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PHH CORPORATION
Issuer
to
BANK ONE, N.A.
Trustee
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Supplemental Indenture No. 1
Dated as of ____________, 2000
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SENIOR DEBT SECURITIES
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SUPPLEMENTAL INDENTURE NO. 1
SUPPLEMENTAL INDENTURE NO. 1, dated as of ____________, 2000,
between PHH Corporation, a corporation duly organized and existing under
the laws of the State of Maryland (the "Company"), and Bank One, N.A., a
national banking association duly organized and existing under the laws of
the United States of America (the "Trustee"), as trustee under the Senior
Indenture hereinafter mentioned.
WITNESSETH:
WHEREAS, the Company duly authorized the execution and delivery of
a Senior Indenture, dated as of ____________, 2000 (the "Senior
Indenture"), providing for the issuance from time to time of Securities of
the Company, unlimited as to principal amount, to bear such rates of
interest, to mature at such time or times, to be issued in one or more
series; and
WHEREAS, Section 901 of the Senior Indenture permits the Company
and the Trustee to enter into one or more indentures supplemental to the
Senior Indenture to, among other things, add any additional covenants of
the Company for the holders of a particular series of Securities and to
change or eliminate any provision of the Senior Indenture so long as such
change or elimination shall not become effective with respect to any
particular series entitled to the benefit of such provision until such time
as no Securities of such series are outstanding;
WHEREAS, the Company desires to supplement or amend the Senior
Indenture only with respect to series of Securities issued subsequent to
the date of this Supplemental Indenture No. 1;
WHEREAS, the supplements or amendments to the Senior Indenture set
forth herein shall have no effect upon any series of Securities Outstanding
on the date hereof;
WHEREAS, all conditions necessary to authorize the execution and
delivery of this Supplemental Indenture No. 1 and to make this Supplemental
Indenture No.1 valid and binding have been complied with or have been done
or performed.
NOW, THEREFORE, in consideration of the premises set forth above,
the Company hereby requests that the Trustee join with it in this
Supplemental Indenture No. 1 to add to the covenants of the Company in the
Senior Indenture as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. For all purposes of the Senior Indenture and this
Supplemental Indenture No. 1, except as otherwise expressly provided or
unless the context otherwise requires:
(a) unless indicated otherwise, "herein," "hereof" and other words
of similar import refer to this Supplemental Indenture No. 1 as a whole and
not to any particular Article, Section or other subdivision; and
(b) all capitalized terms used in this Supplemental Indenture No. 1
but not defined herein shall have the meanings assigned such terms in the
Senior Indenture.
ARTICLE TWO
RESTRICTIVE COVENANTS
Section 2.01. Limitation on Restricted Payments.
The Company, (i) shall not, directly or indirectly, declare or pay
any dividend, or make any distributions on account of the Capital Stock of
the Company, and (ii) shall not make, or permit any Subsidiary of the
Company to make any loan, advance to or investment in Cendant and its
subsidiaries (excluding the Subsidiaries of the Company) (the transactions
described in clauses (i) and (ii) being referred to herein as "Restricted
Payments"), if at the time thereof, upon giving effect to such Restricted
Payment, the Debt/Equity Ratio of the Company exceeds 6.5 to 1.
Section 2.02. Debt/Tangible Equity Ratio.
The Company shall maintain, as of the last day of each quarter, a
Debt/Tangible Equity Ratio of not more than 10.0 to 1.0.
"Consolidated Net Worth" of any Person means the consolidated
stockholders' equity of such Person and its consolidated subsidiaries, as
determined on a consolidated basis in accordance with generally accepted
accounting principles plus amounts representing mandatorily redeemable
preferred securities issued by such Person or its Subsidiaries.
"Capital Stock" means any and all shares, interests,
participations, rights or other equivalents (however designated) of
corporate stock or similar interests in any other form of entity,
including, without limitation, with respect to partnerships, partnership
interests (whether general or limited) and any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, such partnership.
"Debt" means (i) all debt, obligations and other liabilities of the
Company and its Subsidiaries which are, at the date as of which Debt is to
be determined, includable as liabilities in a consolidated balance sheet of
the Company and its Subsidiaries, other than (x) accounts payable and
accrued expenses, (y) advances from clients obtained in the ordinary course
of the relocation management services business of the Company and its
Subsidiaries and (z) current and 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, provided however, that
any debt assumed by the Company or any of its Subsidiaries in connection
with the acquisition of Avis Group Holdings, Inc. ("Avis") (whether by
merger with or into Avis or by the guarantee of debt of Avis or its
Subsidiaries), which is transferred to Cendant or a Subsidiary thereof
(other than PHH and its Subsidiaries) within 90 days of such debt
assumption shall not be deemed debt for purposes of the Debt/Equity Ratio
or the Debt/Tangible Equity Ratio. In the event that any such debt is not
transferred within such 90 day period, such debt will be deemed to have
been incurred by PHH on the last day of such 90 day period for purposes of
the foregoing ratios.
"Debt/Equity Ratio" means the ratio of (x) the principal amount of
Debt to (y) the Consolidated Net Worth of the Company.
"Debt/Tangible Equity Ratio" means the ratio of (x) principal
amount of Debt to (y) Tangible Net Worth.
"Tangible Net Worth" means, with respect to any Person at any date,
the Consolidated Net Worth of such Person, less the aggregate book value of
all intangible assets of such Person (as determined in accordance with
GAAP).
ARTICLE THREE
SUPPLEMENTAL INDENTURES
WITH CONSENT OF HOLDER
Section 3.01. Subject to Section 901 of the Indenture, with the
consent of the Holders of not less than 66-2/3% of the aggregate in
principal amount of the outstanding securities (each such series voting as
the same class) affected by such supplemental indenture, by Act of said
Holder delivered to the Company and the Trustee, the Company, when
authorized by a Board Resolution, and the Trustee may enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating Section 2.01 hereof.
ARTICLE FOUR
MISCELLANEOUS
Section 4.01. All of the terms and conditions of the Senior
Indenture shall remain in full force and effect.
Section 4.02. The Trustee assumes no responsibility for the
correctness of the recitals herein contained, which shall be taken as the
statements of the Company. The Trustee makes no representation and shall
have no responsibility as to the validity of this Supplemental Indenture
No. 1.
Section 4.03. In case of any provision in this Supplemental
Indenture No. 1 shall be invalid, illegal or unenforceable, the validity,
legality or enforceability of the remaining provisions of this Supplemental
Indenture No.1 or the Senior Indenture shall not in any way be affected of
impaired thereby.
Section 4.04. This Supplemental Indenture No.1 shall be governed by
and construed in accordance with the laws of the State of New York. This
Supplemental Indenture No.1 is subject to the provisions of the Trust
Indenture Act of 1939, as amended, and shall, to the extent applicable, be
governed by such provisions.
Section 4.05. This Supplement Indenture No. 1 may be executed in
any number of counterparts, each of which so executed shall be deemed to be
an original, but such counterparts shall together constitute but one and
the same instrument.
IN WITNESS WHEREOF, the Company and the Trustee have caused this
Supplemental Indenture No. 1 to be duly executed by their respective
officers thereunto duly authorized all as of the day and the year first
above written.
PHH CORPORATION
By:
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Name:
Title:
BANK ONE, N.A.,
as Trustee
By:
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Name:
Title:
