$625,000,000
LOAN AND SECURITY AGREEMENT
Dated as of December 28, 1998
Among
TRAC FUNDING II, INC.,
as Borrower,
QUINCY CAPITAL CORPORATION
and
RECEIVABLES CAPITAL CORPORATION,
as Lenders,
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Administrator
ARTICLE I. AMOUNT AND TERMS OF THE LOAN
Section 1.1. Loan Facility. ........................................ 1
Section 1.2. Making the Loan. ........................................ 2
Section 1.3. Repayment of the Loan. ................................. 2
Section 1.4. Fees. ................................................. 3
Section 1.5. Payments and Computations, Etc. ....................... 3
Section 1.6. Prepayments. ........................................ 3
Section 1.7. Grant of the Security Interest. ....................... 4
Section 1.8. Inability to Determine Eurodollar Rate. .............. 4
ARTICLE II. [Intentionally Omitted]
ARTICLE III. REPRESENTATIONS AND WARRANTIES
Section 3.1. Borrower Representations and Warranties. .............. 5
ARTICLE IV. CONDITIONS OF LOAN
Section 4.1. Conditions Precedent to the Loan......................... 8
Section 4.2 Conditions Subsequent to the Loan ....................... 9
ARTICLE V. COVENANTS
Section 5.1. Affirmative Covenants of Borrower. .......................9
Section 5.2. Negative Covenants of Borrower. ....................... 12
ARTICLE VI. EVENTS OF DEFAULT
Section 6.1. Events of Default. ................................ 14
Section 6.2. Remedies. ........................................ 16
ARTICLE VII. THE ADMINISTRATOR
Section 7.1. Authorization and Action ................................ 18
Section 7.2. Delegation of Duties ................................ 19
Section 7.3. Exculpatory Provisions ................................ 19
Section 7.4. Reliance by Administrator ................................19
Section 7.5. Non-Reliance on Administrator and Other Lenders ..... 20
Section 7.6. Administrator in its Individual Capacity .............. 20
Section 7.7. Successor Administrator ................................ 20
ARTICLE VIII. [Intentionally Omitted]
ARTICLE IX. INDEMNIFICATION
Section 9.1. Indemnities by the Borrower. ....................... 21
Section 9.2. Increased Cost and Reduced Return........................ 23
Section 9.3. No Withholding or Other Taxes. ....................... 23
Section 9.4. Costs and Expenses Relating to this Agreement. ..... 25
Section 9.5. Refunds ................................................. 25
ARTICLE X. ASSIGNMENTS
Section 10.1. Assignments. ..................................... 26
ARTICLE XI. MISCELLANEOUS
Section 11.1. Waivers and Amendments. ................................ 27
Section 11.2. Notices.................................................. 27
Section 11.3. Ratable Payments......................................... 28
Section 11.4. Confidentiality. ........................................28
Section 11.5. Bankruptcy Petition. ................................ 28
Section 11.6. Limitation of Liability. ................................ 29
Section 11.7. Choice of Law. ........................................ 29
Section 11.8. Consent to Jurisdiction................................. 29
Section 11.9. Waiver of Jury Trial. ................................ 29
Section 11.10. Integration; Survival of Terms. ..................... 29
Section 11.11. Counterparts; Severability............................... 30
Section 11.12. Recourse. ............................................... 30
Section 11.13. Further Actions Evidencing Loans and the Security Interest
Created Herein. .................................... 30
EXHIBITS AND SCHEDULES
EXHIBIT I DEFINITIONS
EXHIBIT II CHIEF EXECUTIVE OFFICE; PLACE(S) OF BUSINESS; FEIN
EXHIBIT III FORM OF LOAN NOTE
EXHIBIT IV FORM OF COMPLIANCE CERTIFICATE
EXHIBIT V FORM OF MONTHLY REPORT
EXHIBIT VI FORM OF LOCK-BOX AGREEMENT
EXHIBIT VII CREDIT AND COLLECTION PRACTICES
SCHEDULE I CLOSING DOCUMENTS
THIS LOAN AND SECURITY AGREEMENT, dated as of December 28, 1998, is by
and among TRAC Funding II, Inc., a Delaware corporation (the "Borrower"), Quincy
Capital Corporation, a Delaware corporation (together with its successors and
permitted assigns, "QCC"), Receivables Capital Corporation, a Delaware
corporation (together with its successors and permitted assigns, "RCC" and,
together with QCC, the "Lenders"), and Bank of America Trust and Savings
Association ("BofA"), as administrator for the Lenders (in such capacity, the
"Administrator"). Unless defined elsewhere herein, capitalized terms used in
this Agreement shall have the meanings assigned to such terms in Exhibit I.
PRELIMINARY STATEMENTS
PHH VMS has delivered to the Trustee a Series Specification Notice
listing certain assets which are to be designated as Series 1998-C Assets.
PHH VMS and the Trust have entered into the assignment pursuant to
which PHH VMS sold, conveyed, assigned, transferred and set over unto the Trust
the Series 1998-C Leased Vehicles, the Series 1998-C Leases and other rights
related thereto.
PHH VMS and the Trust have entered into the Supplement creating the
Series 1998-C Certificate and providing for the administration and servicing of
the Series 1998-C Assets by the Administrative Agent.
The Borrower and PHH VMS have entered into the Contribution Agreement
pursuant to which PHH VMS shall contribute the Certificate and the other
property relating thereto (as more fully described in the Contribution
Agreement) to the Borrower.
The Borrower desires to obtain a loan from the Lenders pursuant to the
terms hereof and is willing to pledge the Collateral to the Administrator for
the benefit of the Lenders in connection therewith.
The Lenders are willing to make a loan to the Borrower on the terms and
subject to the conditions hereinafter set forth.
ARTICLE .
AMOUNT AND TERMS OF THE LOAN
Section .. Loan Facility.
() On the terms and conditions set forth herein, the Lenders shall make
a term loan to the Borrower in an aggregate principal amount not to exceed
$625,000,000 (the "Loan").
() The Loan shall be evidenced by a Loan Note that shall be dated the
Closing Date, be payable to the order of the Administrator, for the benefit of
the Lenders, and provide for the payment of the unpaid principal amount of the
Loan evidenced thereby and interest with respect thereto accruing from time to
time in accordance with the terms of this Agreement until repayment in full of
the Loan.
Section .. Making the Loan. The Borrower shall notify the Administrator
in writing of its desire to borrow under this Agreement, which notice shall be
delivered no later than the date which is one (1) Business Day prior to desired
funding date and shall specify the amount of the Loan requested (together with a
detailed calculation thereof); provided, however, that the Borrower shall not
give such notice to the Administrator before all conditions precedent set forth
in Article IV are satisfied or, in the sole discretion of the Administrator,
waived. Each Lender shall, provided that the conditions precedent set forth in
Article IV are satisfied, make available to the Borrower on the proposed funding
date in same day funds, at the Borrower's account specified in such notice, such
Lender's Percentage amount of the Loan requested. The Borrower's notice shall be
deemed to be an irrevocable and binding commitment to accept the Loan on the
funding date, and the Borrower shall indemnify the Lenders against any loss or
expense incurred by the Lenders if for any reason the Loan is not made on the
funding date, including, without limitation, any Broken Funding Costs.
Section .. Repayment of the Loan.
() The Loan shall mature, and the principal amount thereof shall be
repaid, to the extent not previously repaid as required hereby, on December 28,
2003. Notwithstanding anything contained in this Agreement to the contrary, the
repayment of the Loan and the payment of Discount and all fees, indemnities and
other amounts payable by the Borrower under this Agreement will be full recourse
obligations of the Borrower.
() On each Settlement Date, the Borrower shall pay and deposit to the
Administration Account an amount equal to the sum of (i) all unpaid Discount
(accrued through the end of the preceding Settlement Period ending on or before
such Settlement Date) and all fees and other amounts (other than the principal
amount of the Loan) due and payable on such Settlement Date, plus (ii) an amount
which, when applied to reduce the outstanding principal amount of the Loan,
shall cause the outstanding principal amount of the Loan to be less than or
equal to the lesser of (A) 83.33% of the aggregate Projected Adjusted Lease
Balance on such Settlement Date of the Series 1998-C Leased Vehicles and (B)
such aggregate Projected Adjusted Lease Balance minus $25,000,000.
() Each payment made by the Borrower pursuant to paragraph (b) above
shall be paid by the Administrator to each Lender (on a pro rata basis based on
such Lender's Percentage) and shall be applied by such Lender, first, to the
payment of accrued and unpaid Discount, second, to the payment of fees and other
amounts due and payable, and, third, to the reduction of such Lender's portion
of the outstanding principal amount of the Loan. Loan principal repaid may not
be reborrowed.
() Notwithstanding anything contained in this Section 1.3, on each
Business Day following the occurrence of an Event of Default, the Borrower shall
deposit to the Administration Account, for application as provided in paragraph
(c) above, all Collections with respect to the Series 1998-C Assets for the
previous Business Day.
Section .. Fees. The Borrower shall pay to the Lenders fees in
amounts and at the times set forth in the Fee Letter.
Section .. Payments and Computations, Etc.
() All amounts to be paid or deposited by the Borrower hereunder shall
be paid or deposited no later than 12:00 Noon (New York City time) on the day
when due in same day funds to the Administration Account.
() On and after the occurrence of an Event of Default and during the
continuance thereof, the Borrower shall, to the extent permitted by law, pay on
demand from time to time interest on any overdue amount hereunder at an interest
rate per annum equal to 2% per annum above the then current interest rate on the
outstanding Loan; provided, however, that no provision of this Agreement shall
require the payment or permit the collection of Discount or any other interest
in excess of the maximum permitted by applicable law; and provided further, that
for any such amount paid shall not be considered paid to the extent that at any
time all or a portion of such payment is rescinded or must otherwise be returned
for any reason.
() Except as otherwise provided herein, all computations of interest,
the Program Fee, other fees and other amounts hereunder shall be made on the
basis of a year of 360 days and the actual number of days elapsed and such
computations by the Administrator shall be binding on the parties hereto absent
manifest error. Whenever any payment or deposit to be made hereunder shall be
due on a day other than a Business Day, such payment or deposit shall be made on
the next succeeding Business Day (unless otherwise specified therein) and such
extension of time shall be included in the computation of such payment or
deposit.
() Unless otherwise indicated to the contrary, a decimal resulting from
any calculation under this Agreement will be carried out to the tenth place, a
percentage resulting from any calculation under this Agreement will be carried
out such that there are ten digits in such percentage and a dollar amount used
in or resulting from any calculation will be rounded to the nearest cent (with
one half cent being rounded upward).
Section .. Prepayments.
() The Borrower shall be entitled to voluntarily prepay the Loan, in
whole or in part, on any Settlement Date; provided, however, that the
Administrator shall have received prior irrevocable written notice of such
prepayment at least thirty (30) days (or such shorter period of time as the
Administrator may agree to in its sole discretion) prior to the date of such
prepayment. Notwithstanding the foregoing, the Borrower shall be entitled to
prepay the Loan in full after the occurrence of an Event of Default upon one (1)
Business Day's notice to the Administrator. For purposes of this paragraph, the
term "prepayment" shall not include payments made on each Settlement Date
pursuant to Section 1.3.
() In the case of a prepayment of the Loan by the Borrower pursuant to
paragraph (a) above, the Borrower shall, on the date of such prepayment, (1) pay
to the Administrator, for the account of the Lenders, an amount equal to the sum
of (i) the principal portion of the Loan to be prepaid on such date, plus (ii)
the accrued and unpaid Discount on the Loan through such date plus (iii) all
other amounts due to the Lenders hereunder, including without limitation any
Broken Funding Costs and other expenses, if any (including, without limitation,
attorneys' fees and disbursements, costs, accrued interest or discount in
terminating, closing out or transferring any agreements such as interest rate
swaps, interest rate cap agreements, over-the-counter forward agreements and
futures contracts), in connection with any Lender's funding or maintenance of
the Loan which arise as the result of such prepayment.
Section .. Grant of the Security Interest.
() As collateral security for the prompt and complete payment of
principal of and interest on the Loan and all other amounts owing the
Administrator and the Lenders hereunder and under the Loan Note and the other
Transaction Documents (the "Secured Obligations") and for the prompt and
complete performance when due of all the Borrower's obligations to the
Administrator and the Lenders under this Agreement and the other Transaction
Documents and in order to induce the Administrator and the Lenders to enter into
this Agreement and make the Loan in accordance with the terms hereof, the
Borrower hereby assigns, pledges and grants to the Administrator, for the
benefit of the Lenders, a security interest in all rights, title and interest of
the Borrower, whether now existing or hereafter acquired or arising, in and to
the Collateral and all proceeds thereof.
() The Borrower shall physically deliver, or cause to be physically
delivered, to the possession of the Administrator the original Certificate. The
Certificate shall be held by the Administrator for the benefit of the Lenders.
The Administrator shall return to the Borrower the Certificate upon and subject
to the termination of this Agreement and indefeasible payment in full by the
Borrower of the Loan, all Discount (accrued or to accrue) with respect to the
Loan and all other amounts payable to the Administrator and the Lenders.
Section .. Inability to Determine Eurodollar Rate.
In the event that the Administrator shall have determined prior to the
first day of any Settlement Period (which determination shall be conclusive and
binding upon the parties hereto) by reason of circumstances affecting the
interbank Eurodollar market, either (a) dollar deposits in the relevant amounts
and for the relevant Settlement Period are not available, (b) adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for such
Settlement Period or (c) the Eurodollar Rate determined pursuant hereto does not
accurately reflect the cost (as conclusively determined by the Administrator) of
maintaining any portion of the Loan during such Settlement Period, the
Administrator shall promptly give telephonic notice of such determination,
confirmed in writing, to the Seller prior to the first day of such Settlement
Period. Upon delivery of such notice (a) no portion of the Loan shall be funded
thereafter at the Alternate Rate determined by reference to the Eurodollar Rate,
unless and until the Administrator shall have given notice to the Borrower that
the circumstances giving rise to such determination no longer exist, and (b)
with respect to any outstanding portions of the Loan then funded at the
Alternate Rate determined by reference to the Eurodollar Rate, such Alternate
Rate shall automatically be converted to the Alternate Rate determined by
reference to the Base Rate at the respective last days of the then current
Settlement Periods relating to such portions of the Loan.
ARTICLE .
[Intentionally Omitted]
ARTICLE .
REPRESENTATIONS AND WARRANTIES
Section .. Borrower Representations and Warranties. The
Borrower hereby represents and warrants to the Administrator and each of the
Lenders that:
() Corporate Existence and Power. The Borrower is a corporation validly
organized and existing and in good standing under the laws of the state of its
incorporation, is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the nature of its business
requires such qualification other than those in which its failure to so qualify
would not have a Material Adverse Effect. The Borrower has full power and
authority and holds all requisite governmental licenses, permits and other
approvals, except to the extent that failure to hold such licenses, permits and
approvals would not have a Material Adverse Effect, to enter into and perform
its obligations under the Transaction Documents and to own and hold under lease
its property and to conduct its business as currently proposed to be conducted.
