitute them securities of
different classes, whether or not they are issued under a single
indenture
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States,
any State thereof or the District of Columbia, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000 subject to supervision or examination by Federal, State or
District of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee or Trustees pursuant to this Article shall become effective
until the acceptance of appointment by the successor Trustee or Trustees in
accordance with the applicable requirements of Section 611.
(b) The Trustee may resign at any time with respect to the Securities
of one or more series by giving written notice thereof to the Company. If the
instrument of acceptance by a successor Trustee required by Section 611 shall
not have been delivered to the Trustee within 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 with respect to the
Securities of such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Securities of such series, delivered to the Trustee and to
the Company.
(d) If at any time the Trustee shall fail to comply with Section 608(a)
after written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Security for at least six months, the Company by a Board
Resolution may remove the Trustee with respect to the Securities of such series
or, subject to Section 514, any Holder who has been a bona fide Holder of a
Security of such series for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee with respect to the Securities of such series and the
appointment of a successor Trustee.
(e) If at any time:
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(1) the Trustee shall cease to be eligible under Section 609
and shall fail to resign after written request therefor by the Company
or by any Holder who has been a bona fide Holder of a Security for at
least six months, or
(2) the Trustee shall become incapable of acting 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, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to all Securities, or (ii) subject to Section 514, any
holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.
(f) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, with
respect to the Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with respect
to the Securities of that or those series (it being understood that any such
successor Trustee may be appointed with respect to the Securities of one or more
or all of such series and that at any time there shall be only one Trustee with
respect to the Securities of any particular series) and shall comply with the
applicable requirements of Section 611. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Securities of any series shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance
of such appointment in accordance with the applicable requirements of Section
611, become the successor Trustee with respect to the Securities of such series
and to that extent supersede the successor Trustee appointed by the Company with
respect to such series. If no successor Trustee with respect to the Securities
of any series shall have been so appointed by the Company or the Holders of the
Securities of such series and accepted appointment in the manner required by
Section 611, any Holder who has been a bona fide holder of a Security of such
series for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
(g) The Company shall give notice of each resignation and each removal
of the Trustee with respect to the securities of any series and each appointment
of a successor Trustee with respect to the Securities of any series by mailing
written notice of such event by first-class mail, postage prepaid, to all
Holders of Securities of such series as their names and addresses appear in the
Security Register. Each notice shall include the name of the successor Trustee
with respect to the Securities of such series and the address of its Corporate
Trust Office.
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SECTION 611. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all series of Securities, every such successor Trustee so appointed
shall execute, acknowledge and deliver to the Company and to the retiring
Trustee an instrument accepting such appointment, and thereupon the resignation
or removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee; but, on the
request of the Company or the successor Trustee, such retiring Trustee shall,
upon payment of its charges due pursuant to Section 607, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such retiring Trustee
hereunder subject to the lien provided in Section 607.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (2)
if the retiring Trustee is not retiring with respect to all series of
Securities, shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities or that or those series as to
which the retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, it being understood that
nothing herein or in such supplemental indenture shall constitute such Trustees
co-trustees of the same trust and that each such Trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee; and upon the execution and delivery of
such supplemental indenture the resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates; but, on request of the Company or any successor
Trustee, such retiring trustee shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee hereunder
with respect to the Securities of that or these series to which the appointment
of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to in paragraph (a) or (b) of this Section, as the case may be.
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(d) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
SECTION 613. Preferential Collection of Claims Against Company.
(a) Subject to Subsection (b) of this Section, if the Trustee shall be
or shall become a creditor, directly or indirectly, secured or unsecured, of the
Company within three months prior to a default, as defined in Subsection (c) of
this Section, or subsequent to such a default, then, unless and until such
default shall be cured, the Trustee shall set apart and hold in a special
account for the benefit of the Trustee individually, the Holders of the
Securities and the holders of other indenture securities, as defined in
Subsection (c) of this Section:
(1) an amount equal to any and all reductions in the amount
due and owing upon any claim as such creditor in respect of principal
or interest, effected after the beginning of such three month period
and valid as against the Company and its other creditors, except any
such reduction resulting from the receipt or disposition of any
property described in paragraph (2) of this Subsection, or from the
exercise of any right of set-off which the Trustee could have exercised
if a petition in bankruptcy had been filed by or against the Company
upon the date of such default; and
(2) all property received by the Trustee in respect of any
claims as such creditor, either as security therefor, or in
satisfaction or composition thereof, or otherwise, after the beginning
of such three month period, or an amount equal to the proceeds of any
such property, if disposed of, subject, however, to the rights, if any,
of the Company and its other creditors in such property or such
proceeds.
Nothing herein contained, however, shall affect the right of the Trustee:
(A) to retain for its own account (i) payments made
on account of any such claim by any person (other than the Company) who
is liable thereon, and (ii) the proceeds of the bona fide sale of any
such claim by the Trustee to a third Person, and (iii) distributions
made in cash, securities or other property in respect of claims filed
against
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the Company in bankruptcy or receivership or in proceedings for
reorganization pursuant to the Federal Bankruptcy Code or applicable
State law;
(B) to realize, for its own account, upon any
property held by it as security for any such claim, if such property
was so held prior to the beginning of such three month period;
(C) to realize, for its own account, but only to the
extent of the claim hereinafter mentioned, upon any property held by it
as security for any such claim, if such claim was created after the
beginning of such three month period and such property was received as
security therefor simultaneously with the creation thereof, and if the
Trustee shall sustain the burden of proving that at the time such
property was so received the Trustee had no reasonable cause to believe
that a default, as defined in Subsection (c) of this Section, would
occur within three months; or
(D) to receive payment on any claim referred to in
paragraph (B) or (C), against the release of any property held as
security for such claim as provided in paragraph (B) or (C), as the
case may be, to the extent of the fair value of such property.
For the purposes of paragraphs (B), (C) and (D), property substituted
after the beginning of such three month period for property held as security at
the time of such substitution shall, to the extent of the fair value of the
property released, have the same status as the property released, and, to the
extent that any claim referred to in any of such paragraphs is created in
renewal of or in substitution for or for the purpose of repaying or refunding
any pre-existing claim of the Trustee as such creditor, such claim shall have
the same status as such pre-existing claim.
If the Trustee shall be required to account, the funds and property
held in such special account and the proceeds thereof shall be apportioned among
the Trustee, the Holders and the holders of other indenture securities in such
manner that the Trustee, the Holders and the holders of other indenture
securities realize, as a result of payments from such special account and
payments of dividends on claims filed against the Company in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Federal
Bankruptcy Code or applicable State law, the same percentage of their respective
claims, figured before crediting to the claim of the Trustee anything on account
of the receipt by it from the Company of the funds and property in such special
account and before crediting to the respective claims of the Trustee and the
Holders and the holders of other indenture securities dividends on claims filed
against the Company in bankruptcy or receivership or in proceedings for
reorganization pursuant to the Federal Bankruptcy Code or applicable State law,
but after crediting thereon receipts on account of the indebtedness represented
by their respective claims from all sources other than from such dividends and
from the funds and property so held in such special account. As used in this
paragraph, with respect to any claim, the term "dividends" shall include any
distribution with respect to such claim, in bankruptcy or receivership or
proceedings for reorganization pursuant to the Federal Bankruptcy Code or
applicable State law, whether such distribution is made in cash, securities or
other property, but shall not include any such distribution with respect to the
secured portion, if any, of such claim. The court in which such bankruptcy,
receivership or proceeding
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for reorganization is pending shall have jurisdiction (i) to apportion among the
Trustee, the holders and the holders of other indenture securities, in
accordance with the provisions of this paragraph, the funds and property held in
such special account and proceeds thereof, or (ii) in lieu of such
apportionment, in whole or in part, to give to the provisions of this paragraph
due consideration in determining the fairness of the distributions to be made to
the Trustee and the Holders and the holders of other indenture securities with
respect to their respective claims, in which event it shall not be necessary to
liquidate or to appraise the value of any securities or other property held in
such special account or as security for any such claim, or to make a specific
allocation of such distributions as between the secured and unsecured portions
of such claims, or otherwise to apply the provisions of this paragraph as a
mathematical formula.
Any Trustee which has resigned or been removed after the beginning of
such three month period shall be subject to the provisions of this Subsection as
though such resignation or removal had not occurred. If any Trustee has resigned
or been removed prior to the beginning of such three month period, it shall be
subject to the provisions of this Subsection if and only if the following
conditions exist:
(i) the receipt of property or reduction of claim, which would
have given rise to the obligation to account if such Trustee had
continued as Trustee, occurred after the beginning of such three month
period; and
(ii) such receipt of property or reduction of claim occurred
within three months after such resignation or removal.
(b) There shall be excluded from the operation of Subsection (a) of
this Section a creditor relationship arising from:
(1) the ownership or acquisition of securities issued under
any indenture, or any security or securities having a maturity of one
year or more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court
of competent jurisdiction or by this Indenture, for the purpose of
preserving any property which shall at any time be subject to the lien
of this Indenture or of discharging tax liens or other prior liens or
encumbrances thereon, if notice of such advances and of the
circumstances surrounding the making thereof is given to the Holders at
the time and in the manner provided in this Indenture;
(3) disbursements made in the ordinary course of business in
the capacity of trustee under an indenture, transfer agent, registrar,
custodian, escrow agent, paying agent, fiscal agent or depositary, or
other similar capacity;
(4) an indebtedness created as a result of services rendered
or premises rented; or an indebtedness created as a result of goods or
securities sold in a cash transaction, as defined in Subsection (c) of
this Section;
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(5) the ownership of stock or of other securities of a
corporation organized under the provisions of Section 25(a) of the
Federal Reserve Act, as amended, which is directly or indirectly a
creditor of the Company; and
(6) the acquisition, ownership, acceptance or negotiation of
any drafts, bills of exchange, acceptances or obligations which fall
within the classification of self-liquidating paper, as defined in
Subsection (c) of this Section.
(c) For the purposes of this Section only:
(1) the term "default" means any failure to make payment in
full of the principal of (or premium, if any) or interest, if any, on
any of the Securities or upon the other indenture securities when and
as such principal (or premium, if any) or interest, if any, becomes due
and payable;
(2) the term "other indenture securities" means securities
upon which the Company is an obligor outstanding under any other
indenture (i) under which the Trustee is also trustee, (ii) which
contains provisions substantially similar to the provisions of this
Section, and (iii) under which a default exists at the time of the
apportionment of the funds and property held in the special account
provided for in this Section;
(3) the term "cash transaction" means any transaction in which
full payment for goods or securities sold is made within seven days
after delivery of the goods or securities in currency or in checks or
other orders drawn upon banks or bankers and payable upon demand;
(4) the term "self-liquidating paper" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by the Company for the purpose of financing the purchase,
processing, manufacturing, shipment, storage or sale of goods, wares or
merchandise and which is secured by documents evidencing title to,
possession of, or a lien upon, the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the goods, wares or
merchandise previously constituting the security, provided the security
is received by the Trustee simultaneously with the creation of the
creditor relationship with the Company arising from the making,
drawing, negotiating or incurring of the draft, bill of exchange,
acceptance or obligation;
(5) the term "Company" means any obligor upon the Securities;
and
(6) the term "Federal Bankruptcy Code" means the United States
Bankruptcy Code or Title 11 of the United States Code.
SECTION 614. Appointment of Authenticating Agent.
At any time when any of the Securities remain Outstanding the Trustee
may appoint an Authenticating Agent or Agents with respect to one or more series
of Securities which shall be authorized to act on behalf of the Trustee to
authenticate and deliver Securities of such series
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with respect to which it has been so designated, and Securities so authenticated
and delivered shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by the Trustee
hereunder.
Wherever reference is made in this Indenture to the authentication and
delivery of Securities by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall at all
times be a bank or trust company or corporation organized and doing business and
in good standing under the laws of the United States, any State thereof or the
District of Columbia, authorized under such laws to act as Authenticating Agent,
having a combined capital and surplus of not less than $50,000,000 and subject
to supervision or examination by Federal, State or District of Columbia
authority. If such Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, such Authenticating Agent shall
resign immediately in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign with respect to one or more series
of Securities at any time by giving written notice thereof to the Trustee and to
the Company. The Trustee may at any time terminate the agency of an
Authenticating Agent with respect to one or more series of Securities by giving
written notice thereof to such Authenticating Agent and to the Company. Upon
receiving such a notice of resignation or upon such a termination, or in case at
any time such Authenticating Agent shall cease to be eligible in accordance with
the provisions of this Section, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall mail
written notice of such appointment by first-class mail, postage prepaid, to all
holders of Securities of the series with respect to which such Authenticating
Agent will serve, as their names and addresses appear in the Security Register.
Any successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
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The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, in accordance with
the provisions of Section 607. The provisions of Sections 104, 111, 603, 604 and
605 shall be applicable to any Authenticating Agent.
Pursuant to each appointment made under this Section, the Securities of
each series covered by such appointment may have endorsed thereon, in lieu of
the Trustee's certificate of authentication, an alternate certificate of
authentication in substantially the following form:
This is one of the Securities, of the series designated herein, issued
under the within-mentioned Indenture.
The First National Bank of Chicago
By ______________________________
as Authenticating Agent,
By _______________________________
Authorized Officer
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee with
respect to the Securities of each series (a) semi-annually, either (i) not later
than June 30 and December 31 in each year in the case of Original Issue Discount
Securities which by their terms bear interest only after Maturity, or (ii) not
later than 15 days after each Regular Record Date in the case of Securities of
any other series, if and so long as Securities of such series are Outstanding,
and (b) at such other times as the Trustee may request in writing, within 30
days after receipt by the Company of such request, a list in such form as the
Trustee may reasonably require containing all the information in the possession
or control of the Company, or any of its Paying Agents other than the Trustee,
as to the names and addresses of the Holders obtained since the date as of which
the next previous list, if any, was furnished; provided, however, that any such
list may exclude names and addresses received by the Trustee in its capacity as
Security Registrar if it shall be so acting. Any such list may be dated as of a
date not more than 15 days prior to the time such
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information is furnished or caused to be furnished and need not include
information received after such date.
SECTION 702. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar or Paying Agent, if so acting.
The Trustee may (i) destroy any list furnished to it as provided in
Section 701 upon receipt of a new complete list so furnished, (ii) destroy any
information received by it as Paying Agent or Security Registrar (if so acting)
hereunder upon delivering to itself as Trustee, not earlier than 45 days after
June 30 and December 31 of each year, a list containing the names and addresses
of the Holders obtained from such information since the delivery of the next
previous list, if any, and (iii) destroy any list delivered to itself as Trustee
which was compiled from information received by it as Paying Agent or Security
Registrar (if so acting) hereunder upon the receipt of a new complete list so
delivered.
(b) If three or more Holders of Securities of any series (herein
referred to as "applicants") apply in writing to the Trustee, and furnish to the
Trustee reasonable proof that each such applicant has owned a Security of such
series for a period of at least six months preceding the date of such
application, and such application states that the applicants desire to
communicate with other Holders of Securities of such series or with Holders of
all Securities with respect to their rights under this Indenture or under such
Securities and is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Trustee shall,
within five business days after the receipt of such application, at its
election, either
(i) afford such applicants access to the information preserved
at the time by the Trustee in accordance with Section 702(a), or
(ii) inform such applicants as to the approximate number of
Holders of Securities of such series or all Securities as the case may
be whose names and addresses appear in the information preserved at the
time by the Trustee in accordance with Section 702(a), and as to the
approximate cost of mailing to such Holders the form of proxy or other
communication, if any, specified in such application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall upon the written request of such applicants mail
to each Holder of Securities of such series or all Securities as the case may be
whose name and address appear in the information preserved at the time by the
Trustee in accordance with Section 702(a), a copy of the form of proxy or other
communication which is specified in such request, with reasonable promptness
after a tender to the Trustee of the material to be mailed and of payment, or
provision for the payment, of the reasonable expenses of mailing, unless within
five days after such tender
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the Trustee shall mail to such applicants and file with the Commission, together
with a copy of the material to be mailed, a written statement to the effect
that, in the opinion of the Trustee, such mailing would be contrary to the best
interest of the Holders of Securities of such series or all Securities as the
case may be or would be in violation of applicable law. Such written statement
shall specify the basis of such opinion. If the Commission, after opportunity
for a hearing upon the objections specified in the written statement so filed,
shall enter an order refusing to sustain any of such objections or if, after the
entry of an order sustaining one or more of such objections, the Commission
shall find, after notice and opportunity for hearing, that all the objections so
sustained have been met and shall enter an order so declaring, the Trustee shall
mail copies of such material to all such Holders with reasonable promptness
after the entry of such order and the renewal of such tender; otherwise the
Trustee shall be relieved of any obligation or duty to such applicants
respecting their application.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any Paying Agent nor the Security Registrar nor any agent of any of them
shall be held accountable by reason of the disclosure of any such information as
to the names and addresses of holders in accordance with Section 702(b),
regardless of the source from which such information was derived, and that the
Trustee shall not be held accountable by reason of mailing any material pursuant
to a request made under Section 702(b).
SECTION 703. Reports by Trustee.
(a) Within 60 days after March 1 of each year commencing with the March
1 following the date of this Indenture, if and so long as any Securities are
Outstanding hereunder, the Trustee shall transmit by mail to all Holders, as
their names and addresses appear in the Security Register, a brief report dated
as of such March 1 that complies with Trust Indenture Act ss.313(a). The Trustee
shall also comply with Trust Indenture Act ss.313(b).
(b) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each securities exchange upon which any
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when any Securities are listed on any securities
exchange.
SECTION 704. Reports by Company.
The Company shall:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Company may
be required to file with the Commission pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934; or, if the
Company is not required to file information, documents or reports
pursuant to either of said Sections, then it shall file
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with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may
be required pursuant to Section 13 of the Securities Exchange Act of
1934 in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such
rules and regulations;
(2) file with the Trustee and the Commission, in accordance
with rules and regulations prescribed from time to time by the
Commission, such additional information, documents and reports with
respect to compliance by the Company with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations; and
(3) transmit by mail to all Holders, as their names and
addresses appear in the Security Register, within 30 days after the
filing thereof with the Trustee, such summaries of any information,
documents and reports required to be filed by the Company pursuant to
paragraphs (1) and (2) of this Section as may be required by rules and
regulations prescribed from time to time by the Commission.
ARTICLE EIGHT
RESTRICTIVE COVENANTS; SUCCESSOR CORPORATION
SECTION 801. Certain Definitions.
"Consolidated Assets" means, at any date of determination, the total
assets of the Company and its Consolidated Subsidiaries determined in accordance
with generally accepted accounting principals.
"Consolidated Net Worth" means, at any date of determination, all
amounts which would be included on a balance sheet of the Company and its
Consolidated Subsidiaries under stockholders equity determined in accordance
with generally accepted accounting principles applied from time to time.
"Consolidated Subsidiaries" means all Subsidiaries of the Company that
are required to be consolidated with the Company for financial reporting
purposes in accordance with generally accepted accounting principals.
"Debt" means (i) all debt, obligations and other liabilities of the
Company and its Subsidiaries which are, at the date as of which Debt is to be
determined, includable as liabilities in a consolidated balance sheet of the
Company and its Subsidiaries, other than (x) accounts payable and accrued
expenses, (y) advances from clients obtained in the ordinary course of the
relocation management services business of the Company and its Subsidiaries and
(z) current and
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deferred income taxes and other similar liabilities, plus (ii) without
duplicating any items included in Debt pursuant to the foregoing clause (i), the
maximum aggregate amount of all liabilities of the Company or any of its
Subsidiaries under any guaranty, indemnity or similar undertaking given or
assumed of, or in respect of, the indebtedness, obligations or other
liabilities, assets, revenues, income or dividends of any Person other than the
Company or one of its Subsidiaries and (iii) all other obligations or
liabilities of the Company or any of its Subsidiaries in relation to the
discharge of the obligations of any Person other than the Company or one of its
Subsidiaries.
"Lien" means any mortgage, pledge, lien, security interest or
encumbrance.
"Material U.S. Subsidiary" means any Subsidiary of the Company which
together with its Subsidiaries at the time of determination had assets
constituting 10% or more of Consolidated Assets, accounts for 10% or more of
Consolidated Net Worth, or accounts for 10% or more of the revenues of the
Company and its Consolidated Subsidiaries for the Rolling Period immediately
preceding the date of determination.
"Rolling Period" means, with respect to any fiscal quarter, such fiscal
quarter and the three immediately preceding fiscal quarters considered as a
single accounting period.
"Special Purpose Vehicle Subsidiary" shall mean PHH Caribbean Leasing,
Inc. and any subsidiary engaged in the fleet-leasing management business which
(i) is, at any one time, a party to one or more lease agreements with only one
lessee and (ii) finances, at any one time, its investment in lease agreements on
vehicles with only one lender, which lender may be the Company.
SECTION 802. Limitation on Liens.
The Company shall not, and it shall not permit any Material U.S.
Subsidiary to, incur any Lien to secure Debt without equally and ratably
securing the Securities, except the following:
(a) deposits under worker's compensation, unemployment insurance and
social security laws or to secure statutory obligations or surety or appeal
bonds or performance or other similar bonds in the ordinary course of business,
or statutory liens of landlords, carriers, warehousemen, mechanics and
materialmen and other similar Liens, in respect of liabilities which are not yet
due or which are being contested in good faith by appropriate proceedings, Liens
for taxes not yet due and payable, and Liens for taxes due and payable, the
validity or amount of which is currently being contested in good faith by
appropriate proceedings and as to which foreclosure and other enforcement
proceedings shall not have been commenced (unless fully bonded or otherwise
effectively stayed);
(b) purchase money Liens granted to the vendor or Person financing the
acquisition of property, plant or equipment if (i) limited to the specific
assets acquired and, in the case of tangible assets, other property which is an
improvement to or is acquired for specific use in connection with such acquired
property or which is real property being improved by such
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acquired property; and (ii) the debt secured by such Lien is the unpaid balance
of the acquisition cost of the specific assets on which the Lien is granted.
(c) Liens upon real and/or personal property each of which Liens
existed on such property before the time of its acquisition and was not created
in anticipation thereof; provided that no such Lien shall extend to or cover any
property of the Company or a Material U.S. Subsidiary other than the respective
property so acquired and improvements thereon;
(d) Liens arising out of attachments, judgments or awards as to which
an appeal or other appropriate proceedings for contest or review are promptly
commenced (and as to which foreclosure and other enforcement proceedings (i)
shall not have been commenced (unless fully bonded or otherwise effectively
stayed) or (ii) in any event shall be promptly fully bonded or otherwise
effectively stayed);
(e) Liens securing Debt of any Material U.S. Subsidiary to the Company;
(f) Liens covering only the property or other assets of any Special
Purpose Vehicle Subsidiary and securing only Debt of such Special Purpose
Vehicle Subsidiary;
(g) mortgage liens existing on homes acquired by the Company or any of
its Material U.S. Subsidiaries in the ordinary course of their relocation
management business;
(h) other Liens incidental to the conduct of the business of the
Company or its Subsidiaries or the ownership of their property and other assets,
which do not secure any Debt and did not otherwise arise in connection with the
borrowing of money or the obtaining of advances or credit and which do not, in
the aggregate, materially detract from the value of the property or other assets
of the Company or its Subsidiaries or materially impair the use thereof in the
operation of their businesses;
(i) Liens covering only the property or other assets of any Subsidiary
which principally transacts business outside of the United States;
(j) Liens existing prior to the date of this Indenture and any
extensions or renewals thereof;
(k) Liens incurred in the ordinary course of business to secure Debt
utilized to fund net investments in leases and leased vehicles, equity advances
on homes and other assets under management programs; and
(l) Liens to secure Debt not otherwise permitted by any of the clauses
(a) through (k) if, at the time any such Liens are incurred, the aggregate
amount of Debt secured by such Liens plus the sum of all outstanding
sale-leaseback transactions permitted hereunder does not exceed $125,000,000.
SECTION 803. Limitation on Sale-Leaseback Transactions.
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The Company shall not, and it shall not permit any Material U.S.
Subsidiary to, enter into any arrangement whereby in contemporaneous
transactions the Company or any of its Material U.S. Subsidiaries sells
essentially all of its right, title and interest in a material asset and the
Company or any of its Subsidiaries acquires or leases back the right to use such
property except that the Company may enter into sale-leaseback transactions
relating to assets not in excess of $100,000,000 in the aggregate on a
cumulative basis.
SECTION 804. Intentionally Omitted
SECTION 805. No Lien Created, etc.
This Indenture and the Securities do not create a Lien, charge or
encumbrance on any property of the Company or any Subsidiary.
A Debt or lease obligation shall be counted only once even if more than
one person is responsible for the obligation.
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SECTION 806. When Company May Merge, etc.
The Company shall not consolidate with or merge into, or transfer all
or substantially all of its assets to, another corporation unless the resulting,
surviving or transferee corporation assumes by supplemental indenture all the
obligations of the Company under the Securities and this Indenture. Thereafter
all such obligations of the predecessor corporation shall terminate.
SECTION 807. When Securities Must Be Secured.
If upon any such consolidation, merger or transfer any property or
assets of the Company or a Restricted Subsidiary would become subject to an
attaching Lien that secures Debt, then before the consolidation, merger or
transfer occurs, the Company shall secure the Securities equally and ratably
with or prior to the Debt secured by the attaching Lien. However, the Company
need not comply with this Section if the Company or a Restricted Subsidiary
could secure such Debt by a Lien on the property of the Company or any
Restricted Subsidiary without equally and ratably securing the Securities.
SECTION 808
The Trustee, subject to the provisions of Sections 601 and 603, may
receive an Opinion of Counsel as conclusive evidence that any such
consolidation, merger, sale or conveyance, and any such assumption, complies
with the provisions of this Article VIII.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of
Holders.
Without the consent of any Holder, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation to the
Company and the assumption by any such successor of the covenants of
the Company herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of
the Holders of all or any series of Securities (and if such covenants
are to be for the benefit of less than all series of Securities,
stating that such covenants are expressly being included solely for the
benefit of such series) or to surrender any right or power herein
conferred upon the Company; provided, however, that in respect of any
such additional covenant, such
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supplemental indenture may provide for a particular period of grace
after default in the performance of such covenant (which period may be
shorter or longer than that allowed in the case of other defaults) or
may provide for an immediate enforcement upon such default or may limit
the remedies available to the Trustee upon such default; or
(3) to add any additional Events of Default; or
(4) add to or change or eliminate any of the provisions of
this Indenture to extent as shall be necessary to permit or facilitate
the issuance of Securities in bearer form, registrable or not
registrable as to principal, and with or without interest coupons; or
(5) to change or eliminate any of the provisions of this
Indenture, provided that any such change or elimination shall become
effective only when there is no Security Outstanding of any series
created prior to the execution of such supplemental indenture which is
entitled to the benefit of such provision; or
(6) to secure the Securities pursuant to the requirements of
Sections 802 or 807 or otherwise; or
(7) to establish the form or terms of Securities of any series
as permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one
or more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee,
pursuant to the requirements of Section 611(b); or
(9) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture, provided such action shall not
adversely affect the interests of the Holders of Securities of any
series in any material respect.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities of each series (each such series
voting as a separate class) affected by such supplemental indenture, by Act of
said Holders delivered to the Company and the Trustee, the Company, when
authorized by a Board Resolution, and the Trustee may enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of modifying in any manner the rights of the Holders of Securities of such
series under this Indenture; provided,
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however, that no such supplemental indenture shall, without the consent of the
Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Security, or reduce the
principal amount thereof or the rate of interest thereon or any premium
payable upon the redemption thereof, or modify the manner of
determination of the rate of interest thereon so as to affect adversely
the interest of such Holder or reduce the amount of the principal of an
Original Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section
502, or change any Place of Payment where, or the coin or currency in
which, any Security or any premium or the interest thereon is payable,
or impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date), or
(2) reduce the percentage in principal amount of the
Outstanding Securities of any series, the consent of whose Holders is
required for any such supplemental indenture, or the consent of whose
Holders is required for any waiver (of compliance with certain
provisions of this Indenture or certain defaults hereunder and their
consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section 513
or Section 1006, except to increase any such percentage or to provide
that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Outstanding Security
affected thereby, provided, however, that this clause shall not be
deemed to require the consent of any Holder with respect to changes in
the references to the "Trustee" and concomitant changes in this Section
and Section 1006, or the deletion of this proviso, in accordance with
the requirements of Sections 611(b) and 901(8).
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
The Trustee may in its discretion determine whether or not any
Securities would be affected by any supplemental indenture and any such
determination shall he conclusive upon the Holders of all Securities of any
series. The Trustee shall not be liable for any such determination made in good
faith.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
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In executing or accepting the additional trusts created by any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture and that such supplemental indenture,
when executed and delivered by the Company, will constitute a valid and binding
obligation of the Company in accordance with its terms. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Board of Directors, to any such supplemental
indenture may be prepared and executed by the Company and authenticated and
delivered by the Trustee or any Authenticating Agent in exchange for Outstanding
Securities of such series.
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ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest.
The Company covenants and agrees that it will duly and punctually pay
the principal of (and premium, if any) and interest, if any, on the Securities
of each series in accordance with the terms of the Securities of such series and
this Indenture.
SECTION 1002. Maintenance of Office or Agency.
The Company will cause to be maintained in each Place of Payment for
any series of Securities an office or agency where Securities of that series may
be presented or surrendered for payment, where Securities of that series may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Securities of that series and
this Indenture may be served. The Company will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. With respect to the Securities of any series such office or agency and
each place of Payment shall be as specified as contemplated in Section 301. In
the absence of any such provisions with respect to the Securities of any series
(i) the place of payment for such securities shall be the Borough of Manhattan,
City of New York, New York, and (ii) such office or agency in such Place of
Payment shall be the Corporate Trust Office of the Trustee therein. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee as its agent
to receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside the Borough of Manhattan, City of New York,
New York) where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
in each place of Payment for Securities of any series for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such office or agency.
SECTION 1003. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest, if
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any, on any of the Securities of that series, segregate and hold in trust for
the benefit of the persons entitled thereto a sum sufficient to pay the
principal (and premium, if any) or interest, if any, so becoming due until such
sums shall be paid to such persons or otherwise disposed of as herein provided
and will promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any
series of Securities, it will, on or before each due date of the principal of
(and premium, if any) or interest, if any, on any Securities of that series,
deposit with a Paying Agent a sum sufficient to pay the principal (and premium,
if any) or interest, if any, so becoming due, such sum to be held in trust for
the benefit of the persons entitled to such principal, premium or interest, and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee for any
series of Securities to execute and deliver to the Trustee an instrument in
which such paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal
of (and premium, if any) or interest, if any, on Securities of that
series in trust for the benefit of the Persons entitled thereto until
such sums shall be paid to such Persons or otherwise disposed of as
herein provided;
(2) give the Trustee notice of any default by the Company (or
any other obligor upon the Securities of that series) in the making of
any payment of principal (and premium, if any) or interest, if any, on
the Securities of that series; and
(3) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any paying Agent to the Trustee,
such paying agent shall be released from all further liability with respect to
such money. Upon the satisfaction and discharge of the indebtedness in respect
of all Outstanding Securities of any series all sums then held by any Paying
Agent (other than the Trustee) in respect thereof shall, upon demand of the
Company, be repaid to it or paid to the Trustee, and thereupon such Paying Agent
shall be released from all further liability with respect to such money.
The Trustee and any Paying Agent shall promptly pay to the Company upon
Company Request any money or securities held by them at any time in excess of
amounts necessary to satisfy amounts payable to the Holders, the Trustee and the
Paying Agent.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of (and premium, if
any) or interest, if any, on
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any Security of any series and remaining unclaimed for two years after such
principal (and premium, if any) or interest, if any, has become due and payable
shall, unless otherwise required by mandatory provisions of applicable escheat
or abandoned or unclaimed property law, be paid to the Company on Company
Request, or (if then held by the Company) shall be discharged from such trust;
and the Holder of such Security shall, unless otherwise required by mandatory
provisions of applicable escheat or abandoned or unclaimed property law,
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in each Place of Payment with respect to Securities of such series,
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will, unless otherwise
required by mandatory provisions of applicable escheat or abandoned or unclaimed
property law, be repaid to the Company.
SECTION 1004. Corporate Existence.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence.
SECTION 1005. Statement as to Compliance.
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, a certificate
of the principal executive officer, the principal financial officer or the
principal accounting officer (which need not comply with Section 102), stating
as to each signer thereof that
(1) a review of the activities of the Company during such year
and of performance under this Indenture has been made under his
supervision, and
(2) as of the end of such year and at the date of the
certificate to the best of his knowledge, based on such review, (a) the
Company is not in default in the fulfillment of any of its obligations
under this Indenture, or specifying each such default known to him and
the nature and status thereof and (b) no event has occurred and is
continuing which is or after notice or lapse of time or both would
become an Event of Default, or, if such an event has occurred and is
continuing, specifying each such event known to him and the nature and
status thereof.
SECTION 1006. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
covenant or condition set forth in Sections 802 through 804 and Sections 1002 to
1005, each inclusive, with
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respect to the Securities of any series if before the time for such compliance
the Holders of at least a majority in principal amount of the Outstanding
Securities of such series shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company and the duties of the Trustee
with respect to any such covenant or condition shall remain in full force and
effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article.
Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 301 for Securities of any series)
in accordance with this Article.
SECTION 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced
by a Board Resolution. In case of any redemption at the election of the Company
of less than all the Securities of any series, the Company shall, at least 60
days prior to the Redemption Date fixed by the Company (unless a shorter notice,
but not less than 30 days, shall be satisfactory to the Trustee), notify the
Trustee in writing of such Redemption Date and of the principal amount of
Securities of such series to be redeemed. In the case of any redemption of
Securities prior to the expiration of any restriction on such redemption
provided in the terms of such Securities or elsewhere in this Indenture, the
Company shall furnish the Trustee with an Officers' Certificate evidencing
compliance with such restriction.
SECTION 1103. Selection by Trustee of Securities to be Redeemed.
If less than all the Securities of any series are to be redeemed, the
particular Securities to be redeemed shall be selected by the Trustee not more
than 60 days prior to the Redemption Date, from the Outstanding Securities of
such series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of portions (equal to the minimum authorized denomination for
Securities of that series or any integral multiple thereof) of the principal
amount of Securities of such series of a denomination larger than the minimum
authorized denomination for Securities of that series. In any case where
Securities of such series are registered in the same name, the Trustee in its
discretion may treat the aggregate principal amount so registered as if it were
represented by one Security of such series. If the Securities of any series to
be redeemed consist
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of Securities having different Stated Maturities or different rates of interest
(or methods of computing interest), then the Company may, by written notice to
the Trustee, direct that the Securities of such series to be redeemed shall be
selected from among groups of such Securities having specified Stated Maturities
or rates of interest (or methods or computing interest) and the Trustee shall
thereafter select the particular Securities to be redeemed in the manner set
forth above from among the groups of such Securities so specified.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Security which has been or is to be
redeemed.
SECTION 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the Security Register.
All notices of redemption shall state;
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series
are to be redeemed, the identification (and, in the case of partial
redemption, the principal amounts) of the particular Securities to be
redeemed,
(4) in case any Security is to be redeemed in part only, the
notice which relates to such Security shall state that on and after the
Redemption Date, upon surrender of such Security, the Holder will
receive, without charge, a new Security or Securities of authorized
denominations for the principal amount thereof remaining unredeemed,
(5) that on the Redemption Date, the Redemption Price will
become due and payable upon each such Security to be redeemed and, if
applicable, that interest thereon will cease to accrue on and after
said date.
(6) the place or places where such Securities are to be
surrendered for payment of the Redemption Price, and
(7) that the redemption is for a sinking fund, if such is the
case.
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Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company. In the case of
redemptions by the Company of Global Securities, the Company shall, at least 30
days prior to the Redemption Date, notify the Depositary (with a copy to the
Trustee) of such redemption.
SECTION 1105. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date.
SECTION 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that installments of interest whose
Stated Maturity is on or prior to the Redemption Date shall be payable to the
Holders of such Securities, or one or more Predecessor Securities, registered as
such at the close of business on the relevant Regular Record Date according to
their terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Security.
SECTION 1107. Securities Redeemed in Part.
Any security which is to be redeemed only in part shall be surrendered
at a Place of Payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities of the same series, of any authorized
denomination as requested by such Holder, in aggregate principal amount equal to
and in exchange for the unredeemed portion of the principal of the Security so
surrendered; provided, however, that the Depositary need not surrender Global
Securities for a partial redemption and may be authorized to make a notation on
such Global Security of such partial redemption. In the case of a partial
redemption of the Global Securities, the Depositary, and in turn, the
participants in the Depositary, shall have the responsibility to select any
Securities to be redeemed by random lot.
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ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of a series except as otherwise specified as
contemplated by Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory sinking
fund payment", and any payment in excess of such minimum amount provided for by
the terms of Securities of any series is herein referred to as an "optional
sinking fund payment". If provided for by the terms of Securities of any series,
the cash amount of any sinking fund payment may be subject to reduction as
provided in Section 1202. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of such series.
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.
The Company may, in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of any series required to be made
pursuant to the terms of such Securities as provided for by the terms of such
series (1) deliver Outstanding Securities of such series (other than any
previously called for redemption) and (2) apply as a credit Securities of such
series which have been redeemed either at the election of the Company pursuant
to the terms of such series of Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case, provided that such Securities have not been previously
so credited. Such Securities shall be received and credited for such purpose by
the Trustee at the Redemption Price specified in such Securities for redemption
through operation of the sinking fund and the amount of such sinking fund
payment shall be reduced accordingly.
SECTION 1203. Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied by delivering and crediting Securities of that series
pursuant to Section 1202, and the amount of any optional sinking fund payment to
be added to the next ensuing sinking fund payment, and will also deliver to the
Trustee any Securities to be so delivered. If such Officers' Certificate shall
specify an optional amount to be added in cash to the next ensuing mandatory
sinking fund payment, the Company shall thereupon be obligated to pay the amount
therein specified. Not less than 30 days before each such sinking fund payment
date the Trustee shall select the Securities to be redeemed upon such sinking
fund payment date in the manner specified in Section 1103 and cause notice of
the redemption thereof to be given in the name of
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and at the expense of the Company in the manner provided in Section 1104. Such
notice having been duly given, the redemption of such Securities shall be made
upon the terms and in the manner stated in Sections 1106 and 1107.
* * *
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
PHH CORPORATION
(SEAL)
By _______________________
Attest:
By ________________________
Secretary
THE FIRST NATIONAL BANK OF CHICAGO
(SEAL)
By _______________________
Attest:
By ________________________
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---------------
PHH CORPORATION
and
THE BANK OF NEW YORK
TRUSTEE
---------------
INDENTURE
---------------
DATED AS OF MAY ____, 1997
---------------
SENIOR DEBT SECURITIES
---------------
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TABLE OF CONTENTS
PAGE
PARTIES........................................................................1
RECITALS OF THE COMPANY........................................................1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions:.....................................................1
Act...................................................................2
Affiliate; control....................................................2
Authenticating Agent..................................................2
Beneficial Owner......................................................2
Board of Directors....................................................2
Board Resolution......................................................2
Business Day..........................................................2
Commission............................................................2
Company...............................................................2
Company Request; Company Order........................................3
Corporate Trust Office................................................3
Corporation...........................................................3
Defaulted Interest....................................................3
Depositary............................................................3
Dollar................................................................3
ECU...................................................................3
Event of Default......................................................3
Fixed Rate Security...................................................3
Floating Rate Security................................................3
Foreign Currency......................................................3
Global Security.......................................................3
Holder................................................................4
Indenture.............................................................4
Interest..............................................................4
Interest Payment Date.................................................4
Market Exchange Rate..................................................4
Maturity..............................................................4
Officers' Certificate.................................................4
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NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
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PAGE
Opinion of Counsel....................................................4
Original Issue Discount Security......................................4
Outstanding...........................................................4
Paying Agent..........................................................5
Person................................................................5
Place of Payment......................................................5
Predecessor Security..................................................5
Property..............................................................6
Redemption Date.......................................................6
Redemption Price......................................................6
Regular Record Date...................................................6
Responsible Officer...................................................6
Securities............................................................6
Security Register and Security Registrar..............................6
Special Record Date...................................................6
Stated Maturity.......................................................6
Subsidiary............................................................6
Trustee...............................................................7
Trust Indenture Act...................................................7
Vice President........................................................7
SECTION 102. Compliance Certificates and Opinions.............................7
SECTION 103. Form of Documents Delivered to Trustee...........................8
SECTION 104. Acts of Holders................................................. 8
SECTION 105. Notices, Etc., to Trustee and Company........................... 9
SECTION 106. Notices to Holders; Waiver......................................10
SECTION 107. Conflict with Trust Indenture Act...............................10
SECTION 108. Effect of Headings and Table of Contents........................10
SECTION 109. Successors and Assigns..........................................10
SECTION 110. Separability Clause.............................................10
SECTION 111. Benefits of Indenture...........................................11
SECTION 112. Governing Law...................................................11
SECTION 113. Legal Holidays..................................................11
SECTION 114. Indenture and Securities Solely Corporate Obligations...........11
SECTION 115. Consent of Holders of Securities in a Foreign Currency or ECU...11
SECTION 116. Payment Currency................................................12
SECTION 117. Officers' Certificate Regarding Withholding Obligations.........12
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PAGE
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.................................................13
SECTION 202. Form of Trustee's Certificate of Authentication.................13
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series............................14
SECTION 302. Denominations 16
SECTION 303. Execution, Authentication, Delivery and Dating..................16
SECTION 304. Temporary Securities............................................17
SECTION 305. Registration, Registration of Transfer and Exchange.............18
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities................19
SECTION 307. Payment of Interest; Interest Rights Preserved.................20
SECTION 308. Persons Deemed Owners...........................................21
SECTION 309. Cancellation ...................................................21
SECTION 310. Computation of Interest.........................................21
SECTION 311. Global Securities...............................................21
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Securities of any Series..........23
SECTION 402. Satisfaction and Discharge of Indenture.........................25
SECTION 403. Application of Trust Money......................................25
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default...............................................26
SECTION 502. Acceleration of Maturity; Rescission and Annulment..............27
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee..........................................28
SECTION 504. Trustee May File Proofs of Claim................................29
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.....30
SECTION 506. Application of Money Collected..................................30
SECTION 507. Limitation on Suits.............................................30
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PAGE
SECTION 508. Unconditional Right of Holders to Receive
Principal, Premium and Interest..................31
SECTION 509. Restoration of Rights and Remedies..............................31
SECTION 510. Rights and Remedies Cumulative..................................31
SECTION 511. Delay or Omission Not Waiver....................................32
SECTION 512. Control by Holders..............................................32
SECTION 513. Waiver of Past Defaults.........................................32
SECTION 514. Undertaking for Costs...........................................33
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.............................33
SECTION 602. Notice of Defaults..............................................34
SECTION 603. Certain Rights of Trustee.......................................35
SECTION 604. Not Responsible for Recitals or Issuance of Securities..........36
SECTION 605. May Hold Securities.............................................36
SECTION 606. Money Held in Trust.............................................36
SECTION 607. Compensation and Reimbursement..................................36
SECTION 608. Disqualification; Conflicting Interests.........................37
SECTION 609. Corporate Trustee Required; Eligibility.........................42
SECTION 610. Resignation and Removal; Appointment of Successor...............42
SECTION 611. Acceptance of Appointment by Successor..........................44
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.....45
SECTION 613. Preferential Collection of Claims Against Company...............45
SECTION 614. Appointment of Authenticating Agent.............................49
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.......51
SECTION 702. Preservation of Information; Communications to Holders..........51
SECTION 703. Reports by Trustee..............................................53
SECTION 704. Reports by Company..............................................53
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PAGE
ARTICLE EIGHT
RESTRICTIVE COVENANTS; SUCCESSOR CORPORATION
SECTION 801. Certain Definitions.............................................54
SECTION 802. Limitation on Liens.............................................55
SECTION 803. Limitation on Sale-Leaseback Transactions.......................56
SECTION 804. (Intentionally Omitted).........................................56
SECTION 805. No Lien Created, etc............................................56
SECTION 806. When Company May Merge, etc.....................................57
SECTION 807. When Securities Must Be Secured.................................57
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders..............57
SECTION 902. Supplemental Indentures With Consent of Holders.................58
SECTION 903. Execution of Supplemental Indentures............................60
SECTION 904. Effect of Supplemental Indentures...............................60
SECTION 905. Conformity With Trust Indenture Act.............................60
SECTION 906. Reference in Securities to Supplemental Indentures..............60
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest.....................61
SECTION 1002. Maintenance of Office or Agency................................61
SECTION 1003. Money for Securities Payments to Be Held in Trust..............61
SECTION 1004. Corporate Existence............................................63
SECTION 1005. Statement as to Compliance.....................................63
SECTION 1006. Waiver of Certain Covenants....................................64
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article.......................................64
SECTION 1102. Election to Redeem; Notice to Trustee..........................64
SECTION 1103. Selection by Trustee of Securities to be Redeemed..............64
SECTION 1104. Notice of Redemption...........................................65
SECTION 1105. Deposit of Redemption Price....................................66
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PAGE
SECTION 1106. Securities Payable on Redemption Date..........................66
SECTION 1107. Securities Redeemed in Part....................................66
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article.......................................67
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities..........67
SECTION 1203. Redemption of Securities for Sinking ..........................67
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INDENTURE, dated as of May ____, 1997, between PHH Corporation, a
corporation duly organized and existing under the laws of the State of Maryland
(herein called the "Company"), and The Bank of New York, a national banking
association duly incorporated and existing under the laws of the United States
of America, Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured and
unsubordinated debentures, notes or other evidences of senior indebtedness
(herein called the "Securities"), to be issued in one or more series as in this
Indenture provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all holders of the Securities or of any
series thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as are
generally accepted at the date of such computation; and
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(4) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in that
Article.
"Act," when used with respect to any Holder, has the meaning specified
in Section 104.
"Affiliate" of any specified person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect 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" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee to
act on behalf of the Trustee to authenticate and deliver Securities.
"Beneficial Owner" means, with respect to Global Securities, the Person
who is the beneficial owner of such Securities as effected on the books of the
Depositary for such Securities or on the books of a Person maintaining an
account with such Depositary (directly or as an indirect participant, in
accordance with the rules of such Depositary).
"Board of Directors" means either the board of directors of the Company
or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day," when used with respect to any Place of Payment, means
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment, and (i) with respect to
Securities denominated in a Foreign Currency, the capital city of the country of
the Foreign Currency, or (ii) with respect to Securities denominated in ECU,
Brussels, are authorized or obligated by it to close.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Securities Exchange Act of 1934, or, if
at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor corporation shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.
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"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman, its President or a Vice
President, and by its Treasurer, an Assistant Treasurer, its Controller, an
Assistant Controller, its Secretary or an Assistant Secretary, and delivered to
the Trustee.
"Corporate Trust Office" means the principal corporate trust office of
the Trustee at which at any particular time its corporate trust business shall
be administered. At the date of this Indenture, the Corporate Trust Office of
the Trustee is located at 101 Barclay Street, New York, New York 10286.
"Corporation" includes corporations, associations, companies and
business trusts.
"Defaulted Interest" has the meaning specified in Section 307.
"Depositary" means a clearing agency registered as such under the
Securities Exchange Act of 1934, as amended, or any successor thereto, which
shall in either case be designated by the Company pursuant to Section 301 until
a successor Depositary shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Depositary" shall mean or include
each Person who is then a Depositary hereunder, and if at any time there is more
than one such Person, "Depositary" as used with respect to the Securities of any
series shall mean the Depositary with respect to the Securities of that series.
"Dollar" means the coin or currency of the United States of America as
at the time of payment is legal tender for the payment of public and private
debts.
"ECU" means the European Currency Unit as defined from time to time by
the Council of European Communities.
"Event of Default" has the meaning specified in Section 501.
"Fixed Rate Security" means a Security which provides for the payment
of interest at a fixed rate.
"Floating Rate Security" means a Security which provides for the
payment of interest at a variable rate determined periodically by reference to
an interest rate index or other index specified pursuant to Section 301.
"Foreign Currency" means a currency issued by the government of a
country other than the United States.
"Global Security" means a Security evidencing all or part of a series
of Securities which is executed by the Company and authenticated and delivered
to the Depositary or pursuant to the Depositary's instructions, all in
accordance with this Indenture and pursuant to a Company Order, which shall be
registered in the name of the Depositary or its nominee and which shall
represent the amount of uncertificated securities as specified therein.
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"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
and shall include any Officers' Certificates setting forth the form and terms of
particular series of Securities as contemplated by Sections 201 and 301.
"Interest," when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, means interest
payable after Maturity.
"Interest Payment Date," when used with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.
"Market Exchange Rate" means on a given date, the noon buying rate in
New York City for cable transfers for the stated Foreign Currency as certified
for customs purposes by the Federal Reserve Bank of New York on such date;
provided that, in the case of the ECU, Market Exchange Rate shall mean the rate
of exchange determined by the Council of European Communities (or any successor
thereto) as published for such date in the Official Journal of the European
Communities or any successor publication.
"Maturity," when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Officers' Certificate" means a certificate signed by the Chairman, the
President, a Vice President or the Treasurer, and by an Assistant Treasurer, the
Controller, an Assistant Controller, the Secretary or an Assistant Secretary, of
the Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of or counsel for the Company or the Trustee, and who shall be
acceptable to the Trustee, which opinion is delivered to the Trustee.
"Original Issue Discount Security" means any Security which provides
for an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Outstanding," when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities or portions thereof for whose payment or
redemption money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent (other than the Company) in trust
or set aside and segregated in trust by the
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Company (if the Company shall act as its own Paying Agent) for the
Holders of such Securities; provided that, if such Securities or
portions thereof are to be redeemed, notice of such redemption has been
duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made; and
(iii) Securities which have been paid pursuant to Section 306
or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by a
bona fide purchaser in whose hands such Securities are valid
obligations of the Company;provided, however, that in determining
whether the Holders of the requisite principal amount of Outstanding
Securities have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, Securities owned by the Company or
any other obligor upon the Securities or any Affiliate of the Company
or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities which the Trustee
knows to be so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the pledgee's
right so to act with respect to such Securities and that the pledgee is
not the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor. In determining the
requisite principal amount of any Original Issue Discount Security,
such principal amount that shall be deemed to be Outstanding shall be
equal to the amount of the principal thereof that could be declared to
be due and payable upon an Event of Default pursuant to the terms of
such Original Issue Discount Security at the time of such
determination.
"Paying Agent" means any person authorized by the Company to pay the
principal of (and premium, if any) or interest, if any, on any Security on
behalf of the Company.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Payment," when used with respect to the Securities of any
series, means the place or places where the principal of (and premium, if any)
and interest, if any, on the Securities of that series are payable as specified
as contemplated in Section 301 or, if not so specified, as specified in Section
1002.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in lieu of a mutilated, destroyed,
lost or stolen Security shall be deemed to evidence the same debt as the
mutilated, destroyed, lost or stolen Security.
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"Property" means any kind of property or asset, whether real, personal
or mixed, tangible or intangible.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price," when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that purpose
as contemplated by Section 301.
"Responsible Officer," when used with respect to the Trustee, means the
chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any senior trust officer or trust officer, the controller or
any assistant controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and delivered
under this Indenture.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity," when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
"Subsidiary" means with respect to any Person, any corporation,
association, joint venture, partnership or other business entity of which at
least a majority of the voting stock or other ownership interests owned or
controlled by such Person or one or more subsidiaries of such Person, or by such
Person and one or more subsidiaries of such Person.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor trustee shall have become such
with respect to one or more series of Securities pursuant to the applicable
provisions of this Indenture, and thereafter "Trustee" shall mean or include
each Person who is then a Trustee hereunder, provided, however, that if at any
time there is more than one such person, "Trustee" as used with respect to the
Securities of any series shall mean the Trustee with respect to Securities of
that series.
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"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this instrument was executed, except as provided in
Section 905.
"Vice President," when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate
or opinion has read such condition or covenant and the definitions
herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such condition
or covenant has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more
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other such Persons as to other matters, and any such Person may certify or give
an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders (or Holders of any series) may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such Holders 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 it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments, proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 601) conclusive in favor of
the Trustee and the Company and any agent of the Trustee or the Company, if made
in the manner provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the person executing the same, may also be proved
in any other manner which the Trustee deems sufficient; and the Trustee may in
any instance require further proof with respect to any of the matters referred
to in this Section.
(c) The ownership of Securities shall be proved by the Security
Register.
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(d) If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company may,
at its option, by Board Resolution, fix in advance a record date for the
determination of Holders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other Act, but the Company shall have no
obligation to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be given
before or after such record date, but only the Holders of record at the close of
business on such record date shall be deemed to be Holders for the purposes of
determining whether Holders of the requisite proportion of Outstanding
Securities have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for that
purpose the Outstanding Securities shall be computed as of such record date,
provided that no such authorization, agreement or consent by the Holders on such
record date shall be deemed effective unless it shall become effective pursuant
to the provisions of this Indenture not later than six months after the record
date.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee, the
Security Registrar, any Paying Agent or the Company in reliance thereon, whether
or not notation of such action is made upon such Security.
SECTION 105. Notices, Etc., to Trustee and Company.
Except as otherwise specifically provided herein, any request, demand,
authorization, direction, notice, consent, waiver or Act of Holders or other
document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office,
or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to the attention of its Treasurer at
11333 McCormick Road, Hunt Valley, Maryland 21031 or at any other
address subsequently furnished in writing to the Trustee by the
Company.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Holders is given by mail,
neither the
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failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Any notice mailed in the manner prescribed by this Indenture
shall be conclusively presumed to have been duly given whether or not received
by any particular Holder. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Indenture by any of
the provisions of the Trust Indenture Act, such required provision shall
control.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
In case any provision of this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
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SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto, any Paying Agent, any
Security Registrar, or any Authenticating Agent and their respective successors
hereunder and the Holders, any benefit or any legal or equitable right, remedy
or claim under this Indenture.
SECTION 112. Governing Law.
This Indenture and the Securities shall be governed and construed by
and in accordance with the laws of the State of New York.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date, the
Stated Maturity of any Security or any date upon which any Defaulted Interest is
proposed to be paid shall not be a Business Day at any Place of Payment, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of interest, if any, or principal (and premium, if any) need not be made
at such Place of Payment on such date, but may be made on the next succeeding
Business Day at such Place of Payment with the same force and effect as if made
on the Interest Payment Date, Redemption Date, at the Stated Maturity, or on the
date for payment of Defaulted Interest, provided that no interest shall accrue
for the period from and after such Interest Payment Date, Redemption Date,
Stated Maturity or date for the payment of Defaulted Interest, as the case may
be.
SECTION 114. Indenture and Securities Solely Corporate Obligations.
No recourse for the payment of the principal of (or premium, if any) or
interest on any Security, or for any claim based thereon or otherwise in respect
thereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in this Indenture or in any supplemental indenture, or in any
Security, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, stockholder, officer or director, as
such, past, present or future, of the Company or of any successor corporation,
either directly or through the Company or any successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that all such
liability is hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issue of the
Securities.
SECTION 115. Consent of Holders of Securities in a Foreign Currency or ECU.
Unless otherwise specified in a certificate delivered pursuant to
Section 301 of this Indenture with respect to a particular series of Securities,
whenever for purposes of this Indenture any action may be taken by the Holders
of a specified percentage in aggregate principal amount of Securities of all
series or all series affected by a particular action at the time Outstanding
and, at such time, there are Outstanding Securities of any series which are
denominated in a coin,
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currency or currency unit other than Dollars, then the principal amount of
Securities of such series which shall be deemed to be Outstanding for the
purpose of taking such action shall be that amount of Dollars that could be
obtained for the stated Foreign Currency or ECU principal amount of such
Outstanding Securities at the Market Exchange Rate on the record date for the
purpose of taking such action. If the appropriate Market Exchange Rate is not
available for any reason with respect to the stated currency or currency unit,
the Trustee shall use, in its sole discretion and without liability on its part,
such quotation of the Federal Reserve Bank of New York or, in the case of ECU,
the rate of exchange as published in The Wall Street Journal, as of the most
recent available date, or quotations or, in the case of ECUs, rates of exchange
from one or more major banks in The City of New York or in the country of issue
of the currency in question which for purposes of the ECU shall be Brussels,
Belgium, or such other quotations or, in the case of ECU, rates of exchange as
the Trustee shall deem appropriate. All decisions and determinations of the
Trustee regarding the Market Exchange Rate or any alternative determination
provided for in the preceding paragraph shall be in its sole discretion and
shall, in the absence of manifest error, be conclusive for all purposes and
irrevocably binding upon the Company and all Holders.
SECTION 116. Payment Currency.
If the principal of and/or interest on (or premium, if any, on) any
Securities is payable in a Foreign Currency or ECU and such Foreign Currency or
ECU is not available for payment due to the imposition of exchange controls or
other circumstances beyond the control of the Company, then the Company shall be
entitled to satisfy its obligations to Holders under this Indenture by making
such payment in Dollars on the basis of the Market Exchange Rate for such
Foreign Currency or ECU on the latest date for which such rate was established
on or before the date on which payment is due. Any payment made under this
Section 116 in Dollars where the required payment is in a Foreign Currency or
ECU shall not constitute an Event of Default.
SECTION 117. Officers' Certificate Regarding Withholding Obligations.
At least 15 days prior to the first Interest Payment Date and at least
15 days prior to each date of payment of principal, premium, if any, or interest
thereafter if there has been any change with respect to the matters set forth in
the below-mentioned certificate, the Company will furnish the Trustee and each
Paying Agent with an Officers' Certificate instructing the Trustee and each
Paying Agent whether such payment of principal of and premium, if any, or
interest on the Securities shall be made without deduction or withholding for or
on account of any tax, assessment or other governmental charge imposed upon or
as a result of such payment. If any such deduction or withholding shall be
required, then such certificate shall specify, by country, the amount, if any,
required to be withheld on such payment to Holders of Securities and the Trustee
will cause such amounts to be withheld. The Company agrees to indemnify the
Trustee and each Paying Agent for, and to hold them harmless against, any loss,
liability or expense reasonably incurred without negligence or bad faith on
their part arising out of or in connection with actions taken or omitted by them
in reliance on any certificate furnished pursuant to this Section.
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In furnishing this Officers' Certificate, the Company shall be entitled
to rely on advice of counsel reasonably acceptable to the Trustee and the Paying
Agent and on information furnished in writing to the Company and any agent or
underwriter concerning the residences of the Holders of the Securities, but such
reliance shall not impair the indemnification set forth in the foregoing
paragraph.
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.
The Securities of each series shall be in substantially the form as
shall be established by or pursuant to a Board Resolution or in one or more
indentures supplemental hereto, in each case with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of the Securities. If the form of Securities of
any series is established by action taken pursuant to a Board Resolution, an
appropriate Officers' Certificate setting forth such form together with a copy
of the Board Resolution shall be delivered to the Trustee at or prior to the
delivery of the Company Order contemplated by Section 303 for the authentication
and delivery of such Securities.
The definitive Securities shall be printed, typed, lithographed or
engraved or produced by any combination of these methods or may be produced in
any other manner permitted by the rules of any securities exchange on which the
Securities may be listed, all as determined by the officers executing such
Securities, as evidenced by their execution of such Securities.
SECTION 202. Form of Trustee's Certificate of Authentication.
The Trustee's certificate of authentication shall be in substantially
the form set forth below:
This is one of the Securities of the series designated herein issued
under the within-mentioned Indenture.
The Bank of New York, as Trustee
By ___________________________________
Authorized Officer
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ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of securities which may be authenticated
and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a procedure established in a Board Resolution, and
set forth in an Officers' Certificate, or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of any series:
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from the Securities of all
other series);
(2) any limit upon the aggregate principal amount of the
Securities of the series which may be authenticated and delivered under
this Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities of the series pursuant to Section 304, 305, 306, 906 or
1107);
(3) the date or dates on which the principal of (and premium,
if any, on) the Securities of the series is payable, or the manner in
which such dates are determined;
(4) the rate or rates at which the Securities of the series
shall bear interest, if any, or the manner in which such rates are
determined, the date or dates from which any such interest shall
accrue, or the manner in which such dates are determined, the Interest
Payment Dates on which any such interest shall be payable, the Regular
Record Dates, if any, for the payment of interest on any Interest
Payment Date and the rate or rates of interest, if any, payable on
overdue installments of interest on or principal of (or premium, if
any, on) the Securities of the series, and whether the interest rate
may be reset upon certain designated events and, in the case of
Floating Rate Securities, the notice, if any, to Holders regarding the
determination of interest and the manner of giving such notice, and the
extent to which, or the manner in which, any interest payable on any
Global Security on an Interest Payment Date will be paid if other than
in the manner provided in Section 307;
(5) if other than the Trustee, the identity of the Security
Registrar and, if other than as specified in Section 1002, the place or
places where the principal of (and premium, if any) and interest, if
any, on Securities of the series shall be payable, provided, however,
that, at the option of the Company, any interest on the Securities of
any series may be paid by check mailed to the address of the person
entitled thereto as such address shall appear in the Security Register;
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(6) if the Securities of such series are redeemable, the
period or periods within which, the price or prices at which and the
terms and conditions upon which Securities of the series may be
redeemed, in whole or in part, at the option of the Company;
(7) the obligation, if any, of the Company to redeem or
purchase Securities of the series pursuant to any sinking fund or
analogous provisions or at the option of a Holder thereof and the
period or periods within which, the price or prices at which and the
terms and conditions upon which Securities of the series shall be
redeemed or purchased, in whole or in part, pursuant to such
obligation;
(8) if other than denominations of $5,000 and any integral
multiple thereof, the denominations in which Securities of the series
shall be issuable;
(9) if other than the principal amount thereof, the portion of
the principal amount of Securities of the series which shall be payable
upon declaration of acceleration of the Maturity thereof pursuant to
Section 502;
(10) additional covenants of the Company, if any, for the
benefit of the Holders of Securities of such series and additional
Events of Default, if any, with respect to Securities of such series;
(11) if the provisions of Section 401(4) relating to
satisfaction and discharge of Securities more than one year prior to
their Stated Maturity or redemption shall apply to Securities of the
series, a statement of such fact;
(12) if other than Dollars, the coin or currency in which the
Securities of that series are denominated (including, but not limited
to any Foreign Currency or ECU);
(13) if the amount of payments of principal (and premium, if
any) or interest, if any, on the Securities of the series may be
determined with reference to an index, the manner in which such amounts
shall be determined;
(14) provisions, if any, for the defeasance of Securities of
the series;
(15) the date as of which any Global Security representing any
Outstanding Debt Securities of the series shall be dated if other than
the date of original issuance of the first Security of the series to be
issued;
(16) whether the Securities of the series shall be issued in
whole or in part in the form of one or more Global Securities and, in
such case, the Depositary for such Global Security or Securities; and
(17) any other terms, conditions, rights and preferences (or
limitations on such rights and preferences) relating to the Securities
of such series.
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All Securities of any one series shall be substantially identical
except as to denomination and the rate or rates of interest, if any, the date or
dates from which interest shall accrue and maturity and except as may otherwise
be provided in or pursuant to such Board Resolution and set forth in such
Officers' Certificate or in any such indenture supplemental hereto.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
SECTION 302. Denominations.
The Securities of each series shall be issuable in registered form
without coupons in such denominations as shall be specified as contemplated by
Section 301. In the absence of any such provisions with respect to the
Securities of any series, the Securities of such series shall be issuable in
denominations of $5,000 and any integral multiple thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by any two of
its Chairman of the Board, its President, any Vice President, its Treasurer or
its Secretary, under its corporate seal reproduced thereon. The signature of any
of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver to the Trustee or an Authenticating
Agent for authentication Securities of any series executed by the Company,
together with a Company Order for the authentication and delivery of such
Securities, and the Trustee or such Authenticating Agent in accordance with the
Company Order shall authenticate and deliver such Securities. If all the
Securities of any series are not to be issued at one time, and if the Board
Resolution, Officers' Certificate or supplemental indenture establishing such
series shall so permit, such Company Order may set forth procedures acceptable
to the Trustee for the issuance of such Securities and the determination of the
terms of particular Securities of such series such as interest rate, maturity
date, date of issuance and date from which interest shall accrue. If the form or
terms of the Securities of the series have been established in or pursuant to
one or more Board Resolutions as permitted by Sections 201 and 301, in
authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating,
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(a) if the form of such Securities has been established by or
pursuant to Board Resolution as permitted by Section 201, that such
form has been established in conformity with the provisions of this
Indenture; and
(b) if the terms of such Securities have been established by
or pursuant to Board Resolution as permitted by Section 301, that such
terms have been established in conformity with the provisions of this
Indenture.
If all the Securities of any series are not to be issued at one time,
it shall not be necessary to deliver an Opinion of Counsel at the time of
issuance of each Security, but such Opinion of Counsel, with appropriate
modifications, may instead be delivered at or prior to the time of issuance of
the first Security of such series.
The Trustee or any Authenticating Agent shall have the right to
authenticate and deliver any of such Securities if it, being advised by counsel,
determines that such action may not lawfully be taken, or if it, its board of
directors, trustees, executive committee, or a trust committee of directors or
trustees and/or vice presidents shall determine in good faith that such action
would expose it to personal liability to existing Holders or if the issue of
such Securities pursuant to this Indenture will affect the Trustee's own rights,
duties or immunities under the Securities and this Indenture or otherwise in a
manner which is not reasonably acceptable to the Trustee.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee or an Authenticating Agent by manual signature, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered hereunder
and is entitled to the benefits of this Indenture.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee or an Authenticating
Agent shall authenticate and deliver, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Securities in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities may
determine, as evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Company will
cause definitive Securities of that series to be prepared without unreasonable
delay. After the preparation of definitive Securities of such series, the
temporary Securities of such series shall be exchangeable for definitive
Securities of such series upon surrender of the temporary Securities of such
series
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at the office or agency established by the Company in a Place of Payment for
that series, without charge to the Holder. Upon surrender for cancellation of
any one or more temporary Securities of any series the Company shall execute and
the Trustee shall authenticate and deliver in exchange therefor a like principal
amount of definitive Securities of the same series of authorized denominations.
Until so exchanged the temporary Securities of any series shall in all respects
be entitled to the same benefits under this Indenture as definitive Securities
of such series.
SECTION 305. Registration, Registration of Transfer and
Exchange.
With respect to each series of Securities, the Company shall cause to
be kept at one of the offices or agencies maintained pursuant to Section 1002 a
register (the register maintained in such office and in any other office or
agency established by the Company in a Place of Payment being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities of that series and of transfers of Securities of that
series. Pursuant to Section 301, the Company shall appoint, with respect to
Securities of each series, a "Security Registrar" for the purpose of registering
such Securities and transfers and exchanges of such Securities as herein
provided. In the event the Trustee shall not be Security Registrar, it shall
have the right to examine the Security Register at all reasonable times.
Upon surrender for registration of transfer of any Security of any
series at the designated office or agency in a Place of Payment for that series,
the Company shall execute, and the Trustee or an Authenticating Agent shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities of the same series, of any authorized
denominations and of a like tenor, aggregate principal amount and Stated
Maturity.
At the option of the Holder, Securities of any series (except Global
Securities) may be exchanged for other Securities of the same series, of any
authorized denominations and of a like tenor, aggregate principal amount and
Stated Maturity, upon surrender of the Securities to be exchanged at such office
or agency and upon payment, if the Company shall so require, of the charges
hereinafter provided. Whenever any Securities are so surrendered for exchange,
the Company shall execute, and the Trustee or an Authenticating Agent shall
authenticate and deliver, the Securities which the Holder making the exchange is
entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or
exchange shall (if so required by the Company or the Trustee or the Security
Registrar) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar (and, if
so required by the Trustee, to the Trustee) duly executed, by the Holder thereof
or his attorney duly authorized in writing.
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No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906 or 1107 not involving any transfer.
The Company shall not be required (i) to issue, register the transfer
of or exchange Securities of any series during a period beginning at the opening
of business 15 days before the day of selection for redemption of Securities of
that series selected for redemption under Section 1103 and ending at the close
of business on the day of the mailing of notice of redemption, or (ii) to
register the transfer of or exchange any Security so selected for redemption in
whole or in part, except the unredeemed portion of any Security being redeemed
in part.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If there shall be delivered to the Company and the Trustee (i) a
mutilated Security or evidence to their satisfaction of the destruction, loss or
theft of any Security and (ii) such security or indemnity as may be required by
them to save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security has been
acquired by a bona fide purchaser, the Company shall execute and upon its
request the Trustee or an Authenticating Agent shall authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Security, a new Security of the same series and of like tenor, principal amount
and Stated Maturity and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
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 (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in
lieu of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
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SECTION 307. Payment of Interest; Interest Rights Preserved.
Except as otherwise specified with respect to a series of Securities in
accordance with the provisions of Section 301, interest on any Security which is
payable, and is punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest.
Any interest on any Security of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the
registered Holder on the relevant Regular Record Date by virtue of having been
such Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the persons in whose names the Securities of such series
(or their respective Predecessor Securities) are registered at the
close of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security of such series and the
date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited to
be held in trust for the benefit of the Persons entitled to such
Defaulted Interest as in this Clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less than 10 days
after the receipt by the Trustee of the notice of the proposed payment.
The Trustee shall promptly notify the Company of such Special Record
Date and, in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor to be mailed, first-class postage prepaid,
to each Holder of Securities of such series at his address as it
appears in the Security Register, not less than l0 days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been so mailed,
such Defaulted Interest shall be paid to the persons in whose names the
Securities of such series (or their respective Predecessor Securities)
are registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest on
the Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on which
such Securities may be listed, and upon such notice as may be required
by such exchange, if, after notice given by the Company to the Trustee
of the proposed payment pursuant to this Clause, such manner of payment
shall be deemed practicable by the Trustee.
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Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee, any Paying Agent, any Authenticating Agent and any
other agent of the Company or the Trustee may treat the Person in whose name
such Security is registered as the owner of such Security for the purpose of
receiving payment of principal of (and premium, if any) and (subject to Section
307) interest, if any, on such Security and for all other purposes whatsoever,
whether or not such Security be overdue, and neither the Company, the Trustee,
any Paying Agent, any Authenticating Agent nor any other agent of the Company or
the Trustee shall be affected by notice to the contrary.
SECTION 309. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any person other than the Trustee, be delivered to the Trustee
and shall be promptly cancelled by it. The Company may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Securities so delivered shall be promptly cancelled by the
Trustee. No Securities shall be authenticated in lieu of or in exchange for any
Securities cancelled as provided in this Section, except as expressly permitted
by this Indenture. All cancelled Securities shall be destroyed by the Trustee
and the Trustee shall deliver a certificate of such destruction to the Company,
unless the Company by Company Order shall direct that such cancelled Securities
be returned to it.
SECTION 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a 360-day year of twelve 30-day months.
SECTION 311. Global Securities.
If the Company shall establish pursuant to Section 301 that the
Securities of a series are to be issued in whole or in part in the form of one
or more Global Securities, then the Company shall execute and the Trustee shall,
in accordance with Section 303 and the Company Order with respect to such
series, authenticate and deliver one or more Global Securities in temporary or
permanent form that (i) shall represent and shall be denominated in an amount
equal to the aggregate principal amount of the outstanding Securities of such
series to be represented by one or more Global Securities, (ii) shall be
registered in the name of the Depositary for such Global Security or Securities
or the nominee of such depositary, (iii) shall be delivered by the Trustee to
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such depositary or pursuant to such depositary's instruction, and (iv) shall
bear a legend substantially to the following effect: "Unless and until it is
exchanged in whole or in part for Securities in definitive form, this Security
may not be transferred except as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor depositary or a nominee of such successor Depositary". The Trustee
shall deal with the Depositary and its participants as representatives of the
Beneficial Owners of the Global Securities for purposes of exercising the rights
of the Holders hereunder and the rights of the Beneficial Owners of the Global
Securities shall be limited to those established by law and agreements between
such Beneficial Owners and the Depositary and its participants. Beneficial
Owners shall not be entitled to certificates for Global Securities as to which
they are the Beneficial Owners. Requests and directions from, and votes of, such
representatives shall not be deemed to be inconsistent if they are made with
respect to different Beneficial Owners.
Notwithstanding any other provision of this Section or Section 305,
unless and until it is exchanged in whole or in part for Securities in
definitive form, a Global Security representing all or a portion of the
Securities of a series may not be transferred except as a whole by the
Depositary for such series to a nominee of such depositary or by a nominee of
such depositary to such depositary or another nominee of such depositary or by
such depositary or any such nominee to a successor Depositary for such series or
a nominee of such successor depositary. The Beneficial Owner's ownership of
Securities shall be recorded on the records of a participant of the Depositary
that maintains such Beneficial Owner's account for such purpose and the
participant's record ownership of such Securities shall be recorded on the
records of the Depositary.
If at any time the Depositary for the Securities of a series notifies
the Company that it is unwilling or unable to continue as Depositary for the
Securities of such series or if at any time the Depositary for Securities of a
series shall no longer be registered or in good standing under the Securities
Exchange Act of 1934, as amended, or other applicable statute or regulation, the
Company shall appoint a successor Depositary with respect to the Securities of
such series. If a successor Depositary for the Securities of such series is not
appointed by the Company within 90 days after the Company receives such notice
or becomes aware of such condition, the Company will execute, and the Trustee,
upon receipt of a Company Order for the authentication and delivery of
definitive Securities of such series, will authenticate and deliver, Securities
of such series in definitive form in an aggregate principal amount equal to the
principal amount of the Global Security or Securities representing such series
in exchange for such Global Security or Securities.
The Company may at any time and in its sole discretion determine that
the Securities of any series issued in the form of one or more Global Securities
shall no longer be represented by such Global Security or Securities. In such
event, the Company will execute, and the Trustee, upon receipt of a Company
Order for the authentication and delivery of definitive Securities of such
series, will authenticate and deliver, Securities of such series in definitive
form and in an
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aggregate principal amount equal to the principal amount of the Global Security
or Securities representing such series in exchange for such Global Security or
Securities.
If specified by the Company pursuant to Section 301 with respect to
Securities of a series, the Depositary for such series of Securities may
surrender a Global Security for such series of Securities in exchange in whole
or in part for Securities of such series in definitive form on such terms as are
acceptable to the Company and such Depositary. Thereupon, the Company shall
execute and the Trustee shall authenticate and deliver, without charge,
(i) to each Person specified by the Depositary a new Security
or Securities of the same series, of any authorized denomination as
requested by such Person in aggregate principal amount equal to and in
exchange for such Person's beneficial interest in the Global Security;
and
(ii) to the Depositary a new Global Security in a denomination
equal to the difference, if any, between the principal amount of the
surrendered Global Security and the aggregate principal amount of
Securities delivered to Holders thereof.
Upon the exchange of a Global Security for Securities in definitive
form, such Global Security shall be cancelled by the Trustee. Securities issued
in exchange for a Global Security pursuant to this Section 311 shall be
registered in such names and in such authorized denominations as the Depositary
for such Global Security, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall deliver
such Securities to the persons in whose names such Securities are so registered.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Securities of any
Series.
