<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 30, 1998.
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)
<TABLE>
<S> <C>
MARYLAND 52-0551284
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
</TABLE>
6 SYLVAN WAY
PARSIPPANY, NEW JERSEY 07054
(973) 428-9700
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
JAMES E. BUCKMAN
SENIOR EXECUTIVE VICE PRESIDENT
PHH CORPORATION
6 SYLVAN WAY
PARSIPPANY, NEW JERSEY 07054
(973) 428-9700
FAX (973) 496-5331
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
COPIES TO:
<TABLE>
<S> <C>
ERIC J. BOCK VINCENT J. PISANO
VICE PRESIDENT AND ASSISTANT SECRETARY SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
PHH CORPORATION 919 THIRD AVENUE
6 SYLVAN WAY NEW YORK, NEW YORK 10022
PARSIPPANY, NEW JERSEY 07054 (212) 735-2718
(973) 496-7207 FAX (212) 735-2000
FAX (973) 496-5331
</TABLE>
------------------------
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, 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> <C> <C> <C>
Debt Securities....................... $3,000,000,000* 100% $3,000,000,000 $885,000
</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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION DATED JANUARY 30, 1998
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED , 1998
------------------------------------
[PHH LOGO HERE]
$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> <C> <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 $1,638,500.
(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 , 1998.
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 THIS OFFERING 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 June 5, 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 September 30, 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
$4,490,249,000. 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 September 30, 1997, the aggregate amount of outstanding
indebtedness of subsidiaries of the Company (excluding indebtedness of the
subsidiaries to the Company or other subsidiaries) was $358,797,000.
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 September 30, 1997, there
were $2,262,800,000 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 the redemption price or prices (the "Redemption Price") specified in
the applicable Pricing Supplement, 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 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. 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 specified in the applicable Pricing Supplement,
together with interest thereon payable to the optional 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
S-5
<PAGE>
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 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"),
S-6
<PAGE>
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 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
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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 -- Nonfinancial." 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 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
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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 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
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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 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
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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 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
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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.
The following discussion of the United States federal income tax
consequences is based on the classification of the Notes as debt of the Company,
which determination would be made at the time of the issuances of the
Notes. If, as a result of the particular features of a particular issue of
Notes, an adverse change in the financial condition of the issuer, or
otherwise, the status of the Notes as debt for United States federal income
tax purposes were to be challenged, payments on the Notes could be
characterized as dividends and subject to United States federal withholding
tax. The remaining discussion assumes that the Notes will be classified as
debt.
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 other than to
bond houses, brokers, or similar persons or organizations acting in the
capacity of underwriters, placement agents or wholesalers) 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 (or in the case of
installment obligations, the weighted average 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.
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.
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 October 6, 1997, the U.S. Treasury Department issued final Treasury
regulations governing information reporting and the certification procedures
regarding withholding and backup withholding on certain amounts paid to Non-U.S.
Holders after December 31, 1998. The new Treasury regulations generally would
not alter the treatment of Non-U.S. Holders described above. The new Treasury
regulations would alter the procedures for claiming the benefits of an income
tax treaty and may change the certification procedures relating to the receipt
by intermediaries of payments on behalf of a beneficial owner of a Note.
Prospective investors should consult their tax advisors concerning the effect,
if any, of such new Treasury regulations on an investment in the Notes.
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 , 1998.
<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) Transition Report on Form 10-K
for the eight-month period ended December 31, 1996 filed July 29, 1997; (3)
Quarterly Reports on Form 10-Q as amended by Reports on Form 10-Q/A filed March
27, 1997 and August 15, 1997 for the periods ended July 31, 1996, October 31,
1996, January 31, 1997, June 30, 1997 and September 30, 1997; and (4) Current
Reports on Form 8-K filed November 15, 1996, May 14, 1997, June 6, 1997 and
December 18, 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, 6 Sylvan Way, Parsippany, New Jersey 07054, Telephone (973)
428-9700, Attention: Treasurer.
THE COMPANY
PHH Corporation is a Maryland corporation. The Company's executive offices
are located at 6 Sylvan Way, Parsippany, New Jersey 07054 (telephone (973)
428-9700). Effective as of December 17, 1997, the Company became a wholly-owned
subsidiary of Cendant Corporation, a Delaware corporation ("Cendant").
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
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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, 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.