() Non-Contravention, Due Authorization, Etc. The execution, delivery
and performance by the Borrower of the Transaction Documents, the pledge and
assignment of a security interest in the Collateral and the Borrower's use of
the proceeds of the Loan made hereunder, are within its corporate powers, have
been duly authorized by all necessary corporate action, do not: (i) contravene
the Borrower's certificate of incorporation, by-laws, or any shareholder
agreements, voting trusts, and similar arrangements applicable to any of its
authorized shares, (ii) contravene any contractual restriction, law or
governmental regulation or court decree or order binding on or affecting the
Borrower, or (iii) result in, or require the creation or imposition of, any lien
on any of the Borrower's properties except the lien created by this Agreement.
No transaction contemplated hereby requires compliance with any bulk sales act
or similar law.
() Governmental Authorization. No authorization or approval or other
action by, and no notice to or filing with, any Governmental Authority or
regulatory body or other Person is required for the due execution, delivery and
performance by the Borrower of the Transaction Documents to which it is a party.
() Binding Effect. Each of the Transaction Documents to which the
Borrower is a party has been duly authorized, executed and delivered by the
Borrower. Each of such Transaction Documents constitutes the legal, valid and
binding obligation of the Borrower enforceable against the Borrower in
accordance with its respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws of
general applicability and by the effect of general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law).
() Accuracy of Information. All information heretofore furnished by the
Borrower to the Administrator or any Lender for purposes of or in connection
with the Transaction Documents or any transaction contemplated thereby is, and
all such information hereafter furnished by the Borrower to the Administrator or
any Lender will be, true and accurate in every material respect, on the date
such information is stated or certified and does not and will not contain any
material misstatement of fact or omit to state a material fact or any fact
necessary to make the statements contained therein not misleading.
() Use of Proceeds. The proceeds of the Loan will not be used (i) for a
purpose which violates, or would be inconsistent with, Regulation T, U or X
promulgated by the Board of Governors of the Federal Reserve System from time to
time or (ii) to acquire any security in any transaction which is subject to
Section 13 or 14 of the Securities Exchange Act of 1934, as amended.
() Holder of Title. As of the Closing Date, the Borrower will be the
holder of all right, title and interest in and to the Collateral, free from any
Adverse Claim, and the Borrower shall defend the Administrator's and the
Lenders' security interest in the Collateral against all claims and demands of
all Persons at any time claiming the same or any interest therein adverse to
that of the Administrator and the Lenders.
() Certificate. The Certificate has been duly and validly authorized,
and, when executed and authenticated in accordance with the terms of the Trust
Agreement and the Supplement, and delivered to and paid for by the Borrower in
accordance with the Contribution Agreement, will be duly and validly issued and
outstanding, and will be entitled to the benefits of the Trust Agreement and the
Supplement.
() Litigation. There is no pending or, to the Borrower's knowledge,
threatened action, suit or proceeding by or against the Borrower before any
Governmental Authority or any arbitrator with respect to the Transaction
Documents or any of the transactions contemplated therein, or with respect to
the Borrower.
() Taxes, etc. Any taxes, fees and other charges of Governmental
Authorities applicable to the Borrower, except for franchise or income taxes, in
connection with the execution, delivery and performance by the Borrower of the
Transaction Documents or otherwise applicable to the Borrower in connection
therewith have been paid or will be paid by the Borrower at or prior to the
Closing Date to the extent then due.
() Financial Condition of the Borrower. On the date hereof, the
Borrower is solvent, is not the subject of any voluntary or involuntary
receivership or conservatorship proceeding and will not become insolvent as
a result of the transactions contemplated by this Agreement.
() Places of Business. The principal place of business and chief
executive office of the Borrower is located at the address listed on Exhibit II
or such other location notified to the Administrator in accordance with Section
5.2(a) in jurisdictions where all action required by Section 5.2(a) has been
taken and completed. The Borrower's Federal Employer Identification Number is
correctly set forth on Exhibit II.
() Material Adverse Effect. Since September 30, 1998 to the date of
this Agreement, no event has occurred which could have a Material Adverse
Effect.
() Transfer by the Transferor. The transfer of the Certificate and
the related assets pursuant to the Contribution Agreement from PHH VMS to the
Borrower was not made for or on account of an antecedent debt and is not
voidable under any section of Title 11 of the United States Code (11 U.S.C.
ss.ss. 101 et. seq.), as amended.
() Ownership of the Borrower. As of the Closing Date the Guarantor
owns, directly or indirectly, 100% of the issued and outstanding capital stock
of PHH VMS and the Borrower, free and clear of any Adverse Claim. PHH VMS owns,
directly or indirectly, 100% of the issued and outstanding capital stock of the
Borrower, free and clear of any Adverse Claim. All such capital stock is validly
issued, fully paid and nonassessable, and there are no outstanding options,
warrants or other rights to acquire securities of the Borrower.
() Not an Investment Company. The Borrower is not an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended from time to time, or any
successor statute.
() Year 2000 Plan. The Borrower has reviewed areas within its business
and operations which could be adversely affected by, and has developed a plan (a
"Year 2000 Plan") to address on a timely basis, the Year 2000 Problem. The
Borrower is taking all actions necessary to meet the schedule and goals of its
Year 2000 Plan, and do not anticipate that the Year 2000 Problem will have a
Material Adverse Effect.
() Administrator's Security Interest. At the time of and immediately
after the making of the Loan and at all times thereafter, the Administrator will
have, for the benefit of the Lenders, a first priority perfected security
interest in the Collateral and the proceeds thereof, free and clear of any
Adverse Claims.
() Lock-Boxes. All Lessees have been instructed to make payments on all
the Series 1998-C Leases to one or more Lock-Boxes and no Person other than the
Administrative Agent and The First National Bank of Maryland, as trustee, has
been granted dominion or control of any Lock-Box, Lock-Box Account or Collection
Account or the right to take such dominion or control.
ARTICLE .
CONDITIONS OF LOAN
Section .. Conditions Precedent to the Loan. The making of the Loan
under this Agreement is subject to the conditions precedent (which conditions
precedent shall be satisfactory in form and substance to the Administrator)
that:
() the Administrator shall have completed its audit of PHH VMS's
operations and shall be reasonably satisfied with the results of such audit;
() the Administrator shall have received on or before the Closing Date
those agreements, opinions and other documents listed on Schedule I;
() the Administrative Agent shall have marked its master data
processing records to evidence the inclusion of the Series 1998-C Leases
and the Series 1998-C Leased Vehicles in the Trust and the interest of the
Administrator on behalf of the Lenders therein;
() the Administrator and the Lenders shall have been paid all fees and
expenses required to be paid on the Closing Date pursuant to the terms hereof
and of the Fee Letter;
() on the Closing Date, the following statements shall be true both
before and after giving effect to the making of the Loan (and acceptance of the
proceeds of the Loan shall be deemed a representation and warranty by the
Borrower that such statements are then true):
() the representations and warranties set forth in Section 3.1 are
true and correct on and as of the Closing Date as though made on and as of the
Closing Date;
() no event has occurred and is continuing, or would result from the
making of the Loan, that will constitute an Event of Default or a Potential
Event of Default;
() the principal amount of the Loan shall not exceed the least of (x)
the Maximum Loan, (y) 83.33% of the aggregate Projected Adjusted Lease Balance
of the Series 1998-C Leased Vehicles as of November 30, 1998 and (z) such
aggregate Projected Adjusted Lease Balance, minus $25,000,000; and
() At least ninety nine percent of the Series 1998 C Leased Vehicles
were new at the inception of the Series 1998 C Lease associated with each
such Series 1998 C Leased Vehicle.
() the Administrator shall have received such other approvals, opinions
or documents as it may reasonably request.
Section 4.2. Conditions Subsequent to the Loan. The Borrower shall,
within 30 days of the date of this Agreement, deliver to the Administrator, (a)
a Lockbox Agreement and (b) an insurance certificate showing that the Borrower
and the Administrator, for the benefit of the Lenders, are additional insureds
on Cendant Corporation's Commercial Auto Coverage insurance policy with respect
to bodily injury and property damage claims caused by accidents and resulting
from the ownership, maintenance or use of any Series 1998 C Leased Vehicle.
ARTICLE .
COVENANTS
Section .. Affirmative Covenants of Borrower. Until the date on
which the Secured Obligations have been indefeasibly paid in full, the Borrower
hereby covenants that:
() Financial Reporting. The Borrower will maintain a system of
accounting established and administered in accordance with
generally accepted accounting principles, and furnish to the
Administrator:
() Annual Reporting. Within 95 days after the close of each of its
Fiscal years, balance sheets as at the close of such fiscal year
and statements of income and retained earnings and a statement of
cash flows for such fiscal year of the Borrower, prepared in
accordance with generally accepted accounting principles and
prepared and certified by its chief financial officer.
() Quarterly Reporting. Within 50 days after the close of the
first three quarterly periods of each of its fiscal years, balance
sheets as at the close of each such period and statements of income and
retained earnings and a statement of cash flows for the period from the
beginning of such fiscal year to the end of such quarter of the
Borrower, prepared in accordance with generally accepted accounting
principles and certified by its chief financial officer.
() Compliance Certificate. Together with the financial
statements required hereunder, a compliance certificate in
substantially the form of Exhibit IV signed by the Borrower's chief
financial officer and dated the date of such annual financial statement
or such quarterly financial statement, as the case may be.
() Notices under Transaction Documents. Forthwith upon its
receipt of any notice, amendment, request for consent, financial
statements, certification, report or other communication under or in
connection with any Transaction Document from any Person other than the
Administrator, copies of the same, unless the Administrator is
otherwise entitled to receive the same pursuant to such Transaction
Document.
() Other Information. Such other information (including non-
financial information) as the Lender may from time to time reasonably
request.
() Notices. The Borrower will notify the Administrator in writing of
any of the following immediately upon learning of the occurrence
thereof, describing the same and, if applicable, the steps being taken
with respect thereto:
() Events of Default or Potential Events of Default. The occurrence
of each Event of Default or each Potential Event of Default.
() Judgment. The entry of any judgment or decree against the Borrower.
() Litigation. The institution of any litigation, arbitration
proceeding or governmental proceeding against the Borrower or in which
the Borrower becomes a defendant or respondent.
() Change in Credit and Collection Practices. Any material amendment
or other material modification to the Credit and Collection Practices.
() Downgrades. The reduction, suspension or withdrawal of the
Guarantor's senior unsecured long-term debt rating by any rating
agency.
() Compliance with Laws. The Borrower will comply in all material
respects with all applicable laws, rules, regulations, orders writs,
judgments, injunctions, decrees or awards to which it may be subject.
() Audits. The Borrower will furnish to the Administrator from time to
time such information with respect to the Certificate as the Administrator may
reasonably request. The Borrower shall, from time to time during regular
business hours as requested by the Administrator upon reasonable notice, permit
the Administrator or its representatives (i) to examine and make copies of and
abstracts from all Records in the possession or under the control of the
Borrower relating to the Certificate and (ii) to visit the offices and
properties of the Borrower for the purpose of examining such materials described
in clause (i) above, and to discuss matters relating to the Borrower's financial
condition, the Certificate or the Borrower's performance hereunder and shall
permit and cooperate with an annual (or more frequently if an Event of Default
or Potential Event of Default has occurred) audit of the Borrower by the
Administrator and the independent accounts selected by the Administrator.
() Lenders' Reliance. The Borrower acknowledges that the Administrator
and the Lenders are entering into the transactions contemplated by this
Agreement in reliance upon the Borrower's identity as a legal entity that is
separate from the Guarantor and PHH VMS. Therefore, from and after the date of
execution and delivery of this Agreement, the Borrower shall take all reasonable
and, in any event, necessary steps (including, without limitation, all steps
that the Administrator or any Lender may from time to time reasonably request)
to maintain the Borrower's identity as a separate legal entity and to make it
manifest to third parties that the Borrower is an entity with assets and
liabilities distinct from those of the Guarantor, PHH VMS and any Affiliates of
either thereof (the "PHH Entities") and not just a division of any thereof.
Without limiting the generality of the foregoing and in addition to the other
covenants set forth herein, the Borrower shall:
() conduct its own business in its own name and require that
all full-time employees of the Borrower, if any, identify themselves as
such and not as employees of a PHH Entity (including, without
limitation, by means of providing such employees with business or
identification cards identifying such employees as the Borrower's
employees);
() compensate all employees, consultants and lenders directly,
from the Borrower's bank accounts, for services provided to the
Borrower by such employees, consultants and lenders and, to the extent
any employee, consultant or lender of the Borrower is also an employee,
consultant or lender of a PHH Entity, allocate the compensation of such
employee, consultant or lender between the Borrower and such PHH Entity
on a basis which reflects the services rendered to the Borrower and
such PHH Entity;
() clearly identify its offices, if any, (by signage or
otherwise) as its offices and, if such office is located in the offices
of a PHH Entity, the Borrower shall lease such office at a fair market
rent;
() conduct all transactions with PHH Entities strictly on an
arm's-length basis, and allocate all overhead expenses (including,
without limitation, telephone and other utility charges) for items
shared between the Borrower and any PHH Entity on the basis of actual
use to the extent practicable and, to the extent such allocation is not
practicable, on a basis reasonably related to actual use;
() at all times have at least one member of its Board of Directors
who is an "Independent Director" as provided in the Borrower's
Certificate of Incorporation as in effect on the date hereof;
() observe all corporate formalities as a distinct entity, and
ensure that all corporate actions relating to (A) the selection,
maintenance or replacement of the Independent Director, (B) the
dissolution or liquidation of the Borrower or (C) the initiation or
participation in, acquiescence in or consent to any bankruptcy,
insolvency, reorganization or similar proceeding involving the
Borrower, are duly authorized by unanimous vote of its Board of
Directors (including the Independent Director);
() maintain the Borrower's books and records separate from
those of any PHH Entity and cause its assets to be readily identifiable
as its own assets rather than assets of a PHH Entity; provided,
however, that the commingling by the Trust of Collections relating to
the Series 1998-C Assets and other assets in the Trust (as such term is
defined in the Trust Agreement) shall not violate this provision;
() prepare its financial statements separately from those of
the PHH Entities and insure that any consolidated financial statements
of the PHH Entities that include the Borrower have notes clearly
stating that the Borrower is a separate corporate entity and that its
assets will be available first and foremost to satisfy the claims of
the creditors of the Borrower;
() except as specifically otherwise provided in the
Transaction Documents, not commingle funds or other assets of the
Borrower with those of any PHH Entity and not maintain bank accounts or
other depository accounts to which any PHH Entity is an account party,
into which any PHH Entity makes deposits or from which any PHH Entity
has the power to make withdrawals, except in its capacity as
Administrative Agent; and
() not permit any PHH Entity to pay any of the Borrower's operating
expenses.
() Retitling. If requested by the Administrator, the Borrower shall
require, in accordance with Section 2.10 of the Trust Agreement, that each
certificate of title relating to a Series 1998-C Leased Vehicle be retitled in
the name of the Borrower, that Administrator, for the benefit of the Lenders, be
noted on such certificate as the sole lienholder with respect thereto and that,
if requested by the Administrator, such certificates be transferred to the
possession of the Administrator if the rating of the Guarantor's senior
unsecured long-term debt by each of Moody's Investor's Service, Inc. and
Standard & Poor's Rating Group is reduced (or suspended or withdrawn) to or
drops below "Baa3" and "BBB-", respectively; provided, however, that if the
Borrower fails to take such action, the Administrator shall have the right to do
so in accordance with Section 2.10 of the Trust Agreement.