The Company shall be deemed to have satisfied and discharged the entire
indebtedness on all the Securities of any particular series and the Trustee,
upon Company request and at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of such indebtedness, when
(1) either
(A) all Securities of such series theretofore
authenticated and delivered (other than (i) Securities which
have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 306 and (ii)
Securities for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged
from
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such trust, as provided in the last paragraph of Section 1003)
have been delivered to the Trustee for cancellation; or
(B) with respect to all Outstanding Securities of
such series described in (A) above not theretofore delivered
to the Trustee for cancellation,
(i) The Company has deposited or caused to
be deposited with the Trustee as trust funds in trust an
amount sufficient to pay and discharge the entire indebtedness
on all such Outstanding Securities of such series for
principal (and premium, if any) and interest to the Stated
Maturity or any Redemption Date as contemplated by Section
403, as the case may be; or
(ii) The Company has deposited or caused to
be deposited with the Trustee as obligations in trust such
amount of direct obligations of, or obligations the principal
of and interest on which are fully guaranteed by, the United
States of America (other than obligations subject to
prepayment, redemption or call prior to their stated maturity)
as will, together with the predetermined and certain income to
accrue thereon (without consideration of any reinvestment
thereof), be sufficient to pay and discharge when due the
entire indebtedness on all such Outstanding Securities of such
series for principal (and premium, if any) and interest to the
Stated Maturity or any Redemption Date as contemplated by
Section 403, as the case may be;
(2) the Company has paid or caused to be paid all other sums
payable with respect to the Securities of such series;
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and
discharge of the entire indebtedness on all Securities of such series
have been complied with; and
(4) if (i) the entire indebtedness on the Outstanding
Securities of such series is to be satisfied and discharged pursuant to
Section 401(l)(B) above, (ii) such Securities will not become due and
payable at their Stated Maturity within one year after the date of
deposit provided in Section 40l(1)(B) above, and (iii) such Securities
of such series are not to be called for redemption within one year of
the date of such deposit under arrangements satisfactory to the Trustee
as of the date of such deposit, then (x) the Company shall have
specified the applicability (as provided in Section 301) of this
Section 401(4) to the Securities of such series, (y) the Company shall
have given, not later than the date of such deposit, notice of such
deposit to the Holders of Securities of such series and (z) the Trustee
shall have received an Opinion of Counsel (which Counsel shall be
recognized tax counsel) stating that, in such counsel's opinion, the
deposit of funds or obligations and the satisfaction and discharge of
indebtedness on the Securities of such series pursuant to this Section
401 will not result in recognition by the Holders of income, gain or
loss for federal income tax purposes (other than income, gain or loss
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which would have been recognized in like amount and at a like time
absent such deposit, satisfaction and discharge).
Upon the satisfaction of the conditions set forth in this Section 401
with respect to all the Securities of any series, the terms and conditions of
such series, including the terms and conditions with respect thereto set forth
in this Indenture, shall no longer be binding upon, or applicable to, the
Company, and the Holders of the Securities of such series shall look for payment
only to the funds or obligations deposited with the Trustee pursuant to Section
401(l)(B); provided, however, that, in no event shall the Company be discharged
(a) from any payment obligations in respect of Securities of such series which
are deemed not to be Outstanding under clause (iii) of the definition thereof if
such obligations continue to be valid obligations of the Company under
applicable law, (b) from any obligations under Section 607 or the last paragraph
of Section 1003, and (c) from any obligations under Section 305 and 306 (except
that Securities of such series issued upon registration of transfer or exchange
or in lieu of mutilated, lost, destroyed or stolen Securities shall not be
obligations of the Company), and Section 701.
SECTION 402. Satisfaction and Discharge of Indenture.
Upon compliance by the Company with the provisions of Section 401 as to
the satisfaction and discharge of each series of Securities issued hereunder,
this Indenture shall cease to be of any further effect (except as otherwise
provided herein). Upon Company Request (and at the expense of the Company), the
Trustee shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture. In the event there are two or more Trustees
hereunder, then the effectiveness of any such instrument shall be conditioned
upon receipt of such instruments from all Trustees hereunder.
Notwithstanding the satisfaction and discharge of this Indenture, any
obligations of the Company under Sections 305, 306, 607 and 701 and the last
paragraph of Section 1003, and of the Trustee under Sections 403 and 614 and the
last two paragraphs of Section 1003, shall survive.
SECTION 403. Application of Trust Money.
Subject to the provisions of the last two paragraphs of Section 1003,
all money and obligations deposited with the Trustee pursuant to Section 401
shall be held irrevocably in trust and shall be made under the terms of an
escrow trust agreement in form and substance satisfactory to the Trustee. Such
money and obligations shall be applied by the Trustee, in accordance with the
provisions of the Securities, this Indenture and such escrow trust agreement, to
the payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal of (and premium, if any) and interest, if
any, on the Securities for the payment of which such money and obligations have
been deposited with the Trustee (but such money need not be segregated from
other funds except to the extent required by law). If Securities of any series
are to be redeemed prior to their Stated Maturity, whether pursuant to any
optional redemption
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provisions or in accordance with any mandatory sinking fund requirement, the
Company shall make such arrangements as are satisfactory to the Trustee for the
giving of notice of redemption by the Trustee in the name, and at the expense,
of the Company.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default," wherever used herein with respect to Securities of
any series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Security
of that series when it becomes due and payable, and continuance of such
default for a period of 30 days; or
(2) default in the payment of the principal of (or premium, if
any, on) any Security of that series at its Maturity; or
(3) default in the deposit of any sinking fund payment, when
and as due by the terms of a Security of that series; or
(4) default in the performance, or breach, of any covenant or
agreement of the Company in this Indenture (other than a covenant or
agreement a default in whose performance or whose breach is elsewhere
in this Section specifically dealt with or which has expressly been
included in this Indenture solely for the benefit of series of
Securities other than that series), and continuance of such default or
breach for a period of 90 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in principal
amount of the Outstanding Securities of that series a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or
(5) the Company pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
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(C) consents to the appointment of a Custodian of it
or for all or substantially all of its property, or
(D) makes a general assignment for the benefit of its
creditors; or
(6) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company in an
involuntary case;
(B) appoints a Custodian of the Company or for all or
substantially all of its property, or
(C) orders the liquidation of the Company,
and the order or decree remains unstayed and in effect for 60 days.
The term "Bankruptcy Law" means Title 11 of the U.S. Code or any
similar Federal or State law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
(7) any other Event of Default provided with respect to the
Securities of that series pursuant to Section 301 or in a supplemental
indenture.
SECTION 502. Acceleration of Maturity; Rescission and
Annulment
If an Event of Default with respect to Securities of any series at the
time Outstanding occurs and is continuing, then in every such case the Trustee
or the Holders of not less than 25% in principal amount of the outstanding
Securities of that series may declare the principal amount (or, if the
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount as may be specified in the terms of that series) of all
of the Securities of that series to be due and payable immediately, by a notice
in writing to the Company (and to the Trustee if given by Holders), and upon any
such declaration such principal amount (or specified portion) shall become
immediately due and payable.
Upon payment of such amount, all obligations of the Company in respect
of the payment of principal of the Securities of such series shall terminate.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if
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(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest, if any, on all Securities
of that series,
(B) the principal of (and premium, if any, on) any
Securities of that series which have become due otherwise than
by such declaration of acceleration and interest thereon at
the rate or rates prescribed therefor in such Securities,
(C) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate or rates,
if any, prescribed therefor in such Securities, and
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel; and
(2) all Events of Default with respect to Securities of that
series, other than the non-payment of the principal of Securities of
that series which have become due solely by such declaration of
acceleration, have been cured, or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for
Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any
Security of any series when such interest becomes due and payable and
such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Security of any series at the Maturity
thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of Securities of such series, the whole amount then due and payable on
Securities of such series for principal (and premium, if any) and interest and,
to the extent that payment of such interest shall be legally enforceable,
interest on any overdue principal (and premium, if any) and on any overdue
interest, at the rate or rates, if any, prescribed therefor in such Securities;
and, in addition thereto, such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
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If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Securities, wherever
situated.
If an Event of Default with respect to Securities of any series occurs
and is continuing, the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of Securities of such series by
such appropriate judicial proceedings as the Trustee shall deem most effectual
to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration of
acceleration or otherwise and irrespective of whether the Trustee shall have
made any demand on the Company for the payment of overdue principal or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(i) to file and prove a claim for the whole amount of
principal (or with respect to Original Issue Discount Securities, such
portion of the principal amount as may be specified in the terms of
such Securities), and premium, if any and interest owing and unpaid in
respect of the Securities and to file such other papers or documents as
may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and
of the Holders allowed in such judicial proceeding, and
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial proceeding
is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making
of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607. Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization,
arrangement, adjustment or composition affecting the Securities or the
rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
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SECTION 505. Trustee May Enforce Claims Without Possession
of Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (or premium,
if any) or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the payment of all amounts due the Trustee under Section 607;
SECOND: To the payment of the amounts then due and unpaid for principal
of (and premium, if any) and interest, if any, on the Securities in respect of
which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due and
payable on such Securities for principal (and premium, if any) and interest, if
any, respectively; and
THIRD: The balance, if any, to the Person or Persons entitled
thereto.
SECTION 507. Limitation on Suits.
No Holder of any Security of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Indenture,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless
(1) An Event of Default shall have occurred and be continuing
with respect to the Securities of that series and such Holder shall
have previously given written notice thereof to the Trustee;
(2) the Holders of not less than 25% in principal amount of
the Outstanding Securities of that series shall have made written
request to the Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
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(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Securities of that
series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other Holder
or to obtain or to seek to obtain priority or preference over any other Holder
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all Holders of Securities of
such series.
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Section 307) interest, if any, on such Security on the Stated Maturity or
Maturities expressed in such Security (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 306, no right or remedy herein conferred upon or reserved to the Trustee
or to the Holders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
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No delay or omission of the Trustee or of any Holder of any Security to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
SECTION 512. Control by Holders.
The Holders of a majority in principal amount of the Outstanding
Securities of any series 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, with respect to the
Securities of such series, provided that
(1) such direction shall not be in conflict with any rule of
law or with this Indenture,
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction,
(3) such direction is not unduly prejudicial to the rights of
other Holders, and
(4) such direction would not involve the Trustee in personal
liability.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to such
series and its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest, if any (subject to the provisions of Section 502), on any
Security of such series, or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of the Securities of such series under this Indenture; but no such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon.
SECTION 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for
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any action taken, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees at trial and on appeal, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to any
suit instituted by the Company, to any suit instituted by the Trustee, to any
suit instituted by any Holder, or group of Holders, holding in the aggregate
more than 10% in principal amount of the Outstanding Securities of any series,
or to any suit instituted by any Holder for the enforcement of the payment of
the principal of (or premium, if any) or interest on any Security on or after
the Stated Maturity or Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date).
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such certificate or opinion
which by any provision hereof is specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not it conforms to the requirements of this
Indenture.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(c) No provision of this Indenture 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, except that
(1) this Subsection shall not be construed to limit the effect
of Subsection (a) of this Section;
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(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be 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 a majority in principal
amount of the Outstanding Securities of any series, as provided in
Section 512, 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 Indenture with
respect to the Securities of such series; and
(4) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to
it.
(d) Whether or not herein expressly so provided, every provision of
this Indenture relating to the conduct of or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
SECTION 602. Notice of Defaults.
Within 90 days after the occurrence of any default hereunder with
respect to the Securities of any series, the Trustee shall transmit by mail to
all Holders of Securities of such series, as their names and addresses appear in
the Security Register, notice of such default hereunder known to the Trustee,
unless such default shall have been cured or waived; provided, however, that
except in the case of a default in the payment of the principal of (or premium,
if any) or interest, if any, on any Security of such series, in the payment of
any sinking fund installment with respect to Securities of such series or in the
payment of the Redemption Price of any Securities as to which notice of
redemption has been given, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee or a
trust committee of directors or Responsible Officers of the Trustee in good
faith determines that the withholding of such notice is in the interest of the
Holders of Securities of such series; and provided, further, that in the case of
any default of the character specified in Section 501(4) with respect to
Securities of such series, no such notice to Holders shall be given until at
least 30 days after the occurrence thereof. For the purpose of this Section, the
term "default" means any event which is, or after notice or lapse of time or
both would become, an Event of Default with respect to Securities of such
series.
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SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness 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) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate;
(d) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders pursuant to this Indenture, unless
such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(f) 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, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters
as it may see fit;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney,
including any Authenticating Agent, appointed with due care by it
hereunder; and
(h) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Indenture.
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SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except
certificates of authentication, shall be taken as the statements of the Company,
and neither the Trustee nor any Authenticating Agent assumes any responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Securities. Neither the Trustee nor
any Authenticating Agent shall be accountable for the use or application by the
Company of Securities or the proceeds thereof.
SECTION 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, the Security
Registrar or any other agent of the Company or the Trustee, in their individual
or any other capacity, may become the owner or pledgee of Securities and,
subject to Sections 608 and 613, may otherwise deal with the Company with the
same rights it would have if it were not Trustee, Authenticating Agent, Paying
Agent, Security Registrar or such other agent.
SECTION 606. Money Held in Trust.
Money held by the Trustee or any Paying Agent in trust hereunder need
not be segregated from other funds except to the extent required by law. Neither
the Trustee nor any paying Agent shall be subject to any liability for interest
on any money received by it hereunder except as otherwise agreed with the
Company.
SECTION 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee and its agents for, and to hold
them harmless against, any loss, liability or expense incurred without
negligence or bad faith on their part, arising out of or in connection
with the acceptance or administration of the trust or trusts hereunder,
including the costs and expenses of defending themselves against any
claim or liability in connection with the exercise or performance of
any of their powers or duties hereunder.
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As security for the performance of the obligations of the Company under
this Section, the Trustee shall have a lien prior to the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the payment of principal (or premium, if any) or interest, if any,
on Securities.
The provisions of this Section 607 shall survive the resignation of the
Trustee or the discharge of this Indenture. When the Trustee incurs expenses
after the occurrence of a default specified in Section 501(5) or (6) the
expenses are intended to constitute expenses of administration under any
Bankruptcy law.
SECTION 608. Disqualification; Conflicting Interests.
(a) If the Trustee has or shall acquire any conflicting interest, as
defined in this Section, with respect to the Securities of any series, it shall,
within 90 days after ascertaining that it has such conflicting interest, either
eliminate such conflicting interest or resign with respect to the Securities of
that series in the manner and with the effect hereinafter specified in this
Article.
(b) In the event that the Trustee shall fail to comply with the
provisions of Subsection (a) of this Section with respect to the Securities of
any series, the Trustee shall, within l0 days after the expiration of such
90-day period, transmit by mail to all Holders of Securities of that series, as
their names and addresses appear in the Security Register, notice of such
failure.
(c) For the purposes of this Section, the Trustee shall be deemed to
have a conflicting interest with respect to the Securities of any series if
(1) the Trustee is trustee under this Indenture with respect
to the Outstanding Securities of any series other than that series or
is trustee under another indenture under which any other securities, or
certificates of interest or participation in any other securities, of
the Company are outstanding, unless such other indenture is a
collateral trust indenture under which the only collateral consists of
Securities issued under this Indenture, provided that there shall be
excluded from the operation of this paragraph this Indenture with
respect to the Securities of any series other than that series or any
indenture or indentures under which other securities, or certificates
of interest or participation in other securities, of the Company are
outstanding, if
(i) this Indenture and such other indenture or
indentures are wholly unsecured and such other indenture or
indentures are hereafter qualified under the Trust Indenture
Act, unless the Commission shall have found and declared by
order pursuant to Section 305(b) or Section 307(c) of the
Trust Indenture Act that differences exist between the
provisions of this Indenture with respect to Securities of
that series and one or more other series or the provisions of
such other indenture or indentures which are so likely to
involve a material conflict of interest as to make it
necessary in the public interest or for the protection of
investors to disqualify the Trustee from acting as such under
this Indenture with
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respect to the Securities of that series and such other series
or under such other indenture or indentures, or
(ii) the Company shall have sustained the burden of
proving, on application to the Commission and after
opportunity for hearing thereon, that trusteeship under this
Indenture with respect to the Securities of that series and
such other series or such other indenture or indentures is not
so likely to involve a material conflict of interest as to
make it necessary in the public interest or for the protection
of investors to disqualify the Trustee from acting as such
under this Indenture with respect to the Securities of that
series and such other series or under such other indenture or
indentures;
(2) the Trustee or any of its directors or executive officers
is an obligor upon any Securities of such series or an underwriter for
the Company;
(3) the Trustee directly or indirectly controls or is directly
or indirectly controlled by or is under direct or indirect common
control with the Company or an underwriter for the Company;
(4) the Trustee or any of its directors or executive officers
is a director, officer, partner, employee, appointee or representative
of the Company, or of an underwriter (other than the Trustee itself)
for the Company who is currently engaged in the business of
underwriting, except that (i) one individual may be a director or an
executive officer, or both, of the Trustee and a director or an
executive officer, or both, of the Company but may not be at the same
time an executive officer of both the Trustee and the Company; (ii) if
and so long as the number of directors of the Trustee in office is more
than nine, one additional individual may be a director or an executive
officer, or both, of the Trustee and a director of the Company; and
(iii) the Trustee may be designated by the Company or by any
underwriter for the Company to act in the capacity of transfer agent,
registrar, custodian, paying agent, fiscal agent, escrow agent or
depositary, or in any other similar capacity, or, subject to the
provisions of paragraph (1) of this Subsection, to act as trustee,
whether under an indenture or otherwise;
(5) 10% or more of the voting securities of the Trustee is
beneficially owned either by the Company or by any director, partner or
executive officer thereof, or 20% or more of such voting securities is
beneficially owned, collectively, by any two or more of such persons;
or 10% or more of the voting securities of the Trustee is beneficially
owned either by an underwriter for the Company or by any director,
partner or executive officer thereof, or is beneficially owned,
collectively, by any two or more such persons;
(6) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as
hereinafter in this Subsection defined), (i) 5% or more of the voting
securities, or 10% or more of any other class of security, of the
Company not including the Securities issued under this Indenture and
securities issued under any
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other indenture under which the Trustee is also trustee, or (ii) 10% or
more of any class of security of an underwriter for the Company;
(7) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as
hereinafter in this Subsection defined), 5% or more of the voting
securities of any person who, to the knowledge of the Trustee, owns 10%
or more of the voting securities of, or controls directly or indirectly
or is under direct or indirect common control with, the Company;
(8) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as
hereinafter in this Subsection defined), 10% or more of any class of
security of any person who, to the knowledge of the Trustee, owns 50%
or more of the voting securities of the Company; or
(9) the Trustee owns, on March 1 in any calendar year, in the
capacity of executor, administrator, testamentary or inter vivos
trustee, guardian, committee or conservator, or in any other similar
capacity, an aggregate of 25% or more of the voting securities, or of
any class of security, of any person, the beneficial ownership of a
specified percentage of which would have constituted a conflicting
interest under paragraph (6), (7) or (8) of this Subsection. As to any
such securities of which the Trustee acquired ownership through
becoming executor, administrator or testamentary trustee of an estate
which included them, the provisions of the preceding sentence shall not
apply, for a period of two years from the date of such acquisition, to
the extent that such securities included in such estate do not exceed
25% of such voting securities or 25% of any such class of security.
Promptly after March 1 in each calendar year, the Trustee shall make a
check of its holdings of such securities in any of the above-mentioned
capacities as of such March 1. If the Company fails to make payment in
full of the principal of (or premium, if any) or interest, if any, on
any of the Securities when and as the same becomes due and payable, and
such failure continues for 30 days thereafter, the Trustee shall make a
prompt check of its holdings of such securities in any of the
above-mentioned capacities as of the date of the expiration of such
30-day period, and after such date, notwithstanding the foregoing
provisions of this paragraph, all such securities so held by the
Trustee, with sole or joint control over such securities vested in it,
shall, but only so long as such failure shall continue, be considered
as though beneficially owned by the Trustee for the purposes of
paragraphs (6), (7) and (8) of this Subsection with respect to
Securities of such series.
In determining whether the Trustee has a conflicting interest with
respect to any series of Securities under this Subsection, each other series of
Securities will be treated as having been issued under an indenture other than
this Indenture.
The specification of percentages in paragraphs (5) through (9),
inclusive, of this Subsection shall not be construed as indicating that the
ownership of such percentages of the securities of a person is or is not
necessary or sufficient to constitute direct or indirect control for the
purposes of paragraph (3) or (7) of this Subsection.
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For the purposes of paragraphs (6), (7), (8) and (9) of this Subsection
only, (i) the terms "security" and "securities" shall include only such
securities as are generally known as corporate securities, but shall not include
any note or other evidence of indebtedness issued to evidence an obligation to
repay moneys lent to a person by one or more banks, trust companies or banking
firms, or any certificate of interest or participation in any such note or
evidence of indebtedness; (ii) an obligation shall be deemed to be "in default"
when a default in payment of principal shall have continued for 30 days or more
and shall not have been cured; and (iii) the Trustee shall not be deemed to be
the owner or holder of (A) any security which it holds as collateral security,
as trustee or otherwise, for an obligation which is not in default as defined in
clause (ii) above, or (B) any security which it holds as collateral security
under this Indenture, irrespective of any default hereunder, or (C) any security
which it holds as agent for collection, or as custodian, escrow agent or
depositary, or in any similar representative capacity.
(d) For the purposes of this Section:
(1) The term "underwriter," when used with reference to the
Company, means every person who, within three years prior to the time
as of which the determination is made, has purchased from the Company
with a view to, or has offered or sold for the Company in connection
with, the distribution of any security of the Company outstanding at
such time, or has participated or has had a direct or indirect
participation in any such undertaking, or has participated or has had a
participation in the direct or indirect underwriting of any such
undertaking, but such term shall not include a person whose interest
was limited to a commission from an underwriter or dealer not in excess
of the usual and customary distributors' or sellers' commission.
(2) The term "director" means any director of a corporation or
any individual performing similar functions with respect to any
organization, whether incorporated or unincorporated.
(3) The term "person" means an individual, a corporation, a
partnership, an association, a joint-stock company, a trust, an
unincorporated organization or a government or political subdivision
thereof. As used in this paragraph, the term "trust" shall include only
a trust where the interest or interests of the beneficiary or
beneficiaries are evidenced by a security.
(4) The term "voting security" means any security presently
entitling the owner or holder thereof to vote in the direction or
management of the affairs of a person, or any security issued under or
pursuant to any trust, agreement or arrangement whereby a trustee or
trustees or agent or agents for the owner or holder of such security
are presently entitled to vote in the direction or management of the
affairs of a person.
(5) The term "Company" means any obligor upon the Securities.
(6) The term "executive officer" means the president, every
vice president, every trust officer, the cashier, the secretary and the
treasurer of a corporation, and any
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individual customarily performing similar functions with respect to any
organization whether incorporated or unincorporated, but shall not
include the chairman of the board of directors.
(e) The percentages of voting securities and other securities specified
in this Section shall be calculated in accordance with the following provisions:
(1) A specified percentage of the voting securities of the
Trustee, the Company or any other person referred to in this Section
(each of whom is referred to as a "person" in this paragraph) means
such amount of the outstanding voting securities of such person as
entitles the holder or holders thereof to cast such specified
percentage of the aggregate votes which the holders of all the
outstanding voting securities of such person are entitled to cast in
the direction or management of the affairs of such person.
(2) A specified percentage of a class of securities of a
person means such percentage of the aggregate amount of securities of
the class outstanding.
(3) The term "amount," when used in regard to securities,
means the principal amount if relating to evidences of indebtedness,
the number of shares if relating to capital shares and the number of
units if relating to any other kind of security.
(4) The term "outstanding" means issued and not held by or for
the account of the issuer. The following securities shall not be deemed
outstanding within the meaning of this definition.
(i) securities of an issuer held in a sinking fund
relating to securities of the issuer of the same class;
(ii) securities of an issuer held in a sinking fund
relating to another class of securities of the issuer, if the
obligation evidenced by such other class of securities is not
in default as to principal or interest or otherwise;
(iii) securities pledged by the issuer thereof as
security for an obligation of the issuer not in default as to
principal or interest or otherwise; and
(iv) securities held in escrow if placed in escrow by
the issuer thereof; provided, however, that any voting
securities of an issuer shall be deemed outstanding if any
person other than the issuer is entitled to exercise the
voting rights thereof.
(5) A security shall be deemed to be of the same class as
another security if both securities confer upon the holder or holders
thereof substantially the same rights and privileges; provided,
however, that, in the case of secured evidences of indebtedness, all of
which are issued under a single indenture, differences in the interest
rates or maturity dates of various series thereof shall not be deemed
sufficient to constitute such series different classes; and provided,
further, that, in the case of unsecured evidences of
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indebtedness, differences in the interest rates or maturity dates
thereof shall not be deemed sufficient to constitute them securities of
different classes, whether or not they are issued under a single
indenture
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States,
any State thereof or the District of Columbia, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000 subject to supervision or examination by Federal, State or
District of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee or Trustees pursuant to this Article shall become effective
until the acceptance of appointment by the successor Trustee or Trustees in
accordance with the applicable requirements of Section 611.
(b) The Trustee may resign at any time with respect to the Securities
of one or more series by giving written notice thereof to the Company. If the
instrument of acceptance by a successor Trustee required by Section 611 shall
not have been delivered to the Trustee within 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 with respect to the
Securities of such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Securities of such series, delivered to the Trustee and to
the Company.
(d) If at any time the Trustee shall fail to comply with Section 608(a)
after written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Security for at least six months, the Company by a Board
Resolution may remove the Trustee with respect to the Securities of such series
or, subject to Section 514, any Holder who has been a bona fide Holder of a
Security of such series for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee with respect to the Securities of such series and the
appointment of a successor Trustee.
(e) If at any time:
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(1) the Trustee shall cease to be eligible under Section 609
and shall fail to resign after written request therefor by the Company
or by any Holder who has been a bona fide Holder of a Security for at
least six months, or
(2) the Trustee shall become incapable of acting 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, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to all Securities, or (ii) subject to Section 514, any
holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.
(f) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, with
respect to the Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with respect
to the Securities of that or those series (it being understood that any such
successor Trustee may be appointed with respect to the Securities of one or more
or all of such series and that at any time there shall be only one Trustee with
respect to the Securities of any particular series) and shall comply with the
applicable requirements of Section 611. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Securities of any series shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance
of such appointment in accordance with the applicable requirements of Section
611, become the successor Trustee with respect to the Securities of such series
and to that extent supersede the successor Trustee appointed by the Company with
respect to such series. If no successor Trustee with respect to the Securities
of any series shall have been so appointed by the Company or the Holders of the
Securities of such series and accepted appointment in the manner required by
Section 611, any Holder who has been a bona fide holder of a Security of such
series for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
(g) The Company shall give notice of each resignation and each removal
of the Trustee with respect to the securities of any series and each appointment
of a successor Trustee with respect to the Securities of any series by mailing
written notice of such event by first-class mail, postage prepaid, to all
Holders of Securities of such series as their names and addresses appear in the
Security Register. Each notice shall include the name of the successor Trustee
with respect to the Securities of such series and the address of its Corporate
Trust Office.
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SECTION 611. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all series of Securities, every such successor Trustee so appointed
shall execute, acknowledge and deliver to the Company and to the retiring
Trustee an instrument accepting such appointment, and thereupon the resignation
or removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee; but, on the
request of the Company or the successor Trustee, such retiring Trustee shall,
upon payment of its charges due pursuant to Section 607, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such retiring Trustee
hereunder subject to the lien provided in Section 607.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (2)
if the retiring Trustee is not retiring with respect to all series of
Securities, shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities or that or those series as to
which the retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, it being understood that
nothing herein or in such supplemental indenture shall constitute such Trustees
co-trustees of the same trust and that each such Trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee; and upon the execution and delivery of
such supplemental indenture the resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates; but, on request of the Company or any successor
Trustee, such retiring trustee shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee hereunder
with respect to the Securities of that or these series to which the appointment
of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to in paragraph (a) or (b) of this Section, as the case may be.
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(d) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
SECTION 613. Preferential Collection of Claims Against Company.
(a) Subject to Subsection (b) of this Section, if the Trustee shall be
or shall become a creditor, directly or indirectly, secured or unsecured, of the
Company within three months prior to a default, as defined in Subsection (c) of
this Section, or subsequent to such a default, then, unless and until such
default shall be cured, the Trustee shall set apart and hold in a special
account for the benefit of the Trustee individually, the Holders of the
Securities and the holders of other indenture securities, as defined in
Subsection (c) of this Section:
(1) an amount equal to any and all reductions in the amount
due and owing upon any claim as such creditor in respect of principal
or interest, effected after the beginning of such three month period
and valid as against the Company and its other creditors, except any
such reduction resulting from the receipt or disposition of any
property described in paragraph (2) of this Subsection, or from the
exercise of any right of set-off which the Trustee could have exercised
if a petition in bankruptcy had been filed by or against the Company
upon the date of such default; and
(2) all property received by the Trustee in respect of any
claims as such creditor, either as security therefor, or in
satisfaction or composition thereof, or otherwise, after the beginning
of such three month period, or an amount equal to the proceeds of any
such property, if disposed of, subject, however, to the rights, if any,
of the Company and its other creditors in such property or such
proceeds.
Nothing herein contained, however, shall affect the right of the Trustee:
(A) to retain for its own account (i) payments made
on account of any such claim by any person (other than the Company) who
is liable thereon, and (ii) the proceeds of the bona fide sale of any
such claim by the Trustee to a third Person, and (iii) distributions
made in cash, securities or other property in respect of claims filed
against
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the Company in bankruptcy or receivership or in proceedings for
reorganization pursuant to the Federal Bankruptcy Code or applicable
State law;
(B) to realize, for its own account, upon any
property held by it as security for any such claim, if such property
was so held prior to the beginning of such three month period;
(C) to realize, for its own account, but only to the
extent of the claim hereinafter mentioned, upon any property held by it
as security for any such claim, if such claim was created after the
beginning of such three month period and such property was received as
security therefor simultaneously with the creation thereof, and if the
Trustee shall sustain the burden of proving that at the time such
property was so received the Trustee had no reasonable cause to believe
that a default, as defined in Subsection (c) of this Section, would
occur within three months; or
(D) to receive payment on any claim referred to in
paragraph (B) or (C), against the release of any property held as
security for such claim as provided in paragraph (B) or (C), as the
case may be, to the extent of the fair value of such property.
For the purposes of paragraphs (B), (C) and (D), property substituted
after the beginning of such three month period for property held as security at
the time of such substitution shall, to the extent of the fair value of the
property released, have the same status as the property released, and, to the
extent that any claim referred to in any of such paragraphs is created in
renewal of or in substitution for or for the purpose of repaying or refunding
any pre-existing claim of the Trustee as such creditor, such claim shall have
the same status as such pre-existing claim.
If the Trustee shall be required to account, the funds and property
held in such special account and the proceeds thereof shall be apportioned among
the Trustee, the Holders and the holders of other indenture securities in such
manner that the Trustee, the Holders and the holders of other indenture
securities realize, as a result of payments from such special account and
payments of dividends on claims filed against the Company in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Federal
Bankruptcy Code or applicable State law, the same percentage of their respective
claims, figured before crediting to the claim of the Trustee anything on account
of the receipt by it from the Company of the funds and property in such special
account and before crediting to the respective claims of the Trustee and the
Holders and the holders of other indenture securities dividends on claims filed
against the Company in bankruptcy or receivership or in proceedings for
reorganization pursuant to the Federal Bankruptcy Code or applicable State law,
but after crediting thereon receipts on account of the indebtedness represented
by their respective claims from all sources other than from such dividends and
from the funds and property so held in such special account. As used in this
paragraph, with respect to any claim, the term "dividends" shall include any
distribution with respect to such claim, in bankruptcy or receivership or
proceedings for reorganization pursuant to the Federal Bankruptcy Code or
applicable State law, whether such distribution is made in cash, securities or
other property, but shall not include any such distribution with respect to the
secured portion, if any, of such claim. The court in which such bankruptcy,
receivership or proceeding
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for reorganization is pending shall have jurisdiction (i) to apportion among the
Trustee, the holders and the holders of other indenture securities, in
accordance with the provisions of this paragraph, the funds and property held in
such special account and proceeds thereof, or (ii) in lieu of such
apportionment, in whole or in part, to give to the provisions of this paragraph
due consideration in determining the fairness of the distributions to be made to
the Trustee and the Holders and the holders of other indenture securities with
respect to their respective claims, in which event it shall not be necessary to
liquidate or to appraise the value of any securities or other property held in
such special account or as security for any such claim, or to make a specific
allocation of such distributions as between the secured and unsecured portions
of such claims, or otherwise to apply the provisions of this paragraph as a
mathematical formula.
Any Trustee which has resigned or been removed after the beginning of
such three month period shall be subject to the provisions of this Subsection as
though such resignation or removal had not occurred. If any Trustee has resigned
or been removed prior to the beginning of such three month period, it shall be
subject to the provisions of this Subsection if and only if the following
conditions exist:
(i) the receipt of property or reduction of claim, which would
have given rise to the obligation to account if such Trustee had
continued as Trustee, occurred after the beginning of such three month
period; and
(ii) such receipt of property or reduction of claim occurred
within three months after such resignation or removal.
(b) There shall be excluded from the operation of Subsection (a) of
this Section a creditor relationship arising from:
(1) the ownership or acquisition of securities issued under
any indenture, or any security or securities having a maturity of one
year or more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court
of competent jurisdiction or by this Indenture, for the purpose of
preserving any property which shall at any time be subject to the lien
of this Indenture or of discharging tax liens or other prior liens or
encumbrances thereon, if notice of such advances and of the
circumstances surrounding the making thereof is given to the Holders at
the time and in the manner provided in this Indenture;
(3) disbursements made in the ordinary course of business in
the capacity of trustee under an indenture, transfer agent, registrar,
custodian, escrow agent, paying agent, fiscal agent or depositary, or
other similar capacity;
(4) an indebtedness created as a result of services rendered
or premises rented; or an indebtedness created as a result of goods or
securities sold in a cash transaction, as defined in Subsection (c) of
this Section;
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(5) the ownership of stock or of other securities of a
corporation organized under the provisions of Section 25(a) of the
Federal Reserve Act, as amended, which is directly or indirectly a
creditor of the Company; and
(6) the acquisition, ownership, acceptance or negotiation of
any drafts, bills of exchange, acceptances or obligations which fall
within the classification of self-liquidating paper, as defined in
Subsection (c) of this Section.
(c) For the purposes of this Section only:
(1) the term "default" means any failure to make payment in
full of the principal of (or premium, if any) or interest, if any, on
any of the Securities or upon the other indenture securities when and
as such principal (or premium, if any) or interest, if any, becomes due
and payable;
(2) the term "other indenture securities" means securities
upon which the Company is an obligor outstanding under any other
indenture (i) under which the Trustee is also trustee, (ii) which
contains provisions substantially similar to the provisions of this
Section, and (iii) under which a default exists at the time of the
apportionment of the funds and property held in the special account
provided for in this Section;
(3) the term "cash transaction" means any transaction in which
full payment for goods or securities sold is made within seven days
after delivery of the goods or securities in currency or in checks or
other orders drawn upon banks or bankers and payable upon demand;
(4) the term "self-liquidating paper" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by the Company for the purpose of financing the purchase,
processing, manufacturing, shipment, storage or sale of goods, wares or
merchandise and which is secured by documents evidencing title to,
possession of, or a lien upon, the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the goods, wares or
merchandise previously constituting the security, provided the security
is received by the Trustee simultaneously with the creation of the
creditor relationship with the Company arising from the making,
drawing, negotiating or incurring of the draft, bill of exchange,
acceptance or obligation;
(5) the term "Company" means any obligor upon the Securities;
and
(6) the term "Federal Bankruptcy Code" means the United States
Bankruptcy Code or Title 11 of the United States Code.
SECTION 614. Appointment of Authenticating Agent.
At any time when any of the Securities remain Outstanding the Trustee
may appoint an Authenticating Agent or Agents with respect to one or more series
of Securities which shall be authorized to act on behalf of the Trustee to
authenticate and deliver Securities of such series
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with respect to which it has been so designated, and Securities so authenticated
and delivered shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by the Trustee
hereunder.
Wherever reference is made in this Indenture to the authentication and
delivery of Securities by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall at all
times be a bank or trust company or corporation organized and doing business and
in good standing under the laws of the United States, any State thereof or the
District of Columbia, authorized under such laws to act as Authenticating Agent,
having a combined capital and surplus of not less than $50,000,000 and subject
to supervision or examination by Federal, State or District of Columbia
authority. If such Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, such Authenticating Agent shall
resign immediately in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign with respect to one or more series
of Securities at any time by giving written notice thereof to the Trustee and to
the Company. The Trustee may at any time terminate the agency of an
Authenticating Agent with respect to one or more series of Securities by giving
written notice thereof to such Authenticating Agent and to the Company. Upon
receiving such a notice of resignation or upon such a termination, or in case at
any time such Authenticating Agent shall cease to be eligible in accordance with
the provisions of this Section, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall mail
written notice of such appointment by first-class mail, postage prepaid, to all
holders of Securities of the series with respect to which such Authenticating
Agent will serve, as their names and addresses appear in the Security Register.
Any successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
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The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, in accordance with
the provisions of Section 607. The provisions of Sections 104, 111, 603, 604 and
605 shall be applicable to any Authenticating Agent.
Pursuant to each appointment made under this Section, the Securities of
each series covered by such appointment may have endorsed thereon, in lieu of
the Trustee's certificate of authentication, an alternate certificate of
authentication in substantially the following form:
This is one of the Securities, of the series designated herein, issued
under the within-mentioned Indenture.
The Bank of New York
By ______________________________
as Authenticating Agent,
By _______________________________
Authorized Officer
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee with
respect to the Securities of each series (a) semi-annually, either (i) not later
than June 30 and December 31 in each year in the case of Original Issue Discount
Securities which by their terms bear interest only after Maturity, or (ii) not
later than 15 days after each Regular Record Date in the case of Securities of
any other series, if and so long as Securities of such series are Outstanding,
and (b) at such other times as the Trustee may request in writing, within 30
days after receipt by the Company of such request, a list in such form as the
Trustee may reasonably require containing all the information in the possession
or control of the Company, or any of its Paying Agents other than the Trustee,
as to the names and addresses of the Holders obtained since the date as of which
the next previous list, if any, was furnished; provided, however, that any such
list may exclude names and addresses received by the Trustee in its capacity as
Security Registrar if it shall be so acting. Any such list may be dated as of a
date not more than 15 days prior to the time such
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information is furnished or caused to be furnished and need not include
information received after such date.
SECTION 702. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar or Paying Agent, if so acting.
The Trustee may (i) destroy any list furnished to it as provided in
Section 701 upon receipt of a new complete list so furnished, (ii) destroy any
information received by it as Paying Agent or Security Registrar (if so acting)
hereunder upon delivering to itself as Trustee, not earlier than 45 days after
June 30 and December 31 of each year, a list containing the names and addresses
of the Holders obtained from such information since the delivery of the next
previous list, if any, and (iii) destroy any list delivered to itself as Trustee
which was compiled from information received by it as Paying Agent or Security
Registrar (if so acting) hereunder upon the receipt of a new complete list so
delivered.
(b) If three or more Holders of Securities of any series (herein
referred to as "applicants") apply in writing to the Trustee, and furnish to the
Trustee reasonable proof that each such applicant has owned a Security of such
series for a period of at least six months preceding the date of such
application, and such application states that the applicants desire to
communicate with other Holders of Securities of such series or with Holders of
all Securities with respect to their rights under this Indenture or under such
Securities and is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Trustee shall,
within five business days after the receipt of such application, at its
election, either
(i) afford such applicants access to the information preserved
at the time by the Trustee in accordance with Section 702(a), or
(ii) inform such applicants as to the approximate number of
Holders of Securities of such series or all Securities as the case may
be whose names and addresses appear in the information preserved at the
time by the Trustee in accordance with Section 702(a), and as to the
approximate cost of mailing to such Holders the form of proxy or other
communication, if any, specified in such application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall upon the written request of such applicants mail
to each Holder of Securities of such series or all Securities as the case may be
whose name and address appear in the information preserved at the time by the
Trustee in accordance with Section 702(a), a copy of the form of proxy or other
communication which is specified in such request, with reasonable promptness
after a tender to the Trustee of the material to be mailed and of payment, or
provision for the payment, of the reasonable expenses of mailing, unless within
five days after such tender
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the Trustee shall mail to such applicants and file with the Commission, together
with a copy of the material to be mailed, a written statement to the effect
that, in the opinion of the Trustee, such mailing would be contrary to the best
interest of the Holders of Securities of such series or all Securities as the
case may be or would be in violation of applicable law. Such written statement
shall specify the basis of such opinion. If the Commission, after opportunity
for a hearing upon the objections specified in the written statement so filed,
shall enter an order refusing to sustain any of such objections or if, after the
entry of an order sustaining one or more of such objections, the Commission
shall find, after notice and opportunity for hearing, that all the objections so
sustained have been met and shall enter an order so declaring, the Trustee shall
mail copies of such material to all such Holders with reasonable promptness
after the entry of such order and the renewal of such tender; otherwise the
Trustee shall be relieved of any obligation or duty to such applicants
respecting their application.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any Paying Agent nor the Security Registrar nor any agent of any of them
shall be held accountable by reason of the disclosure of any such information as
to the names and addresses of holders in accordance with Section 702(b),
regardless of the source from which such information was derived, and that the
Trustee shall not be held accountable by reason of mailing any material pursuant
to a request made under Section 702(b).
SECTION 703. Reports by Trustee.
(a) Within 60 days after March 1 of each year commencing with the March
1 following the date of this Indenture, if and so long as any Securities are
Outstanding hereunder, the Trustee shall transmit by mail to all Holders, as
their names and addresses appear in the Security Register, a brief report dated
as of such March 1 that complies with Trust Indenture Act ss.313(a). The Trustee
shall also comply with Trust Indenture Act ss.313(b).
(b) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each securities exchange upon which any
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when any Securities are listed on any securities
exchange.
SECTION 704. Reports by Company.
The Company shall:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Company may
be required to file with the Commission pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934; or, if the
Company is not required to file information, documents or reports
pursuant to either of said Sections, then it shall file
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with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may
be required pursuant to Section 13 of the Securities Exchange Act of
1934 in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such
rules and regulations;
(2) file with the Trustee and the Commission, in accordance
with rules and regulations prescribed from time to time by the
Commission, such additional information, documents and reports with
respect to compliance by the Company with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations; and
(3) transmit by mail to all Holders, as their names and
addresses appear in the Security Register, within 30 days after the
filing thereof with the Trustee, such summaries of any information,
documents and reports required to be filed by the Company pursuant to
paragraphs (1) and (2) of this Section as may be required by rules and
regulations prescribed from time to time by the Commission.
ARTICLE EIGHT
RESTRICTIVE COVENANTS; SUCCESSOR CORPORATION
SECTION 801. Certain Definitions.
"Consolidated Assets" means, at any date of determination, the total
assets of the Company and its Consolidated Subsidiaries determined in accordance
with generally accepted accounting principals.
"Consolidated Net Worth" means, at any date of determination, all
amounts which would be included on a balance sheet of the Company and its
Consolidated Subsidiaries under stockholders equity determined in accordance
with generally accepted accounting principles applied from time to time.
"Consolidated Subsidiaries" means all Subsidiaries of the Company that
are required to be consolidated with the Company for financial reporting
purposes in accordance with generally accepted accounting principals.
"Debt" means (i) all debt, obligations and other liabilities of the
Company and its Subsidiaries which are, at the date as of which Debt is to be
determined, includable as liabilities in a consolidated balance sheet of the
Company and its Subsidiaries, other than (x) accounts payable and accrued
expenses, (y) advances from clients obtained in the ordinary course of the
relocation management services business of the Company and its Subsidiaries and
(z) current and
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deferred income taxes and other similar liabilities, plus (ii) without
duplicating any items included in Debt pursuant to the foregoing clause (i), the
maximum aggregate amount of all liabilities of the Company or any of its
Subsidiaries under any guaranty, indemnity or similar undertaking given or
assumed of, or in respect of, the indebtedness, obligations or other
liabilities, assets, revenues, income or dividends of any Person other than the
Company or one of its Subsidiaries and (iii) all other obligations or
liabilities of the Company or any of its Subsidiaries in relation to the
discharge of the obligations of any Person other than the Company or one of its
Subsidiaries.
"Lien" means any mortgage, pledge, lien, security interest or
encumbrance.
"Material U.S. Subsidiary" means any Subsidiary of the Company which
together with its Subsidiaries at the time of determination had assets
constituting 10% or more of Consolidated Assets, accounts for 10% or more of
Consolidated Net Worth, or accounts for 10% or more of the revenues of the
Company and its Consolidated Subsidiaries for the Rolling Period immediately
preceding the date of determination.
"Rolling Period" means, with respect to any fiscal quarter, such fiscal
quarter and the three immediately preceding fiscal quarters considered as a
single accounting period.
"Special Purpose Vehicle Subsidiary" shall mean PHH Caribbean Leasing,
Inc. and any subsidiary engaged in the fleet-leasing management business which
(i) is, at any one time, a party to one or more lease agreements with only one
lessee and (ii) finances, at any one time, its investment in lease agreements on
vehicles with only one lender, which lender may be the Company.
SECTION 802. Limitation on Liens.
The Company shall not, and it shall not permit any Material U.S.
Subsidiary to, incur any Lien to secure Debt without equally and ratably
securing the Securities, except the following:
(a) deposits under worker's compensation, unemployment insurance and
social security laws or to secure statutory obligations or surety or appeal
bonds or performance or other similar bonds in the ordinary course of business,
or statutory liens of landlords, carriers, warehousemen, mechanics and
materialmen and other similar Liens, in respect of liabilities which are not yet
due or which are being contested in good faith by appropriate proceedings, Liens
for taxes not yet due and payable, and Liens for taxes due and payable, the
validity or amount of which is currently being contested in good faith by
appropriate proceedings and as to which foreclosure and other enforcement
proceedings shall not have been commenced (unless fully bonded or otherwise
effectively stayed);
(b) purchase money Liens granted to the vendor or Person financing the
acquisition of property, plant or equipment if (i) limited to the specific
assets acquired and, in the case of tangible assets, other property which is an
improvement to or is acquired for specific use in connection with such acquired
property or which is real property being improved by such
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acquired property; and (ii) the debt secured by such Lien is the unpaid balance
of the acquisition cost of the specific assets on which the Lien is granted.
(c) Liens upon real and/or personal property each of which Liens
existed on such property before the time of its acquisition and was not created
in anticipation thereof; provided that no such Lien shall extend to or cover any
property of the Company or a Material U.S. Subsidiary other than the respective
property so acquired and improvements thereon;
(d) Liens arising out of attachments, judgments or awards as to which
an appeal or other appropriate proceedings for contest or review are promptly
commenced (and as to which foreclosure and other enforcement proceedings (i)
shall not have been commenced (unless fully bonded or otherwise effectively
stayed) or (ii) in any event shall be promptly fully bonded or otherwise
effectively stayed);
(e) Liens securing Debt of any Material U.S. Subsidiary to the Company;
(f) Liens covering only the property or other assets of any Special
Purpose Vehicle Subsidiary and securing only Debt of such Special Purpose
Vehicle Subsidiary;
(g) mortgage liens existing on homes acquired by the Company or any of
its Material U.S. Subsidiaries in the ordinary course of their relocation
management business;
(h) other Liens incidental to the conduct of the business of the
Company or its Subsidiaries or the ownership of their property and other assets,
which do not secure any Debt and did not otherwise arise in connection with the
borrowing of money or the obtaining of advances or credit and which do not, in
the aggregate, materially detract from the value of the property or other assets
of the Company or its Subsidiaries or materially impair the use thereof in the
operation of their businesses;
(i) Liens covering only the property or other assets of any Subsidiary
which principally transacts business outside of the United States;
(j) Liens existing prior to the date of this Indenture and any
extensions or renewals thereof;
(k) Liens incurred in the ordinary course of business to secure Debt
utilized to fund net investments in leases and leased vehicles, equity advances
on homes and other assets under management programs; and
(l) Liens to secure Debt not otherwise permitted by any of the clauses
(a) through (k) if, at the time any such Liens are incurred, the aggregate
amount of Debt secured by such Liens plus the sum of all outstanding
sale-leaseback transactions permitted hereunder does not exceed $125,000,000.
SECTION 803. Limitation on Sale-Leaseback Transactions.
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The Company shall not, and it shall not permit any Material U.S.
Subsidiary to, enter into any arrangement whereby in contemporaneous
transactions the Company or any of its Material U.S. Subsidiaries sells
essentially all of its right, title and interest in a material asset and the
Company or any of its Subsidiaries acquires or leases back the right to use such
property except that the Company may enter into sale-leaseback transactions
relating to assets not in excess of $100,000,000 in the aggregate on a
cumulative basis.
SECTION 804. Intentionally Omitted
SECTION 805. No Lien Created, etc.
This Indenture and the Securities do not create a Lien, charge or
encumbrance on any property of the Company or any Subsidiary.
A Debt or lease obligation shall be counted only once even if more than
one person is responsible for the obligation.
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SECTION 806. When Company May Merge, etc.
The Company shall not consolidate with or merge into, or transfer all
or substantially all of its assets to, another corporation unless the resulting,
surviving or transferee corporation assumes by supplemental indenture all the
obligations of the Company under the Securities and this Indenture. Thereafter
all such obligations of the predecessor corporation shall terminate.
SECTION 807. When Securities Must Be Secured.
If upon any such consolidation, merger or transfer any property or
assets of the Company or a Restricted Subsidiary would become subject to an
attaching Lien that secures Debt, then before the consolidation, merger or
transfer occurs, the Company shall secure the Securities equally and ratably
with or prior to the Debt secured by the attaching Lien. However, the Company
need not comply with this Section if the Company or a Restricted Subsidiary
could secure such Debt by a Lien on the property of the Company or any
Restricted Subsidiary without equally and ratably securing the Securities.
SECTION 808
The Trustee, subject to the provisions of Sections 601 and 603, may
receive an Opinion of Counsel as conclusive evidence that any such
consolidation, merger, sale or conveyance, and any such assumption, complies
with the provisions of this Article VIII.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of
Holders.
Without the consent of any Holder, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation to the
Company and the assumption by any such successor of the covenants of
the Company herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit of
the Holders of all or any series of Securities (and if such covenants
are to be for the benefit of less than all series of Securities,
stating that such covenants are expressly being included solely for the
benefit of such series) or to surrender any right or power herein
conferred upon the Company; provided, however, that in respect of any
such additional covenant, such
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supplemental indenture may provide for a particular period of grace
after default in the performance of such covenant (which period may be
shorter or longer than that allowed in the case of other defaults) or
may provide for an immediate enforcement upon such default or may limit
the remedies available to the Trustee upon such default; or
(3) to add any additional Events of Default; or
(4) add to or change or eliminate any of the provisions of
this Indenture to extent as shall be necessary to permit or facilitate
the issuance of Securities in bearer form, registrable or not
registrable as to principal, and with or without interest coupons; or
(5) to change or eliminate any of the provisions of this
Indenture, provided that any such change or elimination shall become
effective only when there is no Security Outstanding of any series
created prior to the execution of such supplemental indenture which is
entitled to the benefit of such provision; or
(6) to secure the Securities pursuant to the requirements of
Sections 802 or 807 or otherwise; or
(7) to establish the form or terms of Securities of any series
as permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one
or more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee,
pursuant to the requirements of Section 611(b); or
(9) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture, provided such action shall not
adversely affect the interests of the Holders of Securities of any
series in any material respect.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities of each series (each such series
voting as a separate class) affected by such supplemental indenture, by Act of
said Holders delivered to the Company and the Trustee, the Company, when
authorized by a Board Resolution, and the Trustee may enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of modifying in any manner the rights of the Holders of Securities of such
series under this Indenture; provided,
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however, that no such supplemental indenture shall, without the consent of the
Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Security, or reduce the
principal amount thereof or the rate of interest thereon or any premium
payable upon the redemption thereof, or modify the manner of
determination of the rate of interest thereon so as to affect adversely
the interest of such Holder or reduce the amount of the principal of an
Original Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section
502, or change any Place of Payment where, or the coin or currency in
which, any Security or any premium or the interest thereon is payable,
or impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date), or
(2) reduce the percentage in principal amount of the
Outstanding Securities of any series, the consent of whose Holders is
required for any such supplemental indenture, or the consent of whose
Holders is required for any waiver (of compliance with certain
provisions of this Indenture or certain defaults hereunder and their
consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section 513
or Section 1006, except to increase any such percentage or to provide
that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Outstanding Security
affected thereby, provided, however, that this clause shall not be
deemed to require the consent of any Holder with respect to changes in
the references to the "Trustee" and concomitant changes in this Section
and Section 1006, or the deletion of this proviso, in accordance with
the requirements of Sections 611(b) and 901(8).
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
The Trustee may in its discretion determine whether or not any
Securities would be affected by any supplemental indenture and any such
determination shall he conclusive upon the Holders of all Securities of any
series. The Trustee shall not be liable for any such determination made in good
faith.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
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In executing or accepting the additional trusts created by any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture and that such supplemental indenture,
when executed and delivered by the Company, will constitute a valid and binding
obligation of the Company in accordance with its terms. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Board of Directors, to any such supplemental
indenture may be prepared and executed by the Company and authenticated and
delivered by the Trustee or any Authenticating Agent in exchange for Outstanding
Securities of such series.
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ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest.
The Company covenants and agrees that it will duly and punctually pay
the principal of (and premium, if any) and interest, if any, on the Securities
of each series in accordance with the terms of the Securities of such series and
this Indenture.
SECTION 1002. Maintenance of Office or Agency.
The Company will cause to be maintained in each Place of Payment for
any series of Securities an office or agency where Securities of that series may
be presented or surrendered for payment, where Securities of that series may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Securities of that series and
this Indenture may be served. The Company will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. With respect to the Securities of any series such office or agency and
each place of Payment shall be as specified as contemplated in Section 301. In
the absence of any such provisions with respect to the Securities of any series
(i) the place of payment for such securities shall be the Borough of Manhattan,
City of New York, New York, and (ii) such office or agency in such Place of
Payment shall be the Corporate Trust Office of the Trustee therein. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee as its agent
to receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside the Borough of Manhattan, City of New York,
New York) where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
in each place of Payment for Securities of any series for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such office or agency.
SECTION 1003. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest, if
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any, on any of the Securities of that series, segregate and hold in trust for
the benefit of the persons entitled thereto a sum sufficient to pay the
principal (and premium, if any) or interest, if any, so becoming due until such
sums shall be paid to such persons or otherwise disposed of as herein provided
and will promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any
series of Securities, it will, on or before each due date of the principal of
(and premium, if any) or interest, if any, on any Securities of that series,
deposit with a Paying Agent a sum sufficient to pay the principal (and premium,
if any) or interest, if any, so becoming due, such sum to be held in trust for
the benefit of the persons entitled to such principal, premium or interest, and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee for any
series of Securities to execute and deliver to the Trustee an instrument in
which such paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal
of (and premium, if any) or interest, if any, on Securities of that
series in trust for the benefit of the Persons entitled thereto until
such sums shall be paid to such Persons or otherwise disposed of as
herein provided;
(2) give the Trustee notice of any default by the Company (or
any other obligor upon the Securities of that series) in the making of
any payment of principal (and premium, if any) or interest, if any, on
the Securities of that series; and
(3) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any paying Agent to the Trustee,
such paying agent shall be released from all further liability with respect to
such money. Upon the satisfaction and discharge of the indebtedness in respect
of all Outstanding Securities of any series all sums then held by any Paying
Agent (other than the Trustee) in respect thereof shall, upon demand of the
Company, be repaid to it or paid to the Trustee, and thereupon such Paying Agent
shall be released from all further liability with respect to such money.
The Trustee and any Paying Agent shall promptly pay to the Company upon
Company Request any money or securities held by them at any time in excess of
amounts necessary to satisfy amounts payable to the Holders, the Trustee and the
Paying Agent.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of (and premium, if
any) or interest, if any, on
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any Security of any series and remaining unclaimed for two years after such
principal (and premium, if any) or interest, if any, has become due and payable
shall, unless otherwise required by mandatory provisions of applicable escheat
or abandoned or unclaimed property law, be paid to the Company on Company
Request, or (if then held by the Company) shall be discharged from such trust;
and the Holder of such Security shall, unless otherwise required by mandatory
provisions of applicable escheat or abandoned or unclaimed property law,
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in each Place of Payment with respect to Securities of such series,
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will, unless otherwise
required by mandatory provisions of applicable escheat or abandoned or unclaimed
property law, be repaid to the Company.
SECTION 1004. Corporate Existence.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence.
SECTION 1005. Statement as to Compliance.
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, a certificate
of the principal executive officer, the principal financial officer or the
principal accounting officer (which need not comply with Section 102), stating
as to each signer thereof that
(1) a review of the activities of the Company during such year
and of performance under this Indenture has been made under his
supervision, and
(2) as of the end of such year and at the date of the
certificate to the best of his knowledge, based on such review, (a) the
Company is not in default in the fulfillment of any of its obligations
under this Indenture, or specifying each such default known to him and
the nature and status thereof and (b) no event has occurred and is
continuing which is or after notice or lapse of time or both would
become an Event of Default, or, if such an event has occurred and is
continuing, specifying each such event known to him and the nature and
status thereof.
SECTION 1006. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
covenant or condition set forth in Sections 802 through 804 and Sections 1002 to
1005, each inclusive, with
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respect to the Securities of any series if before the time for such compliance
the Holders of at least a majority in principal amount of the Outstanding
Securities of such series shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company and the duties of the Trustee
with respect to any such covenant or condition shall remain in full force and
effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article.
Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 301 for Securities of any series)
in accordance with this Article.
SECTION 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced
by a Board Resolution. In case of any redemption at the election of the Company
of less than all the Securities of any series, the Company shall, at least 60
days prior to the Redemption Date fixed by the Company (unless a shorter notice,
but not less than 30 days, shall be satisfactory to the Trustee), notify the
Trustee in writing of such Redemption Date and of the principal amount of
Securities of such series to be redeemed. In the case of any redemption of
Securities prior to the expiration of any restriction on such redemption
provided in the terms of such Securities or elsewhere in this Indenture, the
Company shall furnish the Trustee with an Officers' Certificate evidencing
compliance with such restriction.
SECTION 1103. Selection by Trustee of Securities to be Redeemed.
If less than all the Securities of any series are to be redeemed, the
particular Securities to be redeemed shall be selected by the Trustee not more
than 60 days prior to the Redemption Date, from the Outstanding Securities of
such series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of portions (equal to the minimum authorized denomination for
Securities of that series or any integral multiple thereof) of the principal
amount of Securities of such series of a denomination larger than the minimum
authorized denomination for Securities of that series. In any case where
Securities of such series are registered in the same name, the Trustee in its
discretion may treat the aggregate principal amount so registered as if it were
represented by one Security of such series. If the Securities of any series to
be redeemed consist
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of Securities having different Stated Maturities or different rates of interest
(or methods of computing interest), then the Company may, by written notice to
the Trustee, direct that the Securities of such series to be redeemed shall be
selected from among groups of such Securities having specified Stated Maturities
or rates of interest (or methods or computing interest) and the Trustee shall
thereafter select the particular Securities to be redeemed in the manner set
forth above from among the groups of such Securities so specified.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Security which has been or is to be
redeemed.
SECTION 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the Security Register.
All notices of redemption shall state;
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series
are to be redeemed, the identification (and, in the case of partial
redemption, the principal amounts) of the particular Securities to be
redeemed,
(4) in case any Security is to be redeemed in part only, the
notice which relates to such Security shall state that on and after the
Redemption Date, upon surrender of such Security, the Holder will
receive, without charge, a new Security or Securities of authorized
denominations for the principal amount thereof remaining unredeemed,
(5) that on the Redemption Date, the Redemption Price will
become due and payable upon each such Security to be redeemed and, if
applicable, that interest thereon will cease to accrue on and after
said date.
(6) the place or places where such Securities are to be
surrendered for payment of the Redemption Price, and
(7) that the redemption is for a sinking fund, if such is the
case.
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Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company. In the case of
redemptions by the Company of Global Securities, the Company shall, at least 30
days prior to the Redemption Date, notify the Depositary (with a copy to the
Trustee) of such redemption.
SECTION 1105. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date.
SECTION 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that installments of interest whose
Stated Maturity is on or prior to the Redemption Date shall be payable to the
Holders of such Securities, or one or more Predecessor Securities, registered as
such at the close of business on the relevant Regular Record Date according to
their terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Security.
SECTION 1107. Securities Redeemed in Part.
Any security which is to be redeemed only in part shall be surrendered
at a Place of Payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities of the same series, of any authorized
denomination as requested by such Holder, in aggregate principal amount equal to
and in exchange for the unredeemed portion of the principal of the Security so
surrendered; provided, however, that the Depositary need not surrender Global
Securities for a partial redemption and may be authorized to make a notation on
such Global Security of such partial redemption. In the case of a partial
redemption of the Global Securities, the Depositary, and in turn, the
participants in the Depositary, shall have the responsibility to select any
Securities to be redeemed by random lot.
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<PAGE>
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of a series except as otherwise specified as
contemplated by Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory sinking
fund payment", and any payment in excess of such minimum amount provided for by
the terms of Securities of any series is herein referred to as an "optional
sinking fund payment". If provided for by the terms of Securities of any series,
the cash amount of any sinking fund payment may be subject to reduction as
provided in Section 1202. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of such series.
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities.
The Company may, in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of any series required to be made
pursuant to the terms of such Securities as provided for by the terms of such
series (1) deliver Outstanding Securities of such series (other than any
previously called for redemption) and (2) apply as a credit Securities of such
series which have been redeemed either at the election of the Company pursuant
to the terms of such series of Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case, provided that such Securities have not been previously
so credited. Such Securities shall be received and credited for such purpose by
the Trustee at the Redemption Price specified in such Securities for redemption
through operation of the sinking fund and the amount of such sinking fund
payment shall be reduced accordingly.
SECTION 1203. Redemption of Securities for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied by delivering and crediting Securities of that series
pursuant to Section 1202, and the amount of any optional sinking fund payment to
be added to the next ensuing sinking fund payment, and will also deliver to the
Trustee any Securities to be so delivered. If such Officers' Certificate shall
specify an optional amount to be added in cash to the next ensuing mandatory
sinking fund payment, the Company shall thereupon be obligated to pay the amount
therein specified. Not less than 30 days before each such sinking fund payment
date the Trustee shall select the Securities to be redeemed upon such sinking
fund payment date in the manner specified in Section 1103 and cause notice of
the redemption thereof to be given in the name of
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<PAGE>
and at the expense of the Company in the manner provided in Section 1104. Such
notice having been duly given, the redemption of such Securities shall be made
upon the terms and in the manner stated in Sections 1106 and 1107.
* * *
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
PHH CORPORATION
(SEAL)
By _______________________
Attest:
By ________________________
Secretary
THE BANK OF NEW YORK
(SEAL)
By _______________________
Attest:
By ________________________
-68-
REGISTERED Exhibit 4(b)(i)
No. FXR-
CUSIP NO.
PHH CORPORATION MEDIUM-TERM NOTE
(FIXED RATE)
If this Debt Security is registered in the name of The Depository
Trust Company (the "Depositary") (55 Water Street, New York, New
York) or its nominee, this Debt Security may not be transferred
except as a whole by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee
to a successor Depositary or a nominee of such successor
Depositary unless and until this Debt Security is exchanged in
whole or in part for Debt Securities in definitive form. Unless
this certificate is presented by an authorized representative of
the Depositary to the Issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or such other name as
requested by an authorized representative of the Depositary and
any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
since the registered owner hereof, Cede & Co., has an interest
herein.
ORIGINAL ISSUE DATE: PRINCIPAL AMOUNT AND CURRENCY
OR CURRENCY UNIT:
OPTION TO RECEIVE PAYMENTS
IN SPECIFIED CURRENCY:
YES: ___ NO: ___
INTEREST RATE: MATURITY DATE:
REDEMPTION PROVISIONS, IF ANY: REPAYMENT PROVISIONS, IF ANY:
REDEEMABLE ON OR AFTER: OPTIONAL REPAYMENT DATE:
INITIAL REDEMPTION PERCENTAGE: OPTIONAL REPAYMENT PRICE:
ANNUAL REDEMPTION PERCENTAGE
REDUCTION:
OTHER PROVISIONS: EXCHANGE RATE AGENT:
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<PAGE>
If this Debt Security is issued with original issue discount, the
following information is supplied for purposes of Sections 1273 or 1275 of the
Internal Revenue Code: Issue Price (for each $1,000 principal amount): $ ;
Original Issue Discount Under Section 1272 of the Internal Revenue Code (for
each $1,000 principal amount): $ ; Yield To Maturity: ;
Method Used to Determine Yield To Maturity For Short Accrual Period of .
to : ; and Original Issue Discount for Short
Accrual Period of to : .
PHH CORPORATION, a corporation duly organized and existing under
the laws of the State of Maryland (herein called the "Corporation"), for value
received, hereby promises to pay to _______________ or registered assigns the
principal sum of _______ (any currency or currency unit other than U.S. dollars
being hereinafter referred to as a "Specified Currency"), on the Stated Maturity
shown above (the "Maturity Date"), in such coin or currency specified above as
at the time of payment shall be legal tender for the payment of public and
private debts, and to pay interest thereon from the Original Issue Date shown
above or from the most recent Interest Payment Date to which interest has been
paid or duly provided for, semi-annually on February 15 and August 15 in each
year (the "Interest Payment Dates"), unless otherwise provided above, commencing
with the Interest Payment Date immediately following the Original Issue Date
shown above, and on the Maturity Date, at the interest rate per annum shown
above until the principal hereof is paid or made available for payment;
provided, however, that if the Original Issue Date shown above is after a
Regular Record Date and on or before the immediately following Interest Payment
Date, interest payments will commence on the Interest Payment Date following the
next succeeding Regular Record Date to the person in whose name this Note is
registered in the security register (the "Security Register") of the Corporation
(the "Holder") on such next succeeding Regular Record Date and provided,
further, that, unless the Holder hereof is entitled to make, and has made, a
Specified Currency Payment Election (as hereinafter defined) with respect to
one or more such payments, the Corporation will make all such payments in U.S.
dollars in amounts determined as set forth below. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in the Indenture dated as of [May ___. 1997] (hereinafter called the
"Indenture"), between the Corporation and The First National Bank of Chicago,
as trustee (hereinafter called the "Trustee", which term includes any successor
trustee under the Indenture), be paid to the Person in whose name this Note
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest, which shall be the January 31
or July 31 (whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date; provided, however, that interest payable at the
Maturity Date will be paid to the Person to whom said principal sum is payable.
Any interest not so punctually paid or duly provided for will forthwith cease
to be payable to the Holder on such Regular Record Date and may either be paid
to the Person in whose name this Note (or one or more Predecessor Securities)
is registered at the close of business on a Special Record Date for the payment
of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities not less than 10 days prior to such Special
Record Date, or be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Notes may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in the Indenture.
Payment of the principal of (and premium, if any) and any
interest on this Note due to the Holder hereof at the Maturity Date will be made
in immediately available funds, upon surrender of this Note at the offices of
the Trustee, 14 Wall Street, Eighth Floor, New York, New York 10005, provided
that the Note is presented to the Trustee or its agent in time for the Trustee
to make such payments in such funds in accordance with its normal procedures.
Payment of interest on this Note due on any Interest Payment Date (other than
interest on this Note due to the Holder hereof at Maturity) will be made by
check mailed to the address of the person entitled thereto at the Holder's last
address as it appears on the Security Register. Payments of principal, premium
if any, and interest on Global Notes will be made to the Depositary by wire
transfer, either in same day funds or in next day funds. Notwithstanding the
foregoing, a Holder of $10,000,000 or more in aggregate principal amount of
Notes of like tenor and term shall, upon written request, be entitled to receive
payments of interest (other than interest on said Notes due to the Holder at
Maturity) by wire transfer to an account maintained by such Holder with a bank
located in the United States of America.
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<PAGE>
Any such designation for wire transfer purposes shall be made by
filing the appropriate information with the Trustee at its office, 14 Wall
Street, Eighth Floor, New York, New York 10005, on or prior to the Regular
Record Dates relating to the applicable Interest Payment Dates and any such
designation made with respect to any Note by a registered Holder shall remain in
effect with respect to any further payments with respect to this Note payable to
such Holder unless revoked or changed by written instructions received by the
Trustee from such Holder, provided that any such written revocation or change
which is received by the Trustee after a Regular Record Date and before the
related Interest Payment Date shall not be effective with respect to such
Interest Payment Date.
If this Note is denominated in a Specified Currency, payment of
the principal of (and premium, if any) and any interest due on this Note will be
made in Specified Currency provided that the Holder hereof is entitled to make,
and has made, a Specified Currency Payment Election with respect to such
payments, the Exchange Rate Agent is able to convert such payments as provided
below, the Specified Currency is not unavailable due to the imposition of
exchange controls or other circumstances beyond the control of the Corporation
and the Specified Currency is used by the government of the country issuing such
currency or for the settlement of transactions by public institutions of or
within the international banking community. Unless otherwise specified, if this
Note is denominated in a Specified Currency, the Holder hereof may elect to
receive payments of principal of (and premium, if any) and interest in such
Specified Currency (a "Specified Currency Payment Election") by delivery of a
written request for such payment to the principal office of the Trustee, 14 Wall
Street, Eighth Floor, New York, New York 10005, on or prior to the Regular
Record Date or at least fifteen days prior to the Maturity Date, as the case may
be. Such request may be in writing (mailed or hand delivered) or by cable, telex
or other form of facsimile transmission. A Holder of a Foreign Currency Note may
elect to receive payment in the Specified Currency for all principal, premium,
if any, and interest payments and need not file a separate election for each
payment. Such election will remain in effect until revoked by written notice to
the Trustee, 14 Wall Street, Eighth Floor, New York, New York 10005, but written
notice of any such revocation must be received by the Trustee on or prior to the
Regular Record Date or at least fifteen days prior to the Maturity Date, as the
case may be.
In the event of an official redenomination of a foreign currency
or currency unit, the obligations of the Corporation with respect to payments
hereunder denominated or payable in such foreign currency or currency unit
shall, in all cases, be deemed immediately following such redenomination to
provide for payment of that amount of redenominated currency representing the
amount of such obligations immediately before such redenomination. In no event,
however, shall any adjustment be made to any amount payable hereunder as a
result of any change in the value of such foreign currency or currency unit
relative to any other currency due solely to fluctuations in exchange rates.
If any Interest Payment Date or the Maturity Date (or date of
redemption or repayment) of this Note would fall on any day which is not a
Business Day (as defined below), the payment of interest and principal (and
premium, if any) need not be made on such day, but may be made on the next
succeeding Business Day with the same force and effect as if made on the due
date and no interest shall accrue for the period from and after such date.
This Note is one of a duly authorized issue of securities of the
Corporation (hereinafter called the "Securities"), issued and to be issued in
one or more series under the Indenture, to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the
respective rights, obligations, duties and immunities thereunder of the
Corporation, the Trustee and the holders of the Securities and of the terms upon
which the Securities are, and are to be, authenticated and delivered. As
provided in the Indenture, the Securities may be issued in one or more series,
which different series may be issued in various aggregate principal amounts, may
mature at different times, may bear interest, if any, at different rates, may be
subject to different redemption provisions, if any, may be subject to different
sinking, purchase or analogous funds, if any, may be subject to different
covenants and events of default, and may otherwise vary as in the Indenture
provided or permitted. This Note is one of a series of the Securities, which
series is unlimited in aggregate principal amount and is designated as the
Medium-Term Notes (the "Notes") of the Corporation, of which series the
Corporation initially has designated $3,000,000,000 aggregate principal amount,
or the equivalent thereof in foreign currencies or currency units. The Notes may
be issued from time to time in various principal amounts and currencies or
currency units, mature at
- 3 -
<PAGE>
different times, bear interest, if any, at different rates, be redeemable at
different times or not at all, and may have other terms as may be designated
with respect to a Note.
Interest payments for this Note will include interest accrued to
but excluding the Interest Payment Dates. Interest payments for this Note shall
be computed and paid on the basis of a 360-day year of twelve 30-day months,
unless otherwise provided above.
If this Note is denominated in a Specified Currency, unless the
Holder hereof has elected otherwise, payment in respect of a Foreign Currency
Note shall be made in U.S. dollars based upon the exchange rate as determined by
the Exchange Rate Agent based on the quotation for such non-U.S. dollar currency
or composite currency appearing at approximately 11:00 a.m., New York City time,
on the second Business Day (as defined below) preceding the applicable date of
payment, on the bank composite or multi-contributor pages of the Telerate
Monitor Foreign Exchange Service (or, if such service is not then available to
the Exchange Rate Agent, the Reuters Monitor Foreign Exchange Service or, if
neither is available, on a comparable display or in a comparable manner as the
Corporation and the Exchange Rate Agent shall agree), for the first three banks
(or two, if three are not available), in chronological order, appearing on a
list of banks agreed to by the Corporation and the Exchange Rate Agent prior to
such second Business Day, which are offering quotes. The Exchange Rate Agent
shall then select from among the selected quotations in a manner specified in
the applicable Pricing Supplement. If fewer than two bids are available, then
such conversion will be based on the Market Exchange Rate (as defined below) as
of the second Business Day preceding the applicable payment date. "Business Day"
means any day, other than a Saturday or Sunday, that meets each of the following
applicable requirements: the day is (a) not a legal holiday or a day on which
banking institutions are authorized or required by law or regulation to be
closed in the City of New York and (b) if the Note is denominated or payable in
a Specified Currency other than U.S. dollars, (i) not a day on which banking
institutions are authorized or required by law or regulation to close in the
major financial center of the country issuing the Specified Currency (which in
the case of ECU shall include the financial center of each country that issues a
component currency of the ECU) and (ii) a day on which banking institutions in
such financial center are carrying out transactions in such Specified Currency.
"Market Exchange Rate" means the noon U.S. dollar buying rate in the City of New
York for cable transfers of the relevant currency as certified for customs
purposes by the Federal Reserve Bank of New York. If no Market Exchange Rate as
of the second Business Day preceding the applicable payment date is available,
payments will be made in the Specified Currency, unless such Specified Currency
is unavailable due to the imposition of exchange controls or to other
circumstances beyond the Corporation's control, in which case payment will be
made in U.S. dollars. All currency exchange costs will be borne by the Holders
of such Notes by deductions from such payments.
Unless otherwise indicated above, this Note may not be redeemed
by the Corporation prior to Maturity. If so indicated above, this Note may be
redeemed on any date on or after the date set forth above, either in whole or in
part, at the option of the Corporation, at a redemption price equal to the
product of the principal amount of this Note to be redeemed multiplied by the
Redemption Percentage. The Redemption Percentage shall initially equal the
Initial Redemption Percentage specified above, and shall decline at each
anniversary of the initial date that this Note is redeemable by the amount of
the Annual Redemption Percentage Reduction specified above, until the Redemption
Percentage is equal to 100%.
If this Note is subject to redemption, notice of redemption shall
be mailed to the registered Holders of the Notes designated for redemption at
their addresses as the same shall appear in the Security Register not less than
30 and not more than 60 days prior to the date of redemption, subject to all
conditions and provisions of the Indenture. In the event of redemption of this
Note in part, a new Note for the amount of the unredeemed portion hereof shall
be issued in the name of the Holder hereof upon the cancellation hereof.
Unless otherwise indicated above, this Note may not be repaid
prior to Maturity. If so indicated above, this Note may be payable prior to
Maturity at the option of the Holder on the Optional Repayment Dates shown above
at a price equal to 100% of the principal amount to be repaid, together with
accrued interest to the date
- 4 -
<PAGE>
of repayment. In order for this Note to be repaid, the Trustee must receive at
least 30 but not more than 45 days prior to an Optional Repayment Date (i) this
Note with the form below entitled "Option to Elect Repayment" duly completed; or
(ii) a telegram, telex, facsimile transmission or letter from a member of a
national securities exchange or the National Association of Securities Dealers,
Inc. or a commercial bank of trust company in the United States of America
setting forth the name of the Holder of this Note, the principal amount of the
Note to be repaid, the certificate number or a description of the tenor and
terms of this Note, a statement that the option to elect repayment is being
exercised thereby and a guarantee that this Note with the form below entitled
"Option to Elect Repayment" duly completed will be received by the Trustee not
later than five Business Days after the date of such telegram, telex, facsimile
transmission or letter. If the procedure described in clause (ii) of the
preceding sentence is followed, this Note with form duly completed must be
received by the Trustee by such fifth Business Day. Any tender of this Note for
repayment shall be irrevocable. The repayment option may be exercised by the
Holder of this Note for less than the entire principal amount of the Note
provided that the principal amount of this Note remaining outstanding after
repayment is an authorized denomination. Upon such partial repayment, this Note
shall be cancelled and a new Note or Notes for the remaining principal amount
hereof shall be issued in the name of the Holder of this Note.
If an Event of Default with respect to Notes of this series shall
occur and be continuing, the principal of the Notes of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein
provided, the amendment or supplementing thereof and the modification of the
rights and obligations of the Corporation and the rights of the holders of the
Securities of each series to be affected under the Indenture at any time by the
Corporation and the Trustee with the consent of the holders of not less than a
majority in principal amount of the Securities at the time outstanding of each
series to be affected. The Indenture also contains a provision permitting the
holders of not less than a majority in aggregate principal amount of the
Securities of any series at the time outstanding, on behalf of the holders of
all Securities of such series, to waive any past defaults under the Indenture
with respect to such series of Securities and their consequences. Any such
consent or waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Note issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Note.