Cendant is a global provider of consumer and business services. Cendant
operates in three principal segments: Membership, Travel and Real Estate. In
Membership Services, Cendant provides access to travel, shopping, auto, dining
and other services through more than 73 million memberships worldwide. In Travel
Services, Cendant is the leading franchisor of hotels and rental car agencies
worldwide, the premier provider of vacation exchange services and the second
largest fleet management company. In Real Estate Services, Cendant is the
world's premier franchisor of residential real estate brokerage offices, a major
provider of mortgage services to consumers and a global leader in corporate
employee relocation. A pioneer in interactive shopping, Cendant is a major
online commerce facilitator, with more than $1 billion in yearly sales through
its NetMarket(Register mark) and other interactive services.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED DECEMBER 31,
ENDED -------------------------------------
SEPTEMBER 30, 1997 1996 1995 1994 1993 1992
------------------ ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges....... (*) 1.55 1.50 1.58 1.62 1.45
</TABLE>
(*) Earnings are inadequate to cover fixed charges (deficiency of $38.7
million) for the nine months ended September 30, 1997. Loss before income
taxes includes a one-time merger and restructuring charge recorded in the
second quarter of 1997 in the amount of $235.3 million ($182.7 million
after-tax). Excluding the charge, the ratio of earnings to fixed charges
is 1.98x.
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 expense 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.
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
Cendant owns 100% of the outstanding capital stock of the Company. Cendant and
the Company currently operate under policies limiting (a) the payment of
dividends on the Company's capital stock to 40% of net income of the Company on
an annual basis, less the outstanding principal balance of loans from the
Company to Cendant as of the date of any proposed dividend payment, and (b) the
outstanding principal balance of loans from the Company to Cendant to 40% of net
income of the Company on an annual basis, less the payment of dividends on the
Company's capital stock during such year. The Indenture does not require this
policy or otherwise directly limit the Company's ability to pay dividends or
make other distributions.
3
<PAGE>
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 an indenture (the "Indenture")
between the Company and a trustee (the "Trustee"). A copy of the Indenture has
been filed with the Commission as indicated in the Registration Statement. The
following summaries of certain provisions of the Indenture do not purport to be
complete and are subject to, and qualified in their entirety by reference to,
all the provisions of the Indenture, including the definitions therein of
certain terms. Wherever reference is made to particular sections or defined
terms of the Indenture, 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 the Indenture dated as of June
5, 1997, between the Company and The First National Bank of Chicago, 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 Indenture does not limit the aggregate principal amount of the Debt
Securities or of any particular series of Offered Debt Securities and provides
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 Indenture 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
4
<PAGE>
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.
Prospective purchasers of the Debt Securities should be aware that the
Indenture does not contain any covenant that would prevent Cendant 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 Cendant.
CERTAIN DEFINITIONS
The Indenture contains 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 Indenture 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.
5
<PAGE>
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.
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
6
<PAGE>
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.
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 Indenture. 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 Indenture (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 Indenture) of each series affected by the modification, to supplement the
Indenture 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.
7
<PAGE>
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 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.
The Indenture provides that the Trustee will, within 90 days after the
occurrence of a default under the 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.
The 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 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 Indenture.
The general provisions of the Indenture 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.
8
<PAGE>
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
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 Samuel H. Wright, counsel for the Company, and certain legal matters
will be passed upon for the underwriters or agents by Skadden, Arps, Slate,
Meagher & Flom LLP.
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 and to the PHH Transition Report on Form 10-K for the
eight-month period ended December 31, 1996, in reliance upon the reports 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 appearing in the PHH Annual Report on Form 10-K and 10-K/A 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-23
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
Dividend Policy................................ 3
Description of Debt Securities................. 4
Plan of Distribution........................... 8
Legal Matters.................................. 9
Experts........................................ 9
</TABLE>
- --------------------------------------------------------------------------------
[PHH LOGO HERE]
$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.
, 1998
<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.......................................................................... $ 885,000
Transfer agent and registrar fees and expenses............................................ 60,000
Trustee fees and expenses................................................................. 33,500
Printing and engraving.................................................................... 10,000
Legal fees and expenses................................................................... 35,000
Accounting fees and expenses.............................................................. 32,000
Blue Sky filing fees and expenses......................................................... 5,000
Rating agency fees........................................................................ 550,000
Miscellaneous expenses.................................................................... 28,000
----------
Total.............................................................................. $1,638,500
----------
----------
</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) Indenture between The First National Bank of Chicago and the Company dated as of June 5, 1997
(incorporated by reference to Exhibit 4.3 to the Transition Report on Form 10-K for the eight-month
period ended December 31, 1996 of the Company).