() Provision of Information. If requested by the Administrator, the
Borrower shall cause the Administrative Agent to furnish to the Administrator or
any representative of the Administrator copies of any and all of the Records or
Lease Files relating to the Series 1998-C Assets, Series 1998-C Leases or any
portion of the Collateral.
() Maryland Opinion. The Borrower agrees to cause its Maryland counsel
to deliver to the Administrator and each Lender within 30 days of the date
hereof an opinion as to the perfection of the Administrator's (for the benefit
of the Lenders) security interest hereunder to the extent constituting general
intangibles, in form and substance reasonably satisfactory to the Administrator.
Section .. Negative Covenants of Borrower. Until the date on
which the Secured Obligations have been indefeasibly paid in full, the Borrower
hereby covenants that:
() Name Change, Offices, Records and Books of Accounts. The Borrower
will not change its name, identity or corporate structure (within the meaning of
Section 9-402(7) of any applicable enactment of the UCC) or relocate its
principal place of business or chief executive office unless it shall have: (i)
given the Administrator at least 45 days prior notice thereof and (ii) taken all
actions required of each relevant jurisdiction in order to continue the first
priority perfected security interest of the Administrator, for the benefit of
the Lenders, in the Collateral.
() Sales, Liens, Etc. The Borrower shall not sell, assign (by operation
of law or otherwise) or otherwise dispose of, or grant any option with respect
to, or create or suffer to exist any Adverse Claim upon the Certificate except
in favor of the Administrator, and the Borrower shall defend the right, title
and interest of the Administrator in, to and under any of the Certificate,
against all claims of third parties.
() Nature of Business; Other Agreements; Other Indebtedness. The
Borrower shall not engage in any business or activity of any kind or enter into
any transaction or indenture, mortgage, instrument, agreement, contract, lease
or other undertaking, in each case other than the transactions contemplated and
authorized by the Transaction Documents. Without limiting the generality of the
foregoing, the Borrower shall not create, incur, guarantee, assume or suffer to
exist any indebtedness or other liabilities, whether direct or contingent, other
than:
() as a result of the endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business,
() the incurrence of obligations under this Agreement,
() the incurrence of obligations, as expressly contemplated in the
Contribution Agreement, to make payment to PHH VMS thereunder for the purchase
of the Certificate from PHH VMS under the Contribution Agreement, and
() the incurrence of operating expenses in the ordinary course of
business of the type otherwise contemplated in Section 5.1(e).
() Amendments to Transaction Documents. The Borrower shall not, without
the prior written consent of the Administrator (which consent shall be at the
Administrator's sole discretion):
() cancel or terminate the Contribution Agreement,
() give any consent, waiver, directive or approval under the
Contribution Agreement, Trust Agreement, Administrative Agency Agreement or
the Supplement, if such action could have a Material Adverse Effect,
() waive any default, action, omission or breach under the
Contribution Agreement, Trust Agreement, Administrative Agency Agreement, or
the Supplement, or otherwise grant any indulgence thereunder, if such action
could have a Material Adverse Effect, or
() amend, supplement or otherwise modify any of the terms of the
Contribution Agreement or consent to the amendment, supplement, or other
modification of any of the terms of the Trust Agreement, the Supplement, or
the Administrative Agency Agreement or any other Transaction Document, if
such action could have a Material Adverse Effect.
() Amendments to Corporate Documents. Without the prior written consent
of the Administrator, the Borrower shall not amend its certificate of
incorporation or its by-laws in any respect that would impair its ability to
comply with the terms or provisions of any of the Transaction Documents,
including, without limitation, Section 5.1(e).
() Merger. The Borrower shall not merge or consolidate with or into,
or convey, transfer, lease or otherwise dispose of (whether in one transaction
or in a series of transactions) all or substantially all of its assets (whether
now owned or hereafter acquired) to, or acquire all or substantially all of the
assets of, any Person.
() Extension or Amendment of Receivables. The Borrower shall not (or
allow the Administrative Agent to) extend, amend or otherwise modify the terms
of any Series 1998-C Lease; provided, however, that so long as no Event of
Default has occurred and is continuing, the Borrower (or the Administrative
Agent on its behalf) may, in accordance with the Credit and Collection
Practices, extend or otherwise modify the terms of any Defaulted Lease in order
to maximize Collections thereon so long as such extension or modification does
not involve an extension of the maturity date of any Series 1998-C Leased
Vehicle beyond 60 months from its origination.
() Change in Payment Instructions to Obligors; Change in Collection
Account Bank. The Borrower shall not (or allow the Administrative Agent to) add
or terminate any Lock-Box or Lock-Box Account, modify any Lock-Box Account
Agreement or make any change in its instructions to Lessees regarding
Collections, unless (i) the Administrator shall have received notice of such
termination or change and duly executed counterparts of the related Lock-Box
Account Agreement with any amendments, supplements or other modifications
thereto (which shall be in form and substance acceptable to the Administrator)
and (ii) the Administrator previously shall have consented in writing to such
addition, termination or change.
ARTICLE .
EVENTS OF DEFAULT
Section .. Events of Default. The occurrence of any one or more
of the following events shall constitute an event of default (each an "Event of
Default"):
() The Administrative Agent, the Guarantor or the Borrower shall
fail to make any payment or deposit when required under any Transaction Document
and such failure shall continue for three (3) Business Days;
() Any representation, warranty or certification made by the Borrower,
the Guarantor or the Administrative Agent in any Transaction Document or in any
other document delivered pursuant hereto shall prove to have been incorrect in
any material respect when made; provided, however, that a breach of any
representation or warranty with respect to any Series 1998 B Lease being an
Eligible Lease shall not be an Event of Default hereunder if such contract is
timely substituted or repurchased pursuant to Section 5.1 of the Supplement;
() The Borrower, the Guarantor or the Administrative Agent shall fail
to perform or observe any covenant or other similar term or agreement under any
Transaction Document (other than as referred to in any other subsection of this
Section 6.1) and such failure shall remain unremedied for five (5) Business Days
after the Borrower, the Guarantor or the Administrative Agent, as the case may
be, has notice or knowledge thereof;
() (i) The Borrower, the Guarantor or the Administrative Agent shall
generally not pay its debts as such debts become due; (ii) the Borrower, the
Guarantor or the Administrative Agent shall admit in writing its inability to
pay its debts generally or shall make a general assignment for the benefit of
creditors; (iii) any proceeding shall be instituted by the Borrower, the
Guarantor or the Administrative Agent seeking to adjudicate it bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee or other similar official for it or any substantial part of its
property; (iv) the Borrower, the Guarantor or the Administrative Agent shall
take any corporate action to authorize any of the actions set forth above in
clause (ii) or (iii) of this subsection (d); or (v) any proceeding of the type
described in clause (iii) of this subsection (d) shall be instituted against the
Borrower, the Guarantor or the Administrative Agent and shall not be withdrawn,
vacated or dismissed within 60 days after the commencement thereof;
() Failure of the Borrower, the Administrative Agent or the Guarantor
to pay any Indebtedness when due; or the default by the Borrower, the
Administrative Agent or the Guarantor in the performance of any term, provision
or condition contained in any agreement under which any Indebtedness was created
or is governed, the effect of which is to cause or permit the holder or holders
of such Indebtedness to cause, such Indebtedness to become due prior to its
stated maturity; or any such Indebtedness of the Borrower, the Administrative
Agent or the Guarantor shall be declared to be due and payable or required to be
prepaid (other than by a regularly scheduled payment) prior to the date of
maturity thereof; provided, however, that, in the case of the Administrative
Agent or the Guarantor, the aggregate principal amount of any such Indebtedness
is in excess of $25,000,000;
() The rating of the Guarantor's senior unsecured long-term debt by
Moody's Investor's Service, Inc. and Standard & Poor's Rating Group is reduced
(or suspended or withdrawn) below "Baa3" and "BBB-", respectively;
() Failure of the Certificate to represent a 100% beneficial interest
in the Series 1998-C Assets free and clear of any Adverse Claims;
() The Borrower grants or suffers to exist any Adverse Claim on the
Collateral or the proceeds thereof or the Administrator's security interest in
the Collateral or the proceeds thereof is not a first priority perfected
security interest therein free of any Adverse Claims;
() The Delinquency Ratio shall exceed 6.0% for any two consecutive
Collection Periods;
() The Default Ratio shall exceed 8.0% as of the last day of any
Collection Period;
() Any Transaction Document shall cease to be in full force and effect
or is withdrawn, revoked or otherwise amended without the consent of the
Administrator;
() PHH VMS shall fail to own, directly or indirectly, 100% of the
Capital Stock of the Borrower;
() A final judgment or judgments for the payment of money shall be
rendered against Borrower by one or more courts, administrative tribunals or
other bodies having jurisdiction over it and the same shall not be discharged
(or provision shall not be made for such discharge) or bonded, or a stay of
execution thereof shall not be procured, within 60 days from the date of entry
thereof and the Borrower, shall not, within said period of 60 days, or such
longer period during which execution of the same shall have been stayed or
bonded, appeal therefrom and cause the execution thereof to be stayed during
such appeal;
() The Borrower's Net Worth shall be less than $25,000,000 at any time;
() From and after the earlier of (i) the delivery of an insurance
certificate pursuant to Section 4.2 or (ii) 30 days from the date of this
Agreement, the Borrower and the Administrator, for the benefit of the Lenders,
shall not be additional insureds on Cendant Corporation's Commercial Auto
Coverage insurance policy with respect to bodily injury or property damage
claims caused by accidents and resulting from the ownership, maintenance or use
of any Series 1998-C Leased Vehicle; or
() The outstanding principal amount of the loan shall exceed the lesser
of (i) 83.33% of the aggregate Projected Adjusted Lease Balance of the Series
1998-C Leased Vehicles and (ii) such Adjusted Lease Balance minus $25,000,000,
at any time and such condition shall remain unremedied for two (2) Business
Days.
Section .. Remedies.
() If an Event of Default specified in clause (ii), (iii) or (iv) of
paragraph (d) of Section 6.1 occurs, the Loan (with accrued interest thereon)
and all other amounts owing under this Agreement and the other Transaction
Documents shall immediately and automatically become due and payable, and if any
other Event of Default shall occur, with the consent of the Required Lenders,
the Administrator may, or upon the request of the Required Lenders, the
Administrator shall, by notice to the Borrower, declare the Loan (with accrued
interest thereon) and all other amounts owing under this Agreement and the other
Transaction Documents to be due and payable forthwith, whereupon the same shall
immediately become due and payable. Presentment, demand, protest and all other
notices of any kind are hereby expressly waived.
() In addition to the rights and remedies specified in Section 6.2(a),
upon the occurrence of an Event of Default, the Administrator may, or upon the
request of the Required Lenders, the Administrator shall,
() designate as co-Administrative Agent with respect to the Series
1998-C Assets any Person and cause the Administrative Agent to provide such
Person access to the Lease Files (as defined in the Administrative Agency
Agreement) with respect to the Series 1998-C Leases;
() cause the Administrative Agent to segregate from other assets of
the Administrative Agent, and deposit into an account designated by the
Administrator within one Business Day of receipt by the Administrative Agent,
Collections with respect to the Series 1998-C Assets;
() obtain physical possession of the Records and all other files of
the Borrower relating to the Collateral and all documents relating to the
Collateral which are then or may thereafter come in to the possession of the
Borrower or any third party acting for the Borrower and the Borrower shall
deliver to the Administrator such assignments and take such action and
execute such documents and endorsements as the Administrator shall request;
() cause the certificates of title relating to the Series 1998-C Leased
Vehicles to show the Administrator, for the benefit of the Lenders, as the sole
lienholder with respect thereto; or
() exercise, in addition to all other rights and remedies granted to
it in this Agreement and in the other Transaction Documents, all rights and
remedies of a secured party under the UCC in any applicable jurisdiction.
() Without limiting the generality of the foregoing, the Administrator
without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon the Borrower or any other Person (all and each of which
demands, presentments, protests, advertisements and notices are hereby waived),
may in such circumstances forthwith collect, receive, appropriate and realize
upon the Collateral, or any part thereof, and/or may forthwith sell, lease,
assign, give an option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels or as an entirety at public or private sale
or sales, at any exchange, broker's board or office of the Administrator or
elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. The Administrator or any Lender shall have the
right upon any such public sale or sales, and, to the extent permitted by law,
upon any such private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in the Borrower,
which right or equity is hereby waived or released. The Administrator shall
apply the net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of every
kind incurred therein or incidental to the care or safekeeping of the Collateral
or in any way relating to the Collateral or the rights of the Administrator and
the Lenders hereunder, including, without limitation, reasonable attorneys' fees
and disbursements, to the payment in whole or in part of the Secured
Obligations, in such order as the Administrator may elect, and only after such
application and after the payment by the Administrator of any other amount
required or permitted by any provision of law, including, without limitation,
Section 9-504(1)(c) of the UCC, need the Administrator account for the surplus,
if any, to the Borrower. To the extent permitted by applicable law, the Borrower
waives all claims, damages and demands it may acquire against the Administrator
or the Lenders arising out of the exercise by the Administrator or any Lender of
any of the rights hereunder, other than those claims, damages and demands
arising from the gross negligence or willful misconduct of the Administrator. If
any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least ten (10) days before such sale or other disposition. The Borrower shall
remain liable for any deficiency if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay the Secured Obligations
and the reasonable fees and disbursements of any attorneys employed by the
Administrator or any Lender to collect such deficiency.
() No right or remedy herein conferred upon or reserved to the
Administrator or the Lenders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent or subsequent assertion or employment of any other appropriate right
or remedy.
() No delay or omission by the Administrator or any Lender to exercise
any right or remedy accruing upon any Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Section 6.2 or by law
to the Administrator or the Lenders may be exercised from time to time, and as
often as may be deemed expedient, by the Administrator or the Lenders.
() Subject to Section 11.1, the Administrator, with the consent of each
Lender, by written notice to the Borrower may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of principal or
interest that has become due solely because of the acceleration) have been cured
or waived.
ARTICLE .
THE ADMINISTRATOR
Section .. Authorization and Action. Each Lender hereby designates and
appoints BofA to act as its agent hereunder and under each other Transaction
Document, and authorizes the Administrator to take such actions as agent on its
behalf and to exercise such powers as are delegated to the Administrator by the
terms of this Agreement and the other Transaction Documents together with such
powers as are reasonably incidental thereto. The Administrator shall not have
any duties or responsibilities, except those expressly set forth herein or in
any other Transaction Document, or any fiduciary relationship with any Lender,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities on the part of the Administrator shall be read into this Agreement
or any other Transaction Document or otherwise exist for the Administrator. In
performing its functions and duties hereunder and under the other Transaction
Documents, the Administrator shall act solely as agent for the Lenders and does
not assume nor shall be deemed to have assumed any obligation or relationship of
trust or agency with or for the Borrower or any of its successors or assigns.