As set forth in, and subject to, the provisions of the Indenture,
no Holder of any Note of this series will have any right to institute any
proceeding with respect to the Indenture or for any remedy thereunder, unless
such Holder shall have previously given to the Trustee written notice of a
continuing Event of Default with respect to this series, the Holder of not less
than 25% in principal amount of the Notes of this series at the time outstanding
shall have made written request, and offered reasonable indemnity, to the
Trustee to institute such proceeding as trustee, and the Trustee shall not have
received from the Holders of a majority in principal amount of the Notes of this
series at the time outstanding a direction inconsistent with such request and
shall have failed to institute such proceeding within 60 days, provided,
however, that such limitations do not apply to a suit instituted by the Holder
hereof for the enforcement of payment of the principal of (and premium, if any)
or interest on this Note on or after the respective due date expressed herein.
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the
Corporation, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Note at the times, places and rate herein
prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registrable in the Security
Register, upon surrender of this Note for registration of transfer at the office
or agency of the Corporation in any place where the principal of (and premium,
if any) and interest on this Note are payable, duly endorsed by, or accompanied
by a written instrument of transfer in form satisfactory to the Corporation and
the Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Notes of this series of
like tenor and of authorized denominations and for the same
- 5 -
<PAGE>
aggregate principal amount, will be issued to the designated transferee or
transferees. As provided in the Indenture and subject to certain limitations
therein set forth, this Note is exchangeable for the same aggregate principal
amount of Notes of like tenor and of authorized denominations, as requested by
the Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Corporation may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Securities of this series are issuable only in registered
form without coupons in denominations of $1,000 and any integral multiple of
$1,000 in excess thereof (or in the case of Securities denominated in a
Specified Currency, in such minimum denomination not less than the equivalent of
$1,000 in such Specified Currency on the basis of the Market Exchange Rate).
Prior to due presentation of this Note for registration of
transfer, the Corporation, the Trustee and any agent of the Corporation or the
Trustee may treat the Person in whose name this Note is registered as the owner
hereof for all purposes, whether or not this Note is overdue and neither the
Corporation, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture and this Note shall be governed by and construed in
accordance with the laws of the State of New York.
All terms used in this Note which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
This Note shall not be valid or become obligatory for any purpose
until the Certificate of Authentication hereon shall have been signed by an
authorized officer of the Trustee or its duly authorized agent under the
Indenture.
- 6 -
<PAGE>
IN WITNESS WHEREOF, PHH CORPORATION has caused this instrument to
be signed by its duly authorized officers, and has caused its corporate seal or
a facsimile thereof to be affixed hereto or imprinted hereon.
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities PHH CORPORATION
of the series designated herein
issued under the within-mentioned
Indenture. By:____________________
[Title]
THE FIRST NATIONAL BANK
OF CHICAGO, as Trustee Attest:
By:____________________________________ ________________________________
Authorized Signatory Corporate Secretary
[SEAL]
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<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
Please Insert Social Security or __________________________
Other Identifying Number of Assignee __________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE
OF ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
the within Note of PHH CORPORATION and does hereby irrevocably constitute and
appoint
- --------------------------------------------------------------------------------
attorney to transfer the said Note on the books of the Corporation, with full
power of substitution in the premises.
Dated:___________________ Your Signature:______________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the within instrument in every particular, without alteration or
enlargement or any change whatever.
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<PAGE>
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Corporation
to repay $ principal amount of the within Note, pursuant to its terms, on
the "Optional Repayment Date" first occurring after the date of receipt of the
within Note as specified below, together with Interest thereon accrued to the
date of repayment, to the undersigned at
- --------------------------------------------------------------------------------
(Please Print or Type Name and Address of the Undersigned)
and to issue to the Undersigned, pursuant to the terms of the Indenture, a new
Note or Notes representing the remaining principal amount of this Note, if any.
For the Option to Elect Repayment to be effective, this Note with the
Option to Elect Repayment duly completed must be received by the Corporation
within the relevant time period set forth above at the offices of the Trustee,
at 14 Wall Street, Eighth Floor, New York, New York 10005.
Dated:_______________ __________________________________________
NOTICE: The signature to this Option to
Elect Repayment must correspond with the
name as written upon the within Note in
every particular without alteration or
enlargement or any change whatsoever.
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
Please insert Social Security or _______________
Other Identifying Number of Assignee _______________
Please Print or Type Name and Address Including Zip Code of
Assignee of the within Note and all rights hereunder, hereby irrevocably
constituting and appointing ______ attorney to transfer such Note on the books
of PHH Corporation with full power of substitution in the premises.
Dated:_______________ __________________________________________
Signature
__________________________________________
NOTICE: The signature to this assignment
must correspond with the name as it appears
upon the within Note in every particular
without alteration or enlargement or any
change whatsoever.
- 9 -
Exhibit 4(b)(ii)
REGISTERED
No. FLR-
CUSIP NO.
PHH CORPORATION
MEDIUM-TERM NOTE
(FLOATING RATE)
If this Debt Security is registered in the name of The Depository Trust
Company (the "Depositary") (55 Water Street, New York, New York) or its
nominee, this Debt Security may not be transferred except as a whole by
the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by
the Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary unless and until this Debt Security
is exchanged in whole or in part for Debt Securities in definitive form.
Unless this certificate is presented by an authorized representative of
the Depositary to the Issuer or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as requested by an authorized
representative of the Depositary and any payment is made to Cede & Co.,
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co.,
has an interest herein.
PRINCIPAL AMOUNT
AND CURRENCY OR
CURRENCY UNIT: INITIAL INTEREST RATE: MATURITY DATE:
ORIGINAL ISSUE DATE: INDEX MATURITY: SPREAD: +/-
SPREAD MULTIPLIER: %
OPTION TO RECEIVE
PAYMENT IN SPECIFIED
CURRENCY:
YES:______ NO:______
BASE RATE: [__] COMMERCIAL PAPER RATE [__] CD RATE
[__] FEDERAL FUNDS [__] LIBOR [__] TREASURY RATE
EFFECTIVE RATE LIBOR REUTERS____
LIBOR TELERATE___
[__] PRIME RATE [__]Other____________
(See Below)
MAXIMUM INTEREST RATE: % INTEREST PAYMENT PERIOD:______
(monthly, quarterly,
semi-annually or annually)
MINIMUM INTEREST RATE: % INTEREST RATE RESET PERIOD:___
(daily, weekly, monthly,
quarterly, semi-annually or
annually)
INTEREST RESET DATES:
INTEREST PAYMENT DATES: REPAYMENT PROVISIONS, IF ANY:
INTEREST DETERMINATION DATES: OPTIONAL REPAYMENT DATE:
REDEMPTION PROVISIONS, IF ANY: OPTIONAL REPAYMENT PRICE:
REDEEMABLE ON OR AFTER:
- 1 -
<PAGE>
INITIAL REDEMPTION PERCENTAGE:
ANNUAL REDEMPTION PERCENTAGE REDUCTION:
OTHER PROVISIONS:
- 2 -
<PAGE>
If this Debt Security is issued with original issue discount, the
following information is supplied for purposes of Sections 1273 or 1275 of the
Internal Revenue Code: Issue Price (for each $1,000 principal amount): $ ;
Original Issue Discount Under Section 1272 of the Internal Revenue Code (for
each $1,000 principal amount): $ ; Yield To Maturity: ;
Method Used to Determine Yield To Maturity For Short Accrual Period of
to : ; and Original Issue Discount for Short
Accrual Period of to : .
PHH CORPORATION, a corporation duly organized and existing under
the laws of the State of Maryland (herein called the "Corporation"), for value
received, hereby promises to pay to
or registered assigns the principal sum of
(any currency or currency unit other than U.S. dollars being
hereinafter referred to as a "Specified Currency"), on the Stated Maturity shown
above (the "Maturity Date"), in such coin or currency specified above as at the
time of payment shall be legal tender for the payment of public and private
debts, and to pay interest thereon from the Original Issue Date shown above (the
"Issue Date") or from the most recent Interest Payment Date (as hereinafter
defined) to which interest has been paid or duly provided for, in arrears on the
Interest Payment Dates set forth above ("Interest Payment Dates"), and on the
Maturity Date, commencing with the Interest Payment Date immediately following
the Issue Date, at the interest rate per annum determined in accordance with the
provisions hereof, depending on the Base Rate specified above, until the
principal hereof is paid or made available for payment, provided, however, that
if the Issue Date is after a Regular Record Date, as hereinafter defined, and on
or before the immediately following Interest Payment Date, the first payment of
interest will be made on the Interest Payment Date following the next succeeding
Regular Record Date to the person in whose name this Note is registered in the
security register (the "Security Register") of the Corporation (the "Holder") on
such next succeeding Regular Record Date and provided, further, that unless the
Holder hereof is entitled to make, and has made, a Specified Currency Payment
Election (as hereinafter defined) with respect to one or more such payments, the
Corporation will make all such payments in U.S. dollars in amounts determined as
set forth below. The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in the Indenture dated as of
[May ___, 1997] (hereinafter called the "Indenture"), between the Corporation
and The First National Bank of Chicago, as trustee (hereinafter called the
"Trustee", which term includes any successor trustee under the Indenture), be
paid to the Person in whose name this Note (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which unless otherwise specified above shall be the fifteenth
day (whether or not a Business Day) next preceding such Interest Payment Date,
provided, however, that interest payable at the Maturity Date will be paid to
the Person to whom said principal sum is payable. Any interest not so punctually
paid or duly provided for will forthwith cease to be payable to the Holder on
such Regular Record Date and may either be paid to the Person in whose name this
Note (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest, to
be fixed by the Trustee, notice whereof to be given to Holders of Securities not
less than 10 days prior to such Special Record Date, or be paid at any time in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Notes may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in the Indenture.
Payment of the principal of (and premium, if any) and any
interest on this Note due to the Holder hereof at the Maturity Date will be made
in immediately available funds, upon surrender of this Note at the offices of
the Trustee, 14 Wall Street, Eighth Floor, Window 2, New York, New York 10005,
provided that the Note is presented to the Trustee in time for the Trustee to
make such payments in such funds in accordance with its normal procedures.
Payment of interest on this Note due on an Interest Payment Date (other than
interest on this Note due to the Holder hereof at Maturity) will be made by
check mailed to the address of the person entitled thereto at the Holder's last
address as it appears on the Security Register. Payments of principal, premium,
if any, and interest on Global Notes will be made to the Depositary by wire
transfer, either in same day funds or in next day funds. Notwithstanding the
foregoing, a Holder of $10,000,000 or more in aggregate principal amount of
Notes of like tenor and term shall, upon written request, be entitled to receive
payments of interest (other than interest on said Notes due to the Holder at
Maturity) by wire transfer to an account maintained by such Holder with a bank
located in the United States of America.
- 3 -
<PAGE>
Any such designation for wire transfer purposes shall be made by
filing the appropriate information with the Trustee at its offices, 14 Wall
Street, Eighth Floor, Window 2, New York, New York 10005, on or prior to the
Regular Record Dates relating to the applicable Interest Payment Dates and, any
such designation made with respect to any Note by a registered Holder shall
remain in effect with respect to any further payments with respect to this Note
payable to such Holder unless revoked or changed by written instructions
received by the Trustee from such Holder, provided that any such written
revocation or change which is received by the Trustee after a Regular Record
Date and before the related Interest Payment Date shall not be effective with
respect to such Interest Payment Date.
If this Note is denominated in a Specified Currency, payment of
the principal of (and premium, if any) and any interest due on this Note will be
made in Specified Currency provided that the Holder hereof is entitled to make,
and has made, a Specified Currency Payment Election with respect to such
payments, the Exchange Rate Agent is able to convert such payments as provided
below, the Specified Currency is not unavailable due to the imposition of
exchange controls or other circumstances beyond the control of the Corporation
and the Specified Currency is used by the government of the country issuing such
currency or for the settlement of transactions by public institutions of or
within the international banking community. Unless otherwise specified above, if
this Note is denominated in a Specified Currency, the Holder hereof may elect to
receive payments of principal of (and premium, if any) and interest in such
Specified Currency (a "Specified Currency Payment Election") by delivery of a
written request for such payment to the principal office of the Trustee, 14 Wall
Street, Eighth Floor, Window 2, New York, New York 10005, on or prior to the
Regular Record Date or at least fifteen days prior to the Maturity Date, as the
case may be. Such request may be in writing (mailed or hand delivered) or by
cable, telex or other form of facsimile transmission. A Holder of a Foreign
Currency Note may elect to receive payment in the Specified Currency for all
principal, premium, if any, and interest payments and need not file a separate
election for each payment. Such election will remain in effect until revoked by
written notice to the Trustee, 14 Wall Street, Eighth Floor, Window 2, New York,
New York 10005, but written notice of any such revocation must be received by
the Trustee on or prior to the Regular Record Date or at least fifteen days
prior to the Maturity Date, as the case may be.
In the event of an official redenomination of a foreign currency
or currency unit, the obligations of the Corporation with respect to payments
hereunder denominated or payable in such foreign currency or currency unit
shall, in all cases, be deemed immediately following such redenomination to
provide for payment of that amount of redenominated currency representing the
amount of such obligations immediately before such redenomination. In no event,
however, shall any adjustment be made to any amount payable hereunder as a
result of any change in the value of such foreign currency or currency unit
relative to any other currency due solely to fluctuations in exchange rates.
If the Maturity Date (or date of redemption or repayment) of this
Note would fall on any day which is not a Business Day (as defined below), the
payment of interest and principal (and premium, if any) need not be made on such
day, but may be made on the next succeeding Business Day with the same force and
effect as if made on the due date and no interest shall accrue for the period
from and after such date.
This Note is one of a duly authorized issue of securities of the
Corporation (hereinafter called the "Securities"), issued and to be issued in
one or more series under the Indenture, to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the
respective rights, obligations, duties and immunities thereunder of the
Corporation, the Trustee and the holders of the Securities and of the terms upon
which the Securities are, and are to be, authenticated and delivered. As
provided in the Indenture, the Securities may be issued in one or more series,
which different series may be issued in various aggregate principal amounts, may
mature at different times, may bear interest, if any, at different rates, may be
subject to different redemption provisions, if any, may be subject to different
sinking, purchase or analogous funds, if any, may be subject to different
covenants and events of default, and may otherwise vary as in the Indenture
provided or permitted. This Note is one of a series of the Securities, which
series is unlimited in aggregate principal amount and is designated as the
Medium-Term Notes (the "Notes") of the Corporation, of which series the
Corporation initially has designated $3,000,000,000 aggregate principal amount,
or the equivalent thereof in
- 4 -
<PAGE>
foreign currencies or currency units. The Notes may be issued from time to time
in various principal amounts and currencies or currency units, mature at
different times, bear interest, if any, at different rates, be redeemable at
different times or not at all, and have other terms as may be designated with
respect to a Note.
Commencing with the first Interest Reset Date specified herein
following the Issue Date, the rate at which interest on this Note is payable
shall be adjusted daily, weekly, monthly, quarterly, semi-annually or annually
as shown above under Interest Rate Reset Period; unless otherwise specified
above, the Interest Reset Dates will be, if this Note resets daily, each
Business Day; if this Note (unless this Note is a Treasury Rate Note) resets
weekly, Wednesday of each week; if this Note is a Treasury Rate Note that resets
weekly, Tuesday of each week (except as provided below under "Determination of
Treasury Rate"); if this Note resets monthly, the third Wednesday of each month;
if this Note resets quarterly, the third Wednesday of February, May, August and
November of each year; if this Note resets semiannually, the third Wednesday of
the two months of each year specified above; and if this Note resets annually,
the third Wednesday of the month of each year specified above, provided,
however, that unless otherwise specified above, the interest rate in effect from
the Issue Date to the first Interest Reset Date specified above will be the
Initial Interest Rate. Each such adjusted interest rate shall be applicable on
and after the Interest Reset Date to which it relates, to but not including the
next succeeding Interest Reset Date or until the Maturity Date, as the case may
be. If any Interest Reset Date specified above is a day that is not a Business
Day, such Interest Reset Date shall be postponed to the next day that is a
Business Day, except that if (i) the rate of interest on this Note shall be
determined in accordance with the provisions under the heading "Determination of
LIBOR" below, and (ii) such Business Day is in the next succeeding calendar
month, such Interest Reset Date shall be the immediately preceding Business Day.
Subject to applicable provisions of law and except as specified herein, on each
Interest Reset Date, the rate of interest on this Note shall be the rate
determined in accordance with the provisions under the relevant heading and
paragraphs below, as specified by the Base Rate set forth above. Unless
otherwise specified above, the Trustee shall be the Calculation Agent.
Unless otherwise specified above, interest will be payable, if
this Note resets daily, weekly or monthly, on the third Wednesday of each month
or on the third Wednesday of February, May, August and November of each year as
specified above; if this Note resets quarterly, on the third Wednesday of
February, May, August and November of each year; if this Note resets
semiannually, on the third Wednesday of the two months of each year specified
above; and if this Note resets annually, on the third Wednesday of the month of
each year specified above (each such day being an "Interest Payment Date") and,
in each case, at Maturity. If any Interest Payment Date specified above would
fall on a day that is not a Business Day, such Interest Payment Date shall be
the following day that is a Business Day, except that if (i) the rate of
interest on this Note shall be determined in accordance with the provisions
under the heading "Determination of LIBOR" below, and (ii) such Business Day is
in the next succeeding calendar month, such Interest Payment Date shall be the
immediately preceding Business Day.
"Business Day" means any day, other than a Saturday or Sunday,
that meets each of the following applicable requirements: the day is (a) not a
legal holiday or a day on which banking institutions are authorized or required
by law or regulation to be closed in The City of New York, (b) if this Note is
denominated or payable in a Specified Currency other than U.S. dollars, (i) not
a day on which banking institutions are authorized or required by law or
regulation to close in the major financial center of the country issuing the
Specified Currency (which in the case of ECU shall include the financial center
of each country that issues a component currency of the ECU) and (ii) a day on
which banking institutions in such financial center are carrying out
transactions in such Specified Currency and (c) with respect to LIBOR Notes (as
defined below), also a London Banking Day. "London Banking Day" means any day on
which dealings on deposits in U.S. dollars are transacted in the London
interbank market.
All percentages resulting from any calculation on this Note will
be rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upward (e.g.),
9.876545% (or .09876545) would be rounded to 9.87655% (or .0987655), and all
dollar amounts
- 5 -
<PAGE>
used in or resulting from such calculation on this Note will be rounded to the
nearest cent with one half cent being rounded upward.
Determination of Commercial Paper Rate
If the Base Rate on this Note is the Commercial Paper Rate, the
interest rate with respect to this Note shall equal the Money Market Yield
(calculated as described below) of the rate on each Interest Determination Date
designated above for commercial paper having the Index Maturity designated above
as such rate is published by the Board of Governors of the Federal Reserve
System in "Statistical Release H.15(519), Selected Interest Rates," or any
successor publication of the Board of Governors, under the heading "Commercial
Paper." In the event that such rate is not published by 3:00 P.M., New York City
time, on the Calculation Date pertaining to such Interest Determination Date,
the Commercial Paper Rate will be the Money Market Yield (calculated as
described below) of the rate on each Interest Determination Date designated
above for commercial paper having the Index Maturity designated above as
published by the Federal Reserve Bank of New York in its daily statistical
release, "Composite 3:30 P.M. Quotations for U.S. Government Securities" under
the heading "Commercial Paper." If such rate is not published by 3:00 P.M., New
York City time, on such Calculation Date, the Commercial Paper Rate will be the
Money Market Yield of the arithmetic mean (each as rounded, if necessary, to the
nearest one hundred-thousandth of a percentage point) of the offered rates, as
of 11:00 A.M., New York City time on such Interest Determination Date, of three
leading dealers of commercial paper in New York City selected by the Calculation
Agent for commercial paper having the Index Maturity designated above placed for
an industrial issuer whose bond rating is "AA" or the equivalent, from a
nationally recognized securities rating agency, provided, however, that if the
dealers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the Commercial Paper Rate with respect to such
Interest Determination Date will be the Commercial Paper Rate in effect on such
Interest Determination Date.
"Money Market Yield" shall be a yield (expressed as a percentage
rounded, if necessary, to the nearest one hundred- thousandth of a percentage
point) calculated in accordance with the following formula:
Money Market Yield = D x 360 x 100
-----------
360 - (DxM)
where "D" refers to the per annum rate for the commercial paper, quoted on a
bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the interest period for which interest is being calculated.
If a Spread is designated above, this Note shall bear interest at
the Commercial Paper Rate plus or minus such Spread. If a Spread Multiplier is
designated above, this Note shall bear interest at the Commercial Paper Rate
multiplied by such Spread Multiplier.
The Commercial Paper Rate determined with respect to any Interest
Determination Date will become effective on and as of the Interest Reset Date
specified above; provided, however, that the interest rate in effect for the
period from the Issue Date to the first Commercial Paper Reset Date will be the
Initial Interest Rate specified above. The Interest Determination Date for a
Note with respect to the Commercial Paper Rate will be the second Business Day
prior to the Interest Reset Date for such Note.
Determination of CD Rate
If the Base Rate on this Note is the CD Rate, the interest rate
with respect to this Note shall equal the rate on each Interest Determination
Date designated above for negotiable certificates of deposit having the Index
Maturity designated above as published by the Board of Governors of the Federal
Reserve System in "Statistical Release H.15(519), Selected Interest Rates" or
any successor publication of the Board of Governors, under the heading "CDs
(Secondary Market)." In the event that such rate is not published by 3:00 P.M.,
New
- 6 -
<PAGE>
York City time, on the Calculation Date pertaining to such Interest
Determination Date, the CD Rate will be the rate on such Interest Determination
Date for negotiable certificates of deposit of the Index Maturity designated
above as published by the Federal Reserve Bank of New York in its daily
statistical release "Composite 3:30 P.M. Quotations for U.S. Government
Securities" under the heading "Certificates of Deposits." If such rate is not
published by 3:00 P.M., New York City time, on such Calculation Date, the CD
Rate will be the arithmetic mean (each as rounded, if necessary, to the nearest
one hundred-thousandth of a percentage point) of the secondary market offered
rates as of the opening of business, New York City time, on such Interest
Determination Date, of three leading non-bank dealers in negotiable U.S. dollar
certificates of deposit in New York City selected by the Calculation Agent
(after consultation with the Corporation) for negotiable certificates of deposit
of major United States money market banks of the highest credit standing (in the
market for negotiable certificates of deposit) with a remaining maturity closest
to the Index Maturity designated above in a denomination of $5,000,000;
provided, however, that if the dealers selected as aforesaid by the Calculation
Agent are not quoting as mentioned in this sentence, the CD Rate with respect to
such Interest Determination Date will be the CD Rate in effect on such Interest
Determination Date.
If a Spread is designated above, this Note shall bear interest at
the CD Rate plus or minus such Spread. If a Spread Multiplier is designated
above, this Note shall bear interest at the CD Rate multiplied by such Spread
Multiplier.
The CD Rate determined with respect to any Interest Determination
Date will become effective on and as of the Interest Reset Date specified above;
provided, however, that the interest rate in effect for the period from the
Issue Date to the first CD Reset Date will be the Initial Interest Rate
specified above. The Interest Determination Date with respect to a CD Rate Note
will be the second Business Day prior to the Interest Reset Date for such Note.
Determination of Federal Funds Effective Rate
If the Base Rate on this Note is the Federal Funds Effective
Rate, the interest rate payable with respect to this Note shall equal, on each
Interest Determination Date designated above, the rate on that date for Federal
Funds as published by the Board of Governors of the Federal Reserve System in
"Statistical Release H.15(5l9), Selected Interest Rates," or any successor
publication of the Board of Governors, under the heading "Federal Funds
(Effective)." In the event that such rate is not published by 9:00 A.M., New
York City time, on the Calculation Date pertaining to such Interest
Determination Date, the Federal Funds Effective Rate will be the rate on such
Interest Determination Date as published in "Composite 3:30 P.M. Quotations for
U.S. Government Securities" under the heading "Federal Funds/Effective Rate." If
such rate is not published by 9:00 A.M., New York City time, on the Calculation
Date pertaining to such Interest Determination Date, then the Federal Funds
Effective Rate for such Interest Determination Date will be calculated by the
Calculation Agent and will be the arithmetic mean (rounded, if necessary, to the
nearest one hundred-thousandth of a percentage point) of the rates as of 9:00
A.M., New York City time, on such Interest Determination Date for the last
transaction in overnight Federal Funds arranged by three leading brokers of
Federal Funds transactions in New York City selected by the Calculation Agent;
provided, however, that if the brokers selected as aforesaid by the Calculation
Agent are not quoting as mentioned in this sentence, the Federal Funds Effective
Rate with respect to such Interest Determination Date will be the Federal Funds
Effective Rate in effect on such Interest Determination Date.
If a Spread is designated above, this Note shall bear interest at
the Federal Funds Effective Rate plus or minus such Spread. If a Spread
Multiplier is designated above, this Note shall bear interest at the Federal
Funds Effective Rate multiplied by such Spread Multiplier.
The Federal Funds Effective Rate determined with respect to any
Interest Determination Date will become effective on and as of the Interest
Reset Date specified above; provided, however, that the interest rate in effect
for the period from the Issue Date to the first Federal Funds Effective Reset
Date will be the Initial Interest Rate specified above. The Interest
Determination Date with respect to a Federal Funds Effective Rate Note will be
the second Business Day prior to the Interest Reset Date for such Note.
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<PAGE>
Determination of LIBOR
LIBOR, with respect to any Interest Reset Date, will be
determined by the Calculation Agent in accordance with the following provisions:
(i) With respect to a LIBOR Interest Determination Date,
LIBOR will be either (a) the arithmetic mean of the offered rates
for deposits in U.S. dollars having the Index Maturity designated
above, commencing on the second London Banking Day immediately
following such LIBOR Interest Determination Date, that appears on
the Reuters Screen LIBO page as of 11:00 A.M., London time, on
such LIBOR Interest Determination Date, if at least two such
offered rates appear on the Reuters Screen LIBO Page ("LIBOR
Reuters"), or (b) the rate for deposits in U.S. dollars having
the Index Maturity designated above, commencing on the second
London Banking Day immediately following such LIBOR Interest
Determination Date, that appears on the Telerate Page 3750 as of
11:00 A.M., London time, on such LIBOR Interest Determination
Date ("LIBOR Telerate"). "Reuters Screen LIBO Page" means the
display designated as page "LIBO" on the Reuters Monitor Money
Rates Service (or such other page as may replace page LIBO on
that service for the purpose of displaying London interbank
offered rates of major banks). "Telerate Page 3750" means the
display designated as page "3750" on the Telerate Service (or
such other page as may replace the 3750 page on that service or
such other service or services as may be nominated by the British
Bankers' Association for the purpose of displaying London
interbank offered rates for U.S. dollar deposits). If neither
LIBOR Reuters nor LIBOR Telerate is specified above, LIBOR will
be determined as if LIBOR Telerate had been specified. If at
least two such offered rates appear on the Telerate Page 3750,
the rate in respect of such LIBOR Interest Determination Date
will be the arithmetic mean of such offered rates as determined
by the Calculation Agent. If fewer than two offered rates appear
on the Telerate Page 3750, or if no rate appears on the Reuters
Screen LIBO Page, as applicable, LIBOR in respect of such LIBOR
Interest Determination Date will be determined as if the parties
had specified the rate described in (ii) below.
(ii) On any LIBOR Interest Determination Date on which fewer
than two offered rates appear on the Reuters Screen LIBO Page as
specified in (i)(a) above, or on which no rate appears on the
Telerate Page 3750, as specified in (i)(b) above, as applicable,
LIBOR will be determined on the basis of the rates at which
deposits in U.S. dollars are offered by four major banks in the
London interbank market selected by the Calculation Agent (the
"Reference Banks") at approximately 11:00 A.M., London time, on
such LIBOR Interest Determination Date to prime banks in the
London interbank market, having the Index Maturity designated
above, commencing on the second London Banking Day immediately
following such LIBOR Interest Determination Date and in a
principal amount equal to an amount of not less than U.S.
$1,000,000 that is representative for a single transaction in
such market at such time. The Calculation Agent will request the
principal London office of each of such Reference Banks to
provide a quotation of its rate. If at least two such quotations
are provided, LIBOR in respect of such LIBOR Interest
Determination Date will be the arithmetic mean of such
quotations. If fewer than two quotations are provided, LIBOR in
respect of such LIBOR Interest Determination Date will be the
arithmetic mean of the rates quoted by three major banks in New
York City selected by the Calculation Agent at approximately
11:00 A.M., New York City time, on such LIBOR Interest
Determination Date for loans in U.S. dollars to leading European
banks, having the Index Maturity designated in the applicable
Pricing Supplement, such loans commencing on the second London
Banking Day immediately following such LIBOR Interest
Determination Date and in a principal amount equal to an amount
of not less than U.S. $1,000,000 that is representative for a
single transaction in such market at such time; provided,
however, that if the banks in New York City selected as aforesaid
by the Calculation Agent are not quoting as mentioned in this
sentence, LIBOR with respect to such LIBOR Interest Determination
Date will be LIBOR in effect on such LIBOR Interest Determination
Date.
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<PAGE>
If a Spread is designated above, this Note shall bear interest at
LIBOR plus or minus such Spread. If a Spread Multiplier is designated above,
this Note shall bear interest at LIBOR multiplied by such Spread Multiplier.
LIBOR determined with respect to any Interest Determination Date
will become effective on and as of the Interest Reset Date specified above;
provided, however, that the interest rate in effect for the period from the
Issue Date to the first LIBOR Reset Date will be the Initial Interest Rate
specified above. The Interest Determination Date with respect to a LIBOR Note
will be the second London Banking Day prior to the Interest Reset Date for such
Note.
Determination of Treasury Rate
If the Base Rate on this Note is the Treasury Rate, the interest
rate with respect to this Note shall equal the interest rate on each Interest
Determination Date designated above for the most recent auction of direct
obligations of the United States ("Treasury Bills") having the Index Maturity
designated above as published by the Board of Governors of the Federal Reserve
System in "Statistical Release H.15(519), Selected Interest Rates," or any
successor publication of the Board of Governors, under the heading "Pricing U.S.
Government Securities - Treasury Bills -- auction average (investment)." In the
event that such rate is not published by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, the Treasury
Rate shall be the auction average rate (expressed as a bond equivalent, rounded,
if necessary, to the nearest one hundred-thousandth of a percentage point, on
the basis of a year of 365 days or 366 days, as applicable, and applied on a
daily basis) as otherwise announced by the United States Department of the
Treasury. In the event that the result of the auction of Treasury Bills having
the Index Maturity designated above is not otherwise reported as provided above
by 3:00 P.M., New York City time, on such Calculation Date or, if no such
auction is held in a particular week, then the Treasury Rate shall be calculated
by the Calculation Agent and shall be a yield to maturity (expressed as a bond
equivalent, rounded, if necessary, to the nearest one hundred-thousandth of a
percentage point, on the basis of a year of 365 days or 366 days, as applicable,
and applied on a daily basis) of the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 P.M., New York City time, on such Interest
Determination Date, of three leading primary United States government securities
dealers selected by the Calculation Agent for the issue of Treasury Bills with a
remaining maturity closest to the Index Maturity designated above; provided,
however, that if the dealers selected as aforesaid by the Calculation Agent are
not quoting as mentioned in this sentence, the Treasury Rate with respect to
such Interest Determination Date will be the Treasury Rate in effect on such
Determination Date.
If a Spread is designated above, this Note shall bear interest at
the Treasury Rate plus or minus such Spread. If a Spread Multiplier is
designated above, this Note shall bear interest at the Treasury Rate multiplied
by such Spread Multiplier.
The Interest Determination Date pertaining to the Interest Reset
Date for this Note if the Base Rate designated above is the Treasury Rate (the
"Treasury Interest Determination Date") will be the day of the week in which
such Interest Reset Date falls on which Treasury Bills would normally be
auctioned. Treasury Bills are usually sold at auction on Monday of each week,
unless that day is a legal holiday, in which case the auction is usually held on
the Tuesday following, except that such auction may be held on the preceding
Friday. If, as the result of a legal holiday, an auction is so held on the
preceding Friday, such Friday will be the Treasury Interest Determination Date
pertaining to the Interest Reset Date occurring in the next succeeding week. If
an auction date shall fall on any Interest Reset Date for this Note if the Base
Rate designated above is the Treasury Rate, then such Interest Reset Date shall
instead be the first Business Day immediately following such auction date. The
interest rate in effect for the period from the Issue Date to the first Treasury
Reset Date will be the Initial Interest Rate specified above.
- 9 -
<PAGE>
Determination of Prime Rate
If the Base Rate on this Note is the Prime Rate, the interest
rate with respect to this Note shall equal, on each Interest Determination Date
designated above, the rate of interest set forth on the Interest Determination
Date as published by the Board of Governors of the Federal Reserve System in
"Statistical Release H.15(519)", under the heading "Bank Prime Loan." In the
event that such rate is not published by 9:00 A.M., New York City time on the
Calculation Date pertaining to such Interest Determination Date, the Prime Rate
in respect of such Interest Determination Date shall be determined by the
Calculation Agent and will be the arithmetic mean of the rates of interest
publicly announced by each bank that appears on the Reuters Screen USPRIME1 Page
(as defined below) as such bank's prime rate or base lending rate as in effect
for that Interest Determination Date. If fewer than four such rates but more
than one such rate appear on the Reuters Screen USPRIME1 Page for the Interest
Determination Date, the Prime Rate will be determined by the Calculation Agent
and will be the arithmetic mean of the prime rates quoted on the basis of the
actual number of days in the year divided by a 360-day year as of the close of
business on such Interest Determination Date by four major money center banks in
New York City selected by the Calculation Agent. If fewer than two such rates
appear on the Reuters Screen USPRIME1 Page, the Prime Rate will be determined by
the Calculation Agent on the basis of the rates furnished in New York City by
the appropriate number of substitute banks or trust companies organized and
doing business under the laws of the United States, or any State thereof, having
total equity capital of at least U.S. $500,000,000 and being subject to
supervision or examination by Federal or State authority, selected by the
Calculation Agent to provide such rate or rates; provided, however, that if the
banks selected as aforesaid are not quoting as mentioned in this sentence, the
Prime Rate will be the Prime Rate in effect on such Interest Determination Date.
"Reuters Screen USPRIME1 Page" means the display designated as page "USPRIME1"
on the Reuters Monitor Money Rates Service (or such other page as may replace
the USPRIME1 page on that service for the purpose of displaying prime rates or
base lending rates of major United States banks).
If a Spread is designated above, this Note shall bear interest at
the Prime Rate plus or minus such Spread. If a Spread Multiplier is designated
above, this Note shall bear interest at the Prime Rate multiplied by such Spread
Multiplier.
The Prime Rate determined with respect to any Prime Interest
Determination Date will become effective on and as of the Interest Reset Date
specified above; provided, however, that the interest rate in effect for the
period from the Issue Date to the first Prime Reset Date will be the Initial
Interest Rate specified above. The Interest Determination Date with respect to a
Prime Rate Note will be the second Business Day prior to the Interest Reset Date
for such Note.
Notwithstanding the determinations under the foregoing paragraphs
with respect to the applicable Base Rate, the interest rate hereon shall not be
greater than the Maximum Interest Rate, if any, or less than the Minimum
Interest Rate, if any, shown above. The Calculation Agent shall calculate the
interest rate on this Note in accordance with the foregoing relevant section
applicable to the Base Rate of this Note, on or before each Calculation Date.
The interest rate on this Note will in no event be higher than
the maximum interest rate permitted under the laws of the State of New York as
the same may be modified by the United States law of general applicability.
The Calculation Agent will, upon the request of the Holder of
this Note, provide to such Holder the interest rate of this Note then in effect
and the interest rate which will become effective as a result of a determination
made with respect to the most recent Interest Determination Date with respect to
this Note.
Unless otherwise specified above, the Calculation Date, if
applicable, pertaining to any Interest Determination Date is the earlier of (i)
the 10th calendar day after such Interest Determination Date or, if any
- 10 -
<PAGE>
such day is not a Business Day, the next succeeding Business Day and (ii) the
Business Day next preceding the relevant Interest Payment Date or Maturity, as
the case may be.
Unless otherwise specified above, interest payments for this Note
will include interest accrued from and including the next preceding Interest
Payment Date in respect of which interest has been paid (or from and including
the date of issue, if no interest has been paid with respect to this Note) to
but excluding the Interest Payment Date. Accrued interest hereon from the Issue
Date or from the last date for which interest hereon has been paid, as the case
may be, shall be an amount calculated by multiplying the principal amount of
this Note as set forth above by an accrued interest factor. Such accrued
interest factor shall be computed by adding the interest factors calculated for
each day from the Issue Date, or from the last date to which interest shall have
been paid, as the case may be, to the date for which accrued interest is being
calculated. Unless otherwise specified above, the interest factor (expressed as
a decimal rounded, if necessary, to the nearest one hundred-thousandth of a
percentage point) for each such day shall be computed by dividing the interest
rate (expressed as a decimal rounded, if necessary, to the nearest one
hundred-thousandth of a percentage point) applicable to such day by 360, in the
case of the Commercial Paper Rate, CD Rate, LIBOR, Prime Rate or Federal Funds
Effective Rate, or by the actual number of days in the year in the case of the
Treasury Rate.
If this Note is denominated in a Specified Currency, unless the
Holder hereof has elected otherwise, or unless otherwise specified above,
payment in respect of a Foreign Currency Note shall be made in U.S. dollars
based upon the exchange rate as determined by the Exchange Rate Agent based on
the quotation for such non-U.S. dollar currency or composite currency appearing
at approximately 11:00 a.m., New York City time, on the second Business Day
preceding the applicable date of payment, on the bank composite or
multi-contributor pages of the Telerate Monitor Foreign Exchange Service (or, if
such service is not then available to the Exchange Rate Agent, the Reuters
Monitor Foreign Exchange Service or, if neither is available, on a comparable
display or in a comparable manner as the Corporation and the Exchange Rate Agent
shall agree), for the first three banks (or two, if three are not available), in
chronological order, appearing on a list of banks agreed to by the Corporation
and the Exchange Rate Agent prior to such second Business Day, which are
offering quotes. The Exchange Rate Agent shall then select from among the
selected quotations in a manner specified in the applicable Pricing Supplement.
If fewer than two bids are available, then such conversion will be based on the
Market Exchange Rate (as defined below) as of the second Business Day preceding
the applicable payment date. "Market Exchange Rate" means the noon U.S. dollar
buying rate in The City of New York for cable transfers of the relevant currency
as certified for customs purposes by the Federal Reserve Bank of New York. If no
Market Exchange Rate as of the second Business Day preceding the applicable
payment date is available, payments will be made in the Specified Currency,
unless such Specified Currency is unavailable due to the imposition of exchange
controls or to other circumstances beyond the Corporation's control, in which
case payment will be made in U.S. dollars. All currency exchange costs will be
borne by the Holder of this Note by deductions from such payments.
Unless otherwise indicated above, this Note may not be redeemed
prior to Maturity. If so indicated above, this Note may be redeemed, at the
option of the Corporation, on any date on or after the date set forth above,
either in whole or in part, at the option of the Corporation, at a redemption
price equal to the product of the principal amount of this Note to be redeemed
multiplied by the Redemption Percentage. The Redemption Percentage shall
initially equal the Initial Redemption Percentage specified above, and shall
decline at each anniversary of the initial date that this Note is redeemable by
the amount of the Annual Redemption Percentage Reduction specified above, until
the Redemption Percentage is equal to 100%.
If this Note is subject to redemption, notice of redemption shall
be mailed to the registered Holder of the Note designated for redemption at
Holder's address as the same shall appear in the Security Register not less than
30 and not more than 60 days prior to the date of redemption, subject to all
conditions and provisions of the Indenture. In the event of redemption of this
Note in part, a new Note for the amount of the unredeemed portion hereof shall
be issued in the name of the Holder hereof upon the cancellation hereof.
- 11 -
<PAGE>
Unless otherwise indicated above, this Note may not be repaid
prior to maturity. If so indicated above, this Note may be payable prior to
Maturity at the option of the Holder on the Optional Repayment Dates shown above
at a price equal to 100% of the principal amount to be repaid, together with
accrued interest to the date of repayment. In order for this Note to be repaid,
the Trustee must receive at least 30 but not more than 45 days prior to an
Optional Repayment Date (i) this Note with the form below entitled "Option to
Elect Repayment" duly completed; or (ii) a telegram, telex, facsimile
transmission or letter from a member of a national securities exchange or the
National Association of Securities Dealers, Inc. or a commercial bank or trust
company in the United States of America setting forth the name of the Holder of
this Note, the principal amount of the Note to be repaid, the certificate number
or a description of the tenor and terms of this Note, a statement that the
option to elect repayment is being exercised thereby and a guarantee that this
Note with the form below entitled "Option to Elect Repayment" duly completed
will be received by the Trustee not later than five Business Days after the date
of such telegram, telex, facsimile transmission or letter. If the procedure
described in clause (ii) of the preceding sentence is followed, this Note with
form duly completed must be received by the Trustee by such fifth Business Day.
Any tender of this Note for repayment shall be irrevocable. The repayment option
may be exercised by the Holder of this Note for less than the entire principal
amount of the Note provided that the principal amount of this Note remaining
outstanding after repayment is an authorized denomination. Upon such partial
repayment, this Note shall be canceled and a new Note or Notes for the remaining
principal amount hereof shall be issued in the name of the Holder of this Note.
If an Event of Default with respect to Notes of this series shall
occur and be continuing, the principal of the Notes of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein
provided, the amendment or supplementing thereof and the modification of the
rights and obligations of the Corporation and the rights of the holders of the
Securities of each series to be affected under the Indenture at any time by the
Corporation and the Trustee with the consent of the holders of not less than a
majority in principal amount of the Securities at the time outstanding of each
series to be affected. The Indenture also contains a provision permitting the
holders of not less than a majority in aggregate principal amount of the
Securities of any series at the time outstanding, on behalf of the holders of
all Securities of such series, to waive any past defaults under the Indenture
with respect to such series of Securities and their consequences. Any such
consent or waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Note issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Note.
As set forth in, and subject to, the provisions of the Indenture,
no Holder of any Note of this series will have any right to institute any
proceeding with respect to the Indenture or for any remedy thereunder, unless
such Holder shall have previously given to the Trustee written notice of a
continuing Event of Default with respect to this series, the Holders of not less
than 25% in principal amount of the Notes of this series at the time outstanding
shall have made written request, and offered reasonable indemnity, to the
Trustee to institute such proceeding as trustee, and the Trustee shall not have
received from the Holders of a majority in principal amount of the Notes of this
series at the time outstanding a direction inconsistent with such request and
shall have failed to institute such proceeding within 60 days, provided,
however, that such limitations do not apply to a suit instituted by the Holder
hereof for the enforcement of payment of the principal of (and premium, if any)
or interest on this Note on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the
Corporation, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Note at the times, places, and rate herein
prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registrable in the Security
Register, upon surrender of this Note for registration of transfer at the office
or agency of the Corporation in any place where the principal of (and premium,
if any) and interest on this
- 12 -
<PAGE>
Note are payable, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Corporation and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Notes of this series of like tenor and of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees. As provided in the Indenture and subject
to certain limitations therein set forth, this Note is exchangeable for the same
aggregate principal amount of Notes of like tenor and of authorized
denominations, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Corporation may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Securities of this series are issuable only in registered
form without coupons in denominations of $1,000 and any integral multiple of
$1,000 in excess thereof (or in the case of Securities denominated in a
Specified Currency, in such minimum denomination not less that the equivalent of
$1,000 in such Specified Currency on the basis of the Market Exchange Rate).
Prior to due presentation of this Note for registration of
transfer, the Corporation, the Trustee and any agent of the Corporation or the
Trustee may treat the Person in whose name this Note is registered as the owner
hereof for all purposes, whether or not this Note is overdue and neither the
Corporation, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture and this Note shall be governed by and construed in
accordance with the laws of the State of New York.
All terms used in this Note which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
This Note shall not be valid or become obligatory for any purpose
until the Certificate of Authentication hereon shall have been signed by an
authorized officer of the Trustee or its duly authorized agent under the
Indenture.
IN WITNESS WHEREOF, PHH CORPORATION has caused this instrument to
be signed by its duly authorized officers, and has caused its corporate seal or
a facsimile thereof to be affixed hereto or imprinted hereon.
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes of the PHH CORPORATION
series designated herein issued
under the within-mentioned Indenture. By:_________________________
THE FIRST NATIONAL BANK OF
CHICAGO, as Trustee Attest:
By:________________________________________ By:_________________________
Authorized Signatory Corporate Secretary
[SEAL]
- 13 -
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
Please Insert Social Security or ________________________
Other Identifying Number of Assignee ________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF
ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
the within Note of PHH CORPORATION and does hereby irrevocably constitute and
appoint
- --------------------------------------------------------------------------------
attorney to transfer the said Note on the books of the Corporation with full
power of substitution in the premises.
Dated:_________________ Your Signature:___________________________
---------------------------
NOTICE: The signature to this assignment must correspond with the name as
written upon the within instrument in every particular, without alteration or
enlargement or any change whatever.
- 14 -
<PAGE>
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the
Corporation to repay $ principal amount of the within Note, pursuant to its
terms, on the "Optional Repayment Date" first occurring after the date of
receipt of the within Note as specified below, together with Interest thereon
accrued to the date of repayment, to the undersigned at
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Print or Type Name and Address of the Undersigned)
and to issue to the Undersigned, pursuant to the terms of the Indenture, a new
Note or Notes representing the remaining principal amount of this Note, if any.
For the Option to Elect Repayment to be effective, this Note with
the Option to Elect Repayment duly completed must be received by the Corporation
within the relevant time period set forth above at the offices of the Trustee,
14 Wall Street, Eighth Floor, New York, New York 10005.
Dated: ______________________________________________
Note: The signature to this Option to Elect Repayment
must correspond with the name as written upon the
within Note in every particular without alteration or
enlargement or any change whatsoever.
- 15 -
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
Please insert Social Security
or Other Identifying Number of
Assignee ______________________
- ------------------------------------- / ----------------------------------------
Please Print or Type Name and Address Including Zip Code of
Assignee of the within note and all rights hereunder, hereby irrevocably
constituting and appointing attorney to transfer such Note on the
books of PHH Corporation with full power of substitution in the premises.
Dated:________________________ ______________________________
Signature
------------------------------
NOTICE: The signature to this
assignment must correspond
with the name as it appears
upon the within Note in every
particular without alteration
or enlargement or any change
whatsoever.
- 16 -
Exhibit 5
PIPER & MARBURY
L.L.P.
CHARLES CENTER SOUTH
36 SOUTH CHARLES STREET
BALTIMORE, MARYLAND 21201-3010
410-539-2530
FAX: 410-539-0489 WASHINGTON
NEW YORK
PHILADELPHIA
EASTON, MD
MAY 23, 1997
PHH Corporation
11333 McCormick Road
Hunt Valley, Maryland 21031
Ladies and Gentlemen:
We have acted as counsel for PHH Corporation, a Maryland corporation
(the "Company"), in connection with the Company's Registration Statement on Form
S-3 (the "Registration Statement") filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, and the Trust Indenture
Act of 1939, as amended, with respect to the proposed offer and issuance by the
Company of up to $3,000,000,000 in principal amount of the Company's Debt
Securities. In this capacity, we have reviewed the charter and by-laws of the
Company, the proposed form of Indenture (the "Indenture"), between the Company
and The First National Bank of Chicago, as Trustee, the proposed form of
Distribution Agreement among the Company and the several selling agents, the
Registration Statement, the corporate proceedings of the Company relating to the
execution and delivery of the Indenture and the proposed offer and issuance by
the Company of the Debt Securities, and such other materials as we have deemed
necessary to the issuance of this opinion.
We are of the opinion and advise you that:
1. The execution and delivery by the Company of the Indenture has been
duly authorized.
2. The issuance by the Company of the Debt Securities has been duly and
validly authorized and, upon their due execution, authentication and delivery in
accordance with the Indenture and upon payment therefor, the Debt Securities
will be legally issued and will constitute binding obligations of the Company
entitled to the benefits of the Indenture.
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
above-mentioned Registration Statement and to the reference made to us in the
Registration Statement and the related Prospectus.
Very truly yours,
364-DAY COMPETITIVE ADVANCE AND REVOLVING CREDIT AGREEMENT (the
"Agreement"), dated as of March 4, 1997, among PHH CORPORATION, a Maryland
corporation (the "Borrower"), PHH VEHICLE MANAGEMENT SERVICES INC., a
corporation incorporated under the Canada Business Corporations Act (the
"Canadian Borrower"), the Lenders referred to herein, CHASE SECURITIES INC., as
arranger (the "Arranger") for the Lenders, THE CHASE MANHATTAN BANK, a New York
banking corporation, as agent (the "Administrative Agent") for the US Lenders,
and The Chase Manhattan Bank of Canada, a Canadian chartered bank, as
administrative agent for the Canadian Lenders (in such capacity, the "Canadian
Agent").
INTRODUCTORY STATEMENT
----------------------
The Borrower has requested that the Lenders establish a $1,250,000,000
committed revolving credit facility pursuant to which Revolving Credit Loans may
be made to the Borrowers (as defined below). In addition, the Borrower has
requested that the Lenders provide (i) a procedure pursuant to which Lenders may
bid on an uncommitted basis on short-term borrowings by the Borrower and (ii) a
multi-currency credit facility in an amount equal to $500,000,000, of which up
to the equivalent of $200,000,000 will be made available by the Canadian Lenders
(as defined below) to the Canadian Borrower as a separate Canadian Dollar
tranche to be guaranteed by the Borrower.
Subject to the terms and conditions set forth herein, the
Administrative Agent is willing to act as agent for the Lenders, the Canadian
Agent is willing to act as agent for the Canadian Lenders and each Lender is
willing to make Loans.
Accordingly, the parties hereto hereby agree as follows:
1. DEFINITIONS
For the purposes hereof unless the context otherwise requires, the
following terms shall have the meanings indicated, all accounting terms not
otherwise defined herein shall have the respective meanings accorded to them
under GAAP and all terms defined in the New York Uniform Commercial Code and not
otherwise defined herein shall have the respective meanings accorded to them
therein:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any Revolving Credit Loan bearing
interest at a rate determined by reference to the Alternate Base Rate
in accordance with the provisions of Article 2.
-1-
<PAGE>
"Acceptance Fee" shall mean a fee payable in C$ by the
Canadian Borrower to a Canadian Lender with respect to the acceptance
of a B/A, calculated on the face amount of the B/A at the rate per
annum equal to the B/A Spread on the basis of the number of days in the
applicable Contract Period and a year of 365 days.
"Acquisition" shall mean the acquisition by HFS Incorporated
("HFS") of all of the voting common stock of the Borrower pursuant to
the Agreement dated as of November 10, 1996 between HFS, the Borrower
and Mercury Acq. Corp.
"Affiliate" shall mean any Person which, directly or
indirectly, is in control of, is controlled by, or is under common
control with, the Borrower. For purposes of this definition, a Person
shall be deemed to be "controlled by" another if such latter Person
possesses, directly or indirectly, power either to (i) vote 10% or more
of the securities having ordinary voting power for the election of
directors of such controlled Person or (ii) direct or cause the
direction of the management and policies of such controlled Person
whether by contract or otherwise.
"Agents" shall mean, collectively, the Administrative Agent
and the Canadian Agent.
"Alternate Base Rate" shall mean for any day, a rate per annum
(rounded upwards to the nearest 1/16 of 1% if not already an integral
multiple of 1/16 of 1%) equal to the greater of (a) the Prime Rate in
effect for such day and (b) the Federal Funds Effective Rate in effect
for such day plus 1/2 of 1%. "Prime Rate" shall mean the rate per annum
publicly announced by the entity which is the Administrative Agent from
time to time as its prime rate in effect at its principal office in New
York City. For purposes of this Agreement, any change in the Alternate
Base Rate due to a change in the Prime Rate shall be effective on the
date such change in the Prime Rate is announced as effective. "Federal
Funds Effective Rate" shall mean, for any period, a fluctuating
interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for
the day of such transactions received by the Administrative Agent from
three Federal funds brokers of recognized standing selected by it. If
for any reason the Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is
unable to ascertain the Federal Funds Effective Rate, for any reason,
including, without limitation, the inability or failure of the
Administrative Agent to obtain sufficient bids or publications in
accordance with the terms hereof, the Alternate Base Rate shall be
determined without regard to clause (b) until the circumstances giving
rise to such inability no longer exist. Any change in the Alternate
Base Rate due to a change in the
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<PAGE>
Federal Funds Effective Rate shall be effective on the effective date
of such change in the Federal Funds Effective Rate.
"Applicable Agent" shall mean, (i) with respect to US Loans or
the Borrower, the Administrative Agent, and (ii) with respect to
Canadian Loans or the Canadian Borrower, the Canadian Agent.
"Applicable Borrower" shall mean (i) with respect to US Loans,
the Borrower, and (ii) with respect to Canadian Loans, the Canadian
Borrower.
"Applicable Law" shall mean all provisions of statutes, rules,
regulations and orders of governmental bodies or regulatory agencies
applicable to a Person, and all orders and decrees of all courts and
arbitrators in proceedings or actions in which the Person in question
is a party.
"Assessment Rate" shall mean, for any day, the net annual
assessment rate (rounded upwards, if necessary, to the next higher
Basis Point) as most recently reasonably estimated by the
Administrative Agent for determining the then current annual assessment
payable by the entity which is the Administrative Agent to the Federal
Deposit Insurance Corporation (or any successor) for insurance by such
Corporation (or such successor) of time deposits made in Dollars at
such entity's domestic offices.
"Assignment and Acceptance" shall mean an agreement in the
form of Exhibit C hereto, executed by the assignor, assignee and the
other parties as contemplated thereby.
"Available Foreign Currencies" shall mean the currencies set
forth on Schedule 1.1B, and any other available and freely-convertible
non-Dollar currency selected by the Borrower and approved (which
approval shall not be unreasonably withheld) in writing by the
Administrative Agent.
"Bankers' Acceptance" and "B/A" shall mean a bill of exchange
denominated in C$, drawn by the Canadian Borrower and accepted by a
Canadian Lender or a Participant in accordance with this Agreement.
"B/A Borrowing" shall mean a Borrowing comprised of Bankers'
Acceptances.
"B/A Spread" shall mean, at any date or for any period of
determination, the B/A Spread that would be in effect on such date or
during such period pursuant to the table set forth in Section 2.22
based on the rating of the Borrower's senior unsecured long-term debt.
"Basis Point" shall mean 1/100th of 1%.
-3-
<PAGE>
"Board" shall mean the Board of Governors of the Federal
Reserve System.
"Borrowers" shall mean, collectively, the Borrower and the
Canadian Borrower.
"Borrowing" shall mean a group of Loans of a single Interest
Rate Type made by certain Lenders (or in the case of a Competitive
Borrowing, by the Lender or Lenders whose Competitive Bids have been
accepted pursuant to Section 2.4) on a single date and as to which a
single Interest Period is in effect.
"Borrowing Date" shall mean any Business Day specified in a
notice pursuant to Section 2.5(b) as a date on which the Canadian
Borrower requests the Canadian Lenders to make Canadian Revolving
Credit Loans hereunder.
"Branch of Account" shall mean, for each Canadian Lender, the
branch or office of such Canadian Lender at the address set out
opposite that Canadian Lender's name or such other branch or office as
such Canadian Lender may advise the Canadian Borrower and the Canadian
Agent in writing.
"Business Day" shall mean, (i) with respect to any Loan other
than a Canadian Loan, any day other than a Saturday, Sunday or other
day on which banks in the State of New York are permitted or required
by law to close; provided that when used in connection with a LIBOR
Loan, the term "Business Day" shall also exclude any day on which banks
are not open for dealings in deposits in Dollars or the applicable
Available Foreign Currency on the London Interbank Market (or such
other interbank eurocurrency market where the foreign currency and
exchange operations in respect of Dollars or the applicable Available
Foreign Currency, as the case may be, are then being conducted for
delivery on the first day of such Interest Period) and (ii) with
respect to any Canadian Loan, any day other than a Saturday, Sunday or
other day on which banks in Toronto, Ontario or New York City are
permitted or required by law to close.
"C$ Prime Rate" shall mean, on any day, the annual rate of
interest (rounded upwards, if necessary, to the next 1/16 of 1%) equal
to the greater of:
(a) the annual rate of interest determined by The Bank of
Nova Scotia as the annual rates of interest announced
from time to time by The Bank of Nova Scotia as its
prime rate in effect at its principal office in
Toronto on such day for determining interest rates on
C$ denominated commercial loans in Canada; and
(b) the annual rate of interest equal to the sum of (A)
the CDOR Rate in effect on such day and (B) 1%.
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"C$ Prime Rate Borrowing" shall mean a Borrowing comprised of
C$ Prime Rate Loans.
"C$ Prime Rate Loan" shall mean a Canadian Revolving Credit
Loan denominated in C$ which bears interest at a rate based upon the C$
Prime Rate.
"Canadian Agent" shall have the meaning assigned to such term
in the preamble hereto.
"Canadian Borrower" shall have the meaning assigned to such
term in the preamble hereto.
"Canadian Borrowing" shall mean a Borrowing consisting of
simultaneous Canadian Revolving Credit Loans from the Canadian Lenders.
"Canadian Commitment" shall mean, with respect to each Lender,
the commitment of such Lender to make Canadian Revolving Credit Loans
to the Canadian Borrower pursuant to Section 2.1(b), in an aggregate
amount not to exceed at any time the amount set forth opposite such
Lender's name under the heading "Canadian Commitment" on or in (i)
Schedule 1.1A hereto, (ii) any applicable Assignment and Acceptance to
which it may be a party, and/or (iii) any agreement delivered pursuant
to Section 2.24(d), as the case may be, as such Lender's Canadian
Commitment may be permanently terminated or reduced from time to time
pursuant to Section 2.12 or 2.24 or Article 7 or changed pursuant to
Section 9.3. The Canadian Commitments shall automatically and
permanently terminate on the earlier of (a) the Maturity Date or (b)
the date of termination in whole pursuant to Section 2.12 or Article 7.
"Canadian Dollars" and "C$" shall mean the lawful currency of
Canada.
"Canadian Lender" shall mean each Lender which has a Canadian
Commitment or which has extended a Canadian Loan.
"Canadian Loan" shall mean any loan made by any Canadian
Lender pursuant to this Agreement to the Canadian Borrower.
"Canadian Obligations" shall mean the obligation of the
Canadian Borrower to make due and punctual payment of principal of, and
interest on (including post-petition interest, whether or not allowed),
the Canadian Loans and all other monetary obligations of the Canadian
Borrower to the Canadian Agent or any Canadian Lender under this
Agreement, the Canadian Revolving Credit Notes or with respect to any
Interest Rate Protection Agreement entered into between the Canadian
Borrower or any of its Subsidiaries and any Canadian Lender.
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"Canadian Revolving Credit Loan" shall have the meaning
assigned to such term in Section 2.1(b).
"Canadian Revolving Credit Note" shall have the meaning
assigned to such term in Section 2.8.
"Capital Lease" shall mean as applied to any Person, any lease
of any property (whether real, personal or mixed) by that Person as
lessee which, in accordance with GAAP, is or should be accounted for as
a capital lease on the balance sheet of that Person.
"Cash Equivalents" shall mean (i) investments in commercial
paper maturing in not more than 270 days from the date of issuance
which at the time of acquisition is rated at least A-1 or the
equivalent thereof by S&P, or P-1 or the equivalent thereof by Moody's,
(ii) investments in direct obligations or obligations which are
guaranteed or insured by the United States or any agency or
instrumentality thereof (provided that the full faith and credit of the
United States is pledged in support thereof) having a maturity of not
more than three years from the date of acquisition, (iii) investments
in certificates of deposit maturing not more than one year from the
date of origin issued by a bank or trust company organized or licensed
under the laws of the United States or any state or territory thereof
having capital, surplus and undivided profits aggregating at least
$500,000,000 and A rated or better by S&P or Moody's, (iv) money market
mutual funds having assets in excess of $2,000,000,000, (v) investments
in asset-backed or mortgage-backed securities, including investments in
collateralized, adjustable rate mortgage securities and those
mortgage-backed securities which are rated at least AA by S&P or Aa by
Moody's or are of comparable quality at the time of investment, and
(vi) banker's acceptances maturing not more than one year from the date
of origin issued by a bank or trust company organized or licensed under
the laws of the United States or any state or territory thereof and
having a capital, surplus and undivided profits aggregating at least
$500,000,000, and rated A or better by S&P or Moody's.
"CDOR Rate" shall mean, on any date, the annual rate of
interest which is the rate based on an average rate applicable to C$
bankers' acceptances for a term of 30 days (in the case of the
definition of "C$ Prime Rate") appearing on the "Reuters Screen CDOR
Page" (as defined in the International Swaps and Derivatives
Association, Inc. definitions, as modified and amended from time to
time) at approximately 10:00 a.m. (Toronto time), on such date, or if
such date is not a Business Day, then on the immediately preceding
Business Day; provided, that if such rate does not appear on the
Reuters Screen CDOR Page as contemplated, then the CDOR Rate on any
date shall be calculated as the arithmetic mean of the rates for the
term referred to above applicable to C$ bankers' acceptances quoted by
The Bank of Nova Scotia as of 10:00 a.m. (Toronto time), on such date,
or if such date is not a Business Day, then on the immediately
preceding Business Day.
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"Change in Control" shall mean, (i) the acquisition by any
Person or group (within the meaning of the Securities Exchange Act of
1934, as amended, and the rules of the Securities and Exchange
Commission thereunder as in effect on the date hereof), directly or
indirectly, beneficially or of record, of ownership or control of in
excess of 50% of the voting common stock of HFS Incorporated on a fully
diluted basis at any time or (ii) at any time, individuals who at the
date hereof constituted the Board of Directors of HFS Incorporated
(together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of HFS
Incorporated, as the case may be, was approved by a vote of the
majority of the directors then still in office who were either
directors at the date hereof or whose election or a nomination for
election was previously so approved) cease for any reason to constitute
a majority of the Board of Directors of HFS Incorporated then in office
or (iii) HFS Incorporated shall cease to own, directly or through
wholly-owned Subsidiaries, all of the capital stock of the Borrower,
free and clear of any direct or indirect Liens.
"Chase" shall mean The Chase Manhattan Bank, a New York
banking corporation.
"Chase Canada" shall mean The Chase Manhattan Bank of Canada,
a Canadian chartered bank.
"Closing Date" shall mean the date on which the conditions
precedent to the effectiveness of this Agreement as set forth in
Section 4.1 have been satisfied or waived, which shall in no event be
later than April 15, 1997.
"Code" shall mean the Internal Revenue Code of 1986 and the
rules and regulations issued thereunder, as now and hereafter in
effect, or any successor provision thereto.
"Commitment" shall mean, (i) with respect to each Primary
Lender, its Primary Commitment, (ii) with respect to each Pounds
Sterling Lender, its Pounds Sterling Commitment and (iii) with respect
to each Canadian Lender, its Canadian Commitment.
"Commitment Expiration Date" shall have the meaning assigned
to such term in Section 2.24(a).
"Commitment Period" shall mean the period from and including
the Closing Date to but not including the Maturity Date or such earlier
date on which the Commitments shall have been terminated in accordance
with the terms hereof.
"Competitive Bid" shall mean an offer by a Lender to make a
Competitive Loan pursuant to Section 2.4 in the form of Exhibit E-3.
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"Competitive Bid Accept/Reject Letter" shall mean a
notification made by the Borrower pursuant to Section 2.4(d) in the
form of Exhibit E-4.
"Competitive Bid Rate" shall mean, as to any Competitive Bid
made by a Lender pursuant to Section 2.4(b), (a) in the case of a LIBOR
Loan, the Margin and (b) in the case of a Fixed Rate Loan, the fixed
rate of interest offered by the Lender making such Competitive Bid.
"Competitive Bid Request" shall mean a request made pursuant
to Section 2.4 in the form of Exhibit E-1.
"Competitive Borrowing" shall mean a Borrowing consisting of a
Competitive Loan or concurrent Competitive Loans from the Lender or
Lenders whose Competitive Bids for such Borrowing have been accepted by
the Borrower under the bidding procedure described in Section 2.4.
"Competitive Loan" shall mean a Loan from a Lender to the
Borrower pursuant to the bidding procedure described in Section 2.4.
Each Competitive Loan shall be a LIBOR Competitive Loan or a Fixed Rate
Loan.
"Competitive Note" shall have the meaning assigned to such
term in Section 2.8.
"Consolidated Assets" shall mean, at any date of
determination, the total assets of the Borrower and its Consolidated
Subsidiaries determined in accordance with GAAP.
"Consolidated Net Income" shall mean, for any period for which
such amount is being determined, the net income (loss) of the Borrower
and its Consolidated Subsidiaries during such period determined on a
consolidated basis for such period taken as a single accounting period
in accordance with GAAP, provided that there shall be excluded (i)
income (or loss) of any Person (other than a Consolidated Subsidiary)
in which the Borrower or any of its Consolidated Subsidiaries has an
equity investment or comparable interest, except to the extent of the
amount of dividends or other distributions actually paid to the
Borrower or its Consolidated Subsidiaries by such Person during such
period, (ii) the income (or loss) of any Person accrued prior to the
date it becomes a Consolidated Subsidiary or is merged into or
consolidated with the Borrower or any of its Consolidated Subsidiaries
or the Person's assets are acquired by the Borrower or any of its
Consolidated Subsidiaries, (iii) the income of any Consolidated
Subsidiary to the extent that the declaration or payment of dividends
or similar distributions by that Consolidated Subsidiary of the income
is not at the time permitted by operation of the terms of its charter
or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Consolidated Subsidiary,
(iv) any extraordinary after-tax gains and (v) any extraordinary pretax
losses but only to the extent attributable to a write-down of financing
costs relating to any existing and future indebtedness.
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"Consolidated Net Worth" shall mean, at any date of
determination, all amounts which would be included on a balance sheet
of the Borrower and its Consolidated Subsidiaries under stockholders'
equity as of such date in accordance with GAAP.
"Consolidated Subsidiaries" shall mean all Subsidiaries of the
Borrower that are required to be consolidated with the Borrower for
financial reporting purposes in accordance with GAAP.
"Contract Period" shall mean the term of a B/A selected by the
Canadian Borrower in accordance with Section 2.25 commencing on the
Borrowing Date, Rollover Date or date of refinancing pursuant to
Section 2.6, as applicable, of such B/A and expiring on a Business Day
which shall be either 30 days, 60 days, 90 days, 120 days or 180 days
thereafter, provided that no Contract Period shall extend beyond the
Maturity Date.
"Contractual Obligation" shall mean, as to any Person, any
provision of any security issued by such Person or of any agreement,
instrument or other undertaking to which such Person is a party or by
which it or any of its property is bound.
"Currency" or "Currencies" shall mean the collective reference
to Dollars and Available Foreign Currencies.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Discount Proceeds" shall mean, for any B/A, an amount
(rounded to the nearest whole cent, and with one-half of one cent being
rounded up) calculated on the applicable Borrowing Date or Rollover
Date by multiplying:
(i) the face amount of the B/A; by
(ii) the quotient of one divided by the sum of
one plus the product of:
1. the Discount Rate (expressed as a decimal) applicable
to such B/A, and
2. a fraction, the numerator of which is the Contract
Period of the B/A and the denominator of which is
365, being the number of days in the applicable year,
with such quotient being rounded up or down to the fifth decimal place
and .000005 being rounded up.
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"Discount Rate" shall mean, with respect to any Canadian
Lender, as applicable to a B/A being purchased by such Canadian Lender
on any day, the average (as determined by the Canadian Agent) of the
respective percentage discount rates (expressed to two decimal places
and rounded upward, if necessary, to the nearest 0.01%) quoted to The
Bank of Nova Scotia as the percentage discount rate at which The Bank
of Nova Scotia would, in accordance with its normal practices, at or
about 10:00 a.m., Toronto time, on such day, be prepared to purchase
Bankers' Acceptances accepted by The Bank of Nova Scotia having a face
amount and term comparable to the face amount and term of such B/A.
"Dollar Equivalent Amount" shall mean with respect to (i) any
amount of any Available Foreign Currency on any date, the equivalent
amount in Dollars of such amount of Available Foreign Currency, as
determined by the Administrative Agent using the applicable Exchange
Rate and (ii) any amount in Dollars, such amount.
"Dollars" and "$" and "US$" shall mean lawful currency of the
United States.
"Domestic Obligations" shall mean the obligation of the
Borrower to make due and punctual payment of principal of, and interest
on (including post-petition interest, whether or not allowed), the
Loans, the Facility Fee, guarantee obligations in respect of the
Canadian Obligations and all other monetary obligations of the Borrower
to the Administrative Agent or any Lender under this Agreement, the
Notes or the Fundamental Documents or with respect to any Interest Rate
Protection Agreements entered into between the Borrower or any of its
Subsidiaries and any Lender.
"Environmental Laws" shall mean any and all federal,
provincial, state, local or municipal laws, rules, orders, regulations,
statutes, ordinances, codes, decrees or requirements of any
Governmental Authority regulating, relating to or imposing liability or
standards of conduct concerning, any Hazardous Material or
environmental protection or health and safety, as now or at any time
hereafter in effect, including without limitation, the Clean Water Act
also known as the Federal Water Pollution Control Act, 33 U.S.C. ss.ss.
1251 et seq., the Clean Air Act, 42 U.S.C. ss.ss. 7401 et seq., the
Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. ss.ss. 136
et seq., the Surface Mining Control and Reclamation Act, 30 U.S.C.
ss.ss. 1201 et seq., the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ss.ss. 9601 et seq., the
Superfund Amendment and Reauthorization Act of 1986, Public Law 99-499,
100 Stat. 1613, the Emergency Planning and Community Right to Know Act,
42 U.S.C. ss.ss. 11001 et seq., the Resource Conservation and Recovery
Act, 42 U.S.C. ss.ss. 6901 et seq., the Occupational Safety and Health
Act as amended, 29 U.S.C. ss. 655 and ss. 657, together, in each case,
with any amendment thereto, and the regulations adopted and
publications promulgated thereunder and all substitutions thereof.
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"Environmental Liabilities" shall mean any liability,
contingent or otherwise (including any liability for damages, costs of
environmental remediation, fines, penaltiesor indemnities), of the
Borrower or any Subsidiary directly or indirectly resulting from or
based upon (a) violation of any Environmental Law, (b) the generation,
use, handling, transportation, storage, treatment or disposal of any
Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the
release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual
arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as such Act may be amended, and the regulations promulgated
thereunder.
"Event of Default" shall have the meaning given such term in
Article 7.
"Exchange Rate" shall mean, (i) with respect to any Available
Foreign Currency other than Canadian Dollars on any date, the rate at
which such Available Foreign Currency may be exchanged into Dollars, as
set forth on such date on the relevant Reuters currency page at or
about 11:00 A.M. New York City time on such date and (ii) with respect
to Canadian Dollars, the spot rate at which Canadian Dollars may be
exchanged into U.S. Dollars, as quoted by The Bank of Canada at
approximately 12:00 noon, Toronto time, as set forth on the Reuters
"BOFC" page. In the event that such rate does not appear on any such
Reuters page, the "Exchange Rate" with respect to such Available
Foreign Currency shall be determined by reference to such other
publicly available service for displaying exchange rates as may be
agreed upon by the Administrative Agent and the Borrower or, in the
absence of such agreement, such "Exchange Rate" shall instead be the
Administrative Agent's spot rate of exchange in the interbank market
where its foreign currency exchange operations in respect of such
Available Foreign Currency are then being conducted, at or about 10:00
A.M., local time, at such date for the purchase of Dollars with such
Available Foreign Currency, for delivery two Business Days later;
provided that if at the time of any such determination, no such spot
rate can reasonably be quoted, the Administrative Agent may use any
reasonable method (including obtaining quotes from three or more market
makers for such Available Foreign Currency) as it deems applicable to
determine such rate, and such determination shall be conclusive absent
manifest error (without prejudice to the determination of the
reasonableness of such method).
"Extension Request" means each request by the Borrower made
pursuant to Section 2.24 for the Lenders to extend the Maturity Date,
which shall contain the information in respect of such extension
specified in Exhibit G and shall be delivered to the Administrative
Agent in writing.
"Facility Fee" shall have the meaning given such term in
Section 2.7.
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"Five Year Credit Agreement" shall mean the Five Year
Competitive Advance and Revolving Credit Agreement, dated as of the
date hereof, among the Borrower, the lenders referred to therein, and
Chase, as Administrative Agent.
"Fixed Rate Borrowing" shall mean a Borrowing comprised of
Fixed Rate Loans.
"Fixed Rate Loan" shall mean any Competitive Loan bearing
interest at a fixed percentage rate per annum (expressed in the form of
a decimal to no more than four decimal places) specified by the Lender
making such Loan in its Competitive Bid.
"Fundamental Documents" shall mean this Agreement, any
Revolving Credit Notes, any Competitive Notes, any Canadian Revolving
Credit Notes, any Pounds Sterling Notes and any other ancillary
documentation which is required to be, or is otherwise, executed by the
Borrowers and delivered to the Administrative Agent in connection with
this Agreement.
"GAAP" shall mean generally accepted accounting principles
consistently applied (except for accounting changes in response to FASB
releases or other authoritative pronouncements) provided, however, that
all calculations made pursuant to Sections 6.7 and 6.8 and the related
definitions shall have been computed based on such generally accepted
accounting principles as are in effect on the date hereof.
"Governmental Authority" shall mean any federal, provincial,
state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, or any court, in each case, whether
of the United States or Canada or foreign.
"Guaranty" shall mean, as to any Person, any direct or
indirect obligation of such Person guaranteeing or intended to
guarantee any Indebtedness, Capital Lease, dividend or other monetary
obligation ("primary obligation") of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not
contingent, (a) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (b) to advance or
supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of
the primary obligor, (c) to purchase property, securities or services,
in each case, primarily for the purpose of assuring the owner of any
such primary obligation of the repayment of such primary obligation or
(d) as a general partner of a partnership or a joint venturer of a
joint venture in respect of indebtedness of such partnership or such
joint venture which is treated as a general partnership for purposes of
Applicable Law. The amount of any Guaranty shall be deemed to be an
amount equal to the stated or determinable amount (or portion thereof)
of the primary obligation in respect of which such Guaranty is made or,
if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such Person is required to
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perform thereunder); provided that the amount of any Guaranty shall be
limited to the extent necessary so that such amount does not exceed the
value of the assets of such Person (as reflected on a consolidated
balance sheet of such Person prepared in accordance with GAAP) to which
any creditor or beneficiary of such Guaranty would have recourse.
Notwithstanding the foregoing definition, the term "Guaranty" shall not
include any direct or indirect obligation of a Person as a general
partner of a general partnership or a joint venturer of a joint venture
in respect of Indebtedness of such general partnership or joint
venture, to the extent such Indebtedness is contractually non-recourse
to the assets of such Person as a general partner or joint venturer
(other than assets comprising the capital of such general partnership
or joint venture).
"Hazardous Materials" shall mean any flammable materials,
explosives, radioactive materials, hazardous materials, hazardous
wastes, hazardous or toxic substances, or similar materials defined as
such in any Environmental Law.
"Indebtedness" shall mean (i) all indebtedness, obligations
and other liabilities of the Borrower and its Subsidiaries which are,
at the date as of which Indebtedness is to be determined, includable as
liabilities in a consolidated balance sheet of the Borrower and its
Subsidiaries, other than (x) accounts payable and accrued expenses, (y)
advances from clients obtained in the ordinary course of the relocation
management services business of the Borrower and its Subsidiaries and
(z) current and deferred income taxes and other similar liabilities,
plus (ii) without duplicating any items included in Indebtedness
pursuant to the foregoing clause (i), the maximum aggregate amount of
all liabilities of the Borrower or any of its Subsidiaries under any
Guaranty, indemnity or similar undertaking given or assumed of, or in
respect of, the indebtedness, obligations or other liabilities, assets,
revenues, income or dividends of any Person other than the Borrower or
one of its Subsidiaries and (iii) all other obligations or liabilities
of the Borrower or any of its Subsidiaries in relation to the discharge
of the obligations of any Person other than the Borrower or one of it
Subsidiaries.