4(b)(i) Proposed Form of Fixed Rate Note between the Company and The First National Bank of Chicago, as
Trustee.
4(b)(ii) Proposed Form of Floating Rate Note between the Company and The First National Bank of Chicago, as
Trustee.
5 Opinion and consent of Samuel H. Wright, counsel for the Company.
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 January 23, 1998.
</TABLE>
II-1
<PAGE>
(b) FINANCIAL STATEMENT SCHEDULES
None.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes (1) to file, during any period
in which offers or sales are being made, a post-effective amendment to this
Registration Statement: (i) to include any prospectus required by section
10(a)(3) of the Securities Act of 1933; (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. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than 20 percent change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective 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; (2) 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
(3) to remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
The undersigned 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 Morris, State of New Jersey, on the 29th day of
January, 1998.
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.
<TABLE>
<S> <C>
PRINCIPAL EXECUTIVE OFFICER:
/s/ ROBERT D. KUNISCH January 29, 1998
- ------------------------------------------------------
ROBERT D. KUNISCH
PRESIDENT AND CHIEF EXECUTIVE OFFICER
PRINCIPAL FINANCIAL OFFICER:
/s/ MICHAEL P. MONACO January 29, 1998
- ------------------------------------------------------
MICHAEL P. MONACO
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
PRINCIPAL ACCOUNTING OFFICER:
/s/ SCOTT FORBES January 29, 1998
- ------------------------------------------------------
SCOTT FORBES
SENIOR VICE PRESIDENT
THE BOARD OF DIRECTORS:
/s/ STEPHEN P. HOLMES January 29, 1998
- ------------------------------------------------------
STEPHEN P. HOLMES
/s/ JAMES E. BUCKMAN January 29, 1998
- ------------------------------------------------------
JAMES E. BUCKMAN
</TABLE>
II-3
Exhibit 1
PHH CORPORATION
U.S. $3,000,000,000
Medium-Term Notes
DISTRIBUTION AGREEMENT
__________, 1998
Credit Suisse First Boston Corporation
11 Madison Avenue
New York, New York 10010
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
_________, 1998, 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,
1
<PAGE>
as from time to time amended, and the term "Prospectus" shall be deemed to refer
collectively, 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 incorpo-
rated 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,
2
<PAGE>
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 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 jurisdic-
tion 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
3
<PAGE>
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 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.
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(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 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
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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
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).
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<PAGE>
(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 warranties of the Company herein contained and shall be subject to the terms
and conditions herein set forth. Each Terms Agreement shall specify the cur
rency 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 (which, if not so specified in a Terms Agreement, shall be at
a discount equivalent to the applicable commission set forth in Section 3(a)
hereof), 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 its independent certified public accountants (who must be of
national standing) (the "Accountants") 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
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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 Skadden, Arps, Slate, Meagher and Flom LLP, 919 Third Avenue, 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:
(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.
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<PAGE>
(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 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 security holders 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
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<PAGE>
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.
(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
10
<PAGE>
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) state
ments 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.
(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
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<PAGE>
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 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
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<PAGE>
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
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 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 its Accountants 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
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<PAGE>
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 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.
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<PAGE>
Section 5. Conditions of Obligations. Your several obligations
to solicit offers to purchase the Offered 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 Com-
pany'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 pur-
pose 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 counsel for the Company acceptable to
the Agents (it being understood that the opinion of the General Counsel or Vice
President, Legal of the Company shall be acceptable to the Agents unless
otherwise provided in the Terms Agreement), 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
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<PAGE>
the 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 Regu-
lations, (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(g) 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.
(d) At the date hereof, and at each Closing Time if called for
by the applicable Terms Agreement,
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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 the Accountants,
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 Skadden,
Arps, Slate, Meagher and Flom LLP, 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 development shall not
affect your respective obligations with respect to Offered Securities
denominated in any currency not so affected.
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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 settle-
ment 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 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
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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 action, suit or proceeding, enclosing a copy of
19
<PAGE>
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.
20
<PAGE>
(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 lia-
bilities (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, knowl-
edge, 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
21
<PAGE>
result of the losses, claims, damages or liabilities (or actions in respect
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, agree-
22
<PAGE>
ments, 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 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
23
<PAGE>
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 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 dupli-
cate originals to:
Credit Suisse First Boston Corporation
11 Madison Avenue
New York, New York 10010
Attention: Short and Medium Term Finance
Telephone: (212) 325-7198
Telecopy: (212) 325-8183
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
24
<PAGE>
Attention: MTN Product Management
Telecopy: (212) 449-2234
J.P. Morgan Securities Inc.