The Administrator shall not be required to take any action which exposes the
Administrator to personal liability or which is contrary to this Agreement, any
other Transaction Document or applicable law. The appointment and authority of
the Administrator hereunder shall terminate upon the indefeasible payment in
full of all the Secured Obligations. Each Lender hereby authorizes the
Administrator to execute on behalf of such Lender (the terms of which shall be
binding on such Lender) each of the UCC financing statements, together with such
other instruments or documents determined by the Administrator to be necessary
or desirable in order to perfect, evidence or more fully protect the interest of
the Lenders contemplated hereunder.
Section .. Delegation of Duties. The Administrator may execute any of
its duties under this Agreement and each other Transaction Document by or
through agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrator shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
Section .. Exculpatory Provisions. Neither the Administrator nor any of
its directors, officers, agents or employees shall be (i) liable for any action
lawfully taken or omitted to be taken by it or them under or in connection with
this Agreement or any other Transaction Document (except for its, their or such
Person's own gross negligence or willful misconduct), or (ii) responsible in any
manner to any of the Lenders for any recitals, statements, representations or
warranties made by the Borrower contained in this Agreement, any other
Transaction Document or any certificate, report, statement or other document
referred to or provided for in, or received under or in connection with, this
Agreement or any other Transaction Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement, or
any other Transaction Document or any other document furnished in connection
herewith or therewith, or for any failure of the Borrower to perform its
obligations hereunder or thereunder, or for the satisfaction of any condition
specified in Article IV, or for the perfection, priority, condition, value or
sufficiency or any collateral pledged in connection herewith. The Administrator
shall not be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance of any of the agreements or covenants contained
in, or conditions of, this Agreement or any other Transaction Document, or to
inspect the properties, books or records of the Borrower. The Administrator
shall not be deemed to have knowledge of an Event of Default or Potential Event
of Default unless the Administrator has received notice from the Borrower or a
Lender.
Section .. Reliance by Administrator. The Administrator shall in all
cases be entitled to rely, and shall be fully protected in relying, upon any
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by the
Administrator. The Administrator shall in all cases be fully justified in
failing or refusing to take any action under this Agreement or any other
Transaction Document unless it shall first receive such advice or concurrence of
any Lender or all of the Lenders; as applicable, as it deems appropriate and it
shall first be indemnified to its satisfaction by the Lenders, provided,
however, that unless and until the Administrator shall have received such
advice, the Administrator may take or refrain from taking any action, as the
Administrator shall deem advisable and in the best interests of the Lenders. The
Administrator shall in all cases be fully protected in acting, or in refraining
from acting, in accordance with a request of any Lender or all of the Lenders,
as applicable, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders.
Section .. Non-Reliance on Administrator and Other Lenders. Each Lender
expressly acknowledges that neither the Administrator, nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the Administrator
hereafter taken, including, without limitation, any review of the affairs of the
Borrower, shall be deemed to constitute any representation or warranty by the
Administrator. Each Lender represents and warrants to the Administrator that it
has and will, independently and without reliance upon the Administrator or any
other Lender and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, prospects, financial and other conditions and
creditworthiness of the Borrower and made its own decision to enter into this
Agreement, the other Transaction Documents and all other documents related
hereto or thereto.
Section .. Administrator in its Individual Capacity. The Administrator
and its Affiliates may make loans to, accept deposits from and generally engage
in any kind of business with the Borrower or any Affiliate of the Borrower as
though the Administrator were not the Administrator hereunder. With respect to
the acquisition of a portion of the Loan pursuant to this Agreement, the
Administrator shall have the same rights and powers under this Agreement as any
Lender and may exercise the same as though it were not the Administrator, and
the terms "Lender" and "Lenders" shall include the Administrator in its
individual capacity.
Section .. Successor Administrator. The Administrator may, upon 10
days' notice to the Borrower and the Lenders, and the Administrator shall, upon
the direction of all of the Lenders (other than the Administrator, in its
individual capacity) resign as Administrator. If the Administrator shall resign,
then the Lenders during such 10-day period shall (with the consent of the
Borrower, which consent shall not be unreasonably withheld or delayed) appoint a
successor agent. If for any reason no successor Administrator is appointed by
the Lenders during such 10-day period, then effective upon the termination of
such 10-day period, the Lenders shall perform all of the duties of the
Administrator hereunder and under the other Transaction Documents and the
Borrower shall make all payments in respect of the Loan directly to the
applicable Lenders and for all purposes shall deal directly with the Lenders.
After the effectiveness of any retiring Administrator's resignation hereunder as
Administrator, the retiring Administrator shall be discharged from its duties
and obligations hereunder and under the other Transaction Documents and the
provisions of this Article VII shall continue in effect for its benefit with
respect to any actions taken or omitted to be taken by it while it was
Administrator under this Agreement and under the other Transaction Documents.
ARTICLE .
[Intentionally Omitted]
ARTICLE .
INDEMNIFICATION
Section .. Indemnities by the Borrower. Without limiting any other
rights which the Administrator or any Lender may have hereunder or under
applicable law, the Borrower hereby agrees to indemnify the Administrator and
each Lender and their respective officers, directors, agents and employees
(each, an "Indemnified Party") from and against any and all damages, losses,
claims, taxes, liabilities, costs, expenses and for all other amounts payable,
including reasonable attorneys' fees and disbursements (all of the foregoing
being collectively referred to as "Indemnified Amounts") awarded against or
actually incurred by any of them arising out of or as a result of this Agreement
or the transaction contemplated by this Agreement or the other Transaction
Documents; excluding, however:
() Indemnified Amounts to the extent a final judgment of a court
of competent jurisdiction holds such Indemnified Amounts resulted from gross
negligence or willful misconduct on the part of the Indemnified Party seeking
indemnification; or
() taxes, except as provided in Section 9.3;
provided, however, that nothing contained in this sentence shall limit the
liability of the Borrower or limit the recourse of the Borrower for amounts
otherwise provided to be paid by the Borrower under the terms of this Agreement.
Without limiting the generality of the foregoing indemnification, the Borrower
shall indemnify the Lenders for Indemnified Amounts relating to or resulting
from:
() any representation or warranty made by the Borrower (or any of its
respective officers) under or in connection with any Transaction Document, any
Monthly Report or any other written information or report delivered by the
Borrower, pursuant hereto or thereto, which shall have been false or incorrect
when made or deemed made;
() the failure by the Borrower to comply with any covenant made by it
in any Transaction Document;
() any failure of the Borrower to perform its duties or obligations
in accordance with the provisions of any Transaction Document;
() the failure to vest and maintain in the Administrator for the
benefit of the Lenders a valid first priority perfected security interest in the
Collateral, free and clear of any Adverse Claim;
() the failure of the Trust to have an ownership interest in the
Series 1998-C Assets free and clear of Adverse Claims, except for the lien-
holder interest of PHH VMS in the related Vehicles noted on the certificate of
title with respect thereto which interest has been transferred to the Borrower;
() any bodily injury or property damage claim caused by an accident
and resulting from the ownership, maintenance or use of any;
() the failure by the Borrower to comply with any applicable law,
rule or regulation with respect to any Series 1998-C Asset or Lease related
thereto, or the failure of any Series 1998-C Asset or Lease related thereto to
conform to any such applicable law, rule or regulations;
() any dispute, claim, offset or defense (other than discharge in bank-
ruptcy of the Lessee) of any Lessee to the payment of any Lease (including,
without limitation, a defense based on such Lease not being a legal, valid and
binding obligation of such Lessee enforceable against it in accordance with
its terms), or any other claim resulting from the lease of the related Vehicle
or service related to such Lease or the furnishing or failure to furnish such
Vehicle or services;
() the commingling of Collections of Series 1998-C Assets at any time
with other funds;
() any investigation, litigation or proceeding related to or arising0
from any Transaction Document, the transactions contemplated thereby, the use
of the proceeds of the Loan or the security interest in the Certificate or any
other investigation, litigation or proceeding relating to the Borrower in
which any Indemnified Party becomes involved as a result of any of the
transactions contemplated hereby or thereby;
() any failure of the Borrower to give reasonably equivalent value to
PHH VMS under the Contribution Agreement in consideration of the transfer by
PHH VMS of the Certificate, or any attempt by any Person to void any such
transfer under statutory provisions or common law or equitable action,
including, without limitation, any provision of the federal Bankruptcy Code,
11 U.S.C. ss. 101 et seq.; or
() a Year 2000 Problem with respect to hardware or software systems
used by the Borrower or the Administrative Agent; or
() reduction by the Borrower of the principal amount of the Loan.
Section .. Increased Cost and Reduced Return.
() If after the date hereof, any Funding Source shall be charged any
fee, expense or increased cost on account of the adoption of any applicable law,
rule or regulation (including any applicable law, rule or regulation regarding
capital adequacy) or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
with any request or directive (whether or not having the force of law) of any
such authority, central bank or comparable agency (a "Regulatory Change"): (i)
which subjects any Funding Source to any charge or withholding on or with
respect to any Funding Agreement or a Funding Source's obligations under a
Funding Agreement, or on or with respect to the Certificate, or changes the
basis of taxation of payments to any Funding Source of any amounts payable under
any Funding Agreement (except for changes in the rate of tax on the overall net
income of a Funding Source) or (ii) which imposes, modifies or deems applicable
any reserve, assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the account of a Funding
Source, or credit extended by a Funding Source pursuant to a Funding Agreement
or (iii) which imposes any other condition the result of which is to increase
the cost to a Funding Source of performing its obligations under a Funding
Agreement, or to reduce the rate of return on a Funding Source's capital as a
consequence of its obligations under a Funding Agreement, or to reduce the
amount of any sum received or receivable by a Funding Source under a Funding
Agreement or to require any payment calculated by reference to the amount of
interests or loans held or interest received by it, then, upon demand by the
Administrator, the Borrower shall pay to the Administrator, for the benefit of
the relevant Funding Source, such amounts charged to such Funding Source or
compensate such Funding Source for such reduction. If the Borrower is required
to make any payment to a Liquidity Purchaser pursuant to this subsection (a),
the Borrower may, but shall not be obligated to, replace such Liquidity
Purchaser with another financial institution (which shall be reasonably
acceptable to the Agent) having a short-term debt rating of A-1+ or better by
Standard & Poor's Ratings Group and P-1 by Moody's Investors Service, Inc. If a
Liquidity Purchaser is replaced pursuant to this subsection (a), the replacement
liquidity purchaser shall be deemed to be a Liquidity Purchaser and shall comply
with the provisions of Section 10.1(b) of this Agreement.
() Payment of any sum pursuant to Section 9.2(a) shall be made by the
Borrower to the Administrator, for the benefit of the relevant Funding Source,
not later than ten (10) days after any such demand is made. A certificate of any
Funding Source, signed by an authorized officer claiming compensation under this
Section 9.2 and setting forth the additional amount to be paid for its benefit
and explaining the manner in which such amount was determined shall constitute
prima facie evidence of the amount to be paid.
Section .. No Withholding or Other Taxes.
() Any and all payments by the Borrower hereunder shall be made free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all interest,
penalties, additions, or liabilities with respect thereto, excluding, in the
case of each Lender and the Administrator, net income taxes that are imposed by
the United States and franchise taxes and net income taxes that are imposed on
such Lender or the Administrator by the state or foreign jurisdiction under the
laws of which such Lender or the Administrator (as the case may be) would be
subject to net income tax, based on either residence or domicile of the
recipient in the taxing jurisdiction or the conduct of a trade or business by
the recipient in such jurisdiction, without regard to the transactions
contemplated hereby and any payments hereunder or under any related Transaction
Document or any political subdivision thereof but not including any such tax
that results in a credit or deduction in the jurisdiction in which such Lender
would not be entitled to indemnification (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes") or Other Taxes (as defined below). If the Borrower shall
be required by law to deduct any Taxes from or in respect of any sum payable
hereunder to any Lender or the Administrator, (i) the sum payable shall be
increased as may be necessary so that, after making all required deductions
(including deductions applicable to additional sums payable under this Section
9.3(a)), such Lender or the Administrator (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower shall pay
the full amount deducted to the relevant taxation authority or other authority
in accordance with applicable law.
() In addition, the Borrower agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement
(hereinafter referred to as "Other Taxes").
() The Borrower will indemnify each Lender and the Administrator within
ten (10) days after demand therefor for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 9.3) paid by such Lender or
the Administrator (as the case may be) and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto; provided,
however, that a Lender or the Administrator, as appropriate, making a demand for
indemnity payment shall provide the Borrower with a certificate from the
relevant taxing authority or from a responsible officer of such Lender or the
Administrator stating or otherwise evidencing that such Lender or the
Administrator has made payment of such Taxes or Other Taxes and will provide a
copy of or extract from documentation, if available, furnished by such taxing
authority evidencing assertion or payment of such Taxes or Other Taxes.
() Within 30 days after the date of any payment of Taxes or Other
Taxes, the Borrower will furnish to the Administrator an original or certified
copy of a receipt issued by the relevant taxing authority or other appropriate
evidence of payment thereof as shall be reasonably acceptable to the
Administrator.
() Each Lender or Liquidity Purchaser that is not created or organized
under the laws of the United States or a political subdivision thereof (each a
"Non-U.S. Person") shall deliver to the Borrower (with a copy to the
Administrator) (i) within 15 days after the date hereof, or, if later, the date
on which such Lender or Liquidity Purchaser becomes a Non-U.S. Person, two (or
such other number as may from time to time be prescribed by applicable laws or
regulations) duly completed copies of IRS Form 4224 or Form 1001 (or any
successor forms or other certificates or statements which may be required from
time to time by the relevant United States taxing authorities or applicable laws
or regulations), as appropriate, to permit the Borrower and the Administrator to
make payments hereunder for the account of such Non-U.S. Person without
deduction or withholding of United States federal income or similar taxes and
(ii) upon request of the Borrower or the Administrator as a result of the
obsolescence of or after the occurrence of any event requiring a change in, any
form or certificate previously delivered pursuant to this Section 9.3(c), copies
(in such numbers as may be from time to time be prescribed by applicable laws or
regulations) of such additional, amended or successor forms, certificates or
statements as may be required under applicable laws or regulations to permit the
Borrower and the Administrator to make payments hereunder for the account of
such Lender without deduction or withholding of United States federal income or
similar taxes.
Section .. Costs and Expenses Relating to this Agreement. In addition
to the fees specified in the Fee Letter, the Borrower shall pay to the
Administrator and the Lenders on demand all reasonable out-of-pocket expenses
(including, without limitation, reasonable audit fees and time charges of
internal and outside counsel for the Administrator and the Lenders) incurred in
connection with the preparation, execution, delivery, amendments and waivers of
this Agreement, the transactions contemplated hereby and the other documents to
be delivered hereunder. The Borrower shall pay to the Administrator on demand
any and all costs and expenses of the Administrator and the Lenders, if any,
including reasonable counsel fees and expenses incurred in connection with the
enforcement of this Agreement and the other documents delivered hereunder and in
connection with any restructuring or workout of this Agreement or such
documents, or the administration of this Agreement or other Transaction
Documents following an Event of Default.