"Interest Payment Date" shall mean, with respect to any
Borrowing, the last day of the Interest Period applicable thereto and,
in the case of a LIBOR Borrowing with an Interest Period of more than
three months' duration or a Fixed Rate Borrowing with an Interest
Period of more than 90 days' duration, each day that would have been an
Interest Payment Date had successive Interest Periods of three months'
duration or 90 days' duration, as the case may be, been applicable to
such Borrowing, and, in addition, the date of any refinancing or
conversion of a Borrowing with, or to, a Borrowing of a different
Interest Rate Type.
"Interest Period" shall mean (a) as to any LIBOR Borrowing,
the period commencing on the date of such Borrowing, and ending on the
numerically corresponding day (or, if there is no numerically
corresponding day, on the last day) in the calendar month that is 1, 2,
3, 6 or, subject to each Lender's approval, 12 months
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thereafter, as the Borrower may elect, (b) as to any ABR Borrowing, the
period commencing on the date of such Borrowing and ending on the
earliest of (i) the next succeeding March 31, June 30, September 30 or
December 31, commencing March 31, 1997, (ii) the Maturity Date and
(iii) the date such Borrowing is refinanced with a Borrowing of a
different Interest Rate Type in accordance with Section 2.6 or is
prepaid in accordance with Section 2.13, (c) as to any C$ Prime Rate
Loan, the period commencing on the date of such Borrowing and ending on
the earliest of (i) the last Business Day of the calendar month, (ii)
the Maturity Date and (iii) the date such Borrowing is refinanced with
a Borrowing of a different Interest Rate Type in accordance with
Section 2.6 or is prepaid in accordance with Section 2.13, and (d) as
to any Fixed Rate Borrowing, the period commencing on the date of such
Borrowing and ending on the date specified in the Competitive Bids in
which the offer to make the Fixed Rate Loans comprising such Borrowing
were extended, which shall not be earlier than seven days after the
date of such Borrowing or later than 360 days after the date of such
Borrowing; provided that with respect to Loans made by an Objecting
Lender, no Interest Period with respect to such Objecting Lender's
Loans shall end after such Objecting Lender's Commitment Expiration
Date; and provided, further, that (i) if any Interest Period would end
on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless, in the case of
LIBOR Loans only, such next succeeding Business Day would fall in the
next calendar month, in which case such Interest Period shall end on
the next preceding Business Day and (ii) no Interest Period with
respect to any LIBOR Borrowing or Fixed Rate Borrowing may be selected
which would result in the aggregate amount of LIBOR Loans and Fixed
Rate Loans having Interest Periods ending after any day on which a
Commitment reduction is scheduled to occur being in excess of the Total
Commitment scheduled to be in effect after such date. Interest shall
accrue from, and including, the first day of an Interest Period to, but
excluding, the last day of such Interest Period.
"Interest Rate Protection Agreement" shall mean any interest
rate swap agreement, interest rate cap agreement or other similar
financial agreement or arrangement.
"Interest Rate Type" when used in respect of any Loan or
Borrowing, shall refer to the Rate by reference to which interest on
such Loan or on the Loans comprising such Borrowing is determined. For
purposes of US Loans, "Rate" shall include LIBOR, the Alternate Base
Rate and the Fixed Rate, and for purposes of Canadian Revolving Credit
Loans, shall include the C$ Prime Rate and the rate implicit in the
Discount Rate.
"Lender and "Lenders" shall mean the financial institutions
whose names appear at the foot hereof and any assignee of a Lender
pursuant to Section 9.3(b).
"Lending Office" shall mean, with respect to any of the
Lenders, the branch or branches (or affiliate or affiliates) from which
any such Lender's LIBOR Loans, Fixed
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Rate Loans or ABR Loans or C$ Prime Rate Loans or Bankers' Acceptances,
as the case may be, are made or maintained and for the account of which
all payments of principal of, and interest on, such Lender's LIBOR
Loans, Fixed Rate Loans or ABR Loans or C$ Prime Rate Loans or Bankers'
Acceptances are made, as notified to the Administrative Agent and the
Canadian Agent from time to time.
"LIBOR" shall mean, with respect to any LIBOR Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next Basis Point) equal to the rate at which deposits
in Dollars or the applicable Available Foreign Currency, as the case
may be, approximately equal in principal amount to (a) in the case of a
Revolving Credit Borrowing, Chase's portion of such LIBOR Borrowing and
(b) in the case of a Competitive Borrowing, a principal amount that
would have been Chase's portion of such Competitive Borrowing had such
Competitive Borrowing been a Revolving Credit Borrowing, and for a
maturity comparable to such Interest Period, are offered to the
principal London office of Chase in immediately available funds in the
London Interbank Market (or such other interbank eurocurrency market
where the foreign currency and exchange operations in respect of
Dollars or such applicable Available Foreign Currency, as the case may
be, are then being conducted for delivery on the first day of such
Interest Period) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period (or, in the case
of U.K. Pounds Sterling, on the first day of such Interest Period).
"LIBOR Borrowing" shall mean a Borrowing comprised of LIBOR
Loans.
"LIBOR Competitive Loan" shall mean any Competitive Loan
bearing interest at a rate determined by reference to LIBOR in
accordance with the provisions of Article 2.
"LIBOR Loan" shall mean any LIBOR Competitive Loan or LIBOR
Revolving Credit Loan.
"LIBOR Revolving Credit Loan" shall mean any Loan (other than
a Competitive Loan) bearing interest at a rate determined by reference
to LIBOR in accordance with the provisions of Article 2.
"LIBOR Spread" shall mean, at any date or any period of
determination, the LIBOR Spread that would be in effect on such date or
during such period pursuant to the chart set forth in Section 2.22
based on the rating of the Borrower's senior unsecured long-term debt.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind whatsoever (including any
conditional sale or other title retention agreement, any lease in the
nature thereof or agreement to give any financing statement under the
Uniform Commercial Code of any jurisdiction).
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"Loan" shall mean a Competitive Loan or a Revolving Credit
Loan, whether made as a LIBOR Loan, an ABR Loan or a Fixed Rate Loan,
as permitted hereby, or a Canadian Revolving Credit Loan, whether made
as a C$ Prime Rate Loan or a B/A, as permitted hereby.
"Margin" shall mean, as to any LIBOR Competitive Loan, the
margin (expressed as a percentage rate per annum in the form of a
decimal to four decimal places) to be added to, or subtracted from,
LIBOR in order to determine the interest rate applicable to such Loan,
as specified in the Competitive Bid relating to such Loan.
"Margin Stock" shall be as defined in Regulation U of the
Board.
"Material Adverse Effect" shall mean a material adverse effect
on the business, assets, operations or condition, financial or
otherwise, of the Borrower and its Subsidiaries taken as a whole.
"Material Subsidiary" shall mean any Subsidiary of the
Borrower which together with its Subsidiaries at the time of
determination had assets constituting 10% or more of Consolidated
Assets, accounts for 10% or more of Consolidated Net Worth, or accounts
for 10% or more of the revenues of the Borrower and its Consolidated
Subsidiaries for the Rolling Period immediately preceding the date of
determination.
"Maturity Date" shall mean 364 days from and including the
Closing Date or such later date as shall be determined pursuant to the
provisions of Section 2.24 with respect to non-Objecting Lenders.
"Moody's" shall mean Moody's Investors Service Inc.
"Multiemployer Plan" shall mean a plan described in Section
3(37) of ERISA.
"non-Objecting Lender" shall mean any Lender that is not an
Objecting Lender.
"Notes" shall mean the Competitive Notes and the Revolving
Credit Notes and the Canadian Revolving Credit Notes and the Pounds
Sterling Notes.
"Notice of Canadian Borrowing" shall have the meaning assigned
to such term in Section 2.5(b).
"Notice of Rollover" shall mean a written notice to the
Canadian Agent substantially in the form attached hereto as Exhibit J.
"Objecting Lender" shall mean any Lender that does not consent
to the extension of the Maturity Date pursuant to Section 2.24.
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"Obligations" shall mean the collective reference to the
Domestic Obligations and the Canadian Obligations.
"Participant" shall have the meaning assigned to such term in
Section 9.3(g).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"Permitted Encumbrances" shall mean Liens permitted under
Section 6.5.
"Person" shall mean any natural person, corporation, division
of a corporation, partnership, limited liability company, trust, joint
venture, association, company, estate, unincorporated organization or
government or any agency or political subdivision thereof.
"Plan" shall mean an employee pension benefit plan described
in Section 3(2) of ERISA, other than a Multiemployer Plan.
"Pounds Sterling Borrowing" shall mean a Borrowing consisting
of simultaneous Pounds Sterling Loans from each of the Pounds Sterling
Lenders.
"Pounds Sterling Commitment" shall mean, with respect to each
Lender, its commitment to make Pounds Sterling Loans to the Borrower
pursuant to Section 2.1(c), in an aggregate Dollar Equivalent Amount
not to exceed at any time the amount set forth opposite such Lender's
name under the heading "Pounds Sterling Commitment" on or in (i)
Schedule 1.1A hereto, (ii) any applicable Assignment and Acceptance to
which it may be a party, and/or (iii) any agreement delivered pursuant
to Section 2.24(d), as the case may be, as such Lender's Pounds
Sterling Commitment may be permanently terminated or reduced from time
to time pursuant to Section 2.12 or 2.24 or Article 7 or changed
pursuant to Section 9.3. The Pounds Sterling Commitments shall
automatically and permanently terminate on the earlier of (a) the
Maturity Date or (b) the date of termination in whole pursuant to
Section 2.12 or Article 7.
"Pounds Sterling Lender" shall mean each Lender which has a
Pounds Sterling Commitment or which has extended a Pounds Sterling
Loan.
"Pounds Sterling Loan" shall have the meaning assigned to such
term in Section 2.1(c).
"Pounds Sterling Note" shall have the meaning assigned to such
term in Section 2.8.
"Primary Borrowing" shall mean a Borrowing consisting of
simultaneous Primary Loans from each of the Primary Lenders.
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"Primary Commitment" shall mean, with respect to each Lender,
its commitment to make Primary Loans to the Borrower pursuant to
Section 2.1(a), in an aggregate amount not to exceed at any time the
amount set forth opposite such Lender's name under the heading "Primary
Commitment" on or in (i) Schedule 1.1A hereto, (ii) any applicable
Assignment and Acceptance to which it may be a party, and/or (iii) any
agreement delivered pursuant to Section 2.24(d), as the case may be, as
such Lender's Primary Commitment may be permanently terminated or
reduced from time to time pursuant to Section 2.12 or 2.24 or Article 7
or changed pursuant to Section 9.3. The Primary Commitments shall
automatically and permanently terminate on the earlier of (a) the
Maturity Date or (b) the date of termination in whole pursuant to
Section 2.12 or Article 7.
"Primary Lender" shall mean each Lender which has a Primary
Commitment or which has extended a Primary Loan.
"Primary Loan" shall mean any Loan made by any Primary Lender
pursuant to Section 2.1(a).
"Pro Forma Balance Sheet" shall have the meaning assigned to
such term in Section 3.4.
"Pro Forma Basis" shall mean, in connection with any
transaction for which a determination on a Pro Forma Basis is required
to be made hereunder, that such determination shall be made (i) after
giving effect to any issuance of Indebtedness, any acquisition, any
disposition or any other transaction (as applicable) and (ii) assuming
that the issuance of Indebtedness, acquisition, disposition or other
transaction and, if applicable, the application of any proceeds
therefrom, occurred at the beginning of the most recent Rolling Period
ending at least thirty (30) days prior to the date on which such
issuance of Indebtedness, acquisition, disposition or other transaction
occurred.
"Reportable Event" shall mean any reportable event as defined
in Section 4043(c) of ERISA, other than a reportable event as to which
provision for 30-day notice to the PBGC would be waived under
applicable regulations had the regulations in effect on the Closing
Date been in effect on the date of occurrence of such reportable event.
"Required Lenders" shall mean at any time, Lenders holding
Commitments representing (in Dollar amounts) 51% or more of the Primary
Commitment, except that (i) for purposes of determining the Lenders
entitled to declare the principal of and the interest on the Loans and
the Notes and all other amounts payable hereunder or thereunder to be
forthwith due and payable pursuant to Article 7 and (ii) at all times
after the termination of the Total Commitment in its entirety,
"Required Lenders" shall mean
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Lenders holding 51% or more of the aggregate principal amount of the
Loans at the time outstanding.
"Revolving Credit Borrowing" shall mean a Borrowing consisting
of simultaneous Revolving Credit Loans from each of the Primary Lenders
or Pounds Sterling Lenders, as the case may be.
"Revolving Credit Borrowing Request" shall mean a request made
pursuant to Section 2.5 in the form of Exhibit F.
"Revolving Credit Loans" shall mean the Loans made by the
Primary or Pounds Sterling Lenders to the Borrower pursuant to a notice
given by the Borrower under Section 2.5(a). Each Revolving Credit Loan
shall be a LIBOR Revolving Credit Loan or an ABR Loan.
"Revolving Credit Note" shall have the meaning assigned to
such term in Section 2.8.
"Rolling Period" shall mean with respect to any fiscal
quarter, such fiscal quarter and the three immediately preceding fiscal
quarters considered as a single accounting period.
"Rollover Date" shall mean any Business Day specified in a
Notice of Rollover pursuant to Section 2.25 as the date of issue of a
B/A in respect of any maturing B/As.
"S&P" shall mean Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies.
"Special Purpose Vehicle Subsidiary" shall mean PHH Caribbean
Leasing, Inc. and any Subsidiary engaged in the fleet-leasing
management business which (i) is, at any one time, a party to one or
more lease agreements with only one lessee and (ii) finances, at any
one time, its investment in lease agreements or vehicles with only one
lender, which lender may be the Borrower if and to the extent that such
loans and/or advances by the Borrower are not prohibited hereby.
"Statutory Reserves" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator
of which is the number one minus the aggregate of the maximum reserve
percentages (including any marginal, special, emergency or supplemental
reserves) expressed as a decimal established by the Board and any other
banking authority to which the Administrative Agent or any Lender is
subject, for Eurocurrency Liabilities (as defined in Regulation D of
the Board) (or, at any time when such Lender may be required by the
Board or by any other Governmental Authority, whether within the United
States or in another relevant jurisdiction, to
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maintain reserves against any other category of liabilities which
includes deposits by reference to which LIBOR is determined as provided
in this Agreement or against any category of extensions of credit or
other assets of such Lender which includes any such LIBOR Loans). Such
reserve percentages shall include those imposed under Regulation D of
the Board. LIBOR Loans shall be deemed to constitute Eurocurrency
Liabilities and as such shall be deemed to be subject to such reserve
requirements without benefit of or credit for proration, exceptions or
offsets which may be available from time to time to any Lender under
Regulation D of the Board. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any
reserve percentage.
"Subsidiary" shall mean with respect to any Person, any
corporation, association, joint venture, partnership or other business
entity (whether now existing or hereafter organized) of which at least
a majority of the voting stock or other ownership interests having
ordinary voting power for the election of directors (or the equivalent)
is, at the time as of which any determination is being made, owned or
controlled by such Person or one or more subsidiaries of such Person or
by such Person and one or more subsidiaries of such Person. Unless
otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of the Borrower.
"Supermajority Lenders" shall mean Lenders which have
Commitments representing at least 75% of the aggregate Dollar amount of
the Primary Commitments.
"Total Commitment" shall mean, at any time, the aggregate
amount of the Lenders' Commitments as in effect at such time.
"United States" shall mean the United States of America.
"US Lenders" shall mean the Lenders other than the Canadian
Lenders.
"US Loans" shall mean Loans other than Canadian Loans.
"Working Day" shall mean any Business Day on which dealings in
foreign currencies and exchange between banks may be carried on in
London, England and in New York, New York.
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2. THE LOANS
SECTION 2.1. Commitments
(a) Subject to the terms and conditions hereof and relying upon the
representations and warranties herein set forth, each Primary Lender agrees,
severally and not jointly, to make Revolving Credit Loans to the Borrower in
Dollars, at any time and from time to time on and after the Closing Date and
until the earlier of the Maturity Date and the termination of the Primary
Commitment of such Lender, in an aggregate principal amount at any time
outstanding not to exceed such Primary Lender's Primary Commitment minus the sum
of such Primary Lender's pro rata share of the aggregate principal Dollar
Equivalent Amount of the Pounds Sterling Loans and Canadian Loans made by such
Lender plus the outstanding Dollar Equivalent Amount by which the Competitive
Loans outstanding at such time shall be deemed to have used such Lender's
Commitment pursuant to Section 2.18, subject, however, to the condition that at
no time shall (i) the sum of (A) the outstanding aggregate principal amount of
all Revolving Credit Loans made by all Primary Lenders plus the outstanding
aggregate principal Dollar Equivalent Amount of all Competitive Loans, Pounds
Sterling Loans and Canadian Revolving Credit Loans made by the Lenders exceed
(ii) the Total Commitment. During the Commitment Period, the Borrower may use
the Primary Commitments of the Primary Lenders by borrowing, prepaying the
Primary Loans in whole or in part, and reborrowing, all in accordance with the
terms and conditions hereof.
(b) Subject to the terms and conditions hereof and relying upon the
representations and warranties herein set forth, each Canadian Lender agrees,
severally and not jointly, to make revolving credit loans (each, a "Canadian
Revolving Credit Loan") to the Canadian Borrower in Canadian Dollars, at any
time and from time to time on and after the Closing Date and until the earliest
of (i) the Maturity Date, (ii) such date on which the Borrower shall fail to
own, directly or indirectly, beneficially and of record, all of the capital
stock of the Canadian Borrower and (iii) the termination of the Canadian
Commitment of such Canadian Lender, in an aggregate principal amount at any time
outstanding not to exceed such Canadian Lender's Canadian Commitment minus the
sum of such Canadian Lender's pro rata share of the outstanding Dollar
Equivalent Amount by which the Competitive Loans outstanding at such time shall
be deemed to have used such Canadian Lender's Commitment pursuant to Section
2.18, subject, however, to the conditions that (a) at no time shall (i) the sum
of (A) the outstanding aggregate principal Dollar Equivalent Amount of all
Canadian Revolving Credit Loans made by all Canadian Lenders plus the
outstanding aggregate principal Dollar Equivalent Amount of all Primary Loans,
Pounds Sterling Loans and Competitive Loans made by the Lenders exceed (ii) the
Total Commitment and (b) at all times the outstanding aggregate principal amount
of all Canadian Revolving Credit Loans made by each Canadian Lender shall equal
the product of (i) the percentage that its Canadian Commitment represents of the
aggregate Canadian Commitment times (ii) the outstanding aggregate principal
amount of all Canadian Revolving Credit Loans. During the Commitment Period, the
Canadian Borrower may use the Canadian Commitments of
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the Canadian Lenders by borrowing, prepaying the Canadian Revolving Credit Loans
in whole or in part and reborrowing, all in accordance with the terms and
conditions hereof.
(c) Subject to the terms and conditions hereof and relying upon the
representations and warranties herein set forth, each Pounds Sterling Lender
agrees, severally and not jointly, to make revolving credit loans (each, a
"Pounds Sterling Loan") to the Borrower in U.K. Pounds Sterling, at any time and
from time to time on and after the Closing Date and until the earlier of the
Maturity Date and the termination of the Pounds Sterling Commitment of such
Pounds Sterling Lender, in an aggregate principal amount at any time outstanding
not to exceed such Pounds Sterling Lender's Pounds Sterling Commitment minus the
sum of such Pounds Sterling Lender's pro rata share of the outstanding Dollar
Equivalent Amount by which the Competitive Loans outstanding at such time shall
be deemed to have used such Pounds Sterling Lender's Commitment pursuant to
Section 2.18, subject, however, to the conditions that (a) at no time shall (i)
the sum of (A) the outstanding aggregate principal Dollar Equivalent Amount of
all Pounds Sterling Loans made by all Pounds Sterling Lenders plus the
outstanding aggregate principal Dollar Equivalent Amount of all Primary Loans,
Canadian Revolving Credit Loans and Competitive Loans made by the Lenders exceed
(ii) the Total Commitment and (b) at all times the outstanding aggregate
principal amount of all Pounds Sterling Loans made by each Pounds Sterling
Lender shall equal the product of (i) the percentage that its Pounds Sterling
Commitment represents of the aggregate Pounds Sterling Commitment times (ii) the
outstanding aggregate principal amount of all Pounds Sterling Loans. During the
Commitment Period, the Pounds Sterling Borrower may use the Pounds Sterling
Commitments of the Pounds Sterling Lenders by borrowing, prepaying the Pounds
Sterling Loans in whole or in part and reborrowing, all in accordance with the
terms and conditions hereof.
(d) The Commitments of the Lenders may be terminated or reduced from
time to time pursuant to Section 2.12 or Article 7.
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SECTION 2.2. Loans.
(a) Each Primary Loan, Pounds Sterling Loan or Canadian Revolving
Credit Loan, as the case may be, shall be made as part of a Borrowing from the
Primary Lenders, Pounds Sterling Lenders or the Canadian Lenders, as the case
may be, ratably in accordance with their respective applicable Commitments;
provided that the failure of any Primary Lender, Pounds Sterling Lender or
Canadian Lender, as the case may be, to make any Primary Loan, Pounds Sterling
Loan or Canadian Revolving Credit Loan, as the case may be, shall not in itself
relieve any other Primary Lender, Pounds Sterling Loan or Canadian Lender, as
the case may be, of its obligation to lend hereunder (it being understood,
however, that no Lender shall be responsible for the failure of any other Lender
to make any Loan required to be made by such other Lender); and provided,
further, that (I) each Pounds Sterling Loan made by a Pounds Sterling Lender
shall reduce the Primary Commitment and Canadian Commitment of such Lender by
the principal amount of such Pounds Sterling Loan and (II) each Canadian Loan
shall reduce the Primary Commitment and Pounds Sterling Commitment of such
Lender by the principal amount of such Canadian Loan. Each Competitive Loan
shall be made in accordance with the procedures set forth in Section 2.4. The
Loans comprising any Borrowing shall be (i) in the case of Competitive Loans and
LIBOR Loans, in an aggregate principal Dollar Equivalent Amount that is an
integral multiple of $5,000,000 and not less than $10,000,000 and (ii) in the
case of ABR Loans, in an aggregate principal amount that is an integral multiple
of $500,000 and not less than $5,000,000 (or if less, an aggregate principal
amount equal to the remaining balance of the available Total Commitment). Each
Borrowing of Canadian Revolving Credit Loans shall be in an amount equal to (A)
in the case of C$ Prime Rate Loans, C$1,000,000 or a whole multiple of C$500,000
in excess thereof (or, if the then available Total Commitments or Canadian
Commitments are less than C$500,000, such lesser amount) and (B) in the case of
B/As, C$2,500,000 or a whole multiple of C$100,000 in excess thereof.
(b) Each Competitive Borrowing shall be comprised entirely of LIBOR
Competitive Loans or Fixed Rate Loans, each Primary Borrowing shall be comprised
entirely of LIBOR Revolving Credit Loans or ABR Loans, as the Borrower may
request pursuant to Section 2.4 or 2.5, as applicable, each Canadian Borrowing
shall be comprised entirely of C$ Prime Rate Loans or B/As, as the Canadian
Borrower may request pursuant to Section 2.5 and each Pounds Sterling Borrowing
shall be comprised entirely of LIBOR Revolving Credit Loans. Each US Lender may
at its option make any LIBOR Loan by causing any domestic or foreign branch or
Affiliate of such US Lender to make such Loan, provided that any exercise of
such option shall not affect the obligation of the Borrower to repay such Loan
in accordance with the terms of this Agreement and the applicable Note.
Borrowings of more than one Interest Rate Type may be outstanding at the same
time; provided that the Borrowers shall not be entitled to request any Borrowing
that, if made, would result in an aggregate of more than twenty (20) separate
Loans (other than Competitive Loans) of any Lender being outstanding hereunder
at any one time. For purposes of the calculation required by the immediately
preceding sentence, LIBOR Revolving Credit Loans having different Interest
Periods or having been made in different Currencies, regardless of whether they
commence on the same date, shall be considered separate Loans and
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all Loans of a single Interest Rate Type made on a single date shall be
considered a single Loan if such Loans have a common Interest Period.
(c) (i) Subject to Section 2.6, each US Lender shall make each Loan to
be made by it hereunder on the proposed date thereof by making funds available
at the office of the Administrative Agent specified in Section 9.1 for credit to
PHH Corporation Clearing Account, Account No. 323-5-11260 (Reference: PHH
Corporation Credit Agreement dated as of March 4, 1997) or as otherwise directed
by the Administrative Agent no later than 1:00 P.M. New York City time in the
case of Loans other than ABR Loans, and 4:00 P.M. New York City time in the case
of ABR Loans, in each case, in immediately available funds. Upon receipt of the
funds to be made available by the US Lenders to fund any Borrowing hereunder,
the Administrative Agent shall disburse such funds by depositing them into an
account of the Borrower maintained with the Administrative Agent. Competitive
Loans shall be made by the Lender or Lenders whose Competitive Bids therefor are
accepted pursuant to Section 2.4 in the amounts so accepted and Primary Loans
and Pounds Sterling Loans shall be made by all the Primary Lenders or Pounds
Sterling Lenders, as the case may be, pro rata in accordance with Section 2.1
and this Section 2.2.
(ii) Subject to Section 2.6, each Canadian Lender shall make each
Canadian Loan to be made by it hereunder on the proposed date thereof by making
funds available to the Canadian Agent at Royal Bank of Canada Swift Code
ROYCCAT2, for credit to PHH Vehicle Management Services Inc. Clearing Account,
Account No. 219-247-4 (Reference: PHH Vehicle Management Services Inc. Credit
Agreement dated as of March 4, 1997) no later than 4:00 P.M. Toronto time in the
case of Canadian Loans (other than C$ Prime Rate Loans) and 1:00 P.M. Toronto
time in the case of C$ Prime Rate Loans, in each case, in immediately available
funds. Upon receipt of the funds to be made available by the Canadian Lenders to
fund any Canadian Borrowing hereunder, the Canadian Agent shall disburse such
funds by depositing them into an account of the Canadian Borrower maintained
with the Canadian Agent. Canadian Revolving Credit Loans shall be made by all
the Canadian Lenders pro rata in accordance with Section 2.1 and this Section
2.2.
(d) Notwithstanding any other provision of this Agreement, the
Borrowers shall not be entitled to request any Borrowing if the Interest Period
requested with respect thereto would end after the Maturity Date.
SECTION 2.3. Use of Proceeds
The proceeds of the Loans shall be used for working capital and general
corporate purposes.
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SECTION 2.4. Competitive Bid Procedure.
(a) In order to request Competitive Bids, the Borrower shall hand
deliver or telecopy to the Administrative Agent a duly completed Competitive Bid
Request in the form of Exhibit E-1, to be received by the Administrative Agent
(i) in the case of a LIBOR Competitive Borrowing, not later than 2:00 p.m., New
York City time, four Working Days before a proposed Competitive Borrowing and
(ii) in the case of a Fixed Rate Borrowing, not later than 2:00 p.m., New York
City time, one Business Day before a proposed Competitive Borrowing. Each
Competitive Bid Request shall specify the requested Currency. No ABR Loan, C$
Prime Rate Loan or Bankers' Acceptance shall be requested in, or made pursuant
to, a Competitive Bid Request. A Competitive Bid Request that does not conform
substantially to the format of Exhibit E-1 may be rejected in the Administrative
Agent's sole discretion, and the Administrative Agent shall promptly notify the
Borrower of such rejection by telecopier. Such request for Competitive Bids
shall in each case refer to this Agreement and specify (i) whether the Borrowing
then being requested is to be a LIBOR Borrowing or a Fixed Rate Borrowing, (ii)
the date of such Borrowing (which shall be a Business Day in the case of a Fixed
Rate Borrowing and a Working Day in the case of a LIBOR Competitive Borrowing)
and the aggregate principal Dollar Equivalent Amount thereof, which shall be in
a minimum principal Dollar Equivalent Amount of $10,000,000 and in an integral
multiple of $5,000,000, and (iii) the Interest Period with respect thereto
(which may not end after the Maturity Date). Promptly after its receipt of a
Competitive Bid Request that is not rejected as aforesaid, the Administrative
Agent shall invite by telecopier (in the form set forth in Exhibit E-2) the
Lenders to bid, on the terms and subject to the conditions of this Agreement, to
make Competitive Loans pursuant to such Competitive Bid Request.
(b) Each Lender may, in its sole discretion, make one or more
Competitive Bids to the Borrower responsive to a Competitive Bid Request. Each
Competitive Bid by a Lender must be received by the Administrative Agent via
telecopier, in the form of Exhibit E-3, (i) in the case of a LIBOR Competitive
Borrowing, not later than 9:30 a.m., New York City time, three Working Days
before a proposed Competitive Borrowing and (ii) in the case of a Fixed Rate
Borrowing, not later than 9:30 a.m., New York City time, on the day of a
proposed Competitive Borrowing. Multiple Competitive Bids will be accepted by
the Administrative Agent. Competitive Bids that do not conform substantially to
the format of Exhibit E-3 may be rejected by the Administrative Agent after
conferring with, and upon the instruction of, the Borrower, and the
Administrative Agent shall notify the Lender making such nonconforming
Competitive Bid of such rejection as soon as practicable. Each Competitive Bid
shall refer to this Agreement and specify (i) the principal Dollar Equivalent
Amount (which shall be in a minimum principal Dollar Equivalent Amount of
$10,000,000 and in an integral multiple of $5,000,000 and which may equal the
entire principal amount of the Competitive Borrowing requested by the Borrower)
of the Competitive Loan or Loans that the applicable Lender is willing to make
to the Borrower, (ii) the Competitive Bid Rate or Rates at which such Lender is
prepared to make such Competitive Loan or Loans and (iii) the Interest Period or
Interest Periods with respect thereto. If any Lender shall elect not to make a
Competitive Bid, such Lender shall so notify the
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Administrative Agent via telecopier (i) in the case of LIBOR Competitive Loans,
not later than 9:30 a.m., New York City time, three Working Days before a
proposed Competitive Borrowing and (ii) in the case of Fixed Rate Loans, not
later than 9:30 a.m., New York City time, on the day of a proposed Competitive
Borrowing; provided that failure by any Lender to give such notice shall not
cause such Lender to be obligated to make any Competitive Loan as part of such
proposed Competitive Borrowing. A Competitive Bid submitted by a Lender pursuant
to this paragraph (b) shall be irrevocable.
(c) The Administrative Agent shall promptly notify the Borrower by
telecopier of all the Competitive Bids made, the Competitive Bid Rate or Rates
and the principal amount of each Competitive Loan in respect of which a
Competitive Bid was made and the identity of the Lender that made each
Competitive Bid. The Administrative Agent shall send a copy of all Competitive
Bids to the Borrower for its records as soon as practicable after completion of
the bidding process set forth in this Section 2.4.
(d) The Borrower may in its sole and absolute discretion, subject only
to the provisions of this paragraph (d), accept or reject any Competitive Bid
referred to in paragraph (c) above. The Borrower shall notify the Administrative
Agent by telephone, promptly confirmed by telecopier in the form of a
Competitive Bid Accept/Reject Letter whether and to what extent it has decided
to accept or reject any or all of the Competitive Bids referred to in paragraph
(c) above, (i) in the case of a LIBOR Competitive Borrowing, not later than
10:30 a.m., New York City time, three Working Days before a proposed Competitive
Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later than 10:30
a.m., New York City time, on the day of a proposed Competitive Borrowing;
provided that (A) the failure by the Borrower to give such notice shall be
deemed to be a rejection of all the Competitive Bids referred to in paragraph
(c) above, (B) the Borrower shall not accept a Competitive Bid made at a
particular Competitive Bid Rate if the Borrower has decided to reject a
Competitive Bid made at a lower Competitive Bid Rate, (C) the aggregate amount
of the Competitive Bids accepted by the Borrower shall not exceed the principal
amount specified in the Competitive Bid Request, (D) if the Borrower shall
accept a Competitive Bid or Competitive Bids made at a particular Competitive
Bid Rate but the amount of such Competitive Bid or Competitive Bids shall cause
the total amount of Competitive Bids to be accepted by the Borrower to exceed
the amount specified in the Competitive Bid Request, then the Borrower shall
accept a portion of such Competitive Bid or Competitive Bids in an amount equal
to the amount specified in the Competitive Bid Request less the amount of all
other Competitive Bids accepted at lower Competitive Bid Rates with respect to
such Competitive Bid Request (it being understood that acceptance in the case of
multiple Competitive Bids at such Competitive Bid Rate, shall be made pro rata
in accordance with the amount of each such Competitive Bid at such Competitive
Bid Rate), (E) except pursuant to clause (D) above, no Competitive Bid shall be
accepted for a Competitive Loan unless such Competitive Loan is in a minimum
principal Dollar Equivalent Amount of $10,000,000 and an integral multiple of
$5,000,000 and (F) the Borrower may not accept Competitive Bids for Competitive
Loans in any Currency other than the Currency specified in the related
Competitive Bid Request; and provided, further, that if a Competitive Loan must
be in an amount less than the Dollar
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Equivalent Amount of $10,000,000 because of the provisions of clause (D) above,
such Competitive Loan shall be in a minimum principal Dollar Equivalent Amount
of $1,000,000 or any integral multiple thereof, and in calculating the pro rata
allocation of acceptances of portions of multiple Competitive Bids at a
particular Competitive Bid Rate pursuant to clause (D), the amounts shall be
rounded to integral multiples of $1,000,000 in a manner that shall be in the
discretion of the Borrower. A notice given by the Borrower pursuant to this
paragraph (d) shall be irrevocable.
(e) The Administrative Agent shall promptly notify each bidding Lender
whether its Competitive Bid has been accepted (and if so, in what amount and at
what Competitive Bid Rate) by telecopy sent by the Administrative Agent, and
each successful bidder will thereupon become bound, subject to the other
applicable conditions hereof, to make the Competitive Loan in respect of which
its Competitive Bid has been accepted in the applicable Currency.
(f) If the Administrative Agent shall elect to submit a Competitive Bid
in its capacity as a Lender, it shall submit such Competitive Bid directly to
the Borrower one quarter of an hour earlier than the latest time at which the
other Lenders are required to submit their Competitive Bids to the
Administrative Agent pursuant to paragraph (b) above. Canadian Lenders shall not
be permitted to extend Competitive Loans.
(g) All notices required by this Section 2.4 shall be given in
accordance with Section 9.1.
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SECTION 2.5. Revolving Credit Borrowing Procedure
(a) In order to effect a Revolving Credit Borrowing, the Borrower shall
hand deliver or telecopy to the Administrative Agent a Borrowing notice in the
form of Exhibit F (a) in the case of a Borrowing of a LIBOR Revolving Credit
Loan, not later than 2:00 p.m., New York City time, three Working Days before a
proposed Borrowing, and (b) in the case of an ABR Borrowing, not later than 2:00
p.m., New York City time, on the day of a proposed Borrowing. No Fixed Rate Loan
or LIBOR Competitive Loan shall be requested or made pursuant to a Revolving
Credit Borrowing Request. Such notice shall be irrevocable and shall in each
case specify (a) whether the Borrowing then being requested is to be a Borrowing
of a LIBOR Revolving Credit Loan or an ABR Borrowing, (b) the date of such
Revolving Credit Borrowing (which shall be a Working Day) and the amount
thereof, (c) if such Borrowing is to be a Borrowing of LIBOR Revolving Credit
Loans, the Interest Period with respect thereto and (d) whether such Borrowing
is to be made in Dollars or U.K. Pounds Sterling. If no election as to the
Interest Rate Type of a Revolving Credit Borrowing is specified in any such
notice, then the requested Revolving Credit Borrowing shall be an ABR Borrowing.
Pounds Sterling Loans shall be a Borrowing of LIBOR Revolving Credit Loans. If
no Interest Period with respect to any Borrowing of LIBOR Revolving Credit Loans
is specified in any such notice, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration. If the Borrower shall not
have given notice in accordance with this Section 2.5 of its election to
refinance a Revolving Credit Borrowing prior to the end of the Interest Period
in effect for such Borrowing, then the Borrower shall (unless such Borrowing is
repaid at the end of such Interest Period) be deemed to have given notice of an
election to refinance such Borrowing with an ABR Borrowing in the case of
Primary Loans and a LIBOR Revolving Credit Loan with an Interest Period of one
month's duration in the case of a Pounds Sterling Loan. The Administrative Agent
shall promptly advise the Primary or Pounds Sterling Lenders, as the case may
be, of any notice given pursuant to this Section 2.5 and of each such Lender's
portion of the requested Borrowing.
(b) The Canadian Borrower may borrow under the Canadian Commitments of
the Canadian Lenders during the Commitment Period on any Business Day, provided
that the Canadian Borrower shall give the Canadian Agent (and the Administrative
Agent) irrevocable notice (a "Notice of Canadian Borrowing") (which notice must
be received by the Canadian Agent prior to (a) 2:00 p.m., Toronto time, three
Business Days prior to the requested Borrowing Date, if all or any part of the
requested Canadian Revolving Credit Loans are to be initially B/As or (b) 2:00
p.m., Toronto time, on the requested Borrowing Date, otherwise), specifying (i)
the amount to be borrowed, (ii) the requested Borrowing Date, (iii) whether the
borrowing is to be of C$ Prime Rate Loans or B/As or a combination thereof and
(iv) if the borrowing is to be entirely or partially of B/As, the respective
amounts and lengths of the initial Contract Period thereof. Upon receipt of any
such notice from the Canadian Borrower, the Canadian Agent shall promptly notify
each Canadian Lender thereof.
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SECTION 2.6. Refinancings
Each of the Borrowers may refinance all or any part of any Borrowing
made by it with a Borrowing of the same or a different Interest Rate Type made
pursuant to Section 2.4 (in the case of the Borrower) or pursuant to a notice
under Section 2.5, subject to the conditions and limitations set forth herein
and elsewhere in this Agreement, including, in the case of the Borrower,
refinancings of Competitive Borrowings with Revolving Credit Borrowings in
Dollars and Revolving Credit Borrowings in Dollars with Competitive Borrowings;
provided that (i) a Borrowing by way of B/As may be refinanced only on the last
day of the relevant Contract Period and (ii) on any partial refinancing from a
C$ Prime Rate Loan, or B/A, not less than C$500,000 shall remain as Borrowings
by way of C$ Prime Rate Loan or B/A, as applicable and; provided, further, that
at any time after the occurrence, and during the continuation, of a Default or
an Event of Default, (i) a Revolving Credit Borrowing of Dollars or portion
thereof may only be refinanced with an ABR Borrowing and (ii) C$ Revolving
Credit Loans may not be refinanced with a B/A. Any Borrowing or part thereof so
refinanced shall be deemed to be repaid in accordance with Section 2.8 with the
proceeds of a new Borrowing hereunder and the proceeds of the new Borrowing, to
the extent they do not exceed the principal amount of the Borrowing being
refinanced, shall not be paid by the applicable Lenders to the Applicable Agent
or by the Applicable Agent to the Applicable Borrower pursuant to Section
2.2(c); provided that (a) if the principal amount extended by a Lender in a
refinancing is greater than the principal amount extended by such Lender in the
Borrowing being refinanced, then such Lender shall pay such difference to the
Applicable Agent for distribution to the Lenders described in clause (b) below,
(b) if the principal amount extended by a Lender in the Borrowing being
refinanced is greater than the principal amount being extended by such Lender in
the refinancing, the Applicable Agent shall return the difference to such Lender
out of amounts received pursuant to clause (a) above, and (c) to the extent any
Lender fails to pay the Applicable Agent amounts due from it pursuant to clause
(a) above, any Loan or portion thereof being refinanced with such amounts shall
not be deemed repaid in accordance with Section 2.8 and, to the extent of such
failure, the Applicable Borrower shall pay such amount to the Applicable Agent
as required by Section 2.10; and (d) to the extent the Applicable Borrower fails
to pay to the Applicable Agent any amounts due in accordance with Section 2.8 as
a result of the failure of a Lender to pay the Applicable Agent any amounts due
as described in clause (c) above, the portion of any refinanced Loan deemed not
repaid shall be deemed to be outstanding solely to the Lender which has failed
to pay the Applicable Agent amounts due from it pursuant to clause (a) above to
the full extent of such Lender's portion of such Loan.
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SECTION 2.7. Fees
(a) The Borrower agrees to pay to each Primary Lender, through the
Administrative Agent, on each March 31, June 30, September 30 and December 31,
commencing March 31, 1997, and on the date on which the Primary Commitment of
such Lender shall be terminated as provided herein, a facility fee (a "Facility
Fee",) at the rate per annum from time to time in effect in accordance with
Section 2.22, on the amount of the Primary Commitment of such Lender, whether
used or unused, during the preceding quarter (or shorter period commencing with
the Closing Date, or ending with the Maturity Date or any date on which the
Primary Commitment of such Lender shall be terminated). All Facility Fees shall
be computed on the basis of the actual number of days elapsed in a year of 360
days. The Facility Fee due to each Primary Lender shall commence to accrue on
the Closing Date, shall be payable in arrears and shall cease to accrue on the
earlier of the Maturity Date and the termination of the Primary Commitment of
such Lender as provided herein.
(b) The Borrower agrees to pay the Administrative Agent, for its own
account, the fees at the times and in the amounts provided for in the letter
agreement dated February 4, 1997 among the Borrower, Chase and Chase Securities
Inc.
(c) All fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, if and as appropriate,
among the Lenders. Once paid, none of the fees shall be refundable under any
circumstances.
SECTION 2.8. Repayment of Loans; Evidence of Debt
(a) (i) The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of each Lender the then unpaid principal
amount of each Revolving Credit Loan of such Lender on the Maturity Date (or
such earlier date on which the Revolving Credit Loans become due and payable
pursuant to Article 7); provided that the Revolving Credit Loans made by
Objecting Lenders shall be repaid as provided in Section 2.24. The Borrower
hereby further agrees to pay to the Administrative Agent interest on the unpaid
principal amount of the Revolving Credit Loans from time to time outstanding
from the date hereof until payment in full thereof at the rates per annum, and
on the dates, set forth in Section 2.9.
(ii) The Canadian Borrower hereby unconditionally promises to pay to
the Canadian Agent (with notice to the Administrative Agent) for the account of
each Canadian Lender the then unpaid principal amount of each Canadian Revolving
Credit Loan of such Canadian Lender on the Maturity Date (or such earlier date
on which the Canadian Revolving Credit Loans become due and payable pursuant to
Article 7 or such earlier date on which the Borrower shall fail to own, directly
or indirectly, beneficially and of record, all of the capital stock of the
Canadian Borrower); provided that the Canadian Revolving Credit Loans made by
Objecting Lenders shall be repaid as provided in Section 2.25. The Canadian
Borrower hereby
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further agrees to pay to the Canadian Agent (with notice to the Administrative
Agent) interest on the unpaid principal amount of the Canadian Revolving Credit
Loans from time to time outstanding from the date hereof until payment in full
thereof at the rates per annum, and on the dates, set forth in Section 2.9.
(b) The Borrower unconditionally promises to pay to the Administrative
Agent, for the account of each Lender that makes a Competitive Loan, on the last
day of the Interest Period applicable to such Competitive Loan, the principal
amount of such Competitive Loan. The Borrower further unconditionally promises
to pay interest on each such Competitive Loan for the period from and including
the date of Borrowing of such Competitive Loan on the unpaid principal amount
thereof from time to time outstanding at the applicable rate per annum
determined as provided in, and payable as specified in, Section 2.9.
(c) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing indebtedness of the Borrower and the Canadian
Borrower to such Lender resulting from each Loan of such Lender from time to
time, including the amounts of principal and interest payable and paid to such
Lender from time to time under this Agreement.
(d) The Administrative Agent shall maintain the Register pursuant to
Section 9.3(e), and a subaccount therein for each Lender, in which shall be
recorded (i) the amount of each Loan made hereunder, the Interest Rate Type
thereof and each Interest Period or Contract Period, if any, applicable thereto,
(ii) the amount of any principal or interest due and payable or to become due
and payable from each Borrower to each Lender or the Canadian Agent hereunder
and (iii) both the amount of any sum received by the Administrative Agent
hereunder from the Borrower or the Canadian Borrower, as the case may be, and
each Lender's share thereof.
(e) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 2.8(c) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrowers therein recorded; provided that the failure of any
Lender or the Administrative Agent to maintain the Register or any such account,
or any error therein, shall not in any manner affect the obligation of the
Borrowers to repay (with applicable interest) the Loans made to such Borrower by
such Lender in accordance with the terms of this Agreement.
(f) The Borrower agrees that, upon the request to the Administrative
Agent by any Primary Lender, the Borrower will execute and deliver to such
Primary Lender a promissory note of the Borrower evidencing the Primary Loans of
such Primary Lender, substantially in the form of Exhibit A-1 with appropriate
insertions as to date and principal amount (a "Revolving Credit Note").
(g) The Borrower agrees that, upon the request to the Administrative
Agent by any Lender, the Borrower will execute and deliver to such Lender a
promissory note of the Borrower evidencing the Competitive Loans of such Lender,
substantially in the form of Exhibit
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A-2 with appropriate insertions as to date, principal amount and Currency (a
"Competitive Note").
(h) The Canadian Borrower agrees that, upon the request to the Canadian
Agent by any Canadian Lender, the Canadian Borrower will execute and deliver to
such Canadian Lender a promissory note of the Canadian Borrower evidencing the
Canadian Revolving Credit Loans of such Canadian Lender, substantially in the
form of Exhibit A-3 with appropriate insertions as to date and principal amount
(a "Canadian Revolving Credit Note").
(i) The Borrower agrees that, upon the request of the Administrative
Agent by any Pounds Sterling Lender, the Borrower will execute and deliver to
such Lender a promissory note of the Borrower evidencing the Pounds Sterling
Loans of such Pounds Sterling Lender, substantially in the form of Exhibit A-4
with appropriate insertions as to date and principal amount ("Pounds Sterling
Note").
SECTION 2.9. Interest on Loans.
(a) (i) Subject to the provisions of Section 2.10, the Loans comprising
each LIBOR Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 360 days or 365 days in the case of a
Pounds Sterling Loan) at a rate per annum equal to (i) in the case of each LIBOR
Revolving Credit Loan, LIBOR for the Interest Period in effect for such
Borrowing plus the applicable LIBOR Spread from time to time in effect and (ii)
in the case of each LIBOR Competitive Loan, LIBOR for the Interest Period in
effect for such Borrowing plus or minus the Margin offered by the Lender making
such Loan and accepted by the Borrower pursuant to Section 2.4. Interest on each
LIBOR Borrowing shall be payable on each applicable Interest Payment Date.
(ii) Subject to the provisions of Section 2.10, the Loans comprising
each B/A Borrowing shall be subject to an Acceptance Fee (computed on the basis
of the actual number of days elapsed over a year of 365 days) calculated and
payable at a rate per annum equal to the applicable B/A Spread from time to time
in effect payable as set forth in Section 2.25(f).
(b) (i) Subject to the provisions of Section 2.10, the Loans comprising
each ABR Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 365 or 366 days, as the case may be when
determined by reference to the Prime Rate and over a year of 360 days at all
other times) at a rate per annum equal to the Alternate Base Rate.
(ii) Subject to the provisions of Section 2.10, the Loans comprising
each C$ Prime Rate Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 365 or 366 days, as the case may
be) at a rate per annum equal to the C$ Prime Rate.
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(c) Subject to the provisions of Section 2.10, each Fixed Rate Loan
shall bear interest at a rate per annum (computed on the basis of the actual
number of days elapsed over a year of 360 days) equal to the fixed rate of
interest offered by the Lender making such Loan and accepted by the Borrower
pursuant to Section 2.4.
(d) Interest on each Loan (other than in the case of a B/A, which shall
be payable in accordance with Section 2.25) shall be payable in arrears on each
Interest Payment Date applicable to such Loan. The LIBOR or the Alternate Base
Rate for each Interest Period or day within an Interest Period shall be
determined by the Administrative Agent, the C$ Prime Rate for each Interest
Period or day within an Interest Period shall be determined by the Canadian
Agent, and, in each case, such determination shall be conclusive absent manifest
error.
(e) For the purposes of the Interest Act (Canada) and disclosure
thereunder, whenever interest to be paid hereunder or in connection herewith is
to be calculated on the basis of a year of 360 days or any other period of time
that is less than a calendar year, the yearly rate of interest to which the rate
determined pursuant to such calculation is equivalent is the rate so determined
multiplied by the actual number of days in the calendar year in which the same
is to be ascertained and divided by either 360 or such other period of time, as
the case may be.
(f) If any provision of any Fundamental Document would oblige the
Canadian Borrower to make any payment of interest or other amount payable to any
Canadian Lender in an amount or calculated at a rate which would be prohibited
by law or would result in a receipt by that Canadian Lender of interest at a
criminal rate (as such terms are construed under the Criminal Code (Canada)),
then notwithstanding such provision, such amount or rate shall be deemed to have
been adjusted with retroactive effect to the maximum amount or rate of interest,
as the case may be, as would not be so prohibited by law or so result in a
receipt by that Canadian Lender of interest at a criminal rate, such adjustment
to be effected, to the extent necessary, as follows:
(i) first, by reducing the amount or rate of interest required
to be paid to the affected Canadian Lender under Section 2.9 or 2.10;
and
(ii) thereafter, by reducing any fees, commissions, premiums
and other amounts required to be paid to the affected Canadian Lender
which would constitute interest for purposes of Section 347 of the
Criminal Code (Canada).
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SECTION 2.10. Interest on Overdue Amounts.
If either Borrower shall default in the payment of the principal of, or
interest on, any Loan or any other amount becoming due hereunder, the Applicable
Borrower shall on demand from time to time pay interest, to the extent permitted
by Applicable Law, on such defaulted amount up to (but not including) the date
of actual payment (after as well as before judgment) at a rate per annum
computed on the basis of the actual number of days elapsed over a year of 365
days in the case of B/As and 365 or 366 days, as applicable, in the case of
amounts bearing interest determined by reference to the Prime Rate or the C$
Prime Rate and a year of 360 days in all other cases, equal to (a) in the case
of the remainder of the then current Interest Period or Contract Period, as the
case may be, for any LIBOR Loan or Fixed Rate Loan or B/A, the rate applicable
to such Loan under Section 2.9 plus 2% per annum and (b) in the case of any
other amount, the rate that would at the time be applicable to an ABR Loan if
such other amount is payable in US$ or to a C$ Prime Rate Loan if such other
amount is payable in C$, in each case, under Section 2.9 plus 2% per annum.
SECTION 2.11. Alternate Rate of Interest.
In the event the Administrative Agent shall have determined that
deposits in Dollars or the applicable Available Foreign Currency in the amount
of the requested principal amount of any LIBOR Loan are not generally available
in the London Interbank Market (or such other interbank eurocurrency market
where the foreign currency and exchange operations in respect of Dollars or such
applicable Available Foreign Currency, as the case may be, are then being
conducted for delivery on the first day of such Interest Period), or that the
rate at which such deposits are being offered will not adequately and fairly
reflect the cost to any Lender of making or maintaining its portion of such
LIBOR Loans during such Interest Period, or that reasonable means do not exist
for ascertaining LIBOR, the Administrative Agent shall, as soon as practicable
thereafter, give written or telecopier notice of such determination to the
Borrower and the Lenders. In the event of any such determination, until the
Administrative Agent shall have determined that circumstances giving rise to
such notice no longer exist, (a) any request by the Borrower for a LIBOR
Competitive Borrowing pursuant to Section 2.4 shall be of no force and effect
and shall be denied by the Administrative Agent and (b) any request by the
Borrower for a LIBOR Borrowing pursuant to Section 2.5 shall be deemed to be a
request for an ABR Loan. Each determination by the Administrative Agent
hereunder shall be conclusive absent manifest error.
SECTION 2.12. Termination and Reduction of Commitments.
(a) (i) The Commitments of all of the Lenders shall be automatically
terminated on the earlier of (A) the Maturity Date or (B) April 15, 1997 if the
Closing Date has not occurred on or prior to such date.
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(ii) The Canadian Commitments of all of the Canadian Lenders shall be
automatically terminated on such date on which the Borrower shall fail to own,
directly or indirectly, beneficially and of record, all of the capital stock of
the Canadian Borrower.
(b) Subject to Section 2.13(b), upon at least three Business Days'
prior irrevocable written or telecopy notice to the Administrative Agent (which
shall promptly notify each Lender), the Borrower may at any time in whole
permanently terminate, or from time to time in part permanently reduce, the the
Commitments; provided that (i) each partial reduction shall be in an integral
multiple of $1,000,000 and in a minimum principal amount of $10,000,000 and (ii)
the Borrower shall not be entitled to make any such termination or reduction
that would reduce a type of Commitment to an amount less than the sum of the
aggregate outstanding principal Dollar Equivalent Amount of the related Loans.
(c) Each reduction in a type of Commitment hereunder shall be made
ratably among the applicable Lenders in accordance with their respective
Commitments. The Borrower shall pay to the Administrative Agent for the account
of the applicable Lenders on the date of each termination or reduction in a type
of Commitment, the Facility Fees on the amount of the Commitments so terminated
or reduced accrued to the date of such termination or reduction.
SECTION 2.13. Prepayment of Loans.
(a) (i) Prior to the Maturity Date, the Borrower shall have the right
at any time to prepay any Revolving Credit Borrowing, in whole or in part,
subject to the requirements of Section 2.17 but otherwise without premium or
penalty, upon prior written or telecopy notice to the Administrative Agent
(which shall promptly notify each Lender) before 2:00 p.m. New York City time of
at least one Business Day in the case of an ABR Loan and of at least three
Working Days in the case of a LIBOR Loan; provided that each such partial
prepayment shall be in a minimum aggregate principal Dollar Equivalent Amount of
$1,000,000 or a whole multiple in excess thereof. The Borrower shall not have
the right to prepay any Competitive Borrowing without the consent of the
relevant Lender.
(ii) Prior to the Maturity Date, the Canadian Borrower shall have the
right at any time to prepay any C$ Prime Rate Loan, in whole or in part, without
premium or penalty, upon prior written or telecopy notice to the Canadian Agent
before 2:00 p.m. Toronto time of at least three Business Days; provided that
each such partial prepayment shall be in a minimum aggregate principal amount of
$1,000,000 or a whole multiple in excess thereof. The Borrower shall not have
the right to optionally prepay any B/As.
(b) (i) On any date when the sum of the Dollar Equivalent Amount of the
aggregate outstanding Loans (after giving effect to any Borrowings effected on
such date) exceeds the Total Commitment, the Borrower shall make a mandatory
prepayment of the Loans in such amount as may be necessary so that the Dollar
Equivalent Amount of the aggregate amount of outstanding Loans after giving
effect to such prepayment does not exceed the Total
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Commitment then in effect. Any prepayments required by this paragraph shall be
applied to outstanding ABR Loans and C$ Prime Rate Loans up to the full amount
thereof before they are applied to outstanding LIBOR Loans or B/A's.
(ii) If at any date the sum of the Dollar Equivalent Amount of the
Canadian Revolving Credit Loans exceeds 105% (or 110% to the extent such
Canadian Loans consist of B/As' for which the remaining Contract Period as of
such date is less than 60 days), of the Canadian Commitments (including at any
time after any reduction of the Canadian Commitments pursuant to Section 2.12),
the Canadian Agent may promptly notify the Canadian Borrower, and the next
Business Day after such notification, the Canadian Borrower shall make a payment
in the amount of such excess. Any such payment shall be applied first, to
payment of the C$ Prime Rate Loans and second, to cash collateralize any
outstanding B/As on terms satisfactory to the Canadian Agent acting reasonably.
(iii) If at any date the sum of the Dollar Equivalent Amount of the
Pounds Sterling Loans exceeds 105% (or 110% to the extent such Pounds Sterling
Loans consist of LIBOR Loans for which the remaining Interest Period as of such
date is less than 2 calendar months) of the Pounds Sterling Commitments
(including at any time after any reduction of the Pounds Sterling Commitments
pursuant to Section 2.12), the Administrative Agent may promptly notify the
Borrower, and the next Business Day after such notification, the Borrower shall
make a payment in the amount of such excess, which payment shall be applied to
reduce the outstanding Pounds Sterling Loans.
(c) Each notice of prepayment pursuant to this Section 2.13 shall
specify the specific Borrowing(s), the prepayment date and the aggregate
principal amount of each Borrowing to be prepaid, shall be irrevocable and shall
commit the Applicable Borrower to prepay such Borrowing(s) by the amount stated
therein. All prepayments under this Section 2.13 shall be accompanied by accrued
interest on the principal amount being prepaid to the date of prepayment and any
amounts due pursuant to Section 2.17.
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SECTION 2.14. Eurocurrency Reserve Costs.
The Borrower shall pay to the Administrative Agent for the account of
each Lender, so long as such Lender shall be required under regulations of the
Board to maintain reserves with respect to liabilities or assets consisting of,
or including, Eurocurrency Liabilities (as defined in Regulation D of the Board)
(or, at any time when such Lender may be required by the Board or by any other
Governmental Authority, whether within the United States or in another relevant
jurisdiction, to maintain reserves against any other category of liabilities
which includes deposits by reference to which LIBOR is determined as provided in
this Agreement or against any category of extensions of credit or other assets
of such Lender which includes any such LIBOR Loans), additional interest on the
unpaid principal amount of each LIBOR Loan made to the Borrower by such Lender,
from the date of such Loan until such Loan is paid in full, at an interest rate
per annum equal at all times during the Interest Period for such Loan to the
remainder obtained by subtracting (i) LIBOR for such Interest Period from (ii)
the rate obtained by multiplying LIBOR as referred to in clause (i) above by the
Statutory Reserves of such Lender for such Interest Period, provided that with
respect to Pounds Sterling Loans such additional interest shall be calculated as
specified on Schedule 2.14. Such additional interest shall be determined by such
Lender and notified to the Borrower (with a copy to the Administrative Agent)
not later than five Business Days before the next Interest Payment Date for such
Loan, and such additional interest so notified to the Borrower by any Lender
shall be payable to the Administrative Agent for the account of such Lender on
each Interest Payment Date for such Loan.
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SECTION 2.15. Reserve Requirements; Change in Circumstances.
(a) Notwithstanding any other provision herein, if after the date of
this Agreement any change in Applicable Law or regulation or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof (whether or not having the
force of law) (i) shall subject any Lender to, or increase the net amount of,
any tax, levy, impost, duty, charge, fee, deduction or withholding with respect
to any Loan, or shall change the basis of taxation of payments to any Lender of
the principal of or interest on any Loan made by such Lender or any other fees
or amounts payable hereunder (other than (x) taxes imposed on the overall net
income of such Lender by the jurisdiction in which such Lender has its principal
office or its applicable Lending Office or by any political subdivision or
taxing authority therein (or any tax which is enacted or adopted by such
jurisdiction, political subdivision or taxing authority as a direct substitute
for any such taxes) or (y) any tax, assessment, or other governmental charge
that would not have been imposed but for the failure of any Lender to comply
with any certification, information, documentation or other reporting
requirement), (ii) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender, or (iii) shall impose on any
Lender or eurocurrency market any other condition affecting this Agreement or
any Loan made by such Lender, and the result of any of the foregoing shall be to
increase the cost to such Lender of making or maintaining any Loan or to reduce
the amount of any sum received or receivable by such Lender hereunder (whether
of principal, interest or otherwise) in respect thereof by an amount deemed in
good faith by such Lender to be material, then the Borrowers shall pay such
additional amount or amounts as will compensate such Lender for such increase or
reduction to such Lender upon demand by such Lender.
(b) If, after the date of this Agreement, any Lender shall have
determined in good faith that the adoption after the date hereof of or any
change after the date hereof in any applicable law, rule, regulation or
guideline regarding capital adequacy, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender (or any Lending Office of such Lender) with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such Governmental Authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such Lender's capital or on
the capital of such Lender's holding company, if any, as a consequence of its
obligations hereunder to a level below that which such Lender (or its holding
company) could have achieved but for such applicability, adoption, change or
compliance (taking into consideration such Lender's policies or the policies of
its holding company, as the case may be, with respect to capital adequacy) by an
amount deemed by such Lender to be material, then, from time to time, the
Borrower shall pay to the Administrative Agent for the account of such Lender
(or its holding company) such additional amount or amounts as will compensate
such Lender for such reduction upon demand by such Lender.
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(c) A certificate of a Lender setting forth in reasonable detail (i)
such amount or amounts as shall be necessary to compensate such Lender as
specified in paragraph (a) or (b) above, as the case may be, and (ii) the
calculation of such amount or amounts referred to in the preceding clause (i),
shall be delivered to the Borrower and shall be conclusive absent manifest
error. The Borrower shall pay the Administrative Agent for the account of such
Lender the amount shown as due on any such certificate within 10 Business Days
after its receipt of the same.
(d) Failure on the part of any Lender to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
return on capital with respect to any Interest Period or Contract Period shall
not constitute a waiver of such Lender's rights to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
return on capital with respect to such Interest Period or any other Interest
Period or Contract Period. The protection of this Section 2.15 shall be
available to each Lender regardless of any possible contention of invalidity or
inapplicability of the law, regulation or condition which shall have been
imposed.
(e) Each Lender agrees that, as promptly as practicable after it
becomes aware of the occurrence of an event or the existence of a condition that
(i) would cause it to incur any increased cost under this Section 2.15, Section
2.16 or Section 2.21 or (ii) would require the Borrower to pay an increased
amount under this Section 2.15, Section 2.16 or Section 2.21, it will use
reasonable efforts to notify the Borrower of such event or condition and, to the
extent not inconsistent with such Lender's internal policies, will use its
reasonable efforts to make, fund or maintain the affected Loans of such Lender
through another Lending Office of such Lender if as a result thereof the
additional monies which would otherwise be required to be paid or the reduction
of amounts receivable by such Lender thereunder in respect of such Loans would
be materially reduced, or any inability to perform would cease to exist, or the
increased costs which would otherwise be required to be paid in respect of such
Loans pursuant to this Section 2.15, Section 2.16 or Section 2.21 would be
materially reduced or the taxes or other amounts otherwise payable under this
Section 2.15, Section 2.16 or Section 2.21 would be materially reduced, and if,
as determined by such Lender, in its sole reasonable discretion, the making,
funding or maintaining of such Loans through such other Lending Office would not
otherwise materially adversely affect such Loans.
(f) In the event any Lender shall have delivered to the Borrower a
notice that LIBOR Loans or B/As are no longer available from such Lender
pursuant to Section 2.16, that amounts are due to such Lender pursuant to
paragraph (c) above, that any of the events designated in paragraph (e) above
have occurred or that a Lender shall not be rated at least BBB by S&P and Baa2
by Moody's, the Borrower may (but subject in any such case to the payments
required by Section 2.17), provided that there shall exist no Default or Event
of Default, upon at least five Business Days' prior written or telecopier notice
to such Lender and the Administrative Agent, but not more than 30 days after
receipt of notice from such Lender, identify to the Administrative Agent a
lending institution reasonably acceptable to the Administrative Agent
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which will purchase the Commitment, the amount of outstanding Loans from the
Lender providing such notice and such Lender shall thereupon assign its
Commitment, any Loans owing to such Lender and the Notes held by such Lender to
such replacement lending institution pursuant to Section 9.3. Such notice shall
specify an effective date for such assignment and at the time thereof, the
Borrower shall pay all accrued interest, Facility Fees and all other amounts
(including without limitation all amounts payable under this Section and
Sections 2.21, 9.4 and 9.5) owing hereunder to such Lender as at such effective
date for such assignment.
SECTION 2.16. Change in Legality.
(a) Notwithstanding anything to the contrary herein contained, if any
change in any law or regulation or in the interpretation thereof by any
Governmental Authority charged with the administration or interpretation thereof
shall make it unlawful for any Lender to make or maintain any LIBOR Loan or B/A
or to give effect to its obligations as contemplated hereby, then, by written
notice to the Borrower or the Canadian Borrower, as applicable and to the
Administrative Agent and the Canadian Agent, as applicable, such Lender may:
(i) declare that LIBOR Loans or B/As will not thereafter be
made by such Lender hereunder, whereupon such Lender shall not submit a
Competitive Bid in response to a request for LIBOR Competitive Loans
and the Borrower and the Canadian Borrower shall be prohibited from
requesting LIBOR Revolving Credit Loans or B/As from such Lender
hereunder unless such declaration is subsequently withdrawn; and
(ii) require that all outstanding LIBOR Loans (in Dollars) or
B/As made by it be converted to ABR Loans or C$ Prime Rate Loans,
respectively, in which event (A) all such LIBOR Loans or B/As shall be
automatically converted to ABR Loans or C$ Prime Rate Loans,
respectively, as of the effective date of such notice as provided in
Section 2.16(b) and (B) all payments and prepayments of principal which
would otherwise have been applied to repay the converted LIBOR Loans or
B/As shall instead be applied to repay the ABR Loans or C$ Prime Rate
Loans, as the case may be resulting from the conversion of such LIBOR
Loans or B/As.
(b) For purposes of this Section 2.16, a notice to the Borrower or the
Canadian Borrower, as the case may be, by any Lender pursuant to Section 2.16(a)
shall be effective on the date of receipt thereof by the Borrower or the
Canadian Borrower, as the case may be.
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SECTION 2.17. Reimbursement of Lenders.
(a) The Borrower or the Canadian Borrower, as the case may be, shall
reimburse each Lender on demand for any loss incurred or to be incurred by it in
the reemployment of the funds released (i) by any prepayment (for any reason,
including any refinancing) of any LIBOR or Fixed Rate Loan or B/A if such Loan
is repaid other than on the last day of the applicable Interest Period or
Contract Period, as the case may be, for such Loan or (ii) in the event that
after the Borrower or the Canadian Borrower, as the case may be delivers a
notice of borrowing under Section 2.5 in respect of LIBOR Revolving Credit Loans
or a Competitive Bid Accept/Reject Letter under Section 2.4(d) or B/A, pursuant
to which it has accepted Competitive Bids of one or more of the Lenders, the
applicable Loan is not made on the first day of the Interest Period specified by
the Borrower or the Canadian Borrower, as the case may be for any reason other
than (I) a suspension or limitation under Section 2.16 of the right of the
Borrower or the Canadian Borrower, as the case may be, to select a LIBOR Loan or
B/A or (II) a breach by a Lender of its obligations hereunder. In the case of
such failure to borrow, such loss shall be the amount as reasonably determined
by such Lender as the excess, if any, of (A) the amount of interest which would
have accrued to such Lender on the amount not borrowed, at a rate of interest
equal to the interest rate applicable to such Loan pursuant to Section 2.9, for
the period from the date of such failure to borrow to the last day of the
Interest Period or Contract Period, as the case may be for such Loan which would
have commenced on the date of such failure to borrow, over (B) the amount
realized by such Lender in reemploying the funds not advanced during the period
referred to above. In the case of a payment other than on the last day of the
Interest Period or Contract Period, as the case may be for a Loan, such loss
shall be the amount as the excess, if any, of (A) the amount of interest which
would have accrued on the amount so paid at a rate of interest equal to the
interest rate applicable to such Loan pursuant to Section 2.9, for the period
from the date of such payment to the last day of the then current Interest
Period or Contract Period, as the case may be for such Loan, over (B) an amount
equal to the product of (x) the amount of the Loan so paid times (y) the current
daily yield on U.S. Treasury Securities or Canadian Treasury Securities, as the
case may be (at such date of determination) with maturities approximately equal
to the remaining Interest Period or Contract Period, as the case may be for such
Loan times (z) the number of days remaining in the Interest Period or Contract
Period, as the case may be for such Loan. Each Lender shall deliver to the
Borrower or the Canadian Borrower, as the case may be from time to time one or
more certificates setting forth the amount of such loss (and in reasonable
detail the manner of computation thereof) as determined by such Lender, which
certificates shall be conclusive absent manifest error. The Borrower or the
Canadian Borrower, as the case may be, shall pay to the Administrative Agent or
the Canadian Agent, as the case may be for the account of each Lender the amount
shown as due on any certificate within thirty (30) days after its receipt of the
same.
(b) In the event the Borrower or the Canadian Borrower, as the case may
be, fails to prepay any Loan on the date specified in any prepayment notice
delivered pursuant to Section 2.13(a), the Borrower or the Canadian Borrower, as
the case may be, on demand by any Lender shall pay to the Administrative Agent
or the Canadian Agent, as the case may be for the account
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of such Lender any amounts required to compensate such Lender for any loss
incurred by such Lender as a result of such failure to prepay, including,
without limitation, any loss, cost or expenses incurred by reason of the
acquisition of deposits or other funds by such Lender to fulfill deposit
obligations incurred in anticipation of such prepayment. Each Lender shall
deliver to the Borrower or the Canadian Borrower, as the case may be, and the
Administrative Agent or the Canadian Agent, as the case may be, from time to
time one or more certificates setting forth the amount of such loss (and in
reasonable detail the manner of computation thereof) as determined by such
Lender, which certificates shall be conclusive absent manifest error.
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SECTION 2.18. Pro Rata Treatment.
Except as permitted under Sections 2.14, 2.15(c), 2.15(f), 2.16, 2.17
and 2.24, (i) each Primary Borrowing, each reduction of the aggregate Primary
Commitments and each refinancing of any Borrowing with, or conversion of any
Borrowing to, a Primary Borrowing, or continuation of any Borrowing as a Primary
Borrowing, shall be allocated pro rata among the Primary Lenders in accordance
with their respective Primary Commitments (or, if such Primary Commitments shall
have expired or been terminated, in accordance with the respective principal
amount of their Primary Loans) and each payment or prepayment of principal of
any Primary Borrowing and each payment of interest on the Primary Loans shall be
allocated pro rata in accordance with the respective principal amount of the
Primary Loans then held by the Primary Lenders, (ii) each Pounds Sterling
Borrowing, each reduction of the aggregate Pounds Sterling Commitments and each
refinancing of any Borrowing with, or conversion of any Borrowing to, a Pounds
Sterling Borrowing, or continuation of any Borrowing as a Pounds Sterling
Borrowing, shall be allocated pro rata among the Pounds Sterling Lenders in
accordance with their respective Pounds Sterling Commitments (or, if such Pounds
Sterling Commitments shall have expired or been terminated, in accordance with
the respective principal amount of their outstanding Pounds Sterling Loans) and
each payment or prepayment of principal of any Pounds Sterling Borrowing and
each payment of interest on the Pounds Sterling Loans shall be allocated pro
rata in accordance with the respective principal amount of the Pounds Sterling
Loans then held by the Pounds Sterling Lenders and (iii) each Canadian
Borrowing, each reduction of the aggregate Canadian Commitments and each
refinancing of any Canadian Borrowing, or continuation of any Borrowing as a
Canadian Borrowing, shall be allocated pro rata among the Canadian Lenders in
accordance with their respective Canadian Commitments (or, if such Canadian
Commitments shall have expired or been terminated, in accordance with the
respective principal amount of their outstanding Canadian Revolving Credit
Loans) and each payment or prepayment of principal of any Canadian Borrowing and
each payment of interest on the Canadian Loans shall be allocated pro rata in
accordance with the respective principal amount of the Canadian Loans then held
by the Canadian Lenders. Each payment of principal of any Competitive Borrowing
shall be allocated pro rata among the Lenders participating in such Borrowing in
accordance with the respective principal amounts of their outstanding
Competitive Loans comprising such Borrowing. Each payment of interest on any
Competitive Borrowing shall be allocated pro rata among the Lenders
participating in such Borrowing in accordance with the respective amounts of
accrued and unpaid interest on their outstanding Competitive Loans comprising
such Borrowing. For purposes of determining the available Commitments of the
Lenders at any time, each outstanding Competitive Borrowing shall be deemed to
have utilized the Commitments of the Lenders (including those Lenders that shall
not have made Loans as part of such Competitive Borrowing) pro rata in
accordance with such respective Commitments. Each Lender agrees that in
computing such Lender's portion of any Borrowing to be made hereunder, the
Administrative Agent may, in its discretion, round each Lender's percentage of
such Borrowing computed in accordance with Section 2.1, to the next higher or
lower whole Dollar amount.
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SECTION 2.19. Right of Setoff.
If any Event of Default shall have occurred and be continuing and any
Lender shall have requested the Administrative Agent to declare the Loans
immediately due and payable pursuant to Article 7, each Lender is hereby
authorized at any time and from time to time, to the fullest extent permitted by
Applicable Law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held by such Lender and any
other indebtedness at any time owing by such Lender to, or for the credit or the
account of, each Borrower, against any of and all the obligations now or
hereafter existing under this Agreement and the Loans held by such Lender,
irrespective of whether or not such Lender shall have made any demand under this
Agreement or such Loans and although such Obligations may be unmatured. Each
Lender agrees promptly to notify the Applicable Borrower after any such setoff
and application made by such Lender, but the failure to give such notice shall
not affect the validity of such setoff and application. The rights of each
Lender under this Section 2.19 are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have and are subject to
the provisions of Section 8.2.
SECTION 2.20. Manner of Payments.
(a) All payments by the Borrower hereunder and under the Notes shall be
made in Dollars or other applicable Currency in immediately available funds at
the office of the Administrative Agent's Agent Bank Services Department, One
Chase Manhattan Plaza, New York, New York 10081, Attention: Maggie Swales, for
credit to PHH Corporation Clearing Account, Account No. 323-5-11260 (Reference:
PHH Corporation Credit Agreement dated March 4, 1997) or as otherwise directed
by the Borrower (with the consent of the Administrative Agent, which consent
shall not be unreasonably withheld) no later than 4:30 p.m., New York City time,
on the date on which such payment shall be due. Interest in respect of any Loan
hereunder shall accrue from and including the date of such Loan to, but
excluding, the date on which such Loan is paid or refinanced with a Loan of a
different Interest Rate Type.
(b) All payments by the Canadian Borrower hereunder and under the
Canadian Revolving Credit Notes shall be made in Canadian Dollars in immediately
available funds at Royal Bank of Canada Swift Code ROYCCAT2 for credit to PHH
Vehicle Management Services Inc. Clearing Account, Account No. 219-247-4
Reference: PHH Vehicle Management Services Inc. Credit Agreement dated March 4,
1997) no later than 4:30 p.m., Toronto time, on the date on which such payment
shall be due. Interest in respect of any Canadian Revolving Credit Loan
hereunder shall accrue from and including the date of such Canadian Revolving
Credit Loan to, but excluding, the date on which such Canadian Revolving Credit
Loan is paid or refinanced with a Canadian Revolving Credit Loan of a different
Interest Rate Type.
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SECTION 2.21. Withholding Taxes.
(a) Prior to the date of the initial Loans hereunder, and from time to
time thereafter if requested by either of the Borrowers or the Applicable Agent
or required because, as a result of a change in Applicable Law or a change in
circumstances or otherwise, a previously delivered form or statement becomes
incomplete or incorrect in any material respect, each Lender organized under the
laws of a jurisdiction outside the United States or Canada, in the case of a
Canadian Lender, shall provide, if applicable, the Applicable Agents and the
Borrowers with complete, accurate and duly executed forms or other statements
prescribed by a Governmental Authority certifying such Lender's exemption, if
any, from, or entitlement to a reduced rate, if any, of, withholding taxes
(including backup withholding taxes) with respect to all payments to be made to
such Lender hereunder and under the Notes.
(b) The Borrowers and the Applicable Agents shall be entitled to deduct
and withhold any and all present or future taxes or withholdings, and all
liabilities with respect thereto, from payments hereunder or under the Notes, if
and to the extent that the Borrowers or the Applicable Agents in good faith
determine that such deduction or withholding is required by Applicable Law,
including, without limitation, any applicable treaty. In the event either of the
Borrowers or the Applicable Agents shall so determine that deduction or
withholding of taxes is required, it shall advise the affected Lender as to the
basis of such determination prior to actually deducting and withholding such
taxes. In the event either of the Borrowers or the Applicable Agents shall so
deduct or withhold taxes from amounts payable hereunder, it (i) shall pay to or
deposit with the appropriate taxing authority in a timely manner the full amount
of taxes it has deducted or withheld; (ii) shall provide evidence of payment of
such taxes to, or the deposit thereof with, the appropriate taxing authority and
a statement setting forth the amount of taxes deducted or withheld, the
applicable rate, and any other information or documentation reasonably requested
by the Lenders from whom the taxes were deducted or withheld; and (iii) shall
forward to such Lenders any receipt for such payment or deposit of the deducted
or withheld taxes as may be issued from time to time by the appropriate taxing
authority. Unless either of the Borrowers and the Applicable Agents have
received forms or other documents satisfactory to them indicating that payments
hereunder or under the Notes are not subject to withholding tax or are subject
to such tax at a rate reduced by an applicable tax treaty, the Borrowers or the
Applicable Agents may withhold taxes from such payments at the applicable
statutory rate in the case of payments to or for any Lender.