60 Wall Street - 3rd Floor
New York, New York 10260
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 6 Sylvan Way, Parsippany, New Jersey 07054,
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.
25
<PAGE>
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
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
________________________
26
<PAGE>
EXHIBIT A
PHH CORPORATION
(A Maryland corporation)
Medium-Term Notes
TERMS AGREEMENT
[Date]
PHH Corporation
6 Sylvan Way
Parsippany, New Jersey 07054
Attention:
__________________
Re: Distribution Agreement for
Above-Mentioned Securities
Pursuant to the Distribution Agreement dated _________, 1998
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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<PAGE>
Schedule I
Principal Discount Initial
Amount (as % of Public
Maturity Settle- and Interest Principal Offering
Date ment Date Currency Rate Amount) Price Trustee
-------- --------- ---------- -------- --------- -------- -------
A.
B.
C.
D.
E.
F.
G.
H.
Time of delivery
Place of delivery
[Other terms]
[Closing date]
28
<PAGE>
EXHIBIT B
PHH CORPORATION
Administrative Procedures
These Administrative Procedures relate to the Offered
Securities defined in the Distribution Agreement, dated _________, 1998 (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.
29
<PAGE>
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
30
<PAGE>
the sole right to accept offers to purchase Certificated Securities and may
reject any such offer in whole or in part.
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;
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<PAGE>
(10) If a redeemable Certificated 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 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
32
<PAGE>
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 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
11 Madison Avenue
New York, New York 10010
Attn: Short and Medium Term Finance
Telephone: (212) 325-7198
Telecopy: (212) 325-8183
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
33
<PAGE>
Merrill Lynch World Headquarters
World Financial Center, North Tower
10th Floor
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 third 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
34
<PAGE>
Trustee by facsimile transmission or other acceptable written means.
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.
35
<PAGE>
Certified Securities will be delivered to the Agents as
follows:
Credit Suisse First Boston Corporation
Five World Trade Center
New York, New York 10048
Attention: Joan Bryan
Telephone: (212) 322-5105
Telecopy: (212) 803-4096
Credit Suisse First Boston Corporation
11 Madison Avenue
New York, New York 10010
Attention: Jean Fitzgerald
Telephone: (212) 325-0550
Telecopy: (212) 325-8183
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 (con-
firmed 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
36
<PAGE>
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.
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:
37
<PAGE>
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.
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);
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(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 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
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<PAGE>
(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 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 Of-
fered 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.
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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.
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".
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<PAGE>
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 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 Pur-
chasing 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
11 Madison Avenue
New York, New York 10010
Attn: Short and Medium Term Finance
Telephone: (212) 325-7198
Telecopy: (212) 325-8183
Goldman, Sachs & Co.
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85 Broad Street
New York, New York 10004
Attn: Karen Robinson
MTN Desk Assistant
Telephone: (212) 902-8401
Telecopy: (212) 902-0658
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:
43
<PAGE>
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 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 third 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, which
ever is earlier
B 12:00 noon on the sale date
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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
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 dead lines 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 princi-
45
<PAGE>
pal 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 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
46
<PAGE>
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 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
Exhibit 4(b)(i)
REGISTERED
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 CUR-
RENCY 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:
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
:
1
<PAGE>
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 June 5, 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
2
<PAGE>
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.
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.
3
<PAGE>
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 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
4
<PAGE>
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 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.
5
<PAGE>
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 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
6
<PAGE>
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.
7
<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 of the series designated herein issued
under the within-mentioned Indenture.
PHH CORPORATION
By:____________________________
[Title]
THE FIRST NATIONAL BANK
OF CHICAGO, as Trustee Attest:
By:____________________________________ ________________________________
Authorized Signatory Corporate Secretary
[SEAL]
8
<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 what ever.
9
<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 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.
<TABLE>
<S> <C>
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 what
ever.
</TABLE>
10
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.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
AND CURRENCY OR
CURRENCY UNIT: INITIAL INTEREST RATE: MATURITY DATE:
ORIGINAL ISSUE DATE: INDEX MATURITY: SPREAD: +/-
SPREAD MULTIPLIER: %
<S> <C>
OPTION TO RECEIVE
PAYMENT IN SPECIFIED
CURRENCY:
YES:______ NO:______
BASE RATE: [__] COMMERCIAL PAPER [__] CD RATE
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)
</TABLE>
1
<PAGE>
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:
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
June 5, 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,
3
<PAGE>
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.