Section .. Refunds. If the Administrator or a Lender receives a refund
in respect of any Taxes or Other Taxes as to which it has been indemnified by
the Borrower or with respect to which the Borrower has paid additional amounts
pursuant to this Section 9.3, it shall within 30 days from the date of such
receipt pay over to the Borrower (a) such refund (but only to the extent of
indemnity payments made, or additional amounts paid, by the Borrower under this
Section 9.3 with respect to the Taxes or Other Taxes giving rise to such
refund), net of all out-of-pocket expenses of the Administrator or such Lender
and (b) interest paid by the relevant Governmental Authority with respect to
such refund); provided, however, that the Borrower, upon the request of the
Administrator or such Lender shall repay the amount paid over to the Borrower
(plus penalties, interest or other charges) to the Administrator or such Lender
in the event the Administrator or such Lender is required to repay such refund
to such Governmental Authority.
ARTICLE .
ASSIGNMENTS
Section .. Assignments.
() This Agreement and the Lender's rights and obligations herein
(including their interest in the Loan) shall be assignable, in whole or in part,
by such Lender and its successors and assigns with, if an Event of Default has
not occurred and is continuing, the prior written consent of the Borrower;
provided, however, that such consent shall not be unreasonably withheld;
provided further, that no such consent shall be required if the assignment is
made, with prior or concurrent notice to the Borrower, to BofA, any Affiliate of
BofA (other than a director or officer of BofA), any Liquidity Purchaser or
other Program Support Provider.
Without limiting the foregoing, each Lender may, from time to time in
one transaction or a series of transactions, assign all or a portion of the Loan
of such Lender and its rights and obligations under this Agreement to an SPC
Assignee with the prior written consent of the Borrower; provided, however, that
such consent shall not be unreasonably withheld. Upon and to the extent of such
assignment to an SPC Assignee, (i) the SPC Assignee shall be the owner of the
assigned portion of the Loan of such Lender, (ii) BofA (or an Affiliate thereof)
will act as Administrator for the SPC Assignee as well as for such Lender, with
all corresponding rights and powers, express or implied, granted herein to the
Administrator, (iii) the SPC Assignee and its Program Support Providers and
other related parties shall have the benefit of all the rights and protections
provided to such Lender and its Program Support Providers and other related
parties, respectively, herein and in the other Transaction Documents (including,
without limitation, any limitation on recourse against such Lender or related
parties, any agreement not to file or join in the filing of a petition to
commence an insolvency proceeding against such Lender, and the right to assign
to another SPC Assignee as provided in this paragraph), (iv) the SPC Assignee
shall assume all obligations, if any, of such Lender under and in connection
with this Agreement, and such Lender shall be released from such obligations, in
each case to the extent of such assignment, and the obligations of such Lender
(if any) and the SPC Assignee shall be several and not joint, (v) all
distributions in respect of portion of the Loan of such Lender or Discount
thereon shall be made to such Lender and the SPC Assignee, on a pro rata basis
according to their respective interests (or in the case of Discount, the accrued
amounts thereof), (vi) the rate used to calculate such Discount with respect to
the portion of the Loan of such Lender owned by the SPC Assignee and funded with
commercial paper notes issued by the SPC Assignee from time to time shall be
determined in the manner set forth in the definition of "CP Rate" on the basis
of the discount or interest rates applicable to commercial paper issued by the
SPC Assignee (rather than the Lender), (vii) the defined terms and other terms
and provisions of this Agreement and the other Transaction Documents shall be
interpreted in accordance with the foregoing, and (viii) if requested by the
Administrator, the parties will execute and deliver such further agreements and
documents and take such other actions as the Administrator may reasonably
request to evidence and give effect to the foregoing.
() Each Lender may at any time grant to one or more banks or other
institutions (each a "Liquidity Purchaser") party to its Liquidity Asset
Purchase Agreement or to any other Program Support Provider participating
interests in the portion of the Loan of such Lender. In the event of any such
grant by such Lender of a participating interest to a Liquidity Purchaser or
other Program Support Provider, such Lender shall remain responsible for the
performance of its obligations hereunder. The Borrower agrees that each
Liquidity Purchaser or other Program Support Provider shall be entitled to the
benefits of Article IX with respect to its participating interest.
() This Agreement and the rights and obligations of the Administrator
hereunder shall be assignable, in whole or in part, by the Administrator and its
successors and assigns with, if such assignment is not to BofA or NationsBank,
N.A. or an Affiliate thereof, the consent of the Borrower, which consent shall
not be unreasonably withheld.
() The Borrower may assign its rights or delegate its obligations
hereunder or any interest herein without the prior written consent of the
Administrator.
() Without limiting any other rights that may be available under
applicable law, the rights of any Funding Source may be enforced through it or
by its agents.
ARTICLE .
MISCELLANEOUS
Section .. Waivers and Amendments.
() No failure or delay on the part of any party hereto in exercising
any power, right or remedy under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or
remedy preclude any other further exercise thereof or the exercise of any other
power, right or remedy. The rights and remedies herein provided shall be
cumulative and nonexclusive of any rights or remedies provided by law. Any
waiver of this Agreement shall be effective only in the specific instance and
for the specific purpose for which given.
() No provision of this Agreement may be amended, supplemented,
modified or waived except in writing with the consent of the Borrower, each
Lender and the Administrator.
Section .. Notices.
All communications and notices provided for hereunder shall be in
writing (including bank wire, telecopy or electronic facsimile transmission or
similar writing) and shall be given to the other parties hereto at their
respective addresses or telecopy numbers set forth on the signature pages
hereof. All such communications and notices shall, when mailed, telecopied,
telegraphed, telexed or cabled, be effective when received through the mails,
transmitted by telecopy, delivered to the telegraph company, confirmed by telex
answer back or delivered to the cable company, respectively, except that
communications and notices to the Administrator or any Lender pursuant to
Article I shall not be effective until received by the intended recipient.
Section .. Ratable Payments. If any Lender, whether by setoff or
otherwise, has payment made to it with respect to any portion of the Loan owing
to such Lender (other than payments received pursuant to Section 9.2 or 9.3) in
a greater proportion than that received by any other Lender entitled to receive
a ratable share of such Loan, such Lender agrees, promptly upon demand, to
purchase for cash without recourse or warranty a portion of the Loan held by the
other Lenders so that after such purchase each Lender will hold its ratable
proportion of the Loan; provided, however, that if all or any portion of such
excess amount is thereafter recovered from such Lender, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
Section .. Confidentiality.
() The Borrower shall maintain and shall cause each of its Affiliates
and the employees and officers of the Borrower and each of its Affiliates to
maintain the confidentiality of the terms and provisions of this Agreement and
the other confidential proprietary information with respect to the Lenders and
their respective businesses obtained by it or them in connection with the
structuring, negotiating and execution of the transactions contemplated herein,
except that the Borrower and its officers and employees may disclose such
information to the Administrator and to the Borrower's external accountants and
attorneys and as required by any applicable law or order of any judicial or
administrative proceeding or, except with respect to the Fee Letter, any
Securities and Exchange Commission filings. In addition, the Borrower may
disclose any such nonpublic information pursuant to any law, rule, regulation,
direction, request or order of any judicial, administrative or regulatory
authority or proceedings (whether or not having the force or effect of law).
() Each of the Administrator and the Lenders agree to comply with the
confidentiality letter dated December 16, 1998, executed in connection herewith.
Section .. Bankruptcy Petition.
() The Borrower hereby covenants and agrees that, prior to the date
which is one year and one day after the payment in full of all outstanding
senior indebtedness of the Lenders, it will not institute against, or join any
other Person in instituting against, any Lender any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar proceeding
under the laws of the United States or any state of the United States.
() The Administrator and each Lender hereby covenant and agree that
they shall not have the power to commence a voluntary proceeding in bankruptcy
relating to the Trust without the unanimous prior approval of all Beneficiaries
and the delivery to the Trustee by each such Beneficiary of a certificate
certifying that such Beneficiary reasonably believes that the Trust is
insolvent. In accordance with Section 4.4(f) of the Trust Agreement, the
Administrator and each Lender acknowledge that they shall have no interest in
the Series Specified Assets related to any Series, other than Series 1998-C, of
Specified Beneficial Certificates (as such terms are defined in the Trust
Agreement).
Section .. Limitation of Liability. Except with respect to any claim
arising out of the willful misconduct or gross negligence of the Lenders or the
Administrator, no claim may be made by the Borrower, the Administrative Agent or
any other person against the Lenders, the Administrator, or their respective
Affiliates, directors, officers, employees, or attorneys for any special,
indirect, consequential or punitive damages in respect of any claim for breach
of contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement, or any act, omission or event
occurring in connection therewith; and the Borrower hereby waives, and agrees
not to sue upon any claim for any such damages, whether or not accrued and
whether or not known or suspected to exist in its favor.
Section .. Choice of Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE
OF NEW YORK.
Section .. Consent to Jurisdiction. THE BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW
YORK STATE COURT IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE
TRANSACTION DOCUMENTS AND HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT
OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT
IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE
ADMINISTRATOR OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE
COURTS OF ANY OTHER JURISDICTION WHEREIN ANY ASSETS OF THE BORROWER OR PHH VMS
MAY BE LOCATED. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE
ADMINISTRATOR OR ANY LENDER OR ANY AFFILIATE OF THE ADMINISTRATOR OR A LENDER
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED
TO, OR CONNECTED WITH DOCUMENTS SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO,
ILLINOIS.
Section .. Waiver of Jury Trial. THE ADMINISTRATOR, THE BORROWER AND
EACH LENDER HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, LEASE OR
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THE
TRANSACTION DOCUMENTS OR THE RELATIONSHIPS ESTABLISHED THEREUNDER.
Section .. Integration; Survival of Terms. This Agreement contains the
final and complete integration of all prior expressions by the parties hereto
with respect to the subject matter hereof and shall constitute the entire
agreement among the parties hereto with respect to the subject matter hereof
superseding all prior oral or written understandings. The provisions of Article
IX and Sections 11.5 and 11.12 shall survive any termination of this Agreement.
Section .. Counterparts; Severability. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
Agreement. Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Section .. Recourse. The obligations of the Borrower under this
Agreement or any other Transaction Document constitute a full recourse
obligation of the Borrower. Recourse shall be had for payment of the Loan,
interest thereon and any fee or other obligation or claim arising out of or
relating to this Agreement or any other Transaction Document executed and
delivered or issued by the Borrower or any officer of the Borrower. The
provisions of this Section 11.12 shall survive the termination of this
Agreement.
Section .. Further Actions Evidencing Loans and the Security Interest
Created Herein. The Borrower shall, from time to time, promptly execute and
deliver all further instruments and documents, and take all further actions that
the Administrator may reasonably request, to perfect, protect or more fully
evidence the security interest granted under the Transaction Documents, or to
enable the Administrator to exercise and enforce the respective rights and
remedies of the Administrator and the Lenders under the Transaction Documents.
Without limiting the foregoing, the Borrower shall upon request of the
Administrator (i) execute and file such financing statements, or amendments
thereto, and such other instruments and documents, that may be necessary or
desirable, or that the Administrator may reasonably request, to perfect, protect
or evidence such security interest; and (ii) deliver possession of the
Certificate to the Administrator. The Borrower authorizes the Administrator to
file or cause to be filed financing or continuation statements, and amendments
thereto and assignments thereof, relating to the Certificate and the proceeds
therefrom.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date hereof.
BORROWER: TRAC FUNDING II, INC.
By:
Name:
Title:
TRAC Funding II, Inc.
c/o PHH Vehicle Management Services
307 International Circle
Mail Code CP
Hunt Valley, Maryland 21030-1337
Attention: Joseph Weikel
Telephone No: 410/771-2336
Facsimile No: 410/771-2530
THE LENDERS: QUINCY CAPITAL CORPORATION
By:
Name:
Title:
c/o AMACAR Group, L.L.C.
6707-D Fairview Road
Charlotte, North Carolina 28210
Attention: Douglas K. Johnson
Telephone No.: (704) 365-0569
Facsimile No.: (704) 365-1362
with a copy to:
Bank of America National Trust
and Savings Association
Global Asset-Backed Securitization
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Marianne Mihalik
Telephone No.: (312) 828-6471
Facsimile No.: (312) 923-0273
RECEIVABLES CAPITAL CORPORATION
By:
Name:
Title:
c/o Merrill Lynch & Co., Inc.
World Financial Center
250 Vesey Street, 11th Floor
New York, New York 10281-1311
Attention: Shane Rosenberg
Telephone No.: (212) 449-2130
Facsimile No.: (212) 449-0599
with a copy to:
Bank of America National Trust
and Savings Association
Global Asset-Backed Securitization
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Marianne Mihalik
Telephone No.: (312) 828-6471
Facsimile No.: (312) 923-0273
ADMINISTRATOR: BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:
Name: Mark Wegener
Title: Attorney-In-Fact
Global Asset-Backed Securitization
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Marianne Mihalik
Telephone No.: (312) 828-6471
Facsimile No.: (312) 923-0273
Exhibit I
Definitions
As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
"Adjusted Lease Balance" has the meaning specified in the Trust
Agreement.
"Administration Account" means the special account (ABA #071000039,
account #47-03421, Attention: GPO Account Administrator) of the Administrator
maintained at the office of BofA at 231 South LaSalle Street, Chicago, Illinois,
or such other account as may be so designated in writing by the Administrator to
the Borrower and the Administrative Agent.
"Administrative Agency Agreement" means that certain Administrative
Agency Agreement dated as of June 12, 1998, among the Trust and the
Administrative Agent, as amended and supplemented by the amendment thereto,
dated December 17, 1998 and by the Series 1998-A, Series 1998-B and Series
1998-C supplements thereto.
"Administrative Agent" means at any time PHH VMS or such other Person
then authorized pursuant to the Administrative Agency Agreement to service,
administer and collect the Series 1998-C Assets.
"Administrator" has the meaning set forth in the preamble to this
Agreement.
"Adverse Claim" means a lien, security interest, charge or encumbrance,
or other right or claim in, of or on any Person's assets or properties in favor
of any other Person.
"Affiliate" means, with respect to any specified Person, any other
Person directly or indirectly controlling (including but not limited to all
directors and officers of such Person), controlled by, or under direct or
indirect common control with such Person. For the purpose of this definition,
"control" when used with respect to any specified Person shall mean the power to
direct the management and policies of such Person, directly or indirectly,
whether through ownership of voting securities, by contract or otherwise, and
the terms "controlling" and "controlled by" have meanings correlative to the
foregoing.
"Agreement" means this Loan and Security Agreement, as it may be
amended or modified and in effect from time to time.