(c) Each Lender agrees (i) that as between it and either of the
Borrowers or the Applicable Agents, it shall be the Person to deduct and
withhold taxes, and to the extent required by law it shall deduct and withhold
taxes, on amounts that such Lender may remit to any other Person(s) by reason of
any undisclosed transfer or assignment of an interest in this Agreement to such
other Person(s) pursuant to paragraph (g) of Section 9.3 and (ii) to indemnify
the Borrowers and the Applicable Agents and any of their officers, directors,
agents, or employees against, and to hold them harmless from, any tax, interest,
additions to tax, penalties, reasonable counsel and accountants' fees,
disbursements or payments arising from the assertion by any appropriate
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taxing authority of any claim against them relating to a failure to withhold
taxes as required by Applicable Law with respect to amounts described in clause
(i) of this paragraph (c).
(d) Each assignee of a Lender's interest in this Agreement in
conformity with Section 9.3 shall be bound by this Section 2.21, so that such
assignee will have all of the obligations and provide all of the forms and
statements and all indemnities, representations and warranties required to be
given under this Section 2.21.
(e) In the event that any withholding taxes shall become payable as a
result of any change in any statute, treaty, ruling, determination or regulation
occurring after the Initial Date (as defined below) in respect of any sum
payable hereunder or under any other Fundamental Document to any Lender or
either of the Applicable Agents (i) the sum payable by either of the Borrowers
shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.21) such Lender or the Applicable Agents (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Applicable Borrower shall make such deductions
and (iii) the Applicable Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with Applicable
Law. For purposes of this Section 2.21, the term "Initial Date" shall mean (i)
in the case of the Applicable Agents, the date hereof, (ii) in the case of each
Lender as of the date hereof, the date hereof and (iii) in the case of any other
Lender, the effective date of the Assignment and Acceptance pursuant to which it
became a Lender.
SECTION 2.22. Certain Pricing Adjustments.
The Facility Fee and the applicable LIBOR Spread and B/A Spread in
effect from time to time shall be determined in accordance with the following
table:
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Applicable
S&P/Moody's Rating Equivalent LIBOR Spread
of the Borrower's senior Facility Fee And B/A Spread
unsecured long-term debt (in Basis Points) (in Basis Points)
- ------------------------ ----------------- -----------------
AA-/Aa3 or better 4.0 14.75
A+/A1 5.0 15.00
A/A2 6.0 16.50
A-/A3 7.0 18.00
BBB+/Baa1 8.0 22.00
BBB/Baa2 10.0 25.00
BBB-/Baa3 12.5 37.50
BB+/Ba1 or worse 17.5 45.00
In the event the S&P rating on the Borrower's senior unsecured
long-term debt is not equivalent to the Moody's rating on such debt, the higher
rating will determine the Facility Fee and applicable LIBOR Spread and B/A
Spread, unless the S&P and Moody's ratings are more than one level apart, in
which case the rating one level below the higher rating will be determinative.
In the event that the Borrower's senior unsecured long-term debt is rated by
only one of S&P and Moody's (for any reason, including if S&P or Moody's shall
cease to be in the business of rating corporate debt obligations) or if the
rating system of either S&P or Moody's shall change, then an amendment shall be
negotiated in good faith (and shall be effective only upon approval by the
Borrower and the Supermajority Lenders) to the references to specific ratings in
the table above to reflect such changed rating system or the unavailability of
ratings from such rating agency (including an amendment to provide for the
substitution of an equivalent or successor ratings agency). In the event that
the Borrower's senior unsecured long-term debt is not rated by either S&P or
Moody's, then the Facility Fee and the applicable LIBOR Spread and B/A Spread
shall be deemed to be calculated as if the lowest rating category set forth
above applied. Any increase in the Facility Fee or the applicable LIBOR Spread
and B/A Spread determined in accordance with the foregoing table shall become
effective on the date of announcement or publication by the Borrower or either
such rating agency of a reduction in such rating or, in the absence of such
announcement or publication, on the effective date of such decreased rating, or
on the date of any request by the Borrower to either of such rating agencies not
to rate its senior unsecured long-term debt or on the date either of such rating
agencies announces it shall no longer rate the Borrower's senior unsecured
long-term debt. Any decrease in the Facility Fee or applicable LIBOR Spread and
B/A Spread shall be effective on the date of announcement or publication by
either of such rating agencies of an increase in rating or in the absence of
announcement or publication on the effective date of such increase in rating.
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SECTION 2.23. [Intentionally Deleted.]
SECTION 2.24. Extension of Maturity Date (a) Not less than 60 days and
not more than 90 days prior to the Maturity Date then in effect, provided that
no Event of Default shall have occurred and be continuing, the Borrower may
request an extension of the Maturity Date then in effect by submitting to the
Administrative Agent an Extension Request containing the information in respect
of such extension specified in Exhibit H, which the Administrative Agent shall
promptly furnish to each Lender. Each Lender shall, not less than 30 days and
not more than 60 days prior to such Maturity Date then in effect, notify the
Borrower and the Administrative Agent of its election to grant or not to grant
the extension as requested in such Extension Request. Notwithstanding any
provision of this Agreement to the contrary, any notice by any Lender of its
willingness to extend the Maturity Date shall be revocable by such Lender in its
sole and absolute discretion at any time prior to the date which is 30 days
prior to such Maturity Date then in effect. If the Supermajority Lenders shall
approve in writing the extension of the Maturity Date requested in such
Extension Request, the Maturity Date shall automatically and without any further
action by any Person be extended for the period specified in such Extension
Request; provided that (i) each extension pursuant to this Section 2.24 shall be
for a maximum of 364 days and (ii) the Commitment of any Lender which does not
consent in writing to such extension not less than 30 days and not more than 60
days prior to such Maturity Date then in effect (an "Objecting Lender") shall,
unless earlier terminated in accordance with this Agreement, expire on the
Maturity Date in effect on the date of such Extension Request (such Maturity
Date, if any, referred to as the "Commitment Expiration Date" with respect to
such Objecting Lender). If not less than 30 days and not more than 60 days prior
to such Maturity Date then in effect, the Supermajority Lenders shall not
approve in writing the extension of the Maturity Date requested in an Extension
Request, the Maturity Date shall not be extended pursuant to such Extension
Request. The Administrative Agent shall promptly notify (y) the Lenders and the
Borrower of any extension of the Maturity Date pursuant to this Section 2.24 and
(z) the Borrower and any other Lender of any Lender which becomes an Objecting
Lender.
(b) Loans (including any principal, interest, fees and other amounts
due hereunder) owing to any Objecting Lender on the Commitment Expiration Date
with respect to such Lender shall be repaid in full on or before such Commitment
Expiration Date.
(c) The Borrower shall have the right, so long as no Event of Default
has occurred and is then continuing, upon giving notice to the Administrative
Agent and the Objecting Lender in accordance with Section 2.13, to prepay in
full the Loans of the Objecting Lenders, together with accrued interest thereon,
any amounts payable pursuant to Sections 2.9, 2.10, 2.14, 2.15, 2.17, 2.21, 9.4
and 9.5 and any accrued and unpaid Facility Fee or other amounts payable to it
hereunder and/or, upon giving not less than three Business Days' notice to the
Objecting Lenders and the Administrative Agent, to cancel in whole or in part
the Commitments of the Objecting Lenders.
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(d) The Borrower may, with the consent of the Administrative Agent,
designate one or more financial institutions to act as a Lender hereunder in
place of any Objecting Lender, and upon the execution of an agreement
substantially in the form of Exhibit H by each such Objecting Lender (who hereby
agrees to execute such agreement), such replacement financial institution and
the Administrative Agent, such replacement financial institution shall become
and be a Lender hereunder with all the rights and obligations it would have had
if it had been named on the signature pages hereof, and having for all such
financial institutions aggregate Commitments of no greater than the whole of the
Commitment of the Objecting Lender in place of which such financial institutions
were designated; provided that the Facility Fees, interest and other payments to
the Lenders due hereunder shall accrue for the account of each such financial
institution from the date of replacement pursuant to such agreement. The
Administrative Agent shall notify the Lenders of the execution of any such
agreement, the name of the financial institution executing such agreement and
the amount of such financial institution's Commitment.
SECTION 2.25. Bankers' Acceptances. (a) Subject to the terms and
conditions of this Agreement, the Canadian Borrower may request a Borrowing by
presenting drafts for acceptance and purchase as B/As by the Canadian Lenders.
(b) No Contract Period with respect to a B/A shall extend beyond the
Maturity Date.
(c) To facilitate availment of the Borrowings by way of B/As, the
Canadian Borrower hereby appoints each Canadian Lender as its attorney to sign
and endorse on its behalf, in handwriting or by facsimile or mechanical
signature as and when deemed necessary by such Canadian Lender, blank forms of
B/As substantially in the form of Exhibit H. In this respect, it is each
Canadian Lender's responsibility to maintain an adequate supply of blank forms
of B/As for acceptance under this Agreement. The Canadian Borrower recognizes
and agrees that all B/As signed and/or endorsed on its behalf by a Canadian
Lender shall bind the Canadian Borrower as fully and effectually as if signed in
the handwriting of and duly issued by the proper signing officers of the
Canadian Borrower. Each Canadian Lender is hereby authorized to issue such B/As
endorsed in blank in such face amounts as may be determined by such Canadian
Lender; provided that the aggregate amount thereof is equal to the aggregate
amount of B/As required to be accepted and purchased by such Canadian Lender. No
Canadian Lender shall be liable for any damage, loss or other claim arising by
reason of any loss or improper use of any such instrument except the gross
negligence or wilful misconduct of the Canadian Lender or its officers,
employees, agents or representatives. Each Canadian Lender shall maintain a
record with respect to B/As (a) received by it from the Canadian Agent in blank
hereunder, (b) voided by it for any reason, (c) accepted and purchased by it
hereunder, and (d) cancelled at their respective maturities. Each Canadian
Lender further agrees to retain such records in the manner and for the statutory
periods provided in the various provincial or federal statutes and regulations
which apply to such Canadian Lender. Each Canadian Lender agrees to provide a
copy of such records to the Canadian Borrower at the Canadian Borrower's expense
upon request. On request by or on behalf of the Canadian Borrower, a Canadian
Lender shall cancel all forms of B/A
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which have been pre-signed or pre-endorsed on behalf of the Canadian Borrower
and which are held by the said Canadian Lender and are not required to be issued
in accordance with the Canadian Borrower's irrevocable notice.
(d) Drafts of the Canadian Borrower to be accepted as B/As hereunder
shall be signed as set forth in this Section 2.25. Notwithstanding that any
Person whose signature appears on any B/A may no longer be an authorized
signatory for any of the Canadian Lenders or the Canadian Borrower at the date
of issuance of a B/A, such signature shall nevertheless be valid and sufficient
for all purposes as if such authority had remained in force at the time of such
issuance and any such B/A so signed shall be binding on the Canadian Borrower.
(e) Promptly following receipt of a Notice of Canadian Borrowing or
Notice of Rollover or notice of refinancing pursuant to Section 2.6 by way of
B/As, the Canadian Agent shall so advise the Canadian Lenders and shall advise
each Canadian Lender of the aggregate face amount of the B/As to be accepted by
it and the applicable Contract Period (which shall be identical for all
Lenders). The aggregate face amount of the B/As to be accepted by a Canadian
Lender shall be a whole multiple of C$100,000, and such face amount shall be in
the Canadian Lenders pro rata portion of such Borrowing, provided that the
Canadian Agent may in its sole discretion increase or reduce each Canadian
Lender's portion of such Borrowing to the nearest C$100,000.
(f) Upon acceptance of a B/A by a Canadian Lender, such Canadian Lender
shall purchase, or arrange the purchase of, each B/A from the Canadian Borrower
at the Discount Rate for such Canadian Lender applicable to such B/A accepted by
it and provide to the Canadian Agent the Discount Proceeds for the account of
the Canadian Borrower. The Acceptance Fee payable by the Canadian Borrower to a
Canadian Lender under Section 2.9 in respect of each B/A accepted by such
Canadian Lender shall be set off against the Discount Proceeds payable by such
Canadian Lender under this Section 2.25.
(g) Each Canadian Lender may at any time and from time to time hold,
sell, rediscount or otherwise dispose of any or all B/As accepted and purchased
by it.
(h) With respect to each Borrowing which is outstanding hereunder by
way of B/As, at or before 11:00 a.m. two Business Days before the maturity date
of such B/As, the Canadian Borrower shall notify the Canadian Agent at the
Canadian Agent's address set forth in Section 9.1 by irrevocable telephone
notice, followed by a Notice of Rollover on the same day, if the Canadian
Borrower intends to issue B/As on such maturity date to provide for the payment
of such maturing B/As. If the Canadian Borrower fails to notify the Canadian
Agent of its intention to issue B/As on such maturity date, the Canadian
Borrower shall provide payment to the Canadian Agent on behalf of the Canadian
Lenders of an amount equal to the aggregate face amount of such B/As on the
maturity date of such B/As. If the Canadian Borrower fails to make such payment,
such maturing B/As shall be deemed to have been converted on their maturity date
into a C$ Prime Rate Loan in an amount equal to the face amount of such B/As and
the
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Canadian Borrower shall on demand pay any penalties that may have been incurred
by the Canadian Agent and any Canadian Lender due to the failure of the Canadian
Borrower to make such payment.
(i) The Canadian Borrower waives presentment for payment and any other
defense to payment of any amounts due to a Canadian Lender in respect of a B/A
accepted and purchased by it pursuant to this Agreement which might exist solely
by reason of such B/A being held, at the maturity thereof, by such Canadian
Lender in its own right and the Canadian Borrower agrees not to claim any days
of grace if such Canadian Lender as holder sues the Canadian Borrower on the B/A
for payment of the amount payable by the Canadian Borrower thereunder. On the
specified maturity date of a B/A, or such earlier date as may be required or
permitted pursuant to the provisions of this Agreement, the Canadian Borrower
shall pay the Canadian Lender that has accepted and purchased such B/A the full
face amount of such B/A and after such payment, the Canadian Borrower shall have
no further liability in respect of such B/A and such Canadian Lender shall be
entitled to all benefits of, and be responsible for all payments due to third
parties under, such B/A.
(j) If a Canadian Lender grants a participation in a portion of its
rights under this Agreement to a Participant, then in respect of any Borrowing
by way of Bankers' Acceptances, a portion thereof may, at the option of such
Canadian Lender, be by way of Bankers' Acceptance accepted by such Participant.
In such event, the Canadian Borrower shall upon request of the Canadian Agent or
the Canadian Lender granting the participation execute and deliver a form of
Bankers' Acceptance undertaking in favor of such Participant for delivery to
such Participant.
SECTION 2.26. Guarantee. (a) To induce the Agents and the Lenders to
execute and deliver this Agreement and to make or maintain the Canadian Loans
hereunder, and in consideration thereof, the Borrower hereby unconditionally and
irrevocably guarantees to the Agents, for the ratable benefit of the Lenders,
the prompt and complete payment and performance by the Canadian Borrower when
due (whether at stated maturity, by acceleration or otherwise) of the Canadian
Obligations, and the Borrower further agrees to pay any and all expenses
(including, without limitation, all reasonable fees, charges and disbursements
of counsel) which may be paid or incurred by the Agents or by the Lenders in
enforcing, or obtaining advice of counsel in respect of, any of their rights
under the guarantee contained in this Section 2.26. The guarantee contained in
this Section 2.26, subject to Section 2.26(e), shall remain in full force and
effect until the Canadian Obligations are paid in full and the Canadian
Commitments are terminated, notwithstanding that from time to time prior thereto
the Canadian Borrower may be free from any Canadian Obligations.
(b) Notwithstanding any payment or payments made by the Borrower
hereunder or any set-off or application of funds of the Borrower by any Lender,
the Borrower shall not be entitled to be subrogated to any of the rights of the
Agents or any Lender against the Canadian Borrower or any collateral security or
guarantee or right of offset held by any Lender for the payment of the Canadian
Obligations, nor shall the Borrower seek or be entitled to seek any
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contribution or reimbursement from the Canadian Borrower in respect of payments
made by the Borrower hereunder, until all amounts owing to the Agents and the
Lenders by the Canadian Borrower on account of the Canadian Obligations are paid
in full and the Canadian Commitments are terminated. If any amount shall be paid
to the Borrower on account of such subrogation rights at any time when all of
the Canadian Obligations shall not have been paid in full or the Canadian
Commitments shall not have been terminated, such amount shall be held by the
Borrower in trust for the Agents and the Lenders, segregated from other funds of
the Borrower, and shall, forthwith upon receipt by the Borrower, be turned over
to the Agents in the exact form received by the Borrower (duly endorsed by the
Borrower to the Administrative Agent, if required), to be applied against the
Canadian Obligations, whether matured or unmatured, in such order as the
Administrative Agent may determine. The Borrower hereby further irrevocably
waives all contractual, common law, statutory and other rights of reimbursement,
contribution, exoneration or indemnity (or any similar right) from or against
the Canadian Borrower or any other Person which may have arisen in connection
with the guarantee contained in this Section 2.26.
(c) The Borrower shall remain obligated under this Section 2.26
notwithstanding that, without any reservation of rights against the Borrower,
and without notice to or further assent by the Borrower, any demand for payment
of or reduction in the principal amount of any of the Canadian Obligations made
by either of the Agents or any Lender may be rescinded by either of the Agents
or such Lender, and any of the Canadian Obligations continued, and the Canadian
Obligations, or the liability of any other party upon or for any part thereof,
or any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
either of the Agents or any Lender, and this Agreement, any other Fundamental
Document, and any other documents executed and delivered in connection therewith
may be amended, modified, supplemented or terminated, in whole or in part, as
the Lenders (or the Required Lenders, as the case may be) may deem advisable
from time to time, and any collateral security, guarantee or right of offset at
any time held by either of the Agents or any Lender for the payment of the
Canadian Obligations may be sold, exchanged, waived, surrendered or released.
Neither of the Agents nor any Lender shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for the
Canadian Obligations or for the guarantee contained in this Section 2.26 or any
property subject thereto.
(d) The Borrower waives any and all notice of the creation, renewal,
extension or accrual of any of the Canadian Obligations and notice of or proof
of reliance by either of the Agents or any Lender upon the guarantee contained
in this Section 2.26 or acceptance of the guarantee contained in this Section
2.26; the Canadian Obligations, and any of them, shall conclusively be deemed to
have been created, contracted or incurred, or renewed, extended, amended or
waived, in reliance upon the guarantee contained in this Section 2.26; and all
dealings between the Canadian Borrower or the Borrower, on the one hand, and the
Agents and the Lenders, on the other, shall likewise be conclusively presumed to
have been had or consummated in reliance upon the guarantee contained in this
Section 2.26. The Borrower
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waives diligence, presentment, protest, demand for payment and notice of default
or nonpayment to or upon the Canadian Borrower or the Borrower with respect to
the Canadian Obligations. The guarantee contained in this Section 2.26 shall be
construed as a continuing, absolute and unconditional guarantee of payment
without regard to (i) the validity or enforceability of this Agreement, any
other Fundamental Document, any of the Canadian Obligations or any collateral
security therefor or guarantee or right of offset with respect thereto at any
time or from time to time held by either of the Agents or any Lender, (ii) any
defense, setoff or counterclaim (other than a defense of payment or performance)
which may at any time be available to or be asserted by any Borrower against
either of the Agents or any Lender, or (iii) any other circumstance whatsoever
(with or without notice to or knowledge of the Canadian Borrower or the
Borrower) which constitutes, or might be construed to constitute, an equitable
or legal discharge of the Canadian Borrower for the Canadian Obligations, or of
the Borrower under the guarantee contained in this Section 2.26, in bankruptcy
or in any other instance. When either of the Agents or any Lender is pursuing
its rights and remedies under this Section 2.26 against the Borrower, either of
the Agents or any Lender may, but shall be under no obligation to, pursue such
rights and remedies as it may have against the Canadian Borrower or any other
Person or against any collateral security or guarantee for the Canadian
Obligations or any right of offset with respect thereto, and any failure by
either of the Agents or any Lender to pursue such other rights or remedies or to
collect any payments from the Canadian Borrower or any such other Person or to
realize upon any such collateral security or guarantee or to exercise any such
right of offset, or any release of the Canadian Borrower or any such other
Person or of any such collateral security, guarantee or right of offset, shall
not relieve the Borrower of any liability under this Section 2.26, and shall not
impair or affect the rights and remedies, whether express, implied or available
as a matter of law, of the Agents and the Lenders against the Borrower.
(e) The guarantee contained in this Section 2.26 shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any of the Canadian Obligations is rescinded or must otherwise
be restored or returned by either of the Agents or any Lender upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Canadian Borrower or upon or as a result of the appointment of a receiver,
intervenor or conservator of, or trustee or similar officer for, the Canadian
Borrower or any substantial part of its property, or otherwise, all as though
such payments had not been made.
(f) The Borrower hereby agrees that any payments in respect of the
Canadian Obligations pursuant to this Section 2.26 will be paid to the Canadian
Agent without setoff or counterclaim (other than a defense of payment or
performance) in Dollars at the office of the Canadian Agent specified in Section
9.1.
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3. REPRESENTATIONS AND WARRANTIES OF BORROWER
In order to induce the Lenders to enter into this Agreement and to make
the Loans, each of the Borrowers makes the following representations and
warranties to the Administrative Agent, the Canadian Agent and the Lenders, all
of which shall survive the execution and delivery of this Agreement, the
issuance of the Notes and the making of the Loans:
SECTION 3.1. Corporate Existence and Power.
The Borrower and its Subsidiaries have been duly organized and are
validly existing in good standing under the laws of their respective
jurisdictions of incorporation and are in good standing or have applied for
authority to operate as a foreign corporation in all jurisdictions where the
nature of their properties or business so requires it and where a failure to be
in good standing as a foreign corporation would have a Material Adverse Effect.
Each of the Borrowers has the corporate power to execute, deliver and perform
its obligations under this Agreement and the other Fundamental Documents and
other documents contemplated hereby and to borrow hereunder.
SECTION 3.2. Corporate Authority and No Violation.
The execution, delivery and performance of this Agreement and the other
Fundamental Documents and the borrowings hereunder (a) have been duly authorized
by all necessary corporate action on the part of the Borrowers, (b) will not
violate any provision of any Applicable Law applicable to the Borrower or any of
its Subsidiaries or any of their respective properties or assets, (c) will not
violate any provision of the Certificate of Incorporation or By-Laws of the
Borrower or any of its Subsidiaries, or any Contractual Obligation of the
Borrower or any of its Subsidiaries, (d) will not be in conflict with, result in
a breach of, or constitute (with due notice or lapse of time or both) a default
under, any material indenture, agreement, bond, note or instrument and (e) will
not result in the creation or imposition of any Lien upon any property or assets
of the Borrower or any of its Subsidiaries other than pursuant to this Agreement
or any other Fundamental Document.
SECTION 3.3. Governmental and Other Approval and Consents.
No action, consent or approval of, or registration or filing with, or
any other action by, any governmental agency, bureau, commission or court is
required in connection with the execution, delivery and performance (including
the making of borrowings) by the Borrowers of this Agreement or the other
Fundamental Documents.
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SECTION 3.4. Financial Statements of Borrower.
(a) The (i) audited consolidated financial statements of the Borrower
and its Consolidated Subsidiaries as of April 30, 1995 and April 30, 1996, and
(ii) unaudited consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of October 31, 1996, in each case, together with the related
unaudited statements of income, shareholders' equity and cash flows for the
periods then ended fairly present the financial position of the Borrower and its
Consolidated Subsidiaries as at the dates indicated and the results of
operations and cash flows for the periods indicated in conformity with GAAP
subject to normal year-end adjustments in the case of such quarterly financial
statements.
(b) Upon its delivery to the Lenders pursuant to Section 5.1(g), the
unaudited pro forma consolidated balance sheet of the Borrower as of a date
reasonably acceptable to the Administrative Agent (including the notes thereto)
(the "Pro Forma Balance Sheet"), has been prepared giving effect (as if such
events had occurred on such date) to (i) the Acquisition, (ii) the financings
and other transactions contemplated hereby to be made on or before the Closing
Date and the use of proceeds thereof and (iii) the payment of fees and expenses
in connection with the foregoing. The Pro Forma Balance Sheet has been prepared
based on the best information available to the Borrower as of the date of
delivery thereof and presents fairly on a pro forma basis the estimated
consolidated financial position of the Borrower as of such date, assuming that
the events specified in the preceding sentence had actually occurred at such
date.
SECTION 3.5. No Material Adverse Change.
Since April 30, 1996 there has been no material adverse change in the
business, assets, operations or condition, financial or otherwise, of the
Borrower and its Subsidiaries taken as a whole (provided that the Acquisition
shall not be deemed to be a material adverse change); provided that the
foregoing representation is made solely as of the Closing Date.
SECTION 3.6. Material Subsidiaries.
Annexed hereto as Schedule 3.6 is a correct and complete list as of the
date hereof of all Material Subsidiaries of the Borrower showing, as to each
Material Subsidiary, its name, the jurisdiction of its incorporation, its
authorized capitalization and the ownership of the capital stock of such
Material Subsidiary.
SECTION 3.7. Copyrights, Patents and Other Rights.
Each of the Borrower and its Subsidiaries owns, or is licensed to use,
all trademarks, tradenames, service marks, copyrights, patents and other
intellectual property material to its business, and the use thereof by the
Borrower and its Subsidiaries does not infringe upon the rights of any other
Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
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SECTION 3.8. Title to Properties.
Each of the Borrower and its Material Subsidiaries will have at the
Closing Date good title or valid leasehold interests to each of the properties
and assets reflected on the balance sheets referred to in Section 3.4, except
for minor defects in title that do not interfere with its ability to conduct its
business as currently conducted or to utilize such properties for their intended
purposes, and all such properties and assets will be free and clear of Liens,
except Permitted Encumbrances.
SECTION 3.9. Litigation.
There are no lawsuits or other proceedings pending (including, but not
limited to, matters relating to environmental liability), or, to the knowledge
of the Borrower, threatened, against or affecting the Borrower or any of its
Subsidiaries or any of their respective properties, by or before any
Governmental Authority or arbitrator, which could reasonably be expected to have
a Material Adverse Effect. Neither the Borrower nor any of its Subsidiaries is
in default with respect to any order, writ, injunction, decree, rule or
regulation of any Governmental Authority, which default would have a Material
Adverse Effect.
SECTION 3.10. Federal Reserve Regulations.
Neither the Borrower nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock. No part of
the proceeds of the Loans will be used, whether immediately, incidentally or
ultimately, for any purpose violative of or inconsistent with any of the
provisions of Regulation G, T, U or X of the Board.
SECTION 3.11. Investment Company Act.
Neither of the Borrowers is, nor will during the term of this Agreement
be, (x) an "investment company", within the meaning of the Investment Company
Act of 1940, as amended or (y) subject to regulation under the Public Utility
Holding Company Act of 1935 or the Federal Power Act.
SECTION 3.12. Enforceability.
This Agreement and the other Fundamental Documents when executed will
constitute legal, valid and enforceable obligations (as applicable) of the
Borrowers (subject, as to enforcement, to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and to general principles of equity).
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SECTION 3.13. Taxes.
The Borrower and each of its Subsidiaries have filed or caused to be
filed all federal, provincial, state and local tax returns which are required to
be filed, and have paid or have caused to be paid all taxes as shown on said
returns or on any assessment received by them in writing, to the extent that
such taxes have become due, except (a) as permitted by Section 5.4 or (b) to the
extent that the failure to do so could not reasonably be expected to result in a
Material Adverse Effect.
SECTION 3.14. Compliance with ERISAA.
Each of the Borrower and its Subsidiaries is in compliance in all
material respects with the provisions of ERISA and the Code applicable to Plans,
and the regulations and published interpretations thereunder, if any, which are
applicable to it and the applicable laws, rules and regulations of any
jurisdiction applicable to Plans. Neither the Borrower nor any of its
Subsidiaries has, with respect to any Plan established or maintained by it,
engaged in a prohibited transaction which would subject it to a material tax or
penalty on prohibited transactions imposed by ERISA or Section 4975 of the Code.
No liability to the PBGC that is material to the Borrower and its Subsidiaries
taken as a whole has been, or to the Borrower's best knowledge is reasonably
expected to be, incurred with respect to the Plans and there has been no
Reportable Event and no other event or condition that presents a material risk
of termination of a Plan by the PBGC. Neither the Borrower nor any of its
Subsidiaries has engaged in a transaction which would result in the incurrence
of a material liability under Section 4069 of ERISA. As of the Closing Date,
neither the Borrower nor any of its Subsidiaries contributes to a Multiemployer
Plan, and has not incurred any liability that would be material to the Borrower
and its Subsidiaries taken as a whole on account of a partial or complete
withdrawal (as defined in Sections 4203 and 4205 of ERISA, respectively) with
respect to any Multiemployer Plan.
SECTION 3.15. Disclosure.
As of the Closing Date, neither this Agreement nor the Confidential
Information Memorandum dated February 1997, at the time it was furnished,
contained any untrue statement of a material fact or omitted to state a material
fact, under the circumstances under which it was made, necessary in order to
make the statements contained herein or therein not misleading. At the date
hereof, there is no fact known to the Borrowers which, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect
(provided that the Acquisition shall not be deemed to be a material adverse
change).
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SECTION 3.16. Environmental Liabilities.
Except with respect to any matters, that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, neither the Borrower nor any of its Subsidiaries (i) has failed to
comply with any Environmental Law or to obtain, maintain or comply with any
permit, license or other approval required under any Environmental Law, (ii) has
become subject to any Environmental Liability, (iii) has received notice of any
claim with respect to any Environmental Liability or (iv) knows of any basis for
any Environmental Liability.
4. CONDITIONS OF LENDING
SECTION 4.1. Conditions Precedent to Effectiveness.
The effectiveness of this Agreement is subject to the following
conditions precedent:
(a) Loan Documents. The Administrative Agent shall have
received this Agreement and each of the other Fundamental Documents,
each executed and delivered by a duly authorized officer of each of the
Borrowers party thereto.
(b) Corporate Documents for the Borrowers. The Administrative
Agent shall have received, with copies for each of the Lenders, a
certificate of the Secretary or Assistant Secretary of each of the
Borrowers dated the date hereof and certifying (A) that attached
thereto is a true and complete copy of the certificate of incorporation
and by-laws of such Borrower as in effect on the date of such
certification; (B) that attached thereto is a true and complete copy of
resolutions adopted by the Board of Directors of such Borrower
authorizing the borrowings hereunder and the execution, delivery and
performance in accordance with their respective terms of this Agreement
and any other documents required or contemplated hereunder; and (C) as
to the incumbency and specimen signature of each officer of such
Borrower executing this Agreement or any other document delivered by it
in connection herewith (such certificate to contain a certification by
another officer of such Borrower as to the incumbency and signature of
the officer signing the certificate referred to in this paragraph (b)).
(c) Financial Statements. The Lenders shall have received the
(i) audited consolidated financial statements of the Borrower and its
Consolidated Subsidiaries as of and for the period ended April 30, 1995
and April 30, 1996 and (ii) unaudited consolidated financial statements
of the Borrower and its Consolidated Subsidiaries as of and for the
period ended October 31, 1996.
(d) Opinions of Counsel. The Administrative Agent shall have
received the favorable written opinions, dated the date hereof and
addressed to the Agents and the
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Lenders, of Gordon W. Priest, Jr., Assistant General Counsel of PHH
Corporation, Piper & Marbury, counsel to the Borrowers and of Blake,
Cassels & Graydon, substantially in the form of Exhibits B-1 and B-2
and B-3 hereto respectively.
(e) No Material Adverse Change. The Administrative Agent shall
be satisfied that no material adverse change shall have occurred with
respect to the business, assets, operations or condition, financial or
otherwise, of the Borrower and its Consolidated Subsidiaries, taken as
a whole, since April 30, 1996 (provided that the Acquisition shall not
be deemed to be a material adverse change).
(f) Payment of Fees. The Administrative Agent shall be
satisfied that all amounts payable to the Arranger, the Agents and the
other Lenders pursuant hereto or with regard to the transactions
contemplated hereby have been or are simultaneously being paid.
(g) Litigation. No litigation shall be pending or, to the
Borrower's knowledge, threatened which would be likely to have a
Material Adverse Effect, or which could reasonably be expected to
materially adversely affect the ability of the Borrowers to fulfill
their obligations hereunder or to otherwise materially impair the
interests of the Lenders.
(h) Existing Credit Agreements. Prior to or simultaneously
with the Closing Date, all obligations under the master 3-year and
364-day committed existing credit agreements of the Borrowers shall
have been paid in full and the commitments of the lenders thereunder
shall have been terminated.
(i) Officer's Certificate. The Administrative Agent shall have
received a certificate of the chief executive officer or chief
financial officer or chief accounting officer of each of the Borrowers
certifying, as of the Closing Date, compliance with the conditions set
forth in paragraphs (b) and (c) of Section 4.2.
The Administrative Agent shall provide the Borrower with written confirmation of
the satisfaction of the conditions precedent specified in this Section 4.1.
SECTION 4.2. Conditions Precedent to Each Loan.
The obligation of the Lenders to make each Loan, including the initial
Loan hereunder, is subject to the following conditions precedent:
(a) Notice. The Administrative Agent and the Canadian Agent
shall have received a notice with respect to such Borrowing as required
by Article 2 hereof.
(b) Representations and Warranties. The representations and
warranties set forth in Article 3 (other than those set forth in
Section 3.5, which shall be deemed made only
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on the Closing Date) and in the other Fundamental Documents shall be
true and correct in all material respects on and as of the date of each
Borrowing hereunder (except to the extent that such representations and
warranties expressly relate to an earlier date) with the same effect as
if made on and as of such date; provided that this condition shall not
apply to a Revolving Credit Borrowing which is solely refinancing
outstanding Revolving Credit Loans and which, after giving effect
thereto, has not increased the aggregate amount of outstanding
Revolving Credit Loans.
(c) No Event of Default. On the date of each Borrowing
hereunder, the Borrowers shall be in material compliance with all of
the terms and provisions set forth herein to be observed or performed
and no Event of Default or Default shall have occurred and be
continuing; provided that this condition shall not apply to a Revolving
Credit Borrowing which is solely refinancing outstanding Revolving
Credit Loans and which, after giving effect thereto, has not increased
the aggregate amount of outstanding Revolving Credit Loans.
Each Borrowing shall be deemed to be a representation and warranty by the
Borrowers on the date of such Borrowing as to the matters specified in
paragraphs (b) and (c) of this Section.
5. AFFIRMATIVE COVENANTS
For so long as the Commitments shall be in effect or any amount shall
remain outstanding under any Note or unpaid under this Agreement, the Borrower
agrees that, unless the Required Lenders shall otherwise consent in writing, it
will, and will cause each of its Subsidiaries to:
SECTION 5.1. Financial Statements, Reports, etc.
Deliver to each Lender:
(a) As soon as is practicable, but in any event within 90 days
after the end of each fiscal year of the Borrower, (i) either (A)
consolidated statements of income (or operations) and consolidated
statements of cash flows and changes in stockholders' equity of the
Borrower and its Consolidated Subsidiaries for such year and the
related consolidated balance sheets as at the end of such year, or (B)
the Form 10K filed by the Borrower with the Securities and Exchange
Commission and (ii) if not included in such Form 10K, an opinion of
independent certified public accountants of recognized national
standing, which opinion shall state that said consolidated financial
statements fairly present the consolidated financial position and
results of operations of the Borrower and its Consolidated Subsidiaries
as at the end of, and for, such fiscal year and that such financial
statements were prepared in accordance with GAAP applied consistently
throughout the periods reflected therein and with prior periods;
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(b) Commencing with the quarter ending June 30, 1997 and as
soon as is practicable, but in any event within 60 days after the end
of each of the first three fiscal quarters of each fiscal year, either
(i) the Form 10-Q filed by the Borrower with the Securities and
Exchange Commission or (ii) the unaudited consolidated balance sheet of
the Borrower and its Consolidated Subsidiaries, as at the end of, and
the related unaudited statements of income and cash flows for such
quarter and for the period from the beginning of the then current
fiscal year to the end of such fiscal quarter and the corresponding
figures as of the end of the preceding fiscal year, and for the
corresponding period in the preceding fiscal year, in each case,
together with a certificate (substantially in the form of Exhibit D)
signed by the chief financial officer, the chief accounting officer or
a vice president responsible for financial administration of the
Borrower to the effect that such financial statements, while not
examined by independent public accountants, reflect, in his opinion and
in the opinion of the Borrower, all adjustments necessary to present
fairly the financial position of the Borrower and its Consolidated
Subsidiaries, as the case may be, as at the end of the fiscal quarter
and the results of their operations for the quarter then ended in
conformity with GAAP consistently applied, subject only to year-end and
audit adjustments and to the absence of footnote disclosure;
(c) Together with the delivery of the statements referred to
in paragraphs (a) and (b) of this Section 5.1, a certificate of the
chief financial officer, chief accounting officer or a vice president
responsible for financial administration of the Borrower, substantially
in the form of Exhibit D hereto (i) stating whether or not the signer
has knowledge of any Default or Event of Default and, if so, specifying
each such Default or Event of Default of which the signer has knowledge
and the nature thereof and (ii) demonstrating in reasonable detail
compliance with the provisions of Sections 6.7 and 6.8;
(d) Promptly upon their becoming available, copies of all
financial statements, reports, notices and proxy statements sent or
made available by the Borrower or any of its Subsidiaries to its
shareholders generally, of all regular and periodic reports and all
registration statements and prospectuses, if any, filed by any of them
with any securities exchange or with the Securities and Exchange
Commission, or any comparable foreign bodies, and of all press releases
and other statements made available generally by any of them to the
public concerning material developments in the business of the Borrower
or any of its Subsidiaries;
(e) Promptly upon any executive officer of the Borrower or any
of its Subsidiaries obtaining knowledge of the occurrence of any
Default or Event of Default, a certificate of the president, chief
financial officer or chief accounting officer of the Borrower
specifying the nature and period of existence of such Default or Event
of Default and what action the Borrower has taken, is taking and
proposes to take with respect thereto;
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(f) Promptly upon any executive officer of the Borrower or any
of its Subsidiaries obtaining knowledge of (i) the institution of any
action, suit, proceeding, investigation or arbitration by any
Governmental Authority or other Person against or affecting the
Borrower or any of its Subsidiaries or any of their assets, or (ii) any
material development in any such action, suit, proceeding,
investigation or arbitration (whether or not previously disclosed to
the Lenders), which, in each case might reasonably be expected to have
a Material Adverse Effect, prompt notice thereof and such other
information as may be reasonably available to it (without waiver of any
applicable evidentiary privilege) to enable the Lenders to evaluate
such matters; and
(g) As soon as available, the Pro Forma Balance Sheet.
SECTION 5.2. Corporate Existence; Compliance with Statutes.
Do or cause to be done all things necessary to preserve, renew and keep
in full force and effect its corporate existence, rights, licenses, permits and
franchises and comply, except where failure to comply, either individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect, with all provisions of Applicable Law, and all applicable restrictions
imposed by any Governmental Authority, and all state and provincial laws and
regulations of similar import; provided that mergers, dissolutions and
liquidations permitted under Section 6.4 shall be permitted.
SECTION 5.3. Insurance.
Maintain with good and reputable insurers insurance in such amounts and
against such risks as are customarily insured against by companies in similar
businesses; provided however, that (a) workmen's compensation insurance or
similar coverage may be effected with respect to its operations in any
particular state or other jurisdiction through an insurance fund operated by
such state or jurisdiction and (b) such insurance may contain self-insurance
retention and deductible levels consistent as such insurance is usually carried
by companies of established reputation and comparable size.
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SECTION 5.4. Taxes and Charges.
Duly pay and discharge, or cause to be paid and discharged, before the
same shall become delinquent, all federal, state or local taxes, assessments,
levies and other governmental charges, imposed upon the Borrower or any of its
Subsidiaries or their respective properties, sales and activities, or any part
thereof, or upon the income or profits therefrom, as well as all claims for
labor, materials, or supplies which if unpaid could reasonably be expected to
result in a Material Adverse Effect; provided that any such tax, assessment,
charge, levy or claim need not be paid if the validity or amount thereof shall
currently be contested in good faith by appropriate proceedings and if the
Borrower shall have set aside on its books reserves (the presentation of which
is segregated to the extent required by GAAP) adequate with respect thereto if
reserves shall be deemed necessary by the Borrower in accordance with GAAP; and
provided, further, that the Borrower will pay all such taxes, assessments,
levies or other governmental charges forthwith upon the commencement of
proceedings to foreclose any Lien which may have attached as security therefor
(unless the same is fully bonded or otherwise effectively stayed).
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SECTION 5.5. ERISA Compliance and Reports.
Furnish to the Administrative Agent (a) as soon as possible, and in any
event within 30 days after any executive officer (as defined in Regulation C
under the Securities Act of 1933, as amended) of the Borrower knows that (i) any
Reportable Event with respect to any Plan has occurred, a statement of the chief
financial officer of the Borrower, setting forth details as to such Reportable
Event and the action which it proposes to take with respect thereto, together
with a copy of the notice, if any, required to be filed by the Borrower or any
of its Subsidiaries of such Reportable Event with the PBGC or (ii) an
accumulated funding deficiency has been incurred or an application has been made
to the Secretary of the Treasury for a waiver or modification of the minimum
funding standard or an extension of any amortization period under Section 412 of
the Code with respect to a Plan, a Plan has been or is proposed to be terminated
in a "distress termination" (as defined in Section 4041(c) of ERISA),
proceedings have been instituted to terminate a Plan or a Multiemployer Plan, a
proceeding has been instituted to collect a delinquent contribution to a Plan or
a Multiemployer Plan, or either the Borrower or any of its Subsidiaries will
incur any liability (including any contingent or secondary liability) to or on
account of the termination of or withdrawal from a Plan under Section 4062, 4063
or 4064 of ERISA or the withdrawal or partial withdrawal from a Multiemployer
Plan under Section 4201 or 4204 of ERISA, a statement of the chief financial
officer of the Borrower, setting forth details as to such event and the action
it proposes to take with respect thereto, (b) promptly upon the reasonable
request of the Administrative Agent, copies of each annual and other report with
respect to each Plan and (c) promptly after receipt thereof, a copy of any
notice the Borrower or any of its Subsidiaries may receive from the PBGC
relating to the PBGC's intention to terminate any Plan or to appoint a trustee
to administer any Plan; provided that the Borrower shall not be required to
notify the Administrative Agent of the occurrence of any of the events set forth
in the preceding clauses (a) and (c) unless such event, individually or in the
aggregate, could reasonably be expected to result in a material liability to the
Borrower and its Subsidiaries taken as a whole.
SECTION 5.6. Maintenance of and Access to Books and Records;
Examinations.
Maintain or cause to be maintained at all times true and complete books
and records of its financial operations (in accordance with GAAP) and, after the
occurrence and during the continuance of an Event of Default (at a time during
which Loans are outstanding), provide the Administrative Agent and its
representatives access to all such books and records and to any of their
properties or assets during regular business hours, in order that the
Administrative Agent may make such audits and examinations and make abstracts
from such books, accounts and records and may discuss the affairs, finances and
accounts with, and be advised as to the same by, officers and independent
accountants, all as the Administrative Agent may deem appropriate for the
purpose of verifying the various reports delivered pursuant to this Agreement or
for otherwise ascertaining compliance with this Agreement.
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SECTION 5.7. Maintenance of Properties.
Keep its properties which are material to its business in good repair,
working order and condition consistent with companies of established reputation
and comparable size.
6. NEGATIVE COVENANTS
For so long as the Commitments shall be in effect or any amount shall
remain outstanding under any Note or unpaid under this Agreement, unless the
Required Lenders shall otherwise consent in writing, the Borrower agrees that it
will not, nor will it permit any of its Subsidiaries to, directly or indirectly:
SECTION 6.1. Limitation on Material Subsidiary Indebtedness.
Incur, assume or suffer to exist any Indebtedness of any Material
Subsidiary which principally transacts business in the United States, except:
(a) Indebtedness in existence on the date hereof, or required
to be incurred pursuant to a contractual obligation in existence on the
date hereof, which in either case (to the extent not otherwise
permitted by paragraphs (b)-(g) of this Section 6.1), is listed on
Schedule 6.1 hereto, but not any extensions or renewals thereof, unless
effected on substantially the same terms or on terms not more adverse
to the Lenders;
(b) purchase money Indebtedness (including Capital Leases) to
the extent permitted under Section 6.5(b);
(c) Indebtedness owing by any Material Subsidiary to the
Borrower or any other Subsidiary;
(d) Indebtedness of any Material Subsidiary of the Borrower
issued and outstanding prior to the date on which such Subsidiary
became a Subsidiary of the Borrower (other than Indebtedness issued in
connection with, or in anticipation of, such Subsidiary becoming a
Subsidiary of the Borrower); provided that immediately prior and on a
Pro Forma Basis after giving effect to, such Person becoming a
Subsidiary of the Borrower, no Default or Event of Default shall occur
or then be continuing and the aggregate principal amount of such
Indebtedness, when added to the aggregate outstanding principal amount
of Indebtedness permitted by paragraphs (e) and (f) below, shall not
exceed $125,000,000;
(e) any renewal, extension or modification of Indebtedness
under paragraph (d) above so long (i) as such renewal, extension or
modification is effected on substantially the same terms or on terms
which, in the aggregate, are not more adverse to the Lenders and (ii)
the principal amount of such Indebtedness is not increased;
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(f) other Indebtedness of any Material Subsidiary in an
aggregate principal amount which, when added to the aggregate
outstanding principal amount of Indebtedness permitted by paragraphs
(d) and (e) above, does not exceed $125,000,000; and
(g) Indebtedness of Special Purpose Vehicle Subsidiaries
incurred to finance investment in lease agreements and vehicles by such
Subsidiaries, so long as the lender (and any other party) in respect of
such Indebtedness has recourse, if any, solely to the assets of such
Special Purpose Vehicle Subsidiary.
SECTION 6.2. [Intentionally deleted].
SECTION 6.3. Limitation on Transactions with Affiliates.
Enter into any transaction, including, without limitation, any purchase, sale,
lease or exchange of property or the rendering of any service, with any
Affiliate ( other than the Borrower or a wholly-owned Subsidiary of the
Borrower) unless such transaction is (a) otherwise permitted under this
Agreement, (b) in the ordinary course of the Borrower's or such Subsidiary's
business and (c) upon fair and reasonable terms no less favorable to the
Borrower or such Subsidiary, as the case may be, than it would obtain in
a comparable arm's length transaction with a Person which is not an Affiliate.
SECTION 6.4. Consolidation, Merger, Sale of Assets.
(a) Neither the Borrower nor any of its Material Subsidiaries
(in one transaction or series of transactions) will wind up, liquidate or
dissolve its affairs, or enter into any transaction of merger or consolidation,
except any merger, consolidation, dissolution or liquidation (i) in which the
Borrower is the surviving entity or if the Borrower is not a party to such
transaction then a Subsidiary is the surviving entity, (ii) in which the
surviving entity becomes a Subsidiary of the Borrower immediately upon the
effectiveness of such merger, consolidation, dissolution or liquidation or (iii)
in connection with a transaction permitted by Section 6.4(b); provided that
immediately prior to and on a Pro Forma Basis after giving effect to such
transaction no Default or Event of Default has occurred or is continuing.
(b) Sell or otherwise dispose of all or substantially all of
the assets of the Borrower and its Subsidiaries, taken as a whole, other than
pursuant to the Acquisition; provided that it is understood for purposes of
clarity that this Section 6.4(b) shall not prohibit or limit in any respect
transactions in the ordinary course of business of the Borrower or any of its
Subsidiaries (including but not limited to asset securitization transactions
entered into in the ordinary course of business).
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SECTION 6.5. Limitations on Liens.
Suffer any Lien on the property of the Borrower or any of the
Material Subsidiaries which principally transact business in the United States,
except:
(a) deposits under worker's compensation, unemployment
insurance and social security laws or to secure statutory obligations
or surety or appeal bonds or performance or other similar bonds in the
ordinary course of business, or statutory Liens of landlords, carriers,
warehousemen, mechanics and materialmen and other similar Liens, in
respect of liabilities which are not yet due or which are being
contested in good faith, Liens for taxes not yet due and payable, and
Liens for taxes due and payable, the validity or amount of which is
currently being contested in good faith by appropriate proceedings and
as to which foreclosure and other enforcement proceedings shall not
have been commenced (unless fully bonded or otherwise effectively
stayed);
(b) purchase money Liens granted to the vendor or Person
financing the acquisition of property, plant or equipment if (i)
limited to the specific assets acquired and, in the case of tangible
assets, other property which is an improvement to or is acquired for
specific use in connection with such acquired property or which is real
property being improved by such acquired property; (ii) the debt
secured by such Lien is the unpaid balance of the acquisition cost of
the specific assets on which the Lien is granted; and (iii) such
transaction does not otherwise violate this Agreement;
(c) Liens upon real and/or personal property, which property
was acquired after the date of this Agreement (by purchase,
construction or otherwise) by the Borrower or any of its Material
Subsidiaries, each of which Liens existed on such property before the
time of its acquisition and was not created in anticipation thereof;
provided that no such Lien shall extend to or cover any property of the
Borrower or such Material Subsidiary other than the respective property
so acquired and improvements thereon;
(d) Liens arising out of attachments, judgments or awards as
to which an appeal or other appropriate proceedings for contest or
review are promptly commenced (and as to which foreclosure and other
enforcement proceedings (i) shall not have been commenced (unless fully
bonded or otherwise effectively stayed) or (ii) in any event shall be
promptly fully bonded or otherwise effectively stayed);
(e) Liens created under any Fundamental Document as
contemplated by this Agreement;
(f) Liens securing Indebtedness of any Material Subsidiary to
the Borrower;
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(g) Liens covering only the property or other assets of any
Special Purpose Vehicle Subsidiary and securing only such Indebtedness
of such Special Purpose Vehicle Subsidiary as is permitted by paragraph
(g) of Section 6.1;
(h) mortgage liens existing on homes acquired by the Borrower
or any of its Material Subsidiaries in the ordinary course of their
relocation management business;
(i) other Liens incidental to the conduct of its business or
the ownership of its property and other assets, which do not secure any
Indebtedness and did not otherwise arise in connection with the
borrowing of money or the obtaining of advances or credit and which do
not, in the aggregate, materially detract from the value of its
property or other assets or materially impair the use thereof in the
operation of its business;
(j) Liens covering only the property or other assets of any
Subsidiary which principally transacts business outside of the United
States; and
(k) to the extent not otherwise permitted by paragraphs
(a)-(j) of this Section 6.5, Liens existing on the date hereof listed
on Schedule 6.5 hereto and any extensions or renewals thereof.
SECTION 6.6. Sale and Leaseback.
Enter into any arrangement with any Person or Persons, whereby
in contemporaneous transactions the Borrower or any of its Subsidiaries sells
essentially all of its right, title and interest in a material asset and the
Borrower or any of its Subsidiaries acquires or leases back the right to use
such property except that the Borrower may enter into sale-leaseback
transactions relating to assets not in excess of $100,000,000 in the aggregate
on a cumulative basis.
SECTION 6.7. Consolidated Net Worth.
Permit Consolidated Net Worth on the last day of any fiscal
quarter to be less than the greater of (a) the sum of (i) 70% of Consolidated
Net Worth on the first calendar quarter-end following the Acquisition plus (ii)
25% of Consolidated Net Income, if positive, for each fiscal quarter after the
first fiscal quarter-end following the Acquisition or (b) $400,000,000.
SECTION 6.8. Ratio of Indebtedness To Consolidated Net Worth.
Permit, at any time, Indebtedness of the Borrower and its
Subsidiaries less Cash Equivalents (owned by the Borrower or any of its
Subsidiaries and free of Liens (other than Liens securing Indebtedness)) to
exceed ten (10) times Consolidated Net Worth.
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SECTION 6.9. Accounting Practices.
Establish a fiscal year ending on other than December 31, or
modify or change accounting treatments or reporting practices except as
otherwise required or permitted by GAAP.
SECTION 6.10. Restrictions Affecting Subsidiaries.
Enter into, or suffer to exist, any Contractual Obligation
with any Person, which prohibits or limits the ability of any Subsidiary (other
than Special Purpose Vehicle Subsidiaries) to (a) pay dividends or make other
distributions or pay any Indebtedness owed to the Borrower or any other
Subsidiary, (b) make loans or advances to the Borrower or any other Subsidiary
or (c) transfer any of its properties or assets to the Borrower or any other
Subsidiary.
7. EVENTS OF DEFAULT
In the case of the happening and during the continuance of any
of the following events (herein called "Events of Default"):
(a) any representation or warranty made or deemed made by
either of the Borrowers in this Agreement or any other Fundamental
Document or in connection with this Agreement or with the execution and
delivery of the Notes or the Borrowings hereunder, or any statement or
representation made in any report, financial statement, certificate or
other document furnished by or on behalf of either of the Borrowers or
any of its Subsidiaries to the Administrative Agent or the Canadian
Agent or any Lender under or in connection with this Agreement, shall
prove to have been false or misleading in any material respect when
made or delivered;
(b) default shall be made in the payment of any principal of
or interest on the Notes or of any fees or other amounts payable by
either of the Borrowers hereunder, when and as the same shall become
due and payable, whether at the due date thereof or at a date fixed for
prepayment thereof or by acceleration thereof or otherwise, and in the
case of payments of interest, such default shall continue unremedied
for five Business Days, and in the case of payments other than of any
principal amount of or interest on the Notes, such default shall
continue unremedied for five Business Days after receipt by the
Borrower of an invoice therefor;
(c) default shall be made in the due observance or performance
of any covenant, condition or agreement contained in Section 5.1(e)
(with respect to notice of Default or Events of Default) or Article 6;
(d) default shall be made by either of the Borrowers in the
due observance or performance of any other covenant, condition or
agreement to be observed or performed pursuant to the terms of this
Agreement or any other Fundamental Document and such
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default shall continue unremedied for thirty (30) days after such
Borrower obtains knowledge of such occurrence;
(e) (i) default in payment shall be made with respect to any
Indebtedness or Interest Rate Protection Agreements of the Borrower or
any of its Subsidiaries where the amount or amounts of such
Indebtedness exceeds $25,000,000 (or its equivalent thereof in any
other currency) in the aggregate; or (ii) default in payment or
performance shall be made with respect to any Indebtedness or Interest
Rate Protection Agreements of the Borrower or any of its Subsidiaries
where the amount or amounts of such Indebtedness or Interest Rate
Protection Agreements exceeds $25,000,000 (or its equivalent thereof in
any other currency) in the aggregate, if the effect of such default is
to result in the acceleration of the maturity of such Indebtedness or
Interest Rate Protection Agreement; or (iii) any other circumstance
shall arise (other than the mere passage of time) by reason of which
the Borrower or any Subsidiary of the Borrower is required to redeem or
repurchase, or offer to holders the opportunity to have redeemed or
repurchased, any such Indebtedness or Interest Rate Protection
Agreement where the amount or amounts of such Indebtedness or Interest
Rate Protection Agreement exceeds $25,000,000 (or its equivalent
thereof in any other currency) in the aggregate; provided that clause
(iii) shall not apply to secured Indebtedness or Interest Rate
Protection Agreement that becomes due as a result of a voluntary sale
of the property or assets securing such Indebtedness or Interest Rate
Protection Agreement and provided, further, that clauses (ii) and (iii)
shall not apply to any Indebtedness or Interest Rate Protection
Agreement of any Subsidiary issued and outstanding prior to the date
such Subsidiary became a Subsidiary of the Borrower (other than
Indebtedness or Interest Rate Protection Agreement issued in connection
with, or in anticipation of, such Subsidiary becoming a Subsidiary of
the Borrower) if such default or circumstance arises solely as a result
of a "change of control" provision applicable to such Indebtedness or
Interest Rate Protection Agreement which becomes operative as a result
of the acquisition of such Subsidiary by the Borrower or any of its
Subsidiaries;
(f) the Borrower or any of its Material Subsidiaries shall
generally not pay its debts as they become due or shall admit in
writing its inability to pay its debts, or shall make a general
assignment for the benefit of creditors; or the Borrower or any of its
Material Subsidiaries shall commence any case, proceeding or other
action seeking to have an order for relief entered on its behalf as
debtor or to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, liquidation, dissolution or
composition of it or its debts under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors or seeking appointment
of a receiver, trustee, custodian or other similar official for it or
for all or any substantial part of its property or shall file an answer
or other pleading in any such case, proceeding or other action
admitting the material allegations of any petition, complaint or
similar pleading filed against it or consenting to the relief sought
therein; or the Borrower or any Material Subsidiary thereof shall take
any action to authorize any of the foregoing;
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(g) any involuntary case, proceeding or other action against
the Borrower or any of its Material Subsidiaries shall be commenced
seeking to have an order for relief entered against it as debtor or to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, liquidation, dissolution or composition of it
or its debts under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, or seeking appointment of a
receiver, trustee, custodian or other similar official for it or for
all or any substantial part of its property, and such case, proceeding
or other action (i) results in the entry of any order for relief
against it or (ii) shall remain undismissed for a period of sixty (60)
days;
(h) the occurrence of a Change in Control subsequent to the
Acquisition (provided that, until the Acquisition is consummated and if
the Acquisition is not consummated, the definition of "Change in
Control" shall be deemed amended on such date such that (i) all
references therein to "HFS Incorporated" shall be deemed to be
references to "the Borrower" and (ii) clause (iii) of such definition
shall be deleted in its entirety);
(i) final judgment(s) for the payment of money in excess of
$25,000,000 (or its equivalent thereof in any other currency) shall be
rendered against the Borrower or any of its Subsidiaries which within
thirty (30) days from the entry of such judgment shall not have been
discharged or stayed pending appeal or which shall not have been
discharged within thirty (30) days from the entry of a final order of
affirmance on appeal;
(j) a Reportable Event relating to a failure to meet minimum
funding standards or an inability to pay benefits when due shall have
occurred with respect to any Plan under the control of the Borrower or
any of its Subsidiaries and shall not have been remedied within 45 days
after the occurrence of such Reportable Event, if the occurrence
thereof could reasonably be expected to have a Material Adverse Effect;
or
(k) any provision of Section 2.26 shall cease, for any reason,
to be in full force and effect, or either of the Borrowers or any
Affiliate of either of the Borrowers shall so assert;
then, in every such event and at any time thereafter during the continuance of
such event, the Administrative Agent may or, if directed by the Required
Lenders, shall take either or both of the following actions, at the same or
different times: terminate forthwith the Commitments and/or declare the
principal of and the interest on the Loans and the Notes and all other amounts
payable hereunder or thereunder to be forthwith due and payable, whereupon the
same shall become and be forthwith due and payable, without presentment, demand,
protest, notice of acceleration, notice of intent to accelerate or other notice
of any kind, all of which are hereby expressly waived, anything in this
Agreement or in the Notes to the contrary notwithstanding; provided that, in the
case of a payment of principal default pursuant to paragraph (b), the
Administrative Agent, unless it is directed to do so by the Required Lenders,
will not take either or both of such
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actions for three Business Days. If an Event of Default specified in paragraph
(f) or (g) above shall have occurred, the principal of and interest on the Loans
and the Notes and all other amounts payable hereunder or thereunder shall
thereupon and concurrently become due and payable without presentment, demand,
protest, notice of acceleration, notice of intent to accelerate or other notice
of any kind, all of which are hereby expressly waived, anything in this
Agreement or the Notes to the contrary notwithstanding and the Commitments of
the Lenders shall thereupon forthwith terminate.
8. THE AGENTS
SECTION 8.1. Administration by Agents.
The general administration of the Fundamental Documents and
any other documents contemplated by this Agreement shall be by the Agents or
their designees as provided for herein. Each of the Lenders hereby irrevocably
authorizes the Administrative Agent, at its discretion, to take or refrain from
taking such actions as agent on its behalf and to exercise or refrain from
exercising such powers under the Fundamental Documents, the Notes and any other
documents contemplated by this Agreement as are delegated by the terms hereof or
thereof, as appropriate, together with all powers reasonably incidental thereto.
Each of the Canadian Lenders hereby irrevocably authorizes the Canadian Agent,
at its discretion, to take or refrain from taking such actions as agent on its
behalf and to exercise or refrain from exercising such powers under the
Fundamental Documents, the Canadian Revolving Credit Notes and any other
documents contemplated by this Agreement as are delegated by the terms hereof or
thereof, as appropriates together with all powers reasonably incidental thereto.
The Agents shall have no duties or responsibilities except as set forth in the
Fundamental Documents. Any Lender which is a co-agent or lead manager (as
indicated on Schedule 1.1A hereto) for the credit facility hereunder shall not
have any duties or responsibilities except as a Lender hereunder.
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SECTION 8.2. Advances and Payments.
(a) On the date of each Loan, the Administrative Agent or the
Canadian Agent, as provided for herein, shall be authorized (but not obligated)
to advance, for the account of each of the applicable Lenders, the amount of the
Loan to be made by it in accordance with this Agreement. Each of the Lenders
(other than the Canadian Lenders) hereby authorizes and requests the
Administrative Agent and the Canadian Lenders hereby authorize and request the
Canadian Agent to advance for its account, pursuant to the terms hereof, the
amount of the Loan to be made by it, unless with respect to any Lender, such
Lender has theretofore specifically notified the Administrative Agent or the
Canadian Agent, as the case may be, that such Lender does not intend to fund
that particular Loan. Each of the Lenders agrees forthwith to reimburse the
Administrative Agent or the Canadian Agent, as the case may be, in immediately
available funds for the amount so advanced on its behalf by such Agent pursuant
to the immediately preceding sentence. If any such reimbursement is not made in
immediately available funds on the same day on which such Agent shall have made
any such amount available on behalf of any Lender in accordance with this
Section 8.2, such Lender shall pay interest to such Agent at a rate per annum
equal to such Agent's cost of obtaining overnight funds in the New York Federal
Funds Market in the case of US Loans, and the C$ Prime Rate in the case of
Canadian Loans. Notwithstanding the preceding sentence, if such reimbursement is
not made by the second Business Day following the day on which such Agent shall
have made any such amount available on behalf of any Lender or such Lender has
indicated that it does not intend to reimburse such Agent, the Borrower or the
Canadian Borrower, as the case may be, shall immediately pay such unreimbursed
advance amount (plus any accrued, but unpaid interest at the rate per annum
equal to such Agent's cost of obtaining overnight funds in the New York Federal
Funds Market in the case of US Loans and the C$ Prime Rate in the case of
Canadian Loans) to such Agent.
(b) Any amounts received by either of the Agents in connection
with this Agreement or the Notes the application of which is not otherwise
provided for shall be applied, in accordance with each of the Lenders' pro rata
interest therein, first, to pay accrued but unpaid Facility Fees, second, to pay
accrued but unpaid interest on the Notes, third, to pay the principal balance
outstanding on the Notes and fourth, to pay other amounts payable to the Agents
and/or the Lenders. All amounts to be paid to any of the Lenders by the
Administrative Agent or the Canadian Agent, as the case may be, shall be
credited to the applicable Lenders, after collection by such Agent, in
immediately available funds either by wire transfer or deposit in such Lender's
correspondent account with such Agent, or as such Lender and such Agent shall
from time to time agree.
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SECTION 8.3. Sharing of Setoffs and Cash Collateral.
Each of the Lenders agrees that if it shall, through the
operation of Section 2.19 or the exercise of a right of banker's lien, setoff or
counterclaim against the Borrower or the Canadian Borrower, including, but not
limited to, a secured claim under Section 506 of Title 11 of the United States
Code or other security or interest arising from, or in lieu of, such secured
claim and received by such Lender under any applicable bankruptcy, insolvency or
other similar law, or otherwise (other than pursuant to Section 2.15(f) or
2.24), obtain payment in respect of its Loans as a result of which the unpaid
portion of its Loans is proportionately less than the unpaid portion of any of
the other Lenders (a) it shall promptly purchase at par (and shall be deemed to
have thereupon purchased) from such other Lenders a participation in the Loans
of such other Lenders, so that the aggregate unpaid principal amount of each of
the Lenders' Loans and its participation in Loans of the other Lenders shall be
in the same proportion to the aggregate unpaid principal amount of all Loans
then outstanding as the principal amount of its Loans prior to the obtaining of
such payment was to the principal amount of all Loans outstanding prior to the
obtaining of such payment and (b) such other adjustments shall be made from time
to time as shall be equitable to ensure that the Lenders share such payment pro
rata.
SECTION 8.4. Notice to the Lenders.
Upon receipt by the Administrative Agent or the Canadian Agent
from the Borrower or the Canadian Borrower of any communication calling for an
action on the part of the Lenders, or upon notice to the Administrative Agent or
the Canadian Agent of any Event of Default, such Agent will in turn immediately
inform the other Lenders in writing (which shall include telegraphic
communications) of the nature of such communication or of the Event of Default,
as the case may be.
SECTION 8.5. Liability of Each Agent.
(a) Each of the Agents, when acting on behalf of the Lenders
may execute any of its duties under this Agreement by or through its officers,
agents, or employees and neither the Agents nor their respective directors,
officers, agents, or employees shall be liable to the Lenders or any of them for
any action taken or omitted to be taken in good faith, or be responsible to the
Lenders or to any of them for the consequences of any oversight or error of
judgment, or for any loss, unless the same shall happen through its gross
negligence or willful misconduct. Neither the Agents nor their respective
directors, officers, agents, and employees shall in any event be liable to the
Lenders or to any of them for any action taken or omitted to be taken by it
pursuant to instructions received by it from the Required Lenders or in reliance
upon the advice of counsel selected by it. Without limiting the foregoing,
neither the Agents nor any of their respective directors, officers, employees,
or agents shall be responsible to any of the Lenders for the due execution
(other than its own), validity, genuineness, effectiveness, sufficiency, or
enforceability of, or for any statement, warranty, or representation made by any
other Person in, or for the perfection of any security interest contemplated by,
this Agreement or any related agreement,
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document or order, or for the designation or failure to designate this
transaction as a "Highly Leveraged Transaction" for regulatory purposes, or
shall be required to ascertain or to make any inquiry concerning the performance
or observance by the Borrower or the Canadian Borrower, as the case may be, of
any of the terms, conditions, covenants, or agreements of this Agreement or any
related agreement or document.
(b) Neither the Agents nor any of their respective directors,
officers, employees, or agents shall have any responsibility to the Borrowers on
account of the failure or delay in performance or breach by any of the Lenders
or the Borrowers of any of their respective obligations under this Agreement or
the Notes or any related agreement or document or in connection herewith or
therewith.
(c) Each of the Agents in such capacities hereunder, shall be
entitled to rely on any communication, instrument, or document reasonably
believed by it to be genuine or correct and to have been signed or sent by a
Person or Persons believed by it to be the proper Person or Persons, and it
shall be entitled to rely on advice of legal counsel, independent public
accountants, and other professional advisers and experts selected by it.
SECTION 8.6. Reimbursement and Indemnification.
Each of the Lenders severally and not jointly agrees (i) to
reimburse the Agents and the Arranger, in the amount of its proportionate share,
for any reasonable expenses and fees incurred for the benefit of the Lenders
under the Fundamental Documents, including, without limitation, reasonable
counsel fees and compensation of agents and employees paid for services rendered
on behalf of the Lenders, and any other reasonable expense incurred in
connection with the administration or enforcement thereof not reimbursed by the
Borrowers or one of its Subsidiaries; and (ii) to indemnify and hold harmless
the Agents and the Arranger and any of their directors, officers, employees, or
agents, on demand, in the amount of its proportionate share, from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses, or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against it or any
of them in any way relating to or arising out of the Fundamental Documents or
any action taken or omitted by it or any of them under the Fundamental Documents
to the extent not reimbursed by the Borrowers or one of its Subsidiaries (except
such as shall result from the gross negligence or willful misconduct of the
Person seeking indemnification).
SECTION 8.7. Rights of Each Agent.
It is understood and agreed that Chase and Chase Canada shall
have the same rights and powers hereunder (including the right to give such
instructions) as the other Lenders and may exercise such rights and powers, as
well as its rights and powers under other agreements and instruments to which it
is or may be party, and engage in other transactions with the Borrowers as
though it were not an Agent on behalf of the Lenders under this Agreement.
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SECTION 8.8. Independent Investigation by Lenders.
Each of the Lenders acknowledges that it has decided to enter
into this Agreement and to make the Loans hereunder based on its own analysis of
the transactions contemplated hereby and of the creditworthiness of the
Borrowers and agrees that neither of the Agents shall bear responsibility
therefor.
SECTION 8.9. Notice of Transfer.
Each of the Agents may deem and treat any Lender which is a
party to this Agreement as the owners of such Lender's respective portions of
the Loans for all purposes, unless and until a written notice of the assignment
or transfer thereof executed by any such Lender shall have been received by the
Administrative Agent and become effective pursuant to Section 9.3.
SECTION 8.10. Successor Agents.
Each of the Agents may resign at any time by giving written
notice thereof to the Lenders and the Borrowers. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Agent from among
the Lenders, with the consent of the Borrower, which will not be unreasonably
withheld. If no successor Agent shall have been so appointed by the Required
Lenders and shall have accepted such appointment, within 30 days after the
retiring Agent's giving of notice of resignation, the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent, which with the consent of the
Borrower, which will not be unreasonably withheld, shall be a commercial bank
organized or licensed under the laws of the United States or of any State
thereof and having a combined capital and surplus of at least $500,000,000 in
the case of the Administrative Agent and a commercial bank organized or licensed
under the laws of the Province of Ontario and having a combined capital and
surplus of at least C$100,000,000 in the case of the Canadian Agent. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Article 8 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement.
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9. MISCELLANEOUS
SECTION 9.1. Notices.
Notices and other communications provided for herein shall be
in writing and shall be delivered or mailed (or in the case of telegraphic
communication, if by telegram, delivered to the telegraph company and, if by
telex, telecopy, graphic scanning or other telegraphic communications equipment
of the sending party hereto, delivered by such equipment) addressed, if to the
Administrative Agent or Chase, to it at One Chase Manhattan Plaza, New York, New
York 10081, Attn: Maggie Swales, with a copy to Sandra Miklave, and with a copy
(in the case of all notices relating to Pounds Sterling Loans) to Chase
Manhattan Investment Bank Ltd., Trinity Tower, 9 Thomas Moore Street, London,
England EY91T, Attn: Stephen Clarke, if to the Canadian Agent or Chase Canada,
to it at One First Canadian Place, 100 King Street West, Suite 6900, P.O. Box
106, Toronto, Ontario, Canada MSX 1A4, Attn: Amanda Staff, if to the Borrower or
the Canadian Borrower, to it at 11333 McCormick Road, Hunt Valley, Maryland
21031-1000, Attention: Assistant Treasurer, with a copy to the General Counsel,
or if to a Lender, to it at its address set forth on Schedule 1.1A (or in its
Assignment and Acceptance or other agreement pursuant to which it became a
Lender hereunder), or such other address as such party may from time to time
designate by giving written notice to the other parties hereunder. All notices
and other communications given to any party hereto in accordance with the
provisions of this Agreement shall be deemed to have been given on the fifth
Business Day after the date when sent by registered or certified mail, postage
prepaid, return receipt requested, if by mail, or when delivered to the
telegraph company, charges prepaid, if by telegram, or when receipt is
acknowledged, if by any telecopier or telegraphic communications equipment of
the sender, in each case addressed to such party as provided in this Section 9.1
or in accordance with the latest unrevoked written direction from such party.
SECTION 9.2. Survival of Agreement, Representations and
Warranties, etc.
All warranties, representations and covenants made by each of
the Borrowers herein or in any certificate or other instrument delivered by it
or on its behalf in connection with this Agreement shall be considered to have
been relied upon by the Agents and the Lenders and shall survive the making of
the Loans herein contemplated and the issuance and delivery to the Agents of the
Notes regardless of any investigation made by the Agents or the Lenders or on
their behalf and shall continue in full force and effect so long as any amount
due or to become due hereunder is outstanding and unpaid and so long as the
Commitments have not been terminated. All statements in any such certificate or
other instrument shall constitute representations and warranties by the
Borrowers hereunder.
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SECTION 9.3. Successors and Assigns; Syndications; Loan
Sales; Participations.
(a) Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the successors and
assigns of such party (provided that the Borrowers may not assign their
respective rights hereunder without the prior written consent of all the
Lenders), and all covenants, promises and agreements by, or on behalf of, the
Borrowers which are contained in this Agreement shall inure to the benefit of
the successors and assigns of the Lenders.
(b) Each of the Lenders may (but only with the prior written
consent of the Administrative Agent and the Borrower, which consents shall not
be unreasonably withheld or delayed) assign to one or more banks or other
financial institutions either (i) all or a portion of its interests, rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment and the same portion of the Loans at the time owing to
it and the Notes held by it) (a "Ratable Assignment") or (ii) all or a portion
of its rights and obligations under and in respect of (A) its Commitment under
this Agreement and the same portion of the Loans (other than Competitive Loans)
at the time owing to it or (B) the Competitive Loans at the time owing to it
(including, without limitation, in the case of any such type of Loan, the same
portion of the associated Note) (a "Non-Ratable Assignment"); provided that (1)
each Non-Ratable Assignment shall be of a constant, and not a varying,
percentage of all of the assigning Lender's rights and obligations in respect of
the Loans and the Commitment (if applicable) which are the subject of such
assignment, (2) each Ratable Assignment shall be of a constant, and not a
varying, percentage of the assigning Lender's rights and obligations under this
Agreement, (3) the amount of the Commitment or Competitive Loans, as the case
may be, of the assigning Lender subject to each such assignment (determined as
of the date the Assignment and Acceptance with respect to such assignment is
delivered to the Lender) shall be in a minimum Dollar Equivalent Amount of
$10,000,000 unless otherwise agreed by the Borrower and the Administrative Agent
and (4) the parties to each such assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register (as
defined below), an Assignment and Acceptance, together with any Note or Notes
subject to such assignment (if required hereunder) and a processing and
recordation fee of $3,500. Upon such execution, delivery, acceptance and
recording, and from and after the effective date specified in each Assignment
and Acceptance, which effective date shall be not earlier than five Business
Days after the date of acceptance and recording by the Administrative Agent, (x)
the assignee thereunder shall be a party hereto and, to the extent provided in
such Assignment and Acceptance, have the rights and obligations of a Lender
hereunder and (y) the assigning Lender thereunder shall, to the extent provided
in such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of the assigning Lender's rights and obligations under this
Agreement, such assigning Lender shall cease to be a party hereto).
(c) [Intentionally Deleted].