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
4
<PAGE>
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 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
5
<PAGE>
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 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
6
<PAGE>
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 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
7
<PAGE>
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.
8
<PAGE>
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.
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.
9
<PAGE>
$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.
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
10
<PAGE>
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.
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 Determi-
11
<PAGE>
nation 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 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
12
<PAGE>
(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.
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
13
<PAGE>
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
14
<PAGE>
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 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.
15
<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 of the series designated herein issued
under the within-mentioned Indenture.
PHH CORPORATION
By:____________________________
[Title]
THE FIRST NATIONAL BANK
OF CHICAGO, as Trustee Attest:
By:____________________________________ _______________________________
Authorized Signatory Corporate Secretary
[SEAL]
16
<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.
<TABLE>
<S> <C>
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 what
ever.
</TABLE>
17
<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 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.
<TABLE>
<S> <C>
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 what
ever.
</TABLE>
18
Exhibit 5
PHH CORPORATION
6 SYLVAN WAY
PARSIPPANY, NEW JERSEY 07054
(973) 428-9700
FAX: (973) 496-5531
January 29, 1998
PHH Corporation
6 Sylvan Way
Parsippany, New Jersey 07054
Ladies and Gentlemen:
I am the General Counsel of PHH Corporation, a Maryland corporation
(the "Company"), and as such, I have acted as counsel 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, I have
reviewed the charter and by-laws of the Company, the Indenture (the
"Indenture"), between the Company and The First National Bank of Chicago, as
Trustee, dated as of June 5, 1997, 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.
I am of the opinion and advise you that:
1. The Indenture has been duly authorized, executed and delivered by
the Company.
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.
I hereby consent to the filing of this opinion as an exhibit to the
above-mentioned Registration Statement and to the reference made to me in the
Registration Statement and the related Prospectus.
Very truly yours,
/s/ Samuel H. Wright
--------------------
1
PHH CORPORATION AND SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
(Dollars in thousands)
<TABLE>
<CAPTION>
Nine Months Ended For the Year Ended December 31,
September 30, -----------------------------------------------------------------
1997 1996 1995 1994 1993 1992
------- ---- ---- ---- ---- ----
<S><C>
Income (loss) before income taxes (38,675) 148,220 133,115 116,758 106,943 90,812
Plus: Fixed charges 200,988 268,960 253,481 202,659 182,596 201,631
----------------------------------------------------------------------------------
Earnings available to cover fixed charges 162,313 417,180 386,596 319,417 289,539 292,443
==================================================================================
Fixed charges (1)
Interest including amortization of deferred
loan costs 195,567 260,765 245,641 194,594 173,508 193,175
Capitalized interest - - - - - -
Interest portion of rental payment 5,421 8,195 7,840 8,065 9,088 8,456
----------------------------------------------------------------------------------
Total fixed charges 200,988 268,960 253,481 202,659 182,596 201,631
==================================================================================
Ratio of earnings to fixed charges (2) (3) 1.55x 1.53x 1.58x 1.59x 1.45x
==================================================================================
</TABLE>
(1) The interest included in fixed charges consists of interest expense 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.
(2) Earnings before fixed charges consist of income (loss) before income taxes
plus fixed charges. Fixed charges consist of interest expense on all
indebtedness (including amortization of deferred financing costs) and the
portion of operating lease rental expense that is representative of the
interest factor (deemed to be one-third of operating lease rentals).
(3) Earnings are inadequate to cover fixed charges (deficiency of $38.7
million) for the nine months ended September 30, 1997. Loss before income
taxes includes a one-time merger and restructuring charge recorded in the
second quarter of 1997 in the amount of $235.3 million ($182.7 million
after-tax). Excluding the charge, the ratio of earnings to fixed charges
is 1.98x.
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/A filed March 27, 1997 for the year ended April 30, 1996,
and our report dated April 30, 1997 with respect to the consolidated financial
statements and related financial statement schedule included in the Transition
Report on Form 10-K for the eight-month period ended December 31, 1996, of PHH
Corporation and subsidiaries. We also consent to the reference to our firm
under the heading "Experts" in the Registration Statement.