"Alternate Rate" means, for any Settlement Period for any portion of
the Loan funded by any Lender, an interest rate per annum equal to (a) 1.0% per
annum above the Eurodollar Rate for such Settlement Period or (b) the Base Rate
for such Settlement Period; provided, however, that in the case of
() any Settlement Period on or prior to the first day of which
the Administrator shall have been notified by such Lender or Program
Support Provider that the introduction of or any change in or in the
interpretation of any law or regulation makes it unlawful, or any
central bank or other Governmental Authority asserts that it is
unlawful, for such Lender or such Program Support Provider to fund any
portion of the Loan (based on the Eurodollar Rate) set forth above (and
such Lender or such Program Support Provider shall not have
subsequently notified the Administrator that such circumstances no
longer exist),
() any Settlement Period of less than one calendar month,
() any Settlement Period as to which the Administrator does
not receive notice, by no later than 12:00 noon (New York City time) on
(x) the second Business Day preceding the first day of such Settlement
Period that the Borrower desires that the related portion of the Loan
be funded at the CP Rate, (y) the third Business Day preceding the
first day of such Settlement Period that the Borrower desires that the
related portion of the Loan be funded at the Alternate Rate and based
on the Eurodollar Rate, or (z) the Borrower has given the notice
contemplated by clause (x) of this clause (iii) and the Administrator
shall have notified the Borrower that funding the related portion of
the Loan at the CP Rate is unacceptable to such Lender, or
() any Settlement Period relating to a portion of the Loan
which is less than $1,000,000,the "Alternate Rate" for each such Settlement
Period shall be an interest rate per annum equal to the Base Rate in effect
on each day of such Settlement Period. Notwithstanding the foregoing, the
"Alternate Rate" for any day following the occurrence of an Event of Default
shall be an interest rate equal to 2.00% per annum above the Base Rate in effect
on such day.
"Assignment" means the Assignment and Assumption Agreement II, dated as
of December 17, 1998, among the PHH VMS, PHH Subsidiary and the Trust.
"Base Rate" means, for any day, a fluctuating interest rate per annum
as shall be in effect from time to time, which rate shall be at all times equal
to the higher of:
() the rate of interest in effect for such day as publicly
announced from time to time by BofA in San Francisco, California, as its
"reference rate." It is a rate set by BofA based upon various factors
including BofA's costs and desired return, general economic conditions and
other factors, and is used as a reference point for pricing some loans,
which may be priced at, above, or below such announced rate; and
() 0.50% per annum above the latest Federal Funds Rate.
"Beneficiary" has the meaning specified in the Trust Agreement.
"BofA" has the meaning set forth in the preamble to this Agreement.
"Borrower" has the meaning set forth in the preamble to this Agreement.
"Broken Funding Costs" means, for any Settlement Period during which
either an Event of Default or a reduction of a portion of the Loan pursuant to
Section 1.6 occurs, the amount, if any, by which (i) the additional Discount
(calculated without taking into account any Termination Fee or any shortened
duration of such Settlement Period pursuant to clause (iii) of the definition
thereof) which would have accrued during such Settlement Period on the
reductions of the portion of the Loan relating to such Settlement Period had
such reductions remained as part of such portion of the Loan, exceeds (ii) the
income, if any, received by the affected Lenders, Liquidity Purchasers or other
Program Support Providers from their investment of the proceeds of such
reductions, as determined thereby, which determination shall be binding and
conclusive for all purposes, absent manifest error.
"Business Day" means any day on which banks are not authorized or
required to close in Baltimore, Maryland, New York, New York or Chicago,
Illinois and the Depository Trust Company of New York is open for business, and,
if the applicable Business Day relates to any computation or payment to be made
with respect to the Eurodollar Rate, any day on which dealings in dollar
deposits are carried on in the London interbank market.
"Certificate" means the Series 1998-C Certificate issued pursuant to
the Supplement, and which represents a beneficial interest in the Series 1998-C
Assets.
"Charged-Off Lease" means any Lease or any portion of such a Lease: (i)
as to which the Lessee thereof has taken any action, or suffered any event to
occur, of the type described in Section 6.1(d) (as if references to the Borrower
therein refer to such Lessee); or (ii) which, consistent with the Credit and
Collection Practices, should be written off as uncollectible.
"Closing Date" means the date on which the conditions precedent set
forth in Section 4.1 are satisfied or, in the sole discretion of the
Administrator, waived.
"Collateral" means all right, title and interest of the Borrower in and
to (i) the Certificate issued by the Trust to PHH VMS and conveyed to the
Borrower pursuant to the terms of the Contribution Agreement and any interest of
the Borrower in the Series 1998-C Assets and all other assets of the Trust
evidenced by the Certificate, (ii) the Contribution Agreement, (iii) the Trust
Agreement, (iv) the Administrative Agency Agreement, (v) the Supplement, (vi)
all cash or other property distributed or distributable on account of the
Certificate, (vii) all cash on deposit in any bank account received as income or
distributions on the Series 1998-C Assets and which has been distributed or will
be distributed as income or distributions on the Certificate and the Series
1998-C Assets, and (viii) any and all proceeds with respect to any of the
foregoing.
"Collection Period" means each period from (and including) the first
day of each calendar month to (and including) the last day of such calendar
month.
"Collections" means, with respect to any Series 1998-C Asset
"Collection", as defined in the Trust Agreement in respect of such Series 1998-C
Asset.
"Commercial Paper" means promissory notes of any Lender issued by such
Lender in the commercial paper market.
"Concentration Limit" means, on the date the Loan is made, an amount
equal to the product of (i) the aggregate Projected Adjusted Lease Balance of
the Series 1998-C Leased Vehicles, multiplied by (ii) with respect to any Lessee
with a long-term unsecured debt rating (A) of at least "A" by S&P or "A2" by
Moody's, 5%, (B) of at least "BBB" by S&P or "Baa2" by Moody's (but does not
fall within clause (A)), 3% or (C) not within clauses (A) or (B), 2%.
"Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement, take-or-pay contract or application for a letter of credit.
"Contribution Agreement" means that certain Asset Contribution
Agreement, dated as of December 28, 1998, between the Borrower and PHH VMS, as
the same may be amended, restated and/or otherwise modified from time to time in
accordance with the terms thereof and hereof.
"CP Rate" means, for any Settlement Period for any portion of the Loan
funded by any Lender, to the extent such Lender funds such portion of the Loan
for such Settlement Period by issuing Commercial Paper, the per annum rate
equivalent to the "weighted average cost" (as defined below) related to the
issuance of Commercial Paper that are allocated, in whole or in part, by such
Lender or the Administrator to fund or maintain such portion of the Loan (and
which may also be allocated in part to the funding of other portions of the Loan
hereunder or of other assets of such Lender); provided, however, that if any
component of such rate is a discount rate, in calculating the "CP Rate" for such
portion of the Loan for such Settlement Period, such Lender shall for such
component use the rate resulting from converting such discount rate to an
interest bearing equivalent rate per annum. As used in this definition, such
Lender's "weighted average cost" shall consist of (w) the actual interest rate
(or discount) paid to purchasers of such Lender's Commercial Paper, together
with the commissions of placement agents and dealers in respect of such
Commercial Paper, to the extent such commissions are allocated, in whole or in
part, to such Commercial Paper by such Lender or the Administrator, (x) certain
documentation and transaction costs associated with the issuance of such
Commercial Paper, (y) any incremental carrying costs incurred with respect to
Commercial Paper maturing on dates other than those on which corresponding funds
are received by such Lender, and (z) other borrowings by such Lender (other than
under any Funding Agreement), including, without limitation, borrowings to fund
small or odd dollar amounts that are not easily accommodated in the commercial
paper market.
"Credit and Collection Practices" means the credit and collection
policies and practices relating to Series 1998-C Assets existing on the date
hereof and as attached hereto as Exhibit VIII and as described to the Lenders,
as modified from time to time in accordance with this Agreement.
"Default Ratio" means, at any time of determination, the lesser of (i)
a ratio, expressed as a percentage, of Net Write-Offs for the 12 full calendar
months immediately preceding such time to the average Adjusted Lease Balance of
all Series 1998-C Leases for such 12 full calendar months, and (ii) the ratio,
expressed as a percentage, of (A) such Net Write-Offs multiplied by the ratio,
expressed as a percentage, of the Adjusted Lease Balance of those Series 1998-C
Leases which became Defaulted Leases during such 12 full calendar months to the
Adjusted Lease Balance of all Series 1998-C Leases and all other Leases serviced
by the Administrative Agent for such 12 full calendar months the Lessees of
which were Lessees with respect to such Defaulted Leases, to (B) the average
Adjusted Lease Balance of all Series 1998-C Leases for such 12 full calendar
months; for purposes hereof, the Adjusted Lease Balance of the Leases shall be
deemed to be equal to the Adjusted Lease Balance thereof on the Closing Date for
all times prior to the Closing Date.
"Defaulted Asset" means a Series 1998-C Asset with respect to which the
Lease associated therewith is a Defaulted Lease.
"Defaulted Lease" means a Lease: (i) as to which 25% or greater of
billings remain unpaid for more than 120 days from the original due date,
provided that such delinquency is not due to a valid billing dispute or (ii)
which has been declared in default under the Credit and Collection Practices.
"Delinquent Lease" means a Lease (other than a Defaulted Lease) as to
which any payment, or part thereof, remains unpaid for more than 60 days or more
from the original due date for such payment.
"Delinquency Ratio" means, for any Collection Period, the ratio
(expressed as a percentage) of (i) the aggregate billings which were unpaid for
60 days or more from the original due date thereof as of the last day of such
Collection Period with respect to all Series 1998-C Leases and all other Leases
serviced by the Administrative Agent, to (ii) the sum of (a) the aggregate
billings which were unpaid as of the last day of such Collection Period with
respect to all Series 1998-C Leases and all other Leases serviced by the
Administrative Agent and (b) the aggregate amount billed during such Collection
Period with respect to all Series 1998-C Leases and all other Leases serviced by
the Administrative Agent.
"Depreciation Rent" has the meaning specified in the Administrative
Agency Agreement.
"Discount" means:
(i) for any portion of the Loan funded by any Lender for any
Settlement Period to the extent such portion of the Loan will be funded
by such Lender on the first day of such Settlement Period through the
issuance of Commercial Paper,
CPR x C x ED + BFC
AD
(ii) for any portion of the Loan funded by any Lender for any
Settlement Period to the extent such portion of the Loan will not be
funded by such Lender on the first day of such Settlement Period
through the issuance of Commercial Paper,
AR x C x ED + BFC
AD
where:
AR = the Alternate Rate for such portion of the
Loan funded by such Lender for such
Settlement Period;
C = the weighted average of the Dollar amount
of such portion of the Loan funded by such
Lender during such Settlement Period;
CPR = the CP Rate for such portion of the Loan
funded by such Lender for such Settlement
Period (as determined by the Administrator
on or prior to the fourth Business Day of
the calendar month next following such
Settlement Period);
ED = the actual number of days during such
Settlement Period;
BFC = the Broken Funding Costs, if any, for such
portion of the Loan funded by such Lenderfor
such Settlement Period; and
AD = 360;
provided, however, that during the continuance of an Event of Default, the CP
Rate shall not be available and Discount for each portion of the Loan funded by
such Lender shall be determined using the Alternate Rate for the related
Settlement Period.
"Eligible Lease" means, on the Closing Date, any Series 1998-C Lease:
(1) which is denominated and payable only in United
States dollars in the United States,
(2) the Lessee of which (a) is organized under the laws of the
United States or any political subdivision thereof and has its chief
executive office in the United States, (b) is not an Affiliate of any
of the parties hereto, and (c) is not a government or a governmental
subdivision or agency,
(3) the Lessee of which is not the Lessee of any
Defaulted Lease,
(4) which is not a Charged-Off Lease,
(5) that requires payment within 30 days of the date of
invoice and which requires the unamortized book value of the related
Vehicle to be paid in full, in equal monthly payments, within 60 months
of the date hereof at a floating rate of interest,
(6) which is "chattel paper" or an "account" within the
meaning of 9-105 or Section 9-106, respectively, of the UCC of all
applicable jurisdictions,
(7) which is in full force and effect and constitutes the
legal, valid and binding obligation of the related Lessee enforceable
against such Lessee in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
of general applicability and by the effect of general principles of
equity (regardless of whether enforceability is considered in a
proceeding in equity or at law),
(8) which (a) does not require the Lessee under such Lease to
consent (unless such consent has been obtained) to the transfer, sale
or assignment of the rights of PHH VMS or any of its assignees under
such Lease and (b) is not subject to a confidentiality provision that
would have the effect of restricting the ability of the Administrator
or any Lender to exercise its rights under this Agreement, including,
without limitation, its right to review the Lease,
(9) which has been selected by PHH VMS for inclusion in the
Series 1998-C Assets on a non-preferential basis not adverse to the
interests of the Lenders,
(10) which is not subject to any right of rescission, set-off
(in respect of all or any portion of the outstanding principal balance
thereof then being proposed for inclusion in Series 1998-C Assets as of
the Closing Date), counterclaim, dispute, any other defense (including
defenses arising out of violations of usury laws) of the applicable
Lessee or PHH VMS or any other Adverse Claim,
(11) a Lease as to which PHH VMS has satisfied and fully
performed all obligations on its part with respect to such Lease
required to be fulfilled by it, and no further action is required to be
performed by any Person with respect thereto other than payment thereon
by the applicable Lessee,
(12) all right, title and interest to and in which has been
validly transferred by PHH VMS directly to the Trust under and in
accordance with the Trust Agreement and the Assignment, and the Trustee
has good and marketable title thereto free and clear of any Adverse
Claim, except as permitted by the Transaction Documents,
(13) which was created in compliance with and does not
contravene any law, rule or regulation applicable thereto (including,
without limitation, any law, rule and regulation relating to truth in
lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy) in any
material respect and with respect to which no part of the Lease related
thereto is in violation of any such law, rule or regulation,
(14) which satisfies all applicable requirements of the Credit
and Collection Practices,
(15) which was generated in the ordinary course of PHH VMS'
business,
(16) the Adjusted Lease Balance of which when aggregated with
the Adjusted Lease Balance of all Series 1998-C Leases of the related
Lessee and any Affiliates of such Lessee does not exceed the
Concentration Limit, except as otherwise agreed by Administrator,
(17) which leases an automobile or light duty truck, and
(18) with respect to which the Administrator has not notified
the Borrower or Administrative Agent that such Lease is not acceptable.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurodollar Rate" means, for any Settlement Period for any portion of
the Loan, an interest rate per annum (rounded upward to the nearest 1/16th of
1%) determined pursuant to the following formula:
Eurodollar Rate = LIBOR
1.00 - ERP
Where,
"LIBOR" means the rate of interest per annum determined by the
Administrator to be the arithmetic mean (rounded upward to the nearest
1/16th of 1%) of the rates of interest per annum notified to the
Administrator by the Reference Bank as the rate of interest at which
dollar deposits in the approximate amount of such portion of the Loan
associated with such Settlement Period would be offered to major banks
in the London interbank market at their request at or about 11:00 a.m.
(London time) on the second Business Day prior to the commencement of
such Settlement Period.
"ERP" means, for any Settlement Period, the maximum reserve
percentage (expressed as a decimal, rounded upward to the nearest
1/100th of 1%) in effect on the date LIBOR for such Settlement Period
is determined under regulations issued from time to time by the Federal
Reserve Board for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal reserve
requirement) with respect to Eurocurrency funding (currently referred
to as "Eurocurrency liabilities") having a term comparable to such
Settlement Period.
"Event of Default" has the meaning specified in Section 6.1.