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(d) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim, the
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in, or in connection with, this Agreement and any other Fundamental
Document or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Fundamental Documents or any other instrument or
document furnished pursuant hereto or thereto; (ii) such Lender assignor makes
no representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrowers or the performance or observance by the
Borrowers of any of their obligations under the Fundamental Documents; (iii)
such assignee confirms that it has received a copy of this Agreement, together
with copies of the most recent financial statements delivered pursuant to
Sections 5.1(a) and 5.1(b) (or if none of such financial statements shall have
then been delivered, then copies of the financial statements referred to in
Section 3.4) and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the assigning Lender, the Administrative Agent, the Canadian
Agent, if the assignor is a Canadian Lender, or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such assignee appoints and authorizes the Administrative
Agent and the Canadian Agent, if the assignor is a Canadian Lender, to take such
action as agent on its behalf and to exercise such powers under the Fundamental
Documents as are delegated to such Agent by the terms thereof, together with
such powers as are reasonably incidental thereto; and (vi) such assignee agrees
that it will be bound by the provisions of this Agreement and will perform in
accordance with its terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(e) The Administrative Agent, on behalf of the Borrowers,
shall maintain at its address at which notices are to be given to it pursuant to
Section 9.1, a copy of each Assignment and Acceptance delivered to it and a
register for the recordation of the names and addresses of the Lenders and the
Commitment of, and principal amount of the Loans owing to, each Lender from time
to time (the "Register"). The entries in the Register shall be conclusive, in
the absence of manifest error, and the Borrower, the Administrative Agent and
the Lenders may (and, in the case of any Loan or other obligation hereunder not
evidenced by a Note, shall) treat each Person whose name is recorded in the
Register as the owner of a Loan or other obligation hereunder as the owner
thereof for all purposes of this Agreement and the other Fundamental Documents,
notwithstanding any notice to the contrary. Any assignment of any Loan or other
obligation hereunder not evidenced by a Note shall be effective only upon
appropriate entries with respect thereto being made in the Register. The
Register shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
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(f) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an assignee, any Notes subject to such assignment (if
required hereunder) and the processing and recordation fee, the Administrative
Agent (subject to the right, if any, of the Borrower to require its consent
thereto) shall, if such Assignment and Acceptance has been completed and is in
the form of Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give prompt
written notice thereof to the Borrower. If a portion of its Commitment has been
assigned by an assigning Lender, then such Lender shall deliver its Note in
respect of such Commitment, if any, at the same time it delivers the applicable
Assignment and Acceptance to the Administrative Agent. If only Competitive Loans
have been assigned by the assigning Lender, such Lender shall not be required to
deliver its Competitive Note to the Administrative Agent, unless such Lender no
longer holds a Commitment under this Agreement, in which event such assigning
Lender shall deliver its Competitive Note, if any, at the same time it delivers
the applicable Assignment and Acceptance to the Administrative Agent. Within
five Business Days after receipt of the notice, the Borrower, at its own
expense, shall execute and deliver to the applicable Lenders at their request,
either (A) a new Note in respect of the assigned Commitment to the order of such
assignee in an amount equal to the Commitment assumed by it pursuant to such
Assignment and Acceptance and a Competitive Note to the order of such assignee
in an amount equal to the Total Commitment hereunder, and a new Note in respect
of the assigned Commitment to the order of the assigning Lender in an amount
equal to the Commitment retained by it hereunder, or (B) if Competitive Loans
only have been assigned and the assigning Lender holds a Commitment under this
Agreement, then a new Competitive Note to the order of the assignee Lender in an
amount equal to the outstanding principal amount of the Competitive Loan(s)
purchased by it pursuant to the Assignment and Acceptance, or (C) if Competitive
Loans only have been assigned and the assigning Lender does not hold a
Commitment under this Agreement, a new Competitive Note to the order of such
assignee in an amount equal to the outstanding principal amount of the
Competitive Loans(s) purchased by it pursuant to such Assignment and Acceptance
and, a new Competitive Note to the order of the assigning Lender in an amount
equal to the outstanding principal amount of the Competitive Loans retained by
it hereunder. Any new Notes shall be in an aggregate principal amount equal to
the aggregate principal amount of the Commitments of the respective Lenders. All
new Notes shall be dated the date hereof and shall otherwise be in substantially
the forms of Exhibits A-1, A-2, A-3 and A-4 hereto, as the case may be.
(g) Each of the Lenders may without the consent of the
Borrowers or the Administrative Agent sell participations to one or more banks
or other financial institutions (a "Participant") in all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Commitment and the Loans owing to it and the Note or Notes
held by it); provided that (i) any such Lender's obligations under this
Agreement shall remain unchanged, (ii) such participant shall not be granted any
voting rights under this Agreement, except with respect to matters requiring the
consent of each of the Lenders hereunder, (iii) any such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iv) the participating banks or other entities shall be entitled to
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the cost protection provisions contained in Sections 2.14, 2.15 and 2.17 hereof
but a participant shall not be entitled to receive pursuant to such provisions
an amount larger than its share of the amount to which the Lender granting such
participation would have been entitled to receive, and (v) the Borrowers, the
Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement.
(h) The Lenders may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.3, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrowers furnished to the
Administrative Agent by or on behalf of the Borrowers.
(i) Each Lender hereby represents that it is a commercial
lender or financial institution which makes loans in the ordinary course of its
business and that it will make the Loans hereunder for its own account in the
ordinary course of such business; provided that, subject to preceding clauses
(a) through (h), the disposition of the Notes or other evidence of Indebtedness
held by that Lender shall at all times be within its exclusive control.
(j) Each of the Borrowers consents that any Lender may at any
time and from time to time pledge, or otherwise grant a security interest in,
any Loan or any Note evidencing such Loan (or any part thereof), including any
such pledge or grant to any Federal Reserve Bank, and this Section shall not
apply to any such pledge or grant; provided that no such pledge or grant shall
release a Lender from any of its obligations hereunder or substitute any such
assignee for such Lender as a party hereto.
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SECTION 9.4. Expenses; Documentary Taxes.
Whether or not the transactions hereby contemplated shall be
consummated, each of the Borrowers agrees to pay all reasonable out-of-pocket
expenses incurred by the Administrative Agent, the Canadian Agent and the
Arranger in connection with the syndication, preparation, execution, delivery
and administration of this Agreement, the Notes, and the making of the Loans
including but not limited to the reasonable fees and disbursements of Simpson
Thacher & Bartlett, counsel to the Administrative Agent, and Blake, Cassels &
Graydon, counsel to the Canadian Agent, as well as all reasonable out-of-pocket
expenses incurred by the Lenders in connection with any restructuring or workout
of this Agreement, or the Notes or in connection with the enforcement or
protection of the rights of the Lenders in connection with this Agreement or the
Notes or any other Fundamental Document, and with respect to any action which
may be instituted by any Person against any Lender in respect of the foregoing,
or as a result of any transaction, action or nonaction arising from the
foregoing, including but not limited to the fees and disbursements of any
counsel for the Lenders. Such payments shall be made on the date of execution of
this Agreement and thereafter promptly on demand. Each of the Borrowers agrees
that it shall indemnify the Administrative Agent, the Canadian Agent and the
Lenders from, and hold them harmless against, any documentary taxes, assessments
or charges made by any Governmental Authority by reason of the execution and
delivery of this Agreement or the Notes or any other Fundamental Document. The
obligations of the Borrowers under this Section shall survive the termination of
this Agreement and/or the payment of the Loans for two years.
SECTION 9.5. Indemnity.
Further, by the execution hereof, each of the Borrowers agrees
to indemnify and hold harmless the Administrative Agent, the Canadian Agent, the
Arranger and the Lenders and their respective directors, officers, employees and
agents (each, an "Indemnified Party") from and against any and all expenses
(including reasonable fees and disbursements of counsel), losses, claims,
damages and liabilities arising out of any claim, litigation, investigation or
proceeding (regardless of whether any such Indemnified Party is a party thereto)
in any way relating to the transactions contemplated hereby, but excluding
therefrom all expenses, losses, claims, damages, and liabilities arising out of
or resulting from the gross negligence or willful misconduct of the Indemnified
Party seeking indemnification, provided that the Borrowers shall not be liable
for the fees and expenses of more than one separate firm for all such
Indemnified Parties in connection with any one such action or any separate but
substantially similar or related actions in the same jurisdiction, nor shall the
Borrowers be liable for any settlement of any proceeding effected without each
of the Borrowers' written consent, and provided, further, that this Section 9.5
shall not be construed to expand the scope of the reimbursement obligations
specified in Section 9.4. The obligations of each of the Borrowers under this
Section 9.5 shall survive the termination of this Agreement and/or payment of
the Loans.
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SECTION 9.6. CHOICE OF LAW.
THIS AGREEMENT AND THE NOTES HAVE BEEN EXECUTED AND DELIVERED
IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE CONSTRUED IN ACCORDANCE
WITH, AND GOVERNED BY, THE LAWS OF SUCH STATE APPLICABLE TO CONTRACTS MADE AND
TO BE PERFORMED WHOLLY WITHIN SUCH STATE AND, IN THE CASE OF PROVISIONS RELATING
TO INTEREST RATES, ANY APPLICABLE LAWS OF THE UNITED STATES AND THE PROVINCE OF
ONTARIO.
SECTION 9.7. No Waiver.
No failure on the part of the Administrative Agent, the
Canadian Agent or any Lender to exercise, and no delay in exercising, any right,
power or remedy hereunder or under the Notes shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. All remedies hereunder are cumulative and are not
exclusive of any other remedies provided by law.
SECTION 9.8. Extension of Maturity.
Except as otherwise specifically provided in Article 7, should
any payment of principal of or interest on the Notes or any other amount due
hereunder become due and payable on a day other than a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day and, in
the case of principal, interest shall be payable thereon at the rate herein
specified during such extension.
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SECTION 9.9. Amendments, etc.
No modification, amendment or waiver of any provision of this
Agreement or any other Fundamental Document, and no consent to any departure by
either of the Borrowers herefrom or therefrom, shall in any event be effective
unless the same shall be in writing and signed or consented to in writing by the
Required Lenders, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given; provided that no such
modification or amendment shall without the written consent of each Lender
affected thereby (x) increase the Commitment of a Lender or postpone or waive
any scheduled reduction in the Commitments, (y) alter the stated maturity or
principal amount of any installment of any Loan, or decrease the rate of
interest payable thereon, or the rate at which the Facility Fees or (z) waive a
default under Section 7(b) with respect to a scheduled principal installment of
any Loan or scheduled payment of interest or fees; provided, further, that no
such modification or amendment shall without the written consent of all of the
Lenders (i) amend or modify any provision of this Agreement which provides for
the unanimous consent or approval of the Lenders or (ii) amend this Section 9.9
or the definition of Required Lenders or Supermajority Lenders or (iii) amend
Section 2.26; and provided, further, however, that no such modification or
amendment shall decrease the Commitment of any Lender without the written
consent of such Lender. No such amendment or modification may adversely affect
the rights and obligations of either of the Agents hereunder without its prior
written consent. No notice to or demand on the Borrowers shall entitle either
Borrower to any other or further notice or demand in the same, similar or other
circumstances. Each holder of a Note shall be bound by any amendment,
modification, waiver or consent authorized as provided herein, whether or not a
Note shall have been marked to indicate such amendment, modification, waiver or
consent and any consent by any holder of a Note shall bind any Person
subsequently acquiring a Note, whether or not a Note is so marked.
SECTION 9.10. 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 9.11. SERVICE OF PROCESS; WAIVER OF JURY TRIAL.
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(a) EACH OF THE BORROWERS HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE STATE COURTS OF THE STATE OF NEW YORK LOCATED IN NEW YORK
COUNTY AND TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND THE COURTS OF THE PROVINCE OF ONTARIO FOR THE
PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR BASED UPON
THIS AGREEMENT OR THE SUBJECT MATTER HEREOF BROUGHT BY THE ADMINISTRATIVE AGENT,
THE CANADIAN AGENT OR A LENDER. EACH OF THE BORROWERS TO THE EXTENT PERMITTED BY
APPLICABLE LAW (A) HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS
A DEFENSE, OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH
COURTS, ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF THE
ABOVE-NAMED COURTS, THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR
EXECUTION, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THIS
AGREEMENT OR THE SUBJECT MATTER HEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT,
AND (B) HEREBY WAIVES THE RIGHT TO ASSERT IN ANY SUCH ACTION, SUIT OR PROCEEDING
ANY OFFSETS OR COUNTERCLAIMS EXCEPT COUNTERCLAIMS THAT ARE COMPULSORY OR
OTHERWISE ARISE FROM THE SAME SUBJECT MATTER. EACH OF THE BORROWERS HEREBY
CONSENTS TO SERVICE OF PROCESS BY MAIL AT ITS ADDRESS TO WHICH NOTICES ARE TO BE
GIVEN PURSUANT TO SECTION 9.1. EACH OF THE BORROWERS AGREES THAT ITS SUBMISSION
TO JURISDICTION AND CONSENT TO SERVICE OF PROCESS BY MAIL IS MADE FOR THE
EXPRESS BENEFIT OF THE ADMINISTRATIVE AGENT, THE CANADIAN AGENT AND THE LENDERS.
THE CANADIAN BORROWER HEREBY IRREVOCABLY APPOINTS THE BORROWER AS ITS AGENT FOR
SERVICE OF PROCESS IN ANY PROCEEDING REFERRED TO IN THIS SECTION 9.11 AND AGREES
THAT SERVICE OF PROCESS IN ANY SUCH PROCEEDING MAY BE MADE BY MAILING OR
DELIVERING A COPY THEREOF TO IT CARE OF THE BORROWER AT ITS ADDRESS FOR NOTICES
SET FORTH IN SECTION 9.1. FINAL JUDGMENT AGAINST EITHER OF THE BORROWERS IN ANY
SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY
OTHER JURISDICTION (A) BY SUIT, ACTION OR PROCEEDING ON THE JUDGMENT, A
CERTIFIED OR TRUE COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND THE
AMOUNT OF INDEBTEDNESS OR LIABILITY OF THE SUBMITTING PARTY THEREIN DESCRIBED OR
(B) IN ANY OTHER MANNER PROVIDED BY, OR PURSUANT TO, THE LAWS OF SUCH OTHER
JURISDICTION, PROVIDED THAT THE ADMINISTRATIVE AGENT, THE CANADIAN AGENT OR A
LENDER MAY AT ITS OPTION BRING SUIT, OR INSTITUTE OTHER JUDICIAL PROCEEDINGS
AGAINST EITHER OF THE BORROWERS OR ANY OF ITS ASSETS IN ANY STATE OR FEDERAL
COURT OF THE UNITED STATES OR OF ANY COUNTRY OR PLACE WHERE EITHER OF THE
BORROWERS OR SUCH ASSETS MAY BE FOUND.
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<PAGE>
(b) TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH
CANNOT BE WAIVED, EACH PARTY HERETO HEREBY WAIVES, AND COVENANTS THAT IT WILL
NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY
JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION, OR CAUSE OF
ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF,
IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR
TORT OR OTHERWISE. EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED THAT
THE PROVISIONS OF THIS SECTION 9.11(b) CONSTITUTE A MATERIAL INDUCEMENT UPON
WHICH THE OTHER PARTIES HAVE RELIED, ARE RELYING AND WILL RELY IN ENTERING INTO
THIS AGREEMENT. THE PARTIES HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION 9.11(b) WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF SUCH
OTHER PARTY TO THE WAIVER OF ITS RIGHTS TO TRIAL BY JURY.
SECTION 9.12. Headings.
Section headings used herein are for convenience only and are
not to affect the construction of or be taken into consideration in interpreting
this Agreement.
SECTION 9.13. Execution in Counterparts.
This Agreement may be executed in any number of counterparts,
each of which shall constitute an original, but all of which taken together
shall constitute one and the same instrument.
SECTION 9.14. Entire Agreement.
This Agreement represents the entire agreement of the parties
with regard to the subject matter hereof and the terms of any letters and other
documentation entered into among the Borrower, the Administrative Agent or any
Lender (other than the provisions of the letter agreement dated February 4,
1997, among the Borrower, Chase and Chase Securities Inc., relating to fees and
expenses and syndication issues) prior to the execution of this Agreement which
relate to Loans to be made shall be replaced by the terms of this Agreement.
SECTION 9.15. Foreign Currency Judgments. (a) If, for the
purpose of obtaining judgment in any court, it is necessary to convert a sum
due hereunder in one currency into another currency, each of the Borrowers
agrees, to the fullest extent that it may effectively do so, that the rate of
exchange used shall be that at which in accordance with normal banking
procedures in the relevant jurisdiction the relevant Lender (or agent acting on
its behalf) or the
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<PAGE>
Administrative Agent could purchase the first currency with such other
currency for the first currency on the Business Day immediately preceding the
day on which final judgment is given.
(b) The obligations of either of the Borrowers in respect of
any sum due hereunder shall, notwithstanding any judgment in a currency (the
"Judgment Currency") other than that in which such sum is denominated in
accordance with this Agreement (the "Agreement Currency"), be discharged only to
the extent that, on the Business Day following receipt by any Lender (or agent
acting on its behalf) (the "Applicable Creditor") of any sum adjudged to be so
due in the Judgment Currency, the Applicable Creditor may in accordance with
normal banking procedures in the relevant jurisdiction purchase the Agreement
Currency with the Judgment Currency; if the amount of the Agreement Currency so
purchased is less than the sum originally due to the Applicable Creditor in the
Agreement Currency, each of the Borrowers agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify the Applicable Creditor against
such loss, provided, that if the amount of the Agreement Currency so purchased
exceeds the sum originally due to the Applicable Creditor, the Applicable
Creditor agrees to remit such excess to the Applicable Borrower. The obligations
of the Borrowers contained in this Section 9.15 shall survive the termination of
this Agreement and the payment of all amounts owing hereunder. Each Borrower
shall repay each Loan made to it, and interest thereon, in the Currency in which
such Loan is denominated.
SECTION 9.16. Risks of Superior Force. Each of the Borrowers
expressly assumes all risks of superior force, such that it shall be bound to
timely execute each and every of its obligations under this Agreement
notwithstanding the existence or occurrence of any event or circumstance
constituting a superior force within the meaning of Article 1693 of the Civil
Code of Quebec.
SECTION 9.17. Language. The parties hereto have agreed that
this Agreement as well as any document or instrument relating thereto be drawn
up in English only. Les parties aux presentes ont convenu que la presente
Convention ainsi que tous autres actes ou documents s'y rattachant soient
rediges en anglais seulement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and the year first above written.
PHH CORPORATION
By: /s/ Roy A. Meierhenry
_______________________
Title: Senior Vice President and Treasurer
PHH VEHICLE MANAGEMENT SERVICES INC.
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By: /s/ Roy A. Meierhenry
_______________________
Title: Vice President and Treasurer
THE CHASE MANHATTAN BANK, individually
and as Administrative Agent
By: /s/ Gail Weiss
_______________________
Title: Vice President
THE CHASE MANHATTAN BANK OF
CANADA, as Canadian Agent
By: /s/ Christine Chan
_______________________
Title: Vice President
BANK OF AMERICA ILLINOIS
By: /s/ Nelson Albrecht
_______________________
Title: Vice President
BANK OF MONTREAL
By: /s/ Edward P. McGuire
_______________________
Title: Director
THE BANK OF NEW YORK
By: /s/ Gregory P. Shefrin
_______________________
Title: Vice President
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<PAGE>
THE BANK OF NOVA SCOTIA
By: /s/ J. Alan Edwards
_______________________
Title: Authorized Signatory
THE BANK OF TOKYO-MITSUBISHI,
LIMITED, NEW YORK BRANCH
By: /s/ J. Andrew Don
_______________________
Title: Attorney-In-Fact
BANKERS TRUST COMPANY
By: /s/ Anthony LoGrippo
_______________________
Title: Vice President
CANADIAN IMPERIAL BANK OF COMMERCE
By: /s/ Gerald J. Girardi
______________________
Title: Director, CIBC Wood Gundy
Securities Corp., as Agent
COMERICA BANK
By: /s/ Tamara J. Gurne
_______________________
Title: Account Officer
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<PAGE>
COMMERZBANK AG (NEW YORK BRANCH)
By: /s/ Subash R. Viswanathan
_______________________
Title: Vice President
By: /s/ Andrew R. Campbell
_______________________
Title: Assistant Treasurer
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Mary E. Collier
_______________________
Title: Vice President
DEUTSCHE BANK AG NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES
By: /s/ Gayma Z. Shivnarain
_______________________
Title: Vice President
By: /s/ Dale F. Oberst
_______________________
Title: Associate
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ William A. Artz
_______________________
Title: Vice President
THE FIRST NATIONAL BANK OF MARYLAND
By: /s/ Kellie M. Matthews
_______________________
Title: Vice President
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<PAGE>
FIRST UNION NATIONAL BANK OF
MARYLAND
By: /s/ Ronald J. Bucci
_______________________
Title: Vice President
THE FUJI BANK, LTD. NEW YORK BRANCH
By: /s/ Masanobu Kobayashi
_______________________
Title: Vice Preisdent and Manager
MELLON BANK, N.A.
By: /s/ Laurie G. Dunn
_______________________
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By: /s/ James Dwyer
_______________________
Title: Vice President
NATIONSBANK, N.A.
By: /s/ Elizabeth S. Duff
_______________________
Title: Vice President
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<PAGE>
ROYAL BANK OF CANADA
By: /s/ Peter D. Steffen
_______________________
Title: Senior Manager
THE SUMITOMO BANK, LIMITED
NEW YORK BRANCH
By: /s/ John C. Kissinger
_______________________
Title: Joint General Manager
WELLS FARGO BANK, N.A.
By: /s/ Anthony J. Xinis
_______________________
Title: Senior Vice President
Schedule 1.1A
Commitments
Lender Commitment
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<PAGE>
================================================================================
TOTAL $1,250,000,000.00
Schedule 1.1B
Available Foreign Currencies
For purposes of Competitive Loans, Available Foreign Currencies are the
following:
Canadian Dollars
the lawful currency of France
the lawful currency of Germany
Japanese Yen
the lawful currency of England
Swiss Francs
the lawful currency of Italy
Schedule 2.14
Calculation of Additional Interest for Pounds Sterling Loans
1. The additional interest for any period shall (subject to paragraph 5
below) be calculated in accordance with the following formula:
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BY + L(Y-X) + S(Y-Z) per cent, per annum
____________________
100 - (B+S)
where on the day of application of the formula:
B is the percentage of the Administrative Agent's eligible
liabilities which the Bank of England then requires the
Administrative Agent to hold on a non-interest-bearing deposit
account in accordance with its cash ratio requirements;
Y is the rate at which Pounds Sterling deposits are offered by
the Administrative Agent to leading banks in the London
Interbank Market at or about 11 a.m. on that day for the
relevant period;
L is the percentage of eligible liabilities which (as a result
of the requirements of the Bank of England) the Administrative
Agent maintains as secured money with members of the London
Discount Market Association or in certain marketable or
callable securities approved by the Bank of England, which
percentage shall (in the absence of evidence that any other
figure is appropriate) be conclusively presumed to be 5%;
X is the rate at which secured Pounds Sterling investments may
be placed by the Administrative Agent with members of the
London Discount Market Association at or about 11 a.m. on that
day for the relevant period or, if greater, the rate at which
Pounds Sterling bills of exchange (of a tenor equal to the
duration of the relevant period) eligible for rediscounting at
the Bank of England can be discounted in the London Discount
Market at or about 11 a.m. on that day;
S is the percentage of the Administrative Agent's eligible
liabilities which the Bank of England requires the
Administrative Agent to place as a special deposit; and
Z is the interest rate per annum allowed by the Bank of England
on special deposits.
2. For the purposes of this schedule 2.14:
(a) "eligible liabilities" and "special deposits" have the
meanings given to them at the time of application of the
formula by the Bank of England; and
(b) "relevant period" in relation to each period for which
additional interest is to be calculated means:
(i) if it is 3 months or less, that period; or
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(ii) if it more than 3 months, 3 months.
3. In the application of the formula, B, Y, L, X, S and Z are included in
the formula as figures and not as percentages, e.g. if B = 0.5% and Y =
15% BY is calculated as 0.5 X 15.
4. The formula shall be applied on the first day of each relevant period.
Each amount shall be rounded up to the nearest four decimal places.
5. If the Administrative Agent determines that a change in circumstances
has rendered, or will render, the formula inappropriate, the
Administrative Agent (after consultation with the Lenders) shall notify
the Borrower of the manner in which the additional interest will
subsequently be calculated provided that no amendment to the manner of
such calculation may be made other than to restore the position in
terms of overall return to that which prevailed before such change
occurred. The manner of calculation so notified by the Administrative
Agent shall, in the absence of manifest error be binding on all the
parties.
Schedule 3.6
Material Subsidiaries
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Subsidiary Name Jurisdiction of Authorized Shares Issued Ownership of Capital
Incorporation Capitalization Stock*
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
PHH Vehicle Management Maryland 100,000(C) 404(C) PHH Holdings
Services Corporation Corporation
PHH Real Estate Delaware 1,000(C) 860(C) PHH Holdings
Services Corporation Corporation
PHH Mortgage Services New Jersey 5,000(C) 1,000(C) PHH Holdings
Corporation 20,000(P) 0(P) Corporation
PHH Holdings Maryland 5,000 100 PHH Corporation
Corporation
PHH Investments I Delaware 5,000 1,000 PHH Corporation
Corporation
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<PAGE>
PHH Europe PLC** United Kingdom 25,000,000 18,251,110 PHH Holdings
Corporation
PHH Vehicle Management United Kingdom 2,000,000 1,147,500 PHH Europe PLC
Services PLC**
PHH Financial Services United Kingdom 10,000,000 10,000,000 PHH Investment
Ltd.** Services Ltd.***
</TABLE>
* Ownership is 100% unless otherwise indicated.
** These Material Subsidiaries Do Not principally transact business in the
United States.
*** Does not meet the Material Subsidiary test.
(C)=Common stock
(P)=Preferred stock
Schedule 3.9
Litigation
None.
Schedule 6.1
Existing Indebtedness and Guaranties
None.
Schedule 6.5
Existing Liens
None.
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<PAGE>
EXECUTION COPY
================================================================================
$1,250,000,000
364-DAY COMPETITIVE ADVANCE AND
REVOLVING CREDIT AGREEMENT
Dated as of March 4, 1997
among
PHH CORPORATION
and
PHH VEHICLE MANAGEMENT SERVICES INC.
as Borrowers
and
THE LENDERS REFERRED TO HEREIN
and
THE CHASE MANHATTAN BANK, as Administrative Agent
and
THE CHASE MANHATTAN BANK OF CANADA, as Canadian Agent
================================================================================
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<PAGE>
CHASE SECURITIES INC., Arranger
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. DEFINITIONS................................................................................................. 1
2. THE LOANS................................................................................................... 22
SECTION 2.1. Commitments.............................................................................. 22
SECTION 2.2. Loans.................................................................................... 24
SECTION 2.3. Use of Proceeds.......................................................................... 26
SECTION 2.4. Competitive Bid Procedure................................................................ 26
SECTION 2.5. Revolving Credit Borrowing Procedure..................................................... 29
SECTION 2.6. Refinancings............................................................................. 30
SECTION 2.7. Fees..................................................................................... 31
SECTION 2.8. Repayment of Loans; Evidence of Debt..................................................... 31
SECTION 2.9. Interest on Loans........................................................................ 33
SECTION 2.10. Interest on Overdue Amounts.............................................................. 35
SECTION 2.11. Alternate Rate of Interest............................................................... 35
SECTION 2.12. Termination and Reduction of Commitments................................................. 36
SECTION 2.13. Prepayment of Loans...................................................................... 36
SECTION 2.14. Eurocurrency Reserve Costs............................................................... 38
SECTION 2.15. Reserve Requirements; Change in Circumstances............................................ 38
SECTION 2.16. Change in Legality....................................................................... 41
SECTION 2.17. Reimbursement of Lenders................................................................. 42
SECTION 2.18. Pro Rata Treatment....................................................................... 43
SECTION 2.19. Right of Setoff.......................................................................... 44
SECTION 2.20. Manner of Payments....................................................................... 45
SECTION 2.21. Withholding Taxes........................................................................ 45
SECTION 2.22. Certain Pricing Adjustments.............................................................. 47
SECTION 2.23. [Intentionally Deleted.]................................................................. 48
SECTION 2.24. Extension of Maturity Date............................................................... 48
SECTION 2.25. Bankers' Acceptances..................................................................... 50
SECTION 2.26. Guarantee................................................................................ 52
3. REPRESENTATIONS AND WARRANTIES OF BORROWER.................................................................. 55
SECTION 3.1. Corporate Existence and Power............................................................ 55
SECTION 3.2. Corporate Authority and No Violation..................................................... 55
SECTION 3.3. Governmental and Other Approval and Consents............................................. 56
SECTION 3.4. Financial Statements of Borrower......................................................... 56
SECTION 3.5. No Material Adverse Change............................................................... 56
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<PAGE>
SECTION 3.6. Material Subsidiaries.................................................................... 56
SECTION 3.7. Copyrights, Patents and Other Rights..................................................... 57
SECTION 3.8. Title to Properties...................................................................... 57
SECTION 3.9. Litigation............................................................................... 57
SECTION 3.10. Federal Reserve Regulations.............................................................. 57
SECTION 3.11. Investment Company Act................................................................... 57
SECTION 3.12. Enforceability........................................................................... 58
SECTION 3.13. Taxes.................................................................................... 58
SECTION 3.14. Compliance with ERISA.................................................................... 58
SECTION 3.15. Disclosure............................................................................... 59
SECTION 3.16. Environmental Liabilities................................................................ 59
4. CONDITIONS OF LENDING....................................................................................... 59
SECTION 4.1. Conditions Precedent to Effectiveness.................................................... 59
(a) Loan Documents........................................................................... 59
(b) Corporate Documents for the Borrower..................................................... 59
(c) Financial Statements..................................................................... 60
(d) Opinions of Counsel...................................................................... 60
(e) No Material Adverse Change............................................................... 60
(f) Payment of Fees.......................................................................... 60
(g) Litigation............................................................................... 60
(h) Existing Credit Agreements............................................................... 60
(i) Officer's Certificate.................................................................... 60
SECTION 4.2. Conditions Precedent to Each Loan........................................................ 61
(a) Notice................................................................................... 61
(b) Representations and Warranties........................................................... 61
(c) No Event of Default...................................................................... 61
5. AFFIRMATIVE COVENANTS....................................................................................... 61
SECTION 5.1. Financial Statements, Reports, etc. ..................................................... 62
SECTION 5.2. Corporate Existence; Compliance with Statutes............................................ 63
SECTION 5.3. Insurance................................................................................ 64
SECTION 5.4. Taxes and Charges........................................................................ 64
SECTION 5.5. ERISA Compliance and Reports............................................................. 64
SECTION 5.6. Maintenance of and Access to Books and Records; Examinations............................. 65
SECTION 5.7. Maintenance of Properties................................................................ 65
6. NEGATIVE COVENANTS.......................................................................................... 66
SECTION 6.1. Limitation on Material Subsidiary Indebtedness........................................... 66
SECTION 6.2. [Intentionally deleted].................................................................. 67
SECTION 6.3. Limitation on Transactions with Affiliates............................................... 67
SECTION 6.4. Consolidation, Merger, Sale of Assets.................................................... 67
SECTION 6.5. Limitations on Liens..................................................................... 68
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<PAGE>
SECTION 6.6. Sale and Leaseback....................................................................... 69
SECTION 6.7. Consolidated Net Worth................................................................... 69
SECTION 6.8. Ratio of Indebtedness To Consolidated Net Worth.......................................... 70
SECTION 6.9. Accounting Practices..................................................................... 70
SECTION 6.10. Restrictions Affecting Subsidiaries...................................................... 70
7. EVENTS OF DEFAULT........................................................................................... 70
8. THE AGENTS.................................................................................................. 73
SECTION 8.1. Administration by Agents................................................................. 73
SECTION 8.2. Advances and Payments.................................................................... 74
SECTION 8.3. Sharing of Setoffs and Cash Collateral................................................... 75
SECTION 8.4. Notice to the Lenders.................................................................... 75
SECTION 8.5. Liability of Each Agent.................................................................. 75
SECTION 8.6. Reimbursement and Indemnification........................................................ 76
SECTION 8.7. Rights of Each Agent..................................................................... 77
SECTION 8.8. Independent Investigation by Lenders..................................................... 77
SECTION 8.9. Notice of Transfer....................................................................... 77
SECTION 8.10. Successor Agents......................................................................... 77
9. MISCELLANEOUS............................................................................................... 78
SECTION 9.1. Notices.................................................................................. 78
SECTION 9.2. Survival of Agreement, Representations and Warranties, etc. ............................. 79
SECTION 9.3. Successors and Assigns; Syndications; Loan Sales; Participations......................... 79
SECTION 9.4. Expenses; Documentary Taxes.............................................................. 83
SECTION 9.5. Indemnity................................................................................ 84
SECTION 9.6. CHOICE OF LAW............................................................................ 84
SECTION 9.7. No Waiver................................................................................ 84
SECTION 9.8. Extension of Maturity.................................................................... 85
SECTION 9.9. Amendments, etc. ........................................................................ 85
SECTION 9.10. Severability............................................................................. 85
SECTION 9.11. SERVICE OF PROCESS; WAIVER OF JURY TRIAL................................................. 86
SECTION 9.12. Headings................................................................................. 87
SECTION 9.13. Execution in Counterparts................................................................ 87
SECTION 9.14. Entire Agreement......................................................................... 87
SECTION 9.15. Foreign Currency Judgments............................................................... 87
SECTION 9.16. Risks of Superior Force.................................................................. 88
SECTION 9.17. Language................................................................................. 88
</TABLE>
SCHEDULES
1.1A Lenders, Addresses and Commitments
1.1B Available Foreign Currencies
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<PAGE>
2.14 Eurocurrency Reserve Costs For Pounds Sterling Loans
3.6 Material Subsidiaries
3.9 Litigation
6.1 Existing Material Subsidiary Indebtedness
6.5 Existing Liens
EXHIBITS
A-1 Form of Revolving Credit Note
A-2 Form of Competitive Note
A-3 Form of Canadian Revolving Credit Note
A-4 Form of Pounds Sterling Note
B-1 Opinion of Gordon W. Priest, Esq.
B-2 Opinion of Piper & Marbury
B-3 Opinion of Blake, Cassels & Graydon
C Form of Assignment and Acceptance
D Form of Compliance Certificate
E-1 Form of Competitive Bid Request
E-2 Form of Competitive Bid Invitation
E-3 Form of Competitive Bid
E-4 Form of Competitive Bid Accept/Reject Letter
F Form of Revolving Credit Borrowing Request
G Form of Extension Request
H Form of Replacement Bank Agreement
I Form of Bankers' Acceptance
J Form of Notice of Rollover
-102-
FIVE YEAR COMPETITIVE ADVANCE AND REVOLVING CREDIT AGREEMENT
(the "Agreement"), dated as of March 4, 1997, among PHH CORPORATION, a Maryland
corporation (the "Borrower"), the Lenders referred to herein, CHASE SECURITIES
INC., as arranger (the "Arranger") for the Lenders, and THE CHASE MANHATTAN
BANK, a New York banking corporation, as agent (the "Administrative Agent") for
the Lenders.
INTRODUCTORY STATEMENT
----------------------
The Borrower has requested that the Lenders establish a
$1,250,000,000 committed revolving credit facility pursuant to which Revolving
Credit Loans may be made to the Borrower (as defined below), and Letters of
Credit issued for the account of the Borrower (of which not more than the
amounts described herein at any time shall consist of Letters of Credit). In
addition, the Borrower has requested that the Lenders provide a procedure
pursuant to which Lenders may bid on an uncommitted basis on short-term
borrowings by the Borrower.
Subject to the terms and conditions set forth herein, the
Administrative Agent is willing to act as agent for the Lenders and each Lender
is willing to make Loans and to participate in Letters of Credit.
Accordingly, the parties hereto hereby agree as follows:
1. DEFINITIONS
For the purposes hereof unless the context otherwise requires,
the following terms shall have the meanings indicated, all accounting terms not
otherwise defined herein shall have the respective meanings accorded to them
under GAAP and all terms defined in the New York Uniform Commercial Code and not
otherwise defined herein shall have the respective meanings accorded to them
therein:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any Revolving Credit Loan bearing
interest at a rate determined by reference to the Alternate Base Rate
in accordance with the provisions of Article 2.
"Acquisition" shall mean the acquisition by HFS Incorporated
("HFS") of all of the voting common stock of the Borrower pursuant to
the Agreement dated as of November 10, 1996 between HFS, the Borrower
and Mercury Acq. Corp.
-1-
<PAGE>
"Affiliate" shall mean any Person which, directly or
indirectly, is in control of, is controlled by, or is under common
control with, the Borrower. For purposes of this definition, a Person
shall be deemed to be "controlled by" another if such latter Person
possesses, directly or indirectly, power either to (i) vote 10% or more
of the securities having ordinary voting power for the election of
directors of such controlled Person or (ii) direct or cause the
direction of the management and policies of such controlled Person
whether by contract or otherwise.
"Alternate Base Rate" shall mean for any day, a rate per annum
(rounded upwards to the nearest 1/16 of 1% if not already an integral
multiple of 1/16 of 1%) equal to the greater of (a) the Prime Rate in
effect for such day and (b) the Federal Funds Effective Rate in effect
for such day plus 1/2 of 1%. "Prime Rate" shall mean the rate per annum
publicly announced by the entity which is the Administrative Agent from
time to time as its prime rate in effect at its principal office in New
York City. For purposes of this Agreement, any change in the Alternate
Base Rate due to a change in the Prime Rate shall be effective on the
date such change in the Prime Rate is announced as effective. "Federal
Funds Effective Rate" shall mean, for any period, a fluctuating
interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for
the day of such transactions received by the Administrative Agent from
three Federal funds brokers of recognized standing selected by it. If
for any reason the Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is
unable to ascertain the Federal Funds Effective Rate, for any reason,
including, without limitation, the inability or failure of the
Administrative Agent to obtain sufficient bids or publications in
accordance with the terms hereof, the Alternate Base Rate shall be
determined without regard to clause (b) until the circumstances giving
rise to such inability no longer exist. Any change in the Alternate
Base Rate due to a change in the Federal Funds Effective Rate shall be
effective on the effective date of such change in the Federal Funds
Effective Rate.
"Applicable Law" shall mean all provisions of statutes, rules,
regulations and orders of governmental bodies or regulatory agencies
applicable to a Person, and all orders and decrees of all courts and
arbitrators in proceedings or actions in which the Person in question
is a party.
"Assessment Rate" shall mean, for any day, the net annual
assessment rate (rounded upwards, if necessary, to the next higher
Basis Point) as most recently reasonably estimated by the
Administrative Agent for determining the then current annual assessment
payable by the entity which is the Administrative Agent to the Federal
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Deposit Insurance Corporation (or any successor) for insurance by such
Corporation (or such successor) of time deposits made in Dollars at
such entity's domestic offices.
"Assignment and Acceptance" shall mean an agreement in the
form of Exhibit C hereto, executed by the assignor, assignee and the
other parties as contemplated thereby.
"Available Foreign Currencies" shall mean the currencies set
forth on Schedule 1.1B, and any other available and freely-convertible
non-Dollar currency selected by the Borrower and approved (which
approval shall not be unreasonably withheld) in writing by the
Administrative Agent.
"Basis Point" shall mean 1/100th of 1%.
"Board" shall mean the Board of Governors of the Federal
Reserve System.
"Borrowing" shall mean a group of Loans of a single Interest
Rate Type made by certain Lenders (or in the case of a Competitive
Borrowing, by the Lender or Lenders whose Competitive Bids have been
accepted pursuant to Section 2.4) on a single date and as to which a
single Interest Period is in effect.
"Business Day" shall mean, with respect to any Loan, any day
other than a Saturday, Sunday or other day on which banks in the State
of New York are permitted or required by law to close; provided that
when used in connection with a LIBOR Loan, the term "Business Day"
shall also exclude any day on which banks are not open for dealings in
deposits in Dollars or the applicable Available Foreign Currency on the
London Interbank Market (or such other interbank eurocurrency market
where the foreign currency and exchange operations in respect of
Dollars or the applicable Available Foreign Currency, as the case may
be, are then being conducted for delivery on the first day of such
Interest Period).
"Capital Lease" shall mean as applied to any Person, any lease
of any property (whether real, personal or mixed) by that Person as
lessee which, in accordance with GAAP, is or should be accounted for as
a capital lease on the balance sheet of that Person.
"Cash Collateral Account" shall mean a collateral account
established with the Administrative Agent, in the name of the
Administrative Agent and under its sole dominion and control, into
which the Borrower shall from time to time deposit Dollars pursuant to
the express provisions of this Agreement requiring such deposit.
"Cash Equivalents" shall mean (i) investments in commercial
paper maturing in not more than 270 days from the date of issuance
which at the time of acquisition is rated at least A-1 or the
equivalent thereof by S&P, or P-1 or the equivalent thereof by
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Moody's, (ii) investments in direct obligations or obligations
which are guaranteed or insured by the United States or any
agency or instrumentality thereof (provided that the full faith and
credit of the United States is pledged in support thereof) having a
maturity of not more than three years from the date of acquisition,
(iii) investments in certificates of deposit maturing not more
than one year from the date of origin issued by a bank or trust company
organized or licensed under the laws of the United States or any state
or territory thereof having capital, surplus and undivided profits
aggregating at least $500,000,000 and A rated or better by S&P or
Moody's, (iv) money market mutual funds having assets in excess of
$2,000,000,000, (v) investments in asset-backed or mortgage-backed
securities, including investments in collateralized, adjustable rate
mortgage securities and those mortgage-backed securities which
are rated at least AA by S&P or Aa by Moody's or are of comparable
quality at the time of investment, and (vi) banker's acceptances
maturing not more than one year from the date of origin issued by a
bank or trust company organized or licensed under the laws of the
United States or any state or territory thereof and having a
capital, surplus and undivided profits aggregating at least
$500,000,000, and rated A or better by S&P or Moody's.
"Change in Control" shall mean, (i) the acquisition by any
Person or group (within the meaning of the Securities Exchange Act of
1934, as amended, and the rules of the Securities and Exchange
Commission thereunder as in effect on the date hereof), directly or
indirectly, beneficially or of record, of ownership or control of in
excess of 50% of the voting common stock of HFS Incorporated on a fully
diluted basis at any time or (ii) at any time, individuals who at the
date hereof constituted the Board of Directors of HFS Incorporated
(together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of HFS
Incorporated, as the case may be, was approved by a vote of the
majority of the directors then still in office who were either
directors at the date hereof or whose election or a nomination for
election was previously so approved) cease for any reason to constitute
a majority of the Board of Directors of HFS Incorporated then in office
or (iii) HFS Incorporated shall cease to own, directly or through
wholly-owned Subsidiaries, all of the capital stock of the Borrower,
free and clear of any direct or indirect Liens.
"Chase" shall mean The Chase Manhattan Bank, a New York
banking corporation.
"Closing Date" shall mean the date on which the conditions
precedent to the effectiveness of this Agreement as set forth in
Section 4.1 have been satisfied or waived, which shall in no event be
later than April 15, 1997.
"Code" shall mean the Internal Revenue Code of 1986 and the
rules and regulations issued thereunder, as now and hereafter in
effect, or any successor provision thereto.
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"Commitment" shall mean, with respect to each Lender, the
commitment of such Lender as set forth on or in (i) Schedule 1.1A
hereto, (ii) any applicable Assignment and Acceptance to which it may
be a party, and/or (iii) any agreement delivered pursuant to Section
2.25(d), as the case may be, as such Lender's Commitment may be
permanently terminated or reduced from time to time pursuant to Section
2.12 or 2.25 or Article 7 or changed pursuant to Section 9.3. The
Commitments shall automatically and permanently terminate on the
earlier of (a) the Maturity Date or (b) the date of termination in
whole pursuant to Section 2.12 or Article 7.
"Commitment Expiration Date" shall have the meaning assigned
to such term in Section 2.25(a).
"Commitment Period" shall mean the period from and including
the Closing Date to but not including the Maturity Date or such earlier
date on which the Commitments shall have been terminated in accordance
with the terms hereof.
"Competitive Bid" shall mean an offer by a Lender to make a
Competitive Loan pursuant to Section 2.4 in the form of Exhibit E-3.
"Competitive Bid Accept/Reject Letter" shall mean a
notification made by the Borrower pursuant to Section 2.4(d) in
the form of Exhibit E-4.
"Competitive Bid Rate" shall mean, as to any Competitive Bid
made by a Lender pursuant to Section 2.4(b), (a) in the case of a LIBOR
Loan, the Margin and (b) in the case of a Fixed Rate Loan, the fixed
rate of interest offered by the Lender making such Competitive Bid.
"Competitive Bid Request" shall mean a request made pursuant
to Section 2.4 in the form of Exhibit E-1.
"Competitive Borrowing" shall mean a Borrowing consisting of a
Competitive Loan or concurrent Competitive Loans from the Lender or
Lenders whose Competitive Bids for such Borrowing have been accepted by
the Borrower under the bidding procedure described in Section 2.4.
"Competitive Loan" shall mean a Loan from a Lender to the
Borrower pursuant to the bidding procedure described in Section 2.4.
Each Competitive Loan shall be a LIBOR Competitive Loan or a Fixed Rate
Loan.
"Competitive Note" shall have the meaning assigned to such
term in Section 2.8.
"Consolidated Assets" shall mean, at any date of
determination, the total assets of the Borrower and its Consolidated
Subsidiaries determined in accordance with GAAP.
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"Consolidated Net Income" shall mean, for any period for which
such amount is being determined, the net income (loss) of the Borrower
and its Consolidated Subsidiaries during such period determined on a
consolidated basis for such period taken as a single accounting period
in accordance with GAAP, provided that there shall be excluded (i)
income (or loss) of any Person (other than a Consolidated Subsidiary)
in which the Borrower or any of its Consolidated Subsidiaries has an
equity investment or comparable interest, except to the extent of the
amount of dividends or other distributions actually paid to the
Borrower or its Consolidated Subsidiaries by such Person during such
period, (ii) the income (or loss) of any Person accrued prior to the
date it becomes a Consolidated Subsidiary or is merged into or
consolidated with the Borrower or any of its Consolidated Subsidiaries
or the Person's assets are acquired by the Borrower or any of its
Consolidated Subsidiaries, (iii) the income of any Consolidated
Subsidiary to the extent that the declaration or payment of dividends
or similar distributions by that Consolidated Subsidiary of the income
is not at the time permitted by operation of the terms of its charter
or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Consolidated Subsidiary,
(iv) any extraordinary after-tax gains and (v) any extraordinary pretax
losses but only to the extent attributable to a write-down of financing
costs relating to any existing and future indebtedness.
"Consolidated Net Worth" shall mean, at any date of
determination, all amounts which would be included on a balance sheet
of the Borrower and its Consolidated Subsidiaries under stockholders'
equity as of such date in accordance with GAAP.
"Consolidated Subsidiaries" shall mean all Subsidiaries of the
Borrower that are required to be consolidated with the Borrower for
financial reporting purposes in accordance with GAAP.
"Contractual Obligation" shall mean, as to any Person, any
provision of any security issued by such Person or of any agreement,
instrument or other undertaking to which such Person is a party or by
which it or any of its property is bound.
"Currency" or "Currencies" shall mean the collective reference
to Dollars and Available Foreign Currencies.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Dollar Equivalent Amount" shall mean with respect to (i) any
amount of any Available Foreign Currency on any date, the equivalent
amount in Dollars of such amount of Available Foreign Currency, as
determined by the Administrative Agent using the applicable Exchange
Rate and (ii) any amount in Dollars, such amount.
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"Dollars" and "$" and "US$" shall mean lawful currency of the
United States.
"Environmental Laws" shall mean any and all federal,
provincial, state, local or municipal laws, rules, orders, regulations,
statutes, ordinances, codes, decrees or requirements of any
Governmental Authority regulating, relating to or imposing liability or
standards of conduct concerning, any Hazardous Material or
environmental protection or health and safety, as now or at any time
hereafter in effect, including without limitation, the Clean Water Act
also known as the Federal Water Pollution Control Act, 33 U.S.C. ss.ss.
1251 et seq., the Clean Air Act, 42 U.S.C. ss.ss. 7401 et seq., the
Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. ss.ss. 136
et seq., the Surface Mining Control and Reclamation Act, 30 U.S.C.
ss.ss. 1201 et seq., the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ss.ss. 9601 et seq., the
Superfund Amendment and Reauthorization Act of 1986, Public Law 99-499,
100 Stat. 1613, the Emergency Planning and Community Right to Know Act,
42 U.S.C. ss.ss. 11001 et seq., the Resource Conservation and Recovery
Act, 42 U.S.C. ss.ss. 6901 et seq., the Occupational Safety and Health
Act as amended, 29 U.S.C. ss. 655 and ss. 657, together, in each case,
with any amendment thereto, and the regulations adopted and
publications promulgated thereunder and all substitutions thereof.
"Environmental Liabilities" shall mean any liability,
contingent or otherwise (including any liability for damages, costs of
environmental remediation, fines, penalties or indemnities), of the
Borrower or any Subsidiary directly or indirectly resulting from or
based upon (a) violation of any Environmental Law, (b) the generation,
use, handling, transportation, storage, treatment or disposal of any
Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the
release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual
arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as such Act may be amended, and the regulations promulgated
thereunder.
"Event of Default" shall have the meaning given such term in
Article 7.
"Exchange Rate" shall mean, (i) with respect to any Available
Foreign Currency other than Canadian Dollars on any date, the rate at
which such Available Foreign Currency may be exchanged into Dollars, as
set forth on such date on the relevant Reuters currency page at or
about 11:00 A.M. New York City time on such date and (ii) with respect
to Canadian Dollars, the spot rate at which Canadian Dollars may be
exchanged into U.S. Dollars, as quoted by The Bank of Canada at
approximately 12:00 noon, Toronto time, as set forth on the Reuters
"BOFC" page. In the event that such rate does not appear on any such
Reuters page, the "Exchange Rate" with respect to such Available
Foreign Currency shall be determined by reference to such other
publicly available
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service for displaying exchange rates as may be agreed upon by the
Administrative Agent and the Borrower or, in the absence of such
agreement, such "Exchange Rate" shall instead be the Administrative
Agent's spot rate of exchange in the interbank market where its
foreign currency exchange operations in respect of such Available
Foreign Currency are then being conducted, at or about 10:00 A.M.,
local time, at such date for the purchase of Dollars with such
Available Foreign Currency, for delivery two Business Days later;
provided that if at the time of any such determination, no such spot
rate can reasonably be quoted, the Administrative Agent may use any
reasonable method (including obtaining quotes from three or more market
makers for such Available Foreign Currency) as it deems applicable to
determine such rate, and such determination shall be conclusive absent
manifest error (without prejudice to the determination of the
reasonableness of such method).
"Extension Request" means each request by the Borrower made
pursuant to Section 2.25 for the Lenders to extend the Maturity Date,
which shall contain the information in respect of such extension
specified in Exhibit G and shall be delivered to the Administrative
Agent in writing.
"Facility Fee" shall have the meaning given such term in
Section 2.7.
"Fixed Rate Borrowing" shall mean a Borrowing comprised of
Fixed Rate Loans.
"Fixed Rate Loan" shall mean any Competitive Loan bearing
interest at a fixed percentage rate per annum (expressed in the form of
a decimal to no more than four decimal places) specified by the Lender
making such Loan in its Competitive Bid.
"Fundamental Documents" shall mean this Agreement, any
Revolving Credit Notes, any Competitive Notes and any other ancillary
documentation which is required to be, or is otherwise, executed by the
Borrower and delivered to the Administrative Agent in connection with
this Agreement.
"GAAP" shall mean generally accepted accounting principles
consistently applied (except for accounting changes in response to FASB
releases or other authoritative pronouncements) provided, however, that
all calculations made pursuant to Sections 6.7 and 6.8 and the related
definitions shall have been computed based on such generally accepted
accounting principles as are in effect on the date hereof.
"Governmental Authority" shall mean any federal, provincial,
state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, or any court, in each case, whether
of the United States or Canada or foreign.
"Guaranty" shall mean, as to any Person, any direct or
indirect obligation of such Person guaranteeing or intended to
guarantee any Indebtedness, Capital Lease, dividend
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or other monetary obligation ("primary obligation") of any other
Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such
Person, whether or not contingent, (a) to purchase any such primary
obligation or any property constituting direct or indirect security
therefor, (b) to advance or supply funds (i) for the purchase or
payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services, in each case, primarily
for the purpose of assuring the owner of any such primary obligation
of the repayment of such primary obligation or (d) as a general
partner of a partnership or a joint venturer of a joint venture in
respect of indebtedness of such partnership or such joint venture
which is treated as a general partnership for purposes of Applicable
Law. The amount of any Guaranty shall be deemed to be an amount
equal to the stated or determinable amount (or portion thereof) of the
primary obligation in respect of which such Guaranty is made or, if not
stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such Person is required to
perform thereunder); provided that the amount of any Guaranty shall be
limited to the extent necessary so that such amount does not exceed the
value of the assets of such Person (as reflected on a consolidated
balance sheet of such Person prepared in accordance with GAAP) to which
any creditor or beneficiary of such Guaranty would have recourse.
Notwithstanding the foregoing definition, the term "Guaranty" shall not
include any direct or indirect obligation of a Person as a general
partner of a general partnership or a joint venturer of a joint venture
in respect of Indebtedness of such general partnership or joint
venture, to the extent such Indebtedness is contractually non-recourse
to the assets of such Person as a general partner or joint venturer
(other than assets comprising the capital of such general partnership
or joint venture).
"Hazardous Materials" shall mean any flammable materials,
explosives, radioactive materials, hazardous materials, hazardous
wastes, hazardous or toxic substances, or similar materials defined as
such in any Environmental Law.
"Indebtedness" shall mean (i) all indebtedness, obligations
and other liabilities of the Borrower and its Subsidiaries which are,
at the date as of which Indebtedness is to be determined, includable as
liabilities in a consolidated balance sheet of the Borrower and its
Subsidiaries, other than (x) accounts payable and accrued expenses, (y)
advances from clients obtained in the ordinary course of the relocation
management services business of the Borrower and its Subsidiaries and
(z) current and deferred income taxes and other similar liabilities,
plus (ii) without duplicating any items included in Indebtedness
pursuant to the foregoing clause (i), the maximum aggregate amount of
all liabilities of the Borrower or any of its Subsidiaries under any
Guaranty, indemnity or similar undertaking given or assumed of, or in
respect of, the indebtedness, obligations or other liabilities, assets,
revenues, income or dividends of any Person other than the Borrower or
one of its Subsidiaries and (iii) all other obligations or liabilities
of the Borrower or any
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of its Subsidiaries in relation to the discharge of the obligations
of any Person other than the Borrower or one of it Subsidiaries.
"Interest Payment Date" shall mean, with respect to any
Borrowing, the last day of the Interest Period applicable thereto and,
in the case of a LIBOR Borrowing with an Interest Period of more than
three months' duration or a Fixed Rate Borrowing with an Interest
Period of more than 90 days' duration, each day that would have been an
Interest Payment Date had successive Interest Periods of three months'
duration or 90 days' duration, as the case may be, been applicable to
such Borrowing, and, in addition, the date of any refinancing or
conversion of a Borrowing with, or to, a Borrowing of a different
Interest Rate Type.
"Interest Period" shall mean (a) as to any LIBOR Borrowing,
the period commencing on the date of such Borrowing, and ending on the
numerically corresponding day (or, if there is no numerically
corresponding day, on the last day) in the calendar month that is 1, 2,
3, 6 or, subject to each Lender's approval, 12 months thereafter, as
the Borrower may elect, (b) as to any ABR Borrowing, the period
commencing on the date of such Borrowing and ending on the earliest of
(i) the next succeeding March 31, June 30, September 30 or December 31,
commencing March 31, 1997, (ii) the Maturity Date and (iii) the date
such Borrowing is refinanced with a Borrowing of a different Interest
Rate Type in accordance with Section 2.6 or is prepaid in accordance
with Section 2.13, (c) as to any Fixed Rate Borrowing, the period
commencing on the date of such Borrowing and ending on the date
specified in the Competitive Bids in which the offer to make the Fixed
Rate Loans comprising such Borrowing were extended, which shall not be
earlier than seven days after the date of such Borrowing or later than
360 days after the date of such Borrowing; provided that with respect
to Loans made by an Objecting Lender, no Interest Period with respect
to such Objecting Lender's Loans shall end after such Objecting
Lender's Commitment Expiration Date; and provided, further, that (i) if
any Interest Period would end on a day other than a Business Day, such
Interest Period shall be extended to the next succeeding Business Day
unless, in the case of LIBOR Loans only, such next succeeding Business
Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (ii) no
Interest Period with respect to any LIBOR Borrowing or Fixed Rate
Borrowing may be selected which would result in the aggregate amount of
LIBOR Loans and Fixed Rate Loans having Interest Periods ending after
any day on which a Commitment reduction is scheduled to occur being in
excess of the Total Commitment scheduled to be in effect after such
date. Interest shall accrue from, and including, the first day of an
Interest Period to, but excluding, the last day of such Interest
Period.
"Interest Rate Protection Agreement" shall mean any interest
rate swap agreement, interest rate cap agreement or other similar
financial agreement or arrangement.
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"Interest Rate Type" when used in respect of any Loan or
Borrowing, shall refer to the Rate by reference to which interest on
such Loan or on the Loans comprising such Borrowing is determined. For
purposes hereof, "Rate" shall include LIBOR, the Alternate Base Rate
and the Fixed Rate.
"Issuing Lender" shall mean Chase or Chase Delaware, and/or
such other of the Lenders as may be designated in writing by the
Borrower and which agrees in writing to act as such in accordance with
the terms hereof.
"L/C Exposure" shall mean, at any time, the amount expressed
in Dollars of the aggregate face amount of all drafts which may then or
thereafter be presented by beneficiaries under all Letters of Credit
then outstanding plus (without duplication) the face amount of all
drafts which have been presented under Letters of Credit but have not
yet been paid or have been paid but not reimbursed.
"Lender and "Lenders" shall mean the financial institutions
whose names appear at the foot hereof and any assignee of a Lender
pursuant to Section 9.3(b).
"Lending Office" shall mean, with respect to any of the
Lenders, the branch or branches (or affiliate or affiliates) from which
any such Lender's LIBOR Loans, Fixed Rate Loans or ABR Loans, as the
case may be, are made or maintained and for the account of which all
payments of principal of, and interest on, such Lender's LIBOR Loans,
Fixed Rate Loans or ABR Loans are made, as notified to the
Administrative Agent from time to time.
"Letters of Credit" shall mean the letters of credit issued
pursuant to Section 2.24.
"LIBOR" shall mean, with respect to any LIBOR Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next Basis Point) equal to the rate at which deposits
in Dollars or the applicable Available Foreign Currency, as the case
may be, approximately equal in principal amount to (a) in the case of a
Revolving Credit Borrowing, Chase's portion of such LIBOR Borrowing and
(b) in the case of a Competitive Borrowing, a principal amount that
would have been Chase's portion of such Competitive Borrowing had such
Competitive Borrowing been a Revolving Credit Borrowing, and for a
maturity comparable to such Interest Period, are offered to the
principal London office of Chase in immediately available funds in the
London Interbank Market (or such other interbank eurocurrency market
where the foreign currency and exchange operations in respect of
Dollars or such applicable Available Foreign Currency, as the case may
be, are then being conducted for delivery on the first day of such
Interest Period) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period.
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"LIBOR Borrowing" shall mean a Borrowing comprised of LIBOR
Loans.
"LIBOR Competitive Loan" shall mean any Competitive Loan
bearing interest at a rate determined by reference to LIBOR in
accordance with the provisions of Article 2.
"LIBOR Loan" shall mean any LIBOR Competitive Loan or LIBOR
Revolving Credit Loan.
"LIBOR Revolving Credit Loan" shall mean any Loan (other than
a Competitive Loan) bearing interest at a rate determined by reference
to LIBOR in accordance with the provisions of Article 2.
"LIBOR Spread" shall mean, at any date or any period of
determination, the LIBOR Spread that would be in effect on such date or
during such period pursuant to the chart set forth in Section 2.22
based on the rating of the Borrower's senior unsecured long-term debt.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind whatsoever (including any
conditional sale or other title retention agreement, any lease in the
nature thereof or agreement to give any financing statement under the
Uniform Commercial Code of any jurisdiction).
"Loan" shall mean a Competitive Loan or a Revolving Credit
Loan, whether made as a LIBOR Loan, an ABR Loan or a Fixed Rate Loan,
as permitted hereby.
"Margin" shall mean, as to any LIBOR Competitive Loan, the
margin (expressed as a percentage rate per annum in the form of a
decimal to four decimal places) to be added to, or subtracted from,
LIBOR in order to determine the interest rate applicable to such Loan,
as specified in the Competitive Bid relating to such Loan.
"Margin Stock" shall be as defined in Regulation U of the
Board.
"Material Adverse Effect" shall mean a material adverse effect
on the business, assets, operations or condition, financial or
otherwise, of the Borrower and its Subsidiaries taken as a whole.
"Material Subsidiary" shall mean any Subsidiary of the
Borrower which together with its Subsidiaries at the time of
determination had assets constituting 10% or more of Consolidated
Assets, accounts for 10% or more of Consolidated Net Worth, or accounts
for 10% or more of the revenues of the Borrower and its Consolidated
Subsidiaries for the Rolling Period immediately preceding the date of
determination.
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"Maturity Date" shall mean the fifth anniversary of the
Closing Date or such later date as shall be determined pursuant to the
provisions of Section 2.25 with respect to non-Objecting Lenders.
"Moody's" shall mean Moody's Investors Service Inc.
"Multiemployer Plan" shall mean a plan described in Section
3(37) of ERISA.
"non-Objecting Lender" shall mean any Lender that is not an
Objecting Lender.
"Notes" shall mean the Competitive Notes and the Revolving
Credit Notes.
"Objecting Lender" shall mean any Lender that does not consent
to the extension of the Maturity Date pursuant to Section 2.25.
"Obligations" shall mean the obligation of the Borrower to
make due and punctual payment of principal of, and interest on
(including post-petition interest, whether or not allowed), the Loans,
the Facility Fee, reimbursement obligations in respect of Letters of
Credit, and all other monetary obligations of the Borrower to the
Administrative Agent, any Issuing Lender or any Lender under this
Agreement, the Notes or the Fundamental Documents or with respect to
any Interest Rate Protection Agreements entered into between the
Borrower or any of its Subsidiaries and any Lender.
"Participant" shall have the meaning assigned to such term in
Section 9.3(g).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"Permitted Encumbrances" shall mean Liens permitted under
Section 6.5.
"Person" shall mean any natural person, corporation, division
of a corporation, partnership, limited liability company, trust, joint
venture, association, company, estate, unincorporated organization or
government or any agency or political subdivision thereof.
"Plan" shall mean an employee pension benefit plan described
in Section 3(2) of ERISA, other than a Multiemployer Plan.
"Pro Forma Balance Sheet" shall have the meaning assigned to
such term in Section 3.4.
"Pro Forma Basis" shall mean, in connection with any
transaction for which a determination on a Pro Forma Basis is required
to be made hereunder, that such
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determination shall be made (i) after giving effect to any issuance of
Indebtedness, any acquisition, any disposition or any other
transaction (as applicable) and (ii) assuming that the issuance of
Indebtedness, acquisition, disposition or other transaction and, if
applicable, the application of any proceeds therefrom, occurred
at the beginning of the most recent Rolling Period ending at least
thirty (30) days prior to the date on which such issuance of
Indebtedness, acquisition, disposition or other transaction occurred.
"Reportable Event" shall mean any reportable event as defined
in Section 4043(c) of ERISA, other than a reportable event as to which
provision for 30-day notice to the PBGC would be waived under
applicable regulations had the regulations in effect on the Closing
Date been in effect on the date of occurrence of such reportable event.
"Required Lenders" shall mean at any time, Lenders holding
Commitments representing (in Dollar amounts) 51% or more of the Total
Commitment, except that (i) for purposes of determining the Lenders
entitled to declare the principal of and the interest on the Loans and
the Notes and all other amounts payable hereunder or thereunder to be
forthwith due and payable pursuant to Article 7 and (ii) at all times
after the termination of the Total Commitment in its entirety,
"Required Lenders" shall mean Lenders holding 51% or more of the
aggregate principal amount of the Loans and L/C Exposure at the time
outstanding.
"Revolving Credit Borrowing" shall mean a Borrowing consisting
of simultaneous Revolving Credit Loans from each of the Lenders.
"Revolving Credit Borrowing Request" shall mean a request made
pursuant to Section 2.5 in the form of Exhibit F.
"Revolving Credit Loans" shall mean the Loans made by the
Lenders to the Borrower pursuant to a notice given by the Borrower
under Section 2.5(a). Each Revolving Credit Loan shall be a LIBOR
Revolving Credit Loan or an ABR Loan.
"Revolving Credit Note" shall have the meaning assigned to
such term in Section 2.8.
"Rolling Period" shall mean with respect to any fiscal
quarter, such fiscal quarter and the three immediately preceding fiscal
quarters considered as a single accounting period.
"S&P" shall mean Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies.
"Special Purpose Vehicle Subsidiary" shall mean PHH Caribbean
Leasing, Inc. and any Subsidiary engaged in the fleet-leasing
management business which (i) is, at any
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one time, a party to one or more lease agreements with only one
lessee and (ii) finances, at any one time, its investment in lease
agreements or vehicles with only one lender, which lender may be the
Borrower if and to the extent that such loans and/or advances by the
Borrower are not prohibited hereby.
"Statutory Reserves" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator
of which is the number one minus the aggregate of the maximum reserve
percentages (including any marginal, special, emergency or supplemental
reserves) expressed as a decimal established by the Board and any other
banking authority to which the Administrative Agent or any Lender is
subject, for Eurocurrency Liabilities (as defined in Regulation D of
the Board) (or, at any time when such Lender may be required by the
Board or by any other Governmental Authority, whether within the United
States or in another relevant jurisdiction, to maintain reserves
against any other category of liabilities which includes deposits by
reference to which LIBOR is determined as provided in this Agreement or
against any category of extensions of credit or other assets of such
Lender which includes any such LIBOR Loans). Such reserve percentages
shall include those imposed under Regulation D of the Board. LIBOR
Loans shall be deemed to constitute Eurocurrency Liabilities and as
such shall be deemed to be subject to such reserve requirements without
benefit of or credit for proration, exceptions or offsets which may be
available from time to time to any Lender under Regulation D of the
Board. Statutory Reserves shall be adjusted automatically on and as of
the effective date of any change in any reserve percentage.
"Subsidiary" shall mean with respect to any Person, any
corporation, association, joint venture, partnership or other business
entity (whether now existing or hereafter organized) of which at least
a majority of the voting stock or other ownership interests having
ordinary voting power for the election of directors (or the equivalent)
is, at the time as of which any determination is being made, owned or
controlled by such Person or one or more subsidiaries of such Person or
by such Person and one or more subsidiaries of such Person. Unless
otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of the Borrower.
"Supermajority Lenders" shall mean Lenders which have
Commitments representing at least 75% of the aggregate Dollar amount of
the Total Commitments.
"364-Day Credit Agreement" shall mean the 364-Day Competitive
Advance and Revolving Credit Agreement, dated as of the date hereof,
among the Borrower, PHH Vehicle Management Services Inc., the lenders
referred to therein, Chase, as Administrative Agent, and The Chase
Manhattan Bank of Canada, as Canadian Agent.
"Total Commitment" shall mean, at any time, the aggregate
amount of the Lenders' Commitments as in effect at such time.
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"United States" shall mean the United States of America.
"Working Day" shall mean any Business Day on which dealings in
foreign currencies and exchange between banks may be carried on in
London, England and in New York, New York.
2. THE LOANS
SECTION 2.1. Commitments
-----------
(a) Subject to the terms and conditions hereof and relying
upon the representations and warranties herein set forth, each Lender agrees,
severally and not jointly, to make Revolving Credit Loans to the Borrower in
Dollars, at any time and from time to time on and after the Closing Date and
until the earlier of the Maturity Date and the termination of the Commitment of
such Lender, in an aggregate principal amount at any time outstanding not to
exceed such Lender's Commitment minus the sum of such Lender's pro rata share of
the then current L/C Exposure plus the outstanding Dollar Equivalent Amount by
which the Competitive Loans outstanding at such time shall be deemed to have
used such Lender's Commitment pursuant to Section 2.18, subject, however, to the
conditions that (1) at no time shall (i) the sum of (A) the outstanding
aggregate principal amount of all Revolving Credit Loans made by all Lenders
plus (B) the then current L/C Exposure plus (C) the outstanding aggregate
principal Dollar Equivalent Amount of all Competitive Loans made by the Lenders
exceed (ii) the Total Commitment and (2) at all times the outstanding aggregate
principal amount of all Revolving Credit Loans made by each Lender shall equal
the product of (i) the percentage that its Commitment represents of the Total
Commitment times (ii) the outstanding aggregate principal amount of all
Revolving Credit Loans. During the Commitment Period, the Borrower may use the
Commitments of the Lenders by borrowing, prepaying the Loans in whole or in
part, and reborrowing, all in accordance with the terms and conditions hereof.
(b) The Commitments of the Lenders may be terminated or
reduced from time to time pursuant to Section 2.12 or Article 7.
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SECTION 2.2. Loans.
-----
(a) Each Revolving Credit Loan shall be made as part of a
Borrowing from the Lenders ratably in accordance with their respective
applicable Commitments; provided that the failure of any Lender to make any
Revolving Credit Loan shall not in itself relieve any other Lender of its
obligation to lend hereunder (it being understood, however, that no Lender shall
be responsible for the failure of any other Lender to make any Loan required to
be made by such other Lender). Each Competitive Loan shall be made in accordance
with the procedures set forth in Section 2.4. The Revolving Credit Loans or
Competitive Loans comprising any Borrowing shall be (i) in the case of
Competitive Loans and LIBOR Loans, in an aggregate principal Dollar Equivalent
Amount that is an integral multiple of $5,000,000 and not less than $10,000,000
and (ii) in the case of ABR Loans, in an aggregate principal amount that is an
integral multiple of $500,000 and not less than $5,000,000 (or if less, an
aggregate principal amount equal to the remaining balance of the available Total
Commitment).
(b) Each Competitive Borrowing shall be comprised entirely of
LIBOR Competitive Loans or Fixed Rate Loans, and each Revolving Credit Borrowing
shall be comprised entirely of LIBOR Revolving Credit Loans or ABR Loans, as the
Borrower may request pursuant to Section 2.4 or 2.5, as applicable. Each Lender
may at its option make any LIBOR Loan by causing any domestic or foreign branch
or Affiliate of such Lender to make such Loan, provided that any exercise of
such option shall not affect the obligation of the Borrower to repay such Loan
in accordance with the terms of this Agreement and the applicable Note.
Borrowings of more than one Interest Rate Type may be outstanding at the same
time; provided that the Borrower shall not be entitled to request any Borrowing
that, if made, would result in an aggregate of more than twenty (20) separate
Loans (other than Competitive Loans) of any Lender being outstanding hereunder
at any one time. For purposes of the calculation required by the immediately
preceding sentence, LIBOR Revolving Credit Loans having different Interest
Periods, regardless of whether they commence on the same date, shall be
considered separate Loans and all Loans of a single Interest Rate Type made on a
single date shall be considered a single Loan if such Loans have a common
Interest Period.
(c) Subject to Section 2.6, each Lender shall make each Loan
to be made by it hereunder on the proposed date thereof by making funds
available at the office of the Administrative Agent specified in Section 9.1 for
credit to PHH Corporation Clearing Account, Account No. 323-5-11260 (Reference:
PHH Corporation Credit Agreement dated as of March 4, 1997) or as otherwise
directed by the Administrative Agent no later than 1:00 P.M. New York City time
in the case of Loans other than ABR Loans, and 4:00 P.M. New York City time in
the case of ABR Loans, in each case, in immediately available funds. Upon
receipt of the funds to be made available by the Lenders to fund any Borrowing
hereunder, the Administrative Agent shall disburse such funds by depositing them
into an account of the Borrower maintained with the Administrative Agent.
Competitive Loans shall be made by the Lender or Lenders whose Competitive Bids
therefor are accepted pursuant to Section 2.4 in the amounts so accepted and
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Revolving Credit Loans shall be made by all the Lenders pro rata in accordance
with Section 2.1 and this Section 2.2.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request any Borrowing if the Interest Period
requested with respect thereto would end after the Maturity Date.
SECTION 2.3. Use of Proceeds.
---------------
The proceeds of the Loans shall be used for working capital
and general corporate purposes.
SECTION 2.4. Competitive Bid Procedure.
-------------------------
(a) In order to request Competitive Bids, the Borrower shall
hand deliver or telecopy to the Administrative Agent a duly completed
Competitive Bid Request in the form of Exhibit E-1, to be received by the
Administrative Agent (i) in the case of a LIBOR Competitive Borrowing, not later
than 2:00 p.m., New York City time, four Working Days before a proposed
Competitive Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later
than 2:00 p.m., New York City time, one Business Day before a proposed
Competitive Borrowing. Each Competitive Bid Request shall specify the requested
Currency. No ABR Loan shall be requested in, or made pursuant to, a Competitive
Bid Request. A Competitive Bid Request that does not conform substantially to
the format of Exhibit E-1 may be rejected in the Administrative Agent's sole
discretion, and the Administrative Agent shall promptly notify the Borrower of
such rejection by telecopier. Such request for Competitive Bids shall in each
case refer to this Agreement and specify (i) whether the Borrowing then being
requested is to be a LIBOR Borrowing or a Fixed Rate Borrowing, (ii) the date of
such Borrowing (which shall be a Business Day in the case of a Fixed Rate
Borrowing and a Working Day in the case of a LIBOR Competitive Borrowing) and
the aggregate principal Dollar Equivalent Amount thereof, which shall be in a
minimum principal Dollar Equivalent Amount of $10,000,000 and in an integral
multiple of $5,000,000, and (iii) the Interest Period with respect thereto
(which may not end after the Maturity Date). Promptly after its receipt of a
Competitive Bid Request that is not rejected as aforesaid, the Administrative
Agent shall invite by telecopier (in the form set forth in Exhibit E-2) the
Lenders to bid, on the terms and subject to the conditions of this Agreement, to
make Competitive Loans pursuant to such Competitive Bid Request.
(b) Each Lender may, in its sole discretion, make one or more
Competitive Bids to the Borrower responsive to a Competitive Bid Request. Each
Competitive Bid by a Lender must be received by the Administrative Agent via
telecopier, in the form of Exhibit E-3, (i) in the case of a LIBOR Competitive
Borrowing, not later than 9:30 a.m., New York City time, three Working Days
before a proposed Competitive Borrowing and (ii) in the case of a Fixed Rate
Borrowing, not later than 9:30 a.m., New York City time, on the day of a
proposed Competitive Borrowing. Multiple Competitive Bids will be accepted by
the Administrative Agent.
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Competitive Bids that do not conform substantially to the format of Exhibit E-3
may be rejected by the Administrative Agent after conferring with, and
upon the instruction of, the Borrower, and the Administrative Agent
shall notify the Lender making such nonconforming Competitive Bid of such
rejection as soon as practicable. Each Competitive Bid shall refer to this
Agreement and specify (i) the principal Dollar Equivalent Amount (which
shall be in a minimum principal Dollar Equivalent Amount of $10,000,000
and in an integral multiple of $5,000,000 and which may equal the entire
principal amount of the Competitive Borrowing requested by the Borrower) of the
Competitive Loan or Loans that the applicable Lender is willing to make to the
Borrower, (ii) the Competitive Bid Rate or Rates at which such Lender is
prepared to make such Competitive Loan or Loans and (iii) the Interest Period or
Interest Periods with respect thereto. If any Lender shall elect not to make a
Competitive Bid, such Lender shall so notify the Administrative Agent via
telecopier (i) in the case of LIBOR Competitive Loans, not later than 9:30 a.m.,
New York City time, three Working Days before a proposed Competitive Borrowing
and (ii) in the case of Fixed Rate Loans, not later than 9:30 a.m., New York
City time, on the day of a proposed Competitive Borrowing; provided that failure
by any Lender to give such notice shall not cause such Lender to be obligated to
make any Competitive Loan as part of such proposed Competitive Borrowing. A
Competitive Bid submitted by a Lender pursuant to this paragraph (b) shall be
irrevocable.
(c) The Administrative Agent shall promptly notify the
Borrower by telecopier of all the Competitive Bids made, the Competitive Bid
Rate or Rates and the principal amount of each Competitive Loan in respect of
which a Competitive Bid was made and the identity of the Lender that made each
Competitive Bid. The Administrative Agent shall send a copy of all Competitive
Bids to the Borrower for its records as soon as practicable after completion of
the bidding process set forth in this Section 2.4.