Our report dated May 17, 1996, contains an explanatory paragraph that states
that the company adopted the provisions of Statement of Financial Accounting
Standards No. 122 "Accounting for Mortgage Servicing Right," in 1996.
/s/ KPMG Peat Marwick, LLP
---------------------------------
KPMG Peat Marwick, LLP
Baltimore, Maryland
January 29, 1998
Exhibit 25(a)
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)
6 SYLVAN WAY
PARSIPPANY, NEW JERSEY 07054
(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 23rd day of
January, 1998.
THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE
BY /s/ Steven M. Wagner
STEVEN M. WAGNER
VICE PRESIDENT AND SENIOR COUNSEL
* 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
January 23, 1998
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: Steven M. Wagner
STEVEN M. WAGNER
VICE PRESIDENT AND SENIOR COUNSEL
4
<PAGE>
EXHIBIT 7
<TABLE>
<S> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 09/30/97 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0303 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 SEPTEMBER 30, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
DOLLAR AMOUNTS IN C400
THOUSANDS RCFD BIL MIL THOU
--------- ---- ------------
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1).................... 0081 4,499,157 1.a.
b. Interest-bearing balances(2)............................................. 0071 6,967,103 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 5,251,713 2.b.
3. Federal funds sold and securities purchased under agreements to
resell 1350 5,561,976 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule
RC-C).......................................................................RCFD 2122 24,171,565 4.a.
b. LESS: Allowance for loan and lease losses................................RCFD 3123 419,216 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 23,752,349 4.d.
5. Trading assets (from Schedule RD-D)......................................... 3545 6,238,805 5.
6. Premises and fixed assets (including capitalized leases).................... 2145 717,303 6.
7. Other real estate owned (from Schedule RC-M)................................ 2150 7,187 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M).............................................. 2130 77,115 8.
9. Customers' liability to this bank on acceptances outstanding................ 2155 614,921 9.
10. Intangible assets (from Schedule RC-M)...................................... 2143 277,105 10.
11. Other assets (from Schedule RC-F)........................................... 2160 2,147,141 11.
12. Total assets (sum of items 1 through 11).................................... 2170 56,108,875 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>
<S> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 09/30/97 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0303 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
--------- ------------
LIABILITIES
1 Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part 1)............................ RCON 2200 21,496,468 13.a
(1) Noninterest-bearing(1)............................. RCON 6631 8,918,843 13.a.1
(2) Interest-bearing................................... RCON 6636 12,577,625 13.a.2
b. In foreign offices, Edge and Agreement subsidiaries, and
IBFs (from Schedule RC-E, part II)..................... RCFN 2200 14,164,129 13.b.
(1) Noninterest bearing................................ RCFN 6631 352,399 13.b.1
(2) Interest-bearing................................... RCFN 6636 13,811,730 13.b.2
14. Federal funds purchased and securities sold under agreements
to repurchase: RCFD 2800 3,894,469 14
15. a. Demand notes issued to the U.S. Treasury RCON 2840 68,268 15.a
b. Trading Liabilities(from Schedule RC-D)........................ RCFD 3548 5,247,232 15.b
16. Other borrowed money:
a. With a remaining maturity of one year or less................. RCFD 2332 2,608,057 16.a
b. With a remaining maturity of than one year through three years A547 379,893 16.b
. c. With a remaining maturity of more than three years ........... A548 323,042 16.c
17. Not applicable
18. Bank's liability on acceptance executed and outstanding...... RCFD 2920 614,921 18
19. Subordinated notes and debentures (2)......................... RCFD 3200 1,700,000 19
20. Other liabilities (from Schedule RC-G)........................ RCFD 2930 1,222,121 20
21. Total liabilities (sum of items 13 through 20)................ RCFD 2948 51,718,600 21
22. Not applicable
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 2,989,408 25
26. a. Undivided profits and capital reserves.......................... RCFD 3632 1,175,518 26.a.
b. Net unrealized holding gains (losses) on available-for-sale
securities............................................. RCFD 8434 26,750 26.b.
27. Cumulative foreign currency translation adjustments........... RCFD 3284 (2,259) 27
28. Total equity capital (sum of items 23 through 27)............. RCFD 3210 4,390,275 28
29. Total liabilities and equity capital (sum of items 21 and 28). RCFD 3300 56,108,875 29
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 1996 . . . . . . . . . . . . . . . . . . . . . . . . RCFD 6724 N/A. M.1
1 = Independent audit of the bank conducted in accordance 4. = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by
submits a report on the consolidated holding company external auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
- ----------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