"Facility Termination Date" means the earliest to occur of (a) December
27, 1999, (b) the Purchase Termination Date, as defined in its Liquidity Asset
Purchase Agreement, which on the date of the Agreement is December 27, 1999, or
such later date designated as the Purchase Termination Date from time to time
pursuant to such Liquidity Asset Purchase Agreement (it being understood that
the Administrator shall notify the Borrower of the designation of such later
date, provided that failure to provide such notice shall not limit or otherwise
affect the obligations of the Borrower or the rights of the Administrator, any
Lender, or any other party to such Liquidity Asset Purchase Agreement), (c) the
date of termination of the commitment under any other of its Funding Agreement,
and (d) an Event of Default.
"Federal Funds Rate" means, for any day, the per annum rate set forth
in the weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such
successor, "H.15(519)") for such day opposite the caption "Federal Funds
(Effective)". If on any relevant day such rate is not yet published in
H.15(519), the rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m.
Quotation") for such day under the caption "Federal Funds Effective Rate". If on
any relevant day the appropriate rate for such previous day is not yet published
in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day
will be the arithmetic mean as determined by the Administrator of the rates for
the last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New
York time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Administrator.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System, or any entity succeeding to any of its principal functions.
"Fee Letter" means that certain letter agreement, dated as of December
28, 1998, between the Borrower and the Administrator, as heretofore or hereafter
amended or modified and in effect from time to time.
"Fluctuation Factor" means 1.5.
"Funding Agreement" means and includes each Liquidity Asset Purchase
Agreement and any other agreement entered into by any Program Support Provider
providing for the issuance of one or more letters of credit for the account of
any Lender, the issuance of one or more surety bonds for which any Lender is
obligated to reimburse the applicable Program Support Provider for any drawings
thereunder, the sale by any Lender to any Program Support Provider of a portion
of the Loan and/or the making of loans and/or other extensions of credit to any
Lender in connection with any Lender's securitization program, together with any
letter of credit, surety bond or other instrument issued thereunder (but
excluding any discretionary advance facility provided by the Administrator).
"Funding Source" means the Administrator, each Lender, each Liquidity
Purchaser and any other Program Support Provider. "Governmental
Authority" means the United States of America, any state or other
political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee" means the Guarantee, dated as of December 28, 1998, made by
the Guarantor in favor of the Administrator and the Lenders, as hereafter
amended or modified and in effect from time to time.
"Guarantor" means PHH Corporation, a Maryland corporation.
"Holder" has the meaning specified in the Trust Agreement.
"Indebtedness" of a Person means such Person's (i) obligations for
borrowed money, (ii) obligations representing the deferred purchase price of
property or services (other than accounts payable arising in the ordinary course
of such Person's business payable on terms customary in the trade), (iii)
obligations, whether or not assumed, secured by liens or payable out of the
proceeds or production from property now or hereafter owned or acquired by such
Person, (iv) obligations which are evidenced by notes, acceptances, or other
instruments, (v) capitalized lease obligations, (vi) net liabilities under
interest rate swap, exchange or cap agreements, (vii) Contingent Obligations and
(viii) liabilities in respect of unfunded vested benefits under plans covered by
Title IV of ERISA.
"Lease" means, any lease between PHH VMS and a Lessee substantially in
the form of Exhibit A to the Administrative Agency Agreement and assigned by PHH
to the Trust.
"Lease File" has the meaning set forth in the Administrative Agency
Agreement.
"Lender" has the meaning set forth in the preamble to this Agreement.
"Lender's Percentage" means for any date for any Lender (i) on the date
of the funding of the Loan hereunder, 50%, and (ii) thereafter, the portion of
the outstanding principal of the Loan funded by such Lender divided by the
aggregate outstanding principal of the Loan on such date (expressed as a
percentage).
"Lessee" means the Lessee of a Series 1998-C Leased Vehicle or any
Person who is obligated to make payments on the related Lease.
"Liquidity Asset Purchase Agreement" means, for each Lender, that
certain Liquidity Asset Purchase Agreement dated as of the date hereof among
BofA, BofA and certain other Persons as Liquidity Purchasers, and such Lender,
as amended, supplemented or otherwise modified from time to time.
"Liquidity Purchaser" has the meaning set forth in Section 10.1.
"Loan" has the meaning specified in Section 1.1(a).
"Loan Note" means a promissory note, substantially in the form of
Exhibit III, made by the Borrower in favor of the Administrator for the benefit
of the Lenders.
"Loan Request" means a request, substantially in the form of Exhibit
VIII, made by the Borrower to the Administrator for the Loan.
"Lock-Box" means a locked postal box maintained by PHH VMS to which a
bank who has executed a Lock-Box Agreement has been granted exclusive access for
the purposes of retrieving and processing payments made on the Series 1998-C
Assets.
"Lock-Box Account" means the deposit account associated with each Lock
- -Box.
"Lock-Box Agreement" means, in the case of any Lock-Box Account, an
agreement in substantially the form of Exhibit VI.
"Material Adverse Effect" means a material adverse effect on (i) the
ability of the Borrower or the Administrative Agent to perform its obligations
under the Transaction Documents to which it is a party, (iii) the legality,
validity or enforceability of any Transaction Document or any Lock-Box Agreement
relating to a Lock-Box Account into which a material portion of Collections are
deposited, (iv) the Administrator's interest, on behalf of the Lenders, in the
Certificate, (v) the Trust's interest in the Series 1998-C Assets generally or
in any significant portion thereof, or (vi) the collectability of the Series
1998-C Assets generally or of any material portion thereof.
"Maximum Loan" means $625,000,000.
"Monthly Report" means a report, in substantially the form of Exhibit V
(appropriately completed), furnished by the Administrative Agent to the
Administrator on behalf of the Lenders pursuant to Section 10.2 of the
Supplement.
"Net Worth" means, as of the last Business Day of each Collection
Period preceding any date of determination, the excess, if any, of (a) the
aggregate Adjusted Lease Balance of the Series 1998-C Leases at such time, over
(b) the principal amount of the Loan plus Discount outstanding at such time.
"Net Write-Offs" means, for any period of determination, amounts then
due and payable under Leases which became Defaulted Leases during such period,
plus 50% of the Adjusted Lease Balance of all Leases serviced by the
Administrative Agent the Lessees of which are Lessees with respect to such
Defaulted Leases.
"Non-U.S. Person" has the meaning specified in Section 9.3(e).
"Other Taxes" has the meaning specified in Section 9.3(b).
"Originators" means PHH VMS and PHH Subsidiary.
"Participant" has the meaning specified in Section 10.2.
"Person" means an individual, partnership, corporation, association,
trust, or any other entity, or organization, including a government or political
subdivision or agent or instrumentality thereof.
"PHH Entities" has the meaning specified in Section 5.1(e).
"PHH Subsidiary" means PHH VMS Subsidiary Corporation, a Maryland
corporation.
"PHH VMS" means PHH Vehicle Management Services Corporation, a Maryland
corporation.
"Potential Event of Default" means an event which, with the passage of
time or the giving of notice, or both, would constitute an Event of Default.
"Program Fee" has the meaning specified in the Fee Letter.
"Program Support Provider" means and includes each Lender and any other
or additional Person (other than any customer of any Lender) now or hereafter
extending credit or having a commitment to extend credit to or for the account
of, or to make purchases from, any Lender or issuing a letter of credit, surety
bond or other instrument to support any obligations arising under or in
connection with the Lender's securitization program, including, without
limitation, the Liquidity Purchasers.
"Projected Adjusted Lease Balance" means, with respect to any Series
1998-C Leased Vehicle as of any date, the Adjusted Lease Balance of such Series
1998-C Leased Vehicle minus the Depreciation Rent which was unpaid as of such
date with respect to the related Series 1998-C Lease.
"QCC" has the meaning set forth in this preamble to this Agreement.
"RCC" has the meaning set forth in the preamble to this Agreement.
"Records" means, with respect to the Certificate, all Leases and other
documents, books, records and other information (including, without limitation,
computer programs, tapes, disks, punch cards, data processing software and
related property and rights) relating to the Certificate.
"Reference Bank" means BofA.
"Required Lenders" means, at any time, Lenders funding at least 51% of
the aggregate outstanding amount of the Loan.
"Regulatory Change" has the meaning specified in Section 9.2(a).
"Secured Obligations" has the meaning specified in Section 1.8(a).
"Series 1998-C Assets" has the meaning specified in the Amendment,
dated December 28, 1998, to the Administration Agreement.
"Series 1998-C Certificate" means Certificate as defined herein.
"Series 1998-C Lease" has the meaning specified in the Amendment, dated
December 28, 1998, to the Administration Agreement.
"Series 1998-C Leased Vehicle" has the meaning specified in the
Amendment, dated December 28, 1998, to the Administration Agreement.
"Series Specification Notices" has the meaning specified in the Trust
Agreement.
"Settlement Date" means, with respect to any Settlement Period, the
18th day of the next calendar month (or the next succeeding Business Day if such
day is not a Business Day) or upon request by the Administrator after the
occurrence of an Event of Default, daily.
"Settlement Period" means, unless otherwise mutually agreed by the
Administrator and the Borrower, (a) with respect to any portion of the Loan
funded by any Lender through the issuance of Commercial Paper, (x) initially the
period commencing on (and including) the date of the initial purchase or funding
of such portion of the Loan and ending on (but excluding) the first day of the
next following Collection Period, and (y) thereafter, each period commencing on
(and including) the last day of the immediately preceding Settlement Period for
such portion of the Loan and ending on (but excluding) the first day of the next
following Collection Period; and (b) with respect to any portion of the Loan not
funded by the issuance of Commercial Paper, (x) initially the period commencing
on (and including) the date of the initial purchase or funding of such portion
of the Loan and ending on (but excluding) the next following Settlement Date,
and (y) thereafter, each period commencing on (and including) the last day of
the immediately preceding Settlement Period for such portion of the Loan and
ending on (but excluding) the next following Settlement Date; provided, however,
that
(i) any Settlement Period (other than of one day or
funded through the issuance of Commercial Paper) which would
otherwise end on a day which is not a Business Day shall be
extended to the next succeeding Business Day; provided,
however, if Discount in respect of such Settlement Period is
computed by reference to the Eurodollar Rate, and such
Settlement Period would otherwise end on a day which is not a
Business Day, and there is no subsequent Business Day in the
same calendar month as such day, such Settlement Period shall
end on the next preceding Business Day;
(ii) in the case of any Settlement Period for any
portion of the Loan which commences before the Termination
Date and would otherwise end on a date occurring after the
Termination Date, such Settlement Period shall end on such
Termination Date and the duration of each Settlement Period
which commences on or after the Termination Date shall be of
such duration as shall be selected by the Administrator;
(iii) any Settlement Period in respect of which
Discount is computed by reference to the CP Rate may be
terminated at the election of, and upon notice thereof to the
Borrower by, the Administrator any time, in which case the
portion of the Loan allocated to such terminated Settlement
Period shall be allocated to a new Settlement Period
commencing on (and including) the date of such termination and
ending on (but excluding) the next following Settlement Date,
and shall accrue Discount at the Alternate Rate (determined
pursuant to clause (b) of such definition).
"SPC Assignee" means a special purpose company which (i) is
administered by BofA or NationsBank, N.A. or any Affiliate thereof and (ii)
has activities generally similar to any Lender.
"Special Beneficial Certificates" has the meaning specified in the
Trust Agreement.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, association, joint venture or similar business
organization more than 50% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled. Unless otherwise
expressly provided, all references herein to a "Subsidiary" shall mean a
Subsidiary of the Borrower.
"Supplement" means the Series 1998-C Supplement dated as of December
28, 1998 to the Administrative Agency Agreement and the Amended and Restated
Trust Agreement dated as of June 12, 1998 among PHH VMS, PHH Subsidiary and the
Trustee.
"Taxes" has the meaning specified in Section 9.3(a).
"Transaction Documents" means, collectively, this Agreement, the Loan
Note, the Contribution Agreement, the Administrative Agency Agreement, the
Assignment, the Guarantee, the Trust Agreement, the Supplement, the Certificate,
each Lock-Box Agreement, the Fee Letter, each Liquidity Asset Purchase Agreement
and all other instruments, documents and agreements executed and delivered in
connection herewith or therewith.
"Trust" has the meaning specified in the Trust Agreement.
"Trust Agreement" means the Amended and Restated Trust Agreement, dated
as of June 12, 1998 among PHH VMS, PHH Subsidiary and the Trustee as amended and
supplement by the amendment thereto, dated December 17, 1998 and by the Series
1998-A, Series 1998-B and Series 1998-C Supplements..
"Trustee" means First National Bank of Maryland, as trustee under the
Trust Agreement.
"UCC" means the Uniform Commercial Code as from time to time in effect
in New York State.
"Vehicle" has the meaning specified in the Trust Agreement.
"Year 2000 Plan" has the meaning specified in Section 3.1(q).
"Year 2000 Problem" means, with respect to any Person, the risk that
computer applications in use by that Person cannot or will not: (a) handle date
information involving any and all dates before, during and/or after January 1,
2000, including accepting input, providing output and performing date
calculations in whole or in part; (b) operate accurately without interruption on
and in respect of any and all dates before, during and/or after January 1, 2000;
and (c) store and provide date input information without creating any ambiguity
as to the century.
All accounting terms not specifically defined herein shall be construed
in accordance with generally accepted accounting principles. All terms used in
Article 9 of the UCC in the State of New York, and not specifically defined
herein, are used herein as defined in such Article 9.
The words "hereof," "herein," "hereunder" and similar terms when used
in this Agreement shall refer to this agreement as a whole and not to any
particular provision of this Agreement, and article, section, subsection,
schedule and exhibit references herein are references to articles, sections,
subsections, schedules and exhibits to this Agreement unless otherwise
specified.
Capitalized terms used and not otherwise defined herein are used with
the meanings attributed thereto in the Contribution Agreement.