(d) The Borrower may in its sole and absolute discretion,
subject only to the provisions of this paragraph (d), accept or reject any
Competitive Bid referred to in paragraph (c) above. The Borrower shall notify
the Administrative Agent by telephone, promptly confirmed by telecopier in the
form of a Competitive Bid Accept/Reject Letter whether and to what extent it has
decided to accept or reject any or all of the Competitive Bids referred to in
paragraph (c) above, (i) in the case of a LIBOR Competitive Borrowing, not later
than 10:30 a.m., New York City time, three Working Days before a proposed
Competitive Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later
than 10:30 a.m., New York City time, on the day of a proposed Competitive
Borrowing; provided that (A) the failure by the Borrower to give such notice
shall be deemed to be a rejection of all the Competitive Bids referred to in
paragraph (c) above, (B) the Borrower shall not accept a Competitive Bid made at
a particular Competitive Bid Rate if the Borrower has decided to reject a
Competitive Bid made at a lower Competitive Bid Rate, (C) the aggregate amount
of the Competitive Bids accepted by the Borrower shall not exceed the principal
amount specified in the Competitive Bid Request, (D) if the Borrower shall
accept a Competitive Bid or Competitive Bids made at a particular Competitive
Bid Rate but the amount of such Competitive Bid or Competitive Bids shall cause
the total amount of Competitive Bids to be accepted by the Borrower to exceed
the amount specified in the Competitive Bid Request,
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then the Borrower shall accept a portion of such Competitive Bid or Competitive
Bids in an amount equal to the amount specified in the Competitive Bid
Request less the amount of all other Competitive Bids accepted at lower
Competitive Bid Rates with respect to such Competitive Bid Request (it being
understood that acceptance in the case of multiple Competitive Bids at such
Competitive Bid Rate, shall be made pro rata in accordance with the amount of
each such Competitive Bid at such Competitive Bid Rate), (E) except pursuant
to clause (D) above, no Competitive Bid shall be accepted for a Competitive
Loan unless such Competitive Loan is in a minimum principal Dollar Equivalent
Amount of $10,000,000 and an integral multiple of $5,000,000 and (F) the
Borrower may not accept Competitive Bids for Competitive Loans in any
Currency other than the Currency specified in the related Competitive
Bid Request; and provided, further, that if a Competitive Loan must be in an
amount less than the Dollar Equivalent Amount of $10,000,000 because of the
provisions of clause (D) above, such Competitive Loan shall be in a minimum
principal Dollar Equivalent Amount of $1,000,000 or any integral multiple
thereof, and in calculating the pro rata allocation of acceptances of portions
of multiple Competitive Bids at a particular Competitive Bid Rate pursuant to
clause (D), the amounts shall be rounded to integral multiples of $1,000,000 in
a manner that shall be in the discretion of the Borrower. A notice given by the
Borrower pursuant to this paragraph (d) shall be irrevocable.
(e) The Administrative Agent shall promptly notify each
bidding Lender whether its Competitive Bid has been accepted (and if so, in what
amount and at what Competitive Bid Rate) by telecopy sent by the Administrative
Agent, and each successful bidder will thereupon become bound, subject to the
other applicable conditions hereof, to make the Competitive Loan in respect of
which its Competitive Bid has been accepted in the applicable Currency.
(f) If the Administrative Agent shall elect to submit a
Competitive Bid in its capacity as a Lender, it shall submit such Competitive
Bid directly to the Borrower one quarter of an hour earlier than the latest time
at which the other Lenders are required to submit their Competitive Bids to the
Administrative Agent pursuant to paragraph (b) above.
(g) All notices required by this Section 2.4 shall be given in
accordance with Section 9.1.
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SECTION 2.5. Revolving Credit Borrowing Procedure.
------------------------------------
In order to effect a Revolving Credit Borrowing, the Borrower
shall hand deliver or telecopy to the Administrative Agent a Borrowing notice in
the form of Exhibit F (a) in the case of a Borrowing of a LIBOR Revolving Credit
Loan, not later than 2:00 p.m., New York City time, three Working Days before a
proposed Borrowing, and (b) in the case of an ABR Borrowing, not later than 2:00
p.m., New York City time, on the day of a proposed Borrowing. No Fixed Rate Loan
or LIBOR Competitive Loan shall be requested or made pursuant to a Revolving
Credit Borrowing Request. Such notice shall be irrevocable and shall in each
case specify (a) whether the Borrowing then being requested is to be a Borrowing
of a LIBOR Revolving Credit Loan or an ABR Borrowing, (b) the date of such
Revolving Credit Borrowing (which shall be a Working Day) and the amount thereof
and (c) if such Borrowing is to be a Borrowing of LIBOR Revolving Credit Loans,
the Interest Period with respect thereto. If no election as to the Interest Rate
Type of a Revolving Credit Borrowing is specified in any such notice, then the
requested Revolving Credit Borrowing shall be an ABR Borrowing. If no Interest
Period with respect to any Borrowing of LIBOR Revolving Credit Loans is
specified in any such notice, then the Borrower shall be deemed to have selected
an Interest Period of one month's duration. If the Borrower shall not have given
notice in accordance with this Section 2.5 of its election to refinance a
Revolving Credit Borrowing prior to the end of the Interest Period in effect for
such Borrowing, then the Borrower shall (unless such Borrowing is repaid at the
end of such Interest Period) be deemed to have given notice of an election to
refinance such Borrowing with an ABR Borrowing. The Administrative Agent shall
promptly advise the Lenders of any notice given pursuant to this Section 2.5 and
of each such Lender's portion of the requested Borrowing.
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SECTION 2.6. Refinancings.
------------
The Borrower may refinance all or any part of any Borrowing
made by it with a Borrowing of the same or a different Interest Rate Type made
pursuant to Section 2.4 or pursuant to a notice under Section 2.5, subject to
the conditions and limitations set forth herein and elsewhere in this Agreement,
including refinancings of Competitive Borrowings with Revolving Credit
Borrowings in Dollars and Revolving Credit Borrowings in Dollars with
Competitive Borrowings; provided that at any time after the occurrence, and
during the continuation, of a Default or an Event of Default, a Revolving Credit
Borrowing of Dollars or portion thereof may only be refinanced with an ABR
Borrowing. Any Borrowing or part thereof so refinanced shall be deemed to be
repaid in accordance with Section 2.8 with the proceeds of a new Borrowing
hereunder and the proceeds of the new Borrowing, to the extent they do not
exceed the principal amount of the Borrowing being refinanced, shall not be paid
by the applicable Lenders to the Administrative Agent or by the Administrative
Agent to the Borrower pursuant to Section 2.2(c); provided that (a) if the
principal amount extended by a Lender in a refinancing is greater than the
principal amount extended by such Lender in the Borrowing being refinanced, then
such Lender shall pay such difference to the Administrative Agent for
distribution to the Lenders described in clause (b) below, (b) if the principal
amount extended by a Lender in the Borrowing being refinanced is greater than
the principal amount being extended by such Lender in the refinancing, the
Administrative Agent shall return the difference to such Lender out of amounts
received pursuant to clause (a) above, and (c) to the extent any Lender fails to
pay the Administrative Agent amounts due from it pursuant to clause (a) above,
any Loan or portion thereof being refinanced with such amounts shall not be
deemed repaid in accordance with Section 2.8 and, to the extent of such failure,
the Borrower shall pay such amount to the Administrative Agent as required by
Section 2.10; and (d) to the extent the Borrower fails to pay to the
Administrative Agent any amounts due in accordance with Section 2.8 as a result
of the failure of a Lender to pay the Administrative Agent any amounts due as
described in clause (c) above, the portion of any refinanced Loan deemed not
repaid shall be deemed to be outstanding solely to the Lender which has failed
to pay the Administrative Agent amounts due from it pursuant to clause (a) above
to the full extent of such Lender's portion of such Loan.
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SECTION 2.7. Fees.
----
(a) The Borrower agrees to pay to each Lender, through the
Administrative Agent, on each March 31, June 30, September 30 and December 31,
commencing March 31, 1997, and on the date on which the Commitment of such
Lender shall be terminated as provided herein, a facility fee (a "Facility
Fee",) at the rate per annum from time to time in effect in accordance with
Section 2.22, on the amount of the Commitment of such Lender, whether used or
unused, during the preceding quarter (or shorter period commencing with the
Closing Date, or ending with the Maturity Date or any date on which the
Commitment of such Lender shall be terminated). All Facility Fees shall be
computed on the basis of the actual number of days elapsed in a year of 360
days. The Facility Fee due to each Lender shall commence to accrue on the
Closing Date, shall be payable in arrears and shall cease to accrue on the
earlier of the Maturity Date and the termination of the Commitment of such
Lender as provided herein.
(b) The Borrower agrees to pay the Administrative Agent, for
its own account, the fees at the times and in the amounts provided for in the
letter agreement dated February 4, 1997 among the Borrower, Chase and Chase
Securities Inc.
(c) All fees shall be paid on the dates due, in immediately
available funds, to the Administrative Agent for distribution, if and as
appropriate, among the Lenders. Once paid, none of the fees shall be refundable
under any circumstances.
SECTION 2.8. Repayment of Loans; Evidence of Debt.
------------------------------------
(a) The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of each Lender the then unpaid principal
amount of each Revolving Credit Loan of such Lender on the Maturity Date (or
such earlier date on which the Revolving Credit Loans become due and payable
pursuant to Article 7); provided that the Revolving Credit Loans made by
Objecting Lenders shall be repaid as provided in Section 2.25. The Borrower
hereby further agrees to pay to the Administrative Agent interest on the unpaid
principal amount of the Revolving Credit Loans from time to time outstanding
from the date hereof until payment in full thereof at the rates per annum, and
on the dates, set forth in Section 2.9.
(b) The Borrower unconditionally promises to pay to the
Administrative Agent, for the account of each Lender that makes a Competitive
Loan, on the last day of the Interest Period applicable to such Competitive
Loan, the principal amount of such Competitive Loan. The Borrower further
unconditionally promises to pay interest on each such Competitive Loan for the
period from and including the date of Borrowing of such Competitive Loan on the
unpaid principal amount thereof from time to time outstanding at the applicable
rate per annum determined as provided in, and payable as specified in, Section
2.9.
(c) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Borrower to such
Lender resulting from each Loan of
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such Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time under this Agreement.
(d) The Administrative Agent shall maintain the Register
pursuant to Section 9.3(e), and a subaccount therein for each Lender, in which
shall be recorded (i) the amount of each Loan made hereunder, the Interest Rate
Type thereof and each Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) both the amount of any sum received
by the Administrative Agent hereunder from the Borrower and each Lender's share
thereof.
(e) The entries made in the Register and the accounts of each
Lender maintained pursuant to Section 2.8(c) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided that the failure of any
Lender or the Administrative Agent to maintain the Register or any such account,
or any error therein, shall not in any manner affect the obligation of the
Borrower to repay (with applicable interest) the Loans made to the Borrower by
such Lender in accordance with the terms of this Agreement.
(f) The Borrower agrees that, upon the request to the
Administrative Agent by any Lender, the Borrower will execute and deliver to
such Lender a promissory note of the Borrower evidencing the Revolving Credit
Loans of such Lender, substantially in the form of Exhibit A-1 with appropriate
insertions as to date and principal amount (a "Revolving Credit Note").
(g) The Borrower agrees that, upon the request to the
Administrative Agent by any Lender, the Borrower will execute and deliver to
such Lender a promissory note of the Borrower evidencing the Competitive Loans
of such Lender, substantially in the form of Exhibit A-2 with appropriate
insertions as to date, principal amount and Currency (a "Competitive Note").
SECTION 2.9. Interest on Loans.
-----------------
(a) Subject to the provisions of Section 2.10, the Loans
comprising each LIBOR Borrowing shall bear interest (computed on the basis of
the actual number of days elapsed over a year of 360 days) at a rate per annum
equal to (i) in the case of each LIBOR Revolving Credit Loan, LIBOR for the
Interest Period in effect for such Borrowing plus the applicable LIBOR Spread
from time to time in effect and (ii) in the case of each LIBOR Competitive Loan,
LIBOR for the Interest Period in effect for such Borrowing plus or minus the
Margin offered by the Lender making such Loan and accepted by the Borrower
pursuant to Section 2.4. Interest on each LIBOR Borrowing shall be payable on
each applicable Interest Payment Date.
(b) Subject to the provisions of Section 2.10, the Loans
comprising each ABR Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a
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year of 365 or 366 days, as the case may be when determined by reference to
the Prime Rate and over a year of 360 days at all other times) at a rate per
annum equal to the Alternate Base Rate.
(c) Subject to the provisions of Section 2.10, each Fixed Rate
Loan shall bear interest at a rate per annum (computed on the basis of the
actual number of days elapsed over a year of 360 days) equal to the fixed rate
of interest offered by the Lender making such Loan and accepted by the Borrower
pursuant to Section 2.4.
(d) Interest on each Loan shall be payable in arrears on each
Interest Payment Date applicable to such Loan. The LIBOR or the Alternate Base
Rate for each Interest Period or day within an Interest Period shall be
determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error.
SECTION 2.10. Interest on Overdue Amounts.
---------------------------
If the Borrower shall default in the payment of the principal
of, or interest on, any Loan or any other amount becoming due hereunder, the
Borrower shall on demand from time to time pay interest, to the extent permitted
by Applicable Law, on such defaulted amount up to (but not including) the date
of actual payment (after as well as before judgment) at a rate per annum
computed on the basis of the actual number of days elapsed over a year of 365 or
366 days, as applicable, in the case of amounts bearing interest determined by
reference to the Prime Rate and a year of 360 days in all other cases, equal to
(a) in the case of the remainder of the then current Interest Period for any
LIBOR Loan or Fixed Rate Loan, the rate applicable to such Loan under Section
2.9 plus 2% per annum and (b) in the case of any other amount, the rate that
would at the time be applicable to an ABR Loan under Section 2.9 plus 2% per
annum.
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<PAGE>
SECTION 2.11. Alternate Rate of Interest.
--------------------------
In the event the Administrative Agent shall have determined
that deposits in Dollars or the applicable Available Foreign Currency in the
amount of the requested principal amount of any LIBOR Loan are not generally
available in the London Interbank Market (or such other interbank eurocurrency
market where the foreign currency and exchange operations in respect of Dollars
or such applicable Available Foreign Currency, as the case may be, are then
being conducted for delivery on the first day of such Interest Period), or that
the rate at which such deposits are being offered will not adequately and fairly
reflect the cost to any Lender of making or maintaining its portion of such
LIBOR Loans during such Interest Period, or that reasonable means do not exist
for ascertaining LIBOR, the Administrative Agent shall, as soon as practicable
thereafter, give written or telecopier notice of such determination to the
Borrower and the Lenders. In the event of any such determination, until the
Administrative Agent shall have determined that circumstances giving rise to
such notice no longer exist, (a) any request by the Borrower for a LIBOR
Competitive Borrowing pursuant to Section 2.4 shall be of no force and effect
and shall be denied by the Administrative Agent and (b) any request by the
Borrower for a LIBOR Borrowing pursuant to Section 2.5 shall be deemed to be a
request for an ABR Loan. Each determination by the Administrative Agent
hereunder shall be conclusive absent manifest error.
SECTION 2.12. Termination and Reduction of Commitments.
----------------------------------------
(a) The Commitments of all of the Lenders shall be
automatically terminated on the earlier of (i) the Maturity Date or (ii) April
15, 1997 if the Closing Date has not occurred on or prior to such date.
(b) Subject to Section 2.13(b), upon at least three Business
Days' prior irrevocable written or telecopy notice to the Administrative Agent
(which shall promptly notify each Lender), the Borrower may at any time in whole
permanently terminate, or from time to time in part permanently reduce, the
Total Commitment; provided that (i) each partial reduction shall be in an
integral multiple of $1,000,000 and in a minimum principal amount of $10,000,000
and (ii) the Borrower shall not be entitled to make any such termination or
reduction that would reduce the Total Commitment to an amount less than the sum
of the aggregate outstanding principal Dollar Equivalent Amount of the Loans
plus the then current L/C Exposure.
(c) Each reduction in the Total Commitment hereunder shall be
made ratably among the Lenders in accordance with their respective Commitments.
The Borrower shall pay to the Administrative Agent for the account of the
Lenders on the date of each termination or reduction in the Total Commitment,
the Facility Fees on the amount of the Commitments so terminated or reduced
accrued to the date of such termination or reduction.
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<PAGE>
SECTION 2.13. Prepayment of Loans.
-------------------
(a) Prior to the Maturity Date, the Borrower shall have the
right at any time to prepay any Revolving Credit Borrowing, in whole or in part,
subject to the requirements of Section 2.17 but otherwise without premium or
penalty, upon prior written or telecopy notice to the Administrative Agent
(which shall promptly notify each Lender) before 2:00 p.m. New York City time of
at least one Business Day in the case of an ABR Loan and of at least three
Working Days in the case of a LIBOR Loan; provided that each such partial
prepayment shall be in a minimum aggregate principal Dollar Equivalent Amount of
$1,000,000 or a whole multiple in excess thereof. The Borrower shall not have
the right to prepay any Competitive Borrowing without the consent of the
relevant Lender.
(b) On any date when the sum of the Dollar Equivalent Amount
of the aggregate outstanding Loans (after giving effect to any Borrowings
effected on such date) plus the then current L/C Exposure exceeds the Total
Commitment, the Borrower shall make a mandatory prepayment of the Loans in such
amount as may be necessary so that the Dollar Equivalent Amount of the aggregate
amount of outstanding Loans plus the then current L/C Exposure after giving
effect to such prepayment does not exceed the Total Commitment then in effect.
Any prepayments required by this paragraph shall be applied to outstanding ABR
Loans up to the full amount thereof before they are applied to outstanding LIBOR
Loans.
(c) Each notice of prepayment pursuant to this Section 2.13
shall specify the specific Borrowing(s), the prepayment date and the aggregate
principal amount of each Borrowing to be prepaid, shall be irrevocable and shall
commit the Borrower to prepay such Borrowing(s) by the amount stated therein.
All prepayments under this Section 2.13 shall be accompanied by accrued interest
on the principal amount being prepaid to the date of prepayment and any amounts
due pursuant to Section 2.17.
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<PAGE>
SECTION 2.14. Eurocurrency Reserve Costs.
--------------------------
The Borrower shall pay to the Administrative Agent for the
account of each Lender, so long as such Lender shall be required under
regulations of the Board to maintain reserves with respect to liabilities or
assets consisting of, or including, Eurocurrency Liabilities (as defined in
Regulation D of the Board) (or, at any time when such Lender may be required by
the Board or by any other Governmental Authority, whether within the United
States or in another relevant jurisdiction, to maintain reserves against any
other category of liabilities which includes deposits by reference to which
LIBOR is determined as provided in this Agreement or against any category of
extensions of credit or other assets of such Lender which includes any such
LIBOR Loans), additional interest on the unpaid principal amount of each LIBOR
Loan made to the Borrower by such Lender, from the date of such Loan until such
Loan is paid in full, at an interest rate per annum equal at all times during
the Interest Period for such Loan to the remainder obtained by subtracting (i)
LIBOR for such Interest Period from (ii) the rate obtained by multiplying LIBOR
as referred to in clause (i) above by the Statutory Reserves of such Lender for
such Interest Period. Such additional interest shall be determined by such
Lender and notified to the Borrower (with a copy to the Administrative Agent)
not later than five Business Days before the next Interest Payment Date for such
Loan, and such additional interest so notified to the Borrower by any Lender
shall be payable to the Administrative Agent for the account of such Lender on
each Interest Payment Date for such Loan.
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<PAGE>
SECTION 2.15. Reserve Requirements; Change in Circumstances.
---------------------------------------------
(a) Notwithstanding any other provision herein, if after the
date of this Agreement any change in Applicable Law or regulation or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof (whether or not having the
force of law) (i) shall subject any Lender to, or increase the net amount of,
any tax, levy, impost, duty, charge, fee, deduction or withholding with respect
to any Loan, or shall change the basis of taxation of payments to any Lender of
the principal of or interest on any Loan made by such Lender or any other fees
or amounts payable hereunder (other than (x) taxes imposed on the overall net
income of such Lender by the jurisdiction in which such Lender has its principal
office or its applicable Lending Office or by any political subdivision or
taxing authority therein (or any tax which is enacted or adopted by such
jurisdiction, political subdivision or taxing authority as a direct substitute
for any such taxes) or (y) any tax, assessment, or other governmental charge
that would not have been imposed but for the failure of any Lender to comply
with any certification, information, documentation or other reporting
requirement), (ii) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender, or (iii) shall impose on any
Lender or eurocurrency market any other condition affecting this Agreement or
any Loan made by such Lender, and the result of any of the foregoing shall be to
increase the cost to such Lender of making or maintaining any Loan or to reduce
the amount of any sum received or receivable by such Lender hereunder (whether
of principal, interest or otherwise) in respect thereof by an amount deemed in
good faith by such Lender to be material, then the Borrower shall pay such
additional amount or amounts as will compensate such Lender for such increase or
reduction to such Lender upon demand by such Lender.
(b) If, after the date of this Agreement, any Lender shall
have determined in good faith that the adoption after the date hereof of or any
change after the date hereof in any applicable law, rule, regulation or
guideline regarding capital adequacy, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender (or any Lending Office of such Lender) with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such Governmental Authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such Lender's capital or on
the capital of such Lender's holding company, if any, as a consequence of its
obligations hereunder to a level below that which such Lender (or its holding
company) could have achieved but for such applicability, adoption, change or
compliance (taking into consideration such Lender's policies or the policies of
its holding company, as the case may be, with respect to capital adequacy) by an
amount deemed by such Lender to be material, then, from time to time, the
Borrower shall pay to the Administrative Agent for the account of such Lender
(or its holding company) such additional amount or amounts as will compensate
such Lender for such reduction upon demand by such Lender.
-29-
<PAGE>
(c) A certificate of a Lender setting forth in reasonable
detail (i) such amount or amounts as shall be necessary to compensate such
Lender as specified in paragraph (a) or (b) above, as the case may be, and (ii)
the calculation of such amount or amounts referred to in the preceding clause
(i), shall be delivered to the Borrower and shall be conclusive absent manifest
error. The Borrower shall pay the Administrative Agent for the account of such
Lender the amount shown as due on any such certificate within 10 Business Days
after its receipt of the same.
(d) Failure on the part of any Lender to demand compensation
for any increased costs or reduction in amounts received or receivable or
reduction in return on capital with respect to any Interest Period shall not
constitute a waiver of such Lender's rights to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
return on capital with respect to such Interest Period or any other Interest
Period. The protection of this Section 2.15 shall be available to each Lender
regardless of any possible contention of invalidity or inapplicability of the
law, regulation or condition which shall have been imposed.
(e) Each Lender agrees that, as promptly as practicable after
it becomes aware of the occurrence of an event or the existence of a condition
that (i) would cause it to incur any increased cost under this Section 2.15,
Section 2.16, Section 2.21 or Section 2.24(g) or (ii) would require the Borrower
to pay an increased amount under this Section 2.15, Section 2.16, Section 2.21
or Section 2.24(g), it will use reasonable efforts to notify the Borrower of
such event or condition and, to the extent not inconsistent with such Lender's
internal policies, will use its reasonable efforts to make, fund or maintain the
affected Loans of such Lender, or, if applicable to participate in Letters of
Credit, through another Lending Office of such Lender if as a result thereof the
additional monies which would otherwise be required to be paid or the reduction
of amounts receivable by such Lender thereunder in respect of such Loans or
Letters of Credit would be materially reduced, or any inability to perform would
cease to exist, or the increased costs which would otherwise be required to be
paid in respect of such Loans or Letters of Credit pursuant to this Section
2.15, Section 2.16, Section 2.21 or Section 2.24(g) would be materially reduced
or the taxes or other amounts otherwise payable under this Section 2.15, Section
2.16, Section 2.21 or Section 2.24(g) would be materially reduced, and if, as
determined by such Lender, in its sole reasonable discretion, the making,
funding or maintaining of such Loans or Letters of Credit through such other
Lending Office would not otherwise materially adversely affect such Loans or
Letters of Credit or such Lender.
(f) In the event any Lender shall have delivered to the
Borrower a notice that LIBOR Loans are no longer available from such Lender
pursuant to Section 2.16, that amounts are due to such Lender pursuant to
paragraph (c) above, that any of the events designated in paragraph (e) above
have occurred or that a Lender shall not be rated at least BBB by S&P and Baa2
by Moody's, the Borrower may (but subject in any such case to the payments
required by Section 2.17), provided that there shall exist no Default or Event
of Default, upon at least five Business Days' prior written or telecopier notice
to such Lender and the Administrative Agent,
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<PAGE>
but not more than 30 days after receipt of notice from such Lender, identify
to the Administrative Agent a lending institution reasonably acceptable to the
Administrative Agent which will purchase the Commitment, the amount of
outstanding Loans and any participations in Letters of Credit from the Lender
providing such notice and such Lender shall thereupon assign its Commitment,
any Loans owing to such Lender and any participations in Letters of
Credit and the Notes held by such Lender to such replacement lending
institution pursuant to Section 9.3. Such notice shall specify an effective
date for such assignment and at the time thereof, the Borrower shall pay
all accrued interest, Facility Fees and all other amounts (including without
limitation all amounts payable under this Section and Sections 2.21,
2.24(g), 9.4 and 9.5) owing hereunder to such Lender as at such effective date
for such assignment.
SECTION 2.16. Change in Legality.
------------------
(a) Notwithstanding anything to the contrary herein contained,
if any change in any law or regulation or in the interpretation thereof by any
Governmental Authority charged with the administration or interpretation thereof
shall make it unlawful for any Lender to make or maintain any LIBOR Loan or to
give effect to its obligations as contemplated hereby, then, by written notice
to the Borrower and to the Administrative Agent, such Lender may:
(i) declare that LIBOR Loans will not thereafter be
made by such Lender hereunder, whereupon such Lender shall not submit a
Competitive Bid in response to a request for LIBOR Competitive Loans
and the Borrower shall be prohibited from requesting LIBOR Revolving
Credit Loans from such Lender hereunder unless such declaration is
subsequently withdrawn; and
(ii) require that all outstanding LIBOR Loans made by
it be converted to ABR Loans, in which event (A) all such LIBOR Loans
shall be automatically converted to ABR Loans as of the effective date
of such notice as provided in Section 2.16(b) and (B) all payments and
prepayments of principal which would otherwise have been applied to
repay the converted LIBOR Loans shall instead be applied to repay the
ABR Loans resulting from the conversion of such LIBOR Loans.
(b) For purposes of this Section 2.16, a notice to the
Borrower by any Lender pursuant to Section 2.16(a) shall be effective on the
date of receipt thereof by the Borrower.
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<PAGE>
SECTION 2.17. Reimbursement of Lenders.
------------------------
(a) The Borrower shall reimburse each Lender on demand for any
loss incurred or to be incurred by it in the reemployment of the funds released
(i) by any prepayment (for any reason, including any refinancing) of any LIBOR
or Fixed Rate Loan if such Loan is repaid other than on the last day of the
applicable Interest Period for such Loan or (ii) in the event that after the
Borrower delivers a notice of borrowing under Section 2.5 in respect of LIBOR
Revolving Credit Loans or a Competitive Bid Accept/Reject Letter under Section
2.4(d), pursuant to which it has accepted Competitive Bids of one or more of the
Lenders, the applicable Loan is not made on the first day of the Interest Period
specified by the Borrower for any reason other than (I) a suspension or
limitation under Section 2.16 of the right of the Borrower to select a LIBOR
Loan or (II) a breach by a Lender of its obligations hereunder. In the case of
such failure to borrow, such loss shall be the amount as reasonably determined
by such Lender as the excess, if any, of (A) the amount of interest which would
have accrued to such Lender on the amount not borrowed, at a rate of interest
equal to the interest rate applicable to such Loan pursuant to Section 2.9, for
the period from the date of such failure to borrow to the last day of the
Interest Period for such Loan which would have commenced on the date of such
failure to borrow, over (B) the amount realized by such Lender in reemploying
the funds not advanced during the period referred to above. In the case of a
payment other than on the last day of the Interest Period for a Loan, such loss
shall be the amount as the excess, if any, of (A) the amount of interest which
would have accrued on the amount so paid at a rate of interest equal to the
interest rate applicable to such Loan pursuant to Section 2.9, for the period
from the date of such payment to the last day of the then current Interest
Period for such Loan, over (B) an amount equal to the product of (x) the amount
of the Loan so paid times (y) the current daily yield on U.S. Treasury
Securities (at such date of determination) with maturities approximately equal
to the remaining Interest Period for such Loan times (z) the number of days
remaining in the Interest Period for such Loan. Each Lender shall deliver to the
Borrower from time to time one or more certificates setting forth the amount of
such loss (and in reasonable detail the manner of computation thereof) as
determined by such Lender, which certificates shall be conclusive absent
manifest error. The Borrower shall pay to the Administrative Agent for the
account of each Lender the amount shown as due on any certificate within thirty
(30) days after its receipt of the same.
(b) In the event the Borrower fails to prepay any Loan on the
date specified in any prepayment notice delivered pursuant to Section 2.13(a),
the Borrower on demand by any Lender shall pay to the Administrative Agent for
the account of such Lender any amounts required to compensate such Lender for
any loss incurred by such Lender as a result of such failure to prepay,
including, without limitation, any loss, cost or expenses incurred by reason of
the acquisition of deposits or other funds by such Lender to fulfill deposit
obligations incurred in anticipation of such prepayment. Each Lender shall
deliver to the Borrower and the Administrative Agent from time to time one or
more certificates setting forth the amount of such loss (and in reasonable
detail the manner of computation thereof) as determined by such Lender, which
certificates shall be conclusive absent manifest error.
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<PAGE>
SECTION 2.18. Pro Rata Treatment.
------------------
Except as permitted under Sections 2.14, 2.15(c), 2.15(f),
2.16, 2.17 and 2.25, (i) each Revolving Credit Borrowing, each payment or
prepayment of principal of any Revolving Credit Borrowing, each payment of
interest on the Revolving Credit Loans, each payment of the Facility Fees, each
reduction of the Total Commitment and each refinancing of any Borrowing with, or
conversion of any Borrowing to, a Revolving Credit Borrowing, or continuation of
any Borrowing as a Revolving Credit Borrowing, shall be allocated pro rata among
the Lenders in accordance with their respective Commitments (or, if such
Commitments shall have expired or been terminated, in accordance with the
respective principal amount of their outstanding Revolving Credit Loans). Each
payment of principal of any Competitive Borrowing shall be allocated pro rata
among the Lenders participating in such Borrowing in accordance with the
respective principal amounts of their outstanding Competitive Loans comprising
such Borrowing. Each payment of interest on any Competitive Borrowing shall be
allocated pro rata among the Lenders participating in such Borrowing in
accordance with the respective amounts of accrued and unpaid interest on their
outstanding Competitive Loans comprising such Borrowing. For purposes of
determining the available Commitments of the Lenders at any time, each
outstanding Competitive Borrowing shall be deemed to have utilized the
Commitments of the Lenders (including those Lenders that shall not have made
Loans as part of such Competitive Borrowing) pro rata in accordance with such
respective Commitments. Each Lender agrees that in computing such Lender's
portion of any Borrowing to be made hereunder, the Administrative Agent may, in
its discretion, round each Lender's percentage of such Borrowing computed in
accordance with Section 2.1, to the next higher or lower whole Dollar amount.
SECTION 2.19. Right of Setoff.
---------------
If any Event of Default shall have occurred and be continuing
and any Lender shall have requested the Administrative Agent to declare the
Loans immediately due and payable pursuant to Article 7, each Lender is hereby
authorized at any time and from time to time, to the fullest extent permitted by
Applicable Law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held by such Lender and any
other indebtedness at any time owing by such Lender to, or for the credit or the
account of, the Borrower, against any of and all the obligations now or
hereafter existing under this Agreement and the Loans and interests in Letters
of Credit held by such Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement or such Loans and although such
Obligations may be unmatured. Each Lender agrees promptly to notify the Borrower
after any such setoff and application made by such Lender, but the failure to
give such notice shall not affect the validity of such setoff and application.
The rights of each Lender under this Section 2.19 are in addition to other
rights and remedies (including other rights of setoff) which such Lender may
have and are subject to the provisions of Section 8.2.
SECTION 2.20. Manner of Payments.
------------------
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<PAGE>
All payments by the Borrower hereunder and under the Notes
shall be made in Dollars in immediately available funds at the office of the
Administrative Agent's Agent Bank Services Department, One Chase Manhattan
Plaza, New York, New York 10081, Attention: Maggie Swales, for credit to PHH
Corporation Clearing Account, Account No. 323-5-11260 (Reference: PHH
Corporation Credit Agreement dated March 4, 1997) or as otherwise directed by
the Borrower (with the consent of the Administrative Agent, which consent shall
not be unreasonably withheld) no later than 4:30 p.m., New York City time, on
the date on which such payment shall be due. Interest in respect of any Loan
hereunder shall accrue from and including the date of such Loan to, but
excluding, the date on which such Loan is paid or refinanced with a Loan of a
different Interest Rate Type.
SECTION 2.21. Withholding Taxes.
-----------------
(a) Prior to the date of the initial Loans hereunder, and from
time to time thereafter if requested by the Borrower or the Administrative Agent
or required because, as a result of a change in Applicable Law or a change in
circumstances or otherwise, a previously delivered form or statement becomes
incomplete or incorrect in any material respect, each Lender organized under the
laws of a jurisdiction outside the United States shall provide, if applicable,
the Administrative Agent and the Borrower with complete, accurate and duly
executed forms or other statements prescribed by a Governmental Authority
certifying such Lender's exemption, if any, from, or entitlement to a reduced
rate, if any, of, withholding taxes (including backup withholding taxes) with
respect to all payments to be made to such Lender hereunder and under the Notes.
(b) The Borrower and the Administrative Agent shall be
entitled to deduct and withhold any and all present or future taxes or
withholdings, and all liabilities with respect thereto, from payments hereunder
or under the Notes, if and to the extent that the Borrower or the Administrative
Agent in good faith determines that such deduction or withholding is required by
Applicable Law, including, without limitation, any applicable treaty. In the
event the Borrower or the Administrative Agent shall so determine that deduction
or withholding of taxes is required, it shall advise the affected Lender as to
the basis of such determination prior to actually deducting and withholding such
taxes. In the event the Borrower or the Administrative Agent shall so deduct or
withhold taxes from amounts payable hereunder, it (i) shall pay to or deposit
with the appropriate taxing authority in a timely manner the full amount of
taxes it has deducted or withheld; (ii) shall provide evidence of payment of
such taxes to, or the deposit thereof with, the appropriate taxing authority and
a statement setting forth the amount of taxes deducted or withheld, the
applicable rate, and any other information or documentation reasonably requested
by the Lenders from whom the taxes were deducted or withheld; and (iii) shall
forward to such Lenders any receipt for such payment or deposit of the deducted
or withheld taxes as may be issued from time to time by the appropriate taxing
authority. Unless the Borrower and the Administrative Agent have received forms
or other documents satisfactory to them indicating that payments hereunder or
under the Notes are not subject to withholding tax or are subject to such tax at
a rate reduced by an applicable tax treaty, the Borrower or the Administrative
Agent
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<PAGE>
may withhold taxes from such payments at the applicable statutory rate in the
case of payments to or for any Lender.
(c) Each Lender agrees (i) that as between it and the Borrower
or the Administrative Agent, it shall be the Person to deduct and withhold
taxes, and to the extent required by law it shall deduct and withhold taxes, on
amounts that such Lender may remit to any other Person(s) by reason of any
undisclosed transfer or assignment of an interest in this Agreement to such
other Person(s) pursuant to paragraph (g) of Section 9.3 and (ii) to indemnify
the Borrower and the Administrative Agent and any of their officers, directors,
agents, or employees against, and to hold them harmless from, any tax, interest,
additions to tax, penalties, reasonable counsel and accountants' fees,
disbursements or payments arising from the assertion by any appropriate taxing
authority of any claim against them relating to a failure to withhold taxes as
required by Applicable Law with respect to amounts described in clause (i) of
this paragraph (c).
(d) Each assignee of a Lender's interest in this Agreement in
conformity with Section 9.3 shall be bound by this Section 2.21, so that such
assignee will have all of the obligations and provide all of the forms and
statements and all indemnities, representations and warranties required to be
given under this Section 2.21.
(e) In the event that any withholding taxes shall become
payable as a result of any change in any statute, treaty, ruling, determination
or regulation occurring after the Initial Date (as defined below) in respect of
any sum payable hereunder or under any other Fundamental Document to any Lender
or the Administrative Agent (i) the sum payable by the Borrower shall be
increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.21) such Lender or the Administrative Agent (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower shall pay
the full amount deducted to the relevant taxation authority or other authority
in accordance with Applicable Law. For purposes of this Section 2.21, the term
"Initial Date" shall mean (i) in the case of the Administrative Agent, the date
hereof, (ii) in the case of each Lender as of the date hereof, the date hereof
and (iii) in the case of any other Lender, the effective date of the Assignment
and Acceptance pursuant to which it became a Lender.
SECTION 2.22. Certain Pricing Adjustments.
---------------------------
The Facility Fee and the applicable LIBOR Spread in effect
from time to time shall be determined in accordance with the following table:
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<PAGE>
<TABLE>
<CAPTION>
S&P/Moody's Rating Equivalent Facility Fee (in Basis Applicable LIBOR Spread
of the Borrower's senior Points) (in Basis Points)
unsecured long-term debt
<S><C>
AA-/Aa3 or better 6.0 12.75
A+/A1 7.0 13.00
A/A2 8.0 14.50
A-/A3 9.0 16.00
BBB+/Baa1 10.0 20.00
BBB/Baa2 12.5 22.50
BBB-/Baa3 17.5 32.50
BB+/Ba1 or worse 25.0 37.50
</TABLE>
In the event the S&P rating on the Borrower's senior unsecured
long-term debt is not equivalent to the Moody's rating on such debt, the higher
rating will determine the Facility Fee and applicable LIBOR Spread, unless the
S&P and Moody's ratings are more than one level apart, in which case the rating
one level below the higher rating will be determinative. In the event that the
Borrower's senior unsecured long-term debt is rated by only one of S&P and
Moody's (for any reason, including if S&P or Moody's shall cease to be in the
business of rating corporate debt obligations) or if the rating system of either
S&P or Moody's shall change, then an amendment shall be negotiated in good faith
(and shall be effective only upon approval by the Borrower and the Supermajority
Lenders) to the references to specific ratings in the table above to reflect
such changed rating system or the unavailability of ratings from such rating
agency (including an amendment to provide for the substitution of an equivalent
or successor ratings agency). In the event that the Borrower's senior unsecured
long-term debt is not rated by either S&P or Moody's, then the Facility Fee and
the applicable LIBOR Spread shall be deemed to be calculated as if the lowest
rating category set forth above applied. Any increase in the Facility Fee or the
applicable LIBOR Spread determined in accordance with the foregoing table shall
become effective on the date of announcement or publication by the Borrower or
either such rating agency of a reduction in such rating or, in the absence of
such announcement or publication, on the effective date of such decreased
rating, or on the date of any request by the Borrower to either of such rating
agencies not to rate its senior unsecured long-term debt or on the date either
of such rating agencies announces it shall no longer rate the Borrower's senior
unsecured long-term debt. Any decrease in the Facility Fee or applicable LIBOR
Spread shall be effective on the date of announcement or publication by either
of such rating agencies of an increase in rating or in the absence of
announcement or publication on the effective date of such increase in rating.
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<PAGE>
SECTION 2.23. [Intentionally Deleted.]
SECTION 2.24. Letters of Credit.
-----------------
(a) (i) Upon the terms and subject to the conditions hereof,
each Issuing Lender agrees to issue Letters of Credit payable in Dollars from
time to time after the Closing Date and prior to the earlier of the Maturity
Date and the termination of the Commitments, upon the request of the Borrower,
provided that (A) the Borrower shall not request that any Letter of Credit be
issued if, after giving effect thereto, the sum of the then current L/C Exposure
plus the aggregate principal Dollar Equivalent Amount of the Loans then
outstanding would exceed the Total Commitment, (B) in no event shall any Issuing
Lender issue (x) any Letter of Credit having an expiration date later than five
Business Days before the Maturity Date or (y) any Letter of Credit having an
expiration date more than one year after its date of issuance, provided,
further, that any Letter of Credit with a 365-day duration may provide for the
renewal thereof for additional one-year periods (which shall in no event extend
beyond the date referred to in clause (x) above), (C) the Borrower shall not
request that an Issuing Lender issue any Letter of Credit if, after giving
effect to such issuance, the L/C Exposure would exceed $100,000,000, and (D) an
Issuing Lender shall be prohibited from issuing or renewing Letters of Credit
hereunder upon the occurrence and during the continuance of an Event of Default.
(ii) Immediately upon the issuance of each Letter of
Credit, each Lender shall be deemed to, and hereby agrees to, have irrevocably
purchased from the applicable Issuing Lender, a participation in such Letter
of Credit in accordance with the percentage which its Commitment represents
of the Total Commitment.
(iii) Each Letter of Credit may, at the option of the
applicable Issuing Lender, provide that such Issuing Lender may (but shall not
be required to) pay all or any part of the maximum amount which may at any time
be available for drawing thereunder to the beneficiary thereof upon the
occurrence of an Event of Default and the acceleration of the maturity of the
Loans, provided that, if payment is not then due to such beneficiary, such
Issuing Lender shall deposit the funds in question in an account with such
Issuing Lender to secure payment to such beneficiary and any funds so deposited
shall be paid to such beneficiary of such Letter of Credit if conditions to such
payment are satisfied or returned to the Administrative Agent for distribution
to the Lenders (or, if all Obligations shall have been paid in full in cash, to
the Borrower) if no payment to such beneficiary has been made and the final date
available for drawings under such Letter of Credit has passed. Each payment or
deposit of funds by an Issuing Lender as provided in this paragraph shall be
treated for all purposes of this Agreement as a drawing duly honored by such
Issuing Lender under the related Letter of Credit.
(b) Whenever the Borrower desires the issuance of a Letter of
Credit, it shall deliver to the Administrative Agent and the applicable Issuing
Lender a written notice no later than 1:00 p.m. (New York time) at least five
Business Days prior to the proposed date of issuance provided, however, that the
Borrower and the Administrative Agent and such Issuing
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Lender may agree to a shorter time period. That notice shall specify (i) the
Issuing Lender for such Letter of Credit, (ii) the proposed date of issuance
(which shall be a Business Day), (iii) the face amount of such Letter of
Credit, (iv) the expiration date of such Letter of Credit and (v) the name and
address of the beneficiary. Such notice shall be accompanied by a brief
description of the underlying transaction and upon the request of the
applicable Issuing Lender, the Borrower shall provide additional details
regarding the underlying transaction. Concurrently with the giving of written
notice of a request for the issuance of a Letter of Credit, the Borrower
shall specify a precise description of the documents and the verbatim text of
any certificate to be presented by the beneficiary of such Letter of Credit
which, if presented by such beneficiary prior to the expiration date of such
Letter of Credit, would require the applicable Issuing Lender to make payment
under such Letter of Credit; provided that the applicable Issuing Lender, in
its reasonable discretion, may require customary changes in any such documents
and certificates. Upon issuance of any Letter of Credit, the applicable
Issuing Lender shall notify the Administrative Agent of the issuance of such
Letter of Credit. Promptly after receipt of such notice, the
Administrative Agent shall notify each Lender of the issuance and the amount of
each such Lender's respective participation therein.
(c) The payment of drafts under any Letter of Credit shall be
made in accordance with the terms of such Letter of Credit and, in that
connection, any Issuing Lender shall be entitled to honor any drafts and accept
any documents presented to it by the beneficiary of such Letter of Credit in
accordance with the terms of such Letter of Credit and believed by such Issuing
Lender in good faith, and in the absence of gross negligence or willful
misconduct, to be genuine. No Issuing Lender shall have any duty to inquire as
to the accuracy or authenticity of any draft or other drawing documents which
may be presented to it, but shall be responsible only to determine in accordance
with customary commercial practices, and in the absence of gross negligence or
willful misconduct, that the documents which are required to be presented before
payment or acceptance of a draft under any Letter of Credit have been delivered
and that they comply on their face with the requirements of that Letter of
Credit. The Borrower's obligations under this Section 2.24 shall be absolute and
unconditional under any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment which the Borrower may have or have had
against any Issuing Lender, any beneficiary of a Letter of Credit or any other
Person.
(d) If any Issuing Lender shall make payment on any draft
presented under a Letter of Credit, such Issuing Lender shall give notice of
such payment to the Administrative Agent and the Lenders and each Lender hereby
authorizes and requests such Issuing Lender to advance for its account pursuant
to the terms hereof its share of such payment based upon its participation in
such Letter of Credit and agrees promptly to reimburse such Issuing Lender in
immediately available funds for the Dollar equivalent of the amount so advanced
on its behalf. If such reimbursement is not made by any Lender in immediately
available funds on the same day on which such Issuing Lender shall have made
payment on any such draft, such Lender shall pay interest thereon to such
Issuing Lender at a rate per annum equal to the Issuing Lender's cost of
obtaining overnight funds in the New York Federal Funds Market.
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(e) In the case of any draft presented under a Letter of
Credit which is required to be paid at any time on or before the Maturity Date
and provided that the conditions specified in Section 4.2 are then satisfied,
such payment shall constitute an ABR Loan hereunder, and interest shall accrue
from the date the applicable Issuing Lender makes payment of a draft under the
Letter of Credit. If any draft is presented under a Letter of Credit and (i) the
conditions specified in Section 4.2 are not satisfied or (ii) if the Commitments
have been terminated, then the Borrower will, upon demand by the Administrative
Agent, pay to the applicable Issuing Lender, in immediately available funds, the
full amount of such draft.
(f) (i) The Borrower agrees to pay the following amount to
each Issuing Lender with respect to Letters of Credit issued by it hereunder:
(A) with respect to drawings made under any Letter of Credit,
interest, payable on demand, on the amount paid by such Issuing Lender
in respect of each such drawing from the date of the drawing to, but
excluding, the date such amount is reimbursed by the Borrower at a rate
which is at all times equal to 2% per annum in excess of the Alternate
Base Rate; provided that no such default interest shall be payable if
such reimbursement is made from the proceeds of Revolving Credit Loans
pursuant to Section 2.24(e);
(B) with respect to the issuance, amendment or transfer of
each Letter of Credit and each drawing made thereunder, documentary and
processing charges in accordance with such Issuing Lender's standard
schedule for such charges in effect at the time of such issuance,
amendment, transfer or drawing, as the case may be; and
(C) a fronting fee computed at the rate agreed to by the
Borrower and the applicable Issuing Lender, on the daily average face
amount of each outstanding Letter of Credit issued by such Issuing
Lender, such fee to be due and payable in arrears on and through the
last day of each fiscal quarter of the Borrower, on the Maturity Date
and on the expiration of the last outstanding Letter of Credit.
(ii) The Borrower agrees to pay to the
Administrative Agent for distribution to each Lender in respect of all Letters
of Credit outstanding, such Lender's pro rata share of a commission on the
maximum amount available from time to time to be drawn under such outstanding
Letters of Credit calculated at a rate per annum equal to the applicable LIBOR
Spread from time to time in effect hereunder. Such commission shall be payable
in arrears on and through the last day of each fiscal quarter of the Borrower
and on the later of the Maturity Date and the expiration of the last
outstanding Letter of Credit.
(iii) Promptly upon receipt by any Issuing Lender
or the Administrative Agent (as applicable) of any amount described in clause
(i)(A) or (ii) of this Section 2.24(f), or any amount described in Section
2.24(e) previously reimbursed to the applicable Issuing Lender by the Lenders,
such Issuing Lender or the Administrative Agent (as applicable) shall distribute
to each Lender its pro rata share of such amount. Amounts payable under clauses
(i)(B) and
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(i)(C) of this Section 2.24(f) shall be paid directly to the Issuing Lender and
shall be for its exclusive use.
(g) If by reason of (i) any change after the date hereof in
Applicable Law, or in the interpretation or administration thereof (including,
without limitation, any request, guideline or policy not having the force of
law) by any Governmental Authority charged with the administration or
interpretation thereof, or (ii) compliance by any Issuing Lender or any Lender
with any direction, request or requirement (whether or not having the force of
law) issued after the date hereof by any Governmental Authority or monetary
authority (including any change whether or not proposed or published prior to
the date hereof), including, without limitation, Regulation D of the Board:
(A) any Issuing Lender or any Lender shall be subject to any
tax, levy, charge or withholding of any nature (other than withholding
tax imposed by the United States or any political subdivision or taxing
authority thereof or therein or any other tax, levy, charge or
withholding (i) that is measured with respect to the overall net income
of such Issuing Lender or such Lender (or is imposed in lieu of a tax
on net income) or of a Lending Office of such Issuing Lender or such
Lender, and that is imposed by the United States, or by the
jurisdiction in which such Issuing Lender or such Lender is
incorporated, or in which such Lending Office is located, managed or
controlled or in which such Issuing Lender or such Lender has its
principal office (or any political subdivision or taxing authority
thereof or therein) or (ii) that is imposed solely by reason of such
Issuing Lender or such Lender failing to make a declaration of, or
otherwise to establish, non-residence, or to make any other claim for
exemption, or otherwise to comply with any certification,
identification, information, documentation or reporting requirements
prescribed under the laws of the relevant jurisdiction, in those cases
where such Issuing Lender or such Lender may properly make the
declaration or claim or so establish non-residence or otherwise comply)
or to any variation thereof or to any penalty with respect to the
maintenance or fulfillment of its obligations under this Section 2.24,
whether directly or by such being imposed on or suffered by any Issuing
Lender or any Lender;
(B) any reserve, deposit or similar requirement is or shall be
applicable, imposed or modified in respect of any Letter of Credit
issued by any Issuing Lender or participations therein purchased by any
Lender; or
(C) there shall be imposed on any Issuing Lender or any Lender
any other condition regarding this Section 2.24, any Letter of Credit
or any participation therein;
and the result of the foregoing is directly or indirectly to increase the cost
to any Issuing Lender or any Lender of issuing, making or maintaining any Letter
of Credit or of purchasing or maintaining any participation therein, or to
reduce the amount receivable in respect thereof by any Issuing Lender or any
Lender, then and in any such case such Issuing Lender or such Lender
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may, at any time, notify the Borrower, and the Borrower shall pay on demand
such amounts as such Issuing Lender or such Lender may specify to be necessary
to compensate such Issuing Lender or such Lender for such additional cost or
reduced receipt. The determination by any Issuing Lender or any Lender, as
the case may be, of any amount due pursuant to this Section 2.24 as set
forth in a certificate setting forth the calculation thereof in reasonable
detail shall, in the absence of manifest error, be final, conclusive and
binding on all of the parties hereto.
(h) If at any time when an Event of Default shall have
occurred and be continuing, any Letters of Credit shall remain outstanding, then
either the applicable Issuing Lender(s) or the Required Lenders may, at their
option, require the Borrower to deposit cash or Cash Equivalents in a Cash
Collateral Account in an amount equal to the full amount of the L/C Exposure or
to furnish other security acceptable to the Administrative Agent and the
applicable Issuing Lender(s). Any amounts so delivered pursuant to the preceding
sentence shall be applied to reimburse the applicable Issuing Lender(s) for the
amount of any drawings honored under Letters of Credit issued by it; provided,
however, that if prior to the Maturity Date, no Event of Default is then
continuing, the Administrative Agent shall return all of such collateral
relating to such deposit to the Borrower if requested by it.
(i) If, at any time, the L/C Exposure exceeds the aggregate
Commitments, then the Required Lenders may, at their option, require the
Borrower to deposit cash or Cash Equivalents in a Cash Collateral Account in an
amount sufficient to eliminate such excess or to furnish other security for such
excess acceptable to the Administrative Agent and the Issuing Lender(s). Any
amounts so delivered pursuant to the preceding sentence shall be applied to
reimburse the applicable Issuing Lender(s) for the amount of any drawings
honored under Letters of Credit; provided that if subsequent to any such deposit
such excess is reduced to an amount less than the portion of such deposited
amounts and no Default or Event of Default is then continuing, the Borrower
shall be entitled to receive such excess collateral if requested by it.
(j) Upon the request of the Administrative Agent, each Issuing
Lender shall furnish to the Administrative Agent copies of any Letter of Credit
issued by such Issuing Lender and such related documentation as may be
reasonably requested by the Administrative Agent.
(k) Notwithstanding the termination of the Commitments and the
payment of the Loans, the obligations of the Borrower under this Section 2.24
shall remain in full force and effect until the Administrative Agent, each
Issuing Lender and the Lenders shall have been irrevocably released from their
obligations with regard to any and all Letters of Credit.
SECTION 2.25. Extension of Maturity Date. (a) Not less than
30 days prior to the Maturity Date then in effect, provided that no Event of
Default shall have occurred and be continuing, the Borrower may request an
extension of the Maturity Date then in effect by submitting to the
Administrative Agent an Extension Request containing the information in
respect of such extension specified in Exhibit H, which the Administrative
Agent shall promptly furnish to each Lender. Each Lender shall, within 30
days of the date of such request, notify the
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Borrower and the Administrative Agent of its election to grant or not to grant
the extension as requested in such Extension Request. Notwithstanding any
provision of this Agreement to the contrary, any notice by any Lender of its
willingness to extend the Maturity Date shall be revocable by such Lender in
its sole and absolute discretion at any time prior to the date which is within
30 days of the date of such request. If the Supermajority Lenders shall
approve in writing the extension of the Maturity Date requested in such
Extension Request, the Maturity Date shall automatically and without any
further action by any Person be extended for the period specified in such
Extension Request; provided that (i) each extension pursuant to this Section
2.25 shall be for a maximum of one year and (ii) the Commitment of any Lender
which does not consent in writing to such extension within 30 days of such
request (an "Objecting Lender") shall, unless earlier terminated in
accordance with this Agreement, expire on the Maturity Date in effect on the
date of such Extension Request (such Maturity Date, if any, referred to as
the "Commitment Expiration Date" with respect to such Objecting Lender). If
the Supermajority Lenders shall not approve in writing the extension of the
Maturity Date requested in an Extension Request, the Maturity Date shall not
be extended pursuant to such Extension Request. The Administrative
Agent shall promptly notify (y) the Lenders and the Borrower of any extension
of the Maturity Date pursuant to this Section 2.25 and (z) the Borrower and
any other Lender of any Lender which becomes an Objecting Lender.
(b) Loans (including any principal, interest, fees and other
amounts due hereunder) owing to any Objecting Lender on the Commitment
Expiration Date with respect to such Lender shall be repaid in full on or before
such Commitment Expiration Date.
(c) The Borrower shall have the right, so long as no Event of
Default has occurred and is then continuing, upon giving notice to the
Administrative Agent and the Objecting Lender in accordance with Section 2.13,
to prepay in full the Loans of the Objecting Lenders, together with accrued
interest thereon, any amounts payable pursuant to Sections 2.9, 2.10, 2.14,
2.15, 2.17, 2.21, 9.4 and 9.5 and any accrued and unpaid Facility Fee or other
amounts payable to it hereunder and/or, upon giving not less than three Business
Days' notice to the Objecting Lenders and the Administrative Agent, to cancel in
whole or in part the Commitments of the Objecting Lenders.
(d) The Borrower may, with the consent of the Administrative
Agent, designate one or more financial institutions to act as a Lender hereunder
in place of any Objecting Lender, and upon the execution of an agreement
substantially in the form of Exhibit H by each such Objecting Lender (who hereby
agrees to execute such agreement), such replacement financial institution and
the Administrative Agent, such replacement financial institution shall become
and be a Lender hereunder with all the rights and obligations it would have had
if it had been named on the signature pages hereof, and having for all such
financial institutions aggregate Commitments of no greater than the whole of the
Commitment of the Objecting Lender in place of which such financial institutions
were designated; provided that the Facility Fees, interest and other payments to
the Lenders due hereunder shall accrue for the account of each such financial
institution from the date of replacement pursuant to such agreement. The
Administrative Agent
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shall notify the Lenders of the execution of any such agreement, the name
of the financial institution executing such agreement and the amount of such
financial institution's Commitment.
3. REPRESENTATIONS AND WARRANTIES OF BORROWER
In order to induce the Lenders to enter into this Agreement
and to make the Loans and participate in the Letters of Credit provided for
herein, the Borrower makes the following representations and warranties to the
Administrative Agent and the Lenders, all of which shall survive the execution
and delivery of this Agreement, the issuance of the Notes and the making of the
Loans and issuance of the Letters of Credit:
SECTION 3.1. Corporate Existence and Power.
-----------------------------
The Borrower and its Subsidiaries have been duly organized and
are validly existing in good standing under the laws of their respective
jurisdictions of incorporation and are in good standing or have applied for
authority to operate as a foreign corporation in all jurisdictions where the
nature of their properties or business so requires it and where a failure to be
in good standing as a foreign corporation would have a Material Adverse Effect.
The Borrower has the corporate power to execute, deliver and perform its
obligations under this Agreement and the other Fundamental Documents and other
documents contemplated hereby and to borrow and obtain other extensions of
credit hereunder.
SECTION 3.2. Corporate Authority and No Violation.
------------------------------------
The execution, delivery and performance of this Agreement and
the other Fundamental Documents and the borrowings and other extensions of
credit hereunder (a) have been duly authorized by all necessary corporate action
on the part of the Borrower, (b) will not violate any provision of any
Applicable Law applicable to the Borrower or any of its Subsidiaries or any of
their respective properties or assets, (c) will not violate any provision of the
Certificate of Incorporation or By-Laws of the Borrower or any of its
Subsidiaries, or any Contractual Obligation of the Borrower or any of its
Subsidiaries, (d) will not be in conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under, any
material indenture, agreement, bond, note or instrument and (e) will not result
in the creation or imposition of any Lien upon any property or assets of the
Borrower or any of its Subsidiaries other than pursuant to this Agreement or any
other Fundamental Document.
SECTION 3.3. Governmental and Other Approval and Consents.
--------------------------------------------
No action, consent or approval of, or registration or filing
with, or any other action by, any governmental agency, bureau, commission or
court is required in connection with the execution, delivery and performance
(including the making of borrowings and other extensions of credit) by the
Borrower of this Agreement or the other Fundamental Documents.
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SECTION 3.4. Financial Statements of Borrower.
--------------------------------
(a) The (i) audited consolidated financial statements of the
Borrower and its Consolidated Subsidiaries as of April 30, 1995 and April 30,
1996, and (ii) unaudited consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of October 31, 1996, in each case, together with
the related unaudited statements of income, shareholders' equity and cash flows
for the periods then ended fairly present the financial position of the Borrower
and its Consolidated Subsidiaries as at the dates indicated and the results of
operations and cash flows for the periods indicated in conformity with GAAP
subject to normal year-end adjustments in the case of such quarterly financial
statements.
(b) Upon its delivery to the Lenders pursuant to Section
5.1(g), the unaudited pro forma consolidated balance sheet of the Borrower as of
a date reasonably acceptable to the Administrative Agent (including the notes
thereto) (the "Pro Forma Balance Sheet"), has been prepared giving effect (as if
such events had occurred on such date) to (i) the Acquisition, (ii) the
financings and other transactions contemplated hereby to be made on or before
the Closing Date and the use of proceeds thereof and (iii) the payment of fees
and expenses in connection with the foregoing. The Pro Forma Balance Sheet has
been prepared based on the best information available to the Borrower as of the
date of delivery thereof and presents fairly on a pro forma basis the estimated
consolidated financial position of the Borrower as of such date, assuming that
the events specified in the preceding sentence had actually occurred at such
date.
SECTION 3.5. No Material Adverse Change.
--------------------------
Since April 30, 1996 there has been no material adverse change
in the business, assets, operations or condition, financial or otherwise, of the
Borrower and its Subsidiaries taken as a whole (provided that the Acquisition
shall not be deemed to be a material adverse change); provided that the
foregoing representation is made solely as of the Closing Date.
SECTION 3.6. Material Subsidiaries.
---------------------
Annexed hereto as Schedule 3.6 is a correct and complete list
as of the date hereof of all Material Subsidiaries of the Borrower showing, as
to each Material Subsidiary, its name, the jurisdiction of its incorporation,
its authorized capitalization and the ownership of the capital stock of such
Material Subsidiary.
SECTION 3.7. Copyrights, Patents and Other Rights.
------------------------------------
Each of the Borrower and its Subsidiaries owns, or is licensed
to use, all trademarks, tradenames, service marks, copyrights, patents and other
intellectual property material to its business, and the use thereof by the
Borrower and its Subsidiaries does not infringe upon the rights of any other
Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
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SECTION 3.8. Title to Properties.
-------------------
Each of the Borrower and its Material Subsidiaries will have
at the Closing Date good title or valid leasehold interests to each of the
properties and assets reflected on the balance sheets referred to in Section
3.4, except for minor defects in title that do not interfere with its ability to
conduct its business as currently conducted or to utilize such properties for
their intended purposes, and all such properties and assets will be free and
clear of Liens, except Permitted Encumbrances.
SECTION 3.9. Litigation.
----------
There are no lawsuits or other proceedings pending (including,
but not limited to, matters relating to environmental liability), or, to the
knowledge of the Borrower, threatened, against or affecting the Borrower or any
of its Subsidiaries or any of their respective properties, by or before any
Governmental Authority or arbitrator, which could reasonably be expected to have
a Material Adverse Effect. Neither the Borrower nor any of its Subsidiaries is
in default with respect to any order, writ, injunction, decree, rule or
regulation of any Governmental Authority, which default would have a Material
Adverse Effect.
SECTION 3.10. Federal Reserve Regulations.
---------------------------
Neither the Borrower nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock. No part of
the proceeds of the Loans and no Letters of Credit will be used, whether
immediately, incidentally or ultimately, for any purpose violative of or
inconsistent with any of the provisions of Regulation G, T, U or X of the Board.
SECTION 3.11. Investment Company Act.
----------------------
The Borrower is not, and will not during the term of this
Agreement be, (x) an "investment company", within the meaning of the Investment
Company Act of 1940, as amended or (y) subject to regulation under the Public
Utility Holding Company Act of 1935 or the Federal Power Act.
SECTION 3.12. Enforceability.
--------------
This Agreement and the other Fundamental Documents when
executed will constitute legal, valid and enforceable obligations (as
applicable) of the Borrower (subject, as to enforcement, to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and to general
principles of equity).
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SECTION 3.13. Taxes.
-----
The Borrower and each of its Subsidiaries have filed or caused
to be filed all federal, provincial, state and local tax returns which are
required to be filed, and have paid or have caused to be paid all taxes as shown
on said returns or on any assessment received by them in writing, to the extent
that such taxes have become due, except (a) as permitted by Section 5.4 or (b)
to the extent that the failure to do so could not reasonably be expected to
result in a Material Adverse Effect.
SECTION 3.14. Compliance with ERISA.
---------------------
Each of the Borrower and its Subsidiaries is in compliance in
all material respects with the provisions of ERISA and the Code applicable to
Plans, and the regulations and published interpretations thereunder, if any,
which are applicable to it and the applicable laws, rules and regulations of any
jurisdiction applicable to Plans. Neither the Borrower nor any of its
Subsidiaries has, with respect to any Plan established or maintained by it,
engaged in a prohibited transaction which would subject it to a material tax or
penalty on prohibited transactions imposed by ERISA or Section 4975 of the Code.
No liability to the PBGC that is material to the Borrower and its Subsidiaries
taken as a whole has been, or to the Borrower's best knowledge is reasonably
expected to be, incurred with respect to the Plans and there has been no
Reportable Event and no other event or condition that presents a material risk
of termination of a Plan by the PBGC. Neither the Borrower nor any of its
Subsidiaries has engaged in a transaction which would result in the incurrence
of a material liability under Section 4069 of ERISA. As of the Closing Date,
neither the Borrower nor any of its Subsidiaries contributes to a Multiemployer
Plan, and has not incurred any liability that would be material to the Borrower
and its Subsidiaries taken as a whole on account of a partial or complete
withdrawal (as defined in Sections 4203 and 4205 of ERISA, respectively) with
respect to any Multiemployer Plan.
SECTION 3.15. Disclosure.
----------
As of the Closing Date, neither this Agreement nor the
Confidential Information Memorandum dated February 1997, at the time it was
furnished, contained any untrue statement of a material fact or omitted to state
a material fact, under the circumstances under which it was made, necessary in
order to make the statements contained herein or therein not misleading. At the
date hereof, there is no fact known to the Borrower which, individually or in
the aggregate, could reasonably be expected to result in a Material Adverse
Effect (provided that the Acquisition shall not be deemed to be a material
adverse change).
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SECTION 3.16. Environmental Liabilities.
-------------------------
Except with respect to any matters, that, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect, neither the Borrower nor any of its Subsidiaries (i) has failed to
comply with any Environmental Law or to obtain, maintain or comply with any
permit, license or other approval required under any Environmental Law, (ii) has
become subject to any Environmental Liability, (iii) has received notice of any
claim with respect to any Environmental Liability or (iv) knows of any basis for
any Environmental Liability.
4. CONDITIONS OF LENDING
SECTION 4.1. Conditions Precedent to Effectiveness.
-------------------------------------
The effectiveness of this Agreement is subject to the
following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have
received this Agreement and each of the other Fundamental Documents,
each executed and delivered by a duly authorized officer of the
Borrower.
(b) Corporate Documents for the Borrower. The Administrative
Agent shall have received, with copies for each of the Lenders, a
certificate of the Secretary or Assistant Secretary of the Borrower
dated the date hereof and certifying (A) that attached thereto is a
true and complete copy of the certificate of incorporation and
by-laws of the Borrower as in effect on the date of such
certification; (B) that attached thereto is a true and complete copy
of resolutions adopted by the Board of Directors of the Borrower
authorizing the borrowings and other extensions of credit hereunder
and the execution, delivery and performance in accordance with their
respective terms of this Agreement and any other documents required
or contemplated hereunder; and (C) as to the incumbency and specimen
signature of each officer of the Borrower executing this Agreement
or any other document delivered by it in connection herewith (such
certificate to contain a certification by another officer of the
Borrower as to the incumbency and signature of the officer signing
the certificate referred to in this paragraph (b)).
(c) Financial Statements. The Lenders shall have received
the (i) audited consolidated financial statements of the Borrower
and its Consolidated Subsidiaries as of and for the period ended
April 30, 1995 and April 30, 1996 and (ii) unaudited consolidated
financial statements of the Borrower and its Consolidated
Subsidiaries as of and for the period ended October 31, 1996.
(d) Opinions of Counsel. The Administrative Agent shall
have received the favorable written opinions, dated the date hereof
and addressed to the Administrative
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Agent and the Lenders, of Gordon W. Priest, Jr., Assistant
General Counsel of PHH Corporation and Piper & Marbury, counsel
to the Borrower, substantially in the form of Exhibits B-1 and B-2
hereto respectively.
(e) No Material Adverse Change. The Administrative Agent
shall be satisfied that no material adverse change shall have
occurred with respect to the business, assets, operations or
condition, financial or otherwise, of the Borrower and its
Consolidated Subsidiaries, taken as a whole, since April 30, 1996
(provided that the Acquisition shall not be deemed to be a material
adverse change).
(f) Payment of Fees. The Administrative Agent shall be
satisfied that all amounts payable to the Arranger, the
Administrative Agent and the other Lenders pursuant hereto or with
regard to the transactions contemplated hereby have been or are
simultaneously being paid.
(g) Litigation. No litigation shall be pending or, to
the Borrower's knowledge, threatened which would be likely to have
a Material Adverse Effect, or which could reasonably be expected to
materially adversely affect the ability of the Borrower to fulfill
its obligations hereunder or to otherwise materially impair the
interests of the Lenders.
(h) Existing Credit Agreements. Prior to or simultaneously
with the Closing Date, all obligations under the master 3-year
and 364-day committed existing credit agreements of the Borrower
shall have been paid in full and the commitments of the lenders
thereunder shall have been terminated.
(i) Officer's Certificate. The Administrative Agent shall
have received a certificate of the chief executive officer or chief
financial officer or chief accounting officer of the Borrower
certifying, as of the Closing Date, compliance with the
conditions set forth in paragraphs (b) and (c) of Section 4.2.
The Administrative Agent shall provide the Borrower with written confirmation of
the satisfaction of the conditions precedent specified in this Section 4.1.
SECTION 4.2. Conditions Precedent to Each Loan and Letter of
Credit.
----------------------------------------------
The obligation of the Lenders to make each Loan and of any
Issuing Lender to issue a Letter of Credit, including the initial Loan and
initial Letter of Credit hereunder, is subject to the following conditions
precedent:
(a) Notice. The Administrative Agent shall have received a
notice with respect to such Borrowing or Letter of Credit as
required by Article 2 hereof.
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(b) Representations and Warranties. The representations and
warranties set forth in Article 3 (other than those set forth in
Section 3.5, which shall be deemed made only on the Closing
Date) and in the other Fundamental Documents shall be true
and correct in all material respects on and as of the date of
each Borrowing or Letter of Credit issuance hereunder (except to
the extent that such representations and warranties expressly
relate to an earlier date) with the same effect as if made on and as
of such date; provided that this condition shall not apply to a
Revolving Credit Borrowing which is solely refinancing
outstanding Revolving Credit Loans and which, after giving
effect thereto, has not increased the aggregate amount of
outstanding Revolving Credit Loans.
(c) No Event of Default. On the date of each Borrowing or the
issuance of a Letter of Credit hereunder, the Borrower shall
be in material compliance with all of the terms and provisions
set forth herein to be observed or performed and no Event of
Default or Default shall have occurred and be continuing;
provided that this condition shall not apply to a Revolving
Credit Borrowing which is solely refinancing outstanding
Revolving Credit Loans and which, after giving effect thereto,
has not increased the aggregate amount of outstanding
Revolving Credit Loans.
Each Borrowing or issuance of a Letter of Credit shall be deemed to be a
representation and warranty by the Borrower on the date of such Borrowing or
issuance of a Letter of Credit as to the matters specified in paragraphs (b) and
(c) of this Section.
5. AFFIRMATIVE COVENANTS
For so long as the Commitments shall be in effect or any
amount shall remain outstanding under any Note or unpaid under this Agreement or
there shall be any outstanding L/C Exposure, the Borrower agrees that, unless
the Required Lenders shall otherwise consent in writing, it will, and will cause
each of its Subsidiaries to:
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SECTION 5.1. Financial Statements, Reports, etc.
-----------------------------------
Deliver to each Lender:
(a) As soon as is practicable, but in any event within 90 days
after the end of each fiscal year of the Borrower, (i) either (A)
consolidated statements of income (or operations) and consolidated
statements of cash flows and changes in stockholders' equity of the
Borrower and its Consolidated Subsidiaries for such year and the
related consolidated balance sheets as at the end of such year, or (B)
the Form 10K filed by the Borrower with the Securities and Exchange
Commission and (ii) if not included in such Form 10K, an opinion of
independent certified public accountants of recognized national
standing, which opinion shall state that said consolidated financial
statements fairly present the consolidated financial position and
results of operations of the Borrower and its Consolidated Subsidiaries
as at the end of, and for, such fiscal year and that such financial
statements were prepared in accordance with GAAP applied consistently
throughout the periods reflected therein and with prior periods;
(b) Commencing with the quarter ending June 30, 1997 and as
soon as is practicable, but in any event within 60 days after the end
of each of the first three fiscal quarters of each fiscal year, either
(i) the Form 10-Q filed by the Borrower with the Securities and
Exchange Commission or (ii) the unaudited consolidated balance sheet of
the Borrower and its Consolidated Subsidiaries, as at the end of, and
the related unaudited statements of income and cash flows for such
quarter and for the period from the beginning of the then current
fiscal year to the end of such fiscal quarter and the corresponding
figures as of the end of the preceding fiscal year, and for the
corresponding period in the preceding fiscal year, in each case,
together with a certificate (substantially in the form of Exhibit D)
signed by the chief financial officer, the chief accounting officer or
a vice president responsible for financial administration of the
Borrower to the effect that such financial statements, while not
examined by independent public accountants, reflect, in his opinion and
in the opinion of the Borrower, all adjustments necessary to present
fairly the financial position of the Borrower and its Consolidated
Subsidiaries, as the case may be, as at the end of the fiscal quarter
and the results of their operations for the quarter then ended in
conformity with GAAP consistently applied, subject only to year-end and
audit adjustments and to the absence of footnote disclosure;
(c) Together with the delivery of the statements referred to
in paragraphs (a) and (b) of this Section 5.1, a certificate of the
chief financial officer, chief accounting officer or a vice president
responsible for financial administration of the Borrower, substantially
in the form of Exhibit D hereto (i) stating whether or not the signer
has knowledge of any Default or Event of Default and, if so, specifying
each such Default or Event of Default of which the signer has knowledge
and the nature thereof and (ii) demonstrating in reasonable detail
compliance with the provisions of Sections 6.7 and 6.8;
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(d) Promptly upon their becoming available, copies of all
financial statements, reports, notices and proxy statements sent or
made available by the Borrower or any of its Subsidiaries to its
shareholders generally, of all regular and periodic reports and all
registration statements and prospectuses, if any, filed by any of them
with any securities exchange or with the Securities and Exchange
Commission, or any comparable foreign bodies, and of all press releases
and other statements made available generally by any of them to the
public concerning material developments in the business of the Borrower
or any of its Subsidiaries;
(e) Promptly upon any executive officer of the Borrower or any
of its Subsidiaries obtaining knowledge of the occurrence of any
Default or Event of Default, a certificate of the president, chief
financial officer or chief accounting officer of the Borrower
specifying the nature and period of existence of such Default or Event
of Default and what action the Borrower has taken, is taking and
proposes to take with respect thereto;
(f) Promptly upon any executive officer of the Borrower or any
of its Subsidiaries obtaining knowledge of (i) the institution of any
action, suit, proceeding, investigation or arbitration by any
Governmental Authority or other Person against or affecting the
Borrower or any of its Subsidiaries or any of their assets, or (ii) any
material development in any such action, suit, proceeding,
investigation or arbitration (whether or not previously disclosed to
the Lenders), which, in each case might reasonably be expected to have
a Material Adverse Effect, prompt notice thereof and such other
information as may be reasonably available to it (without waiver of any
applicable evidentiary privilege) to enable the Lenders to evaluate
such matters; and
(g) As soon as available, the Pro Forma Balance Sheet.
SECTION 5.2. Corporate Existence; Compliance with Statutes.
---------------------------------------------
Do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its corporate existence, rights, licenses,
permits and franchises and comply, except where failure to comply, either
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, with all provisions of Applicable Law, and all
applicable restrictions imposed by any Governmental Authority, and all state and
provincial laws and regulations of similar import; provided that mergers,
dissolutions and liquidations permitted under Section 6.4 shall be permitted.
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SECTION 5.3. Insurance.
---------
Maintain with good and reputable insurers insurance in such
amounts and against such risks as are customarily insured against by companies
in similar businesses; provided however, that (a) workmen's compensation
insurance or similar coverage may be effected with respect to its operations in
any particular state or other jurisdiction through an insurance fund operated by
such state or jurisdiction and (b) such insurance may contain self-insurance
retention and deductible levels consistent as such insurance is usually carried
by companies of established reputation and comparable size.
SECTION 5.4. Taxes and Charges.
-----------------
Duly pay and discharge, or cause to be paid and discharged,
before the same shall become delinquent, all federal, state or local taxes,
assessments, levies and other governmental charges, imposed upon the Borrower or
any of its Subsidiaries or their respective properties, sales and activities, or
any part thereof, or upon the income or profits therefrom, as well as all claims
for labor, materials, or supplies which if unpaid could reasonably be expected
to result in a Material Adverse Effect; provided that any such tax, assessment,
charge, levy or claim need not be paid if the validity or amount thereof shall
currently be contested in good faith by appropriate proceedings and if the
Borrower shall have set aside on its books reserves (the presentation of which
is segregated to the extent required by GAAP) adequate with respect thereto if
reserves shall be deemed necessary by the Borrower in accordance with GAAP; and
provided, further, that the Borrower will pay all such taxes, assessments,
levies or other governmental charges forthwith upon the commencement of
proceedings to foreclose any Lien which may have attached as security therefor
(unless the same is fully bonded or otherwise effectively stayed).
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SECTION 5.5. ERISA Compliance and Reports.