Exhibit II
Chief Executive Office; Place(s) of Business; FEIN
TRAC Funding, Inc.
c/o PHH Vehicle Management Services Corporation
307 International Circle
Mail Code CP
Hunt Valley, Maryland 2130-1337
Federal Taxpayer ID # 52-2135094
Exhibit III
Form of Loan Note
PROMISSORY NOTE
$625,000,000 December 28, 1998
New York, New York
FOR VALUE RECEIVED, TRAC Funding II, Inc., a Delaware
corporation (the "Borrower"), hereby promises to pay to the
order of Bank of America National Trust and Savings
Association, as Administrator for the benefit of Quincy
Capital Corporation (together with its successors and
permitted assigns, "QCC") and Receivables Capital Corporation
(together with its successors and permitted assigns, "RCC"
and, together with QCC, the "Lenders") in lawful money of the
United States, and in immediately available funds, the
principal sum of SIX HUNDRED TWENTY FIVE MILLION DOLLARS
($625,000,000) (or such lesser amount as shall equal the
aggregate unpaid principal amount of the Loan made by the
Lenders to the Borrower under the Loan Agreement referred to
below), on the date and in the principal amounts provided in
the Loan Agreement, and to pay interest on the unpaid
principal amount of the Loan, at such office, in like money
and funds, for the period commencing on the date of the Loan
until the Loan shall be paid in full, at the rates per annum
and on the dates provided in the Loan Agreement. This Loan
Note is the Loan Note referred to in the Loan and Security
Agreement dated as of December 28, 1998 (as amended,
supplemented or otherwise modified and in effect from time to
time, the "Loan Agreement") among the Borrower, the Lenders
and Administrator, and evidences a Loan made by the Lenders
thereunder. Terms used but not defined in this Loan Note have
the respective meanings assigned to them in the Loan
Agreement. The Borrower agrees to pay all the Administrator's
costs of collection and enforcement (including reasonable
attorneys' fees and disbursements of Administrator's counsel)
in respect of this Loan Note when incurred, including, without
limitation, reasonable attorneys' fees through appellate
proceedings. Notwithstanding the pledge of the Collateral, the
Borrower hereby acknowledges, admits and agrees that the
Borrower's obligations under this Loan Note are recourse
obligations of the Borrower to which the Borrower pledges its
full faith and credit. The Borrower, and any endorsers or
guarantors hereof, (a) severally waive diligence, presentment,
protest and demand and also notice of protest, demand,
dishonor and nonpayments of this Loan Note, (b) expressly
agree that this Loan Note, or any payment hereunder, may be
extended from time to time, and consent to the acceptance of
further Collateral, the release of any Collateral for this
Loan Note, the release of any party primarily or secondarily
liable hereon, and (c) expressly agree that it will not be
necessary for the Administrator or a Lender, in order to
enforce payment of this Loan Note, to first institute or
exhaust the Administrator's or such Lender's remedies against
the Borrower or any other party liable hereon or against any
Collateral for this Loan Note. No extension of time for the
payment of this Loan Note, or any installment hereof, made by
agreement by the Administrator or a Lender with any person now
or hereafter liable for the payment of this Loan Note, shall
affect the liability under this Loan Note of the Borrower,
even if the Borrower is not a party to such agreement;
provided, however, that the Lenders and the Borrower, by
written agreement between them, may affect the liability of
the Borrower. Any reference herein to the Administrator shall
be deemed to include and apply to each Lender and every
subsequent holder of this Loan Note. Reference is made to the
Loan Agreement for provisions concerning optional and
mandatory prepayments, Collateral, acceleration and other
material terms affecting this Loan Note. This Loan Note shall
be governed by and construed under the laws of the State of
New York whose laws the Borrower expressly elects to apply to
this Loan Note. The Borrower agrees that any action or
proceeding brought to enforce or arising out of this Loan Note
may be commenced in any United States Federal or New York
State court.
TRAC FUNDING II, INC.
By:
Name:
Title:
Exhibit IV
Form of Compliance Certificate
This Compliance Certificate is furnished pursuant to that certain Loan
and Security Agreement dated as of December 28, 1998 (the "Agreement"), among
TRAC FUNDING II, INC. (the "Borrower"), Quincy Capital Corporation and
Receivables Capital Corporation (the "Lenders") and Bank of America Trust and
Savings Bank (the "Administrator"). Capitalized terms used and not otherwise
defined herein are used with the meanings attributed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected ______________ of the Borrower;
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the related
transactions during the period ended _____________; and
3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or event which constitutes
an Event of Default or a Potential Event of Default, as each such term is
defined under the Agreement, during or at the end of the aforementioned period[,
except as set forth below].
[Described below are the exceptions, if any, to paragraph 3 by listing,
in detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:]
The foregoing certifications, together with the computations set forth
in Schedule I hereto in support hereof, are made and delivered on and as of
[insert date].
[Name]
Schedule of Computations under Section 6.1 (k)
in Support of Compliance Certificate dated ___________
Exhibit V
Form of Monthly Report
[to be provided by the Administrator]
Exhibit VI
Form of Lock-Box Agreement
[TO COME FROM PHH]
_______, 19__
Exhibit VII
Credit and Collection Practices
PHH Shared Services Credit
Credit Risk Policy And Practices - Overview
Through its operating subsidiaries, PHH Corporation provides a broad range of
integrated management services, cost control programs and mortgage banking
services to primarily business entities, government agencies, and affinity
groups. To support these business services in a competitive environment, it is
necessary for PHH to source significant amounts of debt capital, at favorable
interest rates, and with few, if any, restrictions on how the borrowed funds are
utilized.
In order to access debt capital sources, it has been and will continue
to be necessary to maintain high portfolio credit quality and minimal bad debt
write-off experience. Therefore, PHH must consider itself a credit lender and
not a collateral lender, and maintain a credit environment and process
consistent with this position.
Following is an overview of the credit risk policy and practices
throughout PHH Corporation.
o All operating subsidiaries follow formalized,
structured credit and collection policies and procedures that
have been developed with the concurrence of Corporate Credit
Administration.
o Credit authorities are approved by Corporate Credit
Administration and senior financial management of PHH
Corporation, and higher credit lines or lower credit
standings, as defined by PHH Corporation, require the
concurrence of Corporate Credit Administration.
o The credit extension process requires a detailed
credit analysis and generally includes financial statement
analysis with financial ratio measurements of liquidity,
leverage, coverage and return ratios for prospective as well
as existing clients.
o Exception to the financial statement analysis
requirement generally occurs for only low-level credit risks,
such as small fuel accounts at PHH Europe, where a credit
criteria measured threshold must be met. Other exceptions
would include controlled level approvals based upon credit
ratings from major trade and debt rating agencies that are
based on financial statement capacity.
o In order to conduct business with clients where a
level of credit concern exists, the use of credit extension
enhancements is widely encouraged. Such enhancements could
include bank letters of credit, cash security deposits, surety
bonds, electronic payment requirements, corporate guarantees,
etc.
o Clients are subject to periodic (generally annual)
formal credit reviews to evaluate the credit risk basis for
continuing a business relationship.
o Credit line controls are in place for all PHH
operating subsidiaries, and further interim credit reviews are
conducted if a client's service usage exceeds the established
credit line.
o Credit management continues with the monitoring of
client collections on an ongoing basis.
o Credit and collection management control reports
are prepared monthly by all PHH operating subsidiaries and
submitted to Corporate Credit Administration, where an ongoing
oversight activity is exercised.
o Corporate Credit Administration conducts periodic
(not less than annually) on-site audits of the operating sub-
sidiary credit and collection activities. During this process,
a review is made to ensure that established credit and
collection policies and procedures are being adhered to.
The goals and objectives for the foregoing include:
o Maintain a sound, structured credit
environment in which risk exposures can be controlled
and monitored.
o Control bad debt write-offs consistent
with historic nominal levels and business needs, and
ensure adequate bad debt reserves are maintained.
o Optimize the return to shareholders by
providing quality credit risk management practices to
support business growth objectives.
o Maintain strong overall credit risk
portfolio to ensure continued high debt ratings and
access to low-cost debt markets.
Exhibit VIII
Form of Loan Request
Bank of America Trust and Savings Association, as Administrator
231 South LaSalle Street
Chicago, Illinois 60697
This Loan Request is delivered to you pursuant to Section 1.2
of the Loan and Security Agreement dated as of December 29, 1998 (as is may be
amended, supplemented, restated or otherwise modified from time to time, the
"Agreement") among TRAC Funding, Inc., a Delaware corporation (the "Borrower"),
Quincy Capital Corporation (together with its successors and permitted assigns,
"RCC" and, together with QCC, the "Lenders"), and Bank of America Trust and
Savings Association ("BofA"), as administrator for the Lenders (in such
capacity, the "Administrator"). Unless otherwise defined herein or the context
otherwise requires, all capitalized terms used herein will have the respective
meanings assigned to them in the Agreement.
The Borrower hereby requests that the Loan be made in the aggregate
principal amount of $ , on December , 199 . The Borrower hereby certifies that
(i) the representations and warranties of the Borrower set forth in Article III
of the Agreement are on the date hereof, and will be on the date of the proposed
borrowing, true and correct as if made on and as of such dates, and (ii) no
Event of Default has occurred and is continuing on the date hereof or shall have
occurred and be continuing on the date of the proposed borrowing.
The Borrower agrees that if, prior to the time that the borrowing requested
hereby is made, any matter certified to herein shall no longer be true and
correct, it will immediately so notify the Agent. Except to the extent, if any,
that prior to the time that the borrowing requested hereby is made the Agent
shall receive written notice to the contrary from the Borrower, each matter
certified to herein shall be deemed once again to be certified as true and
correct as of the date of the borrowing as if then made.
Please wire transfer the proceeds of the requested borrowing to the
account(s) of the following Persons at the financial institutions indicated
below.
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Amount to be transferred Person to be paid Name, Address, etc. of
Name Account no. Payee Bank
- ------------------------------ ---------------------------- --------------------------- ----------------------------
The Borrower has caused this Loan Request to be executed and delivered, and the
certifications and warranties contained herein to be made, by their duly
authorized officers this __ day of December, 1998.
TRAC FUNDING II, INC.
By:
Name:
Title:
Schedule I
Closing Documents
I. Amended and Restated Trust Agreement and PHH VMS, PHH Subsidiary
Administrative Agency Agreement
A. Series 1998-C Supplement dated as of December 28, 1998 (the
"1998-C Supplement") among PHH VMS, PHH Subsidiary and
the Trust with completed exhibits
B. Amendment to the Amended and Restated Trust Agreement, dated
as of December 17, 1998 among PHH VMS, PHH Subsidiary and the
Trust with completed exhibits.
C. Amendment to the Administrative Agency Agreement dated as of
December 17, 1998 among PHH VMS, PHH Subsidiary and the Trust
with completed exhibits.
D. Series 1998-C Specification Notice delivered by PHH VMS, as
Administrative Administrator, to the Trustee
E. Certificates of PHH VMS' Secretary certifying:
1. An attached copy of its PHH VMS Certificate of
Incorporation (certified within 30 days prior to
closing by the Maryland Secretary of State)
2. An attached copy of its PHH VMS By-Laws
3. An attached copy of resolutions of its PHH VMS Board
of Directors authorizing its PHH VMS execution,
delivery and performance of documents
4. The names, titles and specimen ignatures of its PHH
VMS officers authorized to execute and deliver the
documents
F. Good Standing Certificate for PHH VMS
G. Opinions:
1. Opinion of Skadden, Arps, Slate, Meagher & Flom with
respect to enforceability, corporate law and related
matters
2. Opinion of Skadden, Arps, Slate, Meagher & Flom with
respect to the issuance of the Series 1998-C
Certificate (pursuant to Section 4.4(e) of the Trust
Agreement)
3. Opinion of Counsel to Trustee
H. Series 1998-C Certificate.
II. Assignment & Assumption Agreement
A. Assignment & Assumption Agreement dated December 28, 1998(the
"Assignment") among PHH VMS, PHH Subsidiary and the Trust
with completed exhibits
B. UCC Financing Statement naming each of PHH VMS as debtors and
the Trust as secured party)
C. Acknowledgment by Trustee that the Series 1998-C Leases have
been transferred to it pursuant to the Assignment
D. Opinions
1. Opinion of Piper & Marbury as to UCC matters
2. Opinion of Skadden, Arps, Slate, Meagher & Flom with
respect to true sale matters
3. Opinion of Skadden, Arps, Slate, Meagher & Flom with
respect to non-consolidation matters
III. Sale Agreement
A. Sale Agreement dated as of December [1], 1998 (the "Sale
Agreement") between PHH VMS and PHH Subsidiary, with
completed exhibits
B. Assignment from PHH Subsidiary to PHH VMS
C. Opinions
1. Opinion of Skadden, Arps, Slate, Meagher & Flom with
respect to UCC matters
2. Opinion of Skadden, Arps, Slate, Meagher & Flom with
respect to enforceability, corporate law and related
matters
3. Opinion of Skadden, Arps, Slate, Meager & Flom with
respect to true sale matters
4. Opinion of Skadden, Arps, Slate, Meager & Flom with
respect to non- consolidation matters
IV. Contribution Agreement
A. Asset Contribution Agreement dated as of December 28, 1998
(the "Contribution Agreement") by and between PHH VMS and the
Borrower with completed exhibits.
B. Certificates of the Borrower's Secretary certifying:
1. An attached copy of its Certificate of Incorporation
(certified within 30 days prior to closing by the
Delaware Secretary of State)
2. An attached copy of its By-Laws
3. An attached copy of resolutions of its Board of
Directors authorizing its execution, delivery and
performance of documents
4. The names, titles and specimen signatures of its
officers authorized to execute and deliver the
documents
C. Good Standing Certificate for the Borrower
D. Opinions:
1. Opinion of Skadden, Arps, Slate, Meagher & Flom with
respect to enforceability, corporate law and related
matters
2. Opinion of Skadden, Arps, Slate, Meagher & Flom
with respect to UCC matters.
3. Opinion of Skadden, Arps, Slate, Meagher & Flom with
respect to true sale matters
4. Opinion of Skadden, Arps, Slate, Meagher & Flom with
respect to non-consolidation matters
5. Opinion of Maryland counsel
E. Certificate with respect to no Event of Default or
Potential Event of Default; accuracy of representations and
warranties.
V. Loan Agreement
A. Loan and Security Agreement dated as of December 28, 1998 (the
"Loan Agreement") by and among the Borrower, the Lenders and
the Administrator with completed exhibits.
B. Fee Letter dated as of December 28, 1998 by and between the
Borrower and the Administrator.
C. UCC Financing Statement naming the each Originator, as debtor,
and the Trust, as secured party, filed with the Secretary of
State for the state of Maryland.
D. Loan Request executed by the Borrower.
E. Opinions
1. Opinion of Skadden, Arps, Slate, Meagher
& Flom with respect to enforceability, corporate law
and related matters.
2. Opinion of Skadden, Arps, Slate, Meagher & Flom with
respect to UCC matters
F. Certificate with respect to no Event of Default or Potential
Event of Default, accuracy of representations and
warranties and satisfactions of the "borrowing base."
G. The Certificate registered in the Borrower's name, with an
undated assignment to the Administrator, for the benefit of
the Lenders.
H. Loan Note payable to the Administrator, for the benefit of the
Lenders.
I. UCC Search Results.
J. UCC-1 with respect to Certificate.
VI. Guarantee
A. Guarantee dated as of December 28, 1998 (the "Guarantee")
made by the Guarantor in favor of the Administrator and the
Lenders, with completed exhibits
B. Certificate of the Guarantor's Secretary certifying:
1. An attached copy of the Guarantor's Certificate of
Incorporation (certified within 30 days prior to
closing by the Maryland Secretary of State)
2. An attached copy of the Guarantor's By-Laws
3. An attached copy of resolutions of the Guarantor's
Board of Directors authorizing the Guarantor's
execution, delivery and performance of the Guarantee
and related documents
4. The names, titles and specimen signatures of the
Guarantor's officers authorized to execute and
deliver the Guarantee and related documents
C. Good standing certificates for the Guarantor:
1. Maryland
D. Creditors Acknowledgement Agreement
E. Opinions:
1. Opinion of Skadden, Arps, Slate, Meagher & Flom with
respect to enforceability, corporate law and related
matters
VII. Miscellaneous
A. Termination, Release and Assumption, dated as of December 28,
1998, between PHH Corporation and PHH VMS
B. Re-Execution of 100% Exchangeable Beneficial Certificate
C. Lock-Box Account Agreement
D. Instruction Letter to Administrative Agent regarding
distributions.
E. Release of PHH VMS with respect to Series 1998-C Assets
F. Monthly Report