----------------------------
Furnish to the Administrative Agent (a) as soon as possible,
and in any event within 30 days after any executive officer (as defined in
Regulation C under the Securities Act of 1933, as amended) of the Borrower knows
that (i) any Reportable Event with respect to any Plan has occurred, a statement
of the chief financial officer of the Borrower, setting forth details as to such
Reportable Event and the action which it proposes to take with respect thereto,
together with a copy of the notice, if any, required to be filed by the Borrower
or any of its Subsidiaries of such Reportable Event with the PBGC or (ii) an
accumulated funding deficiency has been incurred or an application has been made
to the Secretary of the Treasury for a waiver or modification of the minimum
funding standard or an extension of any amortization period under Section 412 of
the Code with respect to a Plan, a Plan has been or is proposed to be terminated
in a "distress termination" (as defined in Section 4041(c) of ERISA),
proceedings have been instituted to terminate a Plan or a Multiemployer Plan, a
proceeding has been instituted to collect a delinquent contribution to a Plan or
a Multiemployer Plan, or either the Borrower or any of its Subsidiaries will
incur any liability (including any contingent or secondary liability) to or on
account of the termination of or withdrawal from a Plan under Section 4062, 4063
or 4064 of ERISA or the withdrawal or partial withdrawal from a Multiemployer
Plan under Section 4201 or 4204 of ERISA, a statement of the chief financial
officer of the Borrower, setting forth details as to such event and the action
it proposes to take with respect thereto, (b) promptly upon the reasonable
request of the Administrative Agent, copies of each annual and other report with
respect to each Plan and (c) promptly after receipt thereof, a copy of any
notice the Borrower or any of its Subsidiaries may receive from the PBGC
relating to the PBGC's intention to terminate any Plan or to appoint a trustee
to administer any Plan; provided that the Borrower shall not be required to
notify the Administrative Agent of the occurrence of any of the events set forth
in the preceding clauses (a) and (c) unless such event, individually or in the
aggregate, could reasonably be expected to result in a material liability to the
Borrower and its Subsidiaries taken as a whole.
SECTION 5.6. Maintenance of and Access to Books and Records;
Examinations.
-----------------------------------------------
Maintain or cause to be maintained at all times true and
complete books and records of its financial operations (in accordance with GAAP)
and, after the occurrence and during the continuance of an Event of Default (at
a time during which Loans or Letters of Credit are outstanding), provide the
Administrative Agent and its representatives access to all such books and
records and to any of their properties or assets during regular business hours,
in order that the Administrative Agent may make such audits and examinations and
make abstracts from such books, accounts and records and may discuss the
affairs, finances and accounts with, and be advised as to the same by, officers
and independent accountants, all as the Administrative Agent may deem
appropriate for the purpose of verifying the various reports delivered pursuant
to this Agreement or for otherwise ascertaining compliance with this Agreement.
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SECTION 5.7. Maintenance of Properties.
-------------------------
Keep its properties which are material to its business in good
repair, working order and condition consistent with companies of established
reputation and comparable size.
6. NEGATIVE COVENANTS
For so long as the Commitments shall be in effect or any
amount shall remain outstanding under any Note or unpaid under this Agreement or
there shall be any outstanding L/C Exposure, unless the Required Lenders shall
otherwise consent in writing, the Borrower agrees that it will not, nor will it
permit any of its Subsidiaries to, directly or indirectly:
SECTION 6.1. Limitation on Material Subsidiary Indebtedness.
----------------------------------------------
Incur, assume or suffer to exist any Indebtedness of any
Material Subsidiary which principally transacts business in the United States,
except:
(a) Indebtedness in existence on the date hereof, or required
to be incurred pursuant to a contractual obligation in existence on the
date hereof, which in either case (to the extent not otherwise
permitted by paragraphs (b)-(g) of this Section 6.1), is listed on
Schedule 6.1 hereto, but not any extensions or renewals thereof, unless
effected on substantially the same terms or on terms not more adverse
to the Lenders;
(b) purchase money Indebtedness (including Capital Leases) to
the extent permitted under Section 6.5(b);
(c) Indebtedness owing by any Material Subsidiary to the
Borrower or any other Subsidiary;
(d) Indebtedness of any Material Subsidiary of the Borrower
issued and outstanding prior to the date on which such Subsidiary
became a Subsidiary of the Borrower (other than Indebtedness issued in
connection with, or in anticipation of, such Subsidiary becoming a
Subsidiary of the Borrower); provided that immediately prior and on a
Pro Forma Basis after giving effect to, such Person becoming a
Subsidiary of the Borrower, no Default or Event of Default shall occur
or then be continuing and the aggregate principal amount of such
Indebtedness, when added to the aggregate outstanding principal amount
of Indebtedness permitted by paragraphs (e) and (f) below, shall not
exceed $125,000,000;
(e) any renewal, extension or modification of Indebtedness
under paragraph (d) above so long (i) as such renewal, extension or
modification is effected on substantially the same terms or on terms
which, in the aggregate, are not more adverse to the Lenders and (ii)
the principal amount of such Indebtedness is not increased;
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(f) other Indebtedness of any Material Subsidiary in an
aggregate principal amount which, when added to the aggregate
outstanding principal amount of Indebtedness permitted by paragraphs
(d) and (e) above, does not exceed $125,000,000; and
(g) Indebtedness of Special Purpose Vehicle Subsidiaries
incurred to finance investment in lease agreements and vehicles by such
Subsidiaries, so long as the lender (and any other party) in respect of
such Indebtedness has recourse, if any, solely to the assets of such
Special Purpose Vehicle Subsidiary.
SECTION 6.2. [Intentionally deleted].
-----------------------
SECTION 6.3. Limitation on Transactions with Affiliates.
Enter into any transaction, including, without limitation, any purchase,
sale, lease or exchange of property or the rendering of any service, with any
Affiliate (other than the Borrower or a wholly-owned Subsidiary of the
Borrower) unless such transaction is (a) otherwise permitted under this
Agreement, (b) in the ordinary course of the Borrower's or such Subsidiary's
business and (c) upon fair and reasonable terms no less favorable to the
Borrower or such Subsidiary, as the case may be, than it would obtain in a
comparable arm's length transaction with a Person which is not an Affiliate.
SECTION 6.4. Consolidation, Merger, Sale of Assets.
-------------------------------------
(a) Neither the Borrower nor any of its Material Subsidiaries
(in one transaction or series of transactions) will wind up, liquidate or
dissolve its affairs, or enter into any transaction of merger or consolidation,
except any merger, consolidation, dissolution or liquidation (i) in which the
Borrower is the surviving entity or if the Borrower is not a party to such
transaction then a Subsidiary is the surviving entity, (ii) in which the
surviving entity becomes a Subsidiary of the Borrower immediately upon the
effectiveness of such merger, consolidation, dissolution or liquidation or (iii)
in connection with a transaction permitted by Section 6.4(b); provided that
immediately prior to and on a Pro Forma Basis after giving effect to such
transaction no Default or Event of Default has occurred or is continuing.
(b) Sell or otherwise dispose of all or substantially all of
the assets of the Borrower and its Subsidiaries, taken as a whole, other than
pursuant to the Acquisition; provided that it is understood for purposes of
clarity that this Section 6.4(b) shall not prohibit or limit in any respect
transactions in the ordinary course of business of the Borrower or any of its
Subsidiaries (including but not limited to asset securitization transactions
entered into in the ordinary course of business).
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SECTION 6.5. Limitations on Liens.
--------------------
Suffer any Lien on the property of the Borrower or any of the
Material Subsidiaries which principally transact business in the United States,
except:
(a) deposits under worker's compensation, unemployment
insurance and social security laws or to secure statutory obligations
or surety or appeal bonds or performance or other similar bonds in the
ordinary course of business, or statutory Liens of landlords, carriers,
warehousemen, mechanics and materialmen and other similar Liens, in
respect of liabilities which are not yet due or which are being
contested in good faith, Liens for taxes not yet due and payable, and
Liens for taxes due and payable, the validity or amount of which is
currently being contested in good faith by appropriate proceedings and
as to which foreclosure and other enforcement proceedings shall not
have been commenced (unless fully bonded or otherwise effectively
stayed);
(b) purchase money Liens granted to the vendor or Person
financing the acquisition of property, plant or equipment if (i)
limited to the specific assets acquired and, in the case of tangible
assets, other property which is an improvement to or is acquired for
specific use in connection with such acquired property or which is real
property being improved by such acquired property; (ii) the debt
secured by such Lien is the unpaid balance of the acquisition cost of
the specific assets on which the Lien is granted; and (iii) such
transaction does not otherwise violate this Agreement;
(c) Liens upon real and/or personal property, which property
was acquired after the date of this Agreement (by purchase,
construction or otherwise) by the Borrower or any of its Material
Subsidiaries, each of which Liens existed on such property before the
time of its acquisition and was not created in anticipation thereof;
provided that no such Lien shall extend to or cover any property of the
Borrower or such Material Subsidiary other than the respective property
so acquired and improvements thereon;
(d) Liens arising out of attachments, judgments or awards as
to which an appeal or other appropriate proceedings for contest or
review are promptly commenced (and as to which foreclosure and other
enforcement proceedings (i) shall not have been commenced (unless fully
bonded or otherwise effectively stayed) or (ii) in any event shall be
promptly fully bonded or otherwise effectively stayed);
(e) Liens created under any Fundamental Document as
contemplated by this Agreement;
(f) Liens securing Indebtedness of any Material Subsidiary to
the Borrower;
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(g) Liens covering only the property or other assets of any
Special Purpose Vehicle Subsidiary and securing only such Indebtedness
of such Special Purpose Vehicle Subsidiary as is permitted by paragraph
(g) of Section 6.1;
(h) mortgage liens existing on homes acquired by the Borrower
or any of its Material Subsidiaries in the ordinary course of their
relocation management business;
(i) other Liens incidental to the conduct of its business or
the ownership of its property and other assets, which do not secure any
Indebtedness and did not otherwise arise in connection with the
borrowing of money or the obtaining of advances or credit and which do
not, in the aggregate, materially detract from the value of its
property or other assets or materially impair the use thereof in the
operation of its business;
(j) Liens covering only the property or other assets of any
Subsidiary which principally transacts business outside of the United
States; and
(k) to the extent not otherwise permitted by paragraphs
(a)-(j) of this Section 6.5, Liens existing on the date hereof listed
on Schedule 6.5 hereto and any extensions or renewals thereof.
SECTION 6.6. Sale and Leaseback.
------------------
Enter into any arrangement with any Person or Persons, whereby
in contemporaneous transactions the Borrower or any of its Subsidiaries sells
essentially all of its right, title and interest in a material asset and the
Borrower or any of its Subsidiaries acquires or leases back the right to use
such property except that the Borrower may enter into sale-leaseback
transactions relating to assets not in excess of $100,000,000 in the aggregate
on a cumulative basis.
SECTION 6.7. Consolidated Net Worth.
----------------------
Permit Consolidated Net Worth on the last day of any fiscal
quarter to be less than the greater of (a) the sum of (i) 70% of Consolidated
Net Worth on the first calendar quarter-end following the Acquisition plus (ii)
25% of Consolidated Net Income, if positive, for each fiscal quarter after the
first fiscal quarter-end following the Acquisition or (b) $400,000,000.
SECTION 6.8. Ratio of Indebtedness To Consolidated Net Worth.
-----------------------------------------------
Permit, at any time, Indebtedness of the Borrower and its
Subsidiaries less Cash Equivalents (owned by the Borrower or any of its
Subsidiaries and free of Liens (other than Liens securing Indebtedness)) to
exceed ten (10) times Consolidated Net Worth.
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SECTION 6.9. Accounting Practices.
--------------------
Establish a fiscal year ending on other than December 31, or
modify or change accounting treatments or reporting practices except as
otherwise required or permitted by GAAP.
SECTION 6.10. Restrictions Affecting Subsidiaries.
-----------------------------------
Enter into, or suffer to exist, any Contractual Obligation
with any Person, which prohibits or limits the ability of any Subsidiary (other
than Special Purpose Vehicle Subsidiaries) to (a) pay dividends or make other
distributions or pay any Indebtedness owed to the Borrower or any other
Subsidiary, (b) make loans or advances to the Borrower or any other Subsidiary
or (c) transfer any of its properties or assets to the Borrower or any other
Subsidiary.
7. EVENTS OF DEFAULT
In the case of the happening and during the continuance of any
of the following events (herein called "Events of Default"):
(a) any representation or warranty made or deemed made by the
Borrower in this Agreement or any other Fundamental Document or in
connection with this Agreement or with the execution and delivery of
the Notes or the Borrowings (or other extensions of credit) hereunder,
or any statement or representation made in any report, financial
statement, certificate or other document furnished by or on behalf of
the Borrower or any of its Subsidiaries to the Administrative Agent or
any Lender under or in connection with this Agreement, shall prove to
have been false or misleading in any material respect when made or
delivered;
(b) default shall be made in the payment of any principal of
(or Letter of Credit reimbursement obligations) or interest on the
Notes or of any fees or other amounts payable by the Borrower
hereunder, when and as the same shall become due and payable, whether
at the due date thereof or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise, and in the case of payments of
interest, such default shall continue unremedied for five Business
Days, and in the case of payments other than of any principal amount of
or interest on the Notes, such default shall continue unremedied for
five Business Days after receipt by the Borrower of an invoice
therefor;
(c) default shall be made in the due observance or performance
of any covenant, condition or agreement contained in Section 5.1(e)
(with respect to notice of Default or Events of Default) or Article 6;
(d) default shall be made by the Borrower in the due
observance or performance of any other covenant, condition or agreement
to be observed or performed pursuant to the terms of this Agreement or
any other Fundamental Document and such default shall
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continue unremedied for thirty (30) days after the Borrower obtains
knowledge of such occurrence;
(e) (i) default in payment shall be made with respect to any
Indebtedness or Interest Rate Protection Agreements of the Borrower or
any of its Subsidiaries where the amount or amounts of such
Indebtedness exceeds $25,000,000 (or its equivalent thereof in any
other currency) in the aggregate; or (ii) default in payment or
performance shall be made with respect to any Indebtedness or Interest
Rate Protection Agreements of the Borrower or any of its Subsidiaries
where the amount or amounts of such Indebtedness or Interest Rate
Protection Agreements exceeds $25,000,000 (or its equivalent thereof in
any other currency) in the aggregate, if the effect of such default is
to result in the acceleration of the maturity of such Indebtedness or
Interest Rate Protection Agreement; or (iii) any other circumstance
shall arise (other than the mere passage of time) by reason of which
the Borrower or any Subsidiary of the Borrower is required to redeem or
repurchase, or offer to holders the opportunity to have redeemed or
repurchased, any such Indebtedness or Interest Rate Protection
Agreement where the amount or amounts of such Indebtedness or Interest
Rate Protection Agreement exceeds $25,000,000 (or its equivalent
thereof in any other currency) in the aggregate; provided that clause
(iii) shall not apply to secured Indebtedness or Interest Rate
Protection Agreement that becomes due as a result of a voluntary sale
of the property or assets securing such Indebtedness or Interest Rate
Protection Agreement and provided, further, that clauses (ii) and (iii)
shall not apply to any Indebtedness or Interest Rate Protection
Agreement of any Subsidiary issued and outstanding prior to the date
such Subsidiary became a Subsidiary of the Borrower (other than
Indebtedness or Interest Rate Protection Agreement issued in connection
with, or in anticipation of, such Subsidiary becoming a Subsidiary of
the Borrower) if such default or circumstance arises solely as a result
of a "change of control" provision applicable to such Indebtedness or
Interest Rate Protection Agreement which becomes operative as a result
of the acquisition of such Subsidiary by the Borrower or any of its
Subsidiaries;
(f) the Borrower or any of its Material Subsidiaries shall
generally not pay its debts as they become due or shall admit in
writing its inability to pay its debts, or shall make a general
assignment for the benefit of creditors; or the Borrower or any of its
Material Subsidiaries shall commence any case, proceeding or other
action seeking to have an order for relief entered on its behalf as
debtor or to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, liquidation, dissolution or
composition of it or its debts under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors or seeking appointment
of a receiver, trustee, custodian or other similar official for it or
for all or any substantial part of its property or shall file an answer
or other pleading in any such case, proceeding or other action
admitting the material allegations of any petition, complaint or
similar pleading filed against it or consenting to the relief sought
therein; or the Borrower or any Material Subsidiary thereof shall take
any action to authorize any of the foregoing;
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(g) any involuntary case, proceeding or other action against
the Borrower or any of its Material Subsidiaries shall be commenced
seeking to have an order for relief entered against it as debtor or to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, liquidation, dissolution or composition of it
or its debts under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, or seeking appointment of a
receiver, trustee, custodian or other similar official for it or for
all or any substantial part of its property, and such case, proceeding
or other action (i) results in the entry of any order for relief
against it or (ii) shall remain undismissed for a period of sixty (60)
days;
(h) the occurrence of a Change in Control subsequent to the
Acquisition (provided that, until the Acquisition is consummated and if
the Acquisition is not consummated, the definition of "Change in
Control" shall be deemed amended on such date such that (i) all
references therein to "HFS Incorporated" shall be deemed to be
references to "the Borrower" and (ii) clause (iii) of such definition
shall be deleted in its entirety);
(i) final judgment(s) for the payment of money in excess of
$25,000,000 (or its equivalent thereof in any other currency) shall be
rendered against the Borrower or any of its Subsidiaries which within
thirty (30) days from the entry of such judgment shall not have been
discharged or stayed pending appeal or which shall not have been
discharged within thirty (30) days from the entry of a final order of
affirmance on appeal; or
(j) a Reportable Event relating to a failure to meet minimum
funding standards or an inability to pay benefits when due shall have
occurred with respect to any Plan under the control of the Borrower or
any of its Subsidiaries and shall not have been remedied within 45 days
after the occurrence of such Reportable Event, if the occurrence
thereof could reasonably be expected to have a Material Adverse Effect;
then, in every such event and at any time thereafter during the continuance of
such event, the Administrative Agent may or, if directed by the Required
Lenders, shall take either or both of the following actions, at the same or
different times: terminate forthwith the Commitments and/or declare the
principal of and the interest on the Loans and the Notes and all other amounts
payable hereunder or thereunder to be forthwith due and payable, whereupon the
same shall become and be forthwith due and payable, without presentment, demand,
protest, notice of acceleration, notice of intent to accelerate or other notice
of any kind, all of which are hereby expressly waived, anything in this
Agreement or in the Notes to the contrary notwithstanding; provided that, in the
case of a payment of principal (or Letter of Credit reimbursement obligations)
default pursuant to paragraph (b), the Administrative Agent, unless it is
directed to do so by the Required Lenders, will not take either or both of such
actions for three Business Days. If an Event of Default specified in paragraph
(f) or (g) above shall have occurred, the principal of and interest on the Loans
and the Notes and all other amounts payable hereunder or thereunder shall
thereupon and concurrently become due and payable without presentment, demand,
protest,
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notice of acceleration, notice of intent to accelerate or other notice of any
kind, all of which are hereby expressly waived, anything in this
Agreement or the Notes to the contrary notwithstanding and the Commitments of
the Lenders shall thereupon forthwith terminate.
8. THE ADMINISTRATIVE AGENT AND EACH ISSUING LENDER
SECTION 8.1. Administration by Administrative Agent.
--------------------------------------
The general administration of the Fundamental Documents and
any other documents contemplated by this Agreement shall be by the
Administrative Agent or its designees as provided for herein. Each of the
Lenders hereby irrevocably authorizes the Administrative Agent, at its
discretion, to take or refrain from taking such actions as agent on its behalf
and to exercise or refrain from exercising such powers under the Fundamental
Documents, the Notes and any other documents contemplated by this Agreement as
are delegated by the terms hereof or thereof, as appropriate, together with all
powers reasonably incidental thereto. The Administrative Agent shall have no
duties or responsibilities except as set forth in the Fundamental Documents. Any
Lender which is a co-agent or lead manager (as indicated on Schedule 1.1A
hereto) for the credit facility hereunder shall not have any duties or
responsibilities except as a Lender hereunder.
SECTION 8.2. Advances and Payments.
---------------------
(a) On the date of each Loan, the Administrative Agent shall
be authorized (but not obligated) to advance, for the account of each of the
applicable Lenders, the amount of the Loan to be made by it in accordance with
this Agreement. Each of the Lenders hereby authorizes and requests the
Administrative Agent to advance for its account, pursuant to the terms hereof,
the amount of the Loan to be made by it, unless with respect to any Lender, such
Lender has theretofore specifically notified the Administrative Agent that such
Lender does not intend to fund that particular Loan. Each of the Lenders agrees
forthwith to reimburse the Administrative Agent in immediately available funds
for the amount so advanced on its behalf by the Administrative Agent pursuant to
the immediately preceding sentence. If any such reimbursement is not made in
immediately available funds on the same day on which the Administrative Agent
shall have made any such amount available on behalf of any Lender in accordance
with this Section 8.2, such Lender shall pay interest to the Administrative
Agent at a rate per annum equal to the Administrative Agent's cost of obtaining
overnight funds in the New York Federal Funds Market. Notwithstanding the
preceding sentence, if such reimbursement is not made by the second Business Day
following the day on which the Administrative Agent shall have made any such
amount available on behalf of any Lender or such Lender has indicated that it
does not intend to reimburse the Administrative Agent, the Borrower shall
immediately pay such unreimbursed advance amount (plus any accrued, but unpaid
interest at the rate per annum equal to the Administrative Agent's cost of
obtaining overnight funds in the New York Federal Funds Market) to the
Administrative Agent.
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(b) Any amounts received by the Administrative Agent in
connection with this Agreement or the Notes the application of which is not
otherwise provided for shall be applied, in accordance with each of the Lenders'
pro rata interest therein, first, to pay accrued but unpaid Facility Fees,
second, to pay accrued but unpaid interest on the Notes, third, to pay the
principal balance outstanding on the Notes and fourth, to pay other amounts
payable to the Administrative Agent and/or the Lenders. All amounts to be paid
to any of the Lenders by the Administrative Agent shall be credited to the
applicable Lenders, after collection by the Administrative Agent, in immediately
available funds either by wire transfer or deposit in such Lender's
correspondent account with the Administrative Agent, or as such Lender and the
Administrative Agent shall from time to time agree.
SECTION 8.3. Sharing of Setoffs and Cash Collateral.
--------------------------------------
Each of the Lenders agrees that if it shall, through the
operation of Sections 2.19, 2.24(h) or 2.24(i) or the exercise of a right of
banker's lien, setoff or counterclaim against the Borrower, including, but not
limited to, a secured claim under Section 506 of Title 11 of the United States
Code or other security or interest arising from, or in lieu of, such secured
claim and received by such Lender under any applicable bankruptcy, insolvency or
other similar law, or otherwise (other than pursuant to Section 2.15(f) or
2.25), obtain payment in respect of its Loans or interests in Letters of Credit
as a result of which the unpaid portion of its Loans or L/C Exposure is
proportionately less than the unpaid portion of any of the other Lenders (a) it
shall promptly purchase at par (and shall be deemed to have thereupon purchased)
from such other Lenders a participation in the Loans or L/C Exposure of such
other Lenders, so that the aggregate unpaid principal amount of each of the
Lenders' Loans and L/C Exposure and its participation in Loans and L/C Exposure
of the other Lenders shall be in the same proportion to the aggregate unpaid
principal amount of all Loans and L/C Exposure then outstanding as the principal
amount of its Loans and L/C Exposure prior to the obtaining of such payment was
to the principal amount of all Loans and L/C Exposure outstanding prior to the
obtaining of such payment and (b) such other adjustments shall be made from time
to time as shall be equitable to ensure that the Lenders share such payment pro
rata.
SECTION 8.4. Notice to the Lenders.
---------------------
Upon receipt by the Administrative Agent from the Borrower of
any communication calling for an action on the part of the Lenders, or upon
notice to the Administrative Agent of any Event of Default, the Administrative
Agent will in turn immediately inform the other Lenders in writing (which shall
include telegraphic communications) of the nature of such communication or of
the Event of Default, as the case may be.
SECTION 8.5. Liability of Administrative Agent and Each
Issuing Lender.
------------------------------------------
(a) The Administrative Agent or any Issuing Lender, when
acting on behalf of the Lenders may execute any of its duties under this
Agreement by or through its officers, agents, or
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employees and neither the Administrative Agent, the Issuing Lenders nor
their respective directors, officers, agents, or employees shall be liable to
the Lenders or any of them for any action taken or omitted to be taken in good
faith, or be responsible to the Lenders or to any of them for the
consequences of any oversight or error of judgment, or for any loss, unless
the same shall happen through its gross negligence or willful misconduct.
Neither the Administrative Agent, the Issuing Lenders nor their respective
directors, officers, agents, and employees shall in any event be liable to the
Lenders or to any of them for any action taken or omitted to be taken by it
pursuant to instructions received by it from the Required Lenders or in
reliance upon the advice of counsel selected by it. Without limiting the
foregoing, neither the Administrative Agent, the Issuing Lenders nor any of
their respective directors, officers, employees, or agents shall be
responsible to any of the Lenders for the due execution (other than its own),
validity, genuineness, effectiveness, sufficiency, or enforceability of, or
for any statement, warranty, or representation made by any other Person in, or
for the perfection of any security interest contemplated by, this Agreement or
any related agreement, document or order, or for the designation or failure to
designate this transaction as a "Highly Leveraged Transaction" for regulatory
purposes, or shall be required to ascertain or to make any inquiry concerning
the performance or observance by the Borrower of any of the terms, conditions,
covenants, or agreements of this Agreement or any related agreement or document.
(b) Neither the Administrative Agent, the Issuing Lenders, nor
any of their respective directors, officers, employees, or agents shall have any
responsibility to the Borrower on account of the failure or delay in performance
or breach by any of the Lenders or the Borrower of any of their respective
obligations under this Agreement or the Notes or any related agreement or
document or in connection herewith or therewith.
(c) The Administrative Agent and the Issuing Lenders, in such
capacities hereunder, shall be entitled to rely on any communication,
instrument, or document reasonably believed by it to be genuine or correct and
to have been signed or sent by a Person or Persons believed by it to be the
proper Person or Persons, and it shall be entitled to rely on advice of legal
counsel, independent public accountants, and other professional advisers and
experts selected by it.
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SECTION 8.6. Reimbursement and Indemnification.
---------------------------------
Each of the Lenders severally and not jointly agrees (i) to
reimburse the Administrative Agent and the Arranger, in the amount of its
proportionate share, for any reasonable expenses and fees incurred for the
benefit of the Lenders under the Fundamental Documents, including, without
limitation, reasonable counsel fees and compensation of agents and employees
paid for services rendered on behalf of the Lenders, and any other reasonable
expense incurred in connection with the administration or enforcement thereof
not reimbursed by the Borrower or one of its Subsidiaries; (ii) to indemnify and
hold harmless the Administrative Agent and the Arranger and any of their
directors, officers, employees, or agents, on demand, in the amount of its
proportionate share, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against it or any of them in any way relating to or arising out
of the Fundamental Documents or any action taken or omitted by it or any of them
under the Fundamental Documents to the extent not reimbursed by the Borrower or
one of its Subsidiaries (except such as shall result from the gross negligence
or willful misconduct of the Person seeking indemnification); and (iii) to
indemnify and hold harmless each of the Issuing Lenders and any of their
respective directors, officers, employees, or agents or demand in the amount of
its proportionate share from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on or
incurred by or asserted against it relating to or arising out of the issuance of
any Letters of Credit (except such as shall result from the gross negligence or
willful misconduct of the Person seeking indemnification).
SECTION 8.7. Rights of Administrative Agent.
------------------------------
It is understood and agreed that Chase shall have the same
rights and powers hereunder (including the right to give such instructions) as
the other Lenders and may exercise such rights and powers, as well as its rights
and powers under other agreements and instruments to which it is or may be
party, and engage in other transactions with the Borrower as though it were not
the Administrative Agent on behalf of the Lenders under this Agreement.
SECTION 8.8. Independent Investigation by Lenders.
------------------------------------
Each of the Lenders acknowledges that it has decided to enter
into this Agreement and to make the Loans and participate in the Letters of
Credit hereunder based on its own analysis of the transactions contemplated
hereby and of the creditworthiness of the Borrower and agrees that neither the
Administrative Agent nor any Issuing Lender shall bear responsibility therefor.
SECTION 8.9. Notice of Transfer.
------------------
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The Administrative Agent and the Issuing Lenders may deem and
treat any Lender which is a party to this Agreement as the owners of such
Lender's respective portions of the Loans and Letter of Credit reimbursement
rights for all purposes, unless and until a written notice of the assignment or
transfer thereof executed by any such Lender shall have been received by the
Administrative Agent and become effective pursuant to Section 9.3.
SECTION 8.10. Successor Administrative Agent.
------------------------------
The Administrative Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Required Lenders shall have the right to appoint a successor
Administrative Agent from among the Lenders, with the consent of the Borrower,
which will not be unreasonably withheld. If no successor Administrative Agent
shall have been so appointed by the Required Lenders and shall have accepted
such appointment, within 30 days after the retiring Administrative Agent's
giving of notice of resignation, the retiring Administrative Agent may, on
behalf of the Lenders, appoint a successor Administrative Agent, which with the
consent of the Borrower, which will not be unreasonably withheld, shall be a
commercial bank organized or licensed under the laws of the United States or of
any State thereof and having a combined capital and surplus of at least
$500,000,000. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Administrative Agent's resignation hereunder
as Administrative Agent, the provisions of this Article 8 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.
SECTION 8.11. Resignation of an Issuing Lender.
--------------------------------
Any Issuing Lender may resign at any time by giving written
notice thereof to the Lenders and the Borrower. Upon any such resignation, such
Issuing Lender shall be discharged from any duties and obligations under this
Agreement in its capacity as an Issuing Lender with regard to Letters of Credit
not yet issued. After any retiring Issuing Lender's resignation hereunder as an
Issuing Lender, the provisions of this Agreement shall continue to inure to its
benefit as to any outstanding Letters of Credit or otherwise with regard to
outstanding L/C Exposure and any actions taken or omitted to be taken by it
while it was an Issuing Lender under this Agreement.
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9. MISCELLANEOUS
SECTION 9.1. Notices.
-------
Notices and other communications provided for herein shall be
in writing and shall be delivered or mailed (or in the case of telegraphic
communication, if by telegram, delivered to the telegraph company and, if by
telex, telecopy, graphic scanning or other telegraphic communications equipment
of the sending party hereto, delivered by such equipment) addressed, if to the
Administrative Agent or Chase, to it at One Chase Manhattan Plaza, New York, New
York 10081, Attn: Maggie Swales, with a copy to Sandra Miklave, if to the
Borrower, to it at 11333 McCormick Road, Hunt Valley, Maryland 21031-1000,
Attention: Assistant Treasurer, with a copy to the General Counsel, or if to a
Lender, to it at its address set forth on Schedule 1.1A (or in its Assignment
and Acceptance or other agreement pursuant to which it became a Lender
hereunder), or such other address as such party may from time to time designate
by giving written notice to the other parties hereunder. All notices and other
communications given to any party hereto in accordance with the provisions of
this Agreement shall be deemed to have been given on the fifth Business Day
after the date when sent by registered or certified mail, postage prepaid,
return receipt requested, if by mail, or when delivered to the telegraph
company, charges prepaid, if by telegram, or when receipt is acknowledged, if by
any telecopier or telegraphic communications equipment of the sender, in each
case addressed to such party as provided in this Section 9.1 or in accordance
with the latest unrevoked written direction from such party.
SECTION 9.2. Survival of Agreement, Representations and
Warranties, etc.
------------------------------------------
All warranties, representations and covenants made by the
Borrower herein or in any certificate or other instrument delivered by it or on
its behalf in connection with this Agreement shall be considered to have been
relied upon by the Administrative Agent and the Lenders and shall survive the
making of the Loans and the issuance of Letters of Credit herein contemplated
and the issuance and delivery to the Administrative Agent of the Notes
regardless of any investigation made by the Administrative Agent or the Lenders
or on their behalf and shall continue in full force and effect so long as any
amount due or to become due hereunder is outstanding and unpaid and so long as
the Commitments have not been terminated. All statements in any such certificate
or other instrument shall constitute representations and warranties by the
Borrower hereunder.
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SECTION 9.3. Successors and Assigns; Syndications; Loan
Sales; Participations.
------------------------------------------
(a) Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the successors and
assigns of such party (provided that the Borrower may not assign its rights
hereunder without the prior written consent of all the Lenders), and all
covenants, promises and agreements by, or on behalf of, the Borrower which are
contained in this Agreement shall inure to the benefit of the successors and
assigns of the Lenders.
(b) Each of the Lenders may (but only with the prior written
consent of the Administrative Agent, the Issuing Lenders and the Borrower, which
consents shall not be unreasonably withheld or delayed) assign to one or more
banks or other financial institutions either (i) all or a portion of its
interests, rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment and the same portion of the Loans
at the time owing to it and the Notes and interests in Letters of Credit held by
it) (a "Ratable Assignment") or (ii) all or a portion of its rights and
obligations under and in respect of (A) its Commitment under this Agreement and
the same portion of the Revolving Credit Loans at the time owing to it or (B)
the Competitive Loans at the time owing to it (including, without limitation, in
the case of any such type of Loan, the same portion of the associated Note) (a
"Non-Ratable Assignment"); provided that (1) each Non-Ratable Assignment shall
be of a constant, and not a varying, percentage of all of the assigning Lender's
rights and obligations in respect of the Loans and the Commitment (if
applicable) which are the subject of such assignment, (2) each Ratable
Assignment shall be of a constant, and not a varying, percentage of the
assigning Lender's rights and obligations under this Agreement, (3) the amount
of the Commitment or Competitive Loans, as the case may be, of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Acceptance with respect to such assignment is delivered to the Lender) shall
be in a minimum Dollar Equivalent Amount of $10,000,000 unless otherwise agreed
by the Borrower and the Administrative Agent and (4) the parties to each such
assignment shall execute and deliver to the Administrative Agent, for its
acceptance and recording in the Register (as defined below), an Assignment and
Acceptance, together with any Note or Notes subject to such assignment (if
required hereunder) and a processing and recordation fee of $3,500. Upon such
execution, delivery, acceptance and recording, and from and after the effective
date specified in each Assignment and Acceptance, which effective date shall be
not earlier than five Business Days after the date of acceptance and recording
by the Administrative Agent, (x) the assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder and (y) the assigning Lender thereunder
shall, to the extent provided in such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of the assigning Lender's
rights and obligations under this Agreement, such assigning Lender shall cease
to be a party hereto).
(c) [Intentionally Deleted].
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(d) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim, the
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in, or in connection with, this Agreement and any other Fundamental
Document or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Fundamental Documents or any other instrument or
document furnished pursuant hereto or thereto; (ii) such Lender assignor makes
no representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or the performance or observance by the
Borrower of any of its obligations under the Fundamental Documents; (iii) such
assignee confirms that it has received a copy of this Agreement, together with
copies of the most recent financial statements delivered pursuant to Sections
5.1(a) and 5.1(b) (or if none of such financial statements shall have then been
delivered, then copies of the financial statements referred to in Section 3.4)
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance; (iv) such assignee will, independently and without reliance upon the
assigning Lender, the Administrative Agent, or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such assignee appoints and authorizes the Administrative
Agent to take such action as agent on its behalf and to exercise such powers
under the Fundamental Documents as are delegated to the Administrative Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto; and (vi) such assignee agrees that it will be bound by the provisions
of this Agreement and will perform in accordance with its terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(e) The Administrative Agent, on behalf of the Borrower, shall
maintain at its address at which notices are to be given to it pursuant to
Section 9.1, a copy of each Assignment and Acceptance delivered to it and a
register for the recordation of the names and addresses of the Lenders and the
Commitment of, and principal amount of the Loans owing to, and interests in
Letters of Credit of, each Lender from time to time (the "Register"). The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, the Administrative Agent, the Issuing Lenders and the Lenders
may (and, in the case of any Loan or other obligation hereunder not evidenced by
a Note, shall) treat each Person whose name is recorded in the Register as the
owner of a Loan or other obligation hereunder as the owner thereof for all
purposes of this Agreement and the other Fundamental Documents, notwithstanding
any notice to the contrary. Any assignment of any Loan or other obligation
hereunder not evidenced by a Note shall be effective only upon appropriate
entries with respect thereto being made in the Register. The Register shall be
available for inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
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(f) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an assignee, any Notes subject to such assignment (if
required hereunder) and the processing and recordation fee, the Administrative
Agent (subject to the right, if any, of the Borrower to require its consent
thereto) shall, if such Assignment and Acceptance has been completed and is in
the form of Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give prompt
written notice thereof to the Borrower. If a portion of its Commitment has been
assigned by an assigning Lender, then such Lender shall deliver its Revolving
Credit Note, if any, at the same time it delivers the applicable Assignment and
Acceptance to the Administrative Agent. If only Competitive Loans have been
assigned by the assigning Lender, such Lender shall not be required to deliver
its Competitive Note to the Administrative Agent, unless such Lender no longer
holds a Commitment under this Agreement, in which event such assigning Lender
shall deliver its Competitive Note, if any, at the same time it delivers the
applicable Assignment and Acceptance to the Administrative Agent. Within five
Business Days after receipt of the notice, the Borrower, at its own expense,
shall execute and deliver to the applicable Lenders at their request, either (A)
a new Revolving Credit Note to the order of such assignee in an amount equal to
the Commitment assumed by it pursuant to such Assignment and Acceptance and a
Competitive Note to the order of such assignee in an amount equal to the Total
Commitment hereunder, and a new Revolving Credit Note to the order of the
assigning Lender in an amount equal to the Commitment retained by it hereunder,
or (B) if Competitive Loans only have been assigned and the assigning Lender
holds a Commitment under this Agreement, then a new Competitive Note to the
order of the assignee Lender in an amount equal to the outstanding principal
amount of the Competitive Loan(s) purchased by it pursuant to the Assignment and
Acceptance, or (C) if Competitive Loans only have been assigned and the
assigning Lender does not hold a Commitment under this Agreement, a new
Competitive Note to the order of such assignee in an amount equal to the
outstanding principal amount of the Competitive Loans(s) purchased by it
pursuant to such Assignment and Acceptance and, a new Competitive Note to the
order of the assigning Lender in an amount equal to the outstanding principal
amount of the Competitive Loans retained by it hereunder. Any new Revolving
Credit Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of the Commitments of the respective Lenders. All new Notes
shall be dated the date hereof and shall otherwise be in substantially the forms
of Exhibits A-1 and A-2 hereto, as the case may be.
(g) Each of the Lenders may without the consent of the
Borrower, the Administrative Agent or any Issuing Lender sell participations to
one or more banks or other financial institutions (a "Participant") in all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment and the Loans owing to it and the
Note or Notes and interests in Letters of Credit held by it); provided that (i)
any such Lender's obligations under this Agreement shall remain unchanged, (ii)
such participant shall not be granted any voting rights under this Agreement,
except with respect to matters requiring the consent of each of the Lenders
hereunder, (iii) any such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iv) the
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participating banks or other entities shall be entitled to the cost
protection provisions contained in Sections 2.14, 2.15 and 2.17 hereof but a
participant shall not be entitled to receive pursuant to such provisions an
amount larger than its share of the amount to which the Lender granting such
participation would have been entitled to receive, and (v) the Borrower, the
Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement.
(h) The Lenders may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.3, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to the
Administrative Agent by or on behalf of the Borrower.
(i) Each Lender hereby represents that it is a commercial
lender or financial institution which makes loans in the ordinary course of its
business and that it will make the Loans hereunder for its own account in the
ordinary course of such business; provided that, subject to preceding clauses
(a) through (h), the disposition of the Notes or other evidence of Indebtedness
held by that Lender shall at all times be within its exclusive control.
(j) The Borrower consents that any Lender may at any time and
from time to time pledge, or otherwise grant a security interest in, any Loan or
any Note evidencing such Loan (or any part thereof), including any such pledge
or grant to any Federal Reserve Bank, and this Section shall not apply to any
such pledge or grant; provided that no such pledge or grant shall release a
Lender from any of its obligations hereunder or substitute any such assignee for
such Lender as a party hereto.
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SECTION 9.4. Expenses; Documentary Taxes.
---------------------------
Whether or not the transactions hereby contemplated shall be
consummated, the Borrower agrees to pay all reasonable out-of-pocket expenses
incurred by the Administrative Agent and the Arranger in connection with the
syndication, preparation, execution, delivery and administration of this
Agreement, the Notes, the making of the Loans and issuance and administration of
the Letters of Credit, including but not limited to the reasonable fees and
disbursements of Simpson Thacher & Bartlett, counsel to the Administrative
Agent, as well as all reasonable out-of-pocket expenses incurred by the Lenders
in connection with any restructuring or workout of this Agreement, or the Notes
or the Letters of Credit or in connection with the enforcement or protection of
the rights of the Lenders in connection with this Agreement or the Notes or the
Letters of Credit or any other Fundamental Document, and with respect to any
action which may be instituted by any Person against any Lender or any Issuing
Lender in respect of the foregoing, or as a result of any transaction, action or
nonaction arising from the foregoing, including but not limited to the fees and
disbursements of any counsel for the Lenders or any Issuing Lender. Such
payments shall be made on the date of execution of this Agreement and thereafter
promptly on demand. The Borrower agrees that it shall indemnify the
Administrative Agent, the Lenders and the Issuing Lenders from, and hold them
harmless against, any documentary taxes, assessments or charges made by any
Governmental Authority by reason of the execution and delivery of this Agreement
or the Notes or the issuance of any Letters of Credit or any other Fundamental
Document. The obligations of the Borrower under this Section shall survive the
termination of this Agreement and/or the payment of the Loans and/or expiration
of the Letters of Credit for two years.
SECTION 9.5. Indemnity.
---------
Further, by the execution hereof, the Borrower agrees to
indemnify and hold harmless the Administrative Agent, the Arranger, the Lenders
and the Issuing Lenders and their respective directors, officers, employees and
agents (each, an "Indemnified Party") from and against any and all expenses
(including reasonable fees and disbursements of counsel), losses, claims,
damages and liabilities arising out of any claim, litigation, investigation or
proceeding (regardless of whether any such Indemnified Party is a party thereto)
in any way relating to the transactions contemplated hereby, but excluding
therefrom all expenses, losses, claims, damages, and liabilities arising out of
or resulting from the gross negligence or willful misconduct of the Indemnified
Party seeking indemnification, provided that the Borrower shall not be liable
for the fees and expenses of more than one separate firm for all such
Indemnified Parties in connection with any one such action or any separate but
substantially similar or related actions in the same jurisdiction, nor shall the
Borrower be liable for any settlement of any proceeding effected without the
Borrower's written consent, and provided, further, that this Section 9.5 shall
not be construed to expand the scope of the reimbursement obligations specified
in Section 9.4. The obligations of the Borrower under this Section 9.5 shall
survive the termination of this Agreement and/or payment of the Loans and/or the
expiration of the Letters of Credit.
-71-
<PAGE>
SECTION 9.6. CHOICE OF LAW.
-------------
THIS AGREEMENT AND THE NOTES HAVE BEEN EXECUTED AND DELIVERED
IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE CONSTRUED IN ACCORDANCE
WITH, AND GOVERNED BY, THE LAWS OF SUCH STATE APPLICABLE TO CONTRACTS MADE AND
TO BE PERFORMED WHOLLY WITHIN SUCH STATE AND, IN THE CASE OF PROVISIONS RELATING
TO INTEREST RATES, ANY APPLICABLE LAWS OF THE UNITED STATES.
SECTION 9.7. No Waiver.
---------
No failure on the part of the Administrative Agent, any Lender
or any Issuing Lender to exercise, and no delay in exercising, any right, power
or remedy hereunder or under the Notes or with regard to the Letters of Credit
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law.
SECTION 9.8. Extension of Maturity.
---------------------
Except as otherwise specifically provided in Article 7, should
any payment of principal of or interest on the Notes or any other amount due
hereunder become due and payable on a day other than a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day and, in
the case of principal, interest shall be payable thereon at the rate herein
specified during such extension.
-72-
<PAGE>
SECTION 9.9. Amendments, etc.
----------------
No modification, amendment or waiver of any provision of this
Agreement or any other Fundamental Document, and no consent to any departure by
the Borrower herefrom or therefrom, shall in any event be effective unless the
same shall be in writing and signed or consented to in writing by the Required
Lenders, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given; provided that no such modification
or amendment shall without the written consent of each Lender affected thereby
(x) increase the Commitment of a Lender or postpone or waive any scheduled
reduction in the Commitments, (y) alter the stated maturity or principal amount
of any installment of any Loan, or due date of any Letter of Credit
reimbursement obligation or decrease the rate of interest payable thereon, or
the rate at which the Facility Fees or letter of credit fees accrue or (z) waive
a default under Section 7(b) with respect to a scheduled principal installment
of any Loan or payment of a Letter of Credit reimbursement obligation or
scheduled payment of interest or fees; provided, further, that no such
modification or amendment shall without the written consent of all of the
Lenders (i) amend or modify any provision of this Agreement which provides for
the unanimous consent or approval of the Lenders or (ii) amend this Section 9.9
or the definition of Required Lenders or Supermajority Lenders; and provided,
further, however, that no such modification or amendment shall decrease the
Commitment of any Lender without the written consent of such Lender. No such
amendment or modification may adversely affect the rights and obligations of the
Administrative Agent or any Issuing Lender hereunder without its prior written
consent. No notice to or demand on the Borrower shall entitle the Borrower to
any other or further notice or demand in the same, similar or other
circumstances. Each holder of a Note shall be bound by any amendment,
modification, waiver or consent authorized as provided herein, whether or not a
Note shall have been marked to indicate such amendment, modification, waiver or
consent and any consent by any holder of a Note shall bind any Person
subsequently acquiring a Note, whether or not a Note is so marked.
SECTION 9.10. 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.
-73-
<PAGE>
SECTION 9.11. SERVICE OF PROCESS; WAIVER OF JURY TRIAL.
----------------------------------------
(a) THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE STATE COURTS OF THE STATE OF NEW YORK LOCATED IN NEW YORK
COUNTY AND TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER
PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER
HEREOF BROUGHT BY THE ADMINISTRATIVE AGENT, A LENDER OR AN ISSUING LENDER. THE
BORROWER TO THE EXTENT PERMITTED BY APPLICABLE LAW (A) HEREBY WAIVES, AND AGREES
NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH COURTS, ANY CLAIM THAT IT IS NOT SUBJECT
PERSONALLY TO THE JURISDICTION OF THE ABOVE-NAMED COURTS, THAT ITS PROPERTY IS
EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE SUIT, ACTION OR
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT,
ACTION OR PROCEEDING IS IMPROPER OR THAT THIS AGREEMENT OR THE SUBJECT MATTER
HEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT, AND (B) HEREBY WAIVES THE RIGHT
TO ASSERT IN ANY SUCH ACTION, SUIT OR PROCEEDING ANY OFFSETS OR COUNTERCLAIMS
EXCEPT COUNTERCLAIMS THAT ARE COMPULSORY OR OTHERWISE ARISE FROM THE SAME
SUBJECT MATTER. THE BORROWER HEREBY CONSENTS TO SERVICE OF PROCESS BY MAIL AT
ITS ADDRESS TO WHICH NOTICES ARE TO BE GIVEN PURSUANT TO SECTION 9.1. THE
BORROWER AGREES THAT ITS SUBMISSION TO JURISDICTION AND CONSENT TO SERVICE OF
PROCESS BY MAIL IS MADE FOR THE EXPRESS BENEFIT OF THE ADMINISTRATIVE AGENT, THE
LENDERS AND EACH ISSUING LENDER. FINAL JUDGMENT AGAINST THE BORROWER IN ANY SUCH
ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER
JURISDICTION (A) BY SUIT, ACTION OR PROCEEDING ON THE JUDGMENT, A CERTIFIED OR
TRUE COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND THE AMOUNT OF
INDEBTEDNESS OR LIABILITY OF THE SUBMITTING PARTY THEREIN DESCRIBED OR (B) IN
ANY OTHER MANNER PROVIDED BY, OR PURSUANT TO, THE LAWS OF SUCH OTHER
JURISDICTION, PROVIDED THAT THE ADMINISTRATIVE AGENT OR A LENDER OR AN ISSUING
LENDER MAY AT IS OPTION BRING SUIT, OR INSTITUTE OTHER JUDICIAL PROCEEDINGS
AGAINST THE BORROWER OR ANY OF ITS ASSETS IN ANY STATE OR FEDERAL COURT OF THE
UNITED STATES OR OF ANY COUNTRY OR PLACE WHERE THE BORROWER OR SUCH ASSETS MAY
BE FOUND.
(b) TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH
CANNOT BE WAIVED, EACH PARTY HERETO HEREBY WAIVES, AND COVENANTS THAT IT WILL
NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY
JURY IN ANY FORUM IN RESPECT OF ANY
-74-
<PAGE>
ISSUE, CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON
THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR TORT OR OTHERWISE. EACH PARTY
HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED THAT THE PROVISIONS OF THIS
SECTION 9.11(b) CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH THE OTHER
PARTIES HAVE RELIED, ARE RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT.
THE PARTIES HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION
9.11(b) WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF SUCH OTHER PARTY
TO THE WAIVER OF ITS RIGHTS TO TRIAL BY JURY.
SECTION 9.12. Headings.
--------
Section headings used herein are for convenience only and are
not to affect the construction of or be taken into consideration in interpreting
this Agreement.
SECTION 9.13. Execution in Counterparts.
-------------------------
This Agreement may be executed in any number of counterparts,
each of which shall constitute an original, but all of which taken together
shall constitute one and the same instrument.
SECTION 9.14. Entire Agreement.
----------------
This Agreement represents the entire agreement of the parties
with regard to the subject matter hereof and the terms of any letters and other
documentation entered into among the Borrower, the Administrative Agent or any
Lender (other than the provisions of the letter agreement dated February 4,
1997, among the Borrower, Chase and Chase Securities Inc., relating to fees and
expenses and syndication issues) prior to the execution of this Agreement which
relate to Loans to be made or the Letters of Credit to be issued hereunder shall
be replaced by the terms of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and the year first above written.
PHH CORPORATION
By:/s/ Roy A. Meierhenry
---------------------
Title: Senior Vice President
and Treasurer
-75-
<PAGE>
THE CHASE MANHATTAN BANK, individually
and as Administrative Agent
By:/s/ Gail Weiss
--------------
Title: Vice President
BANK OF AMERICA ILLINOIS
By:/s/ Nelson Albrecht
-------------------
Title: Vice President
BANK OF MONTREAL
By:/s/ Edward P. McGuire
---------------------
Title: Director
THE BANK OF NEW YORK
By:/s/ Gregory P. Shefrin
----------------------
Title: Vice President
THE BANK OF NOVA SCOTIA
By:/s/ J. Alan Edwards
-------------------
Title: Authorized Signatory
THE BANK OF TOKYO-MITSUBISHI,
LIMITED, NEW YORK BRANCH
-76-
<PAGE>
By:/s/ J. Andrew Don
-----------------
Title: Attorney-In-Fact
BANKERS TRUST COMPANY
By:/s/ Anthony LoGrippo
--------------------
Title: Vice President
CANADIAN IMPERIAL BANK OF COMMERCE
By:/s/ Gerald J. Girardi
---------------------
Title: Director, CIBC Wood Gundy
Securites Corp., as Agent
COMERICA BANK
By:/s/ Tamara J. Gurne
-------------------
Title: Account Officer
COMMERZBANK AG (NEW YORK BRANCH)
By:/s/ Subash R. Viswanathan
-------------------------
Title: Vice President
By:/s/ Andrew R. Campbell
----------------------
Title: Assistant Treasurer
-77-
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH
By:/s/ Mary E. Collier
-------------------
Title: Vice President
DEUTSCHE BANK AG NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES
By:/s/ Gayma Z. Shivnarain
-----------------------
Title: Vice President
By:/s/ Dale F. Oberst
------------------
Title: Associate
THE FIRST NATIONAL BANK OF CHICAGO
By:/s/ William A. Artz
-------------------
Title: Vice President
THE FIRST NATIONAL BANK OF MARYLAND
By:/s/ Kellie M. Matthews
----------------------
Title: Vice President
FIRST UNION NATIONAL BANK OF MARYLAND
By:/s/ Ronald J. Bucci
-------------------
Title: Vice President
-78-
<PAGE>
THE FUJI BANK, LTD. NEW YORK BRANCH
By:/s/ Masanobu Kobayashi
----------------------
Title: Vice Preisdent and Manager
MELLON BANK, N.A.
By:/s/ Laurie G. Dunn
------------------
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By:/s/ James Dwyer
---------------
Title: Vice President
NATIONSBANK, N.A.
By:/s/ Elizabeth S. Duff
---------------------
Title: Vice President
ROYAL BANK OF CANADA
By:/s/ Peter D. Steffen
--------------------
Title: Senior Manager
-79-
<PAGE>
THE SUMITOMO BANK, LIMITED
NEW YORK BRANCH
By:/s/ John C. Kissinger
---------------------
Title: Joint General Manager
WELLS FARGO BANK, N.A.
By:/s/ Anthony J. Xinis
--------------------
Title: Senior Vice President
Schedule 1.1A
Commitments
-----------
Lender Commitment
------ ----------
-80-
<PAGE>
================================================================================
TOTAL $1,250,000,000.00
Schedule 1.1B
Available Foreign Currencies
----------------------------
For purposes of Competitive Loans, Available Foreign Currencies are the
following:
Canadian Dollars
the lawful currency of France
the lawful currency of Germany
Japanese Yen
the lawful currency of England
Swiss Francs
the lawful currency of Italy
Schedule 3.6
Material Subsidiaries
---------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Subsidiary Jurisdiction of Authorized Shares Issued Ownership of
Name Incorporation Capitalization Capital Stock*
========================================================================================================================
<S><C>
PHH Vehicle Management Maryland 100,000(C) 404(C) PHH Holdings
Services Corporation
Corporation
</TABLE>
-81-
<PAGE>
<TABLE>
<S><C>
PHH Real Estate Delaware 1,000(C) 860(C) PHH Holdings
Services Corporation
Corporation
PHH Mortgage New Jersey 5,000(C) 1,000(C) PHH Holdings
Services 20,000(P) 0(P) Corporation
Corporation
PHH Holdings Maryland 5,000 100 PHH
Corporation Corporation
PHH Delaware 5,000 1,000 PHH
Investments I Corporation
Corporation
PHH Europe United Kingdom 25,000,000 18,251,110 PHH Holdings
PLC** Corporation
PHH Vehicle United Kingdom 2,000,000 1,147,500 PHH Europe
Management PLC
Services PLC**
PHH Financial United Kingdom 10,000,000 10,000,000 PHH Investment
Services Ltd.** Services Ltd.***
============================================================================================================================
</TABLE>
* Ownership is 100% unless otherwise indicated.
** These Material Subsidiaries Do Not principally transact business in the
United States.
*** Does not meet the Material Subsidiary test.
(C)=Common stock
(P)=Preferred stock
Schedule 3.9
Litigation
----------
None.
Schedule 6.1
-82-
<PAGE>
Existing Indebtedness and Guaranties
------------------------------------
None.
Schedule 6.5
Existing Liens
--------------
None.
EXECUTION COPY
--------------
================================================================================
$1,250,000,000
FIVE YEAR COMPETITIVE ADVANCE AND
REVOLVING CREDIT AGREEMENT
Dated as of March 4, 1997
among
PHH CORPORATION
as Borrower
and
THE LENDERS REFERRED TO HEREIN
-83-
<PAGE>
and
THE CHASE MANHATTAN BANK, as Administrative Agent
================================================================================
CHASE SECURITIES INC., Arranger
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S><C>
1. DEFINITIONS................................................................................................. 1
2. THE LOANS................................................................................................... 17
SECTION 2.1. Commitments............................................................................. 17
SECTION 2.2. Loans................................................................................... 18
SECTION 2.3. Use of Proceeds......................................................................... 19
SECTION 2.4. Competitive Bid Procedure............................................................... 19
SECTION 2.5. Revolving Credit Borrowing Procedure.................................................... 22
SECTION 2.6. Refinancings............................................................................ 23
SECTION 2.7. Fees.................................................................................... 23
SECTION 2.8. Repayment of Loans; Evidence of Debt.................................................... 24
SECTION 2.9. Interest on Loans....................................................................... 25
SECTION 2.10. Interest on Overdue Amounts............................................................. 26
SECTION 2.11. Alternate Rate of Interest.............................................................. 26
SECTION 2.12. Termination and Reduction of
Commitments............................................................................. 27
SECTION 2.13. Prepayment of Loans..................................................................... 27
SECTION 2.14. Eurocurrency Reserve Costs.............................................................. 28
SECTION 2.15. Reserve Requirements; Change in Circumstances........................................... 29
SECTION 2.16. Change in Legality...................................................................... 31
SECTION 2.17. Reimbursement of Lenders................................................................ 32
SECTION 2.18. Pro Rata Treatment...................................................................... 33
SECTION 2.19. Right of Setoff......................................................................... 34
SECTION 2.20. Manner of Payments...................................................................... 34
SECTION 2.21. Withholding Taxes....................................................................... 34
SECTION 2.22. Certain Pricing Adjustments............................................................. 36
SECTION 2.23. [Intentionally Deleted.]................................................................ 37
</TABLE>
-84-
<PAGE>
<TABLE>
<S><C>
SECTION 2.24. Letters of Credit....................................................................... 37
SECTION 2.25. Extension of Maturity Date.............................................................. 43
3. REPRESENTATIONS AND WARRANTIES OF BORROWER.................................................................. 44
SECTION 3.1. Corporate Existence and Power........................................................... 44
SECTION 3.2. Corporate Authority and No Violation.................................................... 45
SECTION 3.3. Governmental and Other Approval and Consents............................................ 45
SECTION 3.4. Financial Statements of Borrower........................................................ 45
SECTION 3.5. No Material Adverse Change.............................................................. 46
SECTION 3.6. Material Subsidiaries................................................................... 46
SECTION 3.7. Copyrights, Patents and Other Rights.................................................... 46
SECTION 3.8. Title to Properties..................................................................... 46
SECTION 3.9. Litigation.............................................................................. 46
SECTION 3.10. Federal Reserve Regulations............................................................. 47
SECTION 3.11. Investment Company Act.................................................................. 47
SECTION 3.12. Enforceability.......................................................................... 47
SECTION 3.13. Taxes................................................................................... 47
SECTION 3.14. Compliance with ERISA................................................................... 47
SECTION 3.15. Disclosure.............................................................................. 48
SECTION 3.16. Environmental Liabilities............................................................... 48
4. CONDITIONS OF LENDING....................................................................................... 48
SECTION 4.1. Conditions Precedent to Effectiveness.................................................... 48
(a) Loan Documents........................................................................... 49
(b) Corporate Documents for the Borrower..................................................... 49
(c) Financial Statements..................................................................... 49
(d) Opinions of Counsel...................................................................... 49
(e) No Material Adverse Change............................................................... 49
(f) Payment of Fees.......................................................................... 49
(g) Litigation............................................................................... 50
(h) Existing Credit Agreements............................................................... 50
(i) Officer's Certificate.................................................................... 50
SECTION 4.2 Conditions Precedent to Each Loan and Letter of Credit................................... 50
(a) Notice................................................................................... 50
(b) Representations and Warranties........................................................... 50
(c) No Event of Default...................................................................... 51
5. AFFIRMATIVE COVENANTS....................................................................................... 51
SECTION 5.1. Financial Statements, Reports, etc. .................................................... 51
SECTION 5.2. Corporate Existence; Compliance with Statutes........................................... 53
</TABLE>
-85-
<PAGE>
<TABLE>
<S><C>
SECTION 5.3. Insurance............................................................................... 53
SECTION 5.4. Taxes and Charges....................................................................... 53
SECTION 5.5. ERISA Compliance and Reports............................................................ 54
SECTION 5.6. Maintenance of and Access to Books and Records; Examinations............................ 55
SECTION 5.7. Maintenance of Properties............................................................... 55
6. NEGATIVE COVENANTS.......................................................................................... 55
SECTION 6.1. Limitation on Material Subsidiary Indebtedness.......................................... 55
SECTION 6.2. [Intentionally deleted]................................................................. 56
SECTION 6.3. Limitation on Transactions with Affiliates.............................................. 56
SECTION 6.4. Consolidation, Merger, Sale of Assets................................................... 57
SECTION 6.5. Limitations on Liens.................................................................... 57
SECTION 6.6. Sale and Leaseback...................................................................... 59
SECTION 6.7. Consolidated Net Worth.................................................................. 59
SECTION 6.8. Ratio of Indebtedness To Consolidated Net Worth......................................... 59
SECTION 6.9. Accounting Practices.................................................................... 59
SECTION 6.10. Restrictions Affecting Subsidiaries..................................................... 59
7. EVENTS OF DEFAULT........................................................................................... 60
8. THE ADMINISTRATIVE AGENT AND EACH ISSUING LENDER............................................................ 63
SECTION 8.1. Administration by Administrative Agent.................................................. 63
SECTION 8.2. Advances and Payments................................................................... 63
SECTION 8.3. Sharing of Setoffs and Cash Collateral.................................................. 64
SECTION 8.4. Notice to the Lenders................................................................... 65
SECTION 8.5. Liability of Administrative Agent and Each Issuing Lender............................... 65
SECTION 8.6. Reimbursement and Indemnification....................................................... 66
SECTION 8.7. Rights of Administrative Agent.......................................................... 66
SECTION 8.8. Independent Investigation by Lenders.................................................... 67
SECTION 8.9. Notice of Transfer...................................................................... 67
SECTION 8.10. Successor Administrative Agent.......................................................... 67
SECTION 8.11. Resignation of an Issuing Lender........................................................ 68
9. MISCELLANEOUS............................................................................................... 68
SECTION 9.1. Notices................................................................................. 68
SECTION 9.2. Survival of Agreement, Representations and Warranties, etc. ............................ 68
SECTION 9.3. Successors and Assigns; Syndications; Loan Sales; Participations ...................... 69
SECTION 9.4. Expenses; Documentary Taxes............................................................. 73
SECTION 9.5. Indemnity............................................................................... 73
SECTION 9.6. CHOICE OF LAW........................................................................... 74
SECTION 9.7. No Waiver............................................................................... 74
</TABLE>
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<PAGE>
<TABLE>
<S><C>
SECTION 9.8. Extension of Maturity................................................................... 74
SECTION 9.9. Amendments, etc. ....................................................................... 75
SECTION 9.10. Severability............................................................................ 75
SECTION 9.11. SERVICE OF PROCESS; WAIVER OF JURY TRIAL................................................ 76
SECTION 9.12. Headings................................................................................ 77
SECTION 9.13. Execution in Counterparts............................................................... 77
SECTION 9.14. Entire Agreement........................................................................ 77
</TABLE>
SCHEDULES
1.1A Lenders, Addresses and Commitments
1.1B Available Foreign Currencies
3.6 Material Subsidiaries
3.9 Litigation
6.1 Existing Material Subsidiary Indebtedness
6.5 Existing Liens
EXHIBITS
A-1 Form of Revolving Credit Note
A-2 Form of Competitive Note
B-1 Opinion of Gordon W. Priest, Esq
B-2 Opinion of Piper & Marbury
C Form of Assignment and Acceptance
D Form of Compliance Certificate
E-1 Form of Competitive Bid Request
E-2 Form of Competitive Bid Invitation
E-3 Form of Competitive Bid
E-4 Form of Competitive Bid Accept/Reject Letter
F Form of Revolving Credit Borrowing Request
G Form of Extension Request
H Form of Replacement Bank Agreement
EXHIBIT (12)
PHH CORPORATION AND SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
(dollars in thousands)
<TABLE>
<CAPTION>
Nine Year Ended April 30
Months Ended --------------------------------------------------------------------
January 31, 1997 1996 1995 1994 1993 1992
---------------- ---- ---- ---- ---- ----
<S> <C>
Income from continuing operations
before income taxes $ 127,949 $ 139,148 $ 121,318 $ 109,796 $ 94,238 $ 83,117
Add:
Interest expense 191,569 252,966 194,196 162,108 193,935 237,058
Interest portion of rentals* 5,978 7,840 8,065 9,088 8,456 8,665
---------- --------- --------- --------- --------- ----------
Earnings available for fixed charges $ 325,496 $ 399,954 $ 323,579 $ 280,992 $ 296,629 $ 328,840
========== ========= ========= ========= ========= =========
Fixed charges:
Interest expense $ 191,569 $ 252,966 $ 194,196 $ 162,108 $ 193,935 $ 237,058
Interest portion of rentals* 5,978 7,840 8,065 9,088 8,456 8,665
---------- --------- --------- --------- --------- ---------
$ 197,547 $ 260,806 $ 202,261 $ 171,196 $ 202,391 $ 245,723
========== ========= ========= ========= ========= =========
Ratio of earnings to fixed charges 1.65 1.53 1.60 1.64 1.47 1.34
========== ========= ========= ========= ========= =========
</TABLE>
*Amounts reflect a one-third portion of rentals, the portion deemed
representative of the interest factor.
Note: The interest included in fixed charges consists of the amounts
identified as interest expense in the Consolidated Statements of Income,
the substantial portion of which represents interest on debt incurred to
finance leasing activities and mortgage banking activities, as well as
the interest costs associated with home relocation services which are
ordinarily recovered through direct billings to clients and are included
with "Costs, including interest, of carrying and reselling homes" in the
Consolidated Financial Statements.
-16-
EXHIBIT 23
The Board of Directors
PHH Corporation:
We consent to the incorporation by reference in this Registration Statement on
Form S-3 of our report dated May 17, 1996, except for the note on capital stock
as to which the date is June 24, 1996 with respect to the consolidated
financial statements and the related financial statement schedule included in
the Annual Report on Form 10-K for the fiscal year ended April 30, 1996 and
Form 10-K/A filed March 27, 1997 of PHH Corporation and subsidiaries for the
year ended April 30, 1996 and to the reference to our firm under the heading
"Experts" in the Registration Statement.
Our report contains an explanatory paragraph that states that the company
adopted the provisions of Statement of Financial Accounting Standards No. 122,
"Accounting for Mortgage Servicing Rights," in 1996.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Baltimore, Maryland
May 20, 1997
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)____
______________________________
THE FIRST NATIONAL BANK OF CHICAGO
(Exact name of trustee as specified in its charter)
A National Banking Association 36-0899825
(I.R.S. employer
identification number)
One First National Plaza, Chicago, Illinois 60670-0126
(Address of principal executive offices) (Zip Code)
The First National Bank of Chicago
One First National Plaza, Suite 0286
Chicago, Illinois 60670-0286
Attn: Lynn A. Goldstein, Law Department (312) 732-6919
(Name, address and telephone number of agent for service)
______________________________
PHH CORPORATION
(Exact name of obligor as specified in its charter)
Maryland 52-0551284
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
1333 McCormick Road
Hunt Valley, Maryland 21031
(Address of principal executive offices) (Zip Code)
Debt Securities
(Title of Indenture Securities)
<PAGE>
Item 1. General Information. Furnish the following
information as to the trustee:
(a) Name and address of each examining or
supervising authority to which it is subject.
Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance Corporation,
Washington, D.C., The Board of Governors of
the Federal Reserve System, Washington D.C.
(b) Whether it is authorized to exercise
corporate trust powers.
The trustee is authorized to exercise corporate
trust powers.
Item 2. Affiliations With the Obligor. If the obligor
is an affiliate of the trustee, describe each
such affiliation.
No such affiliation exists with the trustee.
Item 16. List of exhibits. List below all exhibits filed as a
part of this Statement of Eligibility.
1. A copy of the articles of association of the
trustee now in effect.*
2. A copy of the certificates of authority of the
trustee to commence business.*
3. A copy of the authorization of the trustee to
exercise corporate trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not Applicable.
6. The consent of the trustee required by
Section 321(b) of the Act.
2
<PAGE>
7. A copy of the latest report of condition of the
trustee published pursuant to law or the
requirements of its supervising or examining
authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, The First National Bank of Chicago, a national
banking association organized and existing under the laws of the United
States of America, has duly caused this Statement of Eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all
in the City of Chicago and State of Illinois, on the 19th day of May,
1997.
The First National Bank of Chicago,
Trustee
By /s/ Richard D. Manella
__________________________
Richard D. Manella
Vice President
* Exhibits 1, 2, 3 and 4 are herein incorporated by reference to Exhibits
bearing identical numbers in Item 16 of the Form T-1 of The First National Bank
of Chicago, filed as Exhibit 25.1 to the Registration Statement on Form S-3 of
SunAmerica Inc. filed with the Securities and Exchange Commission on October 25,
1996 (Registration No. 333-14201).
3
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
May 19, 1997
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of an indenture between PHH Corporation and
The First National Bank of Chicago, the undersigned, in accordance with Section
321(b) of the Trust Indenture Act of 1939, as amended, hereby consents that the
reports of examinations of the undersigned, made by Federal or State authorities
authorized to make such examinations, may be furnished by such authorities to
the Securities and Exchange Commission upon its request therefor.
Very truly yours,
The First National Bank of Chicago
By: /s/ Richard D. Manella
____________________________
Richard D. Manella
Vice President
4
<PAGE>
EXHIBIT 7
Legal Title of Bank: The First National Bank of Chicago
Call Date: 12/31/96 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-1
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for December 31, 1996
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding of the last business day of the
quarter.
Schedule RC--Balance Sheet
<TABLE>
<CAPTION>
C400 <-
Dollar Amounts in -------- --------
Thousands RCFD BIL MIL THOU
------------------ ---- ------------
<S> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule
RC-A):
a. Noninterest-bearing balances and currency and coin(1).......... 0081 4,586,399 1.a.
b. Interest-bearing balances(2)................................... 0071 5,224,838 1.b.
2. Securities
a. Held-to-maturity securities(from Schedule RC-B, column A)...... 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)... 1773 3,335,304 2.b.
3. Federal funds sold and securities purchased under agreements to
resell in domestic offices of the bank and its Edge and Agreement
subsidiaries, and in IBFs:
a. Federal Funds sold............................................. 0276 4,157,626 3.a.
b. Securities purchased under agreements to resell................ 0277 96,125 3.b.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule
RC-C)............................................................. RCFD 2122 23,448,929 4.a.
b. LESS: Allowance for loan and lease losses...................... RCFD 3123 419,373 4.b.
c. LESS: Allocated transfer risk reserve.......................... RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance, and
reserve (item 4.a minus 4.b and 4.c)........................... 2125 23,029,556 4.d.
5. Assets held in trading accounts................................... 3545 7,888,514 5.
6. Premises and fixed assets (including capitalized leases).......... 2145 701,700 6.
7. Other real estate owned (from Schedule RC-M)...................... 2150 11,061 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M).................................... 2130 62,681 8.
9. Customers' liability to this bank on acceptances outstanding...... 2155 480,933 9.
10. Intangible assets (from Schedule RC-M)............................ 2143 303,014 10.
11. Other assets (from Schedule RC-F)................................. 2160 1,745,155 11.
12. Total assets (sum of items 1 through 11).......................... 2170 51,622,906 12.
</TABLE>
- ---------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
5
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: The First National Bank of Chicago Call Date: 12/31/96 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
Schedule RC-Continued
Dollar Amounts in
Thousands Bil Mil Thou
----------------- ------------
<S> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part 1).................................. RCON 2200 22,032,796 13.a.
(1) Noninterest-bearing(1)................................... RCON 6631 9,190,670 13.a.1
(2) Interest-bearing......................................... RCON 6636 12,842,126 13.a.2
b. In foreign offices, Edge and Agreement subsidiaries, and
IBFs (from Schedule RC-E, part II)........................... RCFN 2200 10,861,857 13.b.
(1) Noninterest bearing...................................... RCFN 6631 285,745 13.b.1
(2) Interest-bearing......................................... RCFN 6636 10,576,382 13.b.2
14. Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of
its Edge and Agreement subsidiaries, and in IBFs:
a. Federal funds purchased...................................... RCFD 0278 2,639,255 14.a.
b. Securities sold under agreements to repurchase............... RCFD 0279 66,564 14.b.
15. a. Demand notes issued to the U.S. Treasury..................... RCON 2840 121,352 15.a.
b. Trading Liabilities.......................................... RCFD 3548 5,793,742 15.b.
16. Other borrowed money:
a. With original maturity of one year or less................... RCFD 2332 2,665,232 16.a.
b. With original maturity of more than one year................ RCFD 2333 58,105 16.b.
17. Mortgage indebtedness and obligations under capitalized
leases........................................... RCFD 2910 285,671 17.
18. Bank's liability on acceptance executed and outstanding......... RCFD 2920 480,933 18.
19. Subordinated notes and debentures............................... RCFD 3200 1,400,000 19.
20. Other liabilities (from Schedule RC-G).......................... RCFD 2930 1,199,147 20.
21. Total liabilities (sum of items 13 through 20).................. RCFD 2948 47,604,654 21.
22. Limited-Life preferred stock and related surplus................ RCFD 3282 0 22.
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus................... RCFD 3838 0 23.
24. Common stock......................................... RCFD 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred stock)........ RCFD 3839 2,934,523 25.
26. a. Undivided profits and capital reserves....................... RCFD 3632 865,652 26.a.
b. Net unrealized holding gains (losses) on available-for-sale
securities................................................... RCFD 8434 18,441 26.b.
27. Cumulative foreign currency translation adjustments............. RCFD 3284 (1,222) 27.
28. Total equity capital (sum of items 23 through 27)............... RCFD 3210 4,018,252 28.
29. Total liabilities, limited-life preferred stock, and equity
capital (sum of items 21, 22, and 28)........................... RCFD 3300 51,622,906 29.
</TABLE>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best
describes the most comprehensive level of auditing work performed for the
bank by independent external
Number
auditors as of any date during 1995 ....RCFD 6724 . .... [N/A] M.1.
1 = Independent audit of the bank conducted in accordance
with generally accepted auditing standards by a certified
public accounting firm which submits a report on the bank
2 = Independent audit of the bank's parent holding company
conducted in accordance with generally accepted auditing
standards by a certified public accounting firm which
submits a report on the consolidated holding company
(but not on the bank separately)
3 = Directors' examination of the bank conducted in
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
4 = Directors' examination of the bank performed by other
external auditors (may be required by state chartering
authority)
5 = Review of the bank's financial statements by external
auditors
6 = Compilation of the bank's financial statements by external
auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
____________
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
6
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
PHH CORPORATION
(Exact name of obligor as specified in its charter)
Maryland 52-0551284
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
11333 McCormick Road
Hunt Valley, Maryland 21031
(Address of principal executive offices) (Zip code)
----------------------
Debt Securities
(Title of the indenture securities)
================================================================================
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission,
are incorporated herein by reference as an exhibit hereto, pursuant to
Rule 7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17
C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration Statement
No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1
filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 20th day of May, 1997.
THE BANK OF NEW YORK
By: /s/ Vivian Georges
_______________________________
Name: Vivian Georges
Title: Assistant Vice President
<PAGE>
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 4,404,522
Interest-bearing balances .......... 732,833
Securities:
Held-to-maturity securities ........ 789,964
Available-for-sale securities ...... 2,005,509
Federal funds sold in domestic of-
fices of the bank:
Federal funds sold ................... 3,364,838
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ........................... 28,728,602
LESS: Allowance for loan and
lease losses ..................... 584,525
LESS: Allocated transfer risk
reserve........................... 429
Loans and leases, net of unearned
income, allowance, and reserve 28,143,648
Assets held in trading accounts ...... 1,004,242
Premises and fixed assets (including
capitalized leases) ................ 605,668
Other real estate owned .............. 41,238
Investments in unconsolidated
subsidiaries and associated
companies .......................... 205,031
Customers' liability to this bank on
acceptances outstanding ............ 949,154
Intangible assets .................... 490,524
Other assets ......................... 1,305,839
-----------
Total assets ......................... $44,043,010
===========
LIABILITIES
Deposits:
In domestic offices ................ $20,441,318
Noninterest-bearing ................ 8,158,472
Interest-bearing ................... 12,282,846
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 11,710,903
Noninterest-bearing ................ 46,182
Interest-bearing ................... 11,664,721
Federal funds purchased in
domestic offices of the
bank:
Federal funds purchased ............ 1,565,288
Demand notes issued to the U.S.
Treasury ........................... 293,186
Trading liabilities .................. 826,856
Other borrowed money:
With original maturity of one year
or less .......................... 2,103,443
With original maturity of more than
one year ......................... 20,766
Bank's liability on acceptances exe-
cuted and outstanding .............. 951,116
Subordinated notes and debentures .... 1,020,400
Other liabilities .................... 1,522,884
-----------
Total liabilities .................... 40,456,160
-----------
EQUITY CAPITAL
Common stock ........................ 942,284
Surplus ............................. 525,666
Undivided profits and capital
reserves .......................... 2,129,376
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ (2,073)
Cumulative foreign currency transla-
tion adjustments .................. (8,403)
-----------
Total equity capital ................ 3,586,850
-----------
Total liabilities and equity
capital ........................... $44,043,010
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot
Thomas A. Renyi Directors
Alan R. Griffith